Prospectus

$228,000,000 aggregate principal amount of its 9.25% Senior Secured Notes due 2015 and

$235,000,000 aggregate principal amount of its 12.75% Senior Notes due 2016,

the issuance of each of which has been registered under the Securities Act of 1933, as amended,

We are offering to exchange, upon the terms and subject to the conditions set forth in this prospectus and the accompanying letter of transmittal, all of our new 9.25% Senior Secured Notes due 2015 (the “exchange secured notes”) and our new 12.75% Senior Notes due 2016 (“the exchange senior notes” and collectively with the exchange secured notes, the “exchange notes”), for all of our outstanding 9.25% Senior Secured Notes due 2015 (the “outstanding secured notes”) and all of our outstanding 12.75% Senior Notes due 2016 (the “outstanding senior notes” and collectively with the outstanding secured notes, the “outstanding notes” and collectively with the exchange notes, the “notes”), respectively. We are also offering the subsidiary guarantees of the exchange notes, which are described in this prospectus. The terms of the exchange notes are identical to the terms of the outstanding notes except that the exchange notes have been registered under the Securities Act of 1933, as amended (the “Securities Act”), and therefore are freely transferable. We will pay interest on the notes on March 1 and September 1 of each year. The outstanding secured notes and exchange secured notes (collectively, the “secured notes”) will mature on March 1, 2015 and the outstanding senior notes and exchange senior notes (collectively, the “senior notes”) will mature on March 1, 2016.

All untendered outstanding notes will continue to be subject to the restrictions on transfer set forth in the outstanding notes and in the applicable indenture. In general, the outstanding notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. Other than in connection with the exchange offer, we do not currently anticipate that we will register the outstanding notes under the Securities Act.

You should consider carefully the risk factors beginning on page 22 of this prospectus before participating in the exchange offers.

Each broker-dealer that receives exchange notes for its own account pursuant to the exchange offers must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. The letter of transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of exchange notes received in exchange for outstanding notes where such outstanding notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. We have agreed that, for a period of 90 days after the expiration date (as defined herein), we will make this prospectus available to any broker-dealer for use in connection with any such resale. See “Plan of Distribution.”

Neither the Securities and Exchange Commission nor any state securities commission has approved or

disapproved of these securities or passed upon the adequacy or accuracy of this prospectus.

You should rely only on the information contained or incorporated by reference in this prospectus. We have not authorized any person to provide you with any information or represent anything about us or this offering that is not contained in this prospectus. If given or made, any such other information or representation should not be relied upon as having been authorized by us. We are offering to exchange the outstanding notes for the exchange notes only in places where the exchange offers are permitted. You should not assume that the information contained or incorporated by reference in this prospectus is accurate as of any date other than the date on the front cover of this prospectus or the date of any document incorporated by reference herein.

This prospectus contains summaries of the terms of several material documents. These summaries include the terms that we believe to be material, but we urge you to review these documents in their entirety. We will provide without charge to each person to whom a copy of this prospectus is delivered, upon written or oral request of that person, a copy of any and all of this information. Requests for copies should be directed to Isabelle Adjahi, Senior Director, Investor Relations and Communications, Axcan Pharma Inc., 597 Laurier Blvd. Mont-Saint-Hilaire, Quebec J3H 6C4, Canada (Telephone: (450) 467-5138). You should request this information at least five business days in advance of the date on which you expect to make your decision with respect to the exchange offer. In any event, you must request this information prior to December 9, 2008, in order to receive the information prior to the expiration of the exchange offer.

We and the guarantors have filed with the Securities and Exchange Commission, or the SEC, a registration statement on Form S-4 under the Securities Act with respect to the exchange notes being offered hereby. This prospectus, which forms a part of the registration statement, does not contain all of the information set forth in the registration statement. For further information with respect to us, the guarantors or the exchange notes, we refer you to the registration statement. Statements contained in this prospectus as to the contents of any contract or other document are not necessarily complete. We are not currently subject to the informational requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act. As a result of the offering of the exchange notes, we will become subject to the informational requirements of the Exchange Act, and, in accordance therewith, will file reports and other information with the SEC. The registration statement, such reports and other information can be inspected and copied at the Public Reference Room of the SEC located at Room 1580, 100 F Street, N.E., Washington D.C. 20549. Copies of such materials, including copies of all or any portion of the registration statement, can be obtained from the Public Reference Room of the SEC at prescribed rates. You can call the SEC at 1-800-SEC-0330 to obtain information on the operation of the Public Reference Room. Such materials may also be accessed electronically by means of the SEC’s home page on the Internet (http://www.sec.gov).

Under the terms of the indentures relating to the notes, we have agreed that, whether or not we are required to do so by the rules and regulations of the SEC, for so long as any of the notes remain outstanding, we will furnish to the trustee and holders of the notes the information specified therein in the manner specified therein. See “Description of Exchange Secured Notes” and “Description of Exchange Senior Notes”

This prospectus contains forward-looking statements within the meaning of the U.S. federal securities laws. Statements other than statements of historical facts including, without limitation, statements regarding our future financial position, business strategy, budgets, projected costs and plans, future industry growth and objectives of management for future operations, are forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “project,” “forecast,” “anticipate,” “believe” or “continue” or the negative thereof or variations thereon or similar terminology.

Although we believe that the expectations reflected in these forward-looking statements are reasonable, we can give no assurance that such expectations will prove to have been correct. Certain of the important factors that could cause actual results to differ materially from our expectations, or “cautionary statements,” are disclosed under “Risk Factors” and elsewhere in this prospectus, including, without limitation, in conjunction with the forward-looking statements included in this prospectus.

We caution you not to place undue reliance on any forward-looking statements and we do not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this prospectus or to reflect the occurrence of unanticipated events. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements.

Some of the market and industry data contained in this prospectus are based on independent industry publications or other publicly available information, while other information is based on internal studies. Although we believe that these independent sources and our internal data are reliable as of their respective dates, the information contained in them has not been independently verified, and we can not assure you as to the accuracy or completeness of this information. As a result, you should be aware that the market and industry data contained in this prospectus, and beliefs and estimates based on such data, may not be reliable. Unless otherwise indicated, all market share information contained in this prospectus is based upon data prepared by IMS Health Ltd., or IMS. The data provided by IMS that relates to the size of a market in terms of sales was determined based upon gross revenues as opposed to net revenues.

Numerical figures included in this prospectus have been subject to rounding adjustments.

SUMMARY

This summary contains basic information about us and these exchange offers. Because it is a summary, it does not contain all of the information that is important to you. You should read this entire prospectus carefully, including the section entitled “Risk Factors” and our consolidated financial statements and the notes thereto included elsewhere in this prospectus, before participating in the exchange offers. Please note that, unless otherwise noted, our presentation of any financial information for the nine-month period ended June 30, 2008 will include data from the “Predecessor” period, which covers the period preceding the February 2008 Transactions (October 1, 2007 to February 25, 2008) and data from the “Successor” period which covers the period following the February 2008 Transactions (February 26, 2008 to June 30, 2008) on a combined basis. Although this combined basis does not comply with generally accepted accounting principles in the United States, or U.S. GAAP, we believe it provides a more meaningful method of comparison to the other periods presented in this prospectus.

Our Company

General

We are a leading specialty pharmaceutical company focused on the marketing and development of branded prescription pharmaceutical products in the field of gastroenterology. With operations in the United States, or the U.S., Canada and the European Union, or the EU, we have established leading positions in several attractive therapeutic niche markets through our specialty sales force and strong relationships with medical practitioners. For fiscal year 2007 and the nine months ended June 30, 2008, our revenues were $348.9 million and $285.3 million, respectively. For fiscal year 2007 and the nine months ended June 30, 2008, our Adjusted EBITDA was $141.4 million and $102.8 million, respectively. Our revenues have grown at a compound annual growth rate of 27.3% for the two-year period ended September 30, 2007.

Our pharmaceutical products treat a range of symptoms associated with certain gastrointestinal diseases and disorders, including inflammatory bowel disease, irritable bowel syndrome, cholestatic liver diseases, pancreatic insufficiency, gastric and duodenal ulcers and other related gastrointestinal disorders. A significant portion of our revenues are derived from products that treat chronic disorders, which we believe adds significant stability to the demand for our products. Our focus on attractive niche markets with limited competition, and on building strong relationships with medical practitioners in these markets, has enabled us to achieve leading market shares in terms of sales for several of our core products in their respective markets.

We believe that our targeted promotion strategy, which focuses primarily on gastroenterologists and other physicians who prescribe large volumes of drugs for diseases treated by our products, and our specialty sales force, which is dedicated to promoting and marketing our branded products in these niche markets, will continue to position us well to grow revenues from sales of our products. We believe that our specialty sales force represents one of the largest contingents of gastrointestinal sales representatives dedicated to promoting and marketing branded pharmaceutical products in the niche markets in which we compete. Our experienced management team has significant expertise in executing strategies for branded pharmaceutical products and has an established track record of acquiring, developing and growing the revenues of specialty gastroenterology pharmaceutical products.

Our research and development strategy concentrates primarily on what we consider to be lower-risk development and enhancement of existing products and on late-stage development of products that have not yet been approved. We do not spend meaningfully on drug discovery, pre-clinical research or Phase I clinical development, which we view as higher risk. Our lifecycle management strategies include developing new, improved dosage forms of existing products and expanding the approved indications for existing products in our portfolio. We have successfully helped to build our pipeline through the acquisition of development stage products. In doing so, we utilize a rigorous and disciplined approach to identifying new product candidates for

further development. This strategy is designed to reduce the level of risk associated with new drug development. Our product development team has extensive experience and expertise in gaining regulatory approval for new gastrointestinal products and new uses for existing products. We obtained United States Food and Drug Administration, or FDA, approval for PYLERA, a product which assists in the eradication of a bacterium recognized as being the main cause of gastric and duodenal ulcers, in 2006 and have an additional new drug application, or NDA, pending for ULTRASE. We have filed an investigational new drug application, or IND, for VIOKASE and, assuming successful completion of the currently ongoing clinical trials, expect to submit our NDA in time to comply with the FDA’s requirement that pancreatic enzyme product manufacturers file a NDA for their product by April 2009. Subject to the successful completion of clinical trials and regulatory approval, we also expect to launch PYLERA, in the EU in 2010 and to file a biological license application, or BLA, for Cx401, a biological product in development for the treatment of perianal fistulas, perhaps as early as 2011.

Key Products and Markets

We have a diversified, balanced portfolio of market-leading, branded gastrointestinal product lines. We have four main product categories, each of which serves a unique therapeutic niche within the gastroenterology market. Our ursodiol products, which consist of our URSO 250 / URSO FORTE and URSO / URSO DS product lines (collectively referred to as URSO unless otherwise noted or indicated by the context) and DELURSAN, treat the symptoms of cholestatic liver disease, a chronic condition. Our mesalamine products, CANASA and SALOFALK, treat the symptoms of inflammatory bowel disease, a chronic condition. Our pancreatic enzyme products, ULTRASE, VIOKASE and PANZYTRAT, treat the symptoms of pancreatic insufficiency, particularly those associated with cystic fibrosis, also a chronic disease, and our sucralfate product lines, CARAFATE and SULCRATE, include suspension-form products that treat the symptoms of ulcers.

Several of our product lines have a significant share of their respective markets in terms of sales, yet no product line contributed more than 20% of our revenues in fiscal year 2007. We benefit from a variety of non-patent barriers to entry that have allowed us to significantly grow revenues with limited competition from generic products. Our revenues are also geographically diversified. In fiscal year 2007, approximately 73% of our revenue was derived from sales in the United States and approximately 16% and 11% of our revenue was derived from sales in the EU and Canada, respectively. The following table summarizes our core product categories and product lines:


Product Category	Indication	Markets	Product Lines	Fiscal Year 2007 Revenue ($ in millions)		% Fiscal Year 2007 Total Revenue
Mesalamine	Inflammatory	U.S.	CANASA	$	65.1	18.7	%
Products	bowel disease	Canada	SALOFALK		19.4	5.5	%

				$	84.5	24.2	%
Ursodiol Products	Cholestatic liver disease	U.S. Canada EU	URSO 250 / URSO FORTE	$	68.1	19.5	%
Ursodiol Products	Cholestatic liver disease		URSO / URSO DS		8.9	2.6	%
			DELURSAN		16.7	4.8	%

				$	93.7	26.9	%

Pancreatic	Pancreatic	U.S., Canada, Export	ULTRASE	$	48.0	13.7	%
Enzyme Products	insufficiency	U.S., Canada	VIOKASE		11.2	3.2	%
		EU, Export	PANZYTRAT		14.8	4.3	%

				$	74.0	21.2	%

Sucralfate	Ulcers	U.S.	CARAFATE	$	50.2	14.4	%
Products		Canada	SULCRATE		2.0	0.6	%

				$	52.2	15.0	%

Due to the chronic or recurring nature of the gastrointestinal disorders that many of our products are used to treat, patients generally take drugs to treat these disorders for relatively long periods, in some cases for the rest of the patient’s life, and physicians tend to be reluctant to change a patient’s treatment program if the patient is positively responding to and tolerating a particular drug. As a result, we believe that drugs that are prescribed to treat the gastrointestinal disorders and diseases that our products are used to treat often experience a high degree of patient loyalty.

Industry

The pharmaceutical industry is large and growing, enjoying one of the highest growth rates across all healthcare sectors, and, as of the end of the 2007 calendar year, has averaged 11.8% compound annual growth in terms of prescription spending since 1980. According to the Centers for Medicare and Medicaid Services, U.S. prescription drug spending has grown every year since 1980, including during recessionary periods. This growth has been driven by the introduction of new products, increasing utilization, population growth, aging population and price increases, none of which we believe are sensitive to economic cycles. We believe that large pharmaceutical companies are continuing to focus their efforts on developing and commercializing “blockbuster” drugs. This market dynamic creates opportunities for specialty pharmaceutical companies like us to successfully target attractive niches in therapeutic categories such as gastrointestinal diseases and disorders.

According to IMS, the U.S. market for gastrointestinal drugs was approximately $21 billion in 2006, of which approximately $15 billion was represented by proton pump inhibitors and Histamine-2 receptor antagonists, or H2 blockers, for the treatment of symptoms associated with Gastroesophageal Reflux Disease, or GERD. Our current marketed products do not address this sector of the market. The remaining approximately $6 billion of the U.S. gastrointestinal pharmaceutical market consists of sales of products that are used to treat non-GERD gastrointestinal indications. The markets in the U.S. for products that are prescribed primarily by specialists to treat the diseases and disorders treated by our core product lines, including inflammatory bowel disease, irritable bowel syndrome, cholestatic liver diseases, pancreatic insufficiency, gastric and duodenal ulcers and other related gastrointestinal disorders, are estimated to be approximately $682 million in the aggregate in fiscal year 2007. We believe that the stable historical growth rates of the markets in which we participate are primarily a function of the chronic nature of many of the disorders treated by our products.

Competitive Strengths

We believe we have a number of competitive strengths that will enable us to further enhance our position in the gastroenterology market.

Diversified Portfolio of Branded Products. We currently market branded products in seven product categories that treat a broad range of gastrointestinal diseases and disorders. During fiscal year 2007, four product lines contributed 13% or more of our revenues, but no single product line accounted for more than 20% of our revenues. We believe that our diversified portfolio of products distinguishes us from our principal specialty pharmaceutical competitors, which generally depend on one product that accounts for approximately 45% to 50% of their revenues, according to publicly available information. Our portfolio of products is also geographically diverse, with approximately 27% of our revenues being generated from sales outside the United States in fiscal year 2007. The following charts summarize our revenues by product line and by geography in fiscal year 2007:

LOGO

Leading Competitive Positions in Attractive Gastroenterology Markets. We have a strong track record of leveraging a product line’s unique market position to drive performance. CANASA and URSO are currently the only branded, actively-promoted products in their respective markets in the U.S., with respect to CANASA and URSO 250 / URSO FORTE, and Canada, with respect to URSO / URSO DS, and CARAFATE is the only branded suspension-form sucralfate product in its market in the U.S. These product lines enjoy leading market positions in terms of sales in their respective markets: CARAFATE is used to treat gastric and duodenal ulcers and accounted for 70% of the U.S. market for sucralfate products in terms of sales in fiscal year 2007, CANASA

is used to treat ulcerative proctitis and colitis and accounted for 64% of the U.S. market for rectally-administered mesalamine products in terms of sales in fiscal year 2007, and URSO is the only ursodiol product indicated for the treatment of Primary Biliary Cirrhosis, or PBC, in the U.S. and accounted for 67% of the U.S. market for ursodiol products in terms of sales in fiscal year 2007. In addition, VIOKASE is the only branded non-enteric coated prescription pancreatic enzyme product in its market. VIOKASE is used to treat pancreatic insufficiency and, together with ULTRASE, accounted for 28% of the U.S. market for prescription pancreatic enzyme products in terms of sales in fiscal year 2007. We believe that our products are often the first line of treatment prescribed by physicians for these diseases and disorders. Many of the gastrointestinal diseases and disorders that our products are used to treat are chronic, and as a result, we believe that physicians tend to be reluctant to change a patient’s treatment program once the patient has been treated with and becomes accustomed to a particular product. As a result, we believe that our products experience a high degree of patient loyalty allowing us to maintain leading competitive positions in the markets in which we participate.

Non-Patent Barriers to Entry. Despite not having long-term patent protection, we believe that our core product lines benefit from a variety of regulatory, clinical, sourcing and manufacturing barriers to entry, including, depending upon the product line and the product, the requirement to obtain certain regulatory approvals by a specified date, the requirement to conduct clinical trials, the ability to source certain high-grade active pharmaceutical ingredients and the know-how required to manufacture certain dosage forms. We believe that these barriers to entry may create impediments for generic competitors to introduce and market generic versions of certain of our products, including products from our ULTRASE, VIOKASE, CANASA and CARAFATE product lines. See “Business—Products” and “Risk Factors—Risks Related to Our Business.”

Focused Sales Force with Market-Leading Performance. By focusing on establishing strong relationships with high-volume prescribing gastroenterologists, hepatologists and cystic fibrosis centers, we are able to effectively penetrate the gastroenterology market. As of June 30, 2008, our sales force is comprised of 152 sales representatives, with 82 located in the United States, 59 in the EU (including a contracted sales force in Germany that devotes its efforts exclusively to selling our products) and 11 in Canada.

Consistently Strong Historical Organic Growth and High Free Cash Flow Generation. Our business is characterized by strong free cash flows due to our robust operating history and minimal capital intensity. Over the last five fiscal years, we have increased revenue and EBITDA at compound annual growth rates of 21% and 25%, respectively. In addition, our capital expenditure requirements have historically been minimal, averaging 2.7% of revenues over the last six fiscal years, providing for strong free cash flow conversion. Over the last six fiscal years, we have generated cumulative free cash flow of approximately $380 million. We believe, but cannot guarantee, that our strong free cash flow will enable us to adequately service debt and will provide us with financial flexibility to invest in our business. For information regarding the risks we and our business face, please see “Risk Factors.”

Proven Track Record in Acquiring Products and Building Market Share. Our business development effort is focused on expanding our product portfolio by capitalizing on our core knowledge of gastrointestinal markets. Our experienced business development team uses a rigorous and disciplined approach to identify and acquire products that can be grown by our sales force using the strong relationships we have with gastroenterology practitioners. We have a strong record of acquiring and developing products and growing their market share, as evidenced by our leading position in a number of the markets in which we participate.

In addition to URSO, CANASA, CARAFATE, ULTRASE, SALOFALK and VIOKASE, after successfully completing Phase III trials for PYLERA and obtaining FDA approval, in 2006 we launched PYLERA in the

United States in May 2007. By June 30, 2008, PYLERA had already successfully captured 7.0% of the U.S. market in terms of new prescriptions written by gastroenterologists for the eradication of Helicobacter pylori, a bacterium recognized as being the main cause of gastric and duodenal ulcers.

Experienced and Dedicated Management Team. We have a highly experienced management team at both the corporate and operational levels. Our team is led by Dr. Frank Verwiel, our President and Chief Executive Officer, formerly with Merck & Co., Inc. and a 20-year veteran of the healthcare industry, who joined Axcan Pharma Inc. as President and Chief Executive Officer in July 2005. David Mims, formerly with Scandipharm, Inc., is our Executive Vice President and Chief Operating Officer, having joined Axcan Pharma Inc. in such capacity in February 2000 as a result of the acquisition of Scandipharm, Inc. Mr. Mims brings 20 years of experience in the healthcare industry to Axcan. Steve Gannon joined Axcan Intermediate Holdings Inc. and Axcan Pharma Inc. as Senior Vice President, Finance and Chief Financial Officer in February 2008 and April 2006, respectively, having previously served as Chief Financial Officer of CryoCath Technologies, Inc. and held various senior financial roles at AstraZeneca and Mallinckrodt. Dr. Alexandre LeBeaut rejoined us as Senior Vice President and Chief Scientific Officer in September 2008 after previously holding such position with Axcan Pharma from May 2006 to February 2007 and holding various executive positions in the pharmaceutical industry, most recently as Vice President, Medical Units, U.S. Medical Affairs of Sanofi-Aventis Pharmaceuticals. Nicholas Franco joined Axcan Pharma Inc. as Senior Vice President, International Commercial Operations in July 2007, having formerly held various management positions at Novartis Pharma AG. Darcy Toms joined Axcan Pharma Inc. as Vice President, Business Development in January 2007, having formerly held positions at Biovail and Aventis. Richard Tarte, formerly a partner with the law firm of Coudert Brothers, joined us as General Counsel and Secretary in February 2008 and joined Axcan Pharma Inc. as Vice President, Corporate Development & General Counsel in 2001 and brings 8 years of experience in the healthcare sector to Axcan. Overall, the foregoing members of our senior management team have an average tenure of 15 years in the healthcare industry.

Business Strategy

We intend to enhance our position as the leading specialty pharmaceutical company concentrating in the field of gastroenterology by pursuing the following strategic initiatives:

Focus on Gastroenterology Market. While large pharmaceutical companies are primarily focusing on developing “blockbuster” drugs, we concentrate our efforts on branded products in niche gastroenterology markets that we can effectively target with our sales force, which, as of June 30, 2008, consists of a total of 152 sales representatives based in the U.S., U.K., Canada, France and Germany. We currently market a range of established specialty pharmaceutical products intended for the treatment of symptoms associated with gastrointestinal diseases and disorders. We plan to continue to grow our revenues by building on our solid base business and introducing new products to the gastroenterology market. Given the niche nature of our markets and the focused audience, consisting of gastroenterologists, hepatologists and cystic fibrosis centers, our sales representatives are able to concentrate their sales and marketing efforts to effectively target the primary prescription writers of these products.

