FURX (MM)

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD JULY 1, 2014

4101 Lake Boone Trail, Suite 300

Raleigh, North Carolina 27607

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WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN, AS PROMPTLY AS POSSIBLE, THE ENCLOSED PROXY CARD IN THE ACCOMPANYING PREPAID REPLY ENVELOPE, OR SUBMIT YOUR PROXY BY TELEPHONE OR THE INTERNET. IF YOU ATTEND THE SPECIAL MEETING AND VOTE IN PERSON, YOUR VOTE BY BALLOT WILL REVOKE ANY PROXY PREVIOUSLY SUBMITTED.

By Order of the Board of Directors

Donald R. Reynolds

Secretary

Dated: June 4, 2014

Morrisville, North Carolina

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This proxy statement and a proxy card are first being mailed on or about June 9, 2014 to stockholders who owned shares of Company common stock as of the close of business on May 29, 2014.

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QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER

The following questions and answers are intended to address briefly some commonly asked questions regarding the merger, the merger agreement, the CVR agreement and the special meeting. These questions and answers might not address all questions that are important to you as a Company stockholder. Please refer to the “Summary” and the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred to in this proxy statement, which you should read carefully and in their entirety. You may obtain the information incorporated by reference in this proxy statement without charge by following the instructions under “Where You Can Find More Information” beginning on page 105.

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In no event will payment be made with respect to more than a single milestone event. The CVRs may not be sold, assigned, transferred, pledged, encumbered or transferred or disposed of in any other manner, in whole or in part, other than in the limited circumstances specified in the CVR agreement. In addition, the CVRs (i) will not be evidenced by a certificate or other instrument, (ii) will not have any voting or dividend rights and (iii) will not represent any equity or ownership interest in Parent, any constituent company to the merger or any of their respective affiliates. No interest will accrue on any amounts payable in respect of the CVRs.

For a more detailed description of the CVRs and the CVR agreement, see “The CVRs” beginning on page 92.

Restricted Shares. Each share of Company common stock subject to vesting, repurchase or other restrictions that is outstanding immediately prior to the effective time, which we refer to as restricted shares, will be vested and all restrictions thereon will lapse and each such restricted share will be converted into the right to receive the per share cash consideration plus one CVR.

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For a more complete summary of the conditions that must be satisfied or waived prior to the completion of the merger, see “The Merger Agreement—Conditions to the Merger” beginning on page 84.

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Because the affirmative vote required to approve the proposal to adopt the merger agreement is based upon the total number of outstanding shares of Company common stock present in person or represented by proxy, if you fail to submit a proxy or vote in person at the special meeting, or abstain, or you do not provide your bank, brokerage firm or other nominee with instructions, as applicable, this will have the same effect as a vote “AGAINST” approval of the proposal to adopt the merger agreement.

In connection with the merger agreement, the committed stockholders entered into the voting agreement, pursuant to which such committed stockholders agreed, among other things, to vote their shares of Company common stock, representing approximately 27% of the issued and outstanding shares of Company common stock as of May 29, 2014, the record date for the special meeting, in favor of the proposal to adopt the merger agreement, subject to the terms and conditions set forth in the voting agreement.

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Abstaining will have the same effect as a vote “ AGAINST” the proposal to approve the merger-related executive compensation. If you fail to submit a proxy or to vote in person at the special meeting or if your shares of Company common stock are held through a bank, brokerage firm or other nominee and you do not instruct your bank, brokerage firm or other nominee to vote your shares of Company common stock, your shares of Company common stock will not be voted, but this will not have an effect on the proposal to approve the merger related executive compensation.

Abstaining will have the same effect as a vote “ AGAINST” approval of the proposal to adjourn the special meeting, if necessary or appropriate, for the purpose of soliciting additional proxies. If you fail to submit a proxy or to vote in person at the special meeting or if your shares of Company common stock are held through a bank, brokerage firm or other nominee and you do not instruct your bank, brokerage firm or other nominee to vote your shares of Company common stock, your shares of Company common stock will not be voted, but this will not have an effect on the proposal to adjourn the special meeting.

If your shares are held by a bank, broker, trustee or nominee, you are considered the beneficial owner of shares held in “street name,” and your bank or broker is considered the stockholder of record with respect to those shares. Your bank, broker, trustee or nominee will send you, as the beneficial owner, a package describing the procedure for voting your shares. You should follow the instructions provided by them to vote your shares. You are invited to attend the special meeting if you bring a copy of your brokerage statement evidencing your beneficial ownership of Company common stock and valid photo identification; however, you may not vote these shares in person at the meeting unless you obtain a legal proxy from your bank, broker, trustee or nominee that holds your shares, giving you the right to vote the shares at the meeting.

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A control number, located on your proxy card, is designed to verify your identity and allow you to vote your shares of Company common stock, and to confirm that your voting instructions have been properly recorded when voting over the Internet or by telephone. Please be aware that if you vote by telephone or over the Internet, you might incur costs such as telephone and Internet access charges for which you will be responsible.

Beneficial Owner. If you are a beneficial owner, please refer to the instructions provided by your bank, brokerage firm or other nominee to see which of the above choices are available to you. Please note that if you are a beneficial owner and wish to vote in person at the special meeting, you must provide a legal proxy from your bank, brokerage firm or other nominee at the special meeting.

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If you properly sign your proxy card but do not mark the boxes showing how your shares should be voted on a matter, the shares represented by your properly signed proxy will be voted “FOR” approval of the proposal to adopt the merger agreement, “FOR” approval of the proposal to approve, by non-binding, advisory vote, certain compensation arrangements for the Company’s named executive officers in connection with the merger, and “FOR” approval of the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies.

For the proposal to approve the merger-related executive compensation, you may vote “FOR,” “AGAINST” or “ ABSTAIN.” Abstentions will have the same effect as if you voted “AGAINST” approval of the proposal, but broker non-votes will not have an effect on the proposal.

For the proposal to adjourn the special meeting, if necessary or appropriate, you may vote “FOR,” “AGAINST” or “ABSTAIN.” Abstentions will have the same effect as if you voted “AGAINST” approval of the proposal, but broker non-votes will not have an effect on the proposal.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement, and the documents to which we refer you in this proxy statement, as well as oral statements made or to be made by us, contain “forward-looking” statements as that term is defined by Section 27A of the Securities Act of 1933, as amended, which we refer to as the Securities Act, and Section 21E of the Exchange Act. Statements that are predictive in nature, that depend on or relate to future events or conditions, or that include words such as “believes,” “anticipates,” “expects,” “continues,” “predict,” “potential,” “contemplates,” “may,” “might,” “will,” “likely,” “could,” “should,” “estimates,” “intends,” “plans” or “projects” or the negative of those words and other similar expressions are forward-looking statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. Forward-looking statements involve known and unknown risks, assumptions and uncertainties that may cause our actual results in future periods to differ materially from those projected or contemplated in the forward-looking statements as a result of, but not limited to, the following factors:

Additional information about these factors and about the material factors or assumptions underlying such forward-looking statements may be found in our other SEC filings, including under the headings “Risk Factors” and “Business,” and information in our consolidated financial statements and notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (see the section entitled “Where You Can Find More Information” beginning on page 105). The Company cautions that the foregoing list of important factors that may affect future results is not exhaustive. When relying on forward-looking statements

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to make decisions with respect to the proposed transaction, stockholders and others should carefully consider the foregoing factors and other uncertainties and potential events. All subsequent written and oral forward-looking statements concerning the proposed transaction or other matters attributable to the Company or any other person acting on its behalf are expressly qualified in their entirety by the cautionary statements referenced above. The forward-looking statements contained herein speak only as of the date of this communication. Any or all of the Company’s forward-looking statements may turn out to be wrong. They can be affected by inaccurate assumptions or by known or unknown risks, uncertainties and other factors, many of which are beyond the Company’s control. In light of these and other uncertainties, you should not conclude that the Company will necessarily achieve any plans and objectives or projected financial results referred to in any of the forward-looking statements. The Company undertakes no obligation to update or revise the forward-looking statements for any reason, even if new information becomes available or other events occur in the future, except as may be required by law.

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PARTIES TO THE MERGER

The Company

Furiex Pharmaceuticals, Inc.

3900 Paramount Parkway, Suite 150

Morrisville, North Carolina 27560

(919) 456-7800

The Company, a corporation organized under the laws of Delaware, is a drug development company that collaborates with pharmaceutical and biotechnology companies to increase the value of their drug candidates by applying an accelerated approach to drug development, which we believe expedites research and development decision-making and can shorten drug development timelines. We share the risk with our collaborators by conducting and financing drug development programs, and in exchange, we share the potential rewards, receiving milestone and royalty payments for successful out-licensed drug candidates. This business model has generated a diversified product portfolio and pipeline with multiple therapeutic candidates, including one Phase III-ready asset, one compound in Phase III development, one compound that is with a partner pending regulatory approval in Japan, and four products on the market.

For more information about the Company, please visit its website at http://www.furiex.com . The Company’s website address is provided as an inactive textual reference only. The information contained on the Company’s website is not incorporated into, and does not form a part of, this proxy statement or any other report or document on file with or furnished to the SEC. See also “Where You Can Find More Information” beginning on page 105.

The Company common stock is listed on the NASDAQ Global Select Market under the symbol “FURX.”

Parent

Forest Laboratories, Inc.

909 Third Avenue

New York, New York 10022-4731

(212) 421-7850

Parent, a corporation organized under the laws of Delaware, develops, manufactures and sells branded forms of ethical drug products most of which require a physician’s prescription. Its most important products in the United States are marketed directly, or “detailed,” to physicians by its salesforces. It emphasizes detailing to physicians those branded ethical drugs that it believes have the most benefit to patients and potential for growth. It also focuses on the development and introduction of new products, including products developed in collaboration with licensing partners.

On February 17, 2014, Parent entered into an Agreement and Plan of Merger with Actavis and certain other parties. Actavis is a global, integrated specialty pharmaceutical company focused on developing, manufacturing and distributing generic, brand and biosimilar products. Actavis has global headquarters in Dublin, Ireland, and U.S. administrative headquarters in Parsippany, New Jersey. As a result of this pending transaction between Parent and Actavis, Parent is expected to become a wholly owned subsidiary of Actavis. The pending transaction between Parent and Actavis is expected to close in mid-year 2014, pending required approvals. The acquisition of Parent by Actavis may be consummated prior to or after the consummation of the acquisition of Furiex by Parent. In either case, the acquisition of Furiex by Parent, and the rights of stockholders under the merger agreement and the CVR agreement, will not be affected.

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Merger Subsidiary

Royal Empress, Inc.

909 Third Avenue

New York, New York 10022-4731

(212) 421-7850

Royal Empress, Inc., a Delaware corporation and wholly owned subsidiary of Parent, was incorporated in April 2014 by Parent solely for the purpose of facilitating the merger. Merger Subsidiary has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the transactions contemplated by the merger agreement.

Upon consummation of the merger, Merger Subsidiary will cease to exist, and the Company will continue as the surviving corporation.

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THE SPECIAL MEETING

Date, Time, Place and Purpose of the Special Meeting

This proxy statement is being furnished to our stockholders as part of the solicitation of proxies by the board of directors for use at the special meeting to be held on July 1, 2014, at 10:00 a.m. Eastern time, at the offices of Wyrick Robbins Yates & Ponton LLP, 4101 Lake Boone Trail, Suite 300, Raleigh, North Carolina 27607, or at any postponement or adjournment thereof. At the special meeting, holders of Company common stock will be asked to approve the proposal to adopt the merger agreement, to approve the proposal to approve, by non-binding, advisory vote, certain compensation arrangements for the Company’s named executive officers in connection with the merger, and to approve the proposal to adjourn the special meeting, if necessary or appropriate, for the purpose of soliciting additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement.

Our stockholders must approve the proposal to adopt the merger agreement. If our stockholders fail to approve the proposal to adopt the merger agreement, the merger will not occur. A copy of the merger agreement is attached as Annex A to this proxy statement, which we encourage you to read carefully and in its entirety.

