DEF 14A

You are cordially invited to attend the Annual Meeting of Stockholders of Avanir Pharmaceuticals, Inc., a Delaware corporation (the “Company”), which will be held on February 14, 2013, at 9:00 a.m. local time, at the Renaissance ClubSport Aliso Viejo Hotel, 50 Enterprise, Aliso Viejo, California. Only stockholders who held stock at the close of business on the record date, December 18, 2012 (the “Record Date”), may vote at the Annual Meeting, including any adjournment or postponement thereof.

At the Annual Meeting, you will be asked to consider and vote upon: (1) the election of three Class III directors; (2) the ratification of the selection of KMJ Corbin & Company, LLP as our independent registered public accounting firm for the fiscal year ending September 30, 2013, (3) an advisory (non-binding) vote on the Company’s executive compensation and (4) the transaction of any other business that may properly come before the meeting or any adjournment thereof. No other items of business are expected to be considered at the meeting and no other director nominees will be entertained, pursuant to the Company’s Bylaws.

The accompanying Proxy Statement more fully describes the details of the business to be conducted at the Annual Meeting. After careful consideration, our Board of Directors has unanimously approved the proposals and recommends that you vote FOR each nominee and proposal described in the Proxy Statement.

We are pleased to make use of the Securities and Exchange Commission rules that allow companies to furnish proxy materials to their stockholders via the Internet. We believe the ability to deliver proxy materials electronically allows us to provide our stockholders with the information they need, while lowering the costs of delivery and reducing the environmental impact from the distribution of our Annual Meeting materials.

WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE VOTE VIA THE INTERNET OR OVER THE TELEPHONE AS INSTRUCTED IN THE NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS AND ON THE ENCLOSED PROXY CARD OR, IF YOU REQUESTED AND RECEIVED A PRINTED COPY OF THE PROXY STATEMENT, COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD USING THE ENCLOSED RETURN ENVELOPE, AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR REPRESENTATION AT THE MEETING. EVEN IF YOU HAVE VOTED BY PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN A PROXY CARD ISSUED IN YOUR NAME FROM THAT INTERMEDIARY.

This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors (the “Board”) of Avanir Pharmaceuticals, Inc. (“Avanir” or the “Company”) for use at the Company’s 2013 annual meeting of stockholders, to be held at the Renaissance ClubSport Aliso Viejo Hotel, 50 Enterprise, Aliso Viejo, California, on February 14, 2013, at 9:00 a.m. local time. This proxy statement is being made available via the Internet on December 19, 2012 and the mailing date of the Notice Regarding the Availability of Proxy Materials (the “Notice”) to our stockholders will be on or about January 2, 2013. Pursuant to the rules promulgated by the Securities and Exchange Commission, we have elected to provide access to our materials by notifying you of the availability of our proxy materials on the Internet. The proxy statement and 2012 Annual Report are available at www.avanir.com in the “SEC filings” subsection of the “Investors” tab.

The Notice instructs you as to how you may access and review important information contained in the proxy materials. The Notice also instructs you on how you may submit your proxy via the Internet. If you receive a Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials included in the Notice.

For a proxy to be effective, it must be properly executed and received prior to the annual meeting. Each proxy properly tendered will, unless otherwise directed by the stockholder, be voted for the proposals and nominees described in this Proxy Statement and at the discretion of the proxy holder(s) with regard to all other matters that may properly come before the meeting.

The Company will pay all of the costs of soliciting proxies. We will provide copies of our proxy materials to brokerage firms, fiduciaries and custodians for forwarding to beneficial owners who request printed copies of these materials and will reimburse these persons for their costs of forwarding these materials. Our directors, officers and employees may also solicit proxies by telephone, facsimile, or personal solicitation; however, we will not pay them additional compensation for any of these services.

Only holders of record of our common stock (“common stock”) at the close of business on December 18, 2012 (the “Record Date”), are entitled to notice of and to vote at the annual meeting. On the Record Date, 137,144,031 shares of common stock were issued and outstanding. Each share of common stock is entitled to one vote on all matters to be voted upon at the annual meeting. Holders of common stock do not have the right to cumulative voting in the election of directors. The presence, in person or by proxy, of the holders of a majority of the outstanding shares on the Record Date will constitute a quorum for the transaction of business at the annual meeting and any adjournment thereof.

Persons who hold shares of Avanir common stock directly on the Record Date and not through a broker, bank or other financial institution (“record holders”) must return a proxy card or attend the annual meeting in person in order to vote on the proposals. Persons who hold shares of Avanir indirectly on the Record Date through a brokerage firm, bank or other financial institution (“beneficial holders”) must return a voting

instruction form to have their shares voted on their behalf. Brokerage firms, banks or other financial institutions that do not receive voting instructions from beneficial holders may either vote these shares on behalf of the beneficial holders or return a proxy leaving these shares un-voted (a “broker non-vote”).

Abstentions and broker non-votes will be counted for the purpose of determining the presence or absence of a quorum, but will not be counted for the purpose of determining the number of votes cast on a given proposal. The required vote for each of the proposals expected to be acted upon at the annual meeting is described below:

Proposal No. 1 — Election of directors. Directors are elected by a plurality, with the nominees obtaining the most votes being elected. Because there is no minimum vote required, abstentions and broker non-votes will be entirely excluded from the vote and will have no effect on its outcome. However, as described below, we have adopted a majority vote standard under our Bylaws, which means that directors may not be eligible to retain their Board seat if there is a greater number of votes “AGAINST” their election than “FOR” their election. Under the majority vote standard, any shares that are not voted, whether by abstention, broker non-votes or otherwise, will not affect the election of directors.

Proposal No. 2 — Ratification of selection of independent registered public accounting firm. This proposal must be approved by a majority of the shares present and entitled to vote on the proposal. As a result, abstentions will have the same effect as voting against the proposal and broker non-votes will have no effect on the vote outcome.

Proposal No. 3 — Advisory (non-binding) vote on executive compensation. This advisory proposal will be approved if a majority of the shares present and entitled to vote on the proposal are voted in favor of the resolution. As a result, abstentions will have the same effect as voting against the proposal and broker non-votes will have no effect on the vote outcome.

We encourage you to vote by proxy, whether via telephone, through the Internet or mailing an executed proxy card. By voting in advance of the meeting, this ensures that your shares will be voted and reduces the likelihood that the Company will be forced to incur additional expenses soliciting proxies for the annual meeting. Any record holder of our common stock may attend the annual meeting in person and may revoke the enclosed form of proxy at any time by:

Beneficial holders of our common stock who wish to change or revoke their voting instructions should contact their brokerage firm, bank or other financial institution for information on how to do so. Beneficial holders who wish to attend the annual meeting and vote in person should contact their brokerage firm, bank or other financial institution holding shares of Avanir on their behalf in order to obtain a “legal proxy,” which will allow them to both attend the meeting and vote in person. Without a legal proxy, beneficial holders cannot vote at the annual meeting because their brokerage firm, bank or other financial institution may have already voted or returned a broker non-vote on their behalf.

The Certificate of Incorporation of the Company provides that the Board is to be divided into three classes as nearly equal in number as reasonably possible, with directors in each class serving three-year terms. The total Board size is currently fixed at six directors. Currently, the Class III directors (whose terms expire at the 2013 annual meeting of stockholders) are David J. Mazzo, Ph.D., Craig A. Wheeler and Scott M. Whitcup, M.D. The Class I director (whose term expires at the 2014 annual meeting of stockholders) is Dennis G. Podlesak. The Class II directors (whose terms expire at the 2015 annual meeting of stockholders) are Keith A. Katkin and Hans E. Bishop. Class III directors elected at the annual meeting will hold office until the 2016 annual meeting of stockholders and until their successors are elected and qualified, unless they resign or their seats become vacant due to death, removal, or other cause in accordance with the Bylaws of the Company.

As described below, the Board has nominated Drs. Mazzo and Whitcup and Mr. Wheeler for reelection as Class III directors at the Annual Meeting. All nominees have indicated their willingness to serve if elected. Should any of the nominees become unavailable for election at the annual meeting, the persons named on the enclosed proxy as proxy holders may vote all proxies given in response to this solicitation for the election of a substitute nominee chosen by the Board.

The Corporate Governance Committee, which acts as the Company’s nominating committee, reviews and recommends to the Board potential nominees for election to the Board. In reviewing potential nominees, the Corporate Governance Committee considers the qualifications of each potential nominee in light of the Board’s existing and desired mix of experience and expertise. Specifically, the Corporate Governance Committee considers each potential nominee’s scientific and business experience, skills and characteristics, wisdom, integrity, ability to make independent analytical inquiries, understanding of the Company’s business and prospects, and willingness to devote adequate time to Board duties. These criteria are set forth in our Corporate Governance Guidelines, a copy of which is available on our website at www.avanir.com.

After reviewing the qualifications of potential Board candidates, the Corporate Governance Committee presents its recommendations to the Board, which selects the final director nominees. Upon the recommendation of the Corporate Governance Committee, the Board nominated Drs. Mazzo and Whitcup and Mr. Wheeler for reelection as Class III directors. The Company did not pay any fees to any third parties to identify or assist in identifying or evaluating nominees for the annual meeting.

The Corporate Governance Committee considers stockholder nominees using the same criteria set forth above. Stockholders who wish to present a potential nominee to the Corporate Governance Committee for consideration for election at a future annual meeting of stockholders must provide the Corporate Governance Committee with notice of the nomination and certain information regarding the candidate within the time periods set forth below under the caption “Stockholder Proposals.”

Although the Corporate Governance Committee may consider whether nominees assist in achieving a mix of Board members that represents a diversity of background and experience, which is not only limited to race, gender or national origin, we have no formal policy regarding board diversity.

The Corporate Governance Committee has recommended, and the Board has nominated, Drs. Mazzo and Whitcup and Mr. Wheeler to be reelected Class III directors at the annual meeting. The following table sets forth the following information for these nominees and the Company’s continuing directors: the year each was first elected a director of the Company; their respective ages as of the date of filing of this proxy statement; the positions currently held with the Company; the year their current term will expire and their current class.

The following persons have been nominated by the Board to be elected as Class III directors at the 2013 annual meeting.

David J. Mazzo, Ph.D. has served as a member of the Board since July 2005 and he currently serves as Chairman of our Compensation Committee and as a member of our Science Committee. Currently, he is the President and Chief Executive Officer and member of the board of Regado Biosciences, Inc., a privately held, U.S.-based biopharmaceutical company developing novel aptamer-reversal agent pairs initially in the area of injectable antithrombotics. From April 2007 through March 2008, Dr. Mazzo served as President and Chief Executive Officer and member of the board of Æterna Zentaris, Inc., a global biopharmaceutical company with products and a therapeutic focus in the areas of oncology and endocrinology. From April 2003 through March 2007, Dr. Mazzo served as President and Chief Executive Officer and member of the board of Chugai Pharma USA, a pharmaceutical company. Dr. Mazzo has spent more than 28 years in the pharmaceutical industry and has held positions of increasing responsibility with Merck, Baxter, Rhône-Poulenc Rorer, Hoechst Marion Roussel and Schering-Plough. Dr. Mazzo holds a B.A. degree in Honors (Interdisciplinary Humanities) and a B.S. degree in Chemistry from Villanova University, as well as an M.S. degree in Chemistry and a Ph.D. degree in Analytical Chemistry from the University of Massachusetts (Amherst). He further complemented his American education as a Research Fellow at the Ecole Polytechnique Fédérale de Lausanne, Switzerland. Dr. Mazzo serves as non-executive Chairman of the board of directors of pSivida, Inc., a global public biopharmaceutical company. Based on Dr. Mazzo’s experience within the pharmaceutical industry and his executive experience, specifically his experience as Chief Executive Officer at other companies in the biotechnology industry, as well as his service on other boards of directors in the biotechnology industries, the Board believes Dr. Mazzo has the appropriate set of skills to serve as a member of our Board.

Craig A. Wheeler has served as our Chairman of the Board since May 2007 and currently serves as Chairman of each of our Audit Committee, Corporate Governance Committee and Executive Committee. Mr. Wheeler serves as a director and as Chief Executive Officer of Momenta Pharmaceuticals, Inc. Prior to joining Momenta in August 2006, Mr. Wheeler was President of Chiron BioPharmaceuticals for five years, a division of Chiron Corporation, until it was acquired by Novartis AG in 2006. In this position he was responsible for all aspects of the division including commercial, research, development and manufacturing. Mr. Wheeler serves on the board of directors for the Generic Pharmaceutical Associates (GPHA) and is a member of their executive committee. He currently serves on the Cornell Biomedical Engineering Advisory Board, and serves on the Gene Partnership Advisory Board for the Children’s Hospital of Boston. Mr. Wheeler holds B.S. and M.S. degrees in chemical engineering from Cornell University and an M.B.A. degree from the Wharton School of the

University of Pennsylvania, where he majored in marketing and finance. Mr. Wheeler’s experience within the pharmaceutical industry and his management experience at other companies in the biotechnology industry make him a valuable member of our Board.

