11.

Commitments and contingencies:

Litigation Related To ONSOLIS^®

In March 2012, the Company announced that the New Jersey Federal Court granted a stay of further litigation in the patent infringement lawsuit previously filed by MonoSol Rx, LLC (“MonoSol”) against the Company and its ONSOLIS^® commercial partners. The court ordered that the case would be stayed pending resolution by the United States Patent and Trademark Office (“USPTO”) of reexamination proceedings and follows the recent rejection by the USPTO of all claims in all three patents asserted by MonoSol against the Company and its commercial partners for ONSOLIS^®.

In July 2012, a Reexamination Certificate for MonoSol’s ‘292 Patent in its amended form was issued by the USPTO. The USPTO also issued a second Office Action closing prosecution on MonoSol’s ‘588 Patent. The Action rejects all claims as anticipated or obvious for a second time. It also rejects the amended claims proposed by MonoSol as unclear and lacking support. In August 2012, a Reexamination Certificate for MonoSol’s ‘891 Patent in its amended form was issued.

On January 23, 2013, the USPTO issued a Right of Appeal Notice, rejecting all claims of the ‘588 Patent and closing reexamination proceedings. This action confirms that all claims of this patent are also invalid, but unlike ‘292 and ‘891, the USPTO has not found that any amended or narrower claims should be granted. On February 22, 2013, MonoSol filed both a Notice of Appeal to the Board of Patent Appeals and Interferences and a Request for Continuing Examination of the ‘588 Patent. Subsequently, on July 3, 2013, the USPTO denied MonoSol’s February 22, 2013 Request to Continue Examination.

Inter partes reviews, a new USPTO process to review the patentability of one or more claims of patents, was enacted in September, 2012. As such, on June 12, 2013, despite the Company’s previously noted success in the prior ex parte reexaminations for the “292” and “891” patents, the Company availed themselves of this new process and filed requests for inter partes reviews on the narrowed, yet reexamined, patents, the ‘292C1 and ‘891C1 Patents, to challenge their validity and continue to strengthen the Company’s position. This inter partes review process allows the Company to actively participate in the reviews and address any of MonoSol’s arguments and representations made during the review process, which heightens the Company’s ability to invalidate these patents. After reviewing Monosol’s Appeal Brief (filed June 24, 2013) and the Company’s Respondent’s Brief (filed July 24, 2013), the USPTO formally initiated the appeals process with the Examiner’s Answer on August 8, 2013, which affirmed the rejection of all the claims in the ‘588 Patent.

Based on the Company’s original assertion that its proprietary manufacturing process for ONSOLIS^® does not infringe on patents held by MonoSol, and the denial and subsequent narrowing of the claims on the two reissued patents MonoSol has asserted against the Company while the third has had all claims rejected by the USPTO, the Company remains very confident in their original stated position regarding this matter. Thus far the Company has proven that the “original” ‘292 and ‘891patents in light of their reissuance with fewer and narrower claims were indeed invalid and the third and final patent, ‘588, has had all claims rejected and appears to have had a similar fate. Importantly, the Company will continue to defend this case vigorously, and anticipates that MonoSol’s claims against the Company will ultimately be rejected.

Litigation Related To BUNAVAIL^TM

On October 29, 2013, Reckitt Benckiser, Inc. RB Pharmaceuticals Limited, and MonoSol RX, LLC (collectively, the “RB Plaintiffs”) filed an action against the Company relating to the Company’s BUNAVAIL^™ product in the United States District Court for the Eastern District of North Carolina for alleged patent infringement. BUNAVAIL^™ is a proposed treatment for opioid dependence. The RB Plaintiffs claim that the formulation for BUNAVAIL^™, which has never been disclosed publicly, infringes its patent (United States Patent No. 8,475,832). The Company strongly refutes as without merit the RB Plaintiffs’ assertion of patent infringement and will vigorously defend the lawsuit.