Recommendation of the Company’s Board of Directors

After careful consideration, the Company’s board of directors unanimously determined that the terms of the merger are advisable, fair to and in the best interests of the Company and its stockholders and unanimously approved the merger agreement and the merger. Certain factors considered by the board of directors in reaching its decision to approve the merger agreement and the merger can be found in the section entitled “The Merger—Reasons for the Merger; Recommendation of the Board of Directors” beginning on page 39.

The board of directors unanimously recommends that our stockholders vote “FOR” approval of the proposal to adopt of the merger agreement, “FOR” approval of the proposal to approve, by non-binding, advisory vote, certain compensation arrangements for the Company’s named executive officers in connection with the merger, and “FOR” approval of the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies.

Record Date and Quorum

We have fixed the close of business on May 29, 2014 as the record date for the special meeting, and only holders of record of Company common stock on the record date are entitled to vote at the special meeting. You are entitled to receive notice of, and to vote at, the special meeting if you owned shares of Company common stock at the close of business on the record date. On the record date, there were 10,816,005 shares of Company common stock outstanding and entitled to vote. You will have one vote on all matters properly coming before the special meeting for each share of Company common stock that you owned on the record date.

A majority of the shares of Company common stock outstanding at the close of business on the record date and entitled to vote, present in person or represented by proxy, at the special meeting constitutes a quorum for the purposes of the special meeting. Shares of Company common stock represented at the special meeting but not voted, including shares of Company common stock for which a stockholder directs an “abstention” from voting, will be counted for purposes of establishing a quorum. Broker non-votes will not be counted for purposes of establishing a quorum. A quorum is necessary to transact business at the special meeting. Once a share of Company common stock is represented at the special meeting, it will be counted for the purpose of determining a quorum at the special meeting and any adjournment of the special meeting. However, if a new record date is set for the adjourned special meeting, then a new quorum will have to be established. In the event that a quorum is not present at the special meeting, it is expected that the special meeting will be adjourned.

Attendance

Only stockholders of record, their duly authorized proxy holders, beneficial stockholders with proof of ownership and our guests may attend the special meeting. Please bring to the special meeting proof of your

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beneficial ownership of Company common stock. Acceptable proof could include an account statement showing that you owned shares of the Company common stock on the record date, May 29, 2014. If you are the representative of a corporate or institutional stockholder, you must present valid photo identification along with proof that you are the representative of such stockholder. Please note that cameras, recording devices and other electronic devices will not be permitted at the special meeting.

Vote Required

Approval of the proposal to adopt the merger agreement requires the affirmative vote of the holders of a majority of the outstanding shares of Company common stock entitled to vote thereon. The proposal to approve, by non-binding, advisory vote, certain compensation arrangements for the Company’s named executive officers in connection with the merger requires the affirmative vote of the holders of a majority of the shares of Company common stock present in person or represented by proxy and entitled to vote on the matter at the special meeting. The proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies requires the affirmative vote of the holders of a majority of the shares of Company common stock present in person or represented by proxy and entitled to vote on the matter at the special meeting, whether or not a quorum is present. You may vote “FOR,” “AGAINST” or “ABSTAIN” with respect to any proposal.

Your failure to vote, or failure to instruct your broker, bank or other nominee to vote, will have the same effect as a vote against the proposal to adopt the merger agreement, but will have no effect on the other proposals.

If you attend the special meeting or send in your signed proxy card, but abstain from voting on any proposal, you will still be counted for purposes of determining whether a quorum exists. If you abstain from voting on the proposal to adopt the merger agreement, the proposal to approve the merger-related executive compensation or the proposal to adjourn the special meeting, your abstention will have the same effect as a vote against such proposal.

If your shares of Company common stock are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, you are considered, with respect to those shares of Company common stock, the stockholder of record. This proxy statement and proxy card have been sent directly to you by the Company.

If your shares of Company common stock are held through a bank, brokerage firm or other nominee, you are considered the beneficial owner of shares of Company common stock held in street name. In that case, this proxy statement has been forwarded to you by your bank, brokerage firm or other nominee who is considered, with respect to those shares of Company common stock, the stockholder of record. As the beneficial owner, you have the right to direct your bank, brokerage firm or other nominee how to vote your shares by following their instructions for voting.

If you are a stockholder of record, you may vote your shares of Company common stock on matters presented at the special meeting in any of the following ways:

If you are a beneficial owner, you will receive instructions from your bank, brokerage firm or other nominee that you must follow in order to have your shares of Company common stock voted. Those instructions will identify which of the above choices are available to you in order to have your shares voted. Please note that if you are a beneficial owner and wish to vote in person at the special meeting, you must provide a legal proxy from your bank, brokerage firm or other nominee at the special meeting.

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A control number, located on your proxy card, is designed to verify your identity and allow you to vote your shares of Company common stock, and to confirm that your voting instructions have been properly recorded when submitting a proxy over the Internet or by telephone. Please be aware that if you submit a proxy by telephone or over the Internet, you may incur costs such as telephone and Internet access charges for which you will be responsible.

Please refer to the instructions on your proxy or voting instruction card to determine the deadlines for voting over the Internet or by telephone. If you choose to submit a proxy by mailing a proxy card, your proxy card should be mailed in the accompanying prepaid reply envelope, and your proxy card must be filed with our Corporate Secretary by the time the special meeting begins.

DO NOT SEND YOUR STOCK CERTIFICATES NOW. When the merger is completed, a separate letter of transmittal will be mailed to you that will enable you to receive the merger consideration in exchange for your shares of Company common stock.

If you vote by proxy, regardless of the method you choose to vote, the individuals named on the enclosed proxy card, and each of them, with full power of substitution, or your proxies, will vote your shares of Company common stock in the way that you indicate. When completing the Internet or telephone processes or the proxy card, you may specify whether your shares of Company common stock should be voted for or against or to abstain from voting on all, some or none of the specific items of business to come before the special meeting.

If you properly sign your proxy card but do not mark the boxes showing how your shares of Company common stock should be voted on a matter, the shares of Company common stock represented by your properly signed proxy will be voted “FOR” approval of the proposal to adopt the merger agreement, “FOR” approval of the proposal to approve, by non-binding, advisory vote, certain compensation arrangements for the Company’s named executive officers in connection with the merger, and “FOR” approval of the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies.

If you have any questions or need assistance voting your shares of Company common stock, please contact Okapi Partners, our proxy solicitor, by calling toll-free at (877) 259-6290 (for stockholders) or (212) 297-0720 (for brokerage firms and banks), or by e-mail to info@okapipartners.com.

IT IS IMPORTANT THAT YOU VOTE YOUR SHARES OF COMPANY COMMON STOCK AT THE MEETING PROMPTLY. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN, AS PROMPTLY AS POSSIBLE, THE ENCLOSED PROXY CARD IN THE ACCOMPANYING PREPAID REPLY ENVELOPE, OR SUBMIT YOUR PROXY BY TELEPHONE OR THE INTERNET. STOCKHOLDERS WHO ATTEND THE SPECIAL MEETING MAY REVOKE THEIR PROXIES BY VOTING IN PERSON.

Stock Ownership and Interests of Certain Persons

Certain members of our management and the Board have interests that may be different from, or in addition to, those of our stockholders generally. For more information, please read “Interests of Certain Persons in the Merger” beginning on page 58.

As of May 29, 2014, the record date, the directors and executive officers of the Company beneficially owned and were entitled to vote, in the aggregate, 2,991,131 shares of Company common stock (not including any shares of Company common stock deliverable upon exercise or conversion of any stock options), representing approximately 28% of the outstanding shares of Company common stock. The directors and officers have informed the Company that they currently intend to vote all such shares of Company common stock “FOR” approval of the proposal to adopt the merger agreement, “FOR” approval of the proposal to approve, by non-binding, advisory vote, certain compensation arrangements for the Company’s named executive officers in

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connection with the merger, and “FOR” approval of the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies, although no director or executive officer has entered into an agreement obligating him to do so except for the voting agreement described below.

Voting Agreement

In connection with the merger agreement, the committed stockholders entered into the voting agreement. Pursuant to the voting agreement, the committed stockholders agreed to vote their shares of Company common stock in favor of the merger (and if necessary, any proposal to adjourn the special meeting if there are not enough votes to approve the adoption of the merger agreement) and against (i) any takeover proposal or alternative acquisition agreement as defined below, (ii) any election of new directors to the board of directors, other than nominees who are currently serving as directors and are nominated by a majority of the board, or as otherwise provided in the merger agreement, (iii) any action, proposal, transaction or agreement that would reasonably be expected to result in a breach of any covenant, representation, warranty or other obligation or agreement of the committed stockholders under the voting agreement or of the Company under the merger agreement, (iv) any extraordinary corporate transaction, such as a merger, consolidation, sale of substantially all of the assets of the Company, or other business combination involving the Company, or any reorganization, recapitalization, dissolution, liquidation or winding up of the Company other than the merger, or (v) any corporate action that would frustrate the purposes, or prevent or delay consummation of the transactions contemplated by the merger agreement. The committed stockholders together own approximately 27% of the issued and outstanding shares of Company common stock as of May 29, 2014, the record date for the special meeting.

The voting agreement will terminate upon the earlier of (i) the effective time, (ii) termination of the voting agreement by Parent, or (iii) termination of the merger agreement in accordance with its terms. In addition, the committed stockholders may terminate the voting agreement if the merger agreement is amended to (i) reduce or change the form of consideration to be paid to the committed stockholders in connection with the merger, or (ii) create any additional conditions to the consummation of the merger.

The foregoing does not limit or otherwise affect in any way the actions of the committed stockholders in their capacity as a director, officer or employee of the Company, and no such actions constitute a breach of the voting agreement.

Proxies and Revocation

Any stockholder of record entitled to vote at the special meeting may submit a proxy by telephone, over the Internet, by returning the enclosed proxy card in the accompanying prepaid reply envelope, or may vote in person by appearing at the special meeting. If your shares of Company common stock are held in street name through a bank, brokerage firm or other nominee, you should instruct your bank, brokerage firm or other nominee on how to vote your shares of Company common stock using the instructions provided by your bank, brokerage firm or other nominee. If you fail to submit a proxy or to vote in person at the special meeting, or do not provide your bank, brokerage firm or other nominee with instructions, as applicable, your shares of Company common stock will not be voted on the proposal to adopt the merger agreement, which will have the same effect as a vote “AGAINST” approval of the proposal to adopt the merger agreement, and your shares of Company common stock will not have an effect on the proposal to adjourn the special meeting or on the proposal to approve the merger-related executive compensation.

If you are a record holder and you sign, date and mail your proxy and do not indicate how you want to vote, your proxy will be voted “FOR” the proposal to adopt the merger agreement, “FOR” the proposal to approve the merger-related executive compensation, and “FOR” the proposal to adjourn the special meeting, provided that no proxy that is specifically marked “AGAINST” the proposal to adopt the merger agreement will be voted in favor of the proposal to adjourn the special meeting, unless it is specifically marked “FOR” the proposal to adjourn the special meeting.

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You have the right to revoke a proxy, whether delivered over the Internet, by telephone or by mail, at any time before it is exercised, by voting again at a later date through any of the methods available to you, by giving written notice of revocation to our Corporate Secretary, which must be filed with the Secretary by the time the special meeting begins, or by attending the special meeting and voting in person. Attendance at the special meeting without voting will not itself revoke the proxy. If your shares of Company common stock are held in street name through a bank, brokerage firm or other nominee, you must contact your bank, broker or other nominee to revoke your proxy. Written notice of revocation should be mailed to: Furiex Pharmaceuticals, Inc., Attention: Corporate Secretary, 3900 Paramount Parkway, Suite 150, Morrisville, North Carolina 27560.

Adjournments

Although it is not currently expected, the special meeting may be adjourned for the purpose of soliciting additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement or if a quorum is not present at the special meeting. An adjournment generally may be made with the affirmative vote of the holders of a majority of the shares of Company common stock present in person or represented by proxy and entitled to vote on the matter at the special meeting and without notice. Any adjournment of the special meeting for the purpose of soliciting additional proxies will allow the Company’s stockholders who have already sent in their proxies to revoke them at any time prior to their use at the special meeting as adjourned.