Scott M. Whitcup, M.D. joined the Board in September 2005 and currently serves on our Corporate Governance Committee and Executive Committee and as Chairman of our Science Committee. He serves as Executive Vice President and Head of Research and Development of Allergan, Inc. Dr. Whitcup has served in this role since July 2004 and is responsible for Allergan’s drug discovery efforts, as well as the ophthalmology, Botox^®/neurology, urology, skin care, medical devices and other new technology development programs worldwide. Dr. Whitcup was given the additional title of Chief Scientific Officer in 2009. Dr. Whitcup joined Allergan in January 2000 as Vice President, Development, Ophthalmology and, in January 2004, he became Allergan’s Senior Vice President, Development, Ophthalmology. From 1993 until 2000, Dr. Whitcup served as the Clinical Director of the National Eye Institute at the National Institutes of Health. Dr. Whitcup is a faculty member at the Jules Stein Eye Institute / David Geffen School of Medicine at UCLA. Dr. Whitcup graduated from Cornell University Medical College and completed residency training both in internal medicine at UCLA Medical Center and in ophthalmology at the Massachusetts Eye and Ear Infirmary-Harvard Medical School. He then received fellowship training in uveitis and ocular immunology at the National Eye Institute. Dr. Whitcup is currently a member of the board of Questcor Pharmaceuticals, Inc., a pharmaceutical company. Dr. Whitcup’s scientific expertise and involvement in drug discovery efforts allow him to provide unique perspective to our operations and, accordingly, our Board believes Dr. Whitcup has the appropriate skill set to serve on our Board.

Dennis G. Podlesak joined the Board in March 2005 and currently serves on our Compensation Committee and Audit Committee. Since November 2007, Mr. Podlesak has been a Partner with Domain Associates LLC, a life science focused venture capital firm, and has over 20 years of experience within the pharmaceutical industry. Prior to Domain, from 2005 to 2007, Mr. Podlesak served as the Chief Executive Officer and a member of the board of directors of Cerexa, Inc., a biotechnology company. Cerexa, Inc. became a wholly owned subsidiary of Forest Laboratories after being acquired by Forest in January 2007. Prior to Cerexa, from 2004 to 2005, Mr. Podlesak served as the Chief Executive Officer and as a member of the board of directors of Peninsula Pharmaceuticals and in June 2005, Mr. Podlesak led the sale of Peninsula to Johnson & Johnson. Prior to joining Peninsula, Mr. Podlesak served with Novartis AG, a healthcare company, as a Senior Vice President and Head of a North American Business Unit, and as a member of the Pharmaceutical Executive Committee and Global Leadership Team. Earlier in his career, Mr. Podlesak served as Vice President and Head of the CEC division of Allergan, Inc., a healthcare company, and was a member of Allergan’s North American and Global Management Team. Mr. Podlesak spent the first ten years of his career with SmithKline Beecham, a healthcare company (now GlaxoSmithKline plc). Mr. Podlesak has served on a number of public company and private boards, and is currently a member of the board of directors of Adynxx, a pharmaceutical company, Regado Biosciences, a biotechnology company and Syndax Pharmaceuticals, a pharmaceutical company and the non-profit organization Prevent Blindness. Additionally, Mr. Podlesak was Executive Chairman of Corthera, Inc., a biopharmaceutical company, which was acquired by Novartis AG in January 2010 and was also a Founder, Chief Executive Officer, and board member of Calixa Therapeutics, Inc., a biopharmaceutical company, which was acquired by Cubist Pharmaceuticals, Inc. in December 2009. Mr. Podlesak received a B.A. degree and an M.B.A. degree from Pepperdine University and has completed postgraduate studies at the Wharton School, University of Pennsylvania. Based on Mr. Podlesak’s experience within the pharmaceutical industry and his executive experience, specifically his experience as Chief Executive Officer at other successful companies in the biotechnology industry, as well as his service on other boards of directors in the biotechnology industry, the Board believes Mr. Podlesak has the appropriate set of skills to serve as a member of our Board.

Keith A. Katkin was appointed President and Chief Executive Officer of Avanir and was elected as a member of the Board of Directors in March of 2007. From July 2005 until March 2007, Mr. Katkin served as Senior Vice President of Sales and Marketing. Prior to joining Avanir, Mr. Katkin previously served as Vice

President, Commercial Development for Peninsula Pharmaceuticals, playing a key role in the management and ultimate sale of the company to Johnson & Johnson in 2005. Additionally, Mr. Katkin’s employment experience includes leadership roles at InterMune, Amgen and Abbott Laboratories. Mr. Katkin also served as strategic advisor to Cerexa, a pharmaceutical company that was sold to Forest Laboratories in 2007. Mr. Katkin received a B.S. degree in Business and Accounting from Indiana University and an M.B.A. degree in Finance from the Anderson School of Management at UCLA, graduating with honors. Mr. Katkin became a licensed Certified Public Accountant in 1995. The Board has concluded that Mr. Katkin should serve on our Board based on his length of employment with the Company, deep knowledge of our Company gained from his positions as President and Chief Executive Officer and his substantial experience in the pharmaceutical industry.

Hans E. Bishop has served on the Board of Directors since May 2012. Mr. Bishop is the chief operating officer of Photothera Inc., a late stage medical device company. Prior to joining Photothera Inc., Mr. Bishop served as Executive Vice President and Chief Operating Officer at Dendreon Corporation from January 2010 to September 2011. His previous roles have included President of the specialty medicine business at Bayer Healthcare Pharmaceuticals Inc. from December 2006 to January 2010, where he was responsible for a diverse portfolio of neurology, oncology and hematology products, growing the division into a €3 billion global franchise. Mr. Bishop also held various positions at Chiron Corporation, Glaxo Wellcome, and SmithKline Beecham. In addition, he served as Executive Vice President of operations with a global telecom service company. Mr. Bishop currently serves as a member of the board of Photothera Inc. and chairman of the board of Genesis Biopharma, Inc., a biotechnology company. Mr. Bishop received a B.S. degree in chemistry from Brunel University in London. Based on Mr. Bishop’s experience within the pharmaceutical industry and his executive experience at other companies in the biotechnology industry, the Board believes Mr. Bishop has the appropriate set of skills to serve as a member of our Board.

The nominees who receive the greatest number of affirmative votes of the shares present in person or by proxy will be elected as Class III directors. Any shares that are not voted, whether by abstention, broker non-votes or otherwise, will not affect the election of directors. If any of the nominees receives more votes against his election than for his election and that nominee is nevertheless elected under the plurality vote standard, that director will be required under our Bylaws to submit a conditional resignation to the Company. This resignation will then be considered by the Corporate Governance Committee, taking into account the circumstances of the election, and a recommendation will be presented to the disinterested members of the Board, who will then vote whether to accept the resignation.

Holders of proxies solicited by this Proxy Statement will vote the proxies received by them as directed on the proxy card or, if no direction is made, then FOR the election of all nominees named in this Proxy Statement.

Our Audit Committee has selected KMJ Corbin & Company, LLP (“KMJ”) as our independent registered public accounting firm for the fiscal year ending September 30, 2013, and has further directed that we submit the selection of KMJ for ratification by our stockholders at the annual meeting.

The Company is not required to submit the selection of our independent registered public accounting firm for stockholder approval. However, if the stockholders do not ratify this selection, the Audit Committee will reconsider its selection of KMJ. Even if the selection is ratified, our Audit Committee may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee determines that the change would be in the best interests of the Company.

The Audit Committee reviews and pre-approves all audit and non-audit services performed by its independent registered public accounting firm, as well as the fees charged for such services. All fees incurred in fiscal 2012 for services rendered by KMJ were approved in accordance with these policies. In its review of non-audit service fees, the Audit Committee considers, among other things, the possible impact of the performance of such services on the auditor’s independence. The Audit Committee has determined that the non-audit services performed by KMJ in the fiscal year ended September 30, 2012 were compatible with maintaining the auditor’s independence. Additional information concerning the Audit Committee and its activities can be found in the following sections of this Proxy Statement: “Board Committees” and “Report of the Audit Committee.”

KMJ has reviewed our interim financial statements since the quarter ended March 31, 2007 and has audited our annual financial statements since the year ended September 30, 2007. Representatives of KMJ are expected to be present at the annual meeting, will have the opportunity to make a statement if they desire to do so and will be available to respond to appropriate stockholder questions.

The following is a summary of the fees billed to the Company by KMJ for professional services rendered for the fiscal years ended September 30, 2012 and 2011. These fees are for work invoiced in the fiscal years indicated.

Ratification of the selection of the independent registered public accounting firm requires the affirmative vote of a majority of the shares present in person or by proxy and entitled to vote on the proposal. Abstentions will have the same effect as voting against the proposal. Because broker non-votes are not counted as votes for or against this proposal, they will have no effect on the outcome of the vote.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) requires that stockholders have the opportunity to cast an advisory (non-binding) vote on executive compensation (a so-called “say-on-pay” vote), as well as an advisory vote with respect to whether future say-on-pay votes will be held every one, two or three years (a so-called “say-on-frequency” vote).

We have conducted say-on-pay votes at each of our 2011 Annual Meeting of Stockholders and 2012 Annual Meeting of Stockholders. At each of such meetings, a majority of stockholders present and entitled to vote on the proposal approved the say-on-pay proposal. We also conducted a say-on-frequency vote at our 2011 Annual Meeting of Stockholders. At such meeting, a majority of stockholders present and entitled to vote on the proposal selected one year as the desired frequency of future stockholder say-on-pay votes with respect to the say-on-frequency proposal. In light of the results of such stockholder vote, the Board adopted a resolution to hold a say-on-pay vote annually. Accordingly, this Proposal No. 3 seeks an advisory vote of stockholders with respect to the executive compensation of the Company’s named executive officers.

The advisory vote on executive compensation is a non-binding vote on the compensation of the Company’s “named executive officers,” as described in the Compensation Discussion and Analysis section, the tabular disclosure regarding such compensation, and the accompanying narrative disclosure, set forth in this proxy statement. The advisory vote on executive compensation is not a vote on the Company’s general compensation policies, compensation of the Company’s Board of Directors, or the Company’s compensation policies as they relate to risk management.

Our philosophy in setting compensation policies for executive officers has two fundamental objectives: (1) to attract, motivate and retain a highly skilled team of executives and (2) to align our executives’ interests with those of our stockholders by rewarding short-term and long-term performance and tying compensation to increases in stockholder value. The Compensation Committee believes that executive compensation should be directly linked both to continuous improvements in corporate performance (so-called “pay for performance”) and accomplishments that are expected to increase stockholder value. The Compensation Discussion and Analysis section starting on page 19 provides a more detailed discussion of the executive compensation program and compensation philosophy.

The vote under this Proposal No. 3 is advisory, and therefore not binding on the Company, the Board or our Compensation Committee. However, our Board, including our Compensation Committee, values the opinions of our stockholders and, to the extent there is any significant vote against the executive officer compensation as disclosed in this proxy statement, we will consider our stockholders’ concerns and evaluate what actions may be appropriate to address those concerns.

Stockholders will be asked at the Annual Meeting to approve the following resolution pursuant to this Proposal No. 3:

RESOLVED, that the stockholders of Avanir Pharmaceuticals, Inc. approve, on an advisory basis, the compensation of the Company’s “named executive officers” (as defined in the Proxy Statement), as such compensation is described in the Compensation Discussion and Analysis section, the tabular disclosure regarding such compensation, and the accompanying narrative disclosure, set forth in the Company’s definitive proxy statement for the 2013 Annual Meeting of Stockholders.

The Board of Directors recommends a vote “FOR” approval of the foregoing resolution. Proxies will be so voted unless stockholders specify otherwise in their proxies.

Approval of this resolution requires the affirmative vote of a majority of the shares present in person or by proxy and entitled to vote on the matter. Abstentions will have the same effect as voting against the resolution. Because broker non-votes are not counted as votes for or against this resolution, they will have no effect on the outcome of the vote.

We believe that the Company benefits from having a strong and independent Board. For a director to be considered independent, the Board must determine that the director does not have any direct or indirect material relationship with the Company that would affect his or her exercise of independent judgment. On an annual basis, the Board reviews the independence of all directors under guidelines established by NASDAQ and in light of each director’s affiliations with the Company and members of management, as well as significant holdings of Company securities. This review considers all known relevant facts and circumstances in making an independence determination. Based on this review, the Board has made an affirmative determination that all directors, other than Mr. Katkin, are independent. It was determined that Mr. Katkin lacks independence because of his status as the Company’s President and Chief Executive Officer.

We believe that our Board and committees, led by a group of strong and independent directors, provide the necessary leadership, wisdom and experience that the Company needs in making sound business decisions. Our Code of Business Conduct and Ethics helps clarify the operating standards and ethics that we expect of all of our officers, directors and employees in making and implementing those decisions. Waivers of our Code of Business Conduct and Ethics may only be granted by the Board or the Corporate Governance Committee and will be publicly announced promptly in our SEC filings. In furthering our commitment to these principles, we invite you to review our Code of Business Conduct and Ethics and other corporate governance materials located on our website at www.avanir.com.

Generally, stockholders who have questions or concerns regarding the Company should contact our Investor Relations department at (949) 389-6700. However, any stockholders who wish to address questions regarding the business or affairs of the Company directly with the Board, or any individual director, should direct his or her questions in writing to the Chairman of the Board, Avanir Pharmaceuticals, Inc., 20 Enterprise, Suite 200, Aliso Viejo, California 92656. Upon receipt of any such communications, the correspondence will be directed to the appropriate person, including individual directors.

