You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes included in our audited financial statements and notes thereto for the year ended December 31, 2011, and Management's Discussion and Analysis of Financial Condition and Results of Operation included in our 2011 Form 10-K to which the reader is directed for additional information.

All statements included or incorporated by reference into this report other than statements or characterizations of historical fact, are forward-looking statements. Forward-looking statements are often identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "guidance", "continue," "ongoing" and similar expressions, and variations or negatives of these words. Examples of forward-looking statements contained in this report include our statements regarding: the potential for approval and launch of lomitapide, and our expectations regarding the possible timing of such events; our expectations as to the commercial potential for lomitapide, including our estimates as to the number of patients and potential market size in relevant indications; our plans for commercial marketing, sales, manufacturing and distribution; our plans for future clinical trials, and the potential timing of such events; our expectations with respect to the impact of competition on our future operations and results, our beliefs with respect to our intellectual property portfolio and the extent to which it protects us; and our forecasts regarding the timing of any future need for additional capital to fund operations. The forward-looking statements contained in this report are based on our current beliefs and assumptions with respect to future events, all of which are subject to change. Forward-looking statements are not guarantees of future performance, and are subject to risks, uncertainties and assumptions that are difficult to predict, including those discussed in the "Risk Factors" section in Part II, Item 1A of this report. It is not possible for us to predict all risks, or the extent to which any factor, or combination of factors may impact our operations or results. Our actual results could differ materially and adversely from those expressed in any forward-looking statement in this report or in our other filings with the SEC. Except as required by law, we undertake no obligation to update or revise our forward-looking statements whether as the result of new events, additional information or otherwise.

Overview

We are an emerging biopharmaceutical company focused on the development and commercialization of novel, life altering therapeutics to treat debilitating and often fatal rare diseases. Our initial focus is on therapeutics to treat severe inherited lipid disorders. Lipids are naturally occurring molecules, such as cholesterol and triglycerides, which are transported in the blood. Elevated levels of cholesterol, or hypercholesterolemia, and elevated levels of triglycerides, or hypertriglyceridemia, can dramatically increase the risk of experiencing a potentially life-threatening cardiovascular event or other serious medical issue, such as a heart attack or stroke in the case of hypercholesterolemia or acute pancreatitis in the case of hypertriglyceridemia. We are initially developing our first product candidate, lomitapide, as an oral, once-a-day treatment for patients with a rare inherited lipid disorder called homozygous familial hypercholesterolemia, or HoFH. HoFH patients are unable to clear low density lipoprotein cholesterol, known as LDL-C, or "bad cholesterol", from the body efficiently, resulting in extremely elevated LDL-C levels in the blood. As a result, these patients are at a very high risk of experiencing life-threatening cardiovascular events, and typically have a substantially reduced life span relative to unaffected individuals.

In the first quarter of 2012, we submitted a New Drug Application, or NDA, to the United States Food and Drug Administration, or FDA, and a Marketing Authorization Application, or MAA, to the European Medicines Agency, or EMA, requesting approval to market lomitapide as an adjunct to a low-fat diet and other lipid-lowering therapies, to reduce cholesterol in adult patients with HoFH. In March 2012, the EMA accepted the MAA for review with a review start date of March 20, 2012. In April 2012, the FDA accepted the NDA as being sufficiently complete to accept the filing for a full review. The FDA has informed us that the NDA will be subject to standard review. Based on meetings with the FDA and EMA, we submitted the NDA and MAA using the 56-week results from our 78-week pivotal Phase III trial of lomitapide in the treatment of adult patients with HoFH. The 56-week results of the trial were announced in May 2011. We completed the trial in late 2011, and in January 2012, we announced the 78-week results of the trial which were consistent with the 56-week results.

We are a development stage company with a limited operating history. To date, we have primarily focused on developing our lead compound, lomitapide. We have funded our operations to date primarily from the private placement of convertible preferred stock, convertible debt, venture debt, bank debt and the proceeds from our 2010 initial public offering, or IPO, and our 2011 and 2012 follow-on public offerings, or FPOs.

We have incurred losses in each year since our inception in February 2005. Our net losses were approximately $25.6 million, $39.5 million, $14.3 million and $12.2 million for the six months ended June 30, 2012, and the years ended December 31, 2011, 2010 and 2009, respectively. As of June 30, 2012, we had an accumulated deficit of approximately $156.0 million. Substantially all of our operating losses resulted from costs incurred in connection with our development programs and from general and administrative costs associated with our operations.