Anticipated Date of Completion of the Merger

We are working towards completing the merger as soon as possible. Assuming receipt of required regulatory approvals and timely satisfaction of other closing conditions, including the approval by our stockholders of the proposal to adopt the merger agreement, we anticipate that the merger will be completed in early July 2014. If our stockholders vote to approve the proposal to adopt the merger agreement, the merger will become effective two business days following the satisfaction or waiver of the other conditions to the merger, subject to the terms of the merger agreement. See “The Merger—Closing and Effective Time of the Merger” beginning on page 70.

Rights of Stockholders Who Seek Appraisal

Stockholders are entitled to appraisal rights under the DGCL in connection with the merger. This means that you are entitled to have the fair value of your shares of Company common stock determined by the Delaware Court of Chancery and to receive payment based on that valuation in lieu of the merger consideration if you follow exactly the procedures specified under the DGCL. The ultimate amount you receive in an appraisal proceeding may be less than, equal to or more than the amount you would have received under the merger agreement.

To exercise your appraisal rights, you must submit a written demand for appraisal to the Company before the vote is taken on the merger agreement and you must NOT vote (either in person or by proxy) in favor of the proposal to adopt the merger agreement. Your failure to follow exactly the procedures specified under the DGCL may result in the loss of your appraisal rights. See “Appraisal Rights” beginning on page 100 and the text of the Delaware appraisal rights statute reproduced in its entirety as Annex D to this proxy statement. If you hold your shares of Company common stock through a bank, brokerage firm or other nominee and you wish to exercise appraisal rights, you should consult with your bank, brokerage firm or other nominee to determine the appropriate procedures for the making of a demand for appraisal by your bank, brokerage firm or other nominee. In view of the complexity of the DGCL, stockholders who may wish to pursue appraisal rights should consult their own legal and financial advisors promptly.

Solicitation of Proxies; Payment of Solicitation Expenses

The Company has engaged Okapi Partners to assist in the solicitation of proxies for the special meeting. The Company estimates that it will pay Okapi Partners a fee not to exceed $26,000, plus telephone and mailing

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expenses. The Company has agreed to reimburse Okapi Partners, pay directly, or, where requested in special situations, advance sufficient funds to Okapi Partners, for the payment of certain fees and expenses and will also indemnify Okapi Partners, its subsidiaries and their respective directors, officers, employees and agents against certain claims, liabilities, losses, damages and expenses. The Company may also reimburse banks, brokers or their agents for their expenses in forwarding proxy materials to beneficial owners of Company common stock. Our directors, officers and employees may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.

Questions and Additional Information

If you have more questions about the merger or how to submit your proxy, or if you need additional copies of this proxy statement or the enclosed proxy card or voting instructions, please contact Okapi Partners, our proxy solicitor, by calling toll-free at (877) 259-6290 (for stockholders) or (212) 297-0720 (for brokerage firms and banks), or by e-mail to info@okapipartners.com.

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THE MERGER

The discussion of the merger contained in this section is qualified in its entirety by reference to the complete text of the merger agreement, which is attached to this proxy statement as Annex A , and the form of CVR agreement, which is attached to this proxy statement as Annex C , each of which are incorporated by reference into this proxy statement. We encourage you to read the merger agreement and the form of CVR agreement carefully as they are the legal documents governing the merger.

The merger agreement provides that Merger Subsidiary will merge with and into the Company. The Company will be the surviving corporation in the merger and will continue to do business following the merger as a wholly owned subsidiary of Parent. As a result of the merger, the Company will cease to be a publicly traded company. You will not own any shares of the capital stock of the surviving corporation.

Merger Consideration

In the merger, each outstanding share of Company common stock (other than excluded shares) will be converted automatically into the right to receive the $95.00 cash consideration, without interest, less any applicable withholding taxes, plus a CVR representing the right to receive a contingent payment of up to $30.00 in cash, without interest, less any applicable withholding taxes, upon the achievement of one of certain milestones set forth in, and subject to and in accordance with the terms and conditions of, the CVR agreement.

Background of the Merger

Furiex became a separate, independent publicly traded company upon its spin-off from Pharmaceutical Product Development, Inc. in June 2010. Furiex’s business strategy has always involved using its drug development experience to increase the value of drug candidates by applying an accelerated approach to drug development, which the Company believes expedites research and development decision-making and can shorten drug development timelines. As a part of this strategy, the Company has also historically engaged in strategic in- and out-licensing collaborative arrangements with other pharmaceutical companies to share risk by conducting and financing drug development programs in exchange for a share of the potential rewards, through milestone and royalty payments for successful out-licensed drug candidates. Furiex has, therefore, always regularly engaged in numerous discussions concerning potential strategic relationships and transactions with third parties.

More broadly, as part of its ongoing oversight and management of the Company’s business, the Company’s board of directors, or board or board of directors, regularly reviews and assesses the Company’s strategic alternatives in light of the Company’s performance, the stage of development and target markets of its compounds, risks facing the Company and the pharmaceutical industry, stock market conditions, capital structure, pharmaceutical industry dynamics, opportunities and overall strategic direction. In connection with this ongoing process, the board of directors has at various times considered potential business combination transactions and other strategic alternatives, including out-licensing collaborations. In addition, from time to time, Furiex has engaged in discussions with potential buyers of its existing royalty revenue streams from alogliptin and Priligy as a means of financing development of its other drug candidates. RPI Finance Trust, or Royalty Pharma, a U.S. pharmaceutical investor, was among these parties, although discussions between it and Furiex never proceeded past preliminary conversations prior to the events described below.

In connection with the strategy described above, from time to time since June 2010, several parties, including Forest, have discussed with the Company possible strategic and collaborative transactions involving the Company. Prior to the discussions that started in early 2013 described herein, representatives of Forest and the Company held preliminary discussions regarding a potential transaction, including execution of a confidentiality agreement. None of these previous discussions between the Company and Forest proceeded beyond preliminary conversations.

In early 2013, Furiex initiated discussions with Forest and another party, as well as due diligence activities, focused on a potential collaborative arrangement between the parties regarding the compound eluxadoline, which

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the Company was developing for the treatment of diarrhea-predominant irritable bowel syndrome, or IBS-d. During the first half of 2013, Furiex contacted approximately 30 other companies, including Royalty Pharma, regarding a potential eluxadoline collaboration or other strategic transaction, 15 of which entered into confidentiality agreements and conducted due diligence. All of those parties, other than an international pharmaceutical company that we refer to as Bidder A, indicated they preferred to discontinue discussions until the results of the ongoing eluxadoline Phase III clinical trials became available.

During early 2013, Forest and Furiex negotiated for several weeks the terms and draft agreements for an eluxadoline collaboration. The terms under discussion involved an upfront cash payment upon signing of $100.0 million and potential regulatory and sales-based milestones totaling $567.5 million payable over time, as well as royalties on net sales of eluxadoline. Forest requested that the Company negotiate exclusively with it for a period of time, but the Company refused this request. At that time, another party also negotiated with Furiex for a similar transaction, but was only willing to pay $50.0 million upfront and up to a total of $525.0 million in potential regulatory and sales-based milestone payments over time. Forest, too, reduced its offer to $50.0 million upfront and then both it and the other party withdrew their offers and terminated discussions in June, indicating that they preferred to wait to see the results of the ongoing Phase III eluxadoline clinical trials.

On August 16, 2013, Bidder A contacted Dr. Eshelman to provide a non-binding indication of interest to acquire Furiex for aggregate consideration at closing of approximately $627.0 million, or $43.57 per Furiex share, payable 20% in cash and 80% in Bidder A stock, as well as contingent value rights, or CVRs, that would pay up to $15.25 per Furiex share, half payable upon receipt of positive eluxadoline Phase III trial results and half upon FDA approval of eluxadoline. Bidder A also requested a period during which the companies would negotiate exclusively concerning a potential transaction, which request the Company refused. Bidder A indicated that, for strategic and tax reasons, it wanted to sign and close a transaction as soon as possible, and in any event before the Company unblinded any results of its ongoing Phase III clinical trials of eluxadoline. The Furiex board convened a special telephonic meeting on August 20, 2013 to, among other things, consider this offer, including in light of the Company’s long-term strategy and value as an independent entity, other potential strategic transactions and potential financing alternatives. A representative of Wyrick Robbins Yates & Ponton LLP, the Company’s outside counsel, attended this meeting and all Furiex board meetings. At this meeting, that representative provided the directors an overview of their fiduciary duties in considering the alternatives and the board decided to deliberate further before taking any action.

At a telephonic meeting on August 27, 2013, the board deliberated in further detail on these matters, including regarding achievability of the milestones triggering payments under the CVRs proposed by Bidder A. At this meeting, the directors also discussed a number of potential financial advisors they had experience with. The board directed Dr. Eshelman and management to interview some of these potential financial advisors to assist the board in its review of strategic alternatives. Over the next several days, Dr. Eshelman and management contacted approximately five of these potential financial advisors and gathered information about their experience and fee structures.

On September 10, 2013, the board of directors reconvened via teleconference. At this meeting, the board approved the retention of BofA Merrill Lynch as a financial advisor, noting in particular its experience and connections in the pharmaceutical industry and its understanding of structural and related considerations of merger and acquisition transactions. At this meeting, the board also discussed Bidder A’s proposal in additional detail, including its overall value compared to Furiex’s long-term strategic value and the mix of consideration offered. The board then directed Dr. Eshelman to consult with BofA Merrill Lynch to generate a counter-offer within certain parameters, including seeking clarification of what would constitute “positive” clinical trials results triggering the first CVR payment.

Based on the board’s direction and further valuation analyses by management and after management consultation with BofA Merrill Lynch, on September 13, 2013, Dr. Eshelman communicated a counter-proposal from Furiex to Bidder A’s financial advisor for a transaction at $65.00 per Furiex share at closing, payable half in cash and half in Bidder A stock, and CVRs worth an additional $15.00 to $20.00 per Furiex share, payable half for positive Phase III results and half for FDA approval of eluxadoline.

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At its regularly scheduled in-person meeting in Cary, North Carolina held on September 20, 2013, the board discussed with representatives of BofA Merrill Lynch the overall market environment, market perspectives on Furiex and Bidder A, a preliminary financial review and strategic process considerations. The BofA Merrill Lynch representatives also discussed with the board of directors various potential stand-alone alternatives, including a debt or equity financing while remaining an independent public company. The Company’s management and the board of directors discussed these alternatives and potential financing costs and debt capacity in light of recent trends in the markets, pharmaceutical industry and the economy generally, as well as potential execution risks inherent in implementing the alternatives. The BofA Merrill Lynch and Wyrick Robbins representatives then described for the board of directors potential timing and process if the board determined to pursue a sale of the Company. The Wyrick Robbins representative also again reviewed with the directors their fiduciary duties in this context. The directors considered methods and strategies to fully satisfy their duties and engage in an appropriate market check process if they decided to proceed with a transaction. The board directed management and representatives of BofA Merrill Lynch to engage in further discussions with Bidder A.

On October 4, 2013, Bidder A proposed paying $54.00 per Furiex share in cash at closing, along with a CVR for $15.00 per share upon FDA approval of eluxadoline. The Furiex board met via telephone on October 7 to consider this new proposal, including the timing and likelihood of achieving the CVR milestone. Representatives of BofA Merrill Lynch attended this meeting. The board engaged in detailed discussions of various aspects of the proposal and the Company’s valuation. The board directed members of management and the board to prepare, with the assistance of BofA Merrill Lynch, a counter-offer to Bidder A. As directed, on October 9, 2013 Furiex proposed to Bidder A a transaction for $58.00 per Furiex share in cash at closing and CVRs of $5.00 per share upon FDA acceptance of an eluxadoline new drug application, or NDA, and $10.00 more per share upon FDA approval of eluxadoline. Bidder A indicated that this proposed CVR structure was acceptable assuming FDA approval by June 30, 2016, but that its offer for upfront cash consideration remained at $54.00 per share. Members of management and the board, with the assistance of BofA Merrill Lynch, engaged in further discussions with Bidder A and its financial advisor over the next several days.

The board met telephonically again on October 12, 2013 to consider these discussions, and identify potential additional parties that might have an interest in the Company so as to maximize stockholder returns. The board of directors authorized BofA Merrill Lynch to contact six other potential strategic acquirers, including Forest, and two potential royalty acquirers, including Royalty Pharma, that the board, after consultation with BofA Merrill Lynch, deemed most likely to be in a position to pursue a potential transaction with the Company. Other than Forest, the parties contacted indicated no interest in pursuing a transaction until the eluxadoline Phase III results were available. Forest engaged in due diligence over the following two weeks.