During fiscal 2012, our Board met five times. Each director attended at least 75% of the aggregate of the meetings of the Board and meetings of the committees of which he was a member in our last fiscal year. During fiscal 2012, our Board had an Audit Committee, a Compensation Committee, a Corporate Governance Committee, an Executive Committee and a Science Committee. All members of the Audit, Compensation, Corporate Governance and Science Committees are non-employee directors who are deemed independent.

All members of our Board attended the 2012 Annual Meeting of Stockholders. Although the Company has no formal policies regarding director attendance at annual meetings, it does expect that all members of the Board will attend the 2013 Annual Meeting.

The positions of Chairman of the Board and Chief Executive Officer are separated, which allows our Chief Executive Officer to focus on our day-to-day business, while allowing the Chairman of the Board to lead the Board in its fundamental role of providing advice to and independent oversight of management. Our Board recognizes the time, effort, and energy that the Chief Executive Officer is required to devote to his position in the current business environment, as well as the commitment required to serve as our Chairman. Our Board also believes that this structure ensures a greater role for the independent directors in the oversight of our Company

and active participation of the independent directors in setting agendas and establishing priorities and procedures for the work of our Board. Our Board believes its administration of its risk oversight function has not affected its leadership structure.

While our Bylaws do not require that our Chairman and Chief Executive Officer positions be separate, our Board believes that having separate positions and having an independent outside director serve as Chairman is the appropriate leadership structure for us at this time and demonstrates our commitment to good corporate governance. Our separated Chairman and Chief Executive Officer positions are augmented by the independence of five of our six directors, and our independent Board committees that provide appropriate oversight in the areas described below. At executive sessions of independent directors, these directors speak candidly on any matter of interest, which may be with or without the Chief Executive Officer present. The Board of Directors met in executive session three times in 2012. We believe this structure provides consistent and effective oversight of our management and the Company.

The Board has overall responsibility for the oversight of the Company’s risk management process, which is designed to support the achievement of organizational objectives, including strategic objectives, to improve long-term organizational performance and enhance stockholder value. Risk management includes not only understanding company-specific risks and the steps management implements to manage those risks, but also what level of risk is acceptable and appropriate for the Company. Management is responsible for establishing our business strategy, identifying and assessing the related risks and implementing appropriate risk management practices. The Board periodically reviews our business strategy and management’s assessment of the related risk, and discusses with management the appropriate level of risk for the Company, especially in light of the fact that the Company again has a marketed product and may face additional risk management concerns that it did not face while developing product candidates, such as risk of off-label promotion and other risks associated with marketed products. The Board also delegates oversight to Board committees to oversee selected elements of risk as set forth below.

Audit Committee. As of the Record Date, the Audit Committee was comprised of Messrs. Wheeler (Chairman), Bishop and Podlesak. The Audit Committee selects the Company’s independent registered public accounting firm, approves its compensation, oversees and evaluates the performance of the independent registered public accounting firm, oversees the accounting and financial reporting policies and internal control systems of the Company, reviews the Company’s interim and annual financial statements, independent registered public accounting firm reports and management letters, and performs other duties, as specified in the Audit Committee Charter, a copy of which is available on the Company’s website at www.avanir.com. Additionally, the Audit Committee is involved in the oversight of the Company’s risk management through its practice of having a head of the Company’s different business functions report on risk management issues within his or her respective business division at each quarterly meeting of the Audit Committee. The Audit Committee met nine times in fiscal 2012. All members of the Audit Committee satisfy the current independence standards promulgated by NASDAQ and the SEC and the Board has determined that Mr. Wheeler qualifies as an “audit committee financial expert,” as the SEC has defined that term in Item 407 of Regulation S-K.

Compensation Committee. As of the Record Date, the Compensation Committee was comprised of Dr. Mazzo (Chairman) and Mr. Podlesak. The Compensation Committee determines compensation levels for the Company’s executive officers and directors, oversees administration of the Company’s equity compensation plans, and performs other duties regarding compensation for employees and consultants as the Board may delegate from time to time. Our Chief Executive Officer makes recommendations to the Compensation Committee regarding the corporate and individual performance goals and objectives relevant to executive compensation and executives’ performance in light of such goals and objectives, and recommends other executives’ compensation levels to the Compensation Committee based on such evaluations. The Compensation Committee considers these recommendations and then makes an independent decision regarding officer compensation levels and awards. The Compensation Committee met four times in fiscal 2012. A copy of the Compensation Committee charter is available on the Company’s website at www.avanir.com. All members of the Compensation Committee satisfy the current NASDAQ independence standards.

Corporate Governance Committee. As of the Record Date, the Corporate Governance Committee was comprised of Messrs. Wheeler (Chairman) and Bishop and Dr. Whitcup. The Corporate Governance Committee oversees the Company’s Code of Conduct, develops and implements policies and processes regarding corporate governance matters, assesses Board membership needs and acts as the Company’s nominating committee by reviewing potential director nominees and recommending nominees to the Board. The Corporate Governance Committee met four times in fiscal 2012. A copy of the Corporate Governance Committee charter is available on our website at www.avanir.com. All members of the Corporate Governance Committee satisfy the current NASDAQ independence standards.

Executive Committee. As of the Record Date, the Executive Committee was comprised of Messrs. Wheeler (Chairman), Katkin and Mazzo and Dr. Whitcup. Subject to certain exceptions, the Executive Committee is authorized to act on any matter that the Board may consider when the Board is not in session. The Executive Committee did not meet in fiscal 2012.

Science Committee. As of the Record Date, the Science Committee was comprised of Drs. Whitcup (Chairman) and Mazzo. The Science Committee advises management and the Board on scientific and regulatory matters relating to the Company’s drugs and drug candidates, including reviewing medical affairs policies and practices of the Company and reviewing key scientific, clinical and medical aspects of significant proposed business development activities. The Science Committee reviews both pre-clinical studies and clinical trials of Avanir’s research programs, and provides advice on the design, conduct, and analyses of these data. The Science Committee is also responsible for reviewing and providing advice on scientific issues relating to drug manufacturing and intellectual property related to Avanir’s scientific research. The Science Committee met four times in fiscal 2012.

During the last completed fiscal year, no member of the Compensation Committee was a current or former officer or employee of Avanir. None of our executive officers served as a member of the compensation committee (or board of directors serving the compensation function) of another entity where such entity’s executive officers served on our Compensation Committee. Moreover, none of our executive officers served as a member of the compensation committee (or board of directors serving the compensation function) of another entity where such entity’s executive officers served on our Board.

Our current executive officers and key employees and their respective ages and positions as of the Record Date are set forth in the following table. Biographical information regarding each executive officer and key employee who is not also a director is set forth following the table. Biographical information for Mr. Katkin is set forth above under Proposal No. 1 (Election of Directors).

Gregory J. Flesher. Mr. Flesher was appointed Senior Vice President, Corporate Development and Chief Business Officer in February 2011. From August 2007 to February 2011, he served as Vice President of Business Development. From June 2006 to August 2007, he served as Senior Director of Commercial Strategy and, in November 2006, assumed the additional responsibility for Business Development and Portfolio Planning. Prior to joining Avanir, Mr. Flesher held positions as Director of Sales — Hepatology (from 2004 to 2006) and Director of Marketing — Pulmonary at InterMune, Inc. (from 2002 to 2004). Prior to his tenure at InterMune,

Mr. Flesher held both oncology and nephrology marketing positions with Amgen Inc., a global biotechnology company, from 1999 to 2002. Mr. Flesher also has global marketing and clinical development experience from Eli Lilly and Company, where he worked from 1995 to 1998. Mr. Flesher graduated from Purdue University with a Bachelor of Science in Biology.

Randall E. Kaye, M.D. Dr. Kaye was appointed Senior Vice President, Medical Affairs and Chief Medical Officer in March 2007. From November 2006 until March 2007, he served as Vice President Clinical and Medical Affairs, and from January 2006 to November 2006 as Vice President of Medical Affairs. Immediately prior to joining Avanir, Dr. Kaye was the Vice President of Medical Affairs for Scios Inc., a division of Johnson & Johnson, from 2004 to 2006. From 2002 to 2004, Dr. Kaye recruited and managed the Medical Affairs department for InterMune Inc. Previously, Dr. Kaye served for nearly a decade in a variety of Medical Affairs and Marketing positions for Pfizer Inc. Dr. Kaye earned his Doctor of Medicine, Masters in Public Health and Bachelor of Science degrees at George Washington University in Washington, D.C. and was a Research Fellow in Allergy and Immunology at Harvard Medical School.

Rohan Palekar. Mr. Palekar joined Avanir in March 2012 as Senior Vice President and Chief Commercial Officer. Mr. Palekar has over 20 years of experience in the biopharmaceutical industry and has worked on significant brands including Remicade^® and Stelara^®, as well as the investigational therapy MDV3100. Mr. Palekar’s most recent commercial leadership role was as Chief Commercial Officer for Medivation Inc., a biopharmaceutical company, from January 2008 to September 2011, where he was responsible for all commercial activities, chemistry, manufacturing and controls & manufacturing and public relations functions. Prior to Medivation, Mr. Palekar spent over 16 years at Johnson & Johnson, a diversified healthcare company, from July 1991 to January 2008, in various senior commercial and strategic management roles, most recently as a Vice President of Sales & Marketing at Centocor, Inc., a subsidiary of Johnson & Johnson, where he successfully launched two new indications for Remicade. Prior to that, Mr. Palekar was the worldwide Vice President of Immunology and held marketing leadership roles at McNeil Consumer and Specialty Pharmaceuticals. Mr. Palekar earned his M.B.A. degree from the Amos Tuck School of Business Administration Dartmouth College, his B.Com. in Accounting from the University of Bombay and his L.L.B. in Law from the University of Bombay.

Joao Siffert, M.D. Dr. Siffert joined Avanir in August 2011 as Senior Vice President, Research and Development and also became our Chief Scientific Officer in December 2012. Dr. Siffert previously served as Vice President and Chief Medical Officer at Ceregene, Inc., a biotechnology company focused on the development of neurotrophic gene therapies for Alzheimer’s and Parkinson’s diseases, from September 2007 to August 2011. Prior to his work at Ceregene, Dr. Siffert served as the Chief Medical Officer at Avera Pharmaceuticals, a CNS specialty pharmaceutical company, from May 2005 to September 2007. Prior to joining Avera, Dr. Siffert held positions with Pfizer (from February 2002 to May 2005) first as a medical director for Relpax and subsequently as the worldwide medical team leader of Lyrica and Neurontin focusing in areas of pain and epilepsy. Prior to Pfizer, Dr. Siffert held academic positions at Beth Israel Medical Center, where he served as director of the Adult Neuro-Oncology program, and Albert Einstein College of Medicine, where he was assistant professor of neurology. Dr. Siffert completed residencies in pediatrics at New York University School of Medicine and in neurology at Harvard Medical School. Dr. Siffert was certified by the American Board of Neurology and Psychiatry in 1996. He holds an M.D. degree from the University of Sao Paulo School of Medicine as well as an M.B.A. degree from Columbia University Business School.

Christine G. Ocampo. Ms. Ocampo was appointed Vice President, Finance in February 2008. Ms. Ocampo previously served as the Company’s Controller since March 2007. Prior to joining the Company, Ms. Ocampo served as Senior Vice President, Chief Financial Officer, Chief Accounting Officer, Treasurer and Secretary of Cardiogenesis Corporation, a medical device company, from November 2003 until April 2006. From 2001 to November 2003, Ms. Ocampo served in the role of Vice President and Corporate Controller at Cardiogenesis. Prior to joining Cardiogenesis in April 1997, Ms. Ocampo held a management position in Finance at Mills-Peninsula Health Systems in Burlingame, California, and spent three years as an auditor for Ernst & Young LLP. Ms. Ocampo graduated with a Bachelor of Science in Accounting from Seattle University and became a licensed Certified Public Accountant in 1996.

Other than compensation arrangements described below under the captions “Executive Compensation” and “Director Compensation,” we are not a party to any transactions between us and certain “related parties,” which are generally considered to be our directors and executive officers, nominees for director, holders of 5% or more of our outstanding common stock and members of their immediate families.

Our Board has adopted policies and procedures for the review and approval of related-party transactions and has delegated to the Corporate Governance Committee the authority to review and approve the material terms of any proposed related-party transactions. To the extent that a proposed related-party transaction may involve a non-employee director or nominee for election as a director and may be material to a consideration of that person’s independence, the matter may also be considered by the other disinterested directors.

Pursuant to our Code of Business Conduct and Ethics and our Corporate Governance Committee Charter, each of our executive officers and directors must disclose related-party transactions to our Corporate Governance Committee. In order to avoid conflicts of interest, our executive officers and directors may not acquire any ownership interest in any supplier, customer or competitor (other than nominal amounts of stock in publicly traded companies), enter into any consulting or employment relationship with any customer, supplier or competitor, or engage in any outside business activity that is competitive with any of our businesses, without first disclosing the proposed transaction. After the proposed transaction has been disclosed, a determination will be made by our Corporate Governance Committee as to what course to follow, depending on the nature or extent of the conflict. Furthermore, our executive officers and directors may not serve on any board of directors of any customer, supplier or competitor unless such board service has been disclosed to us and approved by our Board. Our Corporate Governance Committee has been delegated the task of reviewing other directorships and consulting agreements of Board members for conflicts of interest. All members of our Board are required to report annually all other directorships and consulting agreements.

