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UNITED STATES
    SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
    20549
      Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31,
    2010ORo

TRANSITION REPORT PURSUANT TO
    SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
    1934For the transition period
    from          to   Commission file number:
    000-50767
      CORNERSTONE THERAPEUTICS
    INC.
 (Exact Name of Registrant as
    Specified in Its Charter)
  Delaware

04-3523569(State or Other Jurisdiction
    of

(IRS EmployerIncorporation or
    Organization)

Identification No.)1255 Crescent Green Drive, Suite 250

27518Cary, North Carolina

(Zip Code)(Address of Principal Executive
    Offices)    (919) 678-6611
       Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, $0.001 par value per share

The NASDAQ Stock Market LLC          o þ
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer o
    Non-accelerated
    filer þ
    Smaller reporting
    company o (Do not check if a smaller
    reporting company)
  Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




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##### 





CORNERSTONE
    THERAPEUTICS INC.
    ANNUAL REPORT
    ON
    FORM 10-K
    INDEX
  PagePART IItem 1.

Business


1Item 1A.

Risk Factors


27Item 1B.

Unresolved Staff Comments


53Item 2.

Properties


53Item 3.

Legal Proceedings


53Item 4.

(Removed and Reserved)


53EXECUTIVE OFFICERS OF THE REGISTRANT


54PART IIItem 5.

Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


56Item 6.

Selected Financial Data


58Item 7.

Managements Discussion and Analysis of
    Financial Condition and Results of Operations


59Item 7A.

Quantitative and Qualitative Disclosures About
    Market Risk


80Item 8.

Financial Statements and Supplementary Data


81Item 9.

Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosure


110Item 9A.

Controls and Procedures


110Item 9B.

Other Information


110PART IIIItem 10.

Directors, Executive Officers and Corporate
    Governance


111Item 11.

Executive Compensation


111Item 12.

Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


111Item 13.

Certain Relationships and Related Transactions,
    and Director Independence


112Item 14.

Principal Accountant Fees and Services


112PART IVItem 15.

Exhibits, Financial Statement Schedules


112SIGNATURES


113EXHIBIT INDEXEX-10.45EX-21.1EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2




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PART I  Cautionary
    Statement Regarding Forward-Looking Statements
  Form 10-K Form 10-K Form 10-K
  ITEM 1.
    BUSINESS  Background
   1




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® ®
  Overview
      
    Leverage commercial capabilities by promoting respiratory and
    related products to high prescribing physicians through our
    respiratory sales force and to hospital-based healthcare
    professionals through our hospital sales force;
    Acquire rights to existing patent- or trade secret-protected,
    branded products, which can be promoted through the same
    channels to generate on-going high-value earnings streams;
    Advance our development projects and further build a robust
    pipeline; and
    Generate revenues by marketing approved generic products through
    our wholly owned subsidiary, Aristos Pharmaceuticals, Inc., or
    Aristos.           2




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
    growing our existing product portfolio by acquiring companies
    and/or
    products that fit with our strategic focus and
    advancing our product pipeline with the expected FDA approval of
    CRTX 067 and the continued development of our other product
    candidates.    Our
    Promoted Products
  CUROSURF
  Overview.
    Market Opportunity.
  Benefits of CUROSURF.
  ® 2
  2 2
     3




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Proprietary Rights.
  ZYFLO
    CR
  Overview.
    Market Opportunity.
  Benefits of ZYFLO CR.
    
    rapid and sustained improvement for patients over a six-month
    period in objective and subjective measures of asthma control;
    reduction of exacerbations and need for either bronchodilatory
    or steroid rescue medications; and
    acute bronchodilatory effect within two hours after the first
    dose.     4




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Proprietary Rights.
  FACTIVE
  Overview. five-day seven-day Streptococcus pneumoniae Haemophilus influenzae, Moraxella catarrhalis,
    Mycoplasma pneumoniae, Chlamydia pneumoniae Klebsiella pneumoniae five-day
  Market Opportunity.
    Benefits of FACTIVE. five-day
 5




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##### Table of Contents



Streptococcus pneumoniae five-day Streptococcus pneumoniae Haemophilus influenzae Chlamydia
    pneumoniae Mycoplasma
    pneumoniae five-day five-day
  Proprietary Rights.
  SPECTRACEF
  Overview.
  10-day 14-day 10-day
  Market Opportunity.
    Benefits of SPECTRACEF. Streptococcus pneumoniae Haemophilus
    influenzae Moraxella catarrhalis
 6




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Streptococcus pneumoniae Haemophilus influenzae Moraxella catarrhalis
  Proprietary Rights.
  Other
    Products
  ® ®
    Form 10-K Form 10-K.
  Product
    Development Pipeline
  Overview.
  Therapeutic Class

Developmental Stage

Regulatory StatusAllergyCRTX 058

Preclinical

Submission timeline under review by managementCRTX 070

Preclinical

Submission targeted in 2014Anti-AsthmaCRTX 073

Preclinical

Submission targeted in 2012CRTX 809

Preclinical

Submission targeted in 2015Cough/ColdProduct Candidate SubmittedCRTX 067

Under FDA Review

Regulatory application submitted in July 2009Other Product CandidatesCRTX 069

Preclinical

Submission timeline under review by managementCRTX 072

Preclinical

Submission targeted in 2013CRTX 074

Preclinical

Submission timeline under review by management  7




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##### Table of Contents



Allergy
    Product Candidates  CRTX 058 and CRTX
    070
  Overview and Development Status.
  Market Opportunity.
    Benefits of CRTX 058 and CRTX 070. and/or
  Proprietary Rights. ®
  Anti-Asthma
    Product Candidates  CRTX 073 and CRTX
    809
  Overview and Development Status.
   8




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Proprietary Rights.
  Cough/Cold
    Product Candidates  CRTX 067, CRTX 069, CRTX 072 and
    CRTX 074
  Overview and Development Status.
  Market Opportunity.
  Benefits of Cough/Cold Product
    Candidates.
  Proprietary Rights. ® ® 12-hour
  Sales and
    Marketing; Co-promotion Agreements
  Sales
    and Marketing
       9




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Co-promotion
    Agreements
    DEY  Co-Promotion and Marketing Services Agreement
    for ZYFLO CR.
       10




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Trade
    and Distribution
    Customer

2010


2009Cardinal Health


43
%


34
%McKesson Corporation


29
%


34
%AmerisourceBergen Corporation


22
%


20
%         Manufacturing
     11




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Product

Manufacturer/PackagerCUROSURF

ChiesiZYFLO/ZYFLO CRAPI (zileuton)