The board met again on October 20 and 23 for further updates on these matters, with input from representatives of BofA Merrill Lynch. In addition, about this time, Furiex retained Kirkland & Ellis LLP, or K&E, to provide additional legal advice and services related to any potential transaction. On the afternoon of October 24, 2013, representatives of BofA Merrill Lynch, K&E and Wyrick Robbins had a teleconference with representatives of Bidder A’s attorneys and financial advisors to discuss structure, draft agreements, related legal issues, timing and logistical matters of a potential transaction. On October 30, 2013, Bidder A’s attorneys delivered a draft merger agreement to Furiex’s advisors, based on Bidder A’s latest proposal. However, on November 1, 2013, representatives of Bidder A telephoned Dr. Eshelman to inform him that Bidder A was withdrawing its proposal. They indicated that Bidder A had determined it could not pay an amount acceptable to Furiex at this time and had decided not to pursue a transaction in the near-term for various reasons. They also indicated that they might reconsider after results of the eluxadoline Phase III clinical trials became available.

On October 28, 2013, Forest delivered a letter to BofA Merrill Lynch outlining two alternative potential transactions it was willing to pursue with Furiex. The first was to acquire the Company for $45.00 per share in cash at closing. The alternative proposed by Forest was a collaborative arrangement with respect to eluxadoline for $75.0 million in cash upfront and up to $492.5 million in contingent consideration based on regulatory and sales-based milestones over time, plus royalties on net sales of eluxadoline by Forest. The Furiex board considered Forest’s proposals and determined that the offer was not in the best interests of the Company’s

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stockholders and that the Company and its stockholders were better served by the Company continuing as an independent entity.

At its regularly scheduled in person meeting in Cary, North Carolina held on December 13, 2013, the board of directors, among other topics, further discussed the Company’s strategy and long-term value, including specifically if and how the Company might proceed as an independent entity and commercialize eluxadoline itself. The board of directors reaffirmed that Furiex should continue to develop its business as an independent entity pending results of the eluxadoline Phase III studies. The board determined to continue to work with BofA Merrill Lynch as well, because of the expectation that third parties would again reach out to the Company concerning a potential transaction following the announcement of Phase III results. At this meeting the board directed representatives of the Company to work with BofA Merrill Lynch, including to engage in a thorough market check if Phase III results were positive.

From January 13-16, 2014, Dr. Eshelman and members of Company management attended the 32 ^nd Annual J.P. Morgan Healthcare Conference in San Francisco, California. While there, they held informal meetings with members of management of several other companies, including Forest. These meetings did not involve any exchange of confidential information, and discussion remained general and preliminary.

In late January 2014, Furiex unblinded and analyzed results of its Phase III clinical trials of eluxadoline. Shortly thereafter, on January 30, 2014, the board met telephonically to discuss the results of those trials, plans for their disclosure and their implications on the Company’s value and strategy. On February 4, 2014, the Company issued a press release and held a public teleconference disclosing the positive top-line results of those trials. That same day, some analysts following the Company and media reports speculated that Furiex was for sale as a result of the announcement, and its stock price, which had closed on the previous trading day at $45.97 per share, increased significantly, closing the day at $105.69 per share. In the days following the release of the positive clinical trial results, numerous large pharmaceutical companies, including Forest, contacted the Company to request additional information and discuss a potential acquisition, collaboration or other strategic transaction.

The Furiex board met again telephonically on February 17 for an update on these matters and to discuss the market reaction to the clinical trial results, among other matters. Also on February 17, 2014, Forest announced that it had entered into a definitive agreement to be acquired by Actavis plc. The merger agreement between Forest and Actavis required Forest to obtain Actavis’ consent for Forest to make acquisitions greater than $10 million or $30 million in the aggregate. On February 19, 2014, media reports speculated that the Company had engaged BofA Merrill Lynch to assist the Company in identifying potential acquirers. On that day, the Company’s stock price reached an intraday high of $113.99, an increase of $16.59 over the closing price of the previous day, before closing at $98.50.

Over several weeks following the February 4 public announcement of the eluxadoline clinical trials results, representatives of BofA Merrill Lynch, at the direction of the Furiex board, contacted or were contacted by a total of 49 parties regarding a potential strategic transaction with the Company. Of these parties, 40 were potential strategic acquirors or collaborators, including Forest and Bidder A, and the other nine, including Royalty Pharma, were potential buyers of the Company’s ongoing royalty streams from alogliptin and Priligy.

Of these 49 parties, 22 strategic and seven royalty buyers expressed initial interest in conducting diligence on a potential transaction. Of these, 10 strategic parties and six royalty buyers ultimately signed confidentiality agreements with Furiex and accessed the Company’s virtual data room to conduct due diligence. Except as described below, none of these parties made an offer for a transaction with the Company. The royalty buyers were not central to the process described herein and were viewed from the beginning of the process as most likely to be involved in any potential transaction in conjunction with a merger transaction with a strategic buyer. Although management and BofA Merrill Lynch were in communication with all six concerning a potential transaction with the Company, Royalty Pharma was viewed by management and BofA Merrill Lynch as the most likely royalty buyer to be involved in such a transaction due to the potential size of a royalty transaction.

In February, three strategic buyers who signed confidentiality agreements and accessed the Company’s data room to conduct due diligence declined to pursue a transaction, indicating the Company was not a strong

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strategic fit. A fourth such buyer also declined to pursue a transaction, indicating that it was focused on internal corporate priorities. Nevertheless, from time to time during the process described herein, management and BofA Merrill Lynch continued to reach out to these potential buyers concerning a potential transaction with the Company.

On February 27, 2014, Forest provided to BofA Merrill Lynch an offer to acquire 100% of the equity of Furiex for $80.00 per share in cash at closing and CVRs worth up to $35.00 per share based on net sales of eluxadoline and on any U.S. Drug Enforcement Agency, or DEA, scheduling of eluxadoline as a controlled substance. Under this proposed CVR structure, Forest would have paid the former Furiex stockholders $15.00 per share if the DEA designated the drug as a Schedule V substance or did not schedule it or $5.00 per share if Schedule IV. In addition, regardless of scheduling, the proposed CVR would have paid $20.00 more per share if U.S. net sales of eluxadoline exceeded $500 million in calendar year 2017. This proposal remained subject to additional due diligence and to the consent of Actavis, which would be required under the terms of the merger agreement between Forest and Actavis. Forest indicated it was prepared to move quickly to sign definitive agreements. Forest also requested exclusivity.

At the Furiex board’s regularly scheduled February 28, 2014 meeting in Cary, North Carolina, also attended by members of the Company’s senior management team and representatives of BofA Merrill Lynch and Wyrick Robbins, the board considered the Forest proposal and related issues, including in light of the fact that Furiex’s stock had been trading well above the upfront cash value of the proposal, closing at $97.45 on February 27, 2014. The board of directors and management reviewed in detail management’s base case forecasts. The board discussed in detail the underlying assumptions and risks in the management base case, potential results in light of these risks and assumptions, and the impact on the Company’s value if the management base case is not achieved. This portion of the discussion focused on, among other matters, whether it was reasonably likely for eluxadoline sales to grow rapidly enough after any approval to achieve the proposed net sales CVR milestone. In addition to updating the board of directors on the terms of the Forest offer and communications with Forest in advance of that offer, BofA Merrill Lynch updated the board of directors regarding communications with potential other parties to a strategic transaction. BofA Merrill Lynch also reviewed and the board discussed in detail the current market environment and strategic alternatives potentially available to Furiex, including how the Company might finance the commercialization of eluxadoline itself and potentially acquire other companies or product candidates. The Wyrick Robbins representative again advised the directors on their duties in this context. In addition, among other business updates, Furiex management reported to the board on the status of preparation of the eluxadoline NDA and specifically on the studies undertaken to determine its potential for abuse, which could affect DEA scheduling of the compound. After extensive consideration of the Company’s potentially available strategic alternatives, the board of directors instructed BofA Merrill Lynch to communicate Furiex’s rejection of Forest’s offer as being inadequate, but also instructed BofA Merrill Lynch and management to continue to explore a potential combination transaction at a higher price while also progressing the eluxadoline NDA and pursuing the possibility of remaining independent and commercializing the drug.

Promptly after the February 28, 2014 meeting, BofA Merrill Lynch representatives and the Company advised Forest of the board’s position. Over the next several weeks, while negotiations with Forest continued as described below, BofA Merrill Lynch and Company management continued to communicate with other potential parties to a strategic transaction who were interested and pursuing due diligence investigations of the Company. This process involved considerable work by Company management over the next several weeks to answer diligence questions, as well as face-to-face meetings with three of these third parties. In March, one strategic buyer who signed a confidentiality agreement in February and accessed the Company’s data room to conduct due diligence declined to pursue a transaction, indicating that the Company’s business was not a strategic fit.

On March 7, 2014, Brenton L. Saunders, Chief Executive Officer and President of Forest, flew to North Carolina and met with Dr. Eshelman to further discuss a potential transaction. At that meeting Dr. Eshelman reiterated the Furiex board’s position that Forest’s offer was not acceptable. On March 12, 2014,

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Forest communicated that it would increase its offer to $90.00 per share in cash at closing but would reduce the highest DEA scheduling CVR payment amount to $10.00 and reduce the net sales CVR payment amount to $10.00.

The Furiex board convened a telephonic meeting on March 14, 2014 to discuss this revised offer. During that call, the board engaged in a detailed discussion, including of potential negotiation tactics and strategy, the status of other potential parties, timing, input from representatives of BofA Merrill Lynch and the implications of any DEA scheduling of eluxadoline, as well as the long-term strategic value of each of the Company’s assets and of the Company as a whole. After this discussion, the board authorized the submission to Forest of a counter-proposal for upfront cash of $105.00 per share and CVRs paying $20.00 per share upon FDA approval of eluxadoline plus another $10.00 per share if the DEA designated the drug as Schedule III or $15.00 per share if Schedule IV or V or no scheduling. On the same day, Dr. Eshelman sent Mr. Saunders a letter containing this counter-proposal.

On March 17, 2014, Forest increased its offer to provide for upfront cash of $95.00 per share and CVRs paying $5.00 per share on FDA approval of eluxadoline, $10.00 per share for DEA designation of the drug on schedule IV, $15.00 if Schedule V or $20.00 if not scheduled. On March 19, 2014 the Furiex board met telephonically with its financial and legal advisors to consider this new proposal and to receive further updates on other potential bidders and the overall process to date. The directors engaged in detailed discussion on negotiation tactics and strategy, and timing. The board also reviewed other strategic alternatives and related issues in great detail, including the Company’s long-term strategic value, the potential for the Company remaining independent and commercializing eluxadoline itself, eluxadoline DEA scheduling risks and implications. A representative of Wyrick Robbins reviewed again with the directors their fiduciary duties in this context. Representatives of BofA Merrill Lynch also discussed Forest’s repeated exclusivity request and ongoing communications with other potential parties. At the meeting, the board authorized Dr. Eshelman to submit a counter-proposal to Forest after consulting with representatives of BofA Merrill Lynch and to communicate the board’s refusal to grant Forest exclusivity.

As directed by the board, after consulting with BofA Merrill Lynch, on March 21, 2014, Dr. Eshelman communicated to Forest Furiex’s refusal to grant exclusivity to Forest and Furiex’s counter-proposal for a transaction at $105.00 per share in cash at closing and CVRs paying $12.50 per share upon FDA approval of eluxadoline and DEA scheduling as had been proposed by Forest, namely $10.00 for Schedule IV, $15.00 for Schedule V or $20.00 if no scheduling. In addition, as directed by the board, on March 22, 2014, Furiex posted to its virtual data room a draft merger agreement prepared by its counsel, so that Forest and other interested parties could review and comment on it.

