Elizabeth M. Higashi - Vice President of Investor Relations Timothy P.

Walbert - Chairman, Chief Executive Officer and President Paul W. Hoelscher - Chief Financial Officer and Executive Vice President of Finance Robert F.

Carey - Chief Business Officer and Executive Vice President

Annabel Samimy - Stifel, Nicolaus & Company, Incorporated, Research Division Ken Cacciatore - Cowen and Company, LLC, Research Division Donald B. Ellis - Avondale Partners, LLC, Research Division Louise Alesandra Chen - Guggenheim Securities, LLC, Research Division Oren G.

Livnat - JMP Securities LLC, Research Division David A. Amsellem - Piper Jaffray Companies, Research Division Difei Yang - R.F.

Lafferty & Co., Inc., Research Division

Thank you, Nicole. Good morning, everyone.

We issued a press release earlier this morning which provides the details of Horizon Pharma plc's financial results for the third quarter and 9 months ended September 30, 2014, as well as a summary of our updated net sales and adjusted EBITDA guidance for 2014 and 2015. The press release we will reference on today's call is available on the Investor Relations Events section of our website at www.horizonpharma.com.

Leading the call today will be Tim Walbert, our Chairman, President and Chief Executive Officer, who will provide a corporate overview and update of the commercial performance of ACTIMMUNE, DUEXIS, RAYOS and VIMOVO, as well as our recent acquisition of the U.S. rights for PENNSAID 2%.

Paul Hoelscher, our Executive Vice President and Chief Financial Officer, will discuss the financial highlights from the third quarter, before turning the call back over to Tim for Q&A. Also on the call this morning are Bob Carey, Executive Vice President and Chief Business Officer; Jeff Sherman, Executive Vice President of Research and Development and Chief Medical Officer; Brian Andersen, Group Vice President and General Manager of our Orphan business unit; Terry Evans, Senior Vice President, Managed Care and Trade and General Manager of Primary Care business; and Ben Bove, Senior Vice President, Commercial Strategy and Our Prescriptions Made-Easy Organization.

As a reminder, during today's call, we will be making certain forward-looking statements, including financial projections and the expected timing and the impact of future events. These statements are subject to various risks that are described in our filings made with the Securities and Exchange Commission, including our annual report on Form 10-K for the year ended December 31, 2013, subsequent quarterly reports on Form 10-Q, and our current report on Form 8-K that was filed this morning.

You are cautioned not to place undue reliance on these forward-looking statements and Horizon disclaims any obligation to update such statements. Further, we will also discuss non-GAAP financial measures during this call to help you understand our underlying business performance.

Reconciliations of these non-GAAP financial measures to the equivalent GAAP measures are provided in the press release, which has been posted on our corporate website. I will now turn the call over to Tim.

Thank you, Elizabeth, and good morning, and we're here in our new corporate headquarters in Dublin. So good afternoon, anyone over here.

And for us, the third quarter was transformational for the company. As you know, on September 19, the company completed the acquisition of Vidara Therapeutics International plc and completed the resulting formation of Horizon Pharma plc headquartered here in Dublin.

The Vidara acquisition was transformational for the company and to prepare us to optimally execute our corporate strategy of continuing to drive organic growth, as well as aggressively pursuing the acquisition of incremental products and/or companies, we restructured our commercial organization into 3 business units: The Primary Care, Specialty and Orphan business units, and we appointed 3 experienced commercial leaders to head each of these businesses. This allows us to continue to drive growth of our base business, as well as integrated core products and our businesses into each business unit without disrupting the other groups.

In the quarter, we also announced that our board elected Liam Daniel, the former Corporate Secretary of Elan, and Brandon Noria, the former President of Vidara to the company's Board of Directors following the closing of the transaction. This morning, we also announced that John Kody will join us in late November as our new Executive Vice President and Chief Commercial Officer.

I've known John for years, and we worked together at Abbott in the past. We're very excited to have John join us, and lead our commercial organization.

He was most recently President of Leica Biosystems Richmond Inc., which is a subsidiary of a multibillion dollar Danaher Corporation. His role there included full P&L responsibility and the leadership and the integration of multiple global acquisitions in the United States and Europe.

Prior to this, John held Senior Management positions at Baxter, Abbott and Lilly. We believe his extensive executive general management and commercial experience, as well as leading and integrating global health care businesses throughout his career, will be a great benefit as we continue to grow our company both organically and through acquisitions.

At this point, I'll walk through the third quarter results. The third quarter 2014 was another record quarter for the company.

