Expert Report : Cross Border Merger of FTSA and Avadel 31 May

Expert Report : Cross Border Merger of FTSA and Avadel 31 May

2016 Reliance Restricted Simon MacAllister Ian Venner Partner Partner Transaction Advisory Services Assurance T +353 (0)1 221 2611

T +353 (0)21 480 5715 M +353 (0)86 830 4580 M +353 (0)86 838 7496 F +353 (0)1 475 0599 F +353 (0)21 4272465 E simon.macallister@ie.ey.com

E ian.venner@ie.ey.com Karl Byrne Assistant Director Transaction Advisory Services T +353 (0) 1 221 1596 M +353 (0)86 168 6425

F +353 (0)1 475 0599 E karl.byrne@ie.ey.com

Ernst & Young Tel: + 353 1 475 0555 Chartered Accountants

Fax: + 353 1 475 0599 Harcourt Centre ey.com Harcourt Street Dublin 2 Ireland Reliance Restricted 31 May 2016 Flamel Technologies

SA 33 Avenue du Dr. Georges Levy 69200 V nissieux FRANCE Avadel Pharmaceuticals Limited Block 10-1 Blanchardstown Corporate

Park Ballycoolin Dublin 15 Ireland Dear Sir/Madam Expert's report' as specified in the Directive 2005/56/EC

of the European Parliament and of the Council of 26 October 2005, on cross-border mergers of limited-liability companies (the "Directive")

as implemented in French law and Irish law. In accordance with your instructions, we have performed the work set out in our engagement

agreement dated 25th April 2016 (the "Engagement Agreement"). Our work has been performed in accordance with the Directive

and as implemented and specified by: The French law no 2008-649 dated 3 July 2008 and the French decree no 2009-11 dated 5 January

2009 which have implemented the Directive into French law under articles L.236-25 et seq. and R.236-13 et seq. of the French Commercial

Code ("French Regulations"); and The European Communities (Cross-Border Mergers) Regulations 2008 as amended by the

European Communities (Mergers and Divisions of Companies) (Amendment) Regulations 2011 ("Irish Regulations"). Collectively

the "Regulations". We are pleased to present the following report (the "Report") in connection with the

cross-border merger (the "Merger") of Flamel Technologies SA ("FTSA") into Avadel Pharmaceuticals Limited

("Avadel") (collectively the "Client" or the "Group") to be effected by way of acquisition

(i.e. by way of absorption under French law) as set out in the common draft terms (the "Common Draft Terms") of the

merger entered into by FTSA and Avadel to be dated on or about the date of this Report. Purpose of our report and restrictions

on its use The Report was prepared on the specific instructions of the directors of the Client solely for the purpose of the Merger

and should not be used or relied upon for any other purpose. The Report and its contents may not be quoted, referred to or shown

to any other parties except as provided in the Engagement Agreement, however the Report may be disclosed to the shareholders of

FTSA solely for the purpose of Regulation 7 of the Regulations. V Bergin, L Charleton, D Daly, G Deegan, F de Freine, D FitzGerald,

G Harman, J Higgins FCCA, N Hodgson, L Kealy, M Keane, K Kelly, H Kerr, T Lillywhite, B Maguire, E MacManus, L McCaul, J McCormack

FCCA, F McNally, C Murphy, F O'Keeffe FCCA, A O'Leary FCCA, P O'Neill, M Purcell, D Quinn, G Reid, H Sidhu US

CPA, A Tiernan, M Treacy, I Venner, R Wallace. The Irish firm Ernst & Young is a member practice of Ernst & Young Global

Limited. It is authorised by the Institute of Chartered Accountants in Ireland to carry on investment business in the Republic

We accept no responsibility or liability to any person other

than to our Client, or to such party to whom we have agreed in writing to accept a duty of care in respect of the Report, and accordingly

if such other persons choose to rely upon any of the contents of the Report they do so at their own risk Nature and scope of the

services The nature and scope of the services, including the basis and limitations, are detailed in the Engagement Agreement. We

performed our work based on the Regulations. When we were performing our work, we acted as an independent expert (the "Expert").

This analysis should not be construed as investment advice and should not be used as a basis to set a transaction price or ratio.

We assume no responsibility to any potential party or the Client to negotiate a purchase or sale at the recommended values. The

contents of the Report have been reviewed by our Client's management team, who has confirmed to us its factual accuracy.

Whilst each part of the Report addresses different aspects of our work, the entire Report should be read for full understanding

of our findings and advice. Our Report does not take account of events or circumstances arising after the Report date and we have

no responsibility to update the Report for such events or circumstances. We appreciate the opportunity to provide our services

to FTSA and Avadel. Please do not hesitate to contact us if you have any questions about this engagement or if we may be of any

further assistance. Yours faithfully, Ian Venner Partner

Abbreviations AGM Annual General Meeting Avadel Avadel Pharmaceuticals

Limited Directive Directive 2005/56/EC of the European Parliament and of the Council of 26 October 2005 Eclat clat Pharmaceuticals

Effective Date 31st December 2016 Ernst & Young EY Expert Ernst & Young or we The French law no 2008-649 dated 3 July 2008

and the French decree no 2009-11 dated 5 January 2009 which French Regulations have implemented the Directive into French law under

articles L.236-25 et seq. and R.236-13 et seq. of the French Commercial Code FTSA Flamel Technologies SA FTSA and Avadel Collectively

referred to as the Client' or the Group' Fx Foreign exchange rate IP Intellectual Property The European