We expect that our near-term efforts will be focused on gaining regulatory approval of lomitapide in adult HoFH in the U.S. and EU and making filings for regulatory approval in other international markets; preparing for the commercialization of lomitapide as a treatment for adult HoFH in the U.S. and EU and initiating such activities if lomitapide is approved; initiating activities related to our planned clinical development program in Japan; and preparing for our planned clinical study in pediatric HoFH patients. In light of these near-term efforts, we have decided to delay the planned timeline for the initiation of a clinical study of lomitapide in FC to 2013. If, in the future, we elect to develop lomitapide for broader patient populations, such as for those patients with heterozygous familial hypercholesterolemia, or HeFH, who have severely elevated LDL-C, levels despite current therapies or who are statin-intolerant, or for non-FC patients with severe hypertriglyceridemia, we would plan to do so selectively either on our own or by establishing alliances with one or more pharmaceutical company collaborators, depending on, among other factors, the applicable indications, the related development costs and our available resources. In addition, in the long-term, after we achieve our goals with respect to launch of lomitapide, if approved, we plan to evaluate opportunities to leverage our infrastructure and expertise by acquiring rights to other product candidates targeted at life-threatening or substantially debilitating rare diseases.

Financial Overview

Revenue

To date, we have not generated any revenue from the sale of any products, and we do not expect to generate significant revenue unless or until we obtain marketing approval of lomitapide and commercialize the product.

Research and Development Expenses

Since our inception, our research and development activities have primarily focused on the clinical development of lomitapide and regulatory activities directed at gaining approval of lomitapide in HoFH. We recognize both internal and external research and development expenses as they are incurred. Our research and development expenses have consisted primarily of:

• salaries and related expenses for personnel;

• fees paid to contract research organizations, or CROs, in conjunction with independently monitoring our clinical trials and acquiring and evaluating data in conjunction with our clinical trials, including all related fees, such as for investigator grants, patient screening, laboratory work and statistical compilation and analysis;

• costs related to production of clinical materials and process development efforts, including fees paid to contract manufacturers;

• costs related to upfront and milestone payments under in-licensing agreements;

• costs related to compliance with regulatory requirements in the United States, the European Union and other foreign jurisdictions;

• consulting fees paid to third parties; and

• costs related to stock options or other stock-based compensation granted to personnel in development functions.

The following table summarizes our research and development expenses by project for the three and six month periods ended June 30, 2012 and 2011.

                                   Three Months              Six Months
                                  Ended June 30,           Ended June 30,
                                 2012        2011         2012        2011
                                               (in thousands)

                  Lomitapide    $ 5,424     $ 5,330     $ 10,059     $ 8,479

                  Implitapide        25          -            25         300


                  Total         $ 5,449     $ 5,330     $ 10,084     $ 8,779

We expect the level of total research and development expenses for the full year 2012 will be substantially similar to the level of research and development expenses for the full year 2011 resulting primarily from: increases in expenses due primarily to our manufacturing validation campaigns, regulatory work and related activities in connection with our NDA and MAA filings for lomitapide, increases in headcount in medical affairs, establishing phamacovigilance systems for lomitapide, and evaluating an alternative presentation of lomitapide that would allow administration to children who have difficulty swallowing capsules in our planned pediatric study in

HoFH; offset by expected decreases in clinical trial expenses as compared to 2011 due primarily to our decision to delay the planned timeline for initiation of a clinical study of lomitapide in FC to 2013 and our pivotal trial for lomitapide being substantially completed at the end of 2011. Due to the numerous risks and uncertainties associated with the timing and costs to conduct clinical trials and activities related thereto, we cannot determine these future expenses with certainty and the actual range may vary significantly from our forecasts.

Our research and development expenditures are subject to numerous uncertainties in timing and cost to completion. Completion of clinical trials may take several years or more, but the length of time generally varies according to the type, complexity, novelty and intended use of a product candidate. The cost of clinical trials may vary significantly over the life of a project as a result of differences arising during clinical development, including, among others:

• the number of trials required for approval;

• the number of sites included in the trials;

• the length of time required to enroll suitable patients;

• the number of patients that participate in the trials;

• the number of doses that patients receive;

• the drop-out or discontinuation rates of patients;

• the duration of patient follow-up;

• the number of analyses and tests performed during the trial;

• the phase of development the product candidate is in; and

• the efficacy and safety profile of the product candidate.

We have not received marketing approval for lomitapide from the FDA, the EMA, or any other foreign regulatory authority. Obtaining marketing approval is an extensive, lengthy, expensive and uncertain process, and the FDA, the EMA or any other foreign regulatory authority may delay, limit or deny approval of lomitapide for many reasons, or may require additional data, studies or trials.