Shasun Pharma Solutions Ltd. (or Shasun)ZYFLO tablets

Patheon Pharmaceuticals Inc. (or Patheon)ZYFLO CR tablet cores

Jagotec AG (or Jagotec)ZYFLO CR tablet coating and packaging

PatheonFACTIVE 5 and 7API (gemifloxacin mesylate)

LGLSFACTIVE tablets

PatheonFACTIVE packaging

PatheonSPECTRACEFAPI (cefditoren pivoxil), tablets and packaging

Tedec-Meiji       Chiesi 
    License and Distribution Agreement
  Form 10-K.
  Shasun 
    Agreement for Manufacturing and Supply of Zileuton
    API
  18-months
  Jagotec 
    Manufacture and Supply Agreement for ZYFLO CR
  12-month 24-months 36-months
 12




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LGLS 
    License and Option Agreement
  Form 10-K.
  Meiji 
    SPECTRACEF License and Supply Agreement
  Form 10-K.
  Intellectual
    Property
    Patents
      Number

Issued Patents

Product(s)

ExpirationLicensed Patents5,422,123

Tablets with controlled-rate release of active substances

ZYFLO CR

06/06/20125,633,262

Quinoline carboxylic acid derivatives having
    7-(4-amino-methyl-3-oxime)
    pyrrolidine substituent and processes for preparing thereof

FACTIVE

06/15/20155,962,468

7-(4-aminomethyl-3-methyloxyiminopyrroplidin-1-yl)-1-cyclopropyl-6-flu
    oro-4-oxo-1,4-dihydro-1,8-naphthyridine-3-carboxylic acid and
    the process for the preparation thereof

FACTIVE

06/15/20155,958,915

Antibacterial composition for oral administration

SPECTRACEF

10/14/20165,776,944

7-(4-aminomethyl-3-methyloxyiminopyrroplidin-1-yl)-1-cyclopropyl-6-flu
    oro-4-oxo-1,4-dihydro-1,8-naphthyridine-3-carboxylic acid and
    the process for the preparation thereof

FACTIVE

04/04/20176,723,734

Salt of naphthyridine carboxylic acid derivative

FACTIVE

03/20/20186,340,689

Methods of use of quinolone compounds against atypical upper
    respiratory pathogenic bacteria

FACTIVE

09/14/2019 13




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Number

Issued Patents

Product(s)

Expiration6,262,071

Methods of use of antimicrobial compounds against pathogenic
    amycoplasma bacteria

FACTIVE

09/21/20196,331,550

Methods of use of quinolone compounds against anaerobic
    pathogenic bacteria

FACTIVE

09/21/20196,455,540

Methods of use of quinolone compounds against anaerobic
    pathogenic bacteria

FACTIVE

09/21/20196,803,376

Method of use of quinolone compounds against pneumococcal and
    haemophilus bacteria

FACTIVE

09/21/2019           Trade
    Secrets
   14




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Trademarks
    License
    and Collaboration Agreements
    Chiesi 
    CUROSURF License and Distribution Agreement
  Overview. 10-year
  Fees, Milestones and Royalties.
  Exclusive Supplier.
  Term and Termination. 10-year
  Abbott 
    Zileuton License Agreements
  Overview. ®
  Fees and Royalty Payments. country-by-country
 15




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Term and Termination. 60-days
  Jagotec 
    Consent to Abbott Sublicense of Zileuton
    LG
    Life Sciences  FACTIVE License and Option
    Agreement
  Overview.
  Fees, Milestones and Royalties.
  Exclusive Supplier.
  Term and Termination.
  Meiji 
    SPECTRACEF License and Supply Agreement
  Overview.
  Fees, Milestones and Royalties.
 16




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Exclusive Supplier and Minimum Purchase
    Obligation.
  Term and Termination. product-by-product product-by-product 270-days
  Neos 
    Development, License and Services Agreement 
    Anticholinergic and Antihistamine Combination
    Product
  Overview.
  Fees, Milestones and Royalties.
  Term and Termination. 90-days
 17




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Neos
    and Coating Place  Development and Manufacturing
    Agreement  Antitussive and Antihistamine Combination
    Product
  Overview.
  Fees, Milestones and Profit Sharing.
  Product Development, Regulatory and Commercialization
    Expenses.
  Exclusivity.
  Term and Termination.
  Neos 
    Products Development Agreement
  Overview.
 18




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Fees, Milestones and Royalties.
  Term and Termination.
  Competition
          
    CUROSURF Abbotts Survanta and ONY,
    Inc.s
    Infasurf®.
    ZYFLO CR or any anti-asthma product candidate IgE blockers, such as Genentech USA, Incs and Novartis
    Pharmaceutical Corporations
    Xolair®;

    bronchodilatory drugs, such as Teva Respiratory LLCs
    ProAir®

    HFA (albuterol sulfate) Inhalation Aerosol and Schering
    Corporations, or Schering,
    Proventil®

    HFA (albuterol sulfate) Inhalation Aerosol; Leukotriene Receptor
    Agonists, such as Merck Sharp and Dohme Corporations
    Singulair®

    (montelukast sodium); inhaled corticosteroids, such as
    GlaxoSmithKlines, or GSK,
    Flovent®

    Diskus®

    (fluticasone propionate inhalation powder); and combination
    products, such as GSKs Advair
    Diskus®

    (fluticasone propionate and salmeterol inhalation powder) and
    AstraZeneca LPs
    Symbicort®

    (budesonide/formoterol fumarate dehydrate) Inhalation 19




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Solution. In addition, we may face competition from
    pharmaceutical companies seeking to develop new drugs for the
    asthma market.  
    FACTIVE or any anti-infective product candidate Ortho-McNeil-Janssen Pharmaceuticals,
    Inc.s
    Levaquin®

    (levofloxacin), Bayer Healthcare Pharmaceutical Inc.s
    Avelox®

    (moxifloxacin) and generic formulations of Bayer Schering
    Pharmas
    Cipro®

    (ciprofloxacin).
    SPECTRACEF or any anti-infective product candidate second and third generation cephalosporins, such
    as Pernix Therapeutics, Inc.s
    Cedax®

    (ceftibuten), Lupin Pharmaceuticals, Inc.s,
    Suprax®

    and generic formulations cefdinir and GSKs
    Ceftin®

    (cefuroxime).
    Cough/cold product candidates various
    narcotic and non-narcotic antitussives, such as King
    Pharmaceuticals, Inc.s
    Tussigon®

    (hydrocodone and homatropine), Mallinckrodt, Inc.s
    TussiCaps®

    (hydrocodone polistirex and chlorpheniramine polistirex), UCB,
    Inc.s, or UCB,
    Tussionex®