We announced sales of $75.1 million, 3x the $24.1 million in the third quarter of 2013, and approximately 14% higher than the second quarter of 2014. Adjusted EBITDA increased to $28.1 million in the quarter compared with just $571,000 in Q3 of last year.

In the third quarter, for the first time, we reported a positive GAAP net income in the amount of $2.1 million. Adjusted non-GAAP net income was $25.3 million versus a loss of $2.1 million last year.

We reported income of $0.32 per basic share versus a loss of $0.03 in the prior year quarter and diluted income per share of $0.24 versus a loss of $0.03 last year -- quarter as well. Net sales for our products continued to grow in the quarter, in aggregate show an increase of 212% versus the third quarter of 2013.

With ACTIMMUNE, which we recorded sales for the period of essentially 1 week, September 19 to September 30, we accounted for $2.7 million in net sales for the quarter. DUEXIS net sales in the quarter were $22.8 million, up 6% versus Q3 of 2013.

And RAYOS net sales were $5.6 million, up 200% versus Q3 of 2013. Net sales for VIMOVO in the third quarter were $43.2 million.

With VIMOVO, which we acquired on November 19 of 2013 for $35 million from AstraZeneca, we have recorded $119.6 million in net sales for the 9-month period through the third quarter, which significantly demonstrates our ability to rapidly integrate acquisitions and drive revenue. DUEXIS, RAYOS and VIMOVO sequentially increased net sales versus the second quarter of 2014, about 28%, 44% and 2%, respectively.

On a prescription base, we also saw continued growth. DUEXIS prescription increased to 69,563 versus 47,200 in the third quarter of 2013, an increase of 47%, and increased 10% versus the second quarter of 2014.

RAYOS prescriptions increased to 3,867 versus a little over 2,300 in the third quarter of 2013, an increase of 67%, and also increased 18% versus the second quarter of 2014. VIMOVO prescriptions in the third quarter were 80,254, which was an increase of 4% versus the second quarter of 2014.

As many of you may know, there was an understatement of prescriptions by IMS in the third quarter, which has continued into the month of October. Total prescriptions from two of our specialty pharmacies were not captured by IMS.

We have heard from IMS and expect them to restate these numbers over the next several weeks. When we add back the misprescriptions by IMS, we estimate prescriptions for DUEXIS, RAYOS and VIMOVO versus the second quarter of 2014 increased 12%, 19% and 5%, respectively.

Our products were understated in the retail channel for the October 2014 data month, again, due to the similar data issue where we had a miscapturing of several of our specialty pharmacies. For the November data month and data week ending November 7, 2014, we hope to have this resolved.

For the month of October, we estimate the impact for DUEXIS prescriptions is 15% to 20%; for RAYOS, 5% to 10%; and for VIMOVO, 8% to 10%. So we hope this restatement comes through soon by IMS, but certainly been an under reporting of actual prescriptions by our respective products.

As we have reviewed in the past, beginning in January of 2015, DUEXIS and VIMOVO will be on exclusion lists of Caremark and Express Scripts. Being on exclusion lists is not new to us as we've stated many times in the past.

RAYOS has in fact been in Caremark's exclusion list since January of this year. It was seen 3 consecutive quarters this year of double-digit sales and prescription increases with the product.

We've completed the substantial amount of analysis on the effect of these exclusion lists on prescription volumes, subsequently -- subsequent to being placed on the exclusion list based on past practices of 81 products over the last 3 years, which started in 2012 with Caremark and added in 2014, Express Scripts. For the first 6 months after placement on this exclusion list or any of them, we found that there was an average decline in prescriptions of approximately 15%.

We also found that approximately half of the revenue decline as a result of this loss in prescriptions was offset by price increases for those respective products. There are several factors that give us confidence in our ability to manage through the situation.

First, while we may experience a decline in prescriptions reimbursed by Express Scripts and Caremark, these are only for those patients covered by plans that adopt their exclusion list formulary, which are those choice of drugs on formulary that are controlled by either Express Scripts or Caremark. We've also seen a situation where the estimated number of controlled lives by some of these PBMs is not as they had forecasted, so less of an impact than we had originally expected.

Based on recent information, at least by Express Scripts, in 2015, approximately 23 of their 75 million covered lives under plans that have adoptive this exclusion list. This is considerably less than what Express Scripts communicated previously, which was that adoption of the exclusion list could be 30 million to 35 million covered lives in 2015.