Grow Sales of Existing Products. We seek to drive growth in sales of our products by continuing to focus on high-volume prescribing physicians in the gastroenterology market and by leveraging the market position and unique nature of our product lines. We utilize extensive analysis of prescription data relating to our products and the products of our competitors to identify physicians who are high-volume prescribers of drugs that treat the diseases and disorders that our products address, and we then call on these high-volume prescribing physicians frequently to build strong professional relationships. We also seek to leverage the unique nature of our product lines to drive

performance. Products from our CANASA and URSO product lines are currently the only branded, actively-promoted products in their respective markets in the U.S., with respect to CANASA and URSO 250 / URSO FORTE, and CARAFATE is the only branded suspension-form sucralfate product in its market in the U.S. ULTRASE, in addition to being promoted by our sales force, also is supported by physicians and caregiver programs which we believe helps to differentiate ULTRASE from competing products and to position ULTRASE as the drug of choice for many patients. In addition, VIOKASE is the only branded non-enteric coated prescription pancreatic enzyme product in its market. As a result, we believe our products are often the first line of treatment prescribed by physicians. We seek to leverage this position and what we believe is the high degree of patient loyalty to our products in order to maintain leading competitive positions in the markets in which we participate.

Take Advantage of Recent Regulatory Developments to Increase Market Share. Due to concerns about substantial variation among pancreatic enzyme products on the market, in April 2004, the FDA formally notified manufacturers of pancreatic enzyme products, including ULTRASE and VIOKASE, that their products had to be approved by the FDA in order to remain on the market in the U.S. Under current requirements, manufacturers are required to file an IND for their pancreatic enzyme products by April 2008, to file an NDA by April 2009 and to obtain FDA approval by April 2010. We believe that the manufacturers of many of the generic, or unbranded, products that are currently on the market will not complete the required clinical trials by the deadline imposed by the FDA. As generic products currently on the U.S. market accounted for approximately 52% of prescription volume in 2007, this could result in a significant growth opportunity for branded products that are approved by the FDA. We have submitted our NDA for ULTRASE MT, the mini-tablet formulation of ULTRASE, have submitted our IND for VIOKASE and, assuming successful completion of the currently ongoing clinical trial, expect to submit our NDA for VIOKASE in time to comply with the FDA’s required timeline for pancreatic enzyme product approval. On July 1, 2008, we received an approvable letter from the FDA regarding our NDA for ULTRASE MT, citing certain chemistry, manufacturing and control data work concerns and we are currently preparing a response to the FDA’s comments in collaboration with our manufacturing partners and expect that required regulatory filings will be made in time to comply with the FDA’s guidelines. At least three other manufacturers of pancreatic enzyme products, Eurand N.V., or Eurand, Solvay Pharmaceuticals, Inc., or Solvay, and Digestive Care, Inc., have submitted or have begun to submit NDAs for their products. In August 2007, Solvay reported that it had received an approvable letter from the FDA citing certain chemistry, manufacturing and control data work and clinical concerns regarding its pancreatic enzyme product and has not reported further regarding its NDA. In September 2008, Eurand announced that it had responded to an approvable letter from the FDA for its pancreatic enzyme product ZENTASE^®, which cited certain chemistry, manufacturing and control data work concerns and that it expected a response filing by its raw material supplier to the FDA’s questions relating to the Drug Master File, or DMF, in the near future. In addition, Digestive Care, Inc. has recently announced that it has submitted the first module of its NDA for its pancreatic enzyme product PANCRECARB^®, which was granted a “Fast Track” designation by the FDA, which allows certain new drugs and biological products to proceed more rapidly through the regulatory review process.

Selectively Acquire or In-License Complementary Products. We intend to continue to seek to acquire or in-license new products that complement the strategic focus of our existing portfolio of product lines. Due to our core knowledge of gastrointestinal markets, our multinational sales and marketing capabilities, our reputation and our top-tier sales force, we believe that we are a preferred partner for companies looking to sell or out-license their products. Our experienced business development team uses a rigorous and disciplined approach to ensure that the product lines we acquire fit strategically within our portfolio. In recent years, we have successfully grown a number of product lines that we acquired or developed to become leaders in their markets, including URSO, CANASA, CARAFATE, ULTRASE, SALOFALK and VIOKASE.

Pursue Growth Opportunities Through Developing Pipeline. We will maintain our commitment to research and development in order to develop the next generation of products to address unmet needs in the gastroenterology market. Our internal development efforts focus primarily on extending proprietary protection of our products through product line extensions, rather than undertaking the costly, high-risk new drug discovery

usually associated with large pharmaceutical and biotechnology companies. Our experienced product development team, which includes both our quality assurance and scientific affairs teams, consists of 102 scientists and technicians, approximately 39 of whom have a Doctor of Medicine (M.D.), Doctor of Philosophy (Ph.D.) or Doctor of Pharmacy (Pharm.D.) degree, has proven expertise in the development of line extensions and formulations and in the commercialization of our development efforts. After successfully completing Phase III trials for PYLERA, we obtained FDA approval in 2006 and, in May 2007, we launched PYLERA in the United States. We believe that PYLERA constitutes a therapy that is less expensive and of shorter duration than its competitors. By June 30, 2008, PYLERA had already successfully captured 7.0% of the U.S. market in terms of new prescriptions written by gastroenterologists for the eradication of Helicobacter pylori, a bacterium recognized as being the main cause of gastric and duodenal ulcers, and we believe that we are well-positioned to continue to capture market share from PYLERA’s competitors. We also expect to launch PYLERA in the EU in 2010, subject to successful completion of clinical trials and regulatory approval, and have a number of additional products in our pipeline, including, among others, CANASA MAX-002, a smaller-form product for our CANASA product line to be used for the treatment of ulcerative proctitis; Cx401, an innovative biological product in development for the treatment of perianal fistula; and AGI-010, a controlled-release proton pump inhibitor to be used for the treatment of symptoms associated with GERD, and, in particular, to be used for the control of night-time gastric acidity, known as nocturnal acid breakthrough. Nocturnal acid breakthrough remains a significant unmet medical need, and is estimated to occur in more than 50% of GERD patients on a proton pump inhibitor therapy.

Expand Internationally. Our current infrastructure in the U.S., Canada and the EU will form the basis of our efforts to expand internationally by increasing our sales and marketing footprint worldwide. We intend to continue to increase the geographic presence of our products, and to that end, for example, we expect to launch PYLERA in the EU in 2010, subject to successful completion of clinical trials and regulatory approval. We also plan to maintain and expand our network of third-party distributors that sell our products in countries where we do not have a sales force presence.

Corporate Information

The principal executive offices of Axcan Intermediate Holdings Inc. are located at 22 Inverness Center Parkway, Suite 310, Birmingham, AL 35242. Our website is www.axcan.com. The information on our website is not deemed to be part of this prospectus, and you should not rely on it in connection with your decision whether to participate in the exchange offer.

The Transactions

On November 29, 2007, we entered into an Arrangement Agreement with Axcan Pharma Inc., or Axcan Pharma, pursuant to which we agreed to, through an indirect wholly-owned subsidiary, acquire all of the common stock of Axcan Pharma and enter into various other transactions in accordance with the plan of arrangement defined therein, or the Plan of Arrangement. Collectively, this acquisition and these transactions are referred to in this prospectus as the “Arrangement”.

At a special meeting of Axcan Pharma’s shareholders on January 25, 2008, the holders of more than 99% of Axcan Pharma’s outstanding common stock approved a special resolution to approve the Arrangement. On January 28, 2008, the Superior Court of Quebec issued a final order approving the Arrangement. The Arrangement closed on February 25, 2008 and at such time each outstanding share of Axcan Pharma common stock was transferred to us in exchange for a payment of $23.35 per share, or the offer price, without interest and less any required withholding taxes. In addition, all granted and outstanding options to purchase common stock

of Axcan Pharma, other than those options held by us or any of our affiliates, were vested, transferred by the holder of such option to Axcan Pharma and cancelled in exchange for an amount in cash equal to the excess, if any, of the offer price over the applicable option exercise price for each share of common stock subject to such option, less any required withholding taxes. Also, all vested and unvested deferred stock units, or DSUs, and restricted stock units, or RSUs, issued under any and all of Axcan Pharma’s existing stock option plans were, without any further action by the holders thereof, vested, cancelled and terminated and the holders of such DSUs and RSUs received the offer price, less any required withholding taxes, for each DSU and RSU formerly held.

The Arrangement was financed through the proceeds from the initial offering of the outstanding secured notes, initial borrowings under our new senior secured credit facilities and our senior unsecured bridge facility, equity investments funded by direct and indirect equity investments from certain investment funds associated with or designated by the Sponsor (as discussed below), or the Sponsor Funds, certain investors who co-invested with the Sponsor Funds, including investment funds affiliated with certain of the initial purchasers of the outstanding notes, or the Co-Investors, and the cash on hand of Axcan Pharma and its subsidiaries. The closing of the offering of the outstanding secured notes, the new senior secured credit facilities and the senior unsecured bridge facility occurred substantially concurrently with the closing of the Arrangement on February 25, 2008. We refer to the Arrangement, the closing of the transactions relating to the Arrangement, and our payment of any fees and expenses related to the Arrangement and such transactions collectively as the “February 2008 Transactions”. Our new senior secured credit facilities and our secured notes are described in more detail under “Description of Other Indebtedness” and “Description of Exchange Secured Notes”.

On May 6, 2008, we completed an offering of $235.0 million of our 12.75% senior unsecured notes due 2016, or our outstanding senior notes. The net proceeds from this offering, along with our cash on hand, were used to repay in full our senior unsecured bridge facility. We refer to this offering of our outstanding senior notes, along with the related use of proceeds, as the “Refinancing” and collectively with the February 2008 Transactions, as the “Transactions”.

For a more complete description of the Transactions, see the sections entitled “The Transactions,” “Use of Proceeds,” “Capitalization,” “Unaudited Pro Forma Condensed Consolidated Financial Statements,” “Description of Other Indebtedness,” “Description of Exchange Secured Notes” and “Description of Exchange Senior Notes”.

The Sponsor

TPG Capital, or the Sponsor, is the global buyout group of TPG, one of the most well-known and respected financial sponsors in the world, with over $55 billion of assets under management and offices in San Francisco, London, Hong Kong, New York, Fort Worth, Melbourne, Menlo Park, Moscow, Mumbai, Beijing, Shanghai, Singapore and Tokyo. TPG Capital has considerable expertise in and commitment to the healthcare sector. TPG Capital has made successful investments in healthcare companies such as Biomet, Inc., Fenwal Inc., IASIS Healthcare Corporation, Oxford Health Plans, LLC, Parkway Holdings Limited, Quintiles Transnational Corp., and Surgical Care Affiliates, as well as in other sectors such as retail and consumer, travel, industrials, technology and financial services, among others. TPG Biotech is part of the venture capital investment platform of TPG. With more than $1 billion under management, TPG Biotech targets investments in life science, biotechnology, renewables and medical technology companies.

The Exchange Offers

On February 25, 2008, we completed a private offering of the outstanding secured notes and on May 6, 2008, we completed a private offering of the outstanding senior notes. We entered into registration rights agreements with the initial purchasers in the private offerings in which we agreed, among other things, to file the registration statement of which this prospectus is a part. The following is a summary of the exchange offers. For more information, please see “The Exchange Offers”.

Securities Offered

•

$228,000,000 aggregate principal amount of 9.25% Senior Secured Notes due 2015; and

•

$235,000,000 aggregate principal amount of 12.75% Senior Notes due 2016.

Exchange Offers

The exchange notes are being offered in exchange for a like principal amount of outstanding notes. The exchange offers will remain in effect for a limited time. We will accept any and all outstanding notes validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on December 16, 2008. Holders may tender some or all of their outstanding notes pursuant to the exchange offers. However, outstanding notes may be tendered only in a denomination equal to $2,000 and any integral multiples of $1,000 in excess of $2,000. The form and terms of the exchange notes are the same as the form and terms of the outstanding notes except that:

•

the exchange notes have been registered under the Securities Act and will not bear any legend restricting their transfer;

•

the exchange notes bear different CUSIP numbers than the outstanding notes; and

•

the holders of the exchange notes will not be entitled to certain rights under the senior secured notes registration rights agreement or the senior notes registration rights agreement (collectively, the “registration rights agreements”), as applicable, including the provisions for an increase in the interest rate on the outstanding notes in some circumstances relating to the timing of the exchange offers. See “The Exchange Offers.”

Resale

Based upon interpretations by the Staff of the SEC set forth in no-action letters issued to unrelated third-parties, we believe that the exchange notes may be offered for resale, resold or otherwise transferred by you without compliance with the registration and prospectus delivery requirements of the Securities Act, unless you:

•

are an “affiliate” of ours within the meaning of Rule 405 under the Securities Act;

•

are a broker-dealer who purchased the notes directly from us for resale under Rule 144A, Regulation S or any other available exemption under the Securities Act;

•

acquired the exchange notes other than in the ordinary course of your business;

•

have an arrangement with any person to engage in the distribution of the exchange notes; or

•

are prohibited by law or policy of the SEC from participating in the exchange offers.

However, we have not submitted a no-action letter, and there can be no assurance that the SEC will make a similar determination with respect to the exchange offers. Furthermore, in order to participate in the exchange offers, you must make the representations set forth in the letter of transmittal that we are sending you with this prospectus.

Expiration Date

The exchange offers will expire at 5:00 p.m., New York City time, on December 16, 2008, unless we decide to extend it. We do not currently intend to extend the expiration date.

Conditions to the Exchange Offers

The exchange offers are subject to certain customary conditions, some of which may be waived by us. See “The Exchange Offers—Conditions to the Exchange Offers.”

Procedures for Tendering Outstanding Notes

To participate in these exchange offers, you must properly complete and duly execute a letter of transmittal, which accompanies this prospectus, and transmit it, along with all other documents required by such letter of transmittal, to the exchange agent on or before the expiration date at the address provided on the cover page of the letter of transmittal.

In the alternative, you can tender your outstanding notes by following the automatic tender offer program, or ATOP, procedures established by The Depository Trust Company, or DTC, for tendering notes held in book-entry form, as described in this prospectus, whereby you will agree to be bound by the letter of transmittal and we may enforce the letter of transmittal against you.

If a holder of outstanding notes desires to tender such notes and the holder’s outstanding notes are not immediately available, or time will not permit the holder’s outstanding notes or other required documents to reach the exchange agent before the expiration date, or the procedure for book-entry transfer cannot be completed on a timely basis, a tender may be effected pursuant to the guaranteed delivery procedures described in this prospectus.

For more details, please read “The Exchange Offers—Procedures for Tendering,” “The Exchange Offers—Book-Entry Transfer” and “The Exchange Offers—Guaranteed Delivery Procedures.”

Special Procedures for Beneficial Owners

If you are a beneficial owner of outstanding notes that are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, and you wish to tender those outstanding notes in the exchange offers, you should contact the registered holder promptly and instruct the registered holder to tender those outstanding notes on your behalf. If you wish to tender on your own behalf, you must, prior to completing and executing the letter of transmittal and delivering your outstanding notes, either make appropriate arrangements to register ownership of the outstanding notes in your name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time and may not be able to be completed prior to the expiration date.

Withdrawal Rights

You may withdraw your tender of outstanding notes at any time prior to 5:00 p.m., New York City time, on the expiration date of the exchange offers. Please read “The Exchange Offers—Withdrawal of Tenders.”

Acceptance of Outstanding Notes and Delivery of Exchange Notes

Subject to customary conditions, we will accept outstanding notes that are properly tendered in the exchange offers and not withdrawn prior to the expiration date. The exchange notes will be delivered as promptly as practicable following the expiration date.

Consequences of Failure to Exchange Outstanding Notes

If you do not exchange your outstanding notes in the exchange offers, you will no longer be able to require us to register the outstanding notes under the Securities Act, except in the limited circumstances provided under our registration rights agreements. In addition, you will not be able to resell, offer to resell or otherwise transfer the outstanding notes unless we have registered the outstanding notes under the Securities Act, or unless you resell, offer to resell or otherwise transfer them under an exemption from the registration requirements of, or in a transaction not subject to, the Securities Act.

Interest on the Exchange Notes and the Outstanding Notes

The exchange notes will bear interest from the most recent interest payment date to which interest has been paid on the outstanding notes. Holders whose outstanding notes are accepted for exchange will be deemed to have waived the right to receive interest accrued on the outstanding notes.

Broker-Dealers

Each broker-dealer that receives exchange notes for its own account in exchange for outstanding notes, where such outstanding notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. See “Plan of Distribution.”

Material U.S. Federal Income Tax Consequences

Neither the registration of the outstanding notes pursuant to our obligations under the registration rights agreements nor the holder’s receipt of exchange notes in exchange for outstanding notes will constitute a taxable event for U.S. federal income tax purposes. Please read “Certain Material United States Federal Income Tax Consequences.”

Exchange Agent

The Bank of New York, the trustee under the indentures governing the notes, or the indentures, is serving as exchange agent in connection with the exchange offers.

Use of Proceeds

The issuance of the exchange notes will not provide us with any new proceeds. We are making the exchange offers solely to satisfy certain of our obligations under our registration rights agreements.

Fees and Expenses

We will bear all expenses related to the exchange offers. Please read “The Exchange Offers—Fees and Expenses.”

The Exchange Notes

Issuer

Axcan Intermediate Holdings Inc.

Notes Offered

Senior Secured Notes

Up to $228 million in aggregate principal amount of 9.25% Senior Secured Notes due 2015. The exchange secured notes and the outstanding secured notes will be considered to be a single class for all purposes under the secured notes indenture, including waivers, amendments, redemptions and offers to purchase.

Senior Notes

Up to $235 million in aggregate principal amount of 12.75% Senior Notes due 2016. The exchange senior notes and the outstanding senior notes will be considered to be a single class for all purposes under the senior notes indenture, including waivers, amendments, redemptions and offers to purchase.

Maturity Dates

•

The exchange secured notes will mature on March 1, 2015.

•

The exchange senior notes will mature on March 1, 2016.

Interest Rate

•

Interest on the exchange secured notes will be payable in cash and will accrue at a rate of 9.25% per annum.

•

Interest on the exchange senior notes will be payable in cash and will accrue at a rate of 12.75% per annum.

Interest Payment Dates

Each March 1 and September 1, beginning on September 1, 2008. Interest will accrue from the respective issue date of the outstanding notes.

Guarantees

All of our existing and, subject to certain exceptions, future restricted subsidiaries that guarantee our obligations under our new senior secured credit facilities will guarantee the exchange notes. If we cannot make payments required by the exchange notes, the subsidiary guarantors must make them. The guarantees may be released under certain circumstances. Any of our subsidiaries that is released as a guarantor of our new senior secured credit facilities will automatically be released as a guarantor of the exchange notes.

Ranking

The exchange secured notes and the related exchange guarantees will be senior secured obligations and will rank equally with any of our and the guarantors’ senior secured indebtedness (including our new senior secured credit facilities), effectively senior to our unsecured indebtedness to the extent of the value of the collateral but effectively junior to all liabilities of our non-guarantor subsidiaries.

The exchange senior notes and the related exchange guarantees will be senior unsecured obligations and will rank equally with any of our and the guarantors’ existing and future senior unsecured indebtedness,

but will be effectively subordinated to all of our secured debt, to the extent of the value of the collateral securing such secured debt, and all liabilities of non-guarantor subsidiaries.

As of June 30, 2008:

•

we have $391.8 million of senior secured indebtedness outstanding, including our new senior secured credit facilities, the secured notes and $0.3 million of pre-existing capital leases, an additional $115.0 million of borrowing capacity under our new senior secured revolving credit facility and, provided our compliance with certain covenants under the terms of our new senior secured credit facilities, the option to increase our new senior secured term loan facility by up to $75 million without satisfying any additional financial test under the indenture for the secured notes;

•

we have $232.3 million of unsecured senior notes; and

•

the non-guarantor subsidiaries have $22.4 million of outstanding liabilities (after giving effect to intercompany obligations).

Security

(for Exchange Secured Notes)

The exchange secured notes will be secured by a lien equally and ratably with all secured debt outstanding under our new senior secured credit facilities. The liens will constitute first-priority liens, subject to certain exceptions and permitted liens, on

•

substantially all of the personal property of us and the guarantors;

•

substantially all of the Equity Interests (as defined in the indentures), that are directly owned by us or any guarantor (or, in the case of a non-U.S. subsidiary, 65% of the Equity Interests directly owned by us or a guarantor); and

•

mortgages on all material real property owned by us or any guarantor,

which, collectively and together with any other assets that may be pledged from time to time, shall be referred to in this prospectus as the “Notes Collateral”.

The collateral securing our new senior secured credit facilities may be released under certain circumstances. Any assets that are released as collateral securing our new senior secured credit facilities will automatically be released as Notes Collateral. In addition, we and the collateral agent may amend the provisions of the security documents with the consent of the requisite lenders and without the consent of the holders of the exchange secured notes. The lenders under our new senior secured credit facilities will have the sole ability to control remedies (including any sale or liquidation after acceleration of the exchange secured notes or indebtedness under the new senior secured credit facilities) with respect to the Notes Collateral. You should read “Description of Exchange Secured Notes—Security” for a more complete description of the security granted to the holders of the exchange secured notes.

Optional Redemption

Exchange Secured Notes

Prior to March 1, 2011, we may redeem some or all of the exchange secured notes at a redemption price equal to 100% plus a make-whole premium and accrued and unpaid interest. On or after March 1, 2011, we may redeem some or all of the exchange secured notes at the redemption prices listed elsewhere in this prospectus. See “Description of Exchange Secured Notes—Optional Redemption.”

In addition, at any time (which may be more than once) before March 1, 2011, we can choose to redeem up to 35% of the outstanding exchange secured notes with money that we raise in certain equity offerings, as long as:

•

we pay a redemption price equal to 109.250% of the aggregate principal amount of the exchange secured notes plus accrued and unpaid interest;

•

we redeem the exchange secured notes within 120 days of completing the equity offering; and

•

at least 50% of the aggregate principal amount of senior secured notes originally issued remains outstanding afterwards.

Exchange Senior Notes

Prior to March 1, 2012, we may redeem some or all of the exchange senior notes at a redemption price equal to 100% plus a make-whole premium and accrued and unpaid interest. On or after March 1, 2012, we may redeem some or all of the exchange senior notes at the redemption prices listed elsewhere in this prospectus. See “Description of Exchange Senior Notes—Optional Redemption” herein.