    (hydrocodone polistirex and chlorpheniramine polistirex) and
    generic formulations of promethazine hydrochloride and codeine
    phosphate oral syrup and Forest Laboratories, Inc.s
    Tessalon®

    (benzonatate);
    over-the-counter
    antitussives, such as Reckitt Benckiser Inc.s
    Delsym®

    (dextromethorphan polistirex) and Schering-Ploughs
    HealthCare Products Inc.s Coricidin
    HBP®

    Cough & Cold (dextromethorphan and chlorpheniramine).  Regulatory
    Matters
  and/or
  FDA
    Regulation of Drug Products
    New Drug Applications.
  
    pre-clinical laboratory tests, animal studies and formulation
    studies;
    submission to the FDA of an IND for human clinical testing,
    which must become effective before human clinical trials may
    begin;
    adequate and well-controlled clinical trials to establish the
    safety and efficacy of the drug for each indication;
    submission to the FDA of an NDA;
    satisfactory completion of an the FDA inspection of the
    manufacturing facility or facilities at which the drug is
    produced to assess compliance with cGMP; and
    FDA review and approval of the NDA.   20




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Supplemental New Drug Applications.
      Abbreviated New Drug Applications.
 21




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and/or 180-day
  Section 505(b)(2) New Drug
    Applications.
  and/or
  Foreign
    Regulation
   22




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Regulation
    of Controlled Substances
          Hazardous
    Materials
    Pharmaceutical
    Pricing and Reimbursement
     23




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
    controls on government-funded reimbursement for drugs;
    controls on payments to health care providers that affect demand
    for drug products; 24




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
    challenges to the pricing of drugs or limits or prohibitions on
    reimbursement for specific products through other means;
    weakening of restrictions on imports of drugs; and
    expansion of the use of managed care systems in which health
    care providers contract to provide comprehensive health care for
    a fixed cost per person.      Fraud and
    Abuse Regulation
    
    Federal Anti-Kickback Law.  The anti-kickback
    law contained in the federal Social Security Act is a criminal
    statute that makes it a felony for individuals or entities
    knowingly and willfully to offer or pay, or to solicit or
    receive, remuneration in order to induce the purchase, order,
    lease or recommending of items or services, or the referral of
    patients for services, that are reimbursed under a federal
    health care program, including Medicare and Medicaid. The term
    remuneration has been interpreted broadly and
    includes both direct and indirect compensation and other items
    and services of value. Both the party offering or paying
    remuneration and the recipient may be found to have violated the
    statute. Courts have interpreted the anti-kickback law to cover
    any arrangement where one purpose of the remuneration is to
    induce purchases or referrals, regardless of whether there are
    also legitimate purposes for the arrangement. There are narrow
    exemptions and regulatory safe harbors, but many legitimate
    transactions fall outside of the scope of any exemption or safe
    harbor, although that does not necessarily mean the arrangement
    will be subject to penalties under the anti-kickback statute.
    Penalties for federal anti-kickback violations are severe,
    including up to five years imprisonment, individual and
    corporate criminal fines, exclusion from participation in
    federal health care programs and civil monetary penalties in the
    form of treble damages plus $50,000 for each violation of the
    statute. Health Care Reform amended the intent requirement of
    the federal anti-kickback statute so that a person or entity
    does not need to have actual knowledge of the statute or
    specific intent to violate it. Violations of the federal
    anti-kickback statute may now also be treated as a false or
    fraudulent claim for purposes of the federal false claims act or
    a violation of the criminal health care fraud law.
    Federal False Claims Law.  The federal false
    claims act imposes liability on any person who knowingly
    submits, or causes another person or entity to submit, a false
    or fraudulent claim for payment of government funds or knowingly
    makes a false statement to avoid, decrease or conceal an
    obligation to pay money to the federal government. Penalties
    include three times the governments 25




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damages plus civil penalties of $5,500 to $11,000 per false
    claim. In addition, the federal false claims act permits a
    person with knowledge of fraud, referred to as a qui tamplaintiff or whistleblower, to file a lawsuit on
    behalf of the government against the person or entity that
    committed the fraud. If the government determines to intervene
    in the lawsuit and the government prevails, the qui tamplaintiff is rewarded with a percentage of the recovery.  
    Federal Health Insurance Portability and Accountability Act
    of 1996.  The HIPAA statute imposes criminal
    liability for knowingly and willfully executing a scheme to
    defraud any health care benefit program. It also prohibits
    knowingly and willfully falsifying, concealing or covering up
    any material fact or making any materially false or fraudulent
    statement in connection with the delivery of or payment for
    health care benefits, items or services. Furthermore, HIPAA
    imposes obligations, including mandatory contractual terms, with
    respect to safeguarding the privacy, security and transmission
    of individually identifiable health information.
    Other Federal Criminal and Civil Health Care
    Laws.  The Social Security Act contains numerous
    penalties for fraud and abuse in the health care industry, such
    as imposition of a civil monetary penalty, a monetary
    assessment, exclusion from participation in federal health care
    programs or a combination of these penalties.
    State Laws.  Various states have enacted laws
    and regulations comparable to the federal fraud and abuse laws
    and regulations. These state laws and regulations may apply to
    items or services reimbursed by any third-party payor, including
    private payors, commercial insurers and other payors. Moreover,
    these laws and regulations vary significantly from state to
    state and, in some cases, are broader than the federal laws and
    regulations. These differences increase the costs of compliance
    and the risk that the same arrangements may be subject to
    different compliance standards in different states.    Employees
    Available
    Information
  Form 10-K, Form 10-Q, Form 8-K
 26




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ITEM 1A.
    RISK
    FACTORS  Form 10-K
  Risks
    Relating to Commercialization and Product Acquisitions
  We use
    third parties to manufacture all of our products and product
    candidates. This may increase the risk that we will not have
    sufficient quantities of our products or product candidates at
    an acceptable cost, which could result in clinical development
    and commercialization of product candidates being delayed,
    prevented or impaired.
      