Approximately 57% of our total prescriptions are expected to be adjudicated by Caremark and Express Scripts. We expect that we may experience a decline in prescriptions reimbursed by these 2 PBMs, solely in their controlled formularies, but in their nonmanaged or noncontrolled lives, we expect prescriptions for DUEXIS and VIMOVO will continue to be reimbursed at our full WAC cost with no rebates.

Additionally, we now have pricing flexibility, again we no will have longer price protection contracts in place at these PBMs. The biggest issue, we believe, exists relative to these exclusion lists, is not the impact of exclusion list, but the impact of the noise associated with the PBMs at preventing, first of all, DUEXIS and VIMOVO being prescribed by physicians, but more importantly, physicians who often prescribe to their most restrictive formulary.

And often, people follow that across their typical prescribing patterns. And because of this, our focus is to manage this, what we call noise.

And we believe we're uniquely prepared to handle this noise issue through our comprehensive Prescriptions Made Easy Program, or PME. The goal of our PME program is to ensure patients receive the prescription their physician intended them to receive at the lowest out-of-pocket cost possible, as well as minimize the hassle factor physicians and their office staff face, when the managed care and PBMs deploy prior authorizations, step-edits and exclusion lists, which create substantial administrative work for both the physician and their staff.

Our PME program continues to progress in an increasing percentage of our total prescriptions. As evidence of the benefit the program offers to physicians ensuring their patients get the drug they prescribe, and eliminating administrative burden, our data shows that physicians who participate in our PME program prescribe our products almost 13 times the rate of physicians who aren't in the program.

We're making continued progress on increasing the penetration of PME among our target physicians. Currently, approximately 53% of DUEXIS prescriptions are processed through PME, over 30% of VIMOVO prescriptions and over 26% of RAYOS prescriptions.

Our goal and expectation is that greater than 60% of our prescriptions go through PME in 2015. We're also excited by a new program we have created, which we're calling our retail PME program, which allows for much broader benefit to physicians and patients with our products by extending many of the benefits of our PME program into retail pharmacies throughout the United States.

We believe this additional layer of protection should go a long way toward mitigating managed care rejections for prescriptions that are processed in retail pharmacies, which typically would fall outside of our PME pharmacy network. With the close of the acquisition of Vidara Therapeutics on September 19, we began recording sales for ACTIMMUNE.

As I mentioned for the period from September 19 through September 30, ACTIMMUNE generated $2.7 million in sales. Our original guidance had us recording ACTIMMUNE for the full quarter 2013.

We completed the deal with 1 week in the quarter, so we're pleased to achieve $2.7 million for that short period. We currently have 270 CGD and SMO patients receiving ACTIMMUNE.

And in the third quarter, 26 new patients initiated therapy with ACTIMMUNE, exceeding our internal forecasts. On October 3, the FDA granted orphan drug designation for ACTIMMUNE for the treatment or Friedreich's ataxia, a rare genetic disease for which there are currently no approved treatments.

Orphan designation qualifies a sponsor of the drug for various development incentives, including tax credits, for qualified clinical testing. A marketing application for prescription that has received orphan drug designation is not subject to the PDUFA fees.

The designation may provide ACTIMMUNE, if approved, with 7 years of market exclusivity for this indication. For those of you who attended the CHOP, the Children's Hospital of Philadelphia's Seventh Annual Symposium for Friedreich's Ataxia, and our FA Analyst Day on October 13, for us, it was a moving experience to meet these FA patients, and see the encouraging ACTIMMUNE Phase II clinical study results that were presented.

FA is a debilitating, life-shortening, degenerative, neuromuscular disorder that affects about 1 in 50,000 people in the United States, with an estimated 4,000 to 5,000 individuals in the U.S. and over 15,000 worldwide, according to the Friedreich's Ataxia Research Alliance or FARA.

There is no currently FDA approved treatment for Friedreich's ataxia. Importantly, FARA is currently adding approximately 200 patients per year to its registry, and now has approximately 2,400 FA patients registered.

To recap the Phase II results of ACTIMMUNE, changes in Patuxent protein levels, the primary endpoint, was statistically significant in red blood cells, white blood cells and platelets, while the magnitude of change absorb was small and varied between the tissues, this predominantly because of where the samples were taken. The clinical outcome measure, the FARA score or Friedreich's Ataxia Rating Scale score, a clinically validated measurement of patient performance, showed a strong efficacy signal with mean improvement by an amount equivalent to approximately 2 years of disease progression, which is highly statistically significant at the P equals 0.008 level.