In addition, at any time (which may be more than once) before March 1, 2011, we can choose to redeem up to 35% of the exchange senior notes with money that we raise in certain equity offerings, as long as:

•

we pay a redemption price equal to 112.750% of the aggregate principal amount of the exchange senior notes plus accrued and unpaid interest;

•

we redeem the exchange senior notes within 120 days of completing the equity offering; and

•

at least 50% of the aggregate principal amount of senior notes originally issued remains outstanding afterwards.

Change of Control

If a change in control of our company occurs, we must give holders the opportunity to sell their exchange notes to us at 101% of their principal amount plus accrued and unpaid interest.

We might not be able to pay the required price for the exchange notes presented to us at the time of a change of control because we might not have enough funds at the time.

Asset Sale Proceeds

If we or our subsidiaries engage in asset sales, we must generally either invest the net cash proceeds from such sales in our business within a period of time, prepay senior secured debt or make an offer to purchase a principal amount of exchange notes equal to the excess net cash proceeds, subject to certain exceptions. The purchase price will be 100% of their principal amount, plus accrued and unpaid interest.

Restrictive Covenants

The indentures governing the exchange notes contain covenants that, among other things, limit our ability and the ability of our restricted subsidiaries to:

•

incur or guarantee additional indebtedness or issue preferred stock;

•

pay dividends or distributions on, or redeem or repurchase, our capital stock;

•

make certain investments;

•

create liens on our assets;

•

enter into transactions with affiliates;

•

merge or consolidate or sell all or substantially all of our assets; and

•

create restrictions on the payment of dividends or other amounts to us.

These covenants are subject to a number of important limitations and exceptions. See “Description of Exchange Secured Notes—Certain Covenants” and “Description of Exchange Senior Notes —Certain Covenants” herein.

Risk Factors

See “Risk Factors” and the other information in this prospectus for a discussion of some of the factors you should carefully consider before participating in the exchange offers.

Summary Historical Consolidated and

Unaudited Pro Forma Condensed Consolidated Financial and Other Data

The following table presents our summary historical consolidated and unaudited pro forma condensed consolidated financial information as of and for the periods presented. The summary historical financial information as of September 30, 2006 and 2007 and for the years in the three-year period ended September 30, 2007 have been derived from, and should be read in conjunction with, our audited financial statements included elsewhere in this prospectus. The summary historical financial information as of September 30, 2005 has been derived from our audited financial statements not included in this prospectus. The unaudited summary historical financial information as of and for the nine months ended June 30, 2007 and as of June 30, 2008 and for the period from October 1, 2007 through February 25, 2008 and for the period from February 26, 2008 through June 30, 2008 are derived from, and should be read in conjunction with, our unaudited condensed consolidated financial statements included elsewhere in this prospectus.

As part of the February 2008 Transactions, we, through an indirect wholly-owned subsidiary, purchased all of the outstanding common stock of Axcan Pharma Inc. on February 25, 2008. Prior to the February 2008 Transactions, Axcan Intermediate Holdings Inc. had no independent operations or assets. Accordingly, our financial information in the table below for the nine months ended June 30, 2008 is presented separately for the period prior to the completion of the February 2008 Transactions (from October 1, 2007 through February 25, 2008, the “Predecessor” or “Predecessor Period”) and the period after the completion of the February 2008 Transactions (from February 26, 2008 through June 30, 2008, the “Successor” or “Successor Period”), which relate to the accounting periods preceding and succeeding the completion of the February 2008 Transactions. The financial information presented for the Predecessor is the financial information for Axcan Pharma Inc. and its consolidated subsidiaries and the financial information presented for the Successor is the financial information for Axcan Intermediate Holdings Inc. and its consolidated subsidiaries, including Axcan Pharma Inc. and its subsidiaries. The summary financial information as of June 30, 2008 and for the Successor Period are not comparable to the summary financial information as of and for the nine months ended June 30, 2007, primarily because of the new basis of accounting resulting from the February 2008 Transactions. Our results of operations for the Predecessor Period and the Successor Period should not be considered representative of our future results of operations.

The summary unaudited pro forma condensed consolidated statements of operations for the year ended September 30, 2007 is based on our audited financial statements appearing elsewhere in this prospectus and gives effect to the Transactions as if they had occurred on October 1, 2006. The summary unaudited pro forma condensed consolidated statements of operations for the nine months ended June 30, 2008 is based on our unaudited condensed consolidated financial statements included elsewhere in this prospectus and gives effect to the Transactions as if they had occurred on October 1, 2006. See “The Transactions.” The unaudited pro forma condensed consolidated statements of operations should not be considered representative of our future results of operations.

Please also refer to “Unaudited Pro Forma Condensed Consolidated Financial Data,” “Selected Historical Consolidated Financial and Other Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and notes thereto included elsewhere in this prospectus.


	Historical																		Pro Forma
	Predecessor															Successor
	Fiscal Years Ended September 30,									Nine Months Ended June 30, 2007			October 1, 2007 through February 25, 2008			February 26 through June 30, 2008			Fiscal Year Ended September 30, 2007			Nine Months Ended June 30, 2008
	2005			2006			2007			Nine Months Ended June 30, 2007			October 1, 2007 through February 25, 2008			February 26 through June 30, 2008			Fiscal Year Ended September 30, 2007			Nine Months Ended June 30, 2008
										(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)
	($ in thousands)
Statement of Operations Data:
Revenue	$	251,343		$	292,317		$	348,947		$	256,475		$	158,579		$	126,701		$	348,947		$	285,280
Cost of goods sold⁽¹⁾		71,534			72,772			83,683			61,121			38,739			53,347			83,865			68,258
Selling and administrative expenses⁽¹⁾⁽²⁾		85,997			93,338			101,273			73,559			76,198			53,662			107,001			82,797
Research and development expenses⁽¹⁾⁽³⁾		31,855			39,789			28,655			21,408			10,256			8,796			29,545			17,966
Depreciation and amortization		21,532			22,823			22,494			16,655			9,595			21,624			60,610			47,173
Acquired in-process research		—			—			10,000			—			—			272,400			10,000			—
Partial write-down of intangible assets		—			5,800			—			—			—			—			—			—

Operating Income		40,425			57,795			102,842			83,732			23,791			(283,128	)		57,926			69,086
Financial expenses		7,140			6,988			4,825			4,702			262			24,122			70,117			52,135
Interest income		(1,340	)		(5,468	)		(11,367	)		(7,523	)		(5,440	)		(443	)		(2,802	)		(986	)
Loss (gain) on foreign currency		(213	)		(1,110	)		2,352			1,038			(198	)		(463	)		2,352			(661	)

Income (loss) before income taxes		34,838			57,385			107,032			85,515			29,167			(306,344	)		(11,741	)		18,598
Income tax provision (benefit)		8,413			18,266			35,567			30,838			12,042			(13,851	)		(21,090	)		(16,893	)

Net income	$	26,425		$	39,119		$	71,465		$	54,677		$	17,125		$	(292,493	)	$	9,349		$	35,491


Balance Sheet Data (at period end):
Cash and cash equivalents	$	79,969		$	55,830		$	179,672		$	262,642		$	348,791		$	59,473
Short-term investments, available for sale		17,619			117,151			129,958			6,200			—			—
Total current assets		190,357			262,378			402,127			368,469			471,170			178,349
Total assets		641,407			695,817			832,611			798,026			902,384			1,000,601
Short-term borrowings		1,497			681			527			554			373			10,074
Total debt		127,829			126,246			649			794			441			624,111
Total current liabilities		58,336			64,617			104,737			92,838			166,456			110,627
Total liabilities		223,803			228,393			142,414			133,005			206,983			800,746
Total shareholders’ equity⁽⁴⁾		417,604			467,424			690,197			665,021			695,401			199,855


	Historical																		Pro Forma
	Predecessor															Successor
	Fiscal Years Ended September 30,									Nine Months Ended June 30, 2007			October 1, 2007 through February 25, 2008			February 26 through June 30, 2008			Fiscal Year Ended September 30, 2007	Nine Months Ended June 30, 2008
	2005			2006			2007			Nine Months Ended June 30, 2007			October 1, 2007 through February 25, 2008			February 26 through June 30, 2008			Fiscal Year Ended September 30, 2007	Nine Months Ended June 30, 2008
										(unaudited)			(unaudited)			(unaudited)			(unaudited)	(unaudited)
	($ in thousands)

Statement of Cash Flows Data:
Net cash from (used in):
Operating activities	$	67,745		$	84,334		$	136,102		$	94,810		$	73,245		$	(48,935	)
Investing activities		(8,078	)		(108,139	)		(19,415	)		(105,781	)		(126,630	)		(960,308	)
Financing activities		(1,375	)		(616	)		6,553			(5,984	)		(31,243	)		1,068,281

Other Financial Data:
EBITDA⁽⁵⁾		62,170			81,728			122,984			99,349			33,584			(261,041	)
Adjusted EBITDA⁽⁵⁾		62,170			92,582			141,407			102,811			70,119			49,236

⁽¹⁾	Exclusive of depreciation and amortization.

⁽²⁾	Amounts shown for the fiscal year ended September 30, 2007, the five-month period ended February 25, 2008 and the four-month period ended June 30, 2008 include approximately $800,000, $26,500,000 and $9,600,000 of expenses related to the February 2008 Transactions, respectively.

⁽³⁾	Amount shown for the fiscal year ended September 30, 2006 includes an up-front licensing fee equal to $1,500,000 paid in connection with a co-development agreement with AGI Therapeutics Ltd. Such amount is counted as acquired in-process research for purposes of calculating Adjusted EBITDA.

⁽⁴⁾

A portion of our common stock was issued to our parent company, Axcan MidCo Inc., in the February 2008 Transactions in exchange for a note receivable amounting to $133,154,405. Pursuant to U.S. GAAP, we report the principal amount as a separate balance offset against shareholders’ equity. Furthermore, we do not recognize interest income related to this note receivable due from Axcan MidCo Inc. in our income statement.

⁽⁵⁾

EBITDA and Adjusted EBITDA are both non-U.S. GAAP financial measures and are presented in this prospectus because our management considers them important supplemental measures of our performance and believes that they are frequently used by interested parties in the evaluation of companies in the industry. EBITDA, as we use it, is net income before financial expenses, interest income, income taxes and depreciation and amortization. We believe that the presentation of EBITDA enhances an investor’s understanding of our financial performance. We believe that EBITDA is a useful financial metric to assess our operating performance from period to period by excluding certain items that we believe are not representative of our core business. The term EBITDA is not defined under U.S. GAAP, and EBITDA is not a measure of net income, operating income or any other performance measure derived in accordance with U.S. GAAP, and is subject to important limitations. Adjusted EBITDA, as we use it, is EBITDA adjusted to exclude certain non-cash charges, unusual or non-recurring items and other adjustments set forth below. Adjusted EBITDA is calculated in the same manner as “EBITDA” and “Consolidated EBITDA” as those terms are defined under the indentures governing the notes and credit facility further described in the section “Liquidity and Capital Resources—Long-term debt and New Senior Secured Credit Facilities” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. We believe that the inclusion of supplementary adjustments applied to EBITDA in presenting Adjusted EBITDA are appropriate to provide additional information to investors about certain material non-cash items and unusual or non-recurring items that we do not expect to continue in the future and to provide additional information with respect to our ability to meet our future debt service and to comply with various covenants in such indentures and credit facility. Adjusted EBITDA is not a measure of net income, operating income or any other performance measure derived in accordance with U.S. GAAP, and is subject to important limitations. EBITDA and Adjusted EBITDA have limitations as an analytical tool, and they should not be considered in isolation, or as substitutes for analysis of our results as reported under U.S. GAAP. Some of these limitations are:

•

EBITDA and Adjusted EBITDA do not reflect all cash expenditures, future requirements for capital expenditures, or contractual commitments;

•

EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, working capital needs;

•

EBITDA and Adjusted EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debt;

•

Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements;

•

Adjusted EBITDA reflects additional adjustments as provided in our new senior secured credit facilities and the indentures governing our notes; and

•

Other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.

Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as measures of discretionary cash available to us to invest in our business. Our management compensates for these limitations by relying primarily on the GAAP results and using EBITDA and Adjusted EBITDA as supplemental information. A reconciliation of net income, the most directly comparable U.S. GAAP measure, to EBITDA and from EBITDA to Adjusted EBITDA for the periods indicated is as follows:


	Predecessor															Successor
	Fiscal Years Ended September 30,									Nine Months Ended June 30, 2007			October 1, 2007 through February 25, 2008			February 26 through June 30, 2008
	2005			2006			2007			Nine Months Ended June 30, 2007			October 1, 2007 through February 25, 2008			February 26 through June 30, 2008
													(unaudited)
	($ in thousands)
Net income to EBITDA:
Net income	$	26,425		$	39,119		$	71,465		$	54,677		$	17,125		$	(292,493	)
Financial expenses		7,140			6,988			4,825			4,702			262			24,122
Interest income		(1,340	)		(5,468	)		(11,367	)		(7,523	)		(5,440	)		(443	)
Income tax provision (benefit)		8,413			18,266			35,567			30,838			12,042			(13,851	)
Depreciation and amortization		21,532			22,823			22,494			16,655			9,595			21,624

EBITDA	$	62,170		$	81,728		$	122,984		$	99,349		$	33,584		$	(261,041	)

EBITDA to Adjusted EBITDA:
EBITDA	$	62,170		$	81,728		$	122,984		$	99,349		$	33,584		$	(261,041	)
Transaction, integration and refinancing costs^(a)		—			—			—			—			26,489			9,624
Stock-based compensation expense⁽^b⁾		—			3,554			4,548			3,462			10,046			5,539
Acquired in-process research^(c)		—			1,500			10,000			—			—			272,400
Inventories stepped-up value expensed^(d)		—			—			—			—			—			22,714
Loss on disposal and write-down of assets^(e)		—			—			3,875			—			—			—
Partial write-down of intangible assets^(f)		—			5,800			—			—			—			—

Adjusted EBITDA	$	62,170		$	92,582		$	141,407		$	102,811		$	70,119		$	49,236

^(a)

Represents investment banking and other professional fees associated with the Transactions, including integration costs.

^(b)

Represents non-cash stock-based employee compensation expense under the provisions of Statement of Financial Accounting Standards, or SFAS, No.123(R) “Share-based Payments”.

^(c)

Represents the acquired in-process research, arising from the February 2008 Transactions, expensed in the period of acquisition.

^(d)

Represents inventories stepped-up value, arising from the February 2008 Transactions, expensed as acquired inventory is sold.

^(e)

Represents loss on disposal and write-down of assets.

^(f)

Represents a partial write-down on French product lines including TAGAMET and TRANSULOSE, as the carrying value of the intangible assets associated with those products exceeded their estimated fair value.

You should carefully consider the risks described below before participating in the exchange offers. The risks described below are not the only ones facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business or results of operations in the future. Any of the following risks could materially adversely affect our business, financial condition or results of operations. In such case, you may lose all or part of your original investment in the notes.

You may have difficulty selling the outstanding notes that you do not exchange.

If you do not exchange your outstanding notes for exchange notes in the exchange offers, you will continue to be subject to the restrictions on transfer of your outstanding notes described in the legend on your outstanding notes. The restrictions on transfer of your outstanding notes arise because we issued the outstanding notes under exemptions from, or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws. In general, you may only offer or sell the outstanding notes if they are registered under the Securities Act and applicable state securities laws, or offered and sold under an exemption from these requirements. Except as required by the registration rights agreements, we do not intend to register the outstanding notes under the Securities Act. The tender of outstanding notes under the exchange offers will reduce the principal amount of the currently outstanding notes. Due to the corresponding reduction in liquidity, this may have an adverse effect upon, and increase the volatility of, the market price of any currently outstanding notes that you continue to hold following completion of the exchange offers. See “The Exchange Offers—Effect of Not Tendering.”

There is no public market for the exchange notes, and we do not know if a market will ever develop or, if a market does develop, whether it will be sustained.

The exchange notes are a new issue of securities for which there is no existing trading market. Accordingly, we cannot assure you that a liquid market will develop for the exchange notes, that you will be able to sell your exchange notes at a particular time or that the prices that you receive when you sell the exchange notes will be favorable.

We do not intend to apply for listing or quotation of the notes on any securities exchange or automated quotation system, although our outstanding notes trade on the PORTAL Market. The liquidity of any market for the exchange notes will depend on a number of factors, including:

We understand that one or more of the initial purchasers of the outstanding notes presently intend to make a market in the exchange notes. However, they are not obligated to do so, and any market-making activity with respect to the exchange notes may be discontinued at any time without notice. In addition, any market-making activity will be subject to the limits imposed by the Securities Act and the Exchange Act and may be limited during the exchange offer or the pendency of an applicable shelf registration statement. There can be no assurance that an active trading market will exist for the exchange notes or that any trading market that does develop will be liquid.

You must comply with the exchange offers procedures in order to receive new, freely tradable exchange notes.

Delivery of exchange notes in exchange for outstanding notes tendered and accepted for exchange pursuant to the exchange offers will be made only after timely receipt by the exchange agent of book-entry transfer of outstanding notes into the exchange agent’s account at DTC, as depositary, including an agent’s message (as defined herein). We are not required to notify you of defects or irregularities in tenders of outstanding notes for exchange. Outstanding notes that are not tendered or that are tendered but we do not accept for exchange will, following consummation of the exchange offers, continue to be subject to the existing transfer restrictions under the Securities Act and, upon consummation of the exchange offers, certain registration and other rights under the registration rights agreements will terminate. See “The Exchange Offers—Procedures for Tendering” and “The Exchange Offers—Effect of Not Tendering.”

Some holders who exchange their outstanding notes may be deemed to be underwriters, and these holders will be required to comply with the registration and prospectus delivery requirements in connection with any resale transaction.

If you exchange your outstanding notes in the exchange offers for the purpose of participating in a distribution of the exchange notes, you may be deemed to have received restricted securities and, if so, will be required to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction.

Our substantial level of indebtedness could materially adversely affect our ability to generate sufficient cash to fulfill our obligations under the notes, our ability to react to changes in our business and our ability to incur additional indebtedness to fund future needs.

We have a substantial amount of indebtedness. As of June 30, 2008, our total indebtedness was $624.1 million and we had an additional $115.0 million of borrowing capacity available under our new senior secured revolving credit facility. The following chart shows our level of indebtedness as of June 30, 2008.

In addition, we have significant other commitments, including for milestone and royalty payments. See Note 18 in “Notes to Consolidated Financial Statements”. On a pro forma basis after giving effect to the Transactions, our cash interest expense, net for fiscal year 2007 would have been $63.1 million. As of June 30, 2008, we have outstanding approximately $166.2 million in aggregate principal amount of indebtedness under our new senior

secured credit facilities that would bear interest at a floating rate. Although we may enter into interest rate swap agreements, and did enter into an interest rate swap on February 28, 2008 related to $115.0 million under our new senior secured revolving credit facility, we are exposed to interest rate increases on the floating portion of our new senior secured credit facility that is not covered by an interest rate swap. Absent any such interest rate swap agreements, a change of 1/8% in floating rates would affect our annual interest expense on the senior secured borrowings by approximately $0.2 million. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Quantitative and Qualitative Disclosures about Market Risk—Interest Rate Risk”.

Our substantial level of indebtedness increases the possibility that we may be unable to generate cash sufficient to pay, when due, the principal of, interest on or other amounts due in respect of our indebtedness. Our substantial indebtedness, combined with our other financial obligations and contractual commitments, could have important consequences for our noteholders. For example, it could:

We, including our subsidiaries, have the ability to incur substantially more indebtedness, including senior secured indebtedness.

Subject to the restrictions in our new senior secured credit facilities and the indentures governing the notes, we, including our subsidiaries, may incur significant additional indebtedness. As of June 30, 2008:

Although the terms of our new senior secured credit facilities and the indentures governing the notes contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of important

exceptions, and indebtedness incurred in compliance with these restrictions could be substantial. If we and our restricted subsidiaries incur significant additional indebtedness, the related risks that we face could increase.

Restrictions imposed by the indentures governing the notes, our new senior secured credit facilities and our other outstanding indebtedness may limit our ability to operate our business and to finance our future operations or capital needs or to engage in other business activities.

The terms of our new senior secured credit facilities and the indentures governing the notes restrict us and our subsidiaries from engaging in specified types of transactions. These covenants restrict our ability and the ability of our restricted subsidiaries, among other things, to:

In addition, the agreements governing our new senior secured credit facilities require us to comply with certain financial ratio maintenance covenants. Our ability to comply with these ratios can be affected by events beyond our control, and we may not be able to satisfy them. A breach of any of these covenants would be an event of default. In the event of a default under any of our new senior secured credit facilities, the lenders could elect to declare all amounts outstanding under the agreements governing our new senior secured credit facilities to be immediately due and payable or terminate their commitments to lend additional money. If the indebtedness under our new senior secured credit facilities accelerates, the indebtedness under the notes would also accelerate and our assets may not be sufficient to repay such indebtedness in full. In particular, holders of senior notes will be paid only if we have assets remaining after we pay amounts due on our secured indebtedness, including our new senior secured credit facilities and the secured notes. We have pledged a significant portion of our assets as collateral under our new senior secured credit facilities and the secured notes. See “Description of Other Indebtedness” and “Description of Exchange Secured Notes”.

We may not be able to generate sufficient cash to service all of our indebtedness, including the notes, 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 on or to refinance our debt obligations depends on our financial condition and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control. We may not be able to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness, including the notes.

If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay investments and capital expenditures, or to sell assets, seek additional capital or restructure or refinance our indebtedness, including the notes. Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition at such time. 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. The terms of existing or future debt instruments and the indentures governing the notes may restrict us from adopting some of these alternatives. 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. In the absence of such operating results and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. Our new senior secured credit facilities and the indentures governing the notes restrict our ability to dispose of assets and use the proceeds from the disposition. We may not be able to consummate those dispositions or to obtain the proceeds that we could realize from them and these proceeds may not be adequate to meet any debt service obligations then due. These alternative measures may not be successful and may not permit us to meet our debt service obligations.

Your right to receive payments on the senior notes is effectively junior to the right of lenders who have a security interest in our assets to the extent of the value of those assets.