On March 25, 2014, Forest submitted another revised proposal, increasing the upfront cash portion to $100.00 per share, and providing for only DEA scheduling based CVRs as follows: $10.00 per share for Schedule IV; $20.00 for Schedule V; or $30.00 if the drug was not scheduled. The Furiex board held a special meeting in Atlanta, Georgia on the morning of March 29, 2014 to consider this proposal and request. Representatives of BofA Merrill Lynch, K&E and Wyrick Robbins, as well as members of Furiex management, also attended this meeting. The K&E and Wyrick Robbins representatives gave the board a presentation regarding director fiduciary duties and Forest’s continued request for exclusivity. Detailed discussion also ensued about provisions of the draft merger agreement prepared by Company counsel, including break-up fees, antitrust matters, and the definition of material adverse effect and its implications. Dr. Eshelman and management updated the board on, and it discussed, Company regulatory and business developments, including the process and timing for review of eluxadoline by the FDA and DEA.

BofA Merrill Lynch representatives then reviewed with the directors a preliminary financial analysis. In connection with the foregoing, management discussed with the board the key assumptions contained in management’s projections used by BofA Merrill Lynch in connection with its preliminary financial analysis and the risks and uncertainties in achieving those projections. Members of the board, and the advisors present, then

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engaged in a detailed discussion covering numerous topics, including the price of the offer, the CVR triggers, the status of other potential parties, the process of negotiations to date and market dynamics. The board further discussed in detail CVR constructs, pricing, timing and risks of various strategic alternatives, including continuing to operate as an independent company. BofA Merrill Lynch also reviewed negotiation strategy. The directors deliberated further on the Company’s alternatives and the revised Forest indication of interest. The board’s then authorized Dr. Eshelman to send Mr. Saunders a letter indicating Furiex’s willingness to negotiate a transaction, requesting that Forest increase the Schedule IV CVR to $15.00 per share, and also requesting that Forest’s counsel provide any comments to the draft merger agreement promptly. Dr. Eshelman did so that same day.

On April 11, 2014, representatives of Covington & Burling LLP, counsel to Forest, delivered to K&E a revised merger agreement along with a draft CVR agreement and voting agreement that Forest requested that all affiliates of the Company sign simultaneously with the merger agreement. The revised merger agreement, among other things, contemplated Forest selling the royalty revenue rights relating to alogliptin and Priligy to Royalty Pharma simultaneously with the closing of the merger, but did not make this sale a condition to the merger closing. Counsel to the parties discussed these agreements in detail over the next few days.

Meanwhile, discussions and due diligence had been ongoing with four other parties including Bidder B. Management and representatives of BofA Merrill Lynch also continued to reach out to other potential buyers concerning a possible transaction with the Company. As a result, on April 15, 2014, another large pharmaceutical company, known as Bidder B, submitted a proposal to acquire the Company for $100.00 per share in cash at closing and a single $30.00 per share CVR to be triggered by FDA approval of eluxadoline “on a basis consistent with [Bidder B’s] expectations.”

On April 16, 2014, Forest informed the Company that it would have to reduce the upfront cash portion of its offer to $90.00 per share in light of its continuing due diligence, discussions with Actavis, stock market conditions and in particular the price of Furiex stock, which had dropped considerably over the past few weeks and closed at $78.71 on April 15, 2014.

Later on April 16, the board of directors held a special telephonic meeting to discuss Bidder B’s proposal and the communication from Forest. Representatives of Company management, BofA Merrill Lynch, K&E and Wyrick Robbins also attended this meeting. The board discussed in detail these matters, as well as the different parties’ diligence activities and requests. The board also discussed the status of drafting and negotiation of the transaction documents, with input from counsel regarding open issues in the agreements, including the structure of the CVRs, the representations, warranties and covenants requested by Forest relating to the alogliptin and Priligy royalty agreements and intellectual property, the covenants regarding Furiex’s operations between signing and closing, and the details of Furiex’s ability to terminate the agreement if it received a higher bid, including Forest’s request for a $55.0 million termination fee Furiex would have to pay in that event.

In addition, counsel discussed with the board BofA Merrill Lynch’s relationships with Actavis, Forest and Bidder B, which BofA Merrill Lynch had disclosed. The directors discussed and considered whether, under the circumstances, it would be advisable to engage an additional financial advisor to assist the Company in evaluating a potential transaction. While the board of directors believed that BofA Merrill Lynch had provided excellent strategic and financial advice to date, and that its relationships with Forest, Actavis, and other potential bidders did not impair its ability to render objective financial advice and had, in fact, been advantageous in facilitating a potential transaction, it was the view of the directors that the board could benefit from the advice of an additional financial advisor with experience in the industry. After considering others as well, the board selected Credit Suisse as an additional financial advisor in connection with the proposed merger based on Credit Suisse’s qualifications, experience and reputation as an internationally recognized investment banking and financial advisory firm. In light of this selection, the board directed management to retain Credit Suisse as an additional financial advisor. Pursuant to an engagement letter dated April 23, 2014, Furiex engaged Credit Suisse to, if requested and appropriate, (i) assist Furiex in analyzing and evaluating Furiex’s business operations and

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financial position and negotiating a proposed transaction and (ii) undertake financial analyses to be in a position to render an opinion to the board as to the fairness, from a financial point of view, of the consideration to be received by the holders of Company common stock in a proposed transaction.

At the April 16 meeting, the Furiex board directed Dr. Eshelman to communicate to Forest that Furiex would continue to negotiate only on the basis that the upfront cash payment would be no lower than $95.00 per share, and request that the maximum potential payout under the CVRs to be issued by Forest be increased from $30.00 to $35.00 per share. The Furiex board also directed counsel to send revised versions of the draft transaction agreements back to Covington for review and to send draft agreements to counsel for Bidder B. On April 17 and 18, Dr. Eshelman and counsel, respectively, did as they were directed. On April 19, 2014, Forest informed Dr. Eshelman that it would agree to an upfront cash payment of $95.00 per share, but would not increase the potential payout under the CVRs.

On April 21, 2014, the Furiex board met telephonically, along with representatives of Company management, BofA Merrill Lynch, K&E and Wyrick Robbins, for an update on negotiations with all parties. The BofA Merrill Lynch representatives reviewed the status of all parties who had expressed an interest in a potential transaction, reporting that the only ones still pursuing a potential transaction were Forest, Bidder B and one other large pharmaceutical company that was conducting due diligence. The BofA Merrill Lynch representatives also reported that two other large pharmaceutical companies had dropped out of the process within the prior week without making an offer for the Company, indicating that the Company was not a strong strategic fit. The board discussed in detail specific provisions of the draft transaction agreements, timing, and negotiating and information-sharing tactics and strategies going forward, including with respect to communications between the Company and the FDA about the eluxadoline NDA. The board directed Dr. Eshelman, management and the Company’s advisors to continue sharing information and negotiating with all parties, which they did. During this time, Forest, Royalty Pharma, Bidder B and the other remaining large pharmaceutical company interested in a potential transaction continued to engage in detailed due diligence. The latter indicated to BofA Merrill Lynch representatives on April 23, 2014 that it was not likely to submit a proposal.

On the morning of April 24, 2014, counsel to Bidder B provided their comments to the agreements to K&E and Wyrick Robbins. That day Bidder B also communicated to representatives of BofA Merrill Lynch that Bidder B’s CVR milestone would be contingent upon no DEA scheduling of eluxadoline whatsoever and would contain additional conditions regarding the content of any FDA-approved labeling for the product. Over the next several days, K&E and Wyrick Robbins spent considerable time discussing and negotiating the respective draft agreements with Bidder B’s counsel and with Covington on behalf of Forest, as well as representatives of Royalty Pharma and its counsel. On the afternoon of April 25, 2014, Bidder B withdrew its proposal.

On Saturday, April 26, 2014, the board convened a special telephonic meeting to review the final proposed terms of a potential merger with Forest. At the invitation of the board of directors, members of Company senior management and representatives of BofA Merrill Lynch, Credit Suisse, Wyrick Robbins and K&E also attended this meeting. The K&E and Wyrick Robbins representatives reviewed the material terms and conditions included in the merger agreement and CVR agreement as negotiated to date, as well as a potential timeline of closing conditions following execution of the agreement. In particular, counsel noted that Forest had agreed to affirmatively represent in the merger agreement that Actavis had consented to the merger, to require a voting agreement only from Dr. Eshelman and his affiliates that own Furiex stock, to accept less detailed representations, warranties and covenants from Furiex including specifically with respect to the alogliptin and Priligy royalty agreements and intellectual property, to allow Furiex more flexibility in operating its business

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prior to closing, and to accept less restrictive provisions regarding Furiex’s ability to accept a superior offer, including specifically a break-up fee of $41 million compared to the $55 million originally requested.

Following this review, the board of directors engaged in discussions and consideration of the terms of the proposed merger and market conditions. Following those discussions, each of BofA Merrill Lynch and Credit Suisse were requested to review and discuss their financial analyses with the board of directors. Representatives of Credit Suisse reviewed and discussed their financial analyses with respect to Furiex and the proposed merger and, at the request of the board of directors, rendered Credit Suisse’s oral opinion to the Furiex board (which was subsequently confirmed in writing by delivery of Credit Suisse’s written opinion addressed to the Furiex board dated as of the same date) as to, as of April 26, 2014, the fairness, from a financial point of view, to the holders of Company common stock of the merger consideration to be received by such holders in the merger pursuant to the merger agreement. See “Opinions of the Company’s Financial Advisors—Credit Suisse” beginning on page 50. Also at this meeting, representatives BofA Merrill Lynch reviewed with Furiex’s board of directors its financial analysis of the consideration per share of Company common stock to be received in the merger by holders of Company common stock and delivered to Furiex’s board of directors an oral opinion, which was confirmed by delivery of a written opinion dated April 27, 2014, to the effect that, as of the date of the written opinion and based on and subject to various assumptions and limitations described in its written opinion, the consideration to be received in the merger by holders of Company common stock was fair, from a financial point of view, to such holders. See “Opinions of the Company’s Financial Advisors—BofA Merrill Lynch” beginning on page 42.

After additional discussions and deliberations, including discussion of potentially available strategic alternatives, including operating as a stand-alone entity, and of the reasons for the merger described in “The Merger—Reasons for the Merger; Recommendation of the Board of Directors,” the board of directors moved to a vote on the proposed merger. The board of directors unanimously resolved that the merger is advisable, fair to and in the best interests of the Company and its stockholders and approved the merger agreement, the CVR agreement and the merger and the other transactions contemplated thereby. The board of directors also unanimously recommended that the stockholders vote to adopt the merger agreement, resolved that the merger agreement be submitted for consideration by the stockholders at a special meeting of stockholders in accordance with all applicable laws and regulations and authorized management to set the record date for the special meeting to consider and vote on the approval of the merger agreement. The board directed Dr. Eshelman to contact Mr. Saunders and inform him of the board’s decision, which he did promptly after the Furiex board meeting.

On April 27, 2014, after receiving approval and consent from Actavis, the parties executed the merger agreement. On the morning of Monday, April 28, 2014, prior to the opening of the Nasdaq Stock Market, the Company and Forest issued a joint press release announcing that they had entered into the merger agreement.

Reasons for the Merger; Recommendation of the Board of Directors

At a meeting held on April 26, 2014, the board of directors, by a unanimous vote, (1) determined that the merger agreement and the transactions contemplated thereby are advisable, fair to and in the best interests of the Company and its stockholders, (2) approved the execution, delivery and performance by the Company of the merger agreement and the consummation of the transactions contemplated thereby, (3) resolved that the merger agreement and the transactions contemplated thereby be submitted to the Company’s stockholders for adoption at a duly held special meeting of such stockholders and (4) recommended that the Company’s stockholders vote to adopt the merger agreement. In making its recommendation, the board of directors consulted with outside legal and financial advisors and the Company’s senior management team at various times, and considered a number of factors, including the following principal factors that the board of directors believes support such determinations, approvals, resolutions and recommendations:

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The board of directors also considered the following potentially negative factors and risks in its deliberations concerning the merger agreement:

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The foregoing discussion of the information and factors considered by the board of directors in reaching their conclusions and recommendations is not intended to be exhaustive, but includes the material factors considered by the board of directors. In view of the wide variety of factors considered in connection with its evaluation of the merger and the complexity of these matters, the board of directors did not find it practicable, and did not attempt, to quantify, rank or assign any relative or specific weights to the various factors considered in reaching its determination and making its recommendation. In addition, individual directors might have given different weights to different factors. The board of directors considered all of the foregoing factors as a whole and based its recommendation on the totality of the information presented.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” APPROVAL OF THE PROPOSAL TO ADOPT THE MERGER AGREEMENT.