We recently received feedback from the FDA in our Phase III trial design. We found the comments to be very thoughtful, and we viewed them as very positive.

We're working with David Lynch from Children's Hospital of Philadelphia, and GenPharma of the Ataxia Research Alliance to incorporate feedback and recommendations into our final protocol. We estimate that ACTIMMUNE could potentially achieve $500 million or greater in peak annual net sales opportunity, if approved by the FDA for Friedreich's ataxia, along with increased penetration and our currently approved indications in CGD and SMO.

We're also evaluating additional potential indications for ACTIMMUNE, including infectious complications of severe atopic dermatitis, including eczema herpaticum and methicillin-resistant Staphylococcus aureus, cutaneous T-cell lymphoma, as well as autosomal dominant osteopetrosis. Since our last call, we have received 3 additional patents from the U.S.

Patent and Trademark Office, with claims covering VIMOVO in patent terms through 2022. In addition, we received a Notice of Allowance for patent application covering VIMOVO and treating a patient at risk for developing an NSAID-associated Ulcer, which when issued, would have a patent term out to 2030.

Importantly, this is a new family of patents. We also received an additional Notice of Allowance with claims covering RAYOS out to 2027.

Now I would like to review our recent acquisition of PENNSAID. On October 17, we announced we acquired the U.S.

rights for $45 million one-time cash payment, along with an 8-year exclusive manufacturing agreement, announced that we plan to sell the product in early January of 2015. PENNSAID 2% is indicated for the treatment of pain of osteoarthritis of the knees.

It was launched into the U.S. last year with annualized net sales of approximately 16% based on second quarter of this year.

Similarly, to our VIMOVO experience, we believe there is an unrealized opportunity for PENNSAID 2%, which is an ideal complement to VIMOVO, DUEXIS and our primary care organization. Our primary care sales force will now be selling all 3 NSAID products.

We believe PENNSAID 2%'s delivery solution is considerably simpler to use than competing topical diclofenac products in the market. The dosage is measured through a pump action metered dose dispenser that we believe is the easiest to use of the topical products in the market.

Further, PENNSAID 2% is a twice per day administration versus current market leader which is 4 times per day. We expect to price PENNSAID 2% at a similar level to DUEXIS and VIMOVO.

And we also announced that we'll be hiring an additional 75 primary care representatives this quarter. We expect to have the expanded commercial organization hired, trained and selling by January of 2015.

Based on our strong year-to-date performance and our expectations for ACTIMMUNE and PENNSAID 2%, we are raising our guidance for both 2014 and 2015. 2000 (sic) [2014] net sales guidance has increased to a range of $280 million to $290 million, and adjusted EBITDA guidance has increased to $90 million to $100 million.

For 2015, we are raising our net sales guidance to $425 million to $450 million, and adjusted EBITDA guidance to $160 million to $180 million. At this point, I'll turn it over to Paul to review the third quarter financial results.

Paul?

Thank you, Tim, and good morning, everyone. As Tim outlined, our third quarter net sales improved threefold to $75.1 million compared to last year's $24.1 million, and we generated net income of $2.1 million, a milestone for us, compared with a loss of $5.5 million last year.

On a GAAP basis, net income per basic share was $0.03 and $0.02 on a diluted basis. On an adjusted basis for the third quarter, adjusted non-GAAP net income was $25.3 million versus a loss of $2.1 million last year.

Adjusted EBITDA increased to $28.1 million in the quarter compared to just $571,000 in the third quarter of last year. Adjusted non-GAAP income per share was $0.32 basic, versus a loss of $0.03 in the prior year, with diluted adjusted non-GAAP income per share at $0.24 versus a loss of $0.03 last year.

Weighted average shares outstanding for the third quarter were 78.4 million for basic compared to 64.6 million shares last year. Please keep in mind that the basic weighted average shares outstanding for the third quarter only reflects the 31.35 million shares issued in the Vidara transaction for 12 days.

Diluted weighted average shares for the third quarter were 85.7 million. As of November 3, 2014, our ordinary shares outstanding were 118.9 million, reflecting both the 31.35 million shares issued in the Vidara transaction and the 12.9 million shares issued in October in connection with the induced conversion of a portion of our convertible senior notes.

If we include all of the ordinary shares that could be issued upon the exercise of outstanding stock options and warrants, divesting of outstanding RSUs, and the conversion of the remaining convertible senior notes, there would be approximately 150 million ordinary shares outstanding. Since Tim has already covered net sales by product, I'll focus now on the rest of our financial highlights for the quarter.