Our obligations under the senior notes and our guarantors’ obligations under their guarantees of the senior notes are unsecured, but our obligations under our new senior secured credit facilities and the secured notes and each guarantor’s obligations under its guarantee of our new senior secured credit facilities and secured notes are secured by a security interest in substantially all of our domestic tangible and intangible assets, including the stock of substantially all of our wholly-owned U.S. subsidiaries and all or a portion of the stock of certain of our non-U.S. subsidiaries. If we are declared bankrupt or insolvent, or if we default under our new senior secured credit facilities or the secured notes, the lenders could declare all of the funds borrowed thereunder, together with accrued interest, immediately due and payable. If we were unable to repay such indebtedness, the lenders could foreclose on the pledged assets to the exclusion of holders of the senior notes, even if an event of default exists under the indenture governing the senior notes at such time. Furthermore, if the lenders foreclose and sell the pledged equity interests in any guarantor under the senior notes, then that guarantor will be released from its guarantee of the senior notes automatically and immediately upon such sale. In any such event, because the senior notes will not be secured by any of our assets or the equity interests in the guarantors, it is possible that there would be no assets remaining from which your claims could be satisfied or, if any assets remained, they might be insufficient to satisfy your claims in full. See “Description of Other Indebtedness”, “Description of Exchange Secured Notes” and “Description of Exchange Senior Notes”.

Subject to the limits set forth in the indentures governing the notes, we may also incur additional secured debt.

Our ability to repay our debt, including the notes, is affected by the cash flow generated by our subsidiaries.

Our subsidiaries own substantially all of our assets and conduct substantially all of our operations. Accordingly, repayment of our indebtedness, including the notes, is dependent on the generation of cash flow by our subsidiaries and their ability to make such cash available to us, by dividend, debt repayment or otherwise. Unless they are guarantors of the notes, our subsidiaries will not have any obligation to pay amounts due on the notes or to make funds available for that purpose. Our subsidiaries may not be able to, or may not be permitted to, make distributions to enable us to make payments in respect of our indebtedness, including the notes. Each subsidiary is a distinct legal entity and, under certain circumstances, legal and contractual restrictions may limit

our ability to obtain cash from our subsidiaries. While the indentures governing the notes limit the ability of our subsidiaries to incur consensual restrictions on their ability to pay dividends or make other intercompany payments to us, these limitations are subject to certain qualifications and exceptions. In the event that we do not receive distributions from our subsidiaries, we may be unable to make required principal and interest payments on our indebtedness, including the notes.

Claims of noteholders will be structurally subordinated to claims of creditors of certain of our subsidiaries that will not guarantee the notes.

The notes will not be guaranteed by certain of our subsidiaries, including all of our significant non-U.S. subsidiaries (other than Axcan Pharma Inc.). Accordingly, claims of holders of the notes will be structurally subordinated to the claims of creditors of these non-guarantor subsidiaries, including trade creditors. All obligations of our non-guarantor subsidiaries will have to be satisfied before any of the assets of such subsidiaries would be available for distribution, upon a liquidation or otherwise, to us or a guarantor of the notes.

For the nine months ended June 30, 2008, our non-guarantor subsidiaries accounted for approximately $52.0 million, or 18.2% of our consolidated revenue. As of June 30, 2008, our non-guarantor subsidiaries accounted for approximately $213.7 million, or 21.4% of our consolidated total assets and $22.4 million, or 2.8% of our consolidated total liabilities. All amounts are presented after giving effect to intercompany eliminations. The indentures governing the notes permit these subsidiaries to incur certain additional debt and does not limit, or will not limit, their ability to incur other liabilities that are not considered indebtedness under the indentures.

The lenders under our new senior secured credit facilities have the discretion to release any guarantors under these facilities in a variety of circumstances, which will cause those guarantors to be released from their guarantees of the notes.

While any obligations under our new senior secured credit facilities remain outstanding, any guarantee of the notes may be released without action by, or consent of, any holder of the notes or the trustee under the indentures governing the notes, at the discretion of lenders under our new senior secured credit facilities, if the related guarantor is no longer a guarantor of obligations under our new senior secured credit facilities or any other indebtedness. See “Description of Exchange Senior Notes” and “Description of Exchange Secured Notes” herein. The lenders under our new senior secured credit facilities have the discretion to release the guarantees under our new senior secured credit facilities in a variety of circumstances. Any of our subsidiaries that is released as a guarantor of our senior secured credit facilities will automatically be released as a guarantor of the notes. You will not have a claim as a creditor against any subsidiary that is no longer a guarantor of the notes, and the indebtedness and other liabilities, including trade payables, whether secured or unsecured, of those subsidiaries will effectively be senior to claims of noteholders.

If we default on our obligations to pay our other indebtedness, we may not be able to make payments on the notes.

Any default under the agreements governing our indebtedness, including a default under our new senior secured credit facilities, that is not waived by the required lenders, and the remedies sought by the holders of such indebtedness, could prevent us from paying principal, premium, if any, and interest on the notes and substantially decrease the market value of the notes. If we are unable to generate sufficient cash flow and are otherwise unable to obtain funds necessary to meet required payments of principal, premium, if any, and interest on our indebtedness, or if we otherwise fail to comply with the various covenants, including financial and operating covenants in the instruments governing our indebtedness (including covenants in our new senior secured credit facilities and the indentures governing the notes), we could be in default under the terms of the agreements governing such indebtedness, including our new senior secured credit facilities and the indentures governing the notes. In the event of such default,

If our operating performance declines, we may in the future need to obtain waivers from the required lenders under our new senior secured credit facilities to avoid being in default. If we breach our covenants under our new senior secured credit facilities and seek a waiver, we may not be able to obtain a waiver from the required lenders. If this occurs, we would be in default under our new senior secured credit facilities, the lenders could exercise their rights, as described above, and we could be forced into bankruptcy or liquidation.

Upon the occurrence of specific kinds of change of control events, we will be required to offer to repurchase all outstanding notes at 101% of their principal amount plus accrued and unpaid interest, if any. The source of funds for any such purchase of the notes will be our available cash or cash generated from our operations or the operations of our subsidiaries or other sources, including borrowings, sales of assets or sales of equity. We may not be able to repurchase the notes upon a change of control because we may not have sufficient financial resources to purchase all of the notes that are tendered upon a change of control. Further, the terms of our new senior secured credit facilities provide that a change of control is an event of default thereunder that permits lenders to accelerate the maturity of borrowings thereunder and require us to offer to repay loans thereunder upon a change of control. Any of our future debt agreements may contain similar provisions. Accordingly, we may not be able to satisfy our obligations to purchase the notes unless we are able to refinance or obtain waivers under our new senior secured credit facilities. Our failure to repurchase the notes upon a change of control would cause a default under the indentures governing the notes and a cross-default under our new senior secured credit facilities.

Insolvency and fraudulent transfer laws and other limitations may preclude the recovery of payment under the notes and the guarantees.

Federal bankruptcy and state fraudulent transfer and conveyance statutes may apply to the issuance of the notes and the incurrence of any guarantees. In addition, insolvency, fraudulent transfer and conveyance statutes in Canada, the Netherlands and Luxembourg may apply to the incurrence of the guarantees by our subsidiaries organized in these countries. Although laws differ among these jurisdictions, in general, under applicable fraudulent transfer or conveyance laws, the notes or guarantees could be voided as a fraudulent transfer or conveyance if (1) we or any of the guarantors, as applicable, issued the notes or incurred the guarantees with the intent of hindering, delaying or defrauding creditors; (2) in the case of a guarantee incurred by any of our foreign subsidiaries, such subsidiary issued the guarantee in a situation where a prudent businessman as a shareholder of such subsidiary would have contributed equity to such subsidiary; or (3) we or any of the guarantors, as applicable, received less than reasonably equivalent value or fair consideration in return for either issuing the notes or incurring the guarantees and, in the case of (3) only, one of the following is also true:

A court could find that we or a guarantor did not receive reasonably equivalent value or fair consideration for the notes or such guarantee if we or such guarantor did not substantially benefit directly or indirectly from the issuance of the notes or the applicable guarantee. As a general matter, value is given for a transfer or an obligation if, in exchange for the transfer or obligation, property is transferred or an antecedent debt is secured or satisfied. A debtor will generally not be considered to have received value in connection with a debt offering if the debtor uses the proceeds of that offering to make a dividend payment or otherwise retire or redeem equity securities issued by the debtor. In addition, because the debt was incurred for our benefit, and only indirectly for the benefit of the guarantors, a court could conclude that the guarantors did not receive fair value.

Different jurisdictions evaluate insolvency on various criteria. Generally, however, an entity would be considered insolvent if, at the time it incurred indebtedness:

We cannot be certain as to the standards a court would use to determine whether or not we or the guarantors were solvent at the relevant time or, regardless of the standard that a court uses, that the issuance of the Senior Notes and the incurrence of the guarantees would not be held to constitute fraudulent transfers or conveyances on other grounds. If a court were to find that the issuance of the notes or the incurrence of the guarantee was a fraudulent transfer or conveyance, the court could void the payment obligations under the notes or such guarantee or further subordinate the notes or such guarantee to presently existing and future indebtedness of ours or of the related guarantor, or require the holders of the notes to repay any amounts received with respect to such guarantee. In the event of a finding that a fraudulent transfer or conveyance occurred, you may not receive any repayment on the notes.

Although each guarantee entered into by a guarantor will contain a provision intended to limit that guarantor’s liability to the maximum amount that it could incur without causing the incurrence of obligations under its guarantee to be a fraudulent transfer, this provision may not be effective to protect those guarantees from being voided under fraudulent transfer or conveyance laws, or may reduce that guarantor’s obligation to an amount that effectively makes its guarantee worthless.

In addition, enforcement of any of the guarantees against any guarantor will be subject to certain other defenses available to guarantors generally. These laws and defenses include those that relate to voidable preference, financial assistance, corporate purpose or benefit, preservation of share capital, thin capitalization and regulations or defenses affecting the rights of creditors generally. If one or more of these laws and defenses are applicable, a guarantor may have no liability or decreased liability under its guarantee.

Enforcing your rights under the guarantees entered into by certain of our foreign subsidiaries across multiple jurisdictions may be difficult.

We are a U.S. company incorporated in the State of Delaware. The notes are guaranteed by all of our significant U.S. subsidiaries and certain of our foreign subsidiaries in Canada, the Netherlands and Luxembourg. In the event of bankruptcy, insolvency or a similar event, proceedings could be initiated in any of these jurisdictions and in the jurisdiction of organization of any future guarantor of the notes. Your rights under the notes and the guarantees will thus be subject to the laws of several jurisdictions, and you may not be able to effectively enforce your rights in multiple bankruptcy, insolvency and other similar proceedings. Moreover, such multi-jurisdictional proceedings are typically complex and costly for creditors and often result in substantial uncertainty and delay in the enforcement of creditors’ rights.

We are indirectly owned and controlled by the Sponsor, and the Sponsor’s interests as equity holders may conflict with yours as a creditor.

The Sponsor owns approximately 70% of our indirect parent’s equity and, accordingly, has the ability to control our policies and operations. The Sponsor does not have any liability for any obligations under the notes, and the interests of the Sponsor may not in all cases be aligned with your interests. For example, if we encounter financial difficulties or are unable to pay our debts as they mature, the interests of our equity holders might conflict with your interests as a noteholder. In addition, our equity holders may have an interest in pursuing acquisitions, divestitures, financings or other transactions that, in their judgment, could enhance their equity investments, even though such transactions might involve risks to you as a holder of the notes. Furthermore, the Sponsor may in the future own businesses that directly or indirectly compete with us. The Sponsor also may pursue acquisition opportunities that may be complementary to our business, and as a result, those acquisition opportunities may not be available to us. For information concerning our arrangements with the Sponsor, see “Certain Relationships and Related Party Transactions”.

Your ability to transfer the notes may be limited by the absence of an active trading market, and there is no assurance that any active trading market will develop for the notes.

There is no established public market for the notes. We expect the notes to be eligible for trading by “qualified institutional buyers,” as defined in Rule 144A under the Securities Act, in The PORTAL^SM Market.

The initial purchasers have advised us that they intend to make a market in the notes as permitted by applicable laws and regulations; however, the initial purchasers are not obligated to make a market in any of the notes, and they may discontinue their market-making activities at any time without notice. Therefore, an active market for any of the notes may not develop or, if developed, it may not continue. The liquidity of any market for the notes will depend upon the number of holders of the notes, our performance, the market for similar securities, the interest of securities dealers in making a market in the notes and other factors. A liquid trading market may not develop for the notes or any series of notes. If a market develops, the notes could trade at prices that may be lower than their initial offering price. If an active market does not develop or is not maintained, the price and liquidity of the notes may be adversely affected. Historically, the market for non-investment grade debt has been subject to disruptions that have caused substantial volatility in the prices of securities similar to the notes. The market, if any, for any of the notes may not be free from similar disruptions, and any such disruptions may adversely affect the prices at which you may sell your notes.

Holders of secured notes may not be able to fully realize the value of their liens.

The security for the benefit of holders of secured notes may be released without such holders’ consent.

The liens for the benefit of the holders of secured notes may be released without vote or consent of such holders, as summarized below:

As a result, we cannot assure holders of secured notes that the secured notes will continue to be secured by a substantial portion of our assets. Holders of secured notes will have no recourse if the lenders under our senior secured credit facilities approve the release of any or all of the collateral, even if that action adversely affects any rating of the secured notes.

In addition, securities of our subsidiaries will be excluded from the liens to the extent liens thereon would trigger reporting obligations under Rule 3-16 of Regulation S-X, which requires financial statements from any company whose securities are collateral if its book value or market value would exceed 20% of the principal amount of the notes secured thereby. However, the liens on such securities will continue to secure obligations under our new senior secured credit facilities.

The collateral may not be valuable enough to satisfy all the obligations secured by the collateral.

We secured our obligations under the secured notes by the pledge of certain of our assets. This pledge is also for the benefit of the lenders under the new senior secured credit facilities.

The value of the pledged assets in the event of a liquidation will depend upon market and economic conditions, the availability of buyers and similar factors. No independent appraisals of any of the pledged property have been prepared by or on behalf of us in connection with this exchange offer. As of June 30, 2008, before taking into consideration the effect of intercompany eliminations, the pledged assets had a book value of approximately $2,507.9 million, approximately $608.9 million of which would have consisted of intangible assets, including goodwill. Accordingly, we cannot assure holders of secured notes that the proceeds of any sale of the pledged assets following an acceleration to maturity with respect to the secured notes would be sufficient to satisfy, or would not be substantially less than, amounts due on the secured notes and the other debt secured thereby.

If the proceeds of any sale of the pledged assets were not sufficient to repay all amounts due on the secured notes, the holders of secured notes (to the extent their secured notes were not repaid from the proceeds of the sale of the pledged assets) would have only an unsecured claim against our remaining assets. By their nature, some or all of the pledged assets may be illiquid and may have no readily ascertainable market value. Likewise, we cannot assure holders of secured notes that the pledged assets will be saleable or, if saleable, that there will not be substantial delays in their liquidation. To the extent that liens, rights and easements granted to third parties encumber assets located on property owned by us or constitute subordinate liens on the pledged assets, those third parties may have or may exercise rights and remedies with respect to the property subject to such encumbrances (including rights to require marshalling of assets) that could adversely affect the value of the pledged assets located at that site and the ability of the collateral agent to realize or foreclose on the pledged assets at that site.

In addition, the indenture governing the secured notes permits us, subject to compliance with certain financial tests, to issue additional secured debt, including debt secured equally and ratably by the same assets pledged for the benefit of the holders of secured notes. This would reduce amounts payable to holders of secured notes from the proceeds of any sale of the collateral.

Bankruptcy laws may limit the ability of holders of secured notes to realize value from the collateral.

The right of the collateral agent to repossess and dispose of the pledged assets upon the occurrence of an event of default under the indenture is likely to be significantly impaired by applicable bankruptcy law if a bankruptcy case were to be commenced by or against us before the collateral agent repossessed and disposed of

the pledged assets. For example, under Title 11 of the United States Code, or the United States Bankruptcy Code, pursuant to the automatic stay imposed upon the bankruptcy filing, a secured creditor is prohibited from repossessing its security from a debtor in a bankruptcy case, or from disposing of security repossessed from such debtor, or taking other actions to levy against a debtor, without bankruptcy court approval. Moreover, the United States Bankruptcy Code permits the debtor to continue to retain and to use collateral even though the debtor is in default under the applicable debt instruments, provided that the secured creditor is given “adequate protection.” The meaning of the term “adequate protection” may vary according to circumstances (and is within the discretion of the bankruptcy court), but it is intended in general to protect the value of the secured creditor’s interest in the collateral and may include cash payments or the granting of additional security, if and at such times as the court in its discretion determines, for any diminution in the value of the collateral as a result of the automatic stay of repossession or disposition or any use of the collateral by the debtor during the pendency of the bankruptcy case. Generally, adequate protection payments, in the form of interest or otherwise, are not required to be paid by a debtor to a secured creditor unless the bankruptcy court determines that the value of the secured creditor’s interest in the collateral is declining during the pendency of the bankruptcy case. Due to the imposition of the automatic stay, the lack of a precise definition of the term “adequate protection” and the broad discretionary powers of a bankruptcy court, it is impossible to predict (1) how long payments under the secured notes could be delayed following commencement of a bankruptcy case, (2) whether or when the collateral agent could repossess or dispose of the pledged assets or (3) whether or to what extent holders of the secured notes would be compensated for any delay in payment or loss of value of the pledged assets through the requirement of “adequate protection.” Similar and other provisions of Canadian, Dutch and Luxembourg bankruptcy laws may preclude holders of secured notes to realize value from the collateral granted by foreign subsidiaries in Canada, the Netherlands and Luxembourg.

The collateral is subject to casualty risks and no mortgage title insurance has been obtained.

We are obligated under the new senior secured credit facilities to at all times cause all the pledged assets to be properly insured and kept insured against loss or damage by fire or other hazards to the extent that such properties are usually insured by corporations operating properties of a similar nature in the same or similar localities. There are, however, some losses, including losses resulting from terrorist acts, that may be either uninsurable or not economically insurable, in whole or in part. As a result, we cannot assure holders of secured notes that the insurance proceeds will compensate us fully for our losses. If there is a total or partial loss of any of the pledged assets, we cannot assure holders of secured notes that the proceeds received by us in respect thereof will be sufficient to satisfy all the secured obligations, including the secured notes.

In the event of a total or partial loss to any of the mortgaged facilities, certain items of equipment and inventory may not be easily replaced. Accordingly, even though there may be insurance coverage, the extended period needed to manufacture replacement units or inventory could cause significant delays.

Additionally, we are not required under the new senior secured credit facilities and the security documents to purchase any title insurance insuring the collateral agent’s lien on the respective mortgaged properties if the costs of creating or perfecting liens would be considered excessive in view of the benefits obtained therefrom by the lenders under the new senior secured credit facilities. If a loss occurs arising from a title defect with respect to any mortgaged property, we cannot assure holders of secured notes that we could replace such property with collateral of equal value.

Rights of holders of secured notes in the collateral may be adversely affected by the failure to perfect security interests in collateral.

Applicable law requires that a security interest in certain tangible and intangible assets can only be properly perfected and its priority retained through certain actions undertaken by the secured party. The liens in the collateral securing the secured notes may not be perfected with respect to the claims of the secured notes if the collateral agent is not able to take the actions necessary to perfect any of these liens on or prior to the date of the

indenture governing the secured notes. There can be no assurance that the lenders under the new senior secured credit facilities will have taken all actions necessary to create properly perfected security interests, which may result in the loss of the priority of the security interest in favor of the holders of the secured notes to which they would otherwise have been entitled. In addition, applicable law requires that certain property and rights acquired after the grant of a general security interest, such as real property, equipment subject to a certificate of title and certain proceeds, can only be perfected at the time such property and rights are acquired and identified. We and the guarantors have limited obligations to perfect the security interest of the holders of secured notes in specified collateral. There can be no assurance that the trustee or the collateral agent for the secured notes will monitor, or that we will inform such trustee or collateral agent of, the future acquisition of property and rights that constitute collateral, and that the necessary action will be taken to properly perfect the security interest in such after-acquired collateral. Neither the trustee nor the collateral agent for the secured notes has an obligation to monitor the acquisition of additional property or rights that constitute collateral or the perfection of any security interest. Such failure may result in the loss of the security interest in the collateral or the priority of the security interest in favor of the secured notes against third parties.

Any future pledge of collateral in favor of the holders of secured notes might be voidable in bankruptcy.

Any future pledge of collateral in favor of the holders of secured notes, including pursuant to security documents delivered after the date of the indenture governing the secured notes, might be voidable by the pledgor (as debtor in possession) or by its trustee in bankruptcy if certain events or circumstances exist or occur, including, under the United States Bankruptcy Code, if the pledgor is insolvent at the time of the pledge, the pledge permits the holders of secured notes to receive a greater recovery than if the pledge had not been given and a bankruptcy proceeding in respect of the pledgor is commenced with 90 days following the pledge, or, in certain circumstances, a longer period. Similar and other provisions of Canadian, Dutch and Luxembourg bankruptcy laws may make any future pledge of collateral granted by foreign subsidiaries in Canada, the Netherlands and Luxembourg voidable.

We currently depend on four categories of products for a large portion of our revenues; any material decline in the sales of any of them would have an adverse impact on our business.

Any factor that adversely affects the sale or price of our key products could significantly decrease our sales and profits. Pancreatic enzyme products (ULTRASE, VIOKASE and PANZYTRAT), ursodiol products (URSO 250 / URSO DS / URSO FORTE and DELURSAN), mesalamine products (CANASA and SALOFALK) and sucralfate products (CARAFATE and SULCRATE) accounted for 21.2%, 26.9%, 24.2% and 15.0%, respectively, of our total revenues for the year ended September 30, 2007 and for 23.3%, 24.4%, 24.2% and 13.7%, respectively, of our total revenues for the nine months ended June 30, 2008. We believe that sales of these products will continue to constitute a significant portion of our total revenues until we launch additional products. Any significant setback with respect to any one of these products, including shipping, manufacturing, product safety, marketing, government licenses and approvals, intellectual property rights problems, or generic or other forms of competition, could have a material adverse effect on our financial position, cash flows or overall trends in results of operations.

We no longer have patent protection for our URSO product lines in the United States and Canada. This is likely to result in competition from generic products and could lead to a significant reduction in our sales of this drug.

On November 19, 2007, our U.S. patent covering URSO 250 / URSO FORTE’s use in the treatment of PBC expired. In addition, the validity of our Canadian patent for the similar use of URSO and URSO DS in Canada was successfully challenged in 2006 by Pharmascience Inc., a generic product manufacturer, under the Notice of Compliance Regulation procedures of Health Canada. Therefore, these products no longer benefit from any effective patent protection or other form of regulatory protection or exclusivity in the United States or Canada.

As a result, competition from generic products that treat the same conditions may increase. Sales of generic products in Canada have already had a negative sales impact on our Canadian sales of URSO / URSO DS; this trend is expected to continue going forward. The loss of intellectual property protection in the United States and generic competition for our URSO 250 / URSO FORTE product line, which made up approximately 20% of our total revenues in fiscal year 2007, could have a material adverse effect on our results of operations and financial condition.