    We may not be able to meet commercial demands for our products;
    We may be required to cease distribution or issue recalls;
    We may not be able to initiate or continue clinical trials of
    product candidates that are under development; and
    We may be delayed in submitting applications for regulatory
    approvals for product candidates.       27




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and/or
  The
    commercial success of our currently marketed products and any
    additional products that we successfully develop or bring to
    market depends on the degree of market acceptance by physicians,
    patients, health care payors and others in the medical
    community.
    
    the prevalence and severity of the products side effects;
    the efficacy and potential advantages of the products over
    alternative treatments;
    the ability to offer the products for sale at competitive
    prices, including in relation to any generic or re-imported
    products or competing treatments;
    the relative convenience and ease of administration of the
    products;
    the willingness of the target patient population to try new
    therapies and of physicians to prescribe these therapies;
    the perception by physicians and other members of the health
    care community of the safety and efficacy of the products and
    competing products;
    the availability and level of third-party reimbursement for
    sales of the products;
    the continued availability of adequate supplies of the products
    to meet demand;
    the strength of marketing and distribution support;
    any unfavorable publicity concerning us, our products or the
    markets for these products, such as information concerning
    product contamination or other safety issues in the markets for
    our products, whether or not directly involving our products;
    regulatory developments related to our marketing and promotional
    practices or the manufacture or continued use of our
    products; and
    changes in intellectual property protection available for the
    products or competing treatments. 28




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Our
    strategy of obtaining, through product acquisitions and
    in-licenses, rights to products and product candidates for our
    development pipeline and to proprietary drug delivery and
    formulation technologies for our life cycle management of
    current products may not be successful.
        
    We may be unable to license or acquire the relevant products,
    product candidates or technologies on terms that would allow us
    to make an appropriate return on investment;
    Companies that perceive us as a competitor may be unwilling to
    license or sell their product rights or technologies to us;
    We may be unable to identify suitable products, product
    candidates or technologies within our areas of
    expertise; and
    We may have inadequate cash resources or may be unable to obtain
    financing to acquire rights to suitable products, product
    candidates or technologies from third parties.    We
    face competition, which may result in others discovering,
    developing or commercializing products before or more
    successfully than us.
       29




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30




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If we
    are unable to identify and acquire products and/or companies ,
    and if we cannot integrate them efficiently, our business and
    ability to realize the value of completed acquisitions, or
    ability to develop our product candidates and expand our product
    pipeline may be harmed.
    
    We may not be able to identify suitable companies to acquire or
    to acquire such companies on favorable terms. We compete with
    others in the pharmaceutical industry to acquire companies. We
    believe that this competition may increase and could result in
    decreased availability or increased prices for suitable
    acquisition candidates.
    During the acquisition process, we may fail or be unable to
    discover some of the liabilities of companies or products that
    we acquire.
    We may overuse our cash resources.
    We may experience higher than anticipated acquisition costs and
    expenses.
    We may not be able to obtain the necessary financing, on
    favorable terms or at all, to finance any of our potential
    acquisitions.
    We may fail to integrate acquired companies or products into our
    business successfully.
    Acquired businesses or products may not perform as we expect or
    we may not be able to obtain the financial improvements and
    results we anticipate. In addition, the development and
    integration of new companies or products could disrupt our
    business and occupy our managements time and attention.
    We face the risk that our existing financial controls,
    information systems, management resources and human resources
    will need to grow to support future growth.
    We may issue equity securities to acquire companies or products,
    which may result in dilution.
    We may be unable to preserve key suppliers or distributors of
    any acquired products.
    Any acquisition could substantially increase our amortization
    expenses.      As our
    competitors introduce their own pharmaceutical and/or
    therapeutic equivalents of our products, our net revenues from
    such products are expected to decline.
  and/or
 31




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Fluoroquinolone
    products have been associated with the risk of tendonitis and
    tendon ruptures. FACTIVE is a fluoroquinolone product and must
    comply with the FDA directives on prescribing information for
    fluoroquinolones.
      Concerns
    regarding the safety profile of ZYFLO CR and ZYFLO may limit
    market acceptance of ZYFLO CR.
   32




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Product
    liability lawsuits against us could cause us to incur
    substantial liabilities and to limit commercialization of any
    products that we may develop.
    
    decreased demand for our products or any products that we may
    develop;
    injury to our reputation;
    the withdrawal of clinical trial participants;
    the withdrawal of a product from the market;
    costs to defend the related litigation;
    substantial monetary awards to clinical trial participants or
    patients;
    diversion of management time and attention;
    loss of revenue; and
    inability to commercialize the products that we may develop.     33




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We may
    rely on third parties to market and promote some products, and
    these third parties may not successfully commercialize these
    products.
    The
    concentration of our product sales to only a few wholesale
    distributors increases the risk that we will not be able to
    effectively distribute our products if we need to replace any of
    these customers, which would cause our sales to
    decline.
      Our
    business could suffer as a result of a failure to manage and
    maintain our distribution network.
       34




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##### Table of Contents



If any
    of the third parties that we rely upon for assistance in
    researching, developing, manufacturing, promoting and
    distributing our products and product candidates experience
    financial distress and are unable to provide this assistance,
    our operating performance would be adversely
    affected.
    If we
    are unable to attract, hire and retain qualified sales and
    marketing personnel, the commercial opportunity for our products
    and product candidates may be diminished.
    A
    failure to maintain optimal inventory levels could harm our
    reputation and subject us to financial losses.
      12-month
   35




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If our
    third-party manufacturers and packagers do not obtain the
    necessary quota for controlled substances needed to supply us
    with our product candidates or products or the quotas are not
    sufficient, our product launches may be delayed or we may be
    unable to meet commercial demand for our products following
    launch.
    If we
    or our contract manufacturers or packagers fail to comply with
    regulatory requirements for our controlled substance products
    and product candidates, the DEA may take regulatory actions
    detrimental to our business, resulting in temporary or permanent
    interruption of distribution, withdrawal of products from the
    market or other penalties.
    Risks
    Relating to Product Development and Regulatory Matters
  Some
    of our pharmaceutical products have been marketed without
    approved NDAs or ANDAs.
   36




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If we
    fail to comply with regulatory requirements for our products or
    if we experience unanticipated problems with them, the FDA may
    take regulatory actions detrimental to our business, resulting
    in temporary or permanent interruption of distribution,
    withdrawal of products from the market or other
    penalties.
     37




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
    withdrawal of the products from the market;
    restrictions on the marketing or distribution of such products;
    restrictions on the manufacturers or manufacturing processes;
    warning letters;
    refusal to approve pending applications or supplements to
    approved applications that we submit;
    recalls;
    fines;
    suspension or withdrawal of regulatory approvals;
    refusal to permit the import or export of our products;
    product seizures; or
    injunctions or the imposition of civil or criminal penalties.   38




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If we
    are unable to develop safe and efficacious formulations of our
    product candidates, or our clinical trials for our product
    candidates are not successful, we may not be able to develop,
    obtain regulatory approval for and commercialize our product
    candidates successfully.
          If
    clinical trials for our product candidates are delayed, we would
    incur additional costs and delay the receipt of any revenues
    from product sales.
      