In determining whether to approve or ratify a related-party transaction, the Corporate Governance Committee may consider, among other factors it deems appropriate, the potential benefits to us, the impact on a director’s or nominee’s independence or an executive officer’s relationship with or service to us, whether the related-party transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related party’s interest in the transaction. In deciding to approve a transaction, the Corporate Governance Committee may, in its sole discretion, impose such conditions as it deems appropriate on us or the related party in connection with its approval of any transaction. Any transactions involving the compensation of executive officers, however, are to be reviewed and approved by the Compensation Committee. If a related-party transaction will be ongoing, the Corporate Governance Committee may establish guidelines to be followed in our ongoing dealings with the related party. Thereafter, the Corporate Governance Committee, on at least an annual basis, will review and assess ongoing relationships with the related party to see that they are in compliance with the committee’s guidelines and that the related-party transaction remains appropriate.

Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who own more than 10% of a registered class of our equity securities, to file reports of beneficial ownership and changes in beneficial ownership with the SEC. Executive officers, directors and greater-than-10% stockholders are required by SEC regulations to furnish us with copies of all reports filed under Section 16(a). To the Company’s knowledge, based solely on the review of copies of the reports filed with the SEC, all reports required to be filed by our executive officers, directors and greater-than-10% stockholders were timely filed in fiscal 2012 except that a Form 4 filed by Rohan Palekar on November 2, 2012 to report his receipt of certain equity compensation awards was filed late.

The following table sets forth certain information, as of September 30, 2012, regarding the Company’s Amended and Restated 1994, 1998 and 2000 Stock Option Plans and 2003 and 2005 Equity Incentive Plans, as well as other stock options and warrants previously issued by the Company as compensation for services.

Based on information available to us and filings with the SEC, the following table sets forth certain information regarding the beneficial ownership (as defined by Rule 13d-3 under the Securities Exchange Act of 1934) of our outstanding common stock for (i) each of our directors, (ii) each of our “named executive officers,” as defined in Executive Compensation below, (iii) all of our directors and executive officers as a group, and (iv) persons known to us to beneficially hold more than 5% of our outstanding common stock. The following information is presented as of December 3, 2012 or such other date as may be reflected below. Beneficial ownership and percentage ownership are determined in accordance with the rules of the SEC and include voting or investment power with respect to shares of stock. This information does not necessarily indicate beneficial ownership for any other purpose. Under these rules, shares of common stock issuable under stock options or warrants that are exercisable within 60 days of December 3, 2012 are deemed outstanding for the purpose of computing the percentage ownership of the person holding the options or warrant(s), but are not deemed outstanding for the purpose of computing the percentage ownership of any other person.

Unless otherwise indicated and subject to applicable community property laws, to our knowledge, each stockholder named in the following table possesses sole voting and investment power over their shares of common stock, except for those jointly owned with that person’s spouse. Unless otherwise indicated below, the address of each person listed on the table is c/o Avanir Pharmaceuticals, Inc., 20 Enterprise, Suite 200, Aliso Viejo, California 92656.

The following compensation discussion and analysis describes the material elements of compensation earned in fiscal 2012 by each of the executive officers identified below in the Summary Compensation Table, who are referred to collectively as our “named executive officers.” Our named executive officers with respect to the fiscal year that ended on September 30, 2012 were Keith A. Katkin, President and Chief Executive Officer; Joao Siffert, M.D., Senior Vice President, Research and Development, Chief Scientific Officer; Rohan Palekar, Senior Vice President and Chief Commercial Officer; and Christine G. Ocampo, Vice President, Finance. These persons constitute our principal executive officer, principal financial officer and two other executive officers serving during fiscal 2012. The 2012 compensation set forth below includes payments that were made, and compensation-related actions that were taken, in the first quarter of fiscal 2013 where these payments and decisions related to performance in fiscal 2012.

Our philosophy in setting compensation policies for executive officers has two fundamental objectives: (1) to attract, motivate and retain a highly skilled team of executives and (2) to align our executives’ interests with those of our stockholders by rewarding short-term and long-term performance and tying compensation to increases in stockholder value. The Compensation Committee believes that executive compensation should be directly linked both to continuous improvements in corporate performance (“pay for performance”) and the achievement of objectives that are expected to increase stockholder value. In furtherance of this goal, the Compensation Committee has established the following guidelines as a foundation for compensation decisions:

The Compensation Committee has historically compensated executive officers with three compensation components: base salary, annual incentive bonus and equity-based compensation. The Compensation Committee believes that cash compensation in the form of base salary and an annual incentive bonus provides our executives with short-term rewards for success in operations, and that long-term compensation through the award of stock options, restricted stock and other equity awards aligns the objectives of management with those of our stockholders with respect to long-term performance and success.

The Compensation Committee also has historically focused on the Company’s financial and working capital condition when making compensation decisions and approving performance objectives. Because the Company has historically sought to preserve cash and currently does not operate at a profit, overall compensation traditionally has been weighted more heavily toward equity-based compensation, as well as cash payments that are earned only upon the Company’s achievement of specified performance goals. The Compensation Committee will continue to periodically reassess the appropriate weighting of cash and equity compensation in light of the Company’s expenditures in connection with commercial operations and its working capital needs, with the goal of more equally weighting cash compensation and equity compensation in the future.

In reviewing the compensation structure in fiscal 2012, the Compensation Committee also considered how the Company’s compensation policies may affect the Company’s risk profile and whether compensation policies and practices may encourage risk-taking by employees. More specifically, the Compensation Committee

considered the general design philosophy of the Company’s policies for employees whose conduct would be most affected by incentives established by compensation policies. In considering these issues, the Compensation Committee concluded that the use of performance-based bonuses and long-term equity awards did not appear to create undue risks for the Company or encourage excessive risk-taking behavior on the part of named executive officers.

With respect to bonus awards, the amount of an individual’s award depends principally (exclusively, in the case of our Chief Executive Officer) on overall Company performance, which reduces the ability and incentive for an individual to take undue risks in an effort to increase the amount of his or her bonus award for a particular year. The Company’s performance goals are reviewed and approved by the Compensation Committee at the beginning of each fiscal year and are considered to be generally of the nature that would not encourage or reward excessive risk taking. Additionally, the Compensation Committee monitors Company performance throughout the year and has the ability to intervene in instances where actions by the Company vis-à-vis Company performance goal attainment would be considered unduly risky to prevent or penalize such actions.

With respect to equity awards, these awards typically vest over several years, meaning that long-term value creation, contrasted with short-term gain, presents the best opportunity for employees to profit from these awards. To the extent that performance-based equity awards are used, the events that trigger vesting are expected to be realized several years in the future. The Company has not historically used claw-back provisions or imposed holding periods for vested awards, although the Compensation Committee will consider whether such mechanisms might be appropriate in the future to mitigate risk as a fully integrated specialty pharmaceutical company with commercial operations. Additionally, the use of financial-based performance metrics to determine employee compensation may subject those payouts to claw-back penalties under the Dodd-Frank Act, to the extent that there is a subsequent restatement of the financial measure that was used to determine a payout.

The Board has delegated to the Compensation Committee the responsibility to ensure that total compensation paid to our executive officers, including named executive officers, is consistent with our compensation policy and objectives. The Compensation Committee oversees and approves all compensation arrangements and actions for our executive officers and other key employees, including the named executive officers. While the Compensation Committee draws on a number of resources, including input from the Chief Executive Officer and independent compensation consultants, to make decisions regarding the Company’s executive compensation program, ultimate decision-making authority rests with the Compensation Committee. The Compensation Committee retains discretion over base salary, annual incentive bonus, equity compensation and other compensation considerations. The Compensation Committee relies upon the judgment of its members in making compensation decisions, after reviewing the performance of the Company and carefully evaluating an executive’s performance during the year against established goals, operational performance and business responsibilities. In addition, the Compensation Committee incorporates judgment in the assessment process to respond to and adjust for the evolving business environment. Corporate goals are reviewed annually by the Compensation Committee and then presented to the full Board for review and approval.

The Compensation Committee has retained the services of an external compensation consultant, Radford, an AonHewitt Company (“Radford”). The mandate of the consultant is to assist the Compensation Committee in its review of executive and director compensation practices, including the competitiveness of pay levels, executive compensation design, benchmarking with the Company’s peers in the industry and other technical considerations including tax- and accounting-related matters. The Compensation Committee regularly evaluates Radford’s performance, considers alternative compensation consultants and has the final authority to engage and terminate Radford’s services. The decision to engage Radford was not made or recommended by the Company’s management. The Compensation Committee, after a review of the factors set forth in Section 10C-1of the Securities Exchange Act of 1934, has determined that Radford does not have conflicts of interest.

The Chief Executive Officer attends Compensation Committee meetings and works with the Compensation Committee Chairman and Radford to develop compensation recommendations for the executive officers (excluding the Chief Executive Officer), based upon individual experience and breadth of knowledge, internal considerations, individual performance during the fiscal year and other factors deemed relevant by the Compensation Committee. The recommendations are then submitted to the Compensation Committee for review and consideration. The Compensation Committee works directly with Radford and the Chairman of the Board to determine compensation actions for the Chief Executive Officer; the Chief Executive Officer does not participate in Compensation Committee discussions relating to his compensation.

The Compensation Committee draws on a number of resources to assist in the evaluation of the various components of the Company’s executive compensation program including, but not limited to, industry data compiled yearly by Radford in its Global Life Sciences Survey, which represents a nationally-based assessment of executive compensation widely used within the pharmaceutical and biotechnology industry sectors. While we do not establish compensation levels based solely on benchmarking, pay practices at other companies are an important factor that the Compensation Committee considers in assessing the reasonableness of compensation and ensuring that our compensation practices are competitive in the marketplace. The peer companies adopted by the Company following the commercial launch of NUEDEXTA during the second quarter of the 2011 fiscal year and used in determining compensation actions in the 2012 fiscal year were selected by the Compensation Committee with Radford’s support in fiscal 2011 on the basis of their similarity to us in terms of competition for talent, phase of development or stage of commercialization, current and potential market capitalization, and number of employees. The list of peer companies used in determining compensation actions in the 2012 fiscal year consisted of the following 27 publicly-traded companies in the pharmaceutical and biotechnology industries:

In addition to adopting the above group of peer companies in May 2011, the Compensation Committee engaged Radford to conduct a comprehensive benchmarking study reporting on compensation levels and practices, including equity, relative to the Company’s newly adopted list of peer companies. An Executive Compensation Assessment report was prepared by Radford in August 2011 that provided a competitive assessment of the Company’s executive compensation program as compared to the market data for base salaries, target total cash compensation and equity compensation of the new list of peer companies. In consideration of the benchmarking data in Radford’s competitive assessment of the Company’s executive compensation programs and the Company’s performance in fiscal 2012, adjustments to compensation were made in the first quarter of fiscal 2013, as described below.

In fiscal 2012, our executive compensation program consisted of the following forms of compensation, each of which are described below in greater detail:

Our Compensation Committee aims to set executives’ base salaries, in the aggregate, at levels near the 50th percentile of salaries of executives with similar roles as compared to the Company’s peer group. The Compensation Committee believes it is important to provide adequate fixed compensation to our executive officers working in a highly volatile and competitive industry. Our Compensation Committee believes that the 50th percentile for base salaries is the minimum cash compensation level that will allow us to attract and retain highly skilled executives. The Compensation Committee’s choice of this target percentile reflects consideration of our stockholders’ interests in paying what is necessary to achieve our corporate goals, while conserving cash and equity as much as practicable. We believe that, given the industry in which we operate and our compensation philosophy and objectives, base salaries at the 50th percentile are generally sufficient to retain our current executives and to hire new executives when and as required. In determining appropriate base salary levels for a given executive officer, the Compensation Committee considers the following factors:

Salaries for executive officers are determined on an individual basis at the time of hire and are set to be competitive with peer companies in our industry. Adjustments to base salary are considered annually in light of each executive officer’s individual performance, the Company’s performance and compensation levels at peer companies in our industry, as well as changes in job responsibilities or promotion. The Chief Executive Officer assists the Compensation Committee in its annual review of the base salaries of other executive officers based on the foregoing criteria.

The Executive Compensation Assessment report prepared by Radford in August 2011 provided a competitive assessment of the Company’s compensation practices as compared to that of the Company’s peer companies adopted during the 2011 fiscal year. In August of 2011, the assessment for several of our executives suggested at the time, and continues to suggest, that base salary levels for the majority of the Company’s executives were between the 25th and 50th percentiles as compared to the Company’s peer group. In order to retain key executives needed to achieve the Company’s goals and business objectives and to be consistent with the Company’s stated compensation philosophy, the Compensation Committee has continued with a plan, previously approved in fiscal 2010, of staged increases to the Company’s executives over a three-year period starting in fiscal 2011. The plan is intended to provide base salary adjustments to the Company’s executives whose base salaries are below the 50th percentile, with the goal of bringing base salaries to competitive base salary levels at or near the 50th percentile by the end of the three-year period. Any increase would be capped at

9.9% annually (unless the base salary for any executive is below market levels for the 25th percentile, in which case the Compensation Committee would, at its discretion, approve an increase above such cap to bring the officer to the 25th percentile) and would take into consideration executives’ tenure in their respective roles, performance, job criticality, and merit increases for each of the fiscal years during the three-year period. Following the end of fiscal 2012, the Compensation Committee approved an adjustment to base salaries for those executives whose base salaries continue to be below the 50^th percentile. This adjustment, which represents a market-based adjustment of compensation, is in addition to the merit-based increase that is typically awarded during the first quarter of each fiscal year.