We have undertaken several improvements to the dosage form and specifications of URSO that we believe may help maintain sales of URSO in the face of generic competition. See “Business—Business Strategy” and “Business—Products.” There is no assurance, however, that any of these improvements will allow us to maintain sales of URSO at historic levels, and generic sales could have a significant negative impact on our sales of URSO. Even with those improvements, we expect results in fiscal year 2008 to decline compared to fiscal year 2007, in part due to competition against URSO resulting from the loss of patent protection.

We no longer have clinical investigation exclusivity in the United States for our CANASA product line. This could result in competition from generic products leading to a significant reduction in sales of this product line.

Although our CANASA product line does not have any patent protection in the United States, we previously had clinical investigation exclusivity from the FDA covering a change in the formulation of this drug from a 500 mg formulation to a 1,000 mg formulation. This clinical investigation exclusivity effectively precluded the FDA from approving a competitor’s abbreviated new drug application, or ANDA, for a 1,000 mg mesalamine product for a period of three years. However, pursuant to the Drug Price Competition and Patent Term Restoration Act, or the Hatch-Waxman Act, this exclusivity expired in November 2007.

The lack of patent protection and the loss of exclusivity for this product in the United States could give rise to competition from generic products or therapeutically substitutable products. A significant reduction in the sales for this product, which made up 18.7% of our revenues in the fiscal year ended September 30, 2007 and 18.5% of our revenues for the nine months ended June 30, 2008, could have a material adverse effect on our results of operations and financial condition.

In February 2006, the FDA published draft guidance indicating that placebo-controlled trials with clinical endpoints will be required for approval of generic mesalamine suppository products. We believe that these requirements will likely increase the costs of obtaining FDA approval and may make it more difficult, lengthy and costly for potential competitors to obtain the FDA approval required to sell a competing mesalamine suppository in the United States. However, there is no assurance that the FDA will require companies seeking approval of a mesalamine suppository product to comply with this draft guidance, and we cannot provide assurances that a potential competitor will not be able to meet such requirements. If a generic or therapeutically substitutable mesalamine suppository is approved by the FDA, it could significantly and negatively impact our sales of CANASA in the future.

Some of our key products face competition from generic or unbranded products.

Some of our key products, including products from our ULTRASE, URSO and CANASA product lines, currently face competition from generic or unbranded products (such as ACTIGALL™ and its generics in the case of URSO, other branded and unbranded pancreatic enzyme products, or PEPs, in the case of ULTRASE and other rectal dosage forms of mesalamine in the case of CANASA). Third-party payors and pharmacists can substitute generic or unbranded products for our products even if physicians prescribe our products by name. Particularly in the United States, government agencies and third-party payors often put pressure on patients to purchase generic products instead of brand-name products as a way to reduce healthcare costs.

Products which are no longer protected by a marketing exclusivity or a patent are subject to generic competition. Generic competition against any of our products would lower prices and unit sales and could therefore have a material adverse effect on our results of operations and financial condition.

Our revenues from ULTRASE and VIOKASE are subject to significant regulatory risk.

In April 2004, the FDA formally notified manufacturers of PEPs that these drugs had to be approved by the FDA in order to remain on the market. Under current requirements, manufacturers are required to file INDs for their PEPs by April 2008, to file NDAs by April 2009 and to obtain FDA approval by April 2010. The FDA decided to require these approvals for all pancreatic extract drug products after reviewing data that showed substantial variation among currently marketed PEPs.

ULTRASE, our enteric coated pancreatic enzyme formulation, accounted for approximately 13.7%, or $48.0 million, of our revenues in fiscal year 2007. We filed an NDA for the mini-tablet formulation of ULTRASE, ULTRASE MT, in September 2007 and such filing was accepted for review in December 2007 by the FDA. On July 1, 2008, we received an approvable letter from the FDA regarding our NDA for ULTRASE MT citing certain chemistry, manufacturing and control data work concerns and we are preparing a response to the FDA’s comments in collaboration with our manufacturing partners and expect that required regulatory filings will be made in time to comply with the FDA’s guidelines. However, there is no guarantee that we will succeed in obtaining approval for such product from the FDA prior to April 2010 or at all. We have filed an IND and expect to submit the first module of our NDA for VIOKASE during calendar year 2008, but we cannot assure that our NDA will be accepted for review or approved by the FDA. If we are unable to obtain FDA approval to market ULTRASE or VIOKASE prior to April 2010, we would no longer be able to sell ULTRASE or VIOKASE in the United States, which would impair our results of operations and liquidity.

Despite the FDA’s announcement of its intention to remove from the market those PEPs for which an IND has not been filed by April 2008, for which an NDA has not been filed by April 2009, and which have not been approved by April 2010, its position is non-binding. As a result, the FDA may not pursue regulatory action against companies that fail to meet these deadlines.

If we are successful in obtaining FDA approval for ULTRASE and VIOKASE and the FDA does not enforce its stated position, the level of competition that our ULTRASE and VIOKASE product lines currently face in the market may not decline and could increase in the future.

The concentration of our product sales to only a few wholesale distributors increases the risk that we will not be able to effectively distribute our products if we need to replace any of these distributors, which would cause our sales to decline.

The majority of our sales are to a small number of pharmaceutical wholesale distributors, which in turn sell our products primarily to retail pharmacies, which ultimately dispense our products to the end consumers. In fiscal year 2007, sales to McKesson Corporation accounted for 41.2% of our total revenue, sales to Cardinal Health, Inc., or Cardinal, accounted for 25.0% of our total revenue, and sales to AmerisourceBergen Corporation accounted for 11.1% of our total revenue.

If any of these distributors cease doing business with us or materially reduce the amount of product they purchase from us and we cannot conclude agreements with replacement wholesale distributors on commercially reasonable terms, we might not be able to effectively distribute our products through retail pharmacies. The possibility of this occurring is exacerbated by the recent significant consolidation in the wholesale drug distribution industry, including through mergers and acquisitions among wholesale distributors and the growth of large retail drugstore chains. As a result, a small number of large wholesale distributors control a significant share of the market.

Wholesaler buying patterns may change, and this could have a detrimental effect on our future revenue and financial condition.

Wholesalers, on which we largely depend for revenue generation, have historically practiced inventory price arbitrage. For example, in the past prior to any routine increase in prices for drugs by manufacturers, many of our wholesalers have purchased excess inventory at lower prices and resold the inventory after the price increase, thereby profiting. This inventory price arbitrage was predominantly how wholesalers were previously compensated for the distribution services they provided and had a dramatic effect on wholesaler buying patterns as wholesalers invested in inventories in anticipation of generating higher gross margins from price increases from manufacturers.

Recently, pharmaceutical manufacturers have not been able to increase drug prices as frequently as they used to, and the percentage of any such increases has been lower. The reduction in the size and frequency of price increases has contributed to wholesalers turning to fee-for-service arrangements under which their fees are expressed as a percentage of the wholesaler’s purchases from the manufacturer or as an amount per unit. As a result, wholesalers’ buying patterns have shifted from large pre-price-increase purchases to more periodic purchasing based on volume activity. Typically, wholesalers that have entered into these fee-for-service arrangements carry lower levels of inventory. This change in wholesalers’ business model has and may in the future negatively impact our revenues.

In 2006, we entered into a distribution services agreement, or a DSA, with Cardinal, one of our pharmaceutical wholesale distributors, which replaced a 2004 DSA with Cardinal. We anticipate that we will also enter into DSAs with McKesson Corporation and Amerisource Bergen, our two other primary pharmaceutical wholesale distributors. Once these DSAs are put in place, these pharmaceutical wholesale distributors could reduce their inventory levels. Our DSA with Cardinal provides that Cardinal will gradually reduce the levels of inventory of our products that Cardinal carries over a four-year period ending in 2009. There is no assurance that any DSA we enter with our other pharmaceutical wholesale distributors will include a provision for the gradual reduction of inventory levels. A reduction in inventory levels by a pharmaceutical wholesale distributor would result in a reduction in our sales to such wholesale distributor for the period during which the reduction occurs, and would have a negative effect on our results of operations for the period, particularly if such reduction is not effected gradually.

We deduct these DSA fees, which totaled approximately $2.6 million and $3.6 million for fiscal year 2006 and fiscal year 2007, respectively, from our total revenues. For example, in the quarter ended September 30, 2006, we chose to adopt the classification of these fees as a deduction from sales. Previously, these fees were included in selling and administrative expenses. If we enter into DSAs with additional wholesalers, we will likely have to pay DSA fees to these wholesalers, which will further reduce our revenue in future periods.

Generally, changes in wholesaler buying patterns may occur in the future, and these changes could result in a reduction in our revenues and could have a detrimental effect on our overall financial condition or results of operations.

Our quarterly operating results have fluctuated in the past and may continue to fluctuate in the future. Factors, many of which are not within our control, that could cause quarterly operating results to decline include, for example, the size and timing of product orders, which can be affected by customer budgeting and buying patterns, or the size and timing of expenses associated with our development and marketing programs. As a result, if customer buying patterns cause revenue shifts from one fiscal quarter to another, or if the development and marketing of our products causes our expenses to change from one fiscal quarter to another, our net quarterly income may not fluctuate.

Our business depends on key scientific, sales and managerial personnel for continued success.

Much of our success to date has resulted from the skills of certain of our officers, scientific personnel and sales force. If these individuals were no longer employed by us, we might not be able to attract or retain employees with similar skills or carry out our business plan.

We use third parties to manufacture and perform analytical testing for almost all of our products and product candidates. This may increase the risk that we will not have sufficient quantities of our products or product candidates or such quantities at an acceptable cost, which could adversely affect sales of our products and could result in the clinical development and commercialization of our product candidates being delayed, prevented or impaired.

We currently rely, and expect to continue to rely, on third parties for (i) the supply and testing of the active pharmaceutical ingredients in our products and product candidates, and (ii) the manufacture and testing of the finished forms of these drugs and their packaging. The current manufacturers of our products and product candidates are, and any future third party manufacturers that we enter into agreements with will likely be, our sole suppliers of our product candidates for a significant period of time. These manufacturers are commonly referred to as single source suppliers. The agreements with our suppliers expire at various times between 2008 and 2015. If we are unable to renew these agreements on favorable terms or find suitable alternatives, our business could be adversely affected. Some of our contracts prohibit us from using alternative manufacturers or suppliers for the products supplied under these contracts, which prevents us from diversifying manufacturing and supply sources. In addition, we currently purchase clinical supplies for many of our product candidates from third party manufacturers on a purchase order basis under short-term supply agreements. If any of these manufacturers should become unavailable to us for any reason, we may be unable to conclude agreements with replacements on favorable terms, if at all, and may be delayed in identifying and qualifying such replacements. In any event, identifying and qualifying a new third party manufacturer could involve significant costs associated with the transfer of the active pharmaceutical ingredient or finished product manufacturing process. A change in manufacturers or testers requires formal approval by the FDA before the new manufacturer may produce commercial supplies of our products. This approval process typically takes a minimum of 12 to 18 months and during that time we may face a shortage of supply of our products.

Reliance on third party manufacturers entails risks to which we would not be subject if we manufactured or tested products or product candidates ourselves, including:

Our products and product candidates may compete with other products and product candidates for access to manufacturing facilities. There are a limited number of manufacturers that operate under current good manufacturing practice regulations and that are both capable of manufacturing for us and willing to do so. If the third parties that we engage to manufacture and/or test a product for commercial sale or for our clinical trials should cease to continue to do so for any reason, we likely would experience delays in obtaining sufficient quantities of our products for us to meet commercial demand or in advancing our clinical trials while we identify and qualify replacement suppliers. If for any reason we are not able to obtain adequate supplies of our product candidates or the drug substances used to manufacture them, it will be more difficult for us to develop our product candidates and compete effectively.

Our current and anticipated future dependence upon others for the manufacture of our products and product candidates may adversely affect our profit margins and our ability to develop product candidates and commercialize any additional products that receive regulatory approval on a timely and competitive basis.

We rely on our third party manufacturers for compliance with applicable regulatory requirements. This may increase the risk of sanctions being imposed on us or on a manufacturer of our products or product candidates, which could result in our inability to obtain sufficient quantities of these products or product candidates.

Our manufacturers may not be able to comply with current good manufacturing practice regulations or other regulatory requirements or similar regulatory requirements outside the United States. Our manufacturers are subject to unannounced inspections by the FDA, state regulators and similar regulators outside the United States. Our failure, or the failure of our third party manufacturers, to comply with applicable regulations, including, in the case of ULTRASE and VIOKASE, the FDA’s guidelines for pancreatic enzyme product manufacturers, could result in sanctions being imposed on us, including:

Any of these sanctions could significantly and adversely affect supplies of our products and product candidates and may adversely affect our profit margins and our ability to develop product candidates and commercialize any additional products that receive regulatory approval on a timely and competitive basis.

We rely on third parties to conduct, supervise and monitor our clinical trials, and those third parties may perform in an unsatisfactory manner, such as by failing to meet established deadlines for the completion of such trials.

We rely on third parties such as contract research organizations, medical institutions and clinical investigators to enroll qualified patients and conduct, supervise and monitor our clinical trials. Our reliance on these third parties for clinical development activities reduces our control over these activities. Our reliance on these third parties, however, does not relieve us of our regulatory responsibilities, including ensuring that our clinical trials are conducted in accordance with good clinical practice regulations, and the investigational plan and protocols contained in the relevant regulatory application, such as the IND. In addition, such third parties may not complete activities on schedule, or may not conduct our preclinical studies or clinical trials in accordance with regulatory requirements or our trial design. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, our efforts to obtain regulatory approvals for, and to commercialize, our product candidates may be delayed or prevented.

We may not be able to acquire or successfully integrate new products or businesses.

Our products are maturing and therefore a significant component of our strategy is growth through acquisitions of products or businesses. However, we cannot be certain that we will be able to identify appropriate acquisition candidates. And even if an acquisition candidate is identified, there can be no assurance we will be able to successfully negotiate the terms of any such acquisition on favorable terms or at all, finance such acquisition or integrate such acquired product or business into our existing business. We face significant competition from other pharmaceutical companies for acquisition candidates, which makes it more difficult to find attractive transaction opportunities for products or companies on acceptable terms. Furthermore, the negotiation of potential acquisitions and the integration of such acquired products or businesses could divert management’s time and resources and require significant financial resources to consummate. Failure to acquire new products may diminish our rate of growth and adversely affect our competitive position.

Acquisitions that we may undertake will involve a number of inherent risks, any of which could cause us not to realize the anticipated benefits.

One of our key strategies will be acquisitions of additional products and/or businesses. Acquisition transactions involve various inherent risks, such as assessing the value, strengths, weaknesses, contingent and other liabilities and potential profitability of the acquisition; the potential loss of key personnel of an acquired business; the ability to achieve identified operating and financial synergies anticipated to result from an acquisition and unanticipated changes in business, industry or general economic conditions that affect the assumptions underlying the acquisition. Any one or more of these factors could cause us not to realize the anticipated benefits from the acquisition of businesses or products.

If our products fail in clinical studies or if we fail, or encounter difficulties, in obtaining regulatory approval for our new products or new indications of existing products, we will have expended significant resources for no return.

If our products are not successful in clinical trials or if we do not obtain such regulatory approvals, we will have expended significant resources for no return. For example, in fiscal year 2005, our clinical trials of itopride hydrochloride, or ITAX, a proposed treatment for functional dyspepsia, were not successful and we terminated the program in 2006. Our ongoing clinical studies might be delayed or halted or additional studies might be required, for various reasons, including if:

If we cannot obtain regulatory approvals for the products we are developing or may seek to develop in the future, our rate of sales growth and competitive position will suffer. This risk is most acute for products that are currently in the development of the final formulation, such as our controlled release omeprazole product, or AGI-010, and our biological product for the treatment of perianal fistulas, Cx401.

Approval might entail ongoing requirements for post-marketing studies. Even if regulatory approval is obtained, labeling and promotional activities are subject to continual scrutiny by the regulatory agencies, in particular the FDA, and, in some circumstances, the Federal Trade Commission. FDA enforcement policy

prohibits the marketing of approved products for unapproved, or off-label, uses. These regulations and the FDA’s interpretation of them might impair our ability to effectively market our products.

We, our third-party manufacturers and certain of our suppliers are also required to comply with the applicable FDA current Good Manufacturing Practices regulations, which include requirements relating to quality control and quality assurance, as well as the corresponding maintenance of records and documentation. Furthermore, manufacturing facilities must be approved by regulatory authorities before they can be used to manufacture our products and certain raw materials used therein, and they are subject to additional inspections. If we or any of our manufacturers or suppliers fails to comply with any of the FDA’s or other relevant foreign counterparts continuing regulations, we could be subject to sanctions, including:

In addition, identification of side effects after a drug is on the market or the occurrence of manufacturing problems could cause subsequent withdrawal of the product from the market, reformulation of the drug, additional testing or changes in labeling of the product.

Our approved products and pipeline products remain subject to ongoing regulatory requirements. If we fail to comply with these requirements, we could lose these approvals, and the sales of any such approved commercial products could be suspended.

After receipt of initial regulatory approval, each product remains subject to extensive regulatory requirements, including requirements relating to manufacturing, labeling, packaging, adverse event reporting, storage, advertising, promotion, distribution and recordkeeping. Furthermore, even if we receive regulatory approval to market a particular product, such product will remain subject to the same extensive regulatory requirements. Even if regulatory approval of a product is granted, the approval may be subject to limitations on the uses for which the product may be marketed or the conditions of approval, or contain requirements for costly post-marketing testing and surveillance to monitor the safety or efficacy of the product, which could reduce our revenues, increase our expenses and render the approved product not commercially viable. In addition, as clinical experience with a drug expands after approval because it is typically used by a greater number and more diverse group of patients after approval than during clinical trials, side effects and other problems may be observed after approval that were not seen or anticipated during pre-approval clinical trials or other studies.

Our business could suffer as a result of adverse drug reactions to the products we market.

Unexpected adverse drug reactions by patients to any of our products could negatively impact utilization or market availability of our product.

Absence of long-term safety data may also limit the approved uses of our products, if any. If we fail to comply with the regulatory requirements of the FDA and other applicable regulatory authorities, or if previously unknown problems with any approved commercial products, manufacturers or manufacturing processes are discovered, we could be subject to administrative or judicially imposed sanctions or other setbacks, including:

We may find it difficult to achieve market acceptance of products in our product pipeline.

The commercial success of any of our product candidates for which we obtain marketing approval from the FDA, Health Canada’s Therapeutic Products Directorate, or TPD, or other regulatory authorities will depend upon the acceptance of these products by the medical community, including physicians, patients and healthcare payors. The degree of market acceptance of any of our approved products will depend on a number of factors, including:

If any of our product candidates are approved but do not achieve an adequate level of acceptance by physicians, healthcare payors and patients, we may not generate sufficient revenue from these products for such products to become or remain profitable. In addition, our efforts to educate the medical community and third-party payors on the benefits of our product candidates may require significant resources and may never be successful.

The publication of negative results of studies or clinical trials may adversely impact our sales revenue.

From time to time, studies or clinical trials on various aspects of pharmaceutical products are conducted by academics or others, including government agencies. The results of these studies or trials, when published, may have a dramatic effect on the market for the pharmaceutical product that is the subject of the study. The publication of negative results of studies or clinical trials related to our products or the therapeutic areas in which our products compete could adversely affect our sales, the prescription trends for our products and the reputation of our products. In the event of the publication of negative results of studies or clinical trials related to our products or the therapeutic areas in which our products compete, our business, financial condition, results of operation and cash flows could be materially adversely affected.

There is no assurance that we will continue to be successful in our licensing and marketing operations.

Certain of our products are sold and marketed by third parties. Such third-party arrangements may not be successfully negotiated in the future. Any such arrangements may not be available on commercially reasonable terms. Even if acceptable and timely marketing arrangements are available, the products we develop may not be accepted in the marketplace, and even if such products are initially accepted, sales may thereafter decline. Additionally, our clients or marketing partners may make important marketing and other commercialization decisions with respect to products we develop that are not within our control. As a result, many of the variables that may affect our revenues, cash flows and net income are not exclusively within our control.

The success of our strategic investments, partnerships or development alliances (like our co-development of AGI-010 and Cx401) depends upon the performance of the companies in which we invest, or with which we partner or co-develop products.

Economic, governmental, industry and internal company factors outside our control affect each of the companies in which we may invest or with which we may partner or co-develop products, like AGI Therapeutics Research Ltd. and Cellerix S.L. Some of the material risks relating to such companies include:

We may have limited or no control over the resources that any such company may devote to develop the products for which we collaborate with them. Any such company may not perform as expected. These companies may breach or terminate their agreements with us or otherwise fail to conduct product discovery and development activities successfully, or in a timely manner. If any of these events occurs, it could have a material adverse effect on our business and our financial results.

The pharmaceutical industry is highly competitive and is subject to rapid and significant change, which could render our products obsolete or uncompetitive.

Our products face competition from other pharmaceutical and generic companies. We compete with companies in the U.S., Canada and internationally, including major pharmaceutical and generic companies. Many of our competitors have greater financial resources and selling and marketing capabilities, have greater experience in clinical testing and human clinical trials of pharmaceutical products, and have greater experience in obtaining approvals from the FDA, the TPD, or other applicable regulatory approvals. Our competitors may succeed in developing products that are more effective or less expensive to use than any that we may develop or license. These developments could render our products obsolete or uncompetitive, which would have a material adverse effect on our business and financial results.

Pricing pressures from, and other measures taken by, third-party payors, including managed care organizations, government sponsored health systems and regulations relating to Medicare and Medicaid, healthcare reform, pharmaceutical reimbursements and pricing in general could decrease our revenues.

Our ability to successfully commercialize our products and product candidates—even if FDA or TPD approval is obtained—depends, in part, on whether appropriate reimbursement levels for the cost of the products and related treatments are obtained from government authorities and private health insurers and other organizations, such as Health Maintenance Organizations, or HMOs, Managed-Care Organizations, or MCOs, and provincial formularies.

Third-party payors increasingly challenge the pricing of pharmaceutical products. In addition, the trend toward managed health-care in the U.S., the growth of organizations such as HMOs and MCOs, and legislative proposals to reform health-care and government insurance programs, could significantly influence the purchase of pharmaceutical products, resulting in lower prices and a reduction in product demand. One way in which managed care organizations and government sponsored health systems seek to control their costs is by developing formularies to encourage plan beneficiaries to utilize preferred products for which the plans have negotiated favorable terms. Exclusion of a product from a formulary, or placement of a product on a disfavored formulary tier, can lead to sharply reduced usage in the patient population covered by the applicable managed care organization or government sponsored health system. If our products are not included within an adequate number of formularies or if adequate reimbursement levels are not provided, or if reimbursement policies increasingly favor generic products, our market share and business could be negatively affected.