Our expenses related to clinical trials are based on estimates of the services received and efforts expended pursuant to contracts with multiple research institutions and CROs that conduct and manage clinical trials on our behalf. The financial terms of these agreements are subject to negotiation and vary from contract to contract and may result in uneven payment flows. Generally, these agreements set forth the scope of work to be performed at a fixed fee or unit price. Payments under the contracts depend on factors such as the successful enrollment of patients or the completion of clinical trial milestones. We generally accrue expenses related to clinical trials based on contracted amounts applied to the level of patient enrollment and activity according to the protocol. If timelines or contracts are modified based upon changes in the clinical trial protocol or scope of work to be performed, we modify our estimates of accrued expenses accordingly on a prospective basis.

As a result of the uncertainties discussed above, we are unable to determine with certainty the duration and completion costs of our development projects or when and to what extent we will receive revenue from the commercialization and sale of lomitapide.

General and Administrative Expenses

General and administrative expenses consist primarily of compensation for employees in executive and operational functions, including finance, human resources, information technology, sales and marketing and legal. Other significant costs include stock compensation costs and professional fees for accounting and legal services, including expenses associated with obtaining and maintaining patents.

We expect that our general and administrative expenses will increase with the continued development of lomitapide, activities in anticipation of potential launch of lomitapide, and the commercialization of lomitapide, if approved. These increases will likely include increased costs for sales and marketing personnel, including sales representatives and reimbursement case managers, as well as set-up costs associated with the establishment of our commercial distribution channel for lomitapide prior to approval.

Interest Income and Interest Expense

Interest income consists of interest earned on our cash, cash equivalents and marketable securities. Interest expense consists primarily of cash and non-cash interest costs related to our outstanding debt. Non-cash interest expense consists of the amortization of capitalized costs incurred in connection with the issuance of debt. We amortize these costs over the life of our debt agreements as interest expense in our statements of operations.

Net Operating Losses and Tax Carryforwards

As of December 31, 2011, we had approximately $105.8 million of federal and state net operating loss carryforwards. We also had federal and state research and development tax credit carryforwards of approximately $11.4 million available to offset future taxable income. These federal and state net operating loss and federal and state tax credit carryforwards will begin to expire at various dates beginning in 2025, if not utilized. The Tax Reform Act of 1986 provides for a limitation on the annual use of net operating loss and research and development tax credit carryforwards following certain ownership changes that could limit our ability to utilize these carryforwards. We have not completed a study to assess whether an ownership change has occurred, or whether there have been multiple ownership changes since our inception, due to the significant costs and complexities associated with such study. Accordingly, we expect our ability to utilize the aforementioned carryforwards may be limited. Additionally, U.S. tax laws limit the time during which these carryforwards may be utilized against future taxes. As a result, we may not be able to take full advantage of these carryforwards for federal and state tax purposes.

Critical Accounting Policies and Estimates

Our management's discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses. On an ongoing basis, we evaluate these estimates and judgments, including those described below. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results and experiences may differ materially from these estimates.

While our significant accounting policies are more fully described in Note 1 to our financial statements and in our audited financial statements and notes for the year ended December 31, 2011 included in our 2011 Form 10-K to which the reader is directed for additional information, we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating our reported financial results and affect the more significant judgments and estimates that we use in the preparation of our financial statements.

Accrued Expenses

As part of the process of preparing financial statements, we are required to estimate accrued expenses. This process involves reviewing open contracts and purchase orders, communicating with applicable vendor personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of actual cost. The majority of our service providers invoice us monthly in arrears for services performed. We make estimates of our accrued expenses as of each balance sheet date in our financial statements based on facts and circumstances known to us. We periodically confirm the accuracy of our estimates with the service providers and make adjustments if necessary. Examples of estimated accrued expenses include:

• fees paid to CROs in connection with clinical trials;

• fees paid to investigative sites in connection with clinical trials;

• fees paid to contract manufacturers in connection with the production of lomitapide, including fill/finish capabilities; and

• professional service fees.

We base our expenses related to clinical trials on our estimates of the services received and efforts expended pursuant to contracts with multiple research institutions and CROs that conduct and manage clinical trials on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. Payments under some of these contracts depend on factors such as the successful enrollment of patients and the completion of clinical trial milestones. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from our estimate, we will adjust the accrual accordingly. If we do not identify costs that we have begun to incur or if

we underestimate or overestimate the level of services performed or the costs of these services, our actual expenses could differ from our estimates. We do not anticipate the future settlement of existing accruals to differ materially from our estimates.