The following table shows the base salaries for our named executive officers for fiscal 2013, after giving effect to merit-based increases made in November 2012, which were made effective as of October 1, 2012, as well as the average salaries in our peer group at the 25th, 50th and 75th percentiles.

The Company also provides executive officers with annual performance-based cash bonuses, which are specifically designed to reward executives for overall corporate performance as well as individual performance in a given year. Corporate goals are established at the beginning of each fiscal year by the Compensation Committee with input from senior management and approved by the independent members of the Board of Directors. The target annual incentive bonus amounts relative to base salary vary depending on each executive’s

accountability, scope of responsibilities and potential impact on the Company’s performance. Accordingly, the higher the level of control and accountability that is exercisable by an executive officer over our overall performance, the greater the percentage of the executive officer’s target total cash compensation that is dependent on the annual performance-based cash bonus award. Fiscal 2012 target annual incentive bonus levels ranged from 30% to 50% of base salary for our named executive officers.

Our Compensation Committee sets annual incentive bonus amounts for executive officers as a percent of base salary generally ranging between the 50th and 75th percentiles in our peer group. We believe these target bonus levels for our executive officers are appropriate and consistent with our pay-for-performance compensation philosophy. The target bonuses, as a percentage of base salary, for the named executive officers for fiscal 2013 are set forth in the following table:

The Compensation Committee considers the individual performance of each executive officer and the Company’s overall performance for the preceding fiscal year in deciding whether to award a bonus and, if one is to be awarded, the amount of the bonus. For fiscal 2012, the maximum bonus for each executive was 150% of his or her respective target and the minimum bonus, or threshold, for each executive was zero. All executive officers, except for the Chief Executive Officer, are assigned annual incentive bonus targets with 75% of the bonus attributed to corporate performance and 25% based on individual performance. The annual incentive bonus for the Chief Executive Officer is based 100% on overall corporate performance. In addition, the Compensation Committee has the discretion to adjust an award by +/-10%, not to exceed 160% of target for any bonus award, based on additional considerations of performance and to account for the evolving business environment during the performance year.

At the end of each fiscal year, individual and corporate performance are measured versus plan and a percentage of target is fixed, which then determines the size of the total bonus pool from which annual bonus incentives are to be paid to executive officers. All cash bonuses are awarded retrospectively. Payout dates for all annual incentive bonuses to executive officers are targeted during the first quarter of each fiscal year.

Upon completion of fiscal 2012, the Compensation Committee assessed the Company’s overall performance against the achievement of corporate performance goals established in November 2011. The Compensation Committee then assessed the individual accomplishments of the Company’s executive officers. Performance against each goal is scored by the Compensation Committee on a scale of 0 to 5, with a score of 3 equaling the target goal and resulting in a payout amount that is equal to 100% of the target amount. After determining scores for individual goals, a weighted-average score is computed, using the weighting prescribed at the beginning of the year for each goal. Once a total performance score is determined, the funding of the bonus pool is determined from the scale shown below, with the Compensation Committee retaining the discretion as set forth below to adjust individual awards, within certain limits.

In fixing the targets for each fiscal year, the Compensation Committee selects performance goals that are considered aggressive, meaning that they are goals that are considered achievable, but only with a high degree of diligence and success in execution. In accruing for bonuses during each fiscal year, management assumes that the target goals will be achieved (i.e., a score of 3.0), absent a set of circumstances arising during the course of the year that would suggest otherwise.

Set forth below are the general performance goals that were considered by the Compensation Committee in assessing overall performance for the 2012 fiscal year, as well as the relative weighting of these goals and the Compensation Committee’s assessment of achievement for each goal:

NUEDEXTA Net Revenues (weighting 50.0%): This goal set targets for sales performance for NUEDEXTA.

Goal Description: This goal measured the net shipment revenues generated from the sales of NUEDEXTA to wholesalers and other customers in 2012.

Results and Scoring: Net NUEDEXTA shipment revenues for fiscal 2012 were $35.4 million. The Compensation Committee determined that the Company’s achievement for the 2012 fiscal year resulted in a score of 4.12.

Clinical Development Goals (weighting 25.0%): These goals established target performance for the Company for the development of AVP-923 for additional indications, including submitting and receiving FDA acceptance of an Investigational New Drug application, or IND, and continuing the development of NUEDEXTA outside of the United States. The specific goals were as follows:

Goal Description: This goal measured the timely submission and regulatory progress of a Marketing Authorization Application, or MAA, for NUEDEXTA for the PBA indication in the European Union.

Results and Scoring: In October 2011, the Company filed an MAA with the EMA for NUEDEXTA for the treatment of PBA. In September 2012, we provided a clinical update reporting the submission of responses to address the “Day-120” questions posed by the EMA. Based on the review timeline, the Company expects to receive an opinion from the Committee for Medicinal Products for Human Use (“CHMP”) regarding the NUEDEXTA MAA by the first calendar quarter of 2012. The Compensation Committee determined that the Company achieved a score of 3.00 for this goal based on the progress made of the review timeline for its submitted MAA.

Goal Description: This goal measured progress made by the Company in two clinical programs — the PRIME study (Pain Research in Multiple sclErosis), a Phase III clinical trial of AVP-923, an investigational drug that is being studied for the treatment of central neuropathic pain in patients with multiple sclerosis, and study AVR-131 investigating the use of AVP-923 for the treatment of agitation in patients with Alzheimer’s disease.

Results and Scoring: Based on the progress of these two studies, the Compensation Committee determined that the Company achieved a score of 0.69 for this goal.

Financial Operations (weighting 20.0%): This category of goals focused attention on demonstrating fiscal responsibility through (i) improving the Company’s cash position by the end of the fiscal year while supporting budgeted activities such as the commercialization of NUEDEXTA; and (ii) effective budget management, as measured by expenses and working capital at the end of the fiscal year.

Goal Description: The performance metric measures the Company’s aggregate cash expenditures on operations for fiscal 2012. This measure is intended to encourage efficient use of capital, while still achieving the operational goals set forth above, including the commercial operations of NUEDEXTA.

Results and Scoring: In 2012, the Net Operating Cash Burn was approximately $57.7 million, resulting in a score of 5.0 on this goal.

Goal Description: The performance metric measures the Company’s effectiveness in raising additional capital and cash available at the end of the 2012 fiscal year. This measure is intended to encourage the Company to seek and select the most efficient financing instrument(s) to appropriately fund on-going operational requirements including the commercial operations of NUEDEXTA.

Results and Scoring: At September 30, 2012, the Company had a cash balance of approximately $69.8 million resulting in a score of 5.00 on this goal.

Corporate Development (weighting 5.0%): This goal targeted enhancing the Company’s clinical and/or product portfolios through licensing opportunities.

Results and Scoring: In February 2012, the Company entered into an exclusive license agreement with Concert Pharmaceuticals, Inc. that provided the Company with worldwide rights to develop and commercialize deuterium-modified dextromethorphan (d-DM) for the potential treatment of neurological and psychiatric disorders. The agreement included the rights to multiple deuterium-modified dextromethorphan compounds. The Compensation Committee awarded a score of 3.00 for this goal.

The individual performance goals for Keith A. Katkin, the Company’s Chief Executive Officer, were the same as the overall corporate performance goals for the Company, as the primary responsibility of the Chief Executive Officer is to help ensure the overall success of the Company by executing the Company’s business strategies. All other executive officers are assigned annual incentive bonus targets with 75% of the bonus attributed to corporate performance and 25% based on individual performance. The individual goals for Dr. Siffert, Mr. Palekar, and Ms. Ocampo are discussed below. In addition, as described above, the Compensation Committee has the discretion to adjust an award by +/-10%, not to exceed 160% of target for any bonus award, based on additional considerations of performance, significant achievements not covered by the annual goals as established at the beginning of the year, and to account for the evolving business environment during the performance year.

The individual performance goals for Joao Siffert, the Company’s Senior Vice President, Research and Development, Chief Scientific Officer were similar to the overall corporate performance goals but weighted more heavily to clinical development and regulatory milestones. Specifically, the clinical development and regulatory goals described above under the captions “NUEDEXTA European Medicines Agency (“EMA”) Progress” and “Clinical Development Programs” accounted for 60% of Dr. Siffert’s individual performance goals. The other 40% relating to additional clinical and regulatory activities (15%), providing clinical and medical input to corporate development activities (10%), efficient management of departmental expenditures and resources (10%), and provide input on the publication of scientific communications and presentations at medical meetings and congresses (5%). With respect to Christine Ocampo, the Company’s Vice President of Finance, and Rohan Palekar, the Company’s Senior Vice President and Chief Commercial Officer, both were assessed solely using the corporate goals. Dr. Siffert’s, Mr. Palekar’s, and Ms. Ocampo’s level of achievement is determined by the Compensation Committee, based in part on recommendations from the Chief Executive Officer, with input from the Chairman of the Audit Committee.

For fiscal 2012, the Compensation Committee determined that the Company’s performance against the corporate performance goals merited a weighted-average score of 3.62 out of 5.0, resulting in a bonus pool equal to 115.5% of the target amount for corporate achievement. With respect to Mr. Katkin, Mr. Palekar, and Ms. Ocampo, their bonus award was determined solely based on the Company’s performance against the corporate goals. The Compensation Committee determined that Dr. Siffert achieved an individual score of 2.14 out of 5.0 resulting in weighted-average annual performance score of 3.04.

These levels of achievement resulted in the Compensation Committee approving bonus awards for performance in 2012 as set forth in the following table:

Stock Options and Restricted Stock. As an additional component of our compensation program, executive officers are eligible to receive equity compensation in the form of stock options or restricted stock awards, which may also be granted as awards of restricted stock units. The Compensation Committee grants stock options to executive officers to aid in their retention, to motivate them to assist with the achievement of corporate objectives and to align their interests with those of our stockholders by creating a return tied to the performance of our stock

price. In determining the form, date of issuance and value of a grant, the Compensation Committee considers the contributions and responsibilities of each executive officer, appropriate incentives for the achievement of our long-term growth, the size and value of grants made to other executives at peer companies holding comparable positions, individual achievement of designated performance goals, and the Company’s overall performance relative to corporate objectives.

Under the terms of our 2003 Equity Incentive Plan and our 2005 Equity Incentive Plan, pursuant to which all new equity grants are currently made, the exercise price of any stock options awarded under these plans must be equal to at least 100% of the fair market value of our common stock (the closing sales price on the NASDAQ Global Market) on the date of grant. We do not have any program, plan or obligation that requires us to grant equity awards on specified dates, although historically we have made annual grants to existing officers and employees two full trading days after our initial release of year-end earnings results, to new hires on a fixed schedule within one month of the commencement of their employment, and periodically in connection with broader compensation surveys. We also do not have any program, plan or practice to time stock option grants to our executive officers in coordination with the release of material nonpublic information, other than our practice to issue annual option awards two full trading days after our initial release of year-end earnings results. Equity awards may occasionally be granted following a significant change in job responsibilities or to meet other special retention or performance objectives. Additionally, executive officers are eligible to receive equity compensation in the form of restricted stock awards, which may also be granted as awards of restricted stock units.

Authority to make equity grants to employees rests with the Compensation Committee. With respect to executive officers, recommendations for equity grants are made by our external compensation consultant, Radford, and then reviewed by the Chief Executive Officer before being sent to the Compensation Committee for review and consideration. The Compensation Committee Chairman has been delegated the authority to review and approve rewards to non-officer employees, within limits set by the Compensation Committee. In addition, the Chief Executive Officer has been delegated the authority to review and approve new hire awards if they are consistent with the guidelines approved by the Compensation Committee.

We believe that periodic equity awards serve as useful performance recognition mechanisms with respect to key employees, as most awards are subject to time-based vesting provisions. Our typical equity awards to executive officers (including the named executive officers) have a term of 10 years and vest and become exercisable over a period of four years, with 25% of the underlying shares vesting on the first anniversary of the grant date and the remainder quarterly over the next three years. Occasionally the granting or vesting of an equity award may be made contingent on achievement of certain specific performance conditions. We believe that such periodic equity awards encourage executive officers to remain with the Company and also focus on our long-term performance as well as the achievement of specific performance goals.

In consideration of the Company’s overall performance against the achievement of corporate goals for fiscal 2012, in November 2012 the Compensation Committee approved annual equity awards for the Company’s executive officers and employees. For the 2013 fiscal year, the Compensation Committee approved granting annual equity awards, consistent with the recommendations presented by Radford in August 2011, representing a mix of stock options and full-value restricted stock units to the Company’s executive officers at the 50th percentile level of the Company’s equity guidelines. The Company’s equity guidelines are based on recommendations by Radford using market data regarding long-term incentives and equity compensation from the Company’s list of new peer companies. The Compensation Committee consults with Radford and the Chairman of the Board in setting the annual equity award for the Chief Executive Officer. All annual equity awards granted in fiscal 2013 to executive officers, including Chief Executive Officer, vest and become exercisable over an estimated period of four years and all options have a term of 10 years. For fiscal 2013, each executive officer received an option to purchase shares of common stock, with 25% of the underlying shares vesting on the first anniversary of the grant date and the remainder quarterly over the next three years, and a grant of restricted stock units, with 25% of the underlying shares vesting on each anniversary of the grant date so that the award is fully vested on the fourth anniversary of the grant.