    we, the FDA, a third party assisting us with product development
    or an IRB suspending or stopping a clinical trial;
    discussions with the FDA regarding the scope or design of our
    clinical trials;
    delay in obtaining, or the inability to obtain, required
    permissions from regulators, IRBs or other governing entities at
    clinical sites selected for participation in our clinical trials; 39




---



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
    the number of patients required for our clinical trials may be
    larger than we anticipate, enrollment in our clinical trials may
    be slower than we anticipate or participants may drop out of our
    clinical trials at a higher rate than we anticipate;
    exposure of participants to unacceptable health risks;
    our clinical trials may produce negative or inconclusive
    results, and we may decide, or regulators may require us, to
    conduct additional clinical trials, or we may abandon projects
    that had appeared to be promising;
    we or our third-party contractors may fail to comply with
    regulatory requirements or contractual obligations in a timely
    manner;
    insufficient supply or deficient quality of product candidate
    materials or other materials necessary to conduct clinical
    trials; or
    unfavorable FDA inspection and review of a clinical trial site
    or records of any clinical investigation.            If we
    are unable to obtain required regulatory approvals, we will be
    unable to commercialize our product candidates, and our ability
    to generate revenue will be materially impaired.
   40




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If our
    clinical trials and other studies do not demonstrate safety and
    efficacy in humans, we may experience delays, incur additional
    costs and ultimately be unable to commercialize our product
    candidates.
          Our
    sales depend on payment and reimbursement from third-party
    payors, and a reduction in the payment rate or reimbursement
    could result in decreased use or sales of our
    products.
     41




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We
    will spend considerable time and money complying with federal
    and state laws and regulations, and, if we are found not to be
    in compliance with such laws and regulations, we could face
    substantial penalties.
       42




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Risks
    Relating to Intellectual Property and Licenses
  If we
    are unable to obtain and maintain protection for the
    intellectual property relating to our technology and products,
    the value of our technology and products will be adversely
    affected.
     43




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The
    composition of matter patent for the API in FACTIVE will expire
    in April 2017. None of our other current products or current
    product candidates have, or will have, composition of matter
    patent protection.
      Our
    patents may be challenged by ANDA applicants.
   44




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and/or
    Trademark
    protection of our products may not provide us with a meaningful
    competitive advantage.
    If we
    fail to comply with our obligations in our intellectual property
    licenses with third parties, we could lose license rights that
    are important to our business.
    If we
    are unable to protect the confidentiality of our proprietary
    information and know-how, the value of our technology and
    products could be adversely affected.
   45




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If we
    infringe or are alleged to infringe intellectual property rights
    of third parties, our business will be adversely
    affected.
        and/or
 46




---



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Risks
    Relating to Financial Results
  Legislative
    or regulatory reform of the health care system may affect our
    ability to sell our products profitably.
            We may
    need additional funding and may be unable to raise capital when
    needed, which could force us to delay, reduce or eliminate our
    product development or commercialization efforts.
   47




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
    the level of product sales and product returns of our currently
    marketed products and any additional products that we may market
    in the future;
    the scope, progress, results and costs of development activities
    for our current product candidates;
    the costs, timing and outcome of regulatory review of our
    product candidates;
    the number of, and development requirements for, additional
    product candidates that we pursue;
    the costs of commercialization activities, including product
    marketing, sales and distribution;
    the costs and timing of establishing manufacturing and supply
    arrangements for clinical and commercial supplies of our product
    candidates and products;
    the extent to which we acquire or invest in products, businesses
    and technologies;
    the extent to which we choose to establish collaboration,
    co-promotion, distribution or other similar arrangements for our
    marketed products and product candidates; and
    the costs of preparing, filing and prosecuting patent
    applications and maintaining, enforcing and defending claims
    related to intellectual property owned by or licensed to us.  The
    terms of any additional capital funding that we require may not
    be favorable to us or our stockholders.
      We may
    incur losses in the future.
    
    establishing a sales and marketing infrastructure;
    acquiring marketed products, product candidates and related
    technologies; 48




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
    commercializing marketed products; and
    developing product candidates, including conducting clinical
    trials.    
    advance the development of our product candidates; and
    seek regulatory approvals for product candidates that
    successfully complete clinical testing.      
    successfully completing clinical trials of our product
    candidates;
    obtaining and maintaining regulatory approval for these product
    candidates; and
    manufacturing, marketing and selling those products for which we
    may obtain regulatory approval.    If the
    estimates that we make, or the assumptions upon which we rely,
    in preparing our financial statements prove inaccurate, the
    actual results may vary from those reflected in our
    projections.
  product-by-product
  Our
    operating results are likely to fluctuate from period to
    period.
    
    seasonality of the respiratory ailment season, which
    historically results in higher sales of our respiratory products
    during the first and fourth quarters of the calendar year;
    new product launches, which could increase revenues but also
    increase sales and marketing expenses;
    acquisition activity;
    charges for inventory expiration or product quality issues;
    changes in the amount and timing of sales of our products due to
    changes in product pricing, changes in the prevalence of disease
    conditions from period to period or other factors;
    the timing of operating expenses, including selling and
    marketing expenses and the costs of maintaining a direct sales
    force; 49




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
    changes in research and development expenses resulting from the
    acquisition of product candidates or from general and
    industry-specific economic conditions;
    changes in the competitive, regulatory or reimbursement
    environment, including the amounts of rebates, discounts,
    holdbacks, chargebacks and returns, which could decrease
    revenues or increase sales and marketing, product development or
    compliance costs;
    unexpected product liability or intellectual property claims and
    lawsuits;
    significant payments, such as milestones, required under
    collaboration, licensing and development agreements before the
    related product candidate has received FDA approval;
    marketing exclusivity, if any, which may be obtained on certain
    new products;
    the dependence on a small number of products for a significant
    portion of net revenues and net income;
    price erosion and customer consolidation;
    the results of ongoing and planned clinical trials of our
    product candidates;
    the results of regulatory reviews relating to the development or
    approval of our product candidates; and
    production problems occurring at our third-party manufacturers.  If we
    fail to maintain an effective system of internal control over
    financial reporting, we may not be able to accurately report our
    financial results. As a result, current and potential
    stockholders could lose confidence in our financial reporting,
    which would harm our business and the trading price of our
    stock.
      Risks
    Relating to Employee Matters and Managing Growth
  If we
    fail to attract and retain key personnel, or to retain our
    executive management team, we may be unable to successfully
    develop or commercialize our products.
   50