Opinions of the Company’s Financial Advisors

BofA Merrill Lynch

Furiex has retained BofA Merrill Lynch to act as Furiex’s financial advisor in connection with the merger. BofA Merrill Lynch is an internationally recognized investment banking firm which is regularly engaged in the valuation of businesses and securities in connection with mergers and acquisitions, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements and valuations for corporate and other purposes. Furiex selected BofA Merrill Lynch to act as Furiex’s financial advisor in connection with the merger on the basis of BofA Merrill Lynch’s experience in transactions similar to the merger and its reputation in the investment community.

On April 26, 2014, at a meeting of the board of directors held to evaluate the merger, BofA Merrill Lynch delivered to the board of directors an oral opinion, which was confirmed by delivery of a written opinion dated April 27, 2014, to the effect that, as of the date of the written opinion and based on and subject to various assumptions and limitations described in its written opinion, the merger consideration to be received by holders of Company common stock in the merger was fair, from a financial point of view, to such holders.

The full text of BofA Merrill Lynch’s written opinion to the board of directors, which describes, among other things, the assumptions made, procedures followed, factors considered and limitations on the review undertaken, is attached as Annex E-1 to this document and is incorporated by reference herein in its entirety. The following summary of BofA Merrill Lynch’s opinion is qualified in its entirety by reference to the full text of the opinion. BofA Merrill Lynch delivered its opinion to the board of directors for the benefit and use of the board of directors (in its capacity as such) in connection with and for purposes of its evaluation of the merger consideration from a financial point of view. BofA Merrill Lynch’s opinion does not address any other aspect of the merger and no opinion or view was expressed as to the relative merits of the merger in comparison to other strategies or transactions that might be available to

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Furiex or in which Furiex might engage or as to the underlying business decision of Furiex to proceed with or effect the merger. BofA Merrill Lynch’s opinion does not address any other aspect of the merger and does not constitute a recommendation to any stockholder as to how to vote or act in connection with the proposed merger or any related matter.

In connection with rendering its opinion, BofA Merrill Lynch:

In arriving at its opinion, BofA Merrill Lynch assumed and relied upon, without independent verification, the accuracy and completeness of the financial and other information and data publicly available or provided to or otherwise reviewed by or discussed with it and relied upon the assurances of the management of Furiex that they were not aware of any facts or circumstances that would make such information or data inaccurate or misleading in any material respect. With respect to the Company Forecasts, BofA Merrill Lynch was advised by Furiex, and assumed, that they were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of the management of Furiex as to the future financial performance of Furiex under the alternative scenarios reflected therein. BofA Merrill Lynch relied, at the direction of Furiex, on the assessments of senior management of Furiex as to Furiex’s ability to utilize and the expected timing of utilization of the NOLs. BofA Merrill Lynch also relied, at the direction of Furiex, upon the assessment of senior management of Furiex as to the probability of achieving each of the milestones giving rise to the payment in respect of the CVRs contemplated by the CVR agreement in various alternative amounts and of the expected

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timing of achievement of a CVR milestone. BofA Merrill Lynch did not make or was not provided with any independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of Furiex, nor did it make any physical inspection of the properties or assets of Furiex. BofA Merrill Lynch did not evaluate the solvency or fair value of Furiex under any state, federal or other laws relating to bankruptcy, insolvency or similar matters. BofA Merrill Lynch assumed, at the direction of Furiex, that the merger would be consummated in accordance with its terms, without waiver, modification or amendment of any material term, condition or agreement and that, in the course of obtaining the necessary governmental, regulatory and other approvals, consents, releases and waivers for the merger, no delay, limitation, restriction or condition, including any divestiture requirements or amendments or modifications, would be imposed that would have an adverse effect on Furiex or the contemplated benefits of the merger.

BofA Merrill Lynch expressed no view or opinion as to any terms or other aspects of the merger or the CVR agreement (other than the merger consideration to the extent expressly specified in its opinion), including, without limitation, the form or structure of the merger or the CVRs. BofA Merrill Lynch’s opinion was limited to the fairness, from a financial point of view, of the merger consideration to be received by the holders of Company common stock and no opinion or view was expressed with respect to any consideration received in connection with the merger by the holders of any class of securities, creditors or other constituencies of any party. In addition, no opinion or view was expressed with respect to the fairness (financial or otherwise) of the amount, nature or any other aspect of any compensation to any of the officers, directors or employees of any party to the merger, or class of such persons, relative to the merger consideration. Furthermore, no opinion or view was expressed as to the relative merits of the merger in comparison to other strategies or transactions that might be available to Furiex or in which Furiex might engage or as to the underlying business decision of Furiex to proceed with or effect the merger. In addition, BofA Merrill Lynch expressed no opinion or recommendation as to how any stockholder should vote or act in connection with the merger or any related matter. Except as described above, Furiex imposed no other limitations on the investigations made or procedures followed by BofA Merrill Lynch in rendering its opinion.

BofA Merrill Lynch’s opinion was necessarily based on financial, economic, monetary, market and other conditions and circumstances as in effect on, and the information made available to BofA Merrill Lynch as of, the date of its opinion. It should be understood that subsequent developments may affect its opinion, and BofA Merrill Lynch does not have any obligation to update, revise or reaffirm its opinion. The issuance of BofA Merrill Lynch’s opinion was approved by BofA Merrill Lynch’s Americas Fairness Opinion Review Committee.

The following represents a brief summary of the material financial analyses presented by BofA Merrill Lynch to the board of directors in connection with its opinion. The financial analyses summarized below include information presented in tabular format. In order to fully understand the financial analyses performed by BofA Merrill Lynch, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses performed by BofA Merrill Lynch. Considering the data set forth in the tables below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of the financial analyses performed by BofA Merrill Lynch.

Furiex Financial Analyses

Calculation of Implied Value of Merger Consideration. BofA Merrill Lynch calculated an implied probability-adjusted present value per CVR of $11.15 by discounting to April 30, 2014 a probability-adjusted estimate of the amount and timing of the payments under the CVR reflecting Furiex management’s estimates as to the probability and timing of achieving each of the CVR milestones and applying a 14.5% discount rate. BofA Merrill Lynch added this $11.15 implied probability-adjusted present value per CVR to the $95.00 per share in cash consideration payable upon closing of the merger to derive an implied value of the merger consideration of $106.15.

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Selected Publicly Traded Companies Analyses. BofA Merrill Lynch reviewed, based on publicly available financial and stock market information, the enterprise values of the following selected publicly traded biopharmaceutical companies with a lead product candidate in development for which the company has received Phase III data and has yet to receive FDA approval:

BofA Merrill Lynch reviewed the enterprise values for the selected companies, calculated by multiplying the closing share price of each company as of April 25, 2014 by the number of fully-diluted outstanding shares of the company as disclosed in its most recent public filings and adding to the result the amount of the company’s net debt (defined as debt, preferred stock and minority interest less cash), as disclosed in its most recent public filings. Using the results of these calculations, BofA Merrill Lynch observed mean and median enterprise values of $779 million and $677 million, respectively, for the selected companies. Based on its review of the enterprise values for the selected companies, BofA Merrill Lynch applied an implied enterprise value reference range for Furiex of approximately $550 million to $900 million. Taking this reference range of implied enterprise values and subtracting Furiex’s net debt as of December 31, 2013, as disclosed in Furiex’s most recent public filings by Furiex management, and dividing the result by Furiex’s fully diluted outstanding shares (based on information disclosed in Furiex’s most recent public filings), BofA Merrill Lynch calculated an approximate implied per share equity value reference range (rounded to the nearest $0.05) for Furiex and compared the range to the implied value of the merger consideration, as calculated by BofA Merrill Lynch, and the closing share price for Furiex as of April 25, 2014, as follows:

BofA Merrill Lynch also calculated for each of the selected companies its enterprise value as a multiple (the “EV/Peak Sales Multiple”) of the median estimate of the peak year sales of the company’s lead product candidate in development as reflected in publicly available research analysts’ reports for the company. Using the results of these calculations, BofA Merrill Lynch observed mean and median implied EV/Peak Sales Multiples of 0.64x and 0.65x, respectively, for the selected companies. Based on its review of the implied EV/Peak Sales Multiples for the selected companies, BofA Merrill Lynch derived an approximate implied EV/Peak Sales Multiple reference range for Furiex of 0.50x to 1.00x. BofA Merrill Lynch multiplied this reference range of implied EV/Peak Sales Multiples by (i) Furiex management’s Base Case estimate of the peak year sales for eluxadoline reflecting adjustments by Furiex management based on its assessment of both the probability of receiving FDA approval and the probability of achieving commercial success (the “Approval and Success Adjusted Estimate”) and (ii) Furiex management’s Base Case estimate of the peak year sales for eluxadoline but modified by Furiex management to reflect an adjustment based on its assessment of the probability of achieving

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commercial success (but no adjustment to reflect its assessment of the probability of receiving FDA approval) (the “Success Adjusted Estimate”) to derive a range of implied enterprise values for Furiex under each of the Approval and Success Adjusted Estimate and the Success Adjusted Estimate. BofA Merrill Lynch subtracted from these ranges of implied enterprise values Furiex’s net debt as of December 31, 2013 as disclosed in Furiex’s most recent public filings by Furiex management and divided the results by Furiex’s fully diluted outstanding shares (based on information disclosed in Furiex’s most recent public filings) to derive an approximate implied per share equity value reference range (rounded to the nearest $0.05) for Furiex using each of the Approval and Success Adjusted Estimate and the Success Adjusted Estimate and compared such ranges to the implied value of the merger consideration, as calculated by BofA Merrill Lynch, and the closing share price for Furiex as of April 25, 2014, as follows:

No company used in this analysis is identical or directly comparable to Furiex. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the public trading or other values of the companies to which Furiex was compared.

Selected Transactions Analysis . BofA Merrill Lynch reviewed, to the extent publicly available, financial information relating to the following twelve selected transactions involving target companies in the biopharmaceutical industry with a lead product that was at the time of the announcement of the applicable transaction in Phase III clinical trials up through being commercialized for a year or less:

BofA Merrill Lynch calculated the implied transaction value of each of the selected transactions based on the consideration to be paid for the target company in the applicable transaction, both excluding and including any contingent consideration payable as a result of the post-closing achievement of milestones, all as disclosed in public filings. Using the results on these calculations, BofA Merrill Lynch observed mean and median implied transaction values of $623 million and $601 million, respectively (excluding any contingent consideration payable as a result of the post-closing achievement of milestones) and $759 million and $810 million, respectively (assuming the full payment of contingent consideration payable upon the achievement of post-closing milestones) for the selected transactions. Based on its review of implied transaction values, BofA Merrill Lynch applied an approximate implied transaction value reference range for Furiex of approximately $600 million to $1,000 million. Taking this reference range of implied transaction values and subtracting Furiex’s net debt as of December 31, 2013 as disclosed in Furiex’s most recent public filings by Furiex management and dividing the result by Furiex’s fully diluted outstanding shares (based on information disclosed in Furiex’s most recent public filings), BofA Merrill Lynch calculated the following approximate implied per share equity value reference range (rounded to the nearest $0.05) for Furiex and compared it to the implied value of the merger

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consideration, as calculated by BofA Merrill Lynch, and the closing share price for Furiex as of April 25, 2014, as follows:

BofA Merrill Lynch also calculated for each of the selected transactions its implied transaction value (assuming the full payment of contingent consideration payable upon the achievement of post-closing milestones) as a multiple (the “TV/Peak Sales Multiple”) of the median estimate of the peak year sales of the target company’s lead product as reflected in publicly available research analysts’ estimates for the target company at the time of announcement of the relevant transaction. Using the results on these calculations, BofA Merrill Lynch observed mean and median implied TV/Peak Sales Multiples of 1.06x and 0.97x, respectively, for the selected transactions. Based on its review of the TV/Peak Sales Multiples for the selected transactions, BofA Merrill Lynch derived an implied TV/Peak Sales Multiple reference range for Furiex of 0.75x to 1.25x. BofA Merrill Lynch separately multiplied this reference range of implied TV/Peak Sales Multiples by Furiex management’s estimates of the peak year sales for eluxadoline as reflected in each of the Approval and Success Adjusted Estimate and the Success Adjusted Estimate to derive a range of implied transaction values for Furiex under each of the Approval and Success Adjusted Estimate and the Success Adjusted Estimate. BofA Merrill Lynch subtracted from these ranges of implied enterprise values Furiex’s net debt as of December 31, 2013 as disclosed in Furiex’s most recent public filings by Furiex management and divided the results by Furiex’s fully diluted outstanding shares (based on information disclosed in Furiex’s most recent public filings) to derive an implied per share equity value reference range (rounded to the nearest $0.05) for Furiex using each of the Approval and Success Adjusted Estimate and the Success Adjusted Estimate and compared these ranges to the implied value of the merger consideration, as calculated by BofA Merrill Lynch, and the closing share price for Furiex as of April 25, 2014, as follows:

No company, business or transaction used in this analysis is identical or directly comparable to Furiex or the merger. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the acquisition or other values of the companies, business segments or transactions to which Furiex and the merger were compared.