In addition to the annual equity grant awarded in fiscal 2013, the Compensation Committee approved a performance-based grant in the form of restricted stock units, the vesting of which commences over a three-year period following the attainment of certain revenue levels for NUEDEXTA during the 2013 fiscal year and vests over a three-year period. The performance-based grant is intended to promote executive retention, while tying compensation to the creation of meaningful stockholder value in a fashion that is consistent with the Company’s pay-for-performance philosophy. Time-based vesting will commence upon the achievement of the specified milestone, with 50% of the underlying shares vesting on the first anniversary following the achievement of the performance milestone, approximately two years after date of grant for a milestone that is estimated to be achieved in one year, and thereafter the grant vests in two equal installments of 25% of the underlying shares of each of the next two anniversaries so that the award is fully vested on the third anniversary of the achievement of the milestone, approximately four years from grant for a milestone that is estimated to be achieved in one year.

Executive officers are eligible to participate in all of our employee benefit plans, including medical, dental, vision, group life, disability and accidental death and dismemberment insurance, in each case on the same basis as other employees, subject to applicable law. In addition, Senior Vice Presidents and above are given access to a health reimbursement account for certain health-related expenses. We also provide vacation and other paid holidays to all employees, including executive officers, all of which we believe to be comparable to those provided at peer companies. These benefit programs are designed to enable us to attract and retain our workforce in a competitive marketplace. Health, welfare, and vacation benefits ensure that we have a productive and focused workforce through reliable and competitive health and other benefits.

Our retirement savings plan (401(k) Plan) is a tax-qualified retirement savings plan, pursuant to which all employees, including the named executive officers, are able to contribute certain amounts of their annual compensation, subject to limits prescribed by the Internal Revenue Service. We have historically made contributions of up to 50% of the first 4% of salary contributed to the plan. The value of these benefits for each of our named executive officers is reflected in the “All Other Compensation” column of the Summary Compensation Table.

We have entered into change of control agreements with each of our named executive officers. Our Board of Directors approved these change of control agreements in order to mitigate some of the risk that exists for executives working in a biopharmaceutical company at our current stage of development and where the possibility exists that we may be acquired if our development efforts succeed. These arrangements are intended to retain highly skilled executives who have, or who may seek, alternatives that may appear to them to be less risky in terms of the potential loss of their position following a merger or sale, particularly where the services of these executive officers may not be required by the acquirer. These agreements provide change of control benefits either upon the termination of the employee’s service, a significant change in job responsibilities or the need to relocate within 12 months following a change of control. By using a so-called “double trigger” change of control benefit, and thereby tying the severance benefit both to a change in control and change in job status, rather than the mere consummation of a change of control transaction, the Compensation Committee believes that it is better able to balance the employee’s need for certainty with the interests of our stockholders.

Additionally, our named executive officers may be entitled to acceleration benefits under stock option and equity incentive plans in connection with a change of control. Our 2003 Equity Incentive Plan contains certain acceleration benefits providing for the accelerated vesting of equity awards in the event of a change of control if such awards are not assumed or substitute awards are not issued. Our 2005 Equity Incentive Plan contains similar provisions, as well as a “double trigger” acceleration benefit that applies if services are terminated for certain reasons within 12 months following a change of control. We believe that these “double trigger” acceleration benefits are common practice among comparable companies.

Information regarding the change of control agreements and the potential value of payments upon termination or change of control is provided for the named executive officers under the headings “Employment, Change of Control and Severance Arrangements” and “Potential Payments Upon Termination or Change of Control.”

Keith Katkin. Mr. Katkin, our President and Chief Executive Officer, is compensated with a base salary and, depending on performance and our financial condition, an annual incentive bonus in an amount targeted at 50% of his then-current annual base salary, as well as the annual grant of an equity award. In November 2012, his base salary was increased by 9.1% to $578,782, effective as of October 1, 2012, representing a merit-based increase for fiscal 2012 performance and a market-based adjustment that is consistent with the decision made by the Compensation Committee in fiscal 2010 to adjust base salaries over a three-year period, starting in fiscal 2011, for the Company’s executive officers to competitive levels at or near the 50th percentile as compared to the Company’s peer group. The total change in Mr. Katkin’s base salary, including the merit-based increase and market-based adjustment, is expected to raise his base compensation to the 50th percentile of the Company’s peer group. On December 17, 2012, two trading days after our initial release of year-end earnings results, Mr. Katkin received an annual equity award representing a mix of stock options and full-value restricted stock units to vest and become exercisable over a period of four years, in which he received an option to purchase 225,000 shares of common stock, with 25% of the underlying shares vesting on the first anniversary of the grant date and the remainder quarterly over the next three years, and a grant of 147,375 restricted stock units, with 25% of the underlying shares vesting on each anniversary of the grant date so that the award is fully vested on the fourth anniversary of the grant. In addition, Mr. Katkin was awarded on December 17, 2012 a performance-based grant of restricted stock units representing the right to receive 73,125 shares of common stock. The grant is tied to a performance milestone relating to the attainment of a certain revenue level for NUEDEXTA during the 2013 fiscal year, with time-based vesting to commence upon the achievement of the specified milestone, with 50% of the underlying shares vesting on the first anniversary following the achievement of the performance milestone, approximately two years after date of grant for a milestone that is estimated to be achieved in one year, and thereafter the grant is to vest in two equal installments of 25% of the underlying shares on each of the next two anniversaries so that the award is fully vested on the third anniversary of the achievement of the milestone, approximately four years from grant for a milestone that is estimated to be achieved in one year.

Joao Siffert, M.D. Dr. Siffert, our Senior Vice President of Research and Development, Chief Scientific Officer is compensated with a base salary and, depending on performance and our financial condition, an annual incentive bonus in an amount targeted at 40% of his then-current annual base salary. In November 2012, his base salary was increased by 3.0% to $362,152 effective as of October 1, 2012, representing a merit-based increase for fiscal 2012 performance. On December 17, 2012, two trading days after our initial release of year-end earnings results, Dr. Siffert received an annual equity award representing a mix of stock options and full-value restricted stock units to vest and become exercisable over a period of four years, in which he received an option to purchase 75,000 shares of common stock, with 25% of the underlying shares vesting on the first anniversary of the grant date and the remainder quarterly over the next three years, and a grant of 49,125 restricted stock units, with 25% of the underlying shares vesting on each anniversary of the grant date so that the award is fully vested on the fourth anniversary of the grant. In addition, Dr. Siffert was awarded on December 17, 2012 a performance-based grant of restricted stock units representing the right to receive 34,875 shares of common stock. The grant is tied to a performance milestone relating to the attainment of a certain revenue level for NUEDEXTA during the 2013 fiscal year, with time-based vesting to commence upon the achievement of the specified milestone, with 50% of the underlying shares vesting on the first anniversary following the achievement of the performance milestone, approximately two years after date of grant for a milestone that is estimated to be achieved in one year, and thereafter the grant is to vest in two equal installments of 25% of the underlying shares on each of the next two anniversaries so that the award is fully vested on the third anniversary of the achievement of the milestone, approximately four years from grant for a milestone that is estimated to be achieved in one year.

Rohan Palekar. Mr. Palekar, our Senior Vice President and Chief Commercial Officer, is compensated with a base salary and, depending on performance and our financial condition, an annual incentive bonus in an amount targeted at 40% of his then-current annual base salary. In November 2012, his base salary was increased by 3.2% to $371,520, effective as of October 1, 2012, representing a merit-based increase for fiscal 2012 performance. On December 17, 2012, two trading days after our initial release of year-end earnings results, Mr. Palekar received an annual equity award representing a mix of stock options and full-value restricted stock units to vest and become exercisable over a period of four years, in which he received an option to purchase 56,250 shares of common stock, with 25% of the underlying shares vesting on the first anniversary of the grant date and the remainder quarterly over the next three years, and a grant of 36,844 restricted stock units, with 25% of the underlying shares vesting on each anniversary of the grant date so that the award is fully vested on the fourth anniversary of the grant. In addition, Mr. Palekar was awarded on December 17, 2012 a performance-based grant of a restricted stock unit representing the right to receive 26,156 shares of common stock. The grant is tied to a performance milestone relating to the attainment of a certain revenue level for NUEDEXTA during the 2013 fiscal year, with time-based vesting to commence upon the achievement of the specified milestone, with 50% of the underlying shares vesting on the first anniversary following the achievement of the performance milestone, approximately two years after date of grant for a milestone that is estimated to be achieved in one year, and thereafter the grant is to vest in two equal installments of 25% of the underlying shares on each of the next two anniversaries so that the award is fully vested on the third anniversary of the achievement of the milestone, approximately four years from grant for a milestone that is estimated to be achieved in one year.

Christine Ocampo. Ms. Ocampo, our Vice President of Finance, is compensated with a base salary and, depending on performance and our financial condition, an annual incentive bonus in an amount targeted at 30% of her then-current annual base salary. In November 2012, her base salary was increased by 9.9% to $260,101, effective as of October 1, 2012, representing a merit-based increase for fiscal 2012 performance and a market-based adjustment that is consistent with the decision made by the Compensation Committee in fiscal 2010 to adjust base salaries over a three-year period, starting in fiscal 2011, for the Company’s executive officers to competitive levels at or near the 50th percentile as compared to the Company’s new peer group. The total change in Ms. Ocampo’s base salary, including the merit-based increase and market-based adjustment, is expected to raise her base compensation to between the 25th and 50th percentile of the Company’s peer group adopted during the 2011 fiscal year. On December 17, 2012, two trading days after our initial release of year-end earnings results, Ms. Ocampo received an annual equity award representing a mix of stock options and full-value restricted stock units to vest and become exercisable over a period of four years, in which she received an option to purchase 32,500 shares of common stock, with 25% of the underlying shares vesting on the first anniversary of the grant date and the remainder quarterly over the next three years, and a grant of 21,288 restricted stock units, with 25% of the underlying shares vesting on each anniversary of the grant date so that the award is fully vested on the fourth anniversary of the grant. In addition, Ms. Ocampo was awarded on December 17, 2012 a performance-based grant of restricted stock units representing the right to receive 8,963 shares of common stock. The grant is tied to a performance milestone relating to the attainment of a certain revenue level for NUEDEXTA during the 2013 fiscal year, with time-based vesting to commence upon the achievement of the specified milestone, with 50% of the underlying shares vesting on the first anniversary following the achievement of the performance milestone, approximately two years after date of grant for a milestone that is estimated to be achieved in one year, and thereafter the grant is to vest in two equal installments of 25% of the underlying shares on each of the next two anniversaries so that the award is fully vested on the third anniversary of the achievement of the milestone, approximately four years from grant for a milestone that is estimated to be achieved in one year.

Deductibility of Executive Compensation. In making compensation decisions affecting our executive officers, the Compensation Committee considers our ability to deduct under applicable federal corporate income tax law compensation payments made to executives. Specifically, the Compensation Committee considers the requirements and impact of Section 162(m) of the Internal Revenue Code, which limits the tax deductibility to us of compensation in excess of $1.0 million in any year for certain executive officers, except for qualified “performance-based compensation” under the Section 162(m) rules. The Compensation Committee considers the

Section 162(m) rules as a factor in determining compensation, but will not necessarily limit compensation to amounts deductible under Section 162(m). No covered executive’s compensation for Section 162(m) purposes exceeded $1.0 million for fiscal 2012.

Accounting for Share-Based Compensation. In accordance with the Financial Accounting Standards Board’s Accounting Standards Codification 718, we are required to estimate the value for each award of equity compensation at the measurement date using the fair value method and record an expense over the service period of the award. Accounting rules also require us to record cash compensation as an expense at the time the obligation is incurred.

There is no pre-established policy or target for the allocation of compensation. The factors described above, as well as the overall compensation philosophy, are reviewed to determine the appropriate level and mix of compensation. In fiscal 2012, the largest portion of compensation to Mr. Katkin, Dr. Siffert, Mr. Palekar, and Ms. Ocampo was in the form of equity compensation.

Compensation, including base salary adjustments, for our named executive officers is reviewed annually, usually in the first quarter of the fiscal year and upon promotion or other change in job responsibilities.

There are no minimum stock ownership guidelines for our executives or employees, although senior members of our management team are encouraged and expected to have a significant direct interest in the value of our common stock through open market purchases and/or receipt of equity awards.

Our compensation policies are designed and are continually being developed to retain and motivate our executive officers and to reward them for outstanding individual and corporate performance.

The Compensation Committee of the Company has reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the foregoing Compensation Discussion and Analysis be included in this proxy statement.

The following table summarizes compensation paid, awarded or earned for services rendered during fiscal 2010, 2011 and 2012 by our President and Chief Executive Officer, our Senior Vice President and Chief Commercial Officer, our Senior Vice President, Research and Development and our Vice President, Finance. We refer to these executive officers collectively as our “named executive officers.”

The following table sets forth certain information regarding grants of plan-based awards to the named executive officers during fiscal 2012.

The following table shows information regarding outstanding equity awards at September 30, 2012 for our named executive officers.

The following table sets forth the vesting in fiscal 2012 of shares of restricted stock or restricted stock units held by the named executive officers, as well as the options exercised by our named executive officers during fiscal 2012.

We do not have a defined benefit plan. Our named executive officers did not participate in, or otherwise receive any special benefits under, any pension or defined benefit retirement plan sponsored by us during fiscal 2012.

