11.

Research, License, Supply and other Agreements

Center for Neurologic Study. The Company holds the exclusive worldwide marketing rights to NUEDEXTA for certain indications pursuant to an exclusive license agreement with CNS.

The Company paid a $75,000 milestone upon FDA approval of NUEDEXTA for the treatment of PBA in fiscal 2011. In addition, the Company is obligated to pay CNS a royalty ranging from approximately 5% to 8% of net U.S. GAAP revenue generated by sales of NUEDEXTA. During fiscal 2013, 2012 and 2011, royalties of approximately $3.5 million, $1.8 million and $309,000, respectively, are recorded to cost of product sales in the accompanying consolidated statements of operations. Under certain circumstances, the Company may have the obligation to pay CNS a portion of net revenues received if the Company sublicenses NUEDEXTA to a third party.

Under the agreement with CNS, the Company is required to make payments on achievements of up to a maximum of ten milestones, based upon five specific clinical indications. Maximum payments for these milestone payments could total approximately $1.1 million if the Company pursued the development of NUEDEXTA for all five of the licensed indications. In general, individual milestones range from $75,000 to $125,000 for each accepted NDA and a similar amount for each approved NDA in addition to the royalty discussed above on net U.S. GAAP revenues. The Company does not have the obligation to develop additional indications under the CNS license agreement.

Concert Pharmaceuticals, Inc. — The Company holds the exclusive worldwide marketing rights to develop and commercialize Concert’s d-DM compounds for the potential treatment of neurological and psychiatric disorders, as well as certain rights to other deuterium-modified dextromethorphan compounds pursuant to a license agreement with Concert.

Under the agreement with Concert, the Company is obligated to make milestone and royalty payments to Concert based on successful advancement of d-DM products for one or more indications in the United States, Europe, and Japan. Individual milestone payments range from $2.0 — $6.0 million, $1.5 — $15.0 million, and $25.0 — $60.0 million for clinical, regulatory and commercial targets respectively, and in aggregate could total over $200 million. Royalty payments are tiered, beginning in the single-digits and increasing to the low double-digits for worldwide net sales of d-DM products exceeding $1.0 billion annually. As of September 30, 2013, the Company has paid $2.0 million for milestones that have been achieved pursuant to this agreement, which were recorded to research and development expense in the accompanying consolidated statement of operations.

OptiNose AS. The Company holds an exclusive license agreement for the development and commercialization of a novel Breath Powered intranasal delivery system containing low-dose sumatriptan powder to treat acute migraine, AVP-825. The licensed territories are the United States, Canada and Mexico.

Under the terms of the agreement, OptiNose received an up-front cash payment of $20.0 million, which was recorded to research and development expense in the accompanying consolidated statement of operations. The Company and OptiNose will share certain shared development costs. OptiNose is eligible to receive up to an additional $90.0 million in total payments resulting from the achievement of future clinical, regulatory and commercial milestones. In addition, if approved, we will make tiered royalty payments to OptiNose of a low double-digit percentage of net sales in the United States, Canada and Mexico.

Merck. In August 2013, the Company entered into a multi-year agreement with Merck to co-promote Merck’s type 2 diabetes therapies JANUVIA^® (sitagliptin) and the sitagliptin family of products in the long-term care institutional setting in the United States beginning October 1, 2013. The term of the Agreement will continue for three years following the launch date of the co-promotion activities.

Under the terms of the Agreement, the Company will be compensated via a (i) fixed monthly fee and (ii) performance fee based on the amount of the products sold by the Company above a predetermined baseline. A significant majority of the fee is performance based. Over the three years of the agreement, the Company could receive up to a maximum of $60.0 million in compensation.

The parties will jointly develop a product marketing and promotion plan. The Company will lead sales implementation with its institutional sales force. Merck will be required to provide a specific level of marketing and promotional support, and the Company is required to provide predetermined level of sales efforts. Merck will continue to be responsible for all other aspects of research, manufacturing, supply, regulatory, medical, managed care and marketing activities for the products.

The Agreement may be terminated without cause by either party upon 90 days written notice, at any time after the first anniversary of the launch date. If after the first anniversary, Merck terminates the Agreement without cause, Merck will be required to continue paying a portion of the performance based fee that would otherwise be due for a period of twelve months (though not beyond the expiration of three years following the launch date.) The Agreement may be terminated with cause by either party based on certain events, including a material uncured breach by either party, a failure to achieve certain sales thresholds by the Company, an assignment for the benefit of creditors, or upon mutual agreement. Additionally, Merck may terminate the Agreement (a) upon change of control of the Company; (b) if the Company adds promotional responsibilities for additional products to its sales representatives promoting the products; or (c) upon a violation of applicable law.

GlaxoSmithKline Subsidiary, SB Pharmco Puerto Rico, Inc. On March 31, 2000, the Company signed an exclusive license agreement with GSK for rights to manufacture and sell Abreva (docosanol 10% cream) as an over-the-counter product in the United States and Canada as a treatment for cold sores. Under the terms of the license agreement, GSK Consumer Healthcare is responsible for all sales and marketing activities and the manufacturing and distribution of Abreva in the U.S. and Canada. The terms of the license agreement provide for the Company to earn royalties on product sales. In October 2000 and August 2005, GSK launched Abreva in the United States and Canada, respectively. All milestones under the agreement were earned and paid prior to fiscal 2003. During fiscal 2003, the Company sold an undivided interest in the GSK license agreement to Drug Royalty with a term until the later of December 13, 2013 or until the expiration of the patent for Abreva on April 30, 2014. (See Note 6, “Deferred Revenues.”)

Azur Pharma. In August 2007, the Company entered into a license agreement with Azur, where the Company could receive up to $2.0 million in royalties, based on 3% of annualized net product revenues in excess of $17.0 million. During fiscal 2012 and 2011, the Company recorded royalty revenues of approximately $492,000 and $527,000 in connection with this agreement. As of September 30, 2012, the Company had received $2.0 million in royalties related to annual revenue in excess of $17.0 million and no further royalties will be recognized related under this license agreement.