Recent reforms in Medicare added an out-patient prescription drug reimbursement beginning 2006 for all Medicare beneficiaries. The U.S. federal government and private plans contracting with the government to deliver the benefit, through their purchasing power under these programs, are demanding discounts from pharmaceutical companies that may implicitly create price controls on prescription drugs. These reforms may decrease our future revenues from product lines such as CARAFATE, URSO, ULTRASE, CANASA and PYLERA that are covered by the Medicare drug benefit. Further, a number of other legislative and regulatory proposals aimed at changing the healthcare system have been proposed. While we cannot predict whether any such proposals will be adopted or the effect such proposals may have on our business, the existence of such proposals, as well as the adoption of any proposal, may increase industry-wide pricing pressures, thereby adversely affecting our results or operations and cash flows.

Uncertainty also exists regarding the reimbursement status of certain newly-approved pharmaceutical products and reimbursement may not be available for some of our products. Any reimbursements granted may not be maintained or limits on reimbursements available from third-party payors may reduce the demand for, or negatively affect the price of, these products. If our products do not qualify for reimbursement, if reimbursement levels diminish, or if reimbursement is denied, our sales and profitability would be adversely affected.

Our relationships with customers and payors are subject to applicable fraud and abuse and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm, and diminished profits and future earnings.

Healthcare providers, physicians and others play a primary role in the recommendation and prescription of our products. Our arrangements with third party payors and customers may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we market, sell and distribute our products. Applicable U.S. federal and state healthcare laws and regulations, include, but are not limited to, the following:

Efforts to ensure that our business arrangements with third parties comply with applicable healthcare laws and regulations could be costly. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our past or present operations, including activities conducted by our sales team or agents, are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, exclusion from third party payor programs, such as Medicare and Medicaid, and the curtailment or restructuring of our operations. If any of the physicians or other providers or entities with whom we do business are found to be not in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs.

Many aspects of these laws have not been definitively interpreted by the regulatory authorities or the courts, and their provisions are open to a variety of subjective interpretations, which increases the risk of potential violations. In addition, these laws and their interpretations are subject to change. Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses, divert our management’s attention from the operation of our business and damage our reputation.

Recently enacted legislation may make it more difficult and costly for us to obtain regulatory approval of our product candidates and to produce, market and distribute our existing products.

On September 27, 2007, President Bush signed the Food and Drug Administration Amendments Act of 2007, or FDAAA, into law. The FDAAA grants a variety of new powers to the FDA, many of which are aimed at improving drug safety and assuring the safety of drug products after approval. Under the FDAAA, companies that violate the new law are subject to substantial civil monetary penalties. While we expect the FDAAA to have a substantial effect on the pharmaceutical industry, the extent of that effect is not yet known. As the FDA issues regulations, guidance and interpretations relating to the new legislation, the impact on the industry, as well as our business, will become clearer. The new requirements and other changes that the FDAAA imposes may make it more difficult, and likely more costly, to obtain approval of new pharmaceutical products and to produce, market and distribute existing products.

Changes in laws and regulations could affect our results of operations, financial position or cash flows.

Our future operating results, financial position or cash flows could be adversely affected by changes in laws and regulations such as (i) changes in the FDA or TPD (or their foreign equivalents) approval processes that may cause delays in, or prevent the approval of, new products, (ii) new laws, regulations and judicial decisions affecting product development, marketing, promotion or the healthcare field generally, (iii) new laws or judicial

decisions affecting intellectual property rights and (iv) changes in the application of tax principles, including tax rates, new tax laws, or revised interpretations of existing tax laws and precedents, which result in shift of taxable earnings between tax jurisdictions.

We may be subject to investigations or other inquiries concerning our compliance with reporting obligations under federal healthcare program pharmaceutical pricing requirements.

Under federal healthcare programs, some state governments and private payors investigate and have filed civil actions against numerous pharmaceutical companies alleging that the reporting of prices for pharmaceutical products has resulted in false and overstated Average Wholesale Price, or AWP, which in turn may be alleged to have improperly inflated the reimbursements paid by Medicare, private insurers, state Medicaid programs, medical plans and others to healthcare providers who prescribed and administered those products or pharmacies that dispensed those products. These same payors may allege that companies do not properly report their “best prices” to the state under the Medicaid program. Suppliers of outpatient pharmaceuticals to the Medicaid program are also subject to price rebate agreements. Failure to comply with these price rebate agreements may lead to federal or state investigations, criminal or civil liability, exclusion from federal healthcare programs, contractual damages, and otherwise harm our reputation, business and prospects.

Future litigation and the outcome of current litigation may harm our business.

In general, and subject to the terms of each specific agreement, we have agreed to indemnify our licensors, distributors and certain of our contract manufacturers for product liability claims and there is a risk that we will be subject to product liability claims and claims for indemnification under these agreements. A substantial portion of our revenues are derived and will continue to be derived from activities in the United States, where pharmaceutical companies are exposed to a higher risk of litigation than in other jurisdictions.

Currently, we maintain claims-based product liability insurance coverage in respect of all our products marketed in the United States. We cannot be certain that existing or future insurance coverage available to us will be adequate to satisfy any or all future product liability claims and defense costs in the United States.

We face an inherent business risk of exposure to product liability and other claims in the event that the use of our products results, or is alleged to have resulted, in adverse effects. While we have taken, and will continue to take, what we believe are appropriate precautions, there can be no assurance that we will avoid significant product liability claims. Although we currently carry product liability insurance that we believe is appropriate for the risks that we face, there can be no assurance that we have sufficient coverage, or can in the future obtain sufficient coverage at a reasonable cost. An inability to obtain product liability insurance at an acceptable cost or to otherwise protect against potential product liability claims could prevent or inhibit the growth of our business or the number of products we can successfully market. Our obligation to pay indemnities, the withdrawal of a product following complaints, or a product-liability claim could have a material adverse effect on our business, results of operations, cash flows and financial condition. For details regarding certain litigation matters in which we are currently involved, see “Business—Legal Proceedings”.

Governmental agencies in the countries in which we conduct business regulate pharmaceutical products intended for human use. These regulations normally require extensive clinical trials and other testing in addition to governmental review and final approval before products can be marketed. Governmental authorities in such countries also regulate the research and development, manufacture, distribution, promotion, testing and safety of products, and therefore, the cost of complying with governmental regulations can be substantial.

Requirements for approval can vary widely from country to country. A product must normally be approved by regulatory authorities in each country in which we intend to market it, prior to the commencement of marketing in such country. There can be long delays in obtaining required clearances from regulatory authorities in many countries after applications are filed. Therefore, there can be no assurance that we will obtain regulatory approvals in such countries or that we will not incur significant costs in obtaining or maintaining such regulatory approvals. Moreover, the regulations applicable to our existing and future products may change.

Government regulations require the detailed inspection and control of research and laboratory procedures, clinical studies, manufacturing procedures and marketing and distribution methods, all of which significantly increase the level of difficulty and the costs involved in obtaining and maintaining the regulatory approval for marketing new and existing products. Moreover, regulatory measures adopted by governments provide for the possible withdrawal of products from the market and in certain cases, suspension or revocation of the required approvals for their production and sale.

Failure to obtain necessary regulatory approvals; the restriction, suspension or revocation of existing approvals; or any other failure to comply with regulatory requirements would restrict or impair our ability to market our products and carry on our business.

We rely on the intellectual property of others, and we may not be able to protect our own intellectual property.

Our continued success will depend, in part, on our ability to obtain, protect and maintain intellectual property rights and licensing arrangements for our products. Some of the proprietary rights in some of our products are held by third parties, which require us to obtain licenses for the use of such products. Despite these licenses, there can be no guarantees that the rights or patents used by us will not be challenged by third parties. Furthermore, an adverse outcome could lead to an infringement or other legal actions being brought against us directly. We have filed and/or licensed patent applications related to certain of our products, but such applications may fail to be granted, or, even if granted, may be challenged or invalidated or may fail to provide us with any competitive advantages.

To protect our own intellectual property, we have historically relied on patents and trade secrets, know-how and other proprietary information, as well as requiring our employees and other vendors and suppliers to sign confidentiality agreements which prohibit them from taking our proprietary information and technology or from using or disclosing proprietary information to third parties except in specified circumstances. However, confidentiality agreements may be breached despite all precautions taken, and we may not have adequate remedies for any breach. Third parties may gain access to our proprietary information or may independently develop substantially equivalent proprietary information. Our inability to protect and maintain intellectual property rights in our products may impair our competitive position and adversely affect our growth.

Litigation or third party claims of intellectual property infringement could require substantial time and money to resolve. Unfavorable outcomes to these proceedings could limit our intellectual property rights and our activities.

Third party patents (now or in the future) may cover the materials or methods of treatment related to our products and third parties may make allegations of infringement, regardless of merit. We cannot provide any assurances that our products or activities, or those of our licensors, will not infringe patents or other intellectual property owned by third parties. We have been (and from time to time we may be) notified that third parties consider their patents or other intellectual property relevant to our products.

In addition, we may from time to time have access to confidential or proprietary information of third parties that could bring a claim against us asserting that we have misappropriated their technology (which, although not patented, may be protected by trade secrets) and that we have improperly incorporated that technology into our products. Some of our employees may have been employed by other pharmaceutical or biotechnology companies

that may allege violations of their trade secrets by these individuals, irrespective of the steps that we may take to prevent such allegations.

If a lawsuit is commenced with respect to any alleged intellectual property infringement by us, the uncertainties inherent in such litigation make the outcome difficult to predict, and the costs that we may incur as a result may have an adverse effect on our profitability. Such litigation would involve significant expense and would be a substantial diversion of the efforts of our scientific and our management teams. During the course of any intellectual property litigation, there may be public announcements regarding claims and defenses, and regarding the results of hearings, motions and other interim proceedings or developments in the litigation. If securities analysts or investors perceive these announcements as negative, the market price of the secured notes or any other securities that we may issue from time to time may decline.

Any such lawsuit that culminates in an adverse determination may result in the award of monetary damages to the intellectual property holder and payment by us of any such damages, and/or an injunction prohibiting all of our business activities that infringe the intellectual property, or may require us to obtain licenses from third parties on terms that may not be commercially acceptable to us, which would in each case adversely affect our profitability and our business. If so, we may attempt to redesign our processes, products or technologies so that they do not infringe, but that might not be possible. If we cannot obtain a necessary or desirable license, can obtain such a license only on terms that we consider to be unattractive or unacceptable, or cannot redesign our products or processes to avoid potential patent or other intellectual property infringement, then we or our collaborators may be restricted or prevented from developing and commercializing our products and our business will be harmed.

We might be impacted by unfavorable decisions in proceedings related to future tax assessments.

We operate in a number of jurisdictions and are from time to time subject to audits and reviews by taxation authorities in the relevant jurisdictions with respect to income, consumption, payroll and other taxes and remittances, for current as well as past periods. Accordingly, we may become subject to future tax assessments by relevant authorities. Any amount we might be required to pay in connection with a future tax assessment may have a material adverse effect on our financial position, cash flows or overall results of operations. There is a possibility of a material adverse effect on the results of operations of the period in which the matter is ultimately resolved, if it is resolved unfavorably, or in the period in which an unfavorable outcome becomes probable and reasonably estimable.

We operate internationally, but a majority of our revenue and expense activities and capital expenditures are denominated in U.S. dollars. The other currencies in which we engage in significant transactions are Canadian dollars and Euros. We face foreign currency exposure on the translation of our operations in Canada and the EU from their local currencies to the U.S. dollar. Currently, we do not utilize forward contracts to hedge against foreign currency risk on an ongoing basis. A significant change in foreign currency exchange rates may have a material effect on our consolidated results of operations, including our revenue, financial position or cash flows.

The cost of insurance—including insurance for directors and officers, workers’ compensation, property, product-liability and general liability insurance—rose significantly in prior years and may continue to increase in future years. In response, we may increase deductibles and/or decrease certain coverages to mitigate these costs. These increases, and our increased risk due to increased deductibles and reduced coverages, could have an adverse impact on our results of operations, financial condition and cash flows.

Our operations could be disrupted if our information systems fail or if we are unsuccessful in implementing necessary upgrades.

Our business depends on the efficient and uninterrupted operation of our computer and communications systems and networks, hardware and software systems and our other information technology. If our systems were to fail or we are unable to successfully expand the capacity of these systems, or we are unable to integrate new technologies into our existing systems, our operations and financial results could suffer.

Concurrently with the sales of the outstanding notes on February 25, 2008 and May 6, 2008, we entered into registration rights agreements with the initial purchasers of the outstanding notes that require us to use our commercially reasonable efforts to prepare and file a registration statement under the Securities Act with respect to the exchange notes and, upon the effectiveness of the registration statement, to offer to the holders of the outstanding notes the opportunity to exchange their outstanding notes for a like principal amount of exchange notes.

The registration rights agreements provide that we must (a) use our commercially reasonable efforts to cause the registration statement of which this prospectus is a part with respect to the exchange of the outstanding notes for the exchange notes to be declared effective under the Securities Act, (b) keep the exchange offers open for at least 20 business days (or longer, if required by applicable law) after the date notice of the exchange offers is mailed to holders of the outstanding notes and (c) consummate the exchange offers on or prior to the 365^th day (or if the 365^th day is not a business day, the first business day thereafter) after the original issue date of the outstanding notes.

Copies of the registration rights agreements have been filed as exhibits to the registration statement of which this prospectus is a part. Following the completion of the exchange offers, holders of outstanding notes not tendered will not have any further registration rights other than as set forth in the paragraphs below, and the outstanding notes will continue to be subject to certain restrictions on transfer.

Subject to certain conditions, including the representations set forth below, the exchange notes will be issued without a restrictive legend and generally may be reoffered and resold without registration under the Securities Act. In order to participate in the exchange offers, a holder must represent to us in writing, or be deemed to represent to us in writing, among other things, that:

Under certain circumstances specified in the registration rights agreements, we may be required to file a “shelf” registration statement covering resales of the outstanding notes pursuant to Rule 415 under the Securities Act.

Based on an interpretation by the SEC’s staff set forth in no-action letters issued to third parties unrelated to us, we believe that, with the exceptions set forth below, the exchange notes issued in the exchange offers may be offered for resale, resold and otherwise transferred by the holder of exchange notes without compliance with the registration and prospectus delivery requirements of the Securities Act, unless the holder:

Any holder who tenders in the exchange offers for the purpose of participating in a distribution of the exchange notes cannot rely on this interpretation by the SEC’s staff and must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. Each broker-dealer that receives exchange notes for its own account in exchange for outstanding notes, where such outstanding notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such exchange note. See “Plan of Distribution.” Broker-dealers who acquired outstanding notes directly from us and not as a result of market-making activities or other trading activities may not rely on the staff’s interpretations discussed above, and must comply with the prospectus delivery requirements of the Securities Act in order to sell the outstanding notes.

Upon the terms and subject to the conditions set forth in this prospectus and in the letter of transmittal, we will accept any and all outstanding notes validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on December 16, 2008, or such date and time to which we extend the exchange offers. We will issue $1,000 in principal amount of exchange notes in exchange for each $1,000 principal amount of outstanding notes accepted in the exchange offers. Holders may tender some or all of their outstanding notes pursuant to the exchange offers. Outstanding notes may be tendered only in a denominations equal to $2,000 and any integral multiples of $1,000 in excess of $2,000.

The exchange notes will evidence the same debt as the outstanding notes and will be issued under the terms of, and entitled to the benefits of, the applicable indenture relating to the outstanding notes.

As of the date of this prospectus: (a) $225.3 million in aggregate principal amount of outstanding secured notes are outstanding and (b) $232.3 million in aggregate principal amount of outstanding senior notes were outstanding. This prospectus, together with the letter of transmittal, is being sent to the registered holders of outstanding notes. We intend to conduct the exchange offers in accordance with the applicable requirements of the Exchange Act and the rules and regulations of the SEC promulgated under the Exchange Act.

We will be deemed to have accepted validly tendered outstanding notes when, as and if we have given oral or written notice thereof to The Bank of New York, which is acting as the exchange agent. The exchange agent will act as agent for the tendering holders for the purpose of receiving the exchange notes from us. If any tendered outstanding notes are not accepted for exchange because of an invalid tender, the occurrence of certain other events set forth under the heading “—Conditions to the Exchange Offers,” any such unaccepted outstanding notes will be returned, without expense, to the tendering holder of those outstanding notes promptly after the expiration date unless the exchange offers are extended.

Holders who tender outstanding notes in the exchange offers will not be required to pay brokerage commissions or fees or, subject to the instructions in the letter of transmittal, transfer taxes with respect to the exchange of outstanding notes in the exchange offers. We will pay all charges and expenses, other than certain applicable taxes, applicable to the exchange offers. See “—Fees and Expenses.”

The expiration date shall be 5:00 p.m., New York City time, on December 16, 2008, unless we, in our sole discretion, extend the exchange offers, in which case the expiration date shall be the latest date and time to which the exchange offers are extended. In order to extend the exchange offers, we will notify the exchange agent and each registered holder of any extension by oral or written notice prior to 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date and will also disseminate notice of any extension by press release or other public announcement prior to 9:00 a.m., New York City time on such date. We reserve the right, in our sole discretion:

When a holder of outstanding notes tenders, and we accept such notes for exchange pursuant to that tender, a binding agreement between us and the tendering holder is created, subject to the terms and conditions set forth in this prospectus and the accompanying letter of transmittal. Except as set forth below, a holder of outstanding notes who wishes to tender such notes for exchange must, on or prior to the expiration date:

The term “agent’s message” means a message, transmitted to DTC, Euroclear or Clearstream, as appropriate, and received by the exchange agent and forming a part of a book-entry transfer, or “book-entry confirmation,” which states that DTC, Euroclear or Clearstream, as appropriate, has received an express acknowledgement that the tendering holder agrees to be bound by the letter of transmittal and that we may enforce the letter of transmittal against such holder.

The method of delivery of the outstanding notes, the letters of transmittal and all other required documents is at the election and risk of the holders. If such delivery is by mail, we recommend registered mail, properly insured, with return receipt requested. In all cases, you should allow sufficient time to assure timely delivery. No letters of transmittal or outstanding notes should be sent directly to us.

Signatures on a letter of transmittal or a notice of withdrawal must be guaranteed by an eligible institution unless the outstanding notes surrendered for exchange are tendered:

An “eligible institution” is a firm which is a member of a registered national securities exchange or a member of the Financial Industry Regulatory Authority, Inc., or a commercial bank or trust company having an office or correspondent in the United States.

If outstanding notes are registered in the name of a person other than the signer of the letter of transmittal, the outstanding notes surrendered for exchange must be endorsed by, or accompanied by a written instrument or instruments of transfer or exchange, in satisfactory form to the exchange agent and as determined by us in our sole discretion, duly executed by the registered holder with the holder’s signature guaranteed by an eligible institution.

We will determine all questions as to the validity, form, eligibility (including time of receipt) and acceptance of outstanding notes tendered for exchange in our sole discretion. Our determination will be final and binding. We reserve the absolute right to:

Notwithstanding the foregoing, we do not expect to treat any holder of outstanding notes differently from other holders to the extent they present the same facts or circumstances.

Our interpretation of the terms and conditions of the exchange offers as to any particular outstanding notes either before or after the expiration date, including the letter of transmittal and the instructions to it, will be final and binding on all parties. Holders must cure any defects and irregularities in connection with tenders of notes for exchange within such reasonable period of time as we will determine, unless we waive such defects or irregularities. Neither we, the exchange agent nor any other person shall be under any duty to give notification of any defect or irregularity with respect to any tender of outstanding notes for exchange, nor shall any of us incur any liability for failure to give such notification.

If a person or persons other than the registered holder or holders of the outstanding notes tendered for exchange signs the letter of transmittal, the tendered outstanding notes must be endorsed or accompanied by appropriate powers of attorney, in either case signed exactly as the name or names of the registered holder or holders that appear on the outstanding notes.

If trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity sign the letter of transmittal or any outstanding notes or any power of attorney, these persons should so indicate when signing, and you must submit proper evidence satisfactory to us of those persons’ authority to so act unless we waive this requirement.

By tendering, each holder will represent to us that the person acquiring exchange notes in the exchange offers, whether or not that person is the holder, is obtaining them in the ordinary course of its business, and at the time of the commencement of the exchange offers neither the holder nor, to the knowledge of such holder, that other person receiving exchange notes from such holder has any arrangement or understanding with any person to participate in the distribution (within the meaning of the Securities Act) of the exchange notes issued in the exchange offers in violation of the provisions of the Securities Act. If any holder or any other person receiving exchange notes from such holder is an “affiliate,” as defined under Rule 405 of the Securities Act, of us, or is engaged in or intends to engage in or has an arrangement or understanding with any person to participate in a distribution (within the meaning of the Securities Act) of the notes in violation of the provisions of the Securities Act to be acquired in the exchange offers, the holder or any other person:

Each broker-dealer who acquired its outstanding notes as a result of market-making activities or other trading activities, and thereafter receives exchange notes issued for its own account in the exchange offers, must acknowledge that it will comply with the applicable provisions of the Securities Act (including, but not limited to, delivering this prospectus in connection with any resale of such exchange notes issued in the exchange offers). The letter of transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. See “Plan of Distribution” for a discussion of the exchange and resale obligations of broker-dealers.

Acceptance of Outstanding Notes for Exchange; Delivery of Exchange Notes Issued in the Exchange Offers

Upon satisfaction or waiver of all the conditions to the exchange offers, we will accept, promptly after the expiration date, all outstanding notes properly tendered and will issue exchange notes registered under the Securities Act in exchange for the tendered outstanding notes. For purposes of the exchange offers, we shall be deemed to have accepted properly tendered outstanding notes for exchange when, as and if we have given oral or written notice to the exchange agent, with written confirmation of any oral notice to be given promptly thereafter, and complied with the applicable provisions of the registration rights agreements. See “—Conditions to the Exchange Offers” for a discussion of the conditions that must be satisfied before we accept any outstanding notes for exchange.

For each outstanding note accepted for exchange, the holder will receive an exchange note registered under the Securities Act having a principal amount equal to that of the surrendered outstanding note. Registered holders of exchange notes issued in the exchange offers on the relevant record date for the first interest payment date following the consummation of the exchange offers will receive interest accruing from the most recent date to which interest has been paid or, if no interest has been paid, from the issue date of the outstanding notes. Holders of exchange notes will not receive any payment in respect of accrued interest on outstanding notes otherwise payable on any interest payment date, the record date for which occurs on or after the consummation of the exchange offers. Under the registration rights agreements, we may be required to make payments of additional interest to the holders of the outstanding notes under circumstances relating to the timing of the exchange offers.