During fiscal 2012, our named executive officers did not contribute to, or earn any amount with respect to, any defined contribution or other plan sponsored by us that provides for the deferral of compensation on a basis that is not tax-qualified.

We have entered into employment agreements with each of the named executive officers. These agreements set forth the individual’s base salary, bonus compensation, equity compensation and other employee benefits, which are described above in the Compensation Discussion and Analysis. All employment agreements provide for “at-will” employment, meaning that either party can terminate the employment relationship at any time, although our agreements with our named executive officers provide that they would be eligible for severance benefits in certain circumstances following a termination of employment without cause. These arrangements are described below.

Change of Control Agreements. We have entered into change of control agreements with each of our named executive officers. The change of control agreements provide certain severance benefits to each officer if his or her employment is terminated within 12 months following a “change of control,” which shall have occurred if (i) any person or entity, including a group deemed to be a person under Section 14(d)(2) of the Exchange Act, becomes the “Beneficial Owner” (as defined in Rule 13d-3 under the Exchange Act) of securities of the Company representing 50% or more of the combined voting power of the Company’s securities entitled to vote in the election of directors of the Company; or (ii) as a result of or in connection with a proxy solicitation made by a third party pursuant to Regulation 14A of the Exchange Act, the individuals who were our directors immediately before the election cease to constitute a majority of the Board; or (iii) there occurs a reorganization, merger, consolidation or other corporate transaction to which we are a party and in which our stockholders

immediately prior to such transaction do not, immediately after such transaction, own more than 50% of the combined voting power of the Company; or (iv) all or substantially all of the assets of the Company are sold, liquidated or distributed, other than in connection with a bankruptcy, insolvency or other similar proceeding, or an assignment for the benefit of creditors.

These severance benefits will be paid only if (i) the termination of employment occurs subsequent to the signing of an agreement, the consummation of which would result in a change of control, or within 12 months following the change of control, and (ii) the termination was without “cause” or was a “resignation for good reason” (as such terms are defined). If these conditions are met for a particular officer, he or she will receive severance payments equal to either 12 months (for Vice Presidents), 18 months (for Ms. Ocampo) or 24 months (for Senior Vice Presidents and above) of base salary, plus an amount equal to the greater of (A) the aggregate bonus payment(s) received by such officer in the Company’s preceding fiscal year or (B) the officer’s then-current target bonus amount; provided, however, that if the officer ceases to be employed due to a “disability change of control termination” (as defined in the change of control agreement), then the severance payment will be prorated by a fraction, the numerator of which is the number of days elapsed from the date of the change of control (or the signing of an agreement, the consummation of which will result in a change of control, if such death or disability occurs prior to the actual change of control) through the date of termination, and the denominator of which is 365. Additionally, the vesting of outstanding equity awards will accelerate and the officer will be entitled to up to 12 months of post-termination benefits continuation under COBRA. Messrs. Katkin and Palekar and Dr. Siffert, as senior executive officers, are entitled to severance payments equal to 24 months of base salary, while Ms. Ocampo is entitled to severance payments equal to 18 months of base salary.

Severance Benefits without a Change of Control. The employment agreement with Mr. Katkin confers certain severance benefits even in the absence of a change of control. In the event Mr. Katkin is terminated without “cause” or he resigns for “good reason” (as such terms are defined) in the absence of a change of control, he will be eligible to receive severance benefits in an amount equal to one year of base salary, plus accelerated vesting of all outstanding equity awards.

Change of Control Provisions in Equity Plans. Under the Company’s 2003 and 2005 Equity Incentive Plans, in any change of control transaction (e.g., the acquisition of the Company by way of merger), if the successor corporation does not assume outstanding awards or issue substitute awards, then the vesting of such awards will accelerate so that they are fully exercisable. The Compensation Committee may also, in its discretion, elect to accelerate the vesting of any or all outstanding awards even if the successor corporation will assume such awards or provide for substitute awards. The vesting of certain options granted to non-employee directors under the 2005 Equity Incentive Plan will automatically accelerate immediately prior to any change of control transaction. Additionally, the 2005 Equity Incentive Plan provides that if a successor corporation assumes outstanding awards (or issues replacement awards) and the award holder is terminated without cause within 12 months following the change of control, then the vesting of awards then held by that person will automatically accelerate. In the event of a proposed dissolution or liquidation of the Company, the Board may cause awards granted under the 2003 and 2005 Equity Incentive Plans to be fully vested and exercisable (but not after their expiration date) before the dissolution is completed, but contingent on its completion.

The table below shows the benefits potentially payable to each of our named executive officers if a change of control termination occurred on September 30, 2012 (after giving effect to the compensation actions taken by the Compensation Committee in November 2012). The closing price per share of our common stock on The NASDAQ Global Market on September 28, 2012 (which was the last business day of fiscal 2012) was $3.20.

The table below shows the benefits potentially payable to Mr. Katkin if his employment was terminated on September 30, 2012 without cause or if he chose to resign for good reason in the absence of a change of control.

We have established and maintain a retirement savings plan under Section 401(k) of the Internal Revenue Code. The Internal Revenue Code allows eligible employees to defer a portion of their compensation, within prescribed limits, on a tax deferred basis through contributions to a 401(k) plan. Our 401(k) plan permits us to make matching contributions on behalf of eligible employees, and we currently make these matching contributions up to a maximum amount of 50% of the first 4% of salary contributed to the plan per year. In fiscal 2012, the total value of the Company’s matching contributions on behalf of the named executive officers was $18,310.

A summary of the non-employee director compensation arrangements for fiscal 2013 (effective October 1, 2012) is set forth below.

Non-employee directors are also reimbursed for their reasonable out-of-pocket expenses incurred in connection with attending Board and committee meetings and in attending continuing education seminars, to the extent that attendance is required by the Board or the committee(s) on which that director serves.

In fiscal 2012, the Company awarded restricted stock units representing 30,000 shares of common stock to each non-employee director. These awards vest over one year. The total grant-date value of these awards was $90,000, based on a closing stock price of $3.00 on the NASDAQ Global Market on the date of grant.

The Compensation Committee and the Board reassesses the appropriate level of equity compensation for non-employee directors on an annual basis. Future equity compensation payments will be determined on a year-by-year basis for the foreseeable future due to the volatility of the Company’s stock price.

The following table shows the compensation paid in fiscal 2012 to the Company’s non-employee directors.

The Audit Committee evaluates auditor performance, manages relations with the Company’s independent registered public accounting firm, and evaluates policies and procedures relating to internal control systems. The Audit Committee operates under a written Audit Committee Charter that has been adopted by the Board, a copy of which is available on the Company’s website at www.avanir.com. All members of the Audit Committee currently meet the independence and qualification standards for Audit Committee membership set forth in the listing standards provided by NASDAQ and the SEC.

No member of the Audit Committee is a professional accountant or auditor. The members’ functions are not intended to duplicate or to certify the activities of management and the independent registered public accounting firm. The Audit Committee serves a board-level oversight role in which it provides advice, counsel and direction to management and the auditors on the basis of the information it receives, discussions with management and the auditors, and the experience of the Audit Committee’s members in business, financial and accounting matters.

The Audit Committee oversees the Company’s financial reporting process on behalf of the Board. The Company’s management has the primary responsibility for the financial statements and reporting process, including the Company’s system of internal controls. In fulfilling its oversight responsibilities, the Audit Committee reviewed with management the audited financial statements included in the Annual Report on Form 10-K for the fiscal year ended September 30, 2012. This review included a discussion of the quality and the acceptability of the Company’s financial reporting, including the nature and extent of disclosures in the financial statements and the accompanying notes. The Audit Committee also reviewed the progress and results of the testing of the design and effectiveness of its internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002.

The Audit Committee also reviewed with the Company’s independent registered public accounting firm, which is responsible for expressing an opinion on the conformity of the audited financial statements with accounting principles generally accepted in the United States of America, their judgments as to the quality and the acceptability of the Company’s financial reporting and such other matters as are required to be discussed with the Committee under generally accepted auditing standards, including Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1. AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T. The Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by the Public Company Accounting Oversight Board. The Audit Committee discussed with the independent registered public accounting firm their independence from management and the Company, including the matters required by the applicable rules of the Public Company Accounting Oversight Board.

In addition to the matters specified above, the Audit Committee discussed with the Company’s independent registered public accounting firm the overall scope, plans and estimated costs of their audit. The Committee met with the independent registered public accounting firm periodically, with and without management present, to discuss the results of the independent registered public accounting firm’s examinations, the overall quality of the Company’s financial reporting and the independent registered public accounting firm’s reviews of the quarterly financial statements, and drafts of the quarterly and annual reports.

In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the Company’s audited financial statements should be included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2012.

We know of no other matters to be submitted to a vote of stockholders at the annual meeting. If any other matter is properly brought before the annual meeting or any adjournment thereof, it is the intention of the persons named in the enclosed proxy to vote the shares they represent in accordance with their judgment. In order for any stockholder to nominate a candidate or to submit a proposal for other business to be acted upon at a given annual meeting, he or she must provide timely written notice to our corporate secretary in the form prescribed by our Bylaws, as described below.

Stockholder proposals intended to be included in the 2014 annual meeting proxy materials must be received by the Secretary of the Company no later than September 4, 2013, or otherwise as permitted by applicable law (the “Proxy Deadline”). The form and substance of these proposals must satisfy the requirements established by the Company’s Bylaws and the SEC, and the timing for the submission of any such proposals may be subject to change as a result of changes in SEC rules and regulations.

Additionally, stockholders who intend to present a stockholder proposal at the 2014 annual meeting must provide the Secretary of the Company with written notice of the proposal between 90 and 120 days prior to the date of the annual meeting, provided, however, that if the 2014 annual meeting date is advanced by more than 30 days before or delayed by more than 60 days after the anniversary date of the 2013 annual meeting, then stockholders must provide notice within time periods specified in our Bylaws. Notice must be tendered in the proper form prescribed by our Bylaws. Proposals not meeting the requirements set forth in our Bylaws will not be entertained at the meeting.

Additionally, any stockholder seeking to recommend a director candidate or any director candidate who wishes to be considered by the Corporate Governance Committee, the committee that recommends a slate of nominees to the Board for election at each annual meeting, must provide the Secretary of the Company with a completed and signed biographical questionnaire on or before the Proxy Deadline. Stockholders can obtain a copy of this questionnaire from the Secretary of the Company upon written request. The Corporate Governance Committee is not required to consider director candidates received after this date or without the required questionnaire. The Corporate Governance Committee will consider all director candidates who comply with these requirements and will evaluate these candidates using the criteria described above under the caption, “Nomination of Directors.” Director candidates who are then approved by the Board will be included in the Company’s proxy statement for that annual meeting.

Our annual report to stockholders for the fiscal year ended September 30, 2012, including audited financial statements, accompanies this Proxy Statement. Copies of our Annual Report on Form 10-K for fiscal 2012 and the exhibits thereto are available from the Company without charge upon written request of a stockholder. Copies of these materials are also available online through the Securities and Exchange Commission at www.sec.gov. The Company may satisfy SEC rules regarding delivery of proxy materials, including the proxy statement, annual report and Notice, by delivering a single Notice and, if applicable, a single set of proxy materials to an address shared by two or more Company stockholders. This delivery method can result in meaningful cost savings for the Company. In order to take advantage of this opportunity, the Company may deliver only one Notice and, if applicable, a single set of proxy materials to multiple stockholders who share an address, unless contrary instructions are received prior to the mailing date. Similarly, if you share an address with another stockholder and have received multiple copies of our Notice and/or other proxy materials, you may write or call us at the address and phone number below to request delivery of a single copy of the Notice and, if applicable, other proxy materials in the future. We undertake to deliver promptly upon written or oral request a separate copy of the Notice and, if applicable, other proxy materials, as requested, to a stockholder at a shared address to which a single copy of the Notice and/or other proxy materials was delivered. If you hold stock as a record

stockholder and prefer to receive separate copies of a Notice and, if applicable, other proxy materials either now or in the future, please contact the Company’s investor relations department at 20 Enterprise, Suite 200, Aliso Viejo California 92656 or by telephone at (949) 389-6700. If your stock is held through a brokerage firm or bank and you prefer to receive separate copies of a Notice and, if applicable, other proxy materials either now or in the future, please contact your brokerage firm or bank.

VOTE BY INTERNET - www.proxyvote.com

Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.

ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS

If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.

VOTE BY PHONE - 1-800-690-6903

Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.

VOTE BY MAIL

Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.


AVANIR PHARMACEUTICALS, INC.

The Board of Directors recommends that you vote FOR the following:

		Vote on Directors

1.		Election of Directors

		Nominees:
		01) David J. Mazzo, Ph.D.
		02) Craig A. Wheeler
		03) Scott M. Whitcup, M.D.

		Vote on Proposals


For All	Withhold All	For All Except	To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below.


¨	¨	¨

The stockholder(s) hereby appoint(s) Keith A. Katkin and Christine G. Ocampo, or either of them, as proxies, each with the power to appoint his or her substitute, and hereby authorize(s) them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of Common Stock of Avanir Pharmaceuticals, Inc. that the stockholder(s) is/are entitled to vote at the 2013 Annual Meeting of Stockholders to be held at 9:00 a.m. Pacific Time on February 14, 2013 at the Renaissance Club Sport Aliso Viejo Hotel, located at 50 Enterprise, Aliso Viejo, California, and at any adjournment or postponement thereof.

This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors’ recommendations and in the discretion of the proxy holders on all other matters that may come before the meeting.