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Risks
    Relating to Common Stock
  Our
    stock price is subject to fluctuation, which may cause an
    investment in our stock to suffer a decline in
    value.
      
    the results of discovery, preclinical studies and clinical
    trials;
    significant acquisitions, strategic partnerships, joint ventures
    or capital commitments.
    the entry into, amendment or termination of key agreements,
    including licensing and collaboration agreements;
    the results and timing of regulatory reviews relating to the
    approval of product candidates;
    the initiation of material developments in or conclusion of
    litigation to enforce or defend intellectual property rights;
    failure of any product candidates, if approved, to achieve
    commercial success;
    general and industry-specific economic conditions that may
    affect research and development expenditures;
    issues in manufacturing products or product candidates;
    recall or withdrawal of a product or products;
    the loss of key employees;
    the acquisition, development or introduction of technologies,
    product candidates or products; 51




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
    changes in the structure of health care payment systems;
    regulatory actions with respect to products;
    our financial results, including
    period-to-period
    fluctuations in those results;
    changes in estimates or recommendations by securities analysts,
    if any, who cover our common stock; and
    future sales of our common stock.    Chiesi
    has substantial control over us and could delay or prevent a
    change in corporate control, including a transaction in which
    our stockholders could sell or exchange their shares for a
    premium.
    
    reconstitute our board of directors to be comprised of two
    classes of directors, with our Class A Directors consisting
    of our Chief Executive Officer and three independent directors
    and our Class B Directors consisting of four persons
    designated by Chiesi, or the Chiesi Designees (the number of
    Chiesi Designees will decrease depending on the level of
    Chiesis and its affiliates ownership of our common
    stock);
    so long as Chiesi and its affiliates beneficially own at least
    50% of our common stock, require board actions to be taken by a
    majority in voting power of the directors present, and further
    provide that the Class B Directors present at a meeting
    will collectively have the same voting power as the Class A
    Directors present at the meeting; and
    so long as Chiesi and its affiliates beneficially own at least
    40% of our common stock, require Chiesis or our full board
    of directors approval of certain corporate actions.     52




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ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 2.
    PROPERTIES    ITEM 3.
    LEGAL
    PROCEEDINGS      ITEM 4.
    (REMOVED
    AND RESERVED) 53




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##### Table of Contents



EXECUTIVE
    OFFICERS OF THE REGISTRANT    Name

Age

PositionCraig A. Collard


44


President and Chief Executive OfficerSteven M. Lutz


44


Executive Vice President, Manufacturing and TradeVincent T. Morgus


45


Executive Vice President, Finance and Chief Financial OfficerAndrew K. W. Powell


53


Executive Vice President, General Counsel and SecretaryJoshua B. Franklin


41


Vice President, Sales and MarketingAlan T. Roberts


44


Vice President, Scientific Affairs   Craig A. Collard
  Steven M. Lutz
  Vincent T. Morgus
 54




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Andrew K. W. Powell, Esq.
  Joshua B. Franklin
  Alan T. Roberts
 55




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##### Table of Contents



PART II  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES  Market
    Price of and Dividends on Cornerstone Therapeutics Inc.s
    Common Stock and Related Stockholder Matters
    Year Ended December 31, 2010

High


LowFirst Quarter (from January 1 to March 31)

$
6.54


$
4.77Second Quarter (from April 1 to June 30)

$
7.57


$
5.20Third Quarter (from July 1 to September 30)

$
7.12


$
5.07Fourth Quarter (from October 1 to December 31)

$
7.10


$
5.37   Year Ended December 31, 2009

High


LowFirst Quarter (from January 1 to March 31)

$
4.70


$
1.72Second Quarter (from April 1 to June 30)

$
12.29


$
3.50Third Quarter (from July 1 to September 30)

$
11.23


$
6.08Fourth Quarter (from October 1 to December 31)

$
6.76


$
4.80      56




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##### Table of Contents



Performance
    Graph
    Comparison
    of 5-Year
    Cumulative Total Return
    among Cornerstone Therapeutics Inc. (known as Critical
    Therapeutics, Inc. prior to October 31, 2008),
    the NASDAQ Composite Index and the NASDAQ Biotechnology
    Index
  
  12/31/05


12/31/06


12/31/07


12/31/08


12/31/09


12/31/10CRTX


$
100



$
28



$
18



$
4



$
8



$
8NASDAQ Composite Index


$
100



$
110



$
120



$
72



$
103



$
120NASDAQ Biotech Index


$
100



$
101



$
106



$
92



$
107



$
123   Recent
    Sales of Unregistered Securities; Uses of Proceeds From
    Registered Securities
    Issuer
    Purchases of Equity Securities
   57




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##### Table of Contents



ITEM 6.
    SELECTED
    FINANCIAL DATA    Year Ended December 31,2010


2009


2008


2007


2006(In thousands, except per share and share amounts)Statement of Income(Loss) Data:Net revenues

$
125,317


$
109,564



64,867



28,071



22,117Costs and expenses:Cost of product sales(1)


32,313



19,457



5,951



3,300



2,151Selling, general and administrative


53,198



45,731



27,082



15,205



14,438Royalties


12,702



18,775



16,193



3,409



1,663Research and development


4,488



3,608



3,679



556



249Amortization of product rights


14,728



6,115



1,334



3,160



2,646Total costs and expenses


117,429



93,686



54,239



25,630



21,147Income from operations


7,888



15,878



10,628



2,441



970Other expense, net


(110
)


(128
)


(1,221
)


(1,741
)


(1,275
)Income (loss) before income taxes


7,778



15,750



9,407



700



(305
)Provision for income taxes


(1,609
)


(5,547
)


(414
)


(130
)


Net income (loss)

$
6,169


$
10,203


$
8,993


$
570


$
(305
)Net income (loss) per share, basic

$
0.24


$
0.58


$
1.29


$
0.10


$
(0.01
)Net income (loss) per share, diluted

$
0.24


$
0.54


$
1.14


$
0.08


$
(0.01
)Weighted-average common shares, basic


25,412,636



17,651,668



6,951,896



5,934,496



5,957,458Weighted-average common shares, diluted


26,036,544



18,776,588



7,861,119



6,751,127



5,957,458     (1)
    
    Excludes amortization of product rights.  December, 312010

2009

2008

2007

2006(In thousands)Balance Sheet Data:Cash and cash equivalents

$
50,945


$
18,853


$
9,286


$
241


$
116Accounts receivable, net


76,476



16,548



12,987



3,505



1,799Inventories, net


15,174



18,106



11,222



2,998



1,847Working capital


61,165



28,312



3,157



(5,131
)