Gross profit margins were 81.8% compared to 86.7% last year. Excluding depreciation, intangible amortization, amortization of inventory step-up from ACTIMMUNE and royalty accretion, non-GAAP gross margins were 95.7% versus 92.7% last year.

Total third quarter operating expenses in 2014 were $73.4 million versus $23.6 million last year. Sales and marketing expenses increased $15.5 million to $31.1 million this year.

The largest portion of the increase was related to salaries and benefits, which increased nearly $9 million due to the expansion of our sales force. You may recall that our sales organization has more than doubled from what it was at this time last year, as we had not yet acquired VIMOVO.

We also incurred about $5 million of additional marketing and commercialization expenses in the quarter, again, primarily related to VIMOVO. General and administrative expenses increased $32.2 million compared with the third quarter of 2013, primarily due to $28.3 million of transaction expenses related to the Vidara acquisition, as well as increased salaries and benefits resulting from additional support staff.

Interest expense increased $1.6 million to $5.2 million during the third quarter compared with $3.6 million last year, primarily due to higher debt balances in the current year. Foreign exchange loss was $2.8 million compared to a foreign exchange gain of $1.1 million in last year's third quarter.

This was primarily attributable to a weakening of the Euro against the U.S. dollar during the current quarter.

Our Horizon Pharma AG subsidiary has intercompany balances and intercompany transactions that are denominated in U.S. dollars.

We also recorded a bargain purchase gain of $22.2 million in the quarter, representing the excess of the estimated fair value of the net assets acquired over the acquisition price of Vidara. Other expenses were $3.2 million during the quarter, and represented commitment fees that were incurred prior to the funding of the senior secured credit facility on September 19.

We recorded a benefit for income taxes of $3 million in the third quarter compared to an expense last year of $265,000. This was attributable to a reduction in our net deferred tax asset position during the quarter.

The inclusion of additional deferred tax liabilities in connection with our merger with Vidara resulted in our ability to reduce our existing deferred tax valuation allowance. We generated $1.5 million in cash from operating activities for the third quarter.

On an adjusted basis, after excluding cash payments related to the Vidara acquisition cost of $20 million and the post-closing payment of certain Vidara transaction costs that we assumed in the merger of $14 million, non-GAAP cash provided by operating activities was $35.6 million for the third quarter. During the third quarter, we also paid out $179.2 million in cash, net of the cash acquired, for the acquisition of Vidara.

We funded the acquisition by drawing $300 million on our senior secured credit facility at an interest rate of 9%. We ended the quarter with $248.8 million of cash and cash equivalents, and net debt of $165 million.

These September 30 balances do not reflect approximately $60 million of cash outflows in October related to 2 transactions. As Tim mentioned earlier, on October 17, we paid $45 million in cash for the U.S.

rights to PENNSAID 2%. In addition, in late October, we induced holders of an aggregate principal amount of $69.4 million of our convertible senior notes to convert issuing 12.9 million ordinary shares and making an aggregate cash payment of $14.6 million.

The aggregate principal amount of the convertible senior notes remaining after these transactions is $80.6 million. Tim outlined our guidance for 2014 and 2015.

Again, we are raising our guidance on net sales for 2014 to $280 million to $290 million and adjusted EBITDA to $90 million to $100 million. For 2015, our revised guidance as for net sales of $425 million to $450 million, and adjusted EBITDA of $160 million to $180 million.

Regarding income taxes, in addition to utilizing a portion of our net operating loss carryforwards, we also expect to benefit from lower tax rates in subsidiaries outside the United States in the fourth quarter and next year, due to our new legal structure following the Vidara transaction. As a result, we are estimating an effective tax rate in the low single digits for both the fourth quarter of 2014 and full year 2015.

We estimate weighted average shares outstanding of 84 million for basic and 106 million for diluted for the full year 2014, and 121 million for basic and 143 million for diluted for 2015. These share estimates include the impact of the shares issued for the Vidara transaction and the induced conversion of a portion of the convertible senior notes in October, but assume no other issuances of shares in the future, other than estimated ordinary course issuances and exercises of outstanding equity grants.

Now I'd like to pass the call back to Tim.

Thanks, Paul. We continue to make progress in executing our strategy in the third quarter.

We had strong organic growth of our base business, and continued our business development strategy with the acquisitions of Vidara and PENNSAID. Our pursuit of new products continues unabated.