Sum-of-the-Parts Discounted Cash Flow Analysis.

BofA Merrill Lynch performed a sum-of-the-parts financial analysis to derive a range of implied present values per share of Company common stock, as follows:

BofA Merrill Lynch performed a sum-of-the-parts discounted cash flow analysis to calculate a range of estimated implied present values as of December 31, 2013 for the alogliptin, eluxadoline and Priligy product franchises of Furiex utilizing estimates (in the case of the eluxadoline franchise reflecting Furiex management’s adjustments thereto reflecting its assessment of its probability of receiving FDA approval and the probability of achieving commercial success) of the standalone, unlevered, after-tax (without regard for the use of Furiex’s currently existing NOLs) free cash flows Furiex could generate from each franchise based on the projections reflected under each of the Base Case and the Limited GI Sales Force Case. Based on guidance provided by Furiex management, BofA Merrill Lynch assumed that there would be no terminal value for any of the product franchises at the end of the relevant projection period. BofA Merrill Lynch also calculated a range of estimated implied negative present values as of December 31, 2013 of the projected corporate general and administrative

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expenses of Furiex (the “G&A Expenses”) reflected under each of the Base Case and the Limited GI Sales Force Case. The estimated cash flows for each product franchise and the estimated G&A Expenses were discounted to present value using discount rates ranging from 13.0% to 16.0%.

BofA Merrill Lynch also calculated (i) an illustrative net debt for Furiex by subtracting from Furiex’s total net debt as of December 31, 2013, as disclosed in Furiex’s most recent public filings, $150 million in net aggregate proceeds from a share issuance as assumed by Furiex management, and (ii) an estimated implied present value as of December 31, 2013 of Furiex’s currently existing NOLs (as reflected in Furiex’s most recent public filings) under each of the Base Case and the Limited GI Sales Force Case, using a 7.0% discount rate.

BofA Merrill Lynch added together the ranges of estimated implied present values it derived for each of Furiex product franchises under each of the Base Case and the Limited GI Sales Force Case, subtracted the range of estimated implied negative present values it derived for the G&A Expenses under each of the Base Case and the Limited GI Sales Force Case and the illustrative net debt amount for Furiex it calculated, as described above, and added the estimated implied present value it calculated for Furiex’s currently existing NOLs, as described above. BofA Merrill Lynch divided the resulting range under each of the Base Case and the Limited GI Sales Force Case, by an illustrative number of fully diluted outstanding shares of Furiex reflecting the number of fully diluted outstanding shares of Furiex (based on information disclosed in Furiex’s most recent public filing) plus an additional number of shares assumed to be issued by Furiex for $150 million in net aggregate proceeds at a 10% discount to the closing price of the Furiex shares as of April 25, 2014 to derive an implied per share equity value reference range (rounded to the nearest $0.05) for Furiex under each of the Base Case and the Limited GI Sales Force Case and compared these ranges to the implied value of the merger consideration, as calculated by BofA Merrill Lynch, and the closing share price for Furiex as of April 25, 2014, as follows:

Other Factors

In rendering its opinion, BofA Merrill Lynch also reviewed and considered other factors, including historical trading prices and trading volumes of Company common stock during the 52-week period ended April 25, 2014. BofA Merrill Lynch observed that the low and high closing prices for Furiex’s common stock over this period ranged from $32.09 to $113.55, as compared to Furiex’s current trading price on April 25, 2014 of $80.15 and the implied value of the merger consideration of $106.15 as calculated by BofA Merrill Lynch.

Miscellaneous

As noted above, the discussion set forth above is a summary of the material financial analyses presented by BofA Merrill Lynch to the board of directors in connection with its opinion and is not a comprehensive description of all analyses undertaken by BofA Merrill Lynch in connection with its opinion. The preparation of a financial opinion is a complex analytical process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, a financial opinion is not readily susceptible to partial analysis or summary description. BofA Merrill Lynch believes that its analyses summarized above must be considered as a whole. BofA Merrill Lynch further believes that selecting portions of its analyses and the factors considered or focusing on information presented in tabular format, without considering all analyses and factors or the narrative description of the analyses, could create a misleading or incomplete view of the processes underlying BofA Merrill Lynch’s analyses and opinion. The fact that any specific analysis has been referred to in the summary above is not meant to indicate that such analysis was given greater weight than any other analysis referred to in the summary.

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In performing its analyses, BofA Merrill Lynch considered industry performance, general business and economic conditions and other matters, many of which are beyond the control of Furiex. The estimates of the future performance of Furiex in or underlying BofA Merrill Lynch’s analyses are not necessarily indicative of actual values or actual future results, which may be significantly more or less favorable than those estimates or those suggested by BofA Merrill Lynch’s analyses. These analyses were prepared solely as part of BofA Merrill Lynch’s analysis of the fairness, from a financial point of view, of the merger consideration and were provided to Furiex’s board of directors in connection with the delivery of BofA Merrill Lynch’s opinion. The analyses do not purport to be appraisals or to reflect the prices at which a company might actually be sold or the prices at which any securities have traded or may trade at any time in the future. Accordingly, the estimates used in, and the ranges of valuations resulting from, any particular analysis described above are inherently subject to substantial uncertainty and should not be taken to be BofA Merrill Lynch’s view of the actual values of Furiex.

The type and amount of consideration payable in the merger was determined through negotiations between Furiex and Forest, rather than by any financial advisor, and was approved by the board of directors. The decision to enter into the merger agreement was solely that of the board of directors. As described above, BofA Merrill Lynch’s opinion and analyses were only one of many factors considered by the board of directors in its evaluation of the proposed merger and should not be viewed as determinative of the views of the board of directors or management with respect to the merger or the merger consideration.

Furiex has agreed to pay BofA Merrill Lynch for its services in connection with the merger an aggregate fee of approximately $15.6 million, a portion of which was payable in connection with the delivery of its opinion and a significant portion of which is contingent upon the consummation of the merger. In the event that a payment is ultimately made in respect of the CVRs, BofA Merrill Lynch will be entitled to receive, at the time such payment is made, an additional fee equal to 2% of the aggregate amount of such payment. Furiex also has agreed to reimburse BofA Merrill Lynch for its expenses and to indemnify BofA Merrill Lynch against certain liabilities arising out of its engagement.

BofA Merrill Lynch and its affiliates comprise a full service securities firm and commercial bank engaged in securities, commodities and derivatives trading, foreign exchange and other brokerage activities, and principal investing as well as providing investment, corporate and private banking, asset and investment management, financing and financial advisory services and other commercial services and products to a wide range of companies, governments and individuals. In the ordinary course of their businesses, BofA Merrill Lynch and its affiliates invest on a principal basis or on behalf of customers or manage funds that invest, make or hold long or short positions, finance positions or trade or otherwise effect transactions in equity, debt or other securities or financial instruments (including derivatives, bank loans or other obligations) of Furiex, Forest and certain of their respective affiliates.

BofA Merrill Lynch and its affiliates in the past have provided, currently are providing, and in the future may provide, investment banking, commercial banking and other financial services to Forest and have received or in the future may receive compensation for the rendering of these services, including (i) having acted or acting as co-manager and joint book runner in connection with the issuance of various series of senior notes by Forest and as a lender under Forest’s revolving credit facility and (ii) having provided or providing certain foreign exchange trading services and treasury and trade management services and products to Forest. From January 2012 through April 2014, BofA Merrill Lynch and its affiliates received or derived aggregate revenues of approximately $5.5 million from Forest and its affiliates for investment, commercial and corporate banking services.

As described above, Forest is party to an Agreement and Plan of Merger, dated February 17, 2014, with Actavis plc and certain of its subsidiaries pursuant to which Actavis is to acquire Forest. BofA Merrill Lynch and its affiliates in the past have provided, currently are providing, and in the future may provide, investment banking, commercial banking and other financial services to Actavis and have received or in the future may receive compensation for the rendering of these services, including (i) having entered into a commitment to provide and/or arrange financing for Actavis in connection with its announced acquisition of Forest (subject to the terms of such commitment), which financing may include acting as administrative agent, joint lead arranger and a joint bookrunner for, and a lender under, certain credit facilities for Actavis and as a joint bookrunner to Actavis in connection with the issuance of senior secured notes, (ii) having acted as financial advisor to Actavis

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in connection with its acquisition of Warner Chilcott plc and having provided and/or arranged financing for such acquisition, (iii) having acted as financial advisor to Watson Pharmaceutical Inc., which we refer to as Watson (a predecessor of Actavis) in connection with its acquisition of Actavis Group and having provided and/or arranged financing for such acquisition, including having acted as a joint bookrunner on a bond offering for Watson, (iv) having acted or acting as an administrative agent, co-lead arranger, and bookrunner for, and a lender (including, in some cases a letter of credit lender and swing-line lender) under, various credit facilities of affiliates of Actavis and (v) having provided or providing certain foreign exchange trading services and treasury and trade management services and products to Actavis. From January 2012 through April 2014, BofA Merrill Lynch and its affiliates received or derived aggregate revenues of approximately $90.5 million from Actavis and its affiliates for investment, commercial and corporate banking services. In addition, as indicated above, BofA Merrill Lynch and its affiliates have entered into a commitment to provide and/or arrange financing for Actavis in connection with its pending acquisition of Forest. In connection with such financing, BofA Merrill Lynch and its affiliates expect to earn significant fees.

Credit Suisse

On April 26, 2014, Credit Suisse rendered its oral opinion to the board of directors (which was subsequently confirmed in writing by delivery of Credit Suisse’s written opinion addressed to the board of directors dated the same date) as to, as of April 26, 2014, the fairness, from a financial point of view, to the holders of Company common stock of the merger consideration to be received by such holders in the merger pursuant to the merger agreement.

Credit Suisse’s opinion was directed to the board of directors (in its capacity as such), and only addressed the fairness, from a financial point of view, to the holders of Company common stock of the merger consideration to be received by such holders in the merger pursuant to the merger agreement and did not address any other aspect or implication of the merger. The summary of Credit Suisse’s opinion in this proxy statement is qualified in its entirety by reference to the full text of its written opinion, which is included as Annex E-2 to this proxy statement, and sets forth procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Credit Suisse in preparing its opinion. However, neither Credit Suisse’s written opinion nor the summary of its opinion and the related analyses set forth in this proxy statement are intended to be, and they do not constitute, advice or a recommendation to any holder of Company common stock as to how such holder should vote or act on any matter relating to the merger.