(9,230
)Total assets


290,138



203,322



69,889



15,909



10,582Deferred revenue


57,194















Debt obligations, including current portion(1)


1,597



2,409



4,856



14,768



12,886Total stockholders equity (deficit)


172,398



163,868



29,426



(12,295
)


(13,844
)Shares of common stock outstanding


25,473



25,023



12,024



5,935



5,935     (1)
    
    Includes line of credit, license agreement liability, note
    payable and capital leases. 58




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##### Table of Contents



ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  The following discussion is designed to provide a better
    understanding of our consolidated financial statements,
    including a brief discussion of our business and products, key
    factors that impacted our performance, and a summary of our
    operating results. You should read the following discussion and
    analysis of financial condition and results of operations
    together with our consolidated financial statements and the
    related notes included in this annual report on
    Form 10-K.
    In addition to historical information, the following discussion
    contains forward-looking statements that involve risks,
    uncertainties and assumptions. Our actual results could differ
    materially from those anticipated by the forward-looking
    statements due to important factors including, but not limited
    to, those set forth in the Risk Factors section of
    this annual report on
    Form 10-K.
  Executive
    Overview
  Strategy
      
    Leverage commercial capabilities by promoting respiratory and
    related products to high prescribing physicians through our
    respiratory sales force and to hospital-based healthcare
    professionals through our hospital sales force;
    Acquire rights to existing patent- or trade secret-protected,
    branded products, which can be promoted through the same
    channels to generate on-going high-value earnings streams;
    Advance our development projects and further build a robust
    pipeline; and
    Generate revenues by marketing approved generic products through
    our wholly owned subsidiary, Aristos.    2010
    Highlights
      
    Overall, cash and cash equivalents increased $32.1 million
    or 170% to $50.9 million as of December 31, 2010
    compared to $18.9 million as of December 31, 2009;
    Net revenues increased $15.8 million, or 14%, from
    $109.6 million in 2009 to $125.3 million in 2010; the
    percentage of net revenues generated from strategic products
    increased from 36% in 2009 to 60% in 2010;
    Income from operations decreased $8.0 million, or 50%, from
    $15.9 million in 2009 to $7.9 million in 2010 on a
    GAAP basis, and decreased $3.1 million, or 11%, from
    $27.0 million in 2009 to $24.0 million in 2010 on a
    non-GAAP basis; and
    Net income decreased $4.0 million, or 40%, from
    $10.2 million in 2009 to $6.2 million in 2010 on a
    GAAP basis, and increased $1.5 million, or 8%, to
    $18.9 million on a non-GAAP basis. 59




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##### Table of Contents



Opportunities
    and Trends
          
    Sales growth of our strategic products through our respiratory
    and hospital sales forces;
    Acquisition of rights to proprietary respiratory or hospital
    products that align with our strategy and that offer potential
    for sustainable growth; and
    Progress in the development of our product candidates, including
    receiving marketing approval by the FDA for CRTX 067 in 2011.         60




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##### Table of Contents



Results
    of Operations
  Comparison
    of the Years Ended December 31, 2010 and 2009
    Year Ended December 31,


Change2010


2009


$


%Net Product SalesCUROSURF

$
33,621


$
10,463


$
23,158



221
%ZYFLO product family


30,619



17,959



12,660



70FACTIVE


5,126



1,178



3,948



335SPECTRACEF product family


5,327



9,390



(4,063
)


(43
)ALLERX Dose Pack products


27,305



31,707



(4,402
)


(14
)HYOMAX product family


10,071



28,148



(18,077
)


(64
)Other products


11,675



10,443



1,232



12Total net product sales


123,744



109,288



14,456



13License and royalty agreement revenues


1,573



276



1,297



470Net revenues


125,317



109,564



15,753



14Cost of product sales (exclusive of amortization of product
    rights)


32,313



19,457



12,856



66Selling, general and administrative


53,198



45,731



7,467



16Royalties


12,702



18,775



(6,073
)


(32
)Research and development


4,488



3,608



880



24Amortization of product rights


14,728



6,115



8,613



141Income from operations


7,888



15,878



(7,990
)


(50
)Total other expenses, net


(110
)


(128
)


(18
)


(14
)Income before income taxes


7,778



15,750



(7,972
)


(51
)Provision for income taxes


(1,609
)


(5,547
)


(3,938
)


(71
)Net income

$
6,169


$
10,203


$
(4,034
)


(40
)%Net income per share, diluted

$
0.24


$
0.54


$
(0.30
)


(56
)%Non-GAAP income from operations(1)

$
23,955


$
27,034


$
(3,079
)


(11
)%Non-GAAP net income(1)

$
18,912


$
17,432


$
1,480



8
%Non-GAAP net income per share, diluted(1)

$
0.73


$
0.93


$
(0.20
)


(22
)%     (1)
    
    A reconciliation of our non-GAAP financial measures to the
    comparable GAAP financial measures is included below.  Net
    Revenues
  Net
    Product Sales.
       61




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##### Table of Contents



® ® ®
  License
    and Royalty Agreement Revenues.
    Costs and
    Expenses
  Cost of Product Sales.
 62




---



##### Table of Contents



Year Ended December 31,


Change2010


2009


$


%Net product sales

$
123,744


$
109,288


$
14,456



13
%Cost of product sales (exclusive of amortization of product
    rights)


32,313



19,457



12,856



66Gross margin

$
91,431


$
89,831


$
1,600



2
%% of net product sales


74
%


82
%






(8
%)     Selling, General and Administrative
    Expenses.
  Royalty Expenses.
  Research and Development Expenses. and/or
  ProjectInception to


Year Ended December 31,December 31,








Change


Change2010


2010


2009


$


%CRTX 067

$
5,348


$
2,290


$
2,442


$
(152
)


(6
)%CRTX 072


83



80



3



77



2567CRTX 073


1,305



1,057



248



809



326CRTX 809


263



260



3



257



8567Other projects






801



912



(111
)


(12
)Total





$
4,488


$
3,608


$
880



24
%   scale-up
 63




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##### Table of Contents



Amortization of Product Rights.
  Provision
    for Income Taxes
    Quarterly
    Results of Operations
  Form 10-K
 64




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##### Table of Contents



Comparison
    of the Years Ended December 31, 2009 and 2008
    Year Ended December 31,


Change2009


2008


$


%Net Product SalesCUROSURF

$
10,463


$



$
10,463



NMZYFLO product family(1)