Our PENNSAID 2% transaction is a direct result of our strategy to identify interesting opportunities, which complement our business and are attractively valued. We're engaged in the pursuit of multiple additional product acquisitions and our emphasis remains on seeking out products within each of our 3 business units.

Our strategy of layering growth through acquisitions on top of our attractive organic growth is successfully advancing the development of our commercial critical mass and establishment with ACTIMMUNE of the late-stage product development product -- pipeline. We moved from 2 commercial products 1 year ago to 5 products as of January 2015 and soon-to-be initiated Phase III program and the large unaddressed market opportunity for Friedreich's ataxia with ACTIMMUNE.

We have aspirations to grow our commercial product portfolio significantly, and judiciously explore development of additional indications for ACTIMMUNE. Thank you for your time, and I'll now open it up to questions.

I wanted to talk to you about some of your strategies to deal with the exclusion list. One of the strategies you mentioned was that you are going to focus your PME plan on finding the high access patients.

So I guess, I'm curious, how is that going? So I think you probably would've started that strategy by now.

And how much of a sense do you have of whether that could -- that you could actually target these patients? Maybe you can just give us a little bit of color on that.

And then I have a follow-up on ACTIMMUNE.

We don't have a strategy to target high access patients. Our strategy is to target the physicians who treat those patients by significantly increasing our penetration of PME, and our PME organization has begun this month an activation program on a district-by-district basis to continue to add new target physicians who are over weighted towards seeing patients who have coverage with the 2 PBMs that we're referencing.

The way we -- outside of our traditional PME program, are able to offset potential impact of this exclusion list is through our new PME program that we're rolling out on a retail basis, which allows a patient who has not been seen a physician who's in the PME program, happens to go to a pharmacy, processes their prescription, and if it were to be rejected by one of the PBMs, it'll automatically be processed as if we were processing it through our traditional PME program, which would entail that patient getting the product at a very low out-of-pocket co-pay and the physician, the pharmacist and everyone involved to see that the patient, in fact, was reimbursed for the product.

Okay. So of the increased penetration you have at PME in your respective products, do you feel that the weighting to those physician practices in geographies is what you're intending?

Yes. It's tracking right at our expectations.

And the retail PME program is really one that covers physicians and patients who fall outside of our direct PME program.

Okay, great. And then on ACTIMMUNE, it looks like there were 26 patients out in the quarter, is what you said, which seems pretty nice clip.

And that's essentially, was still 1 week in your hand. So what do you think you can do in terms of adding patients for ACTIMMUNE, once it's in sort of your system in your hands?

Do you have sort of an idea of the number of patient adds or the rate that you can add at that, now that you've got it in your hands?

I think what the -- thank you, Annabel, for the question. What our target has been to average roughly 7 to 8 patients, and we're on track with that and we expect that rate to continue.

One of the things we love about Friedreich's ataxia is that you've got 2,400 patients in a registry. What you don't have for CGD is when you look at those 1,600 patients, we have 270 on drug.

There isn't a well-formed advocacy group similar to FARA to provide a registry to access them. So the real work is at a grass roots advocacy level to help identify physicians who see these patients, help identify patients through various nonpersonal programs like website and other avenues, as the Vidara team and Brian Andersen's organization has been executing against.

So with CGD and SMO, our target is to continue to add 7 to 8 patients per month. We exceeded our expectations in the third quarter on a full quarter basis, pro forma basis, and we continue to expect that.

With incremental upside coming, obviously, as we move through the process with Friedreich's ataxia, and we did take a recent price increase in October 16, which we think moves the pricing of ACTIMMUNE more similar to its peers relative to incidence and prevalence. So with the combination, we feel confident that we can continue to drive growth in the brand.

Okay. One more on ACTIMMUNE, if I may.

How should we think about the off-label sales? I think on -- the last time, when we saw you about 65% of the 270 -- the 270 patients represented about 65% of unit sales.

So can you help us think about how we should sort of factor in these 35% off-label sales? Is it the same volume use, or maybe you can give us a little bit of guidance on that?

Sure. So we see about the same percentage, so 270 on label with CGD and SMO.

We don't obviously market the product and don't have a lot of transparency into the off label aspect of it, and we see it across a number of different diseases. We don't forecast it at this point.

We basically apply it, the patient's times are typical compliance, which is in the 70% range. And it's hard to forecast it beyond there.

That's the -- one thing we do expect is that percentage of on-label to continue to increase as we drive these incremental patients on-label with CGD and SMO.