(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)


	2012		2011
*Audit Fees:*
Consists of fees billed for professional services rendered for the audit of the Company’s annual financial statements and the review of the interim financial statements included in the Company’s Quarterly Reports (together, the “*Financial Statements*”) and for services normally provided in connection with statutory and regulatory filings or engagements	$	213,720	$	232,832
*Other Fees:*
Audit-Related Fees
Consists of fees billed for assurance and related services reasonably related to the performance of the annual audit or review of the Financial Statements (defined above)		37,854		52,205
Tax Fees
Consists of fees billed for tax compliance, tax advice and tax planning		—		—
All Other Fees
Consists of fees billed for other products and services not described above, which consisted of fees relating to: 401K audit, accounting policy and auditor consent		26,741		23,055

Total Other Fees		64,595		75,260

*Total All Fees*	$	278,315	$	308,092


Plan category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights(1)		Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in First Column)(2)
Equity compensation plans approved by security holders		331,934	$	8.24		674,382
Equity compensation plans not approved by security holders		7,810,534	$	2.44		9,663,594

Total		8,142,468	$	2.67		10,337,976


	Shares Beneficially Owned
Name and Address of Beneficial Owner	Number(1)		Percent of Class(2)
*Greater than 5% Holders*
T. Rowe Price Associates, Inc. (3)		21,663,911		15.8	%
100 E. Pratt Street
Baltimore, MD 21202
FMR LLC (4)		15,795,696		11.5	%
82 Devonshire
Boston, MA 02109

Ingalls & Snyder LLC (5)		13,583,440		9.9	%
61 Broadway
New York, NY 10006
BlackRock Institutional Trust Company, N.A. (6)		8,882,184		6.5	%
400 Howard Street
San Francisco, CA 94105
Wellington Management Company, LLP (7)		8,542,530		6.2	%
280 Congress Street
Boston, MA 02210
Vanguard Group, Inc. (8)		6,968,975		5.1	%
P.O. Box 2600
Valley Forge, PA 19482-2600

*Current directors and named executive officers:*

Keith A. Katkin (9)		1,720,861		1.2	%
Craig A. Wheeler (10)		338,844		*
Hans E. Bishop (11)		45,000		*
David J. Mazzo, Ph.D. (12)		274,844		*
Dennis G. Podlesak (13)		274,844		*
Scott M. Whitcup, M.D. (14)		273,844		*
Rohan Palekar (15)		50,000		*
Joao Siffert, M.D. (16)		127,513		*
Christine G. Ocampo (17)		315,551		*
All current executive officers and directors as a group (9 persons)		3,421,301		2.4	%


Acorda Therapeutics	Isis Pharmaceuticals	Pozen

Affymax	ISTA Pharmaceuticals	Questcor Pharmaceuticals

Alkermes	MAP Pharmaceuticals	Savient Pharmaceuticals

Allos Therapeutics	Momenta Pharmaceuticals	Seattle Genetics

AMAG Pharmaceuticals	Nektar Therapeutics	Somaxon Pharmaceuticals

Cadence Pharmaceuticals	NPS Pharmaceuticals	Theravance

Cell Therapeutics	Optimer Pharmaceuticals	Vical

Dyax	Osiris Therapeutics	ViroPharma

Halozyme Therapeutics	Pain Therapeutics	VIVUS


				Base Salary — Market Data(2)
Name	Title	Fiscal 2013 Base Salary(1)		25^th Percentile		50^th Percentile		75^th Percentile
Keith A. Katkin	President and Chief Executive Officer	$	578,782	$	520,954	$	578,333	$	673,586
Joao Siffert, M.D.	Senior Vice President, Research and Development, Chief Scientific Officer	$	362,152	$	324,770	$	352,841	$	373,997
Rohan Palekar	Senior Vice President, Chief Commercial Officer	$	371,520	$	—	$	333,852	$	350,880
Christine G. Ocampo	Vice President, Finance	$	260,101	$	246,854	$	266,256	$	283,387


Name	Age		Position
Keith A. Katkin		41	President and Chief Executive Officer
Gregory J. Flesher		42	Senior Vice President, Corporate Development and Chief Business Officer
Randall E. Kaye, M.D.		50	Senior Vice President, Medical Affairs and Chief Medical Officer
Rohan Palekar		47	Senior Vice President and Chief Commercial Officer
Joao Siffert, M.D.		48	Senior Vice President, Research and Development, Chief Scientific Officer
Christine G. Ocampo		40	Vice President, Finance (principal financial officer)


Name	Title	Fiscal 2012 Ending Base Salary		Fiscal 2013 Base Salary(1)		Percentage (%) Increase
Keith A. Katkin	President and Chief Executive Officer	$	530,506	$	578,782	$	9.1	%
Joao Siffert, M.D.	Senior Vice President, Research and Development, Chief Scientific Officer	$	351,604	$	362,152	$	3.0	%
Rohan Palekar	Senior Vice President, Chief Commercial Officer	$	360,000	$	371,520	$	3.2	%
Christine G. Ocampo	Vice President, Finance	$	236,670	$	260,101	$	9.9	%


		Target Bonus for Fiscal 2013 (% of			Target Annual Incentive Bonus — Market Data⁽¹⁾
		Target Bonus for Fiscal 2013 (% of			25^th			50^th			75^th
Name	Title	Base Salary)			Percentile			Percentile			Percentile
Keith A. Katkin	President and Chief Executive Officer		50	%		50	%		55	%		60	%
Joao Siffert, M.D.	Senior Vice President, Research and Development, Chief Scientific Officer		40	%		30	%		35	%		40	%
Rohan Palekar	Senior Vice President, Chief Commercial Officer		40	%		35	%		40	%		45	%
Christine G. Ocampo	Vice President, Finance		30	%		30	%		30	%		35	%


Weighted Average Score	Payout Level (Percent of Target Amount)
0		0	%
1		0	%
2		50	%
3		100	%
4		125	%
5		150	%


Corporate Performance Goal	Weighting%			Scoring of Achievement of Corporate Performance Goal
NUEDEXTA Net Revenue
NUEDEXTA Net Revenues		50.0	%		4.12
Clinical Development
EMA Progress		10.0	%		3.00
Clinical Development Programs		15.0	%		0.69
Financial Operations
Cash Position at Year-End of Fiscal 2012		10.0	%		5.00
Fiscal 2012 Net Operating Cash Burn for Budgeted Activities		10.0	%		5.00
Corporate Development
Corporate Development		5.0	%		3.00


Name	Title	Fiscal 2012
Keith A. Katkin	President and Chief Executive Officer	$	306,367
Joao Siffert, M.D.	Senior Vice President, Research and Development, Chief Scientific Officer	$	141,872
Rohan Palekar	Senior Vice President, Chief Commercial Officer	$	83,160	(1)
Christine G. Ocampo	Vice President, Finance	$	82,006


Name and Principal Position	Fiscal Year		Salary		Non-Equity Plan Performance Awards(1)		Option Awards(2)		Stock Awards(2)		All Other Compensation(3)		Total
Keith A. Katkin		2012	$	505,716	$	306,367	$	509,119	$	234,950	$	26,801	$	1,582,953
President and Chief		2011	$	495,800	$	185,925	$	1,368,640	$	261,250	$	24,023	$	2,335,638
Executive Officer		2010	$	410,199	$	307,649	$	581,383	$	—	$	24,729	$	1,323,960

Rohan Palekar (4)		2012	$	237,356	$	83,160	$	757,295	$	169,000	$	11,458	$	1,258,269
Senior Vice President and Chief Commercial Officer

Joao Siffert, M.D. (5)		2012	$	351,604	$	141,872	$	84,853	$	54,575	$	24,706	$	657,610
Senior Vice President,		2011	$	56,731	$	89,578	$	579,306	$	—	$	7,377	$	732,992
Research and Development, Chief Scientific Officer

Christine G. Ocampo		2012	$	224,562	$	82,006	$	135,765	$	37,000	$	21,382	$	500,715
Vice President, Finance		2011	$	220,159	$	57,173	$	248,066	$	47,025	$	18,288	$	590,711
		2010	$	210,678	$	94,805	$	213,563	$	—	$	14,204	$	533,250


Name	Grant Date		Performance Stock Awards: Number of Shares of Stock or Units Granted			Option Awards: Number of Securities Underlying Options Granted(1)		Exercise Price of Option Awards ($/Sh)		Grant Date Fair Value of Stock and Option Awards(2)
Keith A. Katkin		12/15/2011		30,000	(3)		337,500	$	1.85	$	564,619
		12/15/2011		97,000	(4)					$	179,450

Rohan Palekar		4/3/2012		20,000	(3)		275,000	$	3.38	$	824,895
		4/3/2012		30,000	(4)					$	101,400

Joao Siffert, M.D.		12/15/2011		8,125	(3)		56,250	$	1.85	$	99,884
		12/15/2011		21,375	(4)					$	39,544

Christine G. Ocampo		12/15/2011		6,250	(3)		90,000	$	1.85	$	147,327
		12/15/2011		13,750	(4)					$	25,438


	Option Awards								Stock Awards
	Number of Securities Underlying Unexercised Options				Option Exercise Price		Option Expiration Date		Number of Shares or Units of Stock that Have Not Vested			Market Value of Shares or Units of Stock that Have Not Vested(1)
Name	Exercisable		Unexercisable		Option Exercise Price		Option Expiration Date		Number of Shares or Units of Stock that Have Not Vested
Keith A. Katkin		75,000		—	$	11.76		7/5/15		31,250	(2)	$	100,000
		7,500		—	$	11.68		12/7/15		30,000	(3)	$	96,000
		130,960		—	$	1.29		3/21/17		97,000	(4)	$	310,400
		120,781		—	$	2.41		9/10/17		—		$	—
		384,656		92,194	$	0.88		7/25/18		—		$	—
		27,900		27,900	$	0.53		12/16/18		—		$	—
		287,100		130,500	$	1.74		11/27/19		—		$	—
		175,000		225,000	$	4.18		12/1/20		—		$	—
		—		337,500	$	1.85		12/15/21		—		$	—
Rohan Palekar		—		275,000	$	3.38		4/3/22		20,000	(3)	$	64,000
		—		—	$	—		—		30,000	(4)	$	96,000
Joao Siffert, M.D.		65,000		195,000	$	2.74		9/6/21		8,125	(3)	$	26,000
		—		56,250	$	1.85		12/15/21		21,375	(4)	$	68,400
Christine G. Ocampo		35,350		22,350	$	0.88		7/25/18		5,625	(2)	$	18,000
		56,875		8,125	$	0.53		12/16/18		6,250	(3)	$	20,000
		67,113		47,937	$	1.74		11/27/19		13,750	(4)	$	44,000
		31,719		40,781	$	4.18		12/1/20		—		$	—
		—		90,000	$	1.85		12/15/21		—		$	—


Name	Base Salary ($)(1)		Bonus Payment ($)		Accelerated Vesting of Options($)(2)		Accelerated Vesting of Restricted Stock($)(3)		Total ($)
Keith A. Katkin (4)	$	1,061,012	$	265,253	$	934,538	$	506,400	$	2,767,203
Rohan Palekar (5)	$	720,000	$	72,000	$	—	$	160,000	$	952,000
Joao Siffert, M.D. (6)	$	703,208	$	140,642	$	165,638	$	94,400	$	1,103,888
Christine G. Ocampo (7)	$	355,006	$	71,001	$	265,034	$	82,000	$	773,041


Name	Base Salary ($)		Bonus Payment ($)		Accelerated Vesting of Options ($)(1)		Accelerated Vesting of Restricted Stock ($)(2)		Total($)(3)
Keith A. Katkin	$	530,506		—	$	934,538	$	506,400	$	1,971,444


	Retainer and Meeting Fees
Annual Board Retainer Fee:
All non-employee directors	$	40,000
Annual Chairman Retainer Fees: *
Chairman of the Board	$	25,000
Audit Committee Chairman	$	25,000
Compensation Committee Chairman	$	15,000
Corporate Governance or Science Committee Chairman	$	10,000
Annual Committee Member Retainer Fees: *
Audit Committee	$	10,000
Compensation Committee	$	7,500
Corporate Governance or Science Committee	$	5,000


Name	Fees Earned or Paid in Cash		Stock Awards(1)		Total
Stephen G. Austin (2)	$	71,250	$	89,850	$	161,100
Hans E. Bishop	$	13,159	$	128,700	$	141,859
Charles A. Mathews	$	60,000	$	89,850	$	149,850
David J. Mazzo, Ph.D.	$	58,125	$	89,850	$	147,975
Dennis G. Podlesak	$	50,625	$	89,850	$	140,475
Craig A. Wheeler	$	79,375	$	89,850	$	169,225
Scott M. Whitcup, M.D.	$	54,375	$	89,850	$	144,225


The Board of Directors recommends you vote FOR the following proposals:		For	Against	Abstain

2.	Ratification of KMJ Corbin & Company, LLP as independent registered public accounting firm for the fiscal year ending September 30, 2013.	¨	¨	¨

3.	Advisory (non-binding) vote on the Company’s executive compensation.	¨	¨	¨


For address changes and/or comments, please check this box and write them on the back where indicated.		¨


Please indicate if you plan to attend this meeting.	¨	¨
	Yes	No




Signature [PLEASE SIGN WITHIN BOX]	Date	Signature (Joint Owners)	Date