In all cases, we will issue exchange notes for outstanding notes that are accepted for exchange only after the exchange agent timely receives:

If for any reason set forth in the terms and conditions of the exchange offers we do not accept any tendered outstanding notes, or if a holder submits outstanding notes for a greater principal amount than the holder desires to exchange, we will return such unaccepted or nonexchanged notes without cost to the tendering holder. In the case of outstanding notes tendered by book-entry transfer into the exchange agent’s account DTC, Euroclear or Clearstream, the nonexchanged notes will be credited to an account maintained with DTC, Euroclear or Clearstream. We will return the outstanding notes or have them credited to DTC, Euroclear or Clearstream accounts, as appropriate, promptly after the expiration or termination of the exchange offers.

The participant should transmit its acceptance to DTC, Euroclear or Clearstream, as the case may be, on or prior to the expiration date or comply with the guaranteed delivery procedures described below. DTC, Euroclear or Clearstream, as the case may be, will verify the acceptance and then send to the exchange agent confirmation of the book-entry transfer. The confirmation of the book-entry transfer will be deemed to include an agent’s message confirming that DTC, Euroclear or Clearstream, as the case may be, has received an express acknowledgment from the participant that the participant has received and agrees to be bound by the letter of transmittal and that we may enforce the letter of transmittal against such participant. Delivery ofexchange notes issued in the exchange offers may be effected through book-entry transfer at DTC, Euroclear or Clearstream, as the case may be. However, the letter of transmittal or facsimile thereof or an agent’s message, with any required signature guarantees and any other required documents, must:

DTC’s ATOP program is the only method of processing exchange offers through DTC. To accept exchange offers through ATOP, participants in DTC must send electronic instructions to DTC through DTC’s communication system. In addition, such tendering participants should deliver a copy of the letter of transmittal to the exchange agent unless an agent’s message is transmitted in lieu thereof. DTC is obligated to communicate those electronic instructions to the exchange agent through an agent’s message. Any instruction through ATOP, such as an agent’s message, is at your risk and such instruction will be deemed made only when actually received by the exchange agent.

In order for an acceptance of exchange offers through ATOP to be valid, an agent’s message must be transmitted to and received by the exchange agent prior to the expiration date, or the guaranteed delivery procedures described below must be complied with. Delivery of instructions to DTC does not constitute delivery to the exchange agent.

You may withdraw tenders of your outstanding notes at any time prior to the expiration of the exchange offers.

For a withdrawal to be effective, you must send a written notice of withdrawal to the exchange agent at the address set forth below under “—Exchange Agent.” Any such notice of withdrawal must:

If certificates for outstanding notes have been delivered or otherwise identified to the exchange agent, then, prior to the release of such certificates, the withdrawing holder must also submit the serial numbers of the particular certificates to be withdrawn and signed notice of withdrawal with signatures guaranteed by an eligible institution unless such holder is an eligible institution. If outstanding notes have been tendered pursuant to the procedure for book-entry transfer described above, any notice of withdrawal must specify the name and number of the account at DTC, Euroclear or Clearstream, as applicable, to be credited with the withdrawn notes and otherwise comply with the procedures of such facility.

We will determine all questions as to the validity, form and eligibility (including time of receipt) of notices of withdrawal and our determination will be final and binding on all parties. Any tendered notes so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the exchange offers. Any outstanding notes which have been tendered for exchange but which are not exchanged for any reason will be returned to the holder thereof without cost to such holder. In the case of outstanding notes tendered by book-entry transfer into the exchange agent’s account at DTC, Euroclear or Clearstream, as applicable, the outstanding notes withdrawn will be unlocked with DTC, Euroclear or Clearstream, as applicable, for the outstanding notes. The outstanding notes will be returned promptly after withdrawal, rejection of tender or termination of the exchange offers. Properly withdrawn outstanding notes may be re-tendered by following one of the procedures described under “—Procedures for Tendering” above at any time on or prior to 5:00 p.m., New York City time, on the expiration date.

Notwithstanding any other provision of the exchange offers, we may (a) refuse to accept any outstanding notes and return all tendered outstanding notes to the tendering holders, (b) extend the exchange offers and retain all outstanding notes tendered before the expiration of the exchange offers, subject, however, to the rights of holders to withdraw those outstanding notes, or (c) waive the unsatisfied conditions with respect to the exchange offers and accept all properly tendered outstanding notes that have not been withdrawn, if we determine, in our reasonable judgment, that (i) the exchange offers violate applicable law, any applicable interpretation of the staff of the SEC; (ii) an action or proceeding shall have been instituted or threatened in any court or by any

governmental agency which might materially impair our ability to proceed with the exchange offers or a material adverse development shall have occurred in any existing action or proceeding with respect to us; or (iii) all governmental approvals that we deem necessary for the consummation of the exchange offers have not been obtained.

The foregoing conditions are for our sole benefit and may be asserted by us regardless of the circumstances giving rise to any such condition or may be waived by us in whole or in part at any time and from time to time. The failure by us at any time to exercise any of the foregoing rights shall not be deemed a waiver of any of those rights and each of those rights shall be deemed an ongoing right which may be asserted at any time and from time to time.

In addition, we will not accept for exchange any outstanding notes tendered, and no exchange notes will be issued in exchange for those outstanding notes, if at such time any stop order shall be threatened or in effect with respect to the registration statement of which this prospectus constitutes a part or the qualification of the indenture under the Trust Indenture Act of 1939. In any of those events we are required to use every reasonable effort to obtain the withdrawal of any stop order at the earliest possible time.

Holders who desire to tender their outstanding notes in exchange for exchange notes registered under the Securities Act should allow sufficient time to ensure timely delivery. Neither the exchange agent nor we are under any duty to give notification of defects or irregularities with respect to the tenders of outstanding notes for exchange.

Outstanding notes that are not tendered or are tendered but not accepted will, following the consummation of the exchange offers, continue to accrue interest and to be subject to the provisions in the respective indenture regarding the transfer and exchange of the outstanding notes and the existing restrictions on transfer set forth in the legend on the outstanding notes and in the offering memorandum relating to the outstanding notes. After completion of these exchange offers, we will have no further obligation to provide for the registration under the Securities Act of those outstanding notes except in limited circumstances with respect to specific types of holders of outstanding notes and we do not intend to register the outstanding notes under the Securities Act. In general, outstanding notes, unless registered under the Securities Act, may not be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws.

All executed letters of transmittal should be directed to the exchange agent. The Bank of New York has been appointed as exchange agent for the exchange offers. Questions, requests for assistance and requests for additional copies of this prospectus or of the letter of transmittal should be directed to the exchange agent addressed as follows:

We will not make any payments to brokers, dealers or others soliciting acceptances of the exchange offers. The estimated cash expenses to be incurred in connection with the exchange offers will be paid by us and will include fees and expenses of the exchange agent, accounting, legal, printing and related fees and expenses.

We will record the exchange notes at the same carrying value as the outstanding notes, as reflected in our accounting records on the date of the exchange. Accordingly, we will not recognize any gain or loss for accounting purposes as the terms of the exchange notes are substantially identical to those of the outstanding notes. The expenses of the exchange offers will be amortized over the terms of the exchange notes.

Holders who tender their outstanding notes for exchange will not be obligated to pay any transfer taxes in connection with that tender or exchange, except that holders who instruct us to register exchange notes in the name of, or request that outstanding notes not tendered or not accepted in the exchange offers be returned to, a person other than the registered tendering holder will be responsible for the payment of any applicable transfer tax on those outstanding notes.

On November 29, 2007, we, then known as Atom Intermediate Holdings Inc., entered into an Arrangement Agreement with Axcan Pharma Inc., or Axcan Pharma, pursuant to which we agreed to, through an indirect wholly-owned subsidiary, acquire all of the outstanding common stock of Axcan Pharma and enter into other various transactions in accordance with the Plan of Arrangement, collectively referred to in this prospectus as the Arrangement.

At a special meeting of Axcan’s shareholders on January 25, 2008, the holders of more than 99% of the outstanding Common Shares voted on a special resolution to approve the Arrangement. On January 28, 2008, the Superior Court of Quebec issued a final order approving the Arrangement.

The Arrangement was financed through the proceeds from the initial offering of the outstanding secured notes, initial borrowings under our new $175.0 million senior secured term loan facility and new $115.0 million senior secured revolving credit facility, collectively our new senior secured credit facilities, and our senior unsecured bridge facility, equity investments funded by direct and indirect equity investments from the Sponsor Funds, the Co-Investors and our cash on hand. The closing of the offering of the senior secured notes, the new senior secured credit facilities and the senior unsecured bridge facility occurred contemporaneously with the closing of the Arrangement on February 25, 2008. We refer to the Arrangement, the closing of the transactions relating to the Arrangement, and our payment of any fees and expenses related to the Arrangement and transactions collectively as the “February 2008 Transactions”.

On May 6, 2008, we completed our offering of $235.0 million of the outstanding senior notes. The net proceeds from this offering, along with our cash on hand, were used to repay in full our senior unsecured bridge facility. We refer to this offering of our outstanding senior notes, along with the related use of proceeds, as the “Refinancing” and collectively with the February 2008 Transactions, as the “Transactions”.

Subsequent to the February 2008 Transactions, we became an indirect wholly-owned subsidiary of Axcan Holdings Inc., or Holdings, an entity controlled by the Sponsor Funds and the Co-Investors, and Axcan Pharma became our indirect wholly-owned subsidiary. The following chart illustrates our ownership and corporate structure after giving effect to the Transactions.

The exchange offers are intended to satisfy certain of our obligations under the registration rights agreements. We will not receive any proceeds from the issuance of the exchange notes in the exchange offers. In exchange for each of the exchange notes, we will receive outstanding notes in like principal amount. We will retire or cancel all of the outstanding notes tendered in the exchange offers. Accordingly, issuance of the exchange notes will not result in any change in our capitalization.

The following table sets forth our cash, cash equivalents and investments and capitalization as of June 30, 2008. You should read this table in conjunction with “Use of Proceeds,” “The Transactions,” “Unaudited Pro Forma Condensed Consolidated Financial Statements,” “Selected Historical Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Description of Other Indebtedness” and our consolidated financial statements and the related notes herein.

The following table presents our selected historical consolidated financial and other data as of September 30, 2006 and 2007 and for each of the years in the three-year period ended September 30, 2007, which have been derived from, and should be read in conjunction with, our audited consolidated financial statements included elsewhere in this prospectus. The selected historical consolidated financial and other data as of September 30, 2003, 2004 and 2005 and for the years ended September 30, 2003 and 2004 have been derived from our audited consolidated financial statements not included in this prospectus. The unaudited summary historical financial information as of and for the nine months ended June 30, 2007 and as of June 30, 2008 and for the period from October 1, 2007 through February 25, 2008 and for the period from February 26, 2008 to June 30, 2008 are derived from, and should be read in conjunction with, our unaudited condensed consolidated financial statements included elsewhere in this prospectus.

As part of the February 2008 Transactions, we, through an indirect wholly-owned subsidiary, purchased all of the outstanding common stock of Axcan Pharma Inc. on February 25, 2008. Prior to the February 2008 Transactions, Axcan Intermediate Holdings Inc. had no independent operations or assets. Accordingly, our financial information in the table below for the nine months ended June 30, 2008 is presented separately for the period prior to the completion of the February 2008 Transactions (from October 1, 2007 through February 25, 2008, the “Predecessor” or “Predecessor Period”) and the period after the completion of the February 2008 Transactions (from February 26, 2008 through June 30, 2008, the “Successor” or “Successor Period”), which relate to the accounting periods preceding and succeeding the completion of the February 2008 Transactions. The financial information presented for the Predecessor is the financial information for Axcan Pharma Inc. and its consolidated subsidiaries and the financial information presented for the Successor is the financial information for Axcan Intermediate Holdings Inc. and its consolidated subsidiaries. The summary financial information as of June 30, 2008 and for the Successor Period are not comparable to the summary financial information as of and for the nine months ended June 30, 2007 because of the new basis of accounting resulting from the February 2008 Transactions. Our results of operations for the Predecessor Period and the Successor Period should not be considered representative of our future results of operations.

Please also refer to “Unaudited Pro Forma Condensed Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and notes thereto included elsewhere in this prospectus.

The following unaudited pro forma condensed consolidated statements of operations have been developed by applying pro forma adjustments to our audited statement of operations for the fiscal year ended September 30, 2007 and our unaudited interim consolidated financial statements for the period from October 1, 2007 through February 25, 2008, the Predecessor Period, and for the period from February 26, 2008 to June 30, 2008, the Successor Period, appearing elsewhere in this prospectus. The unaudited pro forma condensed consolidated statements of operations for the fiscal year ended September 30, 2007 and the nine months ended June 30, 2008 gives effect to the Transactions as if they had occurred on October 1, 2006. Assumptions underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with these unaudited pro forma condensed consolidated statements of operations.

The unaudited pro forma adjustments are based upon available information and certain assumptions that we believe are reasonable under the circumstances. The unaudited pro forma condensed consolidated financial data is presented for informational purposes only. The unaudited pro forma condensed consolidated financial data does not purport to represent what our results of operations would have been had the Transactions actually occurred on the dates indicated and they do not purport to project our results of operations for any future period. The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the information contained in the “The Transactions,” “Selected Historical Consolidated Financial and Other Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our historical audited and unaudited consolidated financial statements and related notes thereto appearing elsewhere in this prospectus. All pro forma adjustments and their underlying assumptions are described more fully in the notes to our unaudited pro forma condensed consolidated statements of operations.

The Transactions have been accounted for using the purchase accounting method pursuant to SFAS 141, “Business Combinations.” The pro forma information presented, including allocations of the purchase price, is based on preliminary estimates of the fair values of assets acquired and liabilities assumed, available information and assumptions and may be revised as additional information becomes available.

The unaudited pro forma condensed consolidated statements of operations do not reflect non-recurring charges that have been or will be incurred in connection with the Transactions, including (i) the write-off of $272.4 million acquired in-process research and development, (ii) compensation charges of $6.5 million for the acceleration of vesting of stock options and restricted stock units, (iii) certain non-recurring advisory and legal costs incurred in connection with the Transactions of $23.5 million, (iv) inventory write-up in purchase accounting of $24.6 million and associated effect on cost of goods sold, and (v) costs of $3.9 million associated with change-in-control provisions of employment contracts. These amounts do not include any consideration of potentially associated tax effects.

See Accompanying Notes to Unaudited Pro Forma Condensed Consolidated Statements of Operations

See Accompanying Notes to Unaudited Pro Forma Condensed Consolidated Statements of Operations.

Notes to Unaudited Pro Forma Condensed Consolidated Statements of Operations

The unaudited pro forma condensed consolidated statements of operations reflect the following pro forma adjustments as further described below (all $ in thousands):

(A) Represents the pro forma adjustment to depreciation and amortization due to the purchase accounting and the resultant step-up in the values of certain previously recorded intangible assets in the predecessor’s financial statements and the recognition of additional intangible assets, primarily trademarks and product rights. Such intangible assets are amortized in a straight-line manner over their estimated useful life of five to twenty years, with a weighted average useful life of 17 years for trademarks and 12 years for product rights:

(B) Represents the elimination of expenses that have been incurred in historical periods in connection with the Transactions that will not have a continuing impact, including:

(C) Represents pro forma interest expense resulting from our new capital structure upon consummation of the Transactions, using an assumed current three-month LIBOR rate of 2.78% as follows:

The unaudited pro forma condensed statements of operations also assume that the conversion of our Convertible Notes occurred on October 1, 2006 instead of in the third quarter of the year ended September 30, 2007.

Absent any interest rate swap agreements mentioned in footnote (3) to the table in Note (C) above, a change of 1/8% in floating rates would affect our annual interest expense on the senior secured borrowings by approximately $0.2 million.

(D) Reflects the annual monitoring fee to be paid to the Sponsor in accordance with the management services agreement to be entered into on the closing date of the February 2008 Transactions. See “Certain Relationships and Related Party Transactions.”

(E) Reflects an adjustment to eliminate interest income that would not have been earned due to lower pro forma cash and cash equivalents. We used all our cash and cash equivalents, except a minimal amount required for operating purposes of approximately $59 million, to finance a portion of the purchase price.

(F) Represents incremental stock-based compensation cost incurred as a result of the implementation of the following two new incentive programs associated with the February 2008 Transactions:

On April 15, 2008, our indirect parent company, Axcan Holdings Inc., or Holdings, adopted the Axcan Holdings Inc. Management Equity Incentive Plan, or the Management Equity Incentive Plan, under which Holdings is able to grant up to 3,833,307 options to purchase shares of common stock of Holdings to certain of our employees and directors. As of June 30, 2008, 3,313,000 options were outstanding under the Management Equity Incentive Plan. Option awards granted under the Management Equity Incentive Plan are generally comprised of: 1) 50% time-based options which generally vest rateably over 5 years with an exercise price equal to the fair value of common stock of Holdings on the grant date, 2) 25% premium options with an exercise price initially equal to the fair value of common stock of Holdings on the grant date and increasing by 10% each year, and generally vesting rateably over 5 years, and 3) 25% performance-based options with a fixed exercise price equal to the fair value of common stock of Holdings on the grant date, which vest upon the occurrence of a liquidity event (as defined under the terms of the Management Equity Incentive Plan) based on the achievement of return targets calculated based on the return received by majority shareholders from the liquidity event. While the time-based options and the premium options will be expensed over the requisite service period, the performance-based options will not be expensed until the occurrence of the liquidity event and accordingly no expense is reflected in these unaudited, condensed pro forma statements of operations for such performance-based options.

The fair value of the awards was determined pursuant to an option pricing model and include the following assumptions:

On April 15, 2008, Holdings also approved a Restricted Stock Unit grant agreement and a Penny Option grant agreement (collectively, the “Equity Grant Agreements”), pursuant to which a one-time grant of an equity-based award of either restricted stock units (“RSUs”) or options to purchase shares of common stock of Holdings for a penny was made to certain employees of the Company. The total number of RSUs and penny options granted as of June 30, 2008 was 1,343,348, with a fair value of $10.00 each. The recipients have the option to elect to have an amount withheld that is in excess of the required minimum withholding under the current tax law and, as a result, the special grants will be accounted for as liability awards. One-third of the granted RSUs and penny options vested immediately on their respective date of grant and the remainder shall vest in equal portions on August 25, 2009 and 2010. The value of each RSU and penny option granted under the Equity Grant Agreements is always equal to the fair value of one common share of Holdings.

The effective tax rate differs significantly from the statutory rate due to the relatively large impact of actual permanent differences on relatively small pro forma income before tax and the expected impact of foreign withholding taxes upon repatriation of foreign earnings and the accounting benefit expected to be derived from certain intragroup agreements. These pro forma statements do not take into consideration the potential effects of anticipated changes in the U.S.–Canadian tax treaty and the potential risk of re-characterization as equity of certain intragroup agreements in case of insufficient cash flows to service such agreements.

You should read the following discussion of our results of operations and financial condition with the “Unaudited Pro Forma Consolidated Financial Data,” “Selected Historical Consolidated Financial Data” and the historical audited and unaudited consolidated financial statements and related notes included elsewhere in this prospectus. The results of operations for the nine months ended June 30, 2008 includes the results of operations for the period from October 1, 2007 to February 25, 2008 of the Predecessor and the results of operations for the period from February 26 to June 30, 2008 of the Successor on a combined basis. As discussed in further detail below, although this combined basis does not comply with U.S. GAAP, we believe it provides a more meaningful method of comparison. This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the “Risk Factors” section of this prospectus. Actual results may differ materially from those contained in any forward-looking statements.

We are a leading specialty pharmaceutical company concentrating in the field of gastroenterology, with operations in the U.S., Canada and the EU. We market and sell pharmaceutical products used in the treatment of a variety of gastrointestinal diseases and disorders. Our main product lines include ULTRASE, PANZYTRAT and VIOKASE, which are pancreatic enzyme products for the treatment of exocrine pancreatic insufficiency; URSO / URSO 250, URSO FORTE / URSO DS, and DELURSAN, which are ursodiol products for the treatment of certain cholestatic liver diseases; SALOFALK and CANASA, which are mesalamine-based products for the treatment of certain inflammatory bowel diseases; and CARAFATE and SULCRATE, which are sucralfate products for the treatment of gastric and duodenal ulcers. We also have a number of product candidates in later phases of clinical development.

Our revenue in the U.S. and Canada has historically been and continues to be principally derived from sales of pharmaceutical products to large pharmaceutical wholesalers and large pharmacy chains. We utilize a “pull-through” marketing approach that is typical for pharmaceutical companies. According to this approach, our sales representatives actively promote our products by demonstrating the features and benefits of our products to gastroenterologists, who may write their patients prescriptions for our products. The patients, in turn, take the prescriptions to pharmacies to be filled. The pharmacies then place orders with the wholesalers or, in the case of large pharmacy chains, their distribution centres, to which we sell our products. Our revenue in the EU and other markets has historically been and continues to be principally derived from sales of pharmaceutical products to institutional buyers and pharmacies through a network of distributors. The level of patient and physician acceptance of our products, as well as the availability of similar therapies intended for different indications, which may be less expensive but also may be less effective than some of our products, impact our revenues by driving the level and timing of prescriptions for our products. We expect results in fiscal year 2008 to decline compared to fiscal year 2007 as a result of competition against URSO due to the expiration of regulatory protection.

Our expenses are comprised primarily of selling and administrative expenses (including marketing expenses), cost of goods sold (including royalty payments to those companies from which we license some of our commercialized products), research and development expenses and depreciation and amortization.

Our operating revenues are primarily affected by three factors: the level of acceptance of our products by gastroenterologists and their patients; our ability to convince practitioners to use our products for approved indications; and wholesaler buying patterns.

Historically, wholesalers’ business models in the United States were dependent on drug price inflation. Their profitability and gross margins were directly tied to the speculative purchasing of pharmaceutical products

at pre-increase prices, and the selling of their product inventory to their customers at the increased price. This inventory price arbitrage accounted for a predominant portion of wholesalers’ compensation for their distribution services and had a dramatic effect on wholesaler buying patterns, as they invested in inventories in anticipation of generating higher gross margins from manufacturer price increases. Since fiscal year 2005, pharmaceutical manufacturers have not been increasing drug prices as frequently, and the percentage increases have been lower. For these and other reasons, some wholesalers have changed their business model to a fee-for-service arrangement, whereby manufacturers pay wholesalers a fee for inventory management and other services. These fees typically are a percentage of the wholesaler’s purchases from the manufacturer or a fixed charge per item or per unit. The fee-for-service approach results in wholesalers’ compensation being more stable, and volume-based as opposed to price-increase based.