I just wanted to ask about when you plan on having your end of Phase II meeting on ACTIMMUNE? And give us maybe a tighter sense of when the Phase III will start?

And the second question is, when we ask some companies, are they open to transformational transactions, clearly, depending on the market cap, the options can be limited. But in your situation, your current cap, first are you open to transformational-type transactions?

What would it ideally look like if you saw one? And how many of them exist?

Can you give us some sense or quantification of the opportunities that may be out there?

I'll answer the first, and for fun, I'll let Bob answer the second. On the first, we've already gotten the feedback on our Phase II program from the FDA.

We reported that in my comments, where basically, everything we had asked for, we felt very comfortable with. We are working through final details now with the Friedreich's Ataxia Research Alliance, GenPharma, as well as with David Lynch from CHOP, who we expect to be the PI of the study.

And so as based on the feedback we've gotten and our continued discussions, our guidance continues for the second quarter of next year to initiate that trial. I'll comment on the first part of your second question, that is, are we are open to transformational deals.

I think our history is evidence that we are. So the answer is, yes.

As far as availability of them. Bob?

Ken, we continue to see good opportunities, whether it's bolt-on acquisitions like we just executed with PENNSAID 2%, or looking at larger, interesting transactions that may be a little bit outside the box. So we've got several of those in the pipeline that we are working on.

But as we all know, there's no way to predict what the outcome will be on any one of those.

So we're open to them and -- if they are there, and we'll aggressively pursue them as we have in the past. And the third quarter is really representative of that, where we had one transformational acquisition with the Vidara ACTIMMUNE and the bolt-on with PENNSAID.

So that would be fair to look at that as what we're trying to do on a go-forward basis.

A quick question on -- a follow-up on Friedreich's ataxia and ACTIMMUNE. After the Phase II meeting with the FDA, do you have any additional color on the -- roughly, the number of patients you're going to need for that trial, and the length that trial is expected to take?

I think based in our feedback, it's similar to what we guided, less than 100 patients in a 6-month period to accurately assess the drug working in these FA patients. Our initial trial was in 3 months, and we think that 6 months is appropriate in less than 100 patients, and that guidance continues.

But the conversations with the FDA continue. So there's nothing that's been agreed to at this point, Dan.

Okay. Do you think you guys are seeing any off-label use in FA to date?

I think we do have some patients. I actually have no idea how many, I don't even look.

So I think there are some, but it's not something we look at or measure.

So I only have 2. So when you talk about PME, can you talk us through the profitability for your prescriptions?

We've done pushback at the CVS, and expect the prices that are on exclusion but pushback to PME and those scripts are not profitable? And then after that, if you can quantify the capacity of deals you can do post the close of Vidara?

Sure. So the first question was profitability.

You saw an aggregate about 40% of our prescriptions and currently going through, if you aggregate all products and highly profitable quarter, with $28 million adjusted EBITDA on $75 million. So we do -- as we move into the program, we expect to see an increase in our net revenue per prescription as we move forward on a quarter-over-quarter basis and in roughly similar ranges, we may see an increased gross to net as a result of incremental capturing those patients that would've been rejected and that's offset by increased price and prescriptions.

Bob, the second question?

Yes. Well, I think on that also, Louise, it's the interplay between price per script and the volume of scripts that are out there.

So giving up or no longer having to pay the rebate, and then also, having free scripts. Even with both of those trends in place, we expect to see an increase in the net sales per script.

So we talk about profitability, we see it as our profitability on a per script basis going up, as opposed to going down. I don't know what...

Yes. And then relative to our appetite and availability to finance incremental acquisitions, there's 2 pieces that we look at is our existing accelerating adjusted EBITDA, coupled with the EBITDA of the assets we acquired, and with our current debt of $300 million-plus, about $370 million total debt, you have -- we have an accordion feature built in that allows us to go in secured debt, I think 4.5x, and unsecured up to 5.5x.

So we believe that with our growing adjusted EBITDA, along with acquired adjusted EBITDA, that we have flexibility to do the size deals we're contemplating.

And one last question. As -- have you talked about your pricing strategy for PENNSAID?

How you think the market is and then what sort of price arbitrage you can kind of take for that product?

No, we expect the price is in line with our other NSAIDs.

I know you don't want to get bogged down in gross to net conversations. But obviously, there's a lot of moving parts here and you talked about sort of the net result being -- it going up.

I guess, my first question is, is that going to happen immediately? Are these rebates and contracts gone as of them telling that you're excluded or does that kick in, in January?