17,959



888



17,071



1922FACTIVE


1,178







1,178



NMSPECTRACEF product family


9,390



6,981



2,409



35
%ALLERX Dose Pack products


31,707



26,395



5,312



20HYOMAX product family


28,148



22,962



5,186



23Other products


10,443



5,979



4,464



75Total net product sales


109,288



63,205



46,083



73License and royalty agreement revenues


276



1,662



(1,386
)


(83
)Net revenues


109,564



64,867



44,697



69Cost of product sales (exclusive of amortization of product
    rights)


19,457



5,951



13,506



227Selling, general and administrative


45,731



27,082



18,649



69Royalties


18,775



16,193



2,582



16Research and development


3,608



3,679



(71
)


(2
)Amortization of product rights


6,115



1,334



4,781



358Income from operations


15,878



10,628



5,250



49Total other expenses, net


(128
)


(1,221
)


(1,093
)


(90
)Income before income taxes


15,750



9,407



6,343



67Provision for income taxes


(5,547
)


(414
)


5,133



1240Net income

$
10,203


$
8,993


$
1,210



13
%Net income per share, diluted

$
0.54


$
1.14


$
(0.60
)


(53
)%Non-GAAP income from operations(2)

$
27,034


$
12,711


$
14,323



113
%Non-GAAP net income(2)

$
17,432


$
10,984


$
6,448



59
%Non-GAAP net income per share, diluted(2)

$
0.93


$
1.40


$
(0.47
)


(34
)%     (1)
    
    Does not include the historical sales of ZYFLO CR and ZYFLO made
    by Critical Therapeutics.(2)
    
    A reconciliation of our non-GAAP financial measures to the
    comparable GAAP financial measures is included below.    Net
    Revenues
  Net
    Product Sales.
   65




---



##### Table of Contents



License
    and Royalty Agreement Revenues.
    Costs and
    Expenses
  Cost of Product Sales.
    Year Ended December 31,


Change2009


2008


$


%Net product sales

$
109,288


$
63,205


$
46,083



73
%Cost of product sales (exclusive of amortization of product
    rights)


19,457



5,951



13,506



227Gross margin

$
89,831


$
57,254


$
32,577



57
%% of net product sales


82
%


91
%






(9
%)    66




---



##### Table of Contents



Selling, General and Administrative.
  Royalty Expenses.
  Research and Development Expenses.
  ProjectInception to


Year Ended December 31,December 31,








Change


Change2009


2009


2008


$


%CRTX 067

$
3,058


$
2,442


$
616


$
1,826



296
%CRTX 058


638



366



272



94



35CRTX 068


593



72



521



(449
)


(86
)CRTX 062


272



15



257



(242
)


(94
)Other projects






713



2,013



(1,300
)


(65
)Total





$
3,608


$
3,679


$
(71
)


(2
)%     Amortization of Product Rights.
  Other Expenses.
  Provision
    for Income Taxes
   67




---



##### Table of Contents



Reconciliation
    of Non-GAAP Financial Measures
         68




---



##### Table of Contents



For the Year Ended December 31,2010


2009


2008GAAP income from operations

$
7,888


$
15,878


$
10,628Add: stock-based compensation(1)


1,339



1,478



749Add: amortization of product rights


14,728



6,115



1,334Add: acquisition-related expenses(2)






3,563



Non-GAAP income from operations

$
23,955


$
27,034


$
12,711GAAP net income

$
6,169


$
10,203


$
8,993Add: stock-based compensation(1)


1,339



1,478



749Add: amortization of product rights


14,728



6,115



1,334Add: acquisition-related expenses(2)






3,563



Less: tax effects related to above items(3)


(3,324
)


(3,927
)


(92
)Non-GAAP net income

$
18,912


$
17,432


$
10,984GAAP net income per share, diluted

$
0.24


$
0.54


$
1.14Non-GAAP net income per share, diluted

$
0.73


$
0.93


$
1.40Shares used in diluted net income per share calculation:GAAP net income


26,036,544



18,776,588



7,861,119Non-GAAP net income


26,036,544



18,776,588



7,861,119     (1)
    
    Stock-based compensation excludes stock-based compensation
    charges incurred in connection with the Chiesi transaction,
    which are included in acquisition-related expenses.(2)
    
    Acquisition-related expenses include stock-based compensation
    charges and legal, accounting and related costs that resulted
    from or were incurred in connection with the Chiesi transaction.
    During 2009, acquisition-related stock-based compensation
    charges included $1.8 million of charges that were included
    in selling, general and administrative expenses.(3)
    
    Tax effects for 2010, 2009 and 2008 are calculated using
    effective tax rates of 20.7%, 35.2%, and 4.4% respectively.  Liquidity
    and Capital Resources
  Sources
    of Liquidity
   69




---



##### Table of Contents



Cash
    Flows
    Year Ended December 31,2010


2009


2008Cash provided by (used in):Operating activities

$
32,989


$
450


$
12,629Investing activities


(623
)


(5,504
)


(346
)Financing activities


(274
)


14,621



(3,238
)Net increase in cash and cash equivalents

$
32,092


$
9,567


$
9,045   Net Cash
    Provided By Operating Activities
       70




---



##### Table of Contents



Net Cash
    Used in Investing Activities
          Net Cash
    (Used in) Provided by Financing Activities
   71




---



##### Table of Contents



Funding
    Requirements
    
    the level of product sales and product returns of our currently
    marketed products and any additional products that we may market
    in the future;
    the scope, progress, results and costs of development activities
    for our current product candidates;
    the costs, timing and outcome of regulatory review of our
    product candidates;
    the number of, and development requirements for, additional
    product candidates that we pursue;
    the costs of commercialization activities, including product
    marketing, sales and distribution;
    the costs and timing of establishing manufacturing and supply
    arrangements for clinical and commercial supplies of our product
    candidates and products;
    the extent to which we acquire or invest in products, businesses
    and technologies;
    the extent to which we choose to establish collaboration,
    co-promotion, distribution or other similar arrangements for our
    marketed products and product candidates; and
    the costs of preparing, filing and prosecuting patent
    applications and maintaining, enforcing and defending claims
    related to intellectual property owned by or licensed to us.      Contractual
    Obligations
  and/or
 72




---



##### Table of Contents



Payments Due by PeriodLess than








More thanTotal


1 Year


1-3 Years


3-5 Years


5 YearsCapital lease obligations

$
265


$
100


$
164


$
1


$
Operating leases(1)


3,075



627



1,113



1,183



152Purchase obligations(2)


32,123



18,799



13,139



185



Royalty obligations(3)


1,365



315



750



150



150Other long-term liabilities(4)


1,