In arriving at its opinion, Credit Suisse, among other things:

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In connection with its review, Credit Suisse did not independently verify any of the foregoing information and assumed and relied upon such information being complete and accurate in all respects material to Credit Suisse’s analyses and opinion. In addition, management of Furiex advised Credit Suisse, and Credit Suisse assumed, that (i) the Company Forecasts were reasonably prepared on bases reflecting the best currently available estimates and judgments of Furiex’s management as to the future financial performance of Furiex, (ii) the Company Probabilities were reasonably prepared and reflected the best currently available estimates and judgments of Furiex’s management as to the likelihood that the milestones set forth in the CVR agreement will be achieved and the timing thereof, and (iii) the NOLs and Estimated NOL Tax Savings were reasonably prepared on bases reflecting the best currently available estimates and judgments of management of Furiex as to the amount of such NOLs and Estimated NOL Tax Savings. Management of Furiex further advised Credit Suisse and, at their direction Credit Suisse assumed, that the Company Forecasts, the Company Probabilities, the NOLs and the Estimated NOL Tax Savings were a reasonable basis on which to evaluate Furiex and Credit Suisse expressed no view or opinion with respect to, and assumed no responsibility for, the Company Forecasts, the Company Probabilities, the NOLs, the Estimated NOL Tax Savings or the assumptions upon which they were based. Credit Suisse also assumed, with Furiex’s consent, that, in the course of obtaining any regulatory or third-party consents, approvals or agreements in connection with the merger, no delay, limitation, restriction or condition would be imposed that would have an adverse effect on Furiex or the CVRs and that the merger would be consummated in accordance with the terms of the merger agreement, without waiver, modification or amendment of any term, condition or agreement thereof that is material to Credit Suisse’s analyses or opinion and that any payments due and payable to the holders of Company common stock pursuant to the CVRs would be made in accordance with the terms of the CVR agreement, without waiver, modification or amendment of any term, condition or agreement thereof that is material to Credit Suisse’s analyses or opinion. In addition, Credit Suisse was not requested to make, and did not make, an independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of Furiex, nor was Credit Suisse furnished with any such evaluations or appraisals. With Furiex’s consent, Credit Suisse further assumed that the final form of the merger agreement and the CVR agreement, when executed by the parties thereto, would conform to the drafts reviewed by Credit Suisse in all respects material to Credit Suisse’s analyses and opinion.

Credit Suisse’s opinion only addressed the fairness, from a financial point of view, to the holders of Company common stock of the merger consideration to be received by such holders in the merger pursuant to the merger agreement and did not address any other aspect or implication of the merger or any other agreement, arrangement or understanding entered into in connection with the merger or otherwise including, without limitation, any voting agreements entered into between Forest and holders of Company common stock, or the fairness of the amount or nature of, or any other aspect relating to, any compensation or consideration to be received or otherwise payable to any officers, directors, employees, security holders or affiliates of any party to the merger, or class of such persons, relative to the merger consideration or otherwise. Furthermore, no opinion, counsel or interpretation was intended regarding matters that require legal, regulatory, accounting, insurance, tax, executive compensation, environmental or other similar professional advice, including, without limitation, any regulatory or other matters that could affect the ability of Furiex or Forest to achieve the milestones set forth in the CVR agreement. The issuance of the opinion was approved by an authorized internal committee of Credit Suisse.

Credit Suisse’s opinion was necessarily based upon information made available to Credit Suisse as of the date of the opinion and financial, economic, market and other conditions as they existed and could be evaluated on the date thereof. Credit Suisse did not undertake, and is under no obligation, to update, revise, reaffirm or withdraw the opinion, or otherwise comment on or consider events occurring or coming to Credit Suisse’s attention after the date of the opinion. In addition, as Furiex was aware, the Company Forecasts and Company Probabilities reviewed by Credit Suisse relating to the future financial performance of Furiex reflected certain assumptions regarding, among

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other things, the development, marketability and commercial viability of Furiex’s drugs, including eluxadoline, that are subject to significant uncertainty and that, if different than assumed by Furiex management, could have a material impact on Credit Suisse’s analyses and opinion. Credit Suisse’s opinion did not address the relative merits of the merger as compared to alternative transactions or strategies that may be available to Furiex nor did it address Furiex’s underlying decision to proceed with the merger. As Furiex was aware, the CVRs are subject to significant transfer restrictions and are not freely tradable, and Credit Suisse did not express any opinion as to the value of the CVRs when issued pursuant to the merger or at any time thereafter or the price or range of prices at which shares of Company common stock may be purchased or sold at any time. Credit Suisse was not requested to, and did not; solicit third-party indications of interest in acquiring all or any part of Furiex.

In preparing its opinion to the board of directors, Credit Suisse performed a variety of analyses, including those described below. The summary of Credit Suisse’s financial analyses is not a complete description of the analyses underlying Credit Suisse’s opinion. The preparation of such an opinion is a complex process involving various quantitative and qualitative judgments and determinations with respect to the financial, comparative and other analytic methods employed and the adaptation and application of those methods to the unique facts and circumstances presented. As a consequence, neither Credit Suisse’s opinion nor the analyses underlying its opinion are readily susceptible to partial analysis or summary description. Credit Suisse arrived at its opinion based on the results of all analyses undertaken by it and assessed as a whole and did not draw, in isolation, conclusions from or with regard to any individual analysis, analytic method or factor. Accordingly, Credit Suisse believes that its analyses must be considered as a whole and that selecting portions of its analyses, analytic methods and factors, without considering all analyses and factors or the narrative description of the analyses, could create a misleading or incomplete view of the processes underlying its analyses and opinion.

In performing its analyses, Credit Suisse considered business, economic, industry and market conditions, financial and otherwise, and other matters as they existed on, and could be evaluated as of, the date of its opinion. No company, business or transaction used in Credit Suisse’s analyses for comparative purposes is identical to Furiex or the proposed merger. While the results of each analysis were taken into account in reaching its overall conclusion with respect to fairness, Credit Suisse did not make separate or quantifiable judgments regarding individual analyses. The reference ranges indicated by Credit Suisse’s financial analyses are illustrative and not necessarily indicative of actual values nor predictive of future results or values, which may be significantly more or less favorable than those suggested by the analyses. In addition, any analyses relating to the value of assets, businesses or securities do not purport to be appraisals or to reflect the prices at which businesses or securities actually may be sold, which may depend on a variety of factors, many of which are beyond Furiex’s control and the control of Credit Suisse. Much of the information used in, and accordingly the results of, Credit Suisse’s analyses are inherently subject to substantial uncertainty.

Under the terms of its engagement, neither Credit Suisse’s opinion nor any other advice or services rendered by it in connection with the proposed merger or otherwise, should be construed as creating, and Credit Suisse should not be deemed to have, any fiduciary, agency or similar duty to the board of directors, Furiex, Forest, any security holder or creditor of Furiex, Forest or any other person, regardless of any prior or ongoing advice or relationships.

The following is a summary of the material financial analyses reviewed by Credit Suisse with the board of directors in connection with the rendering of its opinion to the board of directors on April 26, 2014. The summary does not contain all of the financial data holders of Company common stock may want or need for purposes of making an independent determination of fair value. Holders of Company common stock are encouraged to consult with their own financial and other advisors before making an investment decision in connection with the proposed merger. The analyses summarized below include information presented in tabular format. The tables alone do not constitute a complete description of the analyses. Considering the data in the tables below without considering the full narrative as well as the methodologies underlying, and the assumptions, qualifications and limitations affecting, each analysis, could create a misleading or incomplete view of Credit Suisse’s analysis.

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Unless the context indicates otherwise, (1) share prices for the selected companies used in the selected companies analysis described below were as of April 25, 2014, (2) the transaction values for the selected transactions used in the selected transactions analysis described below were calculated on an enterprise value basis based on the consideration proposed to be paid in the selected transactions as of the date of announcement, and (3) estimates of future financial performance of Furiex were based on the Company Forecasts. For purposes of its analysis, Credit Suisse calculated an implied value of the merger consideration equal to $106.53 based on the $95.00 in cash per share of Company common stock to be received upon the closing of the merger and the net present value of a CVR indicated by applying a discount rate of 12.5% to the projected future cash payment to be received per share of Company common stock pursuant to the CVR based on the Company Probabilities prepared and provided by Furiex management.

Selected Companies Analysis

Credit Suisse considered certain financial data for Furiex and selected companies with publicly traded equity securities Credit Suisse deemed relevant. The selected companies were selected because they were deemed to be similar to Furiex in one or more respects. The financial data reviewed included enterprise value (calculated as the market value of common equity on a fully diluted basis plus the book value of debt, preferred stock and minority interest less cash) as a multiple of peak sales as prepared and provided to Credit Suisse by the management of Furiex (“Enterprise Value/Peak Sales”).

The selected companies and resulting mean and median data were:

Taking into account the results of the selected companies analysis, Credit Suisse applied a multiple range of 0.5x to 1.0x to Furiex’s projected Peak Sales under the Company Forecasts. The selected companies analysis indicated an implied value reference range of $53.26 to $107.52 per share of Company common stock based on the Base Case and an implied value reference range of $29.87 to $60.68 per share for Company common stock based on the Limited GI Sales Force Case, as compared to the implied value of the merger consideration of $106.53 per share of Company common stock.

Selected Transactions Analysis

Credit Suisse also considered the financial terms of certain business combinations and other transactions that Credit Suisse deemed relevant. The selected transactions were selected because the target companies were deemed similar to Furiex in one or more respects. The financial data reviewed included transaction value (calculated as the equity purchase price, plus any debt, less cash and cash equivalents of the target company) as a multiple of global peak sales as prepared and provided to Credit Suisse by the management of Furiex (“Transaction Value/Global Peak Sales”).

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The selected transactions and resulting mean and median data were:

Phase III Complete/Filed

Overall/Composite

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Taking into account the results of the selected transactions analysis, Credit Suisse applied a multiple range of 0.7x to 1.1x to Furiex’s projected global peak sales under the Company Forecasts. The selected transactions analysis indicated an implied value reference range per share of Company common stock of $74.98 to $118.36 per share of Furiex’s common stock under the Base Case and an implied value reference range per share of Company common stock of $42.19 to $66.84 per share of Furiex’s common stock under the Limited GI Sales Force Case, as compared to the implied value of the merger consideration of $106.53 per share of Company common stock.

Discounted Cash flow Analysis

Credit Suisse performed a discounted cash flow analysis of Furiex by calculating the estimated net present value of the projected after-tax unlevered free cash flows of Furiex based on the Company Forecasts and the Estimated NOL Tax Savings and, at the instruction of Furiex management, taking into account corporate adjustments for a future equity financing forecasted by Furiex. The estimated net present value of the projected after-tax unlevered free cash flows of Furiex and the implied value of the Estimated NOL Tax Savings were calculated using discount rates ranging from 10.0% to 15.0%. The discounted cash flow analysis indicated implied value reference ranges per share of Company common stock of $97.29 to $132.71 for the Base Case and $72.65 to $95.48 for the Limited GI Sales Force Case, compared to the implied value of the merger consideration of $106.53 per share of Company common stock.

Other Considerations

Furiex retained Credit Suisse as its financial advisor in connection with the proposed merger based on Credit Suisse’s qualifications, experience and reputation as an internationally recognized investment banking and financial advisory firm. Pursuant to the engagement letter between Furiex and Credit Suisse, Furiex has agreed to pay Credit Suisse a fee of $2.5 million for its services as financial advisor to Furiex in connection with the merger, which became payable upon the delivery of Credit Suisse’s opinion. No portion of Credit Suisse’s fee is contingent upon the consummation of the merger. In addition, Furiex agreed to reimburse certain of Credit Suisse’s expenses and to indemnify Credit Suisse and certain related parties for certain liabilities and other items arising out of or related to Credit Suisse’s engagement. Credit Suisse and its affiliates have in the past provided investment banking and other financial services, to Forest and its affiliates, including, among other things, during the past two years, having acted as bookrunning lead managing initial purchaser of debt securities issued by Forest in November 2013 and co-managing initial purchaser of debt securities issued by Forest in January 2014, and having been a counterparty to Forest or certain of its affiliates with respect to certain derivatives contracts, for which investment banking advice and services Credit Suisse and its affiliates received an aggregate of approximately $5.2 million in compensation. Credit Suisse and its affiliates may have provided other financial advice and services, and may in the future provide financial advice and services to Furiex, Forest and their respective affiliates. Credit Suisse is a full service securities firm engaged in securities trading and brokerage activities as well as providing investment banking and other financial services. In the ordinary course of business, Credit Suisse and its affiliates may acquire, hold or sell, for Credit Suisse and its affiliates’ own accounts and the accounts of customers, equity, debt and other securities and financial instruments (including bank loans and other obligations) of Furiex, Forest and any other company that may be involved in the merger, as well as provide investment banking and other financial services to such companies and their affiliates.