Communities (Cross-Border Mergers) Regulations 2008 as amended by the European Irish Regulations Communities (Mergers and Divisions

of Companies) (Amendment) Regulations 2011 NASDAQ National Association of Securities Dealers Automated Quotations PP&E Property,

plant and equipment R&D Research and Development Regulations Collectively the French Regulations and the Irish Regulations

Report This Report dated 31 May 2016 SEC Securities and Exchange Commission $US dollar Euro 4 31 May 2016 Reliance Restricted

Flamel Expert Report 31.05.2016 - Final.Docx

Contents Background 6 1. Background 7 Overview of FTSA 9 Balance

Sheet analysis 12 2. Balance Sheet analysis 13 Merger rationale 14 Merger analysis 17 3. Merger overview 18 Final conclusions 24

4. Conclusion of value 25 Appendices 27 5. Appendix A: Signed Engagement Letter 28 6. Appendix B: Sources of information 29 5 31

May 2016 Reliance Restricted Flamel Expert Report 31.05.2016 - Final.Docx

Background 1. Background 6 31 May 2016 Reliance Restricted Flamel

Expert Report 31.05.2016 - Final.Docx

Background Background Our Report has been prepared in accordance

with Article 8 of the Directive and Article 10(2) of Council Directive 78/855/EEC of 9 October 1978 concerning mergers of public

limited liability companies, and the related provisions of the Regulations. We were appointed by the High Court in Ireland, on

the application of FTSA and Avadel, to prepare the Report as required by the Regulations. Council Directive No 2005/56/EC of 26

October 2005 on cross-border mergers of limited liability companies (the "CBM Directive") provides a set of procedures

for the merger of private companies from different states within the European Economic Area ("EEA"). While a directive

is binding in respect of the ends it must achieve, each EEA state has limited degree of autonomy regarding the means with which

it can implement certain aspects of the CBM Directive. Some differences therefore arise between the measures implementing the CBM

Directive across EEA jurisdictions. Our report is based on information provided to us by or on behalf of FTSA and Avadel, including

information from their respective advisors and from public sources. The scope of our report, as required by the Regulations, is

to: 1 State the method or methods used to arrive at the proposed exchange ratio; 2 Give the opinion of the Expert whether the proposed

exchange ratio is fair and reasonable; 3 Give the opinion of the Expert as to the adequacy of the method or methods used in the

case in question; 4 Indicate the values arrived at using each such method; 5 Give the opinion of the Expert as to the relative

importance attributed to such methods in arriving at the values decided on; and 6 Specify any special valuation difficulties which

have arisen. The Report has been prepared on the instruction of the Client to comply with the requirement of Article 8 of the Directive,

Regulation 7 of the Irish Regulations and Article L. 236-10 of the French commercial code. The Report should not be relied upon

by other persons, should not be used for any other purpose and should not be considered as investment advice of any kind whatsoever.

If persons choose to rely in any way on the Report, they do so entirely at their own risk. Typically in the case of a merger of

unrelated parties a detailed valuation would be performed to determine the relative values of each of the merging entities, this

valuation would in turn be used to determine the exchange ratio. In this case the Merger is between two companies within the same

group. Management of FTSA have determined that for this reason a detailed valuation is not required. Save for any responsibility

under Regulation 7 of the Regulations, to the fullest extent permitted by law we do not assume any responsibility and will not

accept any liability to any person for any loss suffered by any person as a result of, arising out of, or in connection with the

Report. 7 31 May 2016 Reliance Restricted Flamel Expert Report 31.05.2016 - Final.Docx

Background Background Our Report has been prepared in accordance

with Article 8 of the Directive and Article 10(2) of Council Directive 78/855/EEC of 9 October 1978 concerning mergers of public

limited liability companies, and the related provisions of the Regulations. We provided a draft of the Report to the Client and

their respective advisers to obtain their comments as to factual accuracy of the information relating to the Group contained herein,

as opposed to our opinions expressed herein, the latter of which are the responsibility of EY alone. Any amendments made to the

Report as a result of this review did not change the methodology, opinions or conclusions reached by us. The Report must not be

used for any other purpose and, save to the extent required by the Regulations, must not be recited or referred to in any document,

copied or made available (in whole or in part) to any person without our prior written express consent (which we will not unreasonably

withhold or delay) and you acknowledge that were you to do so (and without limitation) this could expose us to a risk that a third

party who otherwise would not have access to the Report, might claim to have relied upon the Report and any other advice we provide

to you to its detriment and might bring or threaten to bring an action, claim or proceedings against us. We are not obliged to

update the Report to reflect any events which may arise subsequent to the date of the Report. Shareholders who are in any doubt

as to the action they should take in relation to the Merger should consult their own independent financial advisor. 8 31 May 2016

Reliance Restricted Flamel Expert Report 31.05.2016 - Final.Docx

Overview of FTSA 9 31 May 2016 Reliance Restricted Flamel Expert

Report 31.05.2016 - Final.Docx

Overview of FTSA FTSA is a NASDAQ listed speciality pharmaceutical