So are we going to get that sooner than later, that impact? And also, I guess, are you hearing any comments on just, in general, a size of exclusion just changes in the trends on co-pays and coinsurance rates from your other partners because -- for example, I know that personally, I now need to pay the difference between a branded drug and a generic all out-of-pocket, if there is, in fact, a generic alternative, which I know there is isn't explicitly for your products.

Can you just talk about the overall trends in the pushback you're seeing? And then just separately, I noticed your 2015 guidance, you raised revenue $45 million, EBITDA only $10 million, at the midpoint.

And I'm just wondering if there was any intentional implication of lower EBITDA margins on, maybe, the incremental PENNSAID business, or overall or if this is just ranges are ranges, and your current EBITDA margin should apply going forward?

So I'll start with the last. So we expect our current EBITDA margins to continue, and I'd recommend you get different insurance.

But besides that, or -- I think, what we've seen on a year-over-year basis is an increase of 4%, 5%, 6% of increased coinsurance to patients, and an increase in the average rebate to patients. We don't expect a material amount to impact us, relative to when these things go into effect.

In January, we would expect that the impact of the exclusion lists occurs immediately and the impact of rebates occurs immediately.

Have your wholesalers mentioned anything about de-stocking or anything like that ahead of expected lower volumes in Q1 of next year?

If we expected significant volumes, we would expect something from wholesalers, and that's not the case.

Just a couple. So business development question.

I know you've talked a lot about adding primary care focused assets with leverage of the sales organization. But given how much fragmentation we see in pain and neuro, CNS broadly, is that an area you could want to focus on as well in terms of bizdev, how do you think about that?

Thanks, David. Certainly, from business development standpoint, well, even with our base business, we now have 3 NSAIDs covering the osteoarthritis space and rheumatoid arthritis and some other indications, making up a substantial portion of our business.

So we're definitely focused on that area, and with RAYOS incrementally to that. So if we see products that are in the pain in the neuro space that fit alongside what we're doing, then we'll definitely leverage that.

But I think as we've said all along, we're looking for assets that fit into any of our 3 business units; the orphan, the Primary Care or the Specialty. So we're looking to fit within those, but ultimately, if transformational opportunities exist to add an additional business unit or geographic expansion opportunistically, then we'll pursue it.

And then just switching gears on ACTIMMUNE. I know you had the pricing action recently.

Can you talk about the extent to which you can continue to take price on that product?

Well, I think as we look at it, David, the prices right now on an annualized patient basis, it's approximately $395,000. As we look at other products with similar incidence and prevalence, it ranges from our price up to a little over $600,000 with Solaris.

So there's a broad range, and we are priced at that $395,000 and comfortable with where that is, and we'll evaluate that over time.

Just a quick one. I have to ask one question on the business development.

So now that you guys are Ireland-based, the company, and given the disconnect between -- on some of the assets between the European products versus the U.S. products, are you interested in potentially acquiring something in Europe and build up a sales force there?

So the question was, what is our appetite for geographic expansion? We're not actively pursuing geographic expansion as you've seen that with a number of our specialty pharma peers.

We are focused on really putting products into our existing business units, or adding business units in the U.S. Opportunistically, if there's an opportunity for a platform in Europe or Latin America or other markets, we'll certainly look at that.

But it's not our primary focus.

And then the next one is an easy one, just a data issue. So would you recommend -- I have looked at the ACTIMMUNE data that was captured on Bloomberg.

It's clearly not correlated with IMS [ph] sales, would you or -- how should I think about that?

Well, I think what you saw in Bloomberg is a disconnect between when we gave our $270 million, $280 million guidance, that was assuming we close the transaction by July 1. We closed it 10 weeks later.

So we had 1 week of revenues which was $2.7 million, and for the month of -- the last month and for the quarter, we had exceeded our internal expectations for patients. So any difference between that is just inaccuracy in the updated models to reflect the time the deal closed.

That, and also, I'd like to say that the services, IMS and others, really don't capture the per script data for ACTIMMUNE. So it's opaque to the outside world, what is happening on a week-to-week basis.

Okay. So we should just.

. .

It'll catch up in the next quarter when people have full quarter numbers and forward. Because the product is through specialty pharmacies, IMS retail is not going to estimate our revenues.

Just want to thank everyone again for joining us this afternoon here in Dublin or back in the U.S. A great quarter for the company and excited about the business moving forward and -- the rest of this year and into 2015.

Thank you.