As a result of the move to a fee-for-service business model, many wholesalers are no longer investing in inventory ahead of anticipated price increases and are reducing their inventories from their historical levels. Under the new model, the consequence of manufacturers using wholesalers is that they now realize the benefit of price increases more rapidly in return for paying wholesalers for the services they provide, on a fee-for-service basis. This change in wholesalers’ business models has affected our revenue since fiscal year 2005, and the resulting DSA fees are deducted from gross sales. Currently, only one such DSA is in place and we expect to enter into further DSAs with our other wholesalers.

On November 29, 2007, we entered into an Arrangement Agreement with Axcan Pharma Inc., or Axcan Pharma, pursuant to which we agreed to, through an indirect wholly-owned subsidiary, acquire all of the common stock of Axcan Pharma and enter into various other transactions in accordance with the Plan of Arrangement. Collectively, this acquisition and these transactions are referred to in this prospectus as the “Arrangement”.

At a special meeting of Axcan Pharma’s shareholders on January 25, 2008, the holders of more than 99% of Axcan Pharma’s outstanding common stock voted on a special resolution to approve the Arrangement. On January 28, 2008, the Superior Court of Quebec issued a final order approving the Arrangement. The Arrangement closed on February 25, 2008 and at such time, each outstanding share of Axcan Pharma common stock was transferred to us in exchange for a payment of $23.35 per share, or the offer price, without interest and less any required withholding taxes. In addition, all granted and outstanding options to purchase common stock of Axcan Pharma, other than those options held by us or any of our affiliates, were vested, transferred by the holder of such option to Axcan Pharma and cancelled in exchange for an amount in cash equal to the excess, if any, of the offer price over the applicable option exercise price for each share of common stock subject to such option, less any required withholding taxes and all vested and unvested deferred stock units, or DSUs, and restricted stock units, or RSUs, issued under any and all of Axcan Pharma’s existing stock option plans were, without any further action by the holders thereof, vested, cancelled and terminated. The holders of such DSUs and RSUs received the offer price, less any required withholding taxes, for each DSU and RSU formerly held.

The Arrangement was financed through the proceeds from the initial offering of the outstanding secured notes, initial borrowings under our new senior secured credit facilities and our senior unsecured bridge facility, equity investments funded by the Sponsor Funds, the Co-Investors and Axcan Pharma’s cash on hand. The closing of the offering of the outstanding secured notes, the new senior secured credit facilities and the senior unsecured bridge facility occurred substantially concurrently with the closing of the Arrangement on February 25, 2008. We refer to the Arrangement, the closing of the transactions relating to the Arrangement, and our payment of any fees and expenses related to the Arrangement and such transactions collectively as the “February 2008 Transactions”. Our new senior secured credit facilities and our secured notes are described in more detail under “Description of Other Indebtedness” and “Description of Exchange Secured Notes”.

Subsequent to the February 2008 Transactions, we are an indirect wholly-owned subsidiary of Axcan Holdings Inc., or Holdings, and Axcan Pharma is our indirect wholly-owned subsidiary.

In connection with the Transactions, we incurred significant indebtedness. See “—Liquidity and Capital Resources”. For a more complete description of the Transactions, see the sections entitled “The Transactions,” “Use of Proceeds,” “Capitalization,” “Unaudited Pro Forma Condensed Consolidated Financial Statements,” “Description of Other Indebtedness,” “Description of Exchange Secured Notes” and “Description of Exchange Senior Notes”.

Presentation of Financial Information for Nine Month Period Ended June 30, 2008

In this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” when financial information for the nine-month period ended June 30, 2008 is presented, including the results of operations, this information is presented as the mathematical combination of the relevant financial information of the Successor (from October 1, 2007 to February 25, 2008) and the Predecessor (from February 26, 2008 to June 30, 2008) for such period. This mathematical combination is presented because we believe it assists in a reader’s analysis of our fiscal 2008 results as compared to our fiscal year 2007 results in comparable time periods. However, this approach is not consistent with U.S. GAAP and may yield results that are not strictly comparable on a period-to-period basis primarily due to the impact of purchase accounting entries recorded as a result of the February 2008 Transactions and the lack of substantial debt outstanding of the Predecessor as compared to the Successor. In addition, the “combined” financial information has not been prepared as pro forma information and does not reflect all of the adjustments that would be required if the results for the period were reflected on a pro forma basis. Furthermore, this financial information may not reflect the actual financial results we would have achieved absent the February 2008 Transactions and may not be predictive of future financial results.

For the nine-month period ended June 30, 2008, revenue was $285.3 million ($256.5 million in 2007), operating loss was $259.3 million ($83.7 million of operating income in 2007) and net loss was $275.4 million ($54.7 million of net income in 2007). For the nine-month period ended June 30, 2008, our net income was largely affected by charges related to the Arrangement, including for acquired in-process research amounting to $272.4 million, discussed in greater detail in the following pages. Revenue from sales of our products in the United States was $206.1 million (72.2% of total revenue) for the nine-month period ended June 30, 2008, compared to $181.9 million (70.9% of total revenue) for the corresponding period of fiscal year 2007. In Canada, revenue was $27.2 million (9.5% of total revenue) for the nine-month period ended June 30, 2008, compared to $29.7 million (11.6% of total revenue) for the corresponding period of fiscal year 2007. In the European Union, revenue was $51.7 million (18.1% of total revenue) for the nine-month period ended June 30, 2008, compared to $44.6 million (17.4% of total revenue) for the corresponding period of fiscal year 2007.

The following table sets forth, for the periods indicated, the percentage of revenue represented by items in our consolidated statements of operations:

Nine-Month Period ended June 30, 2008 compared to Nine-Month Period ended June 30, 2007

For the nine-month period ended June 30, 2008, revenue was $285.3 million compared to $256.5 million for the corresponding period of the preceding fiscal year, an increase of 11.2%.

This increase in revenue primarily resulted from higher sales in the United States, which amounted to $206.1 million for the nine-month period ended June 30, 2008, compared to $181.9 million for the corresponding period of preceding fiscal year, an increase of 13.3%. During the nine-month period ended June 30, 2008, end-customer prescription demand resulted in positive growth for most of our products sold in the United States, which in turn resulted in increased sales to our major wholesalers. We do not believe that generic versions of URSO 250 or URSO FORTE have as of yet been introduced in the United States and therefore, our sales of URSO 250 and URSO FORTE in the United States were not adversely affected by generic competition during the nine-month period ended June 30, 2008.

Sales in the European Union increased 15.9%, from $44.6 million to $51.7 million for the nine-month period ended June 30, 2008 when compared to respective corresponding period of the preceding fiscal year. This growth in sales is primarily the result of increases in sales of DELURSAN and LACTEOL as well as the effect of currency conversion. For the nine-month period ended June 30, 2008, we reported sales of $15.7 million for LACTEOL, a 18.0% increase (a 4.6% increase when presented in local currency) from the nine-month period ended June 30, 2007, including $9.3 million (an increase from $8.2 million in the nine-month period ended June 30, 2007) in sales outside of France.

Sales in Canada decreased 8.4% from $29.7 million for the nine-month period ended June 30, 2007, to $27.2 million for the nine-month period ended June 30, 2008. Lower sales of URSO for the first six months of the fiscal year, following the launch of generic URSO products in the second half of fiscal year 2007 was the main cause of this decrease in Canadian sales.

Revenue is stated net of deductions for product returns, chargebacks, contract rebates, DSA fees, discounts and other allowances. The following table summarizes our gross-to-net revenue adjustments for each significant category:

Product returns, chargebacks, contract rebates, DSA fees, discounts and other allowances totalled $47.3 million (14.2% of gross revenue) for the nine-month period ended June 30, 2008, and $46.3 million (15.3% of gross revenue) for the nine-month period ended June 30, 2007.

The decrease in total deductions as a percentage of gross revenue for the nine-month period ended June 30, 2008, was primarily due to a decrease in product returns, which is in line with the decline in wholesaler inventory levels which occurred during the first half of fiscal year 2007 and the decline in DSA fees due to product price increases and their related credits and other changes in related assumptions.

Cost of goods sold consists principally of the costs of raw materials, royalties and manufacturing costs. We outsource most of our manufacturing requirements. For the nine-month period ended June 30, 2008, cost of goods sold increased $30.9 million (50.6%) to $92.0 million from $61.1 million for the corresponding period of the preceding fiscal year. As a percentage of revenue, cost of goods sold for the nine-month period ended June 30, 2008, increased as compared to the corresponding period of the preceding fiscal year from 23.8% to 32.3%. As part of the purchase price allocation for the Arrangement, the book value of inventory acquired was stepped up to fair value by $22.7 million as of February 25, 2008. The stepped-up value is recorded as charge to cost of goods sold as acquired inventory is sold until acquired inventory is sold off. During the nine-month period ended June 30, 2008, $22.7 million of this stepped-up value was expensed. Without this additional charge, cost of goods sold as a percentage of revenue would have been 24.3% for the nine-month period ended June 30, 2008, compared to 23.8% for the same period of the preceding fiscal year, which would represent an increase of 0.5% respectively.

This increase was mainly due to the fact that an increase in sales of products with a higher margin occurred in the third quarter of fiscal year 2007, thus resulting in an unusually low cost of goods sold as a percentage of revenue in the quarter. However, the cost of goods sold as a percentage of revenue, without the additional charge, decreased for the three-month period ended June 30, 2008, compared to the three-month period ended March 30, 2008, from 24.9% to 23.8%.

Selling and administrative expenses consist principally of salaries and other costs associated with our sales force and our marketing activities. For the nine-month period ended June 30, 2008, selling and administrative expenses increased $56.3 million (76.5%) to $129.9 million from $73.6 million for the corresponding period of the preceding fiscal year. The increase in selling and administrative expenses for the nine-month period ended June 30, 2008, was largely attributable to the portion of investment banking and other professional fees charged to operations, amounting to $35.5 million, and the selling and administrative portion of stock-based compensation expenses incurred in relation to our new long-term equity incentive plan, amounting to $6.1 million, as well as higher expenses linked to increased sales performance and the timing of certain marketing expenses.

Research and development expenses consist principally of fees paid to outside parties that we use to conduct clinical studies and to submit governmental approval applications on our behalf, as well as the salaries and benefits paid to our personnel involved in research and development projects. For the nine-month period ended June 30, 2008, research and development expenses decreased $2.3 million (10.7%) to $19.1 million, from $21.4 million for the corresponding period of the preceding fiscal year. The decrease for this period was mainly due to the termination of the development of ITAX in fiscal year 2007 and lower expenses for clinical studies related to our pancreatic enzyme products, compared to the corresponding period of the previous fiscal year. The decrease for the nine-month period ended June 30, 2008, was partly offset by the increase caused by the research and development portion of stock-based compensation expense incurred in relation to the Arrangement, amounting to $0.9 million.

The acquired in-process research of $272.4 million for the nine-month period ended June 30, 2008, relates to the intangible assets acquired in the February 2008 Transactions. The acquired in-process research represents the estimated fair value of acquired in-process R&D projects that had not yet reached technological feasibility and had no alternative future use. Accordingly, this amount was immediately expensed upon the acquisition date. The value assigned to purchased in-process technology is mainly attributable to the following projects: CANASA MAX-002, pancreatic enzymes, PYLERA in the European Union, AGI-010 and Cx401.

Depreciation and amortization consists principally of the amortization of intangible assets with a finite life. Intangible assets include trademarks, trademark licenses and manufacturing rights. For the nine-month period ended June 30, 2008, depreciation and amortization increased $14.5 million (86.8%) to $31.2 million from $16.7 million for the corresponding period of the preceding fiscal year. These increases were due to the amortization of the stepped-up value of the intangible assets and the impact of the reclassification of intangible assets with an indefinite life to intangible assets with a finite life, following the February 2008 Transactions, and the amortization of the intangible assets associated with PYLERA, which was launched in May 2007.

Financial expenses consist principally of interest and fees paid in connection with funds borrowed for acquisitions. For the nine-month period ended June 30, 2008, financial expenses increased $19.7 million to $24.4 million from $4.7 million for the corresponding period of the preceding fiscal year. These increases were mainly due to the increase in interest on long-term debt and in amortization of deferred debt issue expenses on the long-term debt incurred to fund the Arrangement. Financial expenses for the prior fiscal year were mainly related to the $125.0 million 4.25% convertible subordinated notes, due April 15, 2008, or the Convertible Notes, which were converted into common shares of Axcan Pharma in June 2007.

For the nine-month period ended June 30, 2008, total interest income decreased $1.7 million (22.7%) to $5.8 million from $7.5 million for the corresponding period of the preceding fiscal year. This decrease was mainly due to the decline in cash, cash equivalents and short-term investments in the last four months of this nine-month period as a result of the use of excess liquidities to fund the February 2008 Transactions.

For the nine-month period ended June 30, 2008, income tax benefit amounted to $1.8 million compared to an expense of $30.8 million for the corresponding period of the preceding fiscal year. The effective tax rates were 0.6% for the nine-month period ended June 30, 2008, compared to 36.0% for the nine-month period ended June 30, 2007. The effective tax rate for the nine-month period ended June 30, 2008, was affected by a number of elements, the most important being the non-deductible nature of the acquired in-process research expense amounting to $272.4 million resulting from the February 2008 Transactions. If the effect of the acquired in-process research were removed, the effective tax rate would have been 37.5% for the nine-month period ended June 30, 2008.

Net loss was $275.4 million for the nine-month period ended June 30, 2008, compared to $54.7 million of net income for the corresponding period of the preceding year. The change in net income for the nine-month period ended June 30, 2008, resulted mainly from an increase in operating expenses of $371.8 million, largely affected by expenses related to the February 2008 Transactions, including the acquired in-process research expense of $272.4 million, and an increase in financial expenses of $19.7 million, which were partly offset by an increase in revenue of $28.8 million, a decrease in interest income of $1.7 million and a decrease in income taxes of $29.0 million.

The following table summarizes balance sheet information as at June 30, 2008, compared to September 30, 2007:


		Page

WHERE YOU CAN FIND MORE INFORMATION		ii

FORWARD-LOOKING STATEMENTS		ii

MARKET AND INDUSTRY DATA		iii

OTHER DATA		iii

TERMS USED IN THIS PROSPECTUS		iii

SUMMARY		1

SUMMARY HISTORICAL CONSOLIDATED AND UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL AND OTHER DATA		18

RISK FACTORS		22

THE EXCHANGE OFFERS		49

THE TRANSACTIONS		58

USE OF PROCEEDS		61

CAPITALIZATION		62

SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA		63

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA		66

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		72

BUSINESS		104

MANAGEMENT		130

EXECUTIVE COMPENSATION		134

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT		161

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS		163

DESCRIPTION OF OTHER INDEBTEDNESS		165

DESCRIPTION OF EXCHANGE SECURED NOTES		168

DESCRIPTION OF EXCHANGE SENIOR NOTES		234

BOOK ENTRY, DELIVERY AND FORM		297

CERTAIN MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES		299

PLAN OF DISTRIBUTION		304

LEGAL MATTERS		304

EXPERTS		304

INDEX TO FINANCIAL STATEMENTS		F-1


($ in millions)
Debt:
Senior secured term loan facility⁽¹⁾	$	166.2
Senior secured revolving credit facility		0
Secured Notes⁽²⁾		225.3
Senior Notes⁽³⁾		232.3
Obligations under capital leases⁽⁴⁾		0.3

Total	$	624.1


By Registered and Certified Mail:	By Overnight Courier or Regular Mail:	By Hand Delivery:
The Bank of New York Mellon Corporate Trust Operations Reorganization Unit 101 Barclay Street—7 East New York, NY 10286 Attn: Randolph Holder	The Bank of New York Mellon Corporate Trust Operations Reorganization Unit 101 Barclay Street—7 East New York, NY 10286 Attn: Randolph Holder	The Bank of New York Mellon Corporate Trust Operations Reorganization Unit 101 Barclay Street—7 East New York, NY 10286 Attn: Randolph Holder

	By Facsimile Transmission:
	(212) 298-1915

	Confirm by Telephone:
	(212) 815-5098


		As of June 30, 2008
		(unaudited) ($ in millions)
Cash and investments⁽¹⁾		59.5


Debt:
New senior secured credit facilities:
Term loan facility⁽²⁾		166.2
Revolving credit facility⁽³⁾		0
Secured notes⁽⁴⁾		225.3
Senior notes⁽⁵⁾		232.3

Existing Indebtedness:
Obligations under capital leases⁽⁶⁾		0.3

Total debt		624.1

Shareholders’ equity⁽⁷⁾		199.9

Total capitalization		824.0


	Fiscal Year Ended September 30, 2007		Nine-Month Period Ended June 30, 2008
Pro forma amortization	$	55,254	$	42,374
Historical amortization		17,138		26,420

Pro forma adjustment	$	38,116	$	15,954


	Historical Axcan Pharma Inc.			Pro Forma Adjustments				Pro Forma Axcan Intermediate Holdings Inc.
	($ in thousands)
Revenue	$	348,947		$	—			$	348,947
Cost of goods sold		83,683			182		(F)		83,865
Selling and administrative expenses		101,273			5,728		(B),(D),(F)		107,001
Research and development expenses		28,655			890		(F)		29,545
Depreciation and amortization		22,494			38,116		(A)		60,610
Acquired in-process research		10,000			—				10,000

Operating income		102,842			(44,916	)			57,926
Financial expenses		4,825			65,292		(C)		70,117
Interest income		(11,367	)		8,565		(E)		(2,802	)
Loss (gain) on foreign currency		2,352			—				2,352

Income (loss) before income taxes		107,032			(118,773	)			(11,741	)
Income tax provision (benefit)		35,567			(56,657	)	(G)		(21,090	)

Net income	$	71,465		$	(62,116	)		$	9,349


	Fiscal Year Ended September 30, 2007			Nine-Month Period Ended June 30, 2008
Secured notes⁽¹⁾	$	21,090		$	15,818
Senior notes⁽²⁾		30,379			22,805
New senior secured credit facilities:
Term loan facility⁽³⁾		10,358			7,356
Revolving credit facility⁽⁴⁾		575			431
Amortization of debt issuance costs⁽⁵⁾		7,502			5,518

Total pro forma interest expense		69,904			51,928

Less: Historical interest expense⁽⁶⁾		(4,612	)		(24,177	)

Pro forma adjustment	$	65,292		$	27,751


	For the nine-month period ended June 30, 2007	For the nine-month period ended June 30, 2008		For the five-month period ended February 25, 2008	For the four-month period ended June 30, 2008
	Predecessor	Non U.S. GAAP Combined Predecessor/ Successor		Predecessor	Successor
(in millions of U.S. dollars)	$	$		$	$
Revenue	256.5	285.3		158.6	126.7
EBITDA⁽¹⁾	99.4	(227.5	)	33.6	(261.1	)
Adjusted EBITDA⁽¹⁾	102.9	119.3		70.1	49.2
Net income (net loss)	54.7	(275.4	)	17.1	(292.5	)


	As at June 30, 2008	As at September 30, 2007
	Successor	Predecessor
(in millions of U.S. dollars)	$	$
Total assets	1,000.6	832.6
Long-term debt	624.1	0.6
Shareholders’ equity	199.9	690.2


	For the nine-month periods ended June 30,
	2008		2007
	%		%
Revenue	100.0		100.0
Cost of goods sold	32.3		23.8
Selling and administrative expenses	45.5		28.7
Research and development expenses	6.7		8.4
Acquired in-process research	95.5		—
Depreciation and amortization	10.9		6.5

	190.9		67.4

Operating income (loss)	(90.9	)	32.6
Financial expenses	8.5		1.8
Interest income	(2.0	)	(2.9	)
Loss (gain) on foreign currency	(0.2	)	0.4

	6.3		(0.7	)

Income (loss) before income taxes	(97.2	)	33.3
Income taxes expense (benefit)	(0.6	)	12.0

Net income (net loss)	(96.6	)	21.3


	For the four-month period ended June 30, 2008		For the five-month period ended February 25, 2008		For the nine-month period ended June 30, 2008		For the nine-month period ended June 30, 2007		Change
	Successor		Predecessor		Non U.S. GAAP Combined Predecessor/ Successor		Predecessor
(in millions of U.S. dollars)	$		$		$		$		$		%
Revenue	126.7		158.6		285.3		256.5		28.8		11.2
Cost of goods sold^(a)	53.3		38.7		92.0		61.1		30.9		50.6
Selling and administrative expenses^(a)	53.7		76.2		129.9		73.6		56.3		76.5
Research and development expenses^(a)	8.8		10.3		19.1		21.4		(2.3	)	(10.7	)
Acquired in-process research	272.4		—		272.4		—		272.4		—
Depreciation and amortization	21.6		9.6		31.2		16.7		14.5		86.8

	409.8		134.8		544.6		172.8		371.8		215.2

Operating income (loss)	(283.1	)	23.8		(259.3	)	83.7		(343.0	)	(409.8	)
Financial expenses	24.1		0.3		24.4		4.7		19.7		419.2
Interest income	(0.4	)	(5.4	)	(5.8	)	(7.5	)	1.7		22.7
Loss (gain) on foreign currency	(0.5	)	(0.2	)	(0.7	)	1.0		(1.7	)	(170.0	)

	23.2		(5.3	)	17.9		(1.8	)	19.7		1,094.4

Income (loss) before income taxes	(306.3	)	29.1		(277.2	)	85.5		(362.7	)	(424.2	)
Income taxes expense (benefit)	(13.8	)	12.0		(1.8	)	30.8		(32.6	)	(105.8	)

Net income (net loss)	(292.5	)	17.1		(275.4	)	54.7		(330.1	)	(603.5	)


	For the nine-month periods ended June 30,
	2008	2007	Change
(in millions of U.S. dollars)	$	$	$		%
Gross revenue	332.6	302.8	29.8		9.8

Gross-to-net revenue adjustments
Product returns	6.4	9.5	(3.1	)	(32.6	)
Chargebacks	14.9	12.1	2.8		23.1
Contract rebates	18.4	16.7	1.7		10.2
DSA fees	1.4	2.7	(1.3	)	(48.1	)
Discounts and other allowances	6.2	5.3	0.9		17.0

Total gross-to-net revenue adjustments	47.3	46.3	1.0		2.2

Net revenue	285.3	256.5	28.8		11.2


	June 30, 2008	September 30, 2007	Change
(in millions of U.S. dollars)	$