Valuation of Financial Instruments

We regularly invest excess operating cash in deposits with major financial institutions, money market funds, notes issued by the U.S. government, as well as fixed income investments and U.S. bond funds, both of which can be readily purchased and sold using established markets. The carrying amounts of these marketable securities are generally considered to be representative of their respective fair values based upon pricing of securities with similar investment characteristics and holdings. We believe that the market risk arising from our holdings of these financial instruments is mitigated as many of these securities are government backed or of high credit quality.

Restructuring Costs

In October 2011, we initiated plans to consolidate facilities and related administrative functions into our Cambridge headquarters by the end of 2011. The reorganization included a reduction in workforce, closure of a facility and disposal of certain assets. These restructuring charges were accounted for in accordance with Accounting Standards Codification, or ASC, 420, Exit or Disposal Cost Obligations and ASC 718, Compensation - Stock Compensation. See "Results of Operations" below for a further discussion of our restructuring actions.

Stock-Based Compensation

We recognize as compensation expense the fair value, for accounting purposes, of stock options, restricted stock awards and other stock-based compensation issued to employees and directors. For service type awards, compensation expense is typically recognized over the requisite service period, which is the vesting period. For awards that vest or begin vesting upon achievement of a performance condition, the compensation expense is recognized beginning in the period when management has determined it is probable the performance condition will be achieved.

Equity instruments issued to non-employees are recorded at their fair value for accounting purposes. The compensation expense is recognized as expense over the related service period.

For equity awards that have previously been revalued, any incremental increase in the fair value has been recorded as compensation expense on the date of the modification (for vested awards) or over the remaining service (vesting) period (for unvested awards). The incremental compensation cost is the excess of the fair-value-based measure of the modified award on the date of modification over the fair-value-based measure of the original award immediately before the modification. Stock-based compensation expense includes stock options granted to employees and non-employees and has been reported in our statements of operations as follows:

                                           Three Months             Six Months
                                          Ended June 30,          Ended June 30,
                                         2012        2011        2012        2011
                                                      (in thousands)

           Research and development     $   410     $   346     $   973     $   492

           General and administrative     1,740       1,042       3,289       2,158


           Total                        $ 2,150     $ 1,388     $ 4,262     $ 2,650

In addition, restructuring costs for the three and six month periods ending June 30, 2012 contain stock-based compensation expense of $0.4 million and $1.1 million, respectively, related to the acceleration of vesting of certain stock options.

We calculate the fair value of stock-based compensation awards using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires the input of subjective assumptions, including stock price volatility and the expected life of stock options. As a recently public company, we do not have sufficient history to estimate the volatility of our common stock price or the expected life of our options. We calculate expected volatility based on reported data for selected reasonably similar publicly traded companies, or guideline peer group, for which the historical information is available. We will continue to use the guideline peer group volatility information until the historical volatility of our common stock is relevant to measure expected volatility for future option grants. The assumed dividend yield is based on our expectation of not paying dividends in the foreseeable future. We determine the average expected life of stock options

according to the "simplified method" as described in Staff Accounting Bulletin 110, which is the mid-point between the vesting date and the end of the contractual term. We determine the risk-free interest rate by reference to implied yields available from five-year and seven-year U.S. Treasury securities with a remaining term equal to the expected life assumed at the date of grant. We estimate forfeitures based on our historical analysis of actual stock option forfeitures. The assumptions used in the Black-Scholes option-pricing model for the year ended December 31, 2011 are set forth in our 2011 Form 10-K.

There is a high degree of subjectivity involved when using option-pricing models to estimate stock-based compensation. There is currently no market-based mechanism or other practical application to verify the reliability and accuracy of the estimates stemming from these valuation models, nor is there a means to compare and adjust the estimates to actual values. Although the fair value of employee stock-based awards is determined using an option-pricing model, the calculated value may not be indicative of the fair value observed in a market transaction between a willing buyer and willing seller. If factors change and we employ different assumptions when valuing our options, the compensation expense that we record in the future may differ significantly from what we have historically reported.

Results of Operations

Comparison of the Three Months Ended June 30, 2012 and June 30, 2011

The following table summarizes the results of our operations for each of the
three-month periods ended June 30, 2012 and 2011, together with the changes in
those items in dollars and as a percentage:



                                       Three Months
                                      Ended June 30,             Increase/(decrease)
                                    2012           2011             $              %
                                               (in thousands)
     Operating expenses:

     Research and development     $   5,449      $  5,329      $       120          2.3 %

     General and administrative       7,748         3,014            4,734        157.1

     Restructuring costs                546            -               546           -


     Total operating expenses        13,743         8,343            5,400         64.7


     Loss from operations           (13,743 )      (8,343 )         (5,400 )       64.7

     Interest expense                  (199 )        (332 )            133        (40.1 )

     Interest income                     28            70              (42 )      (60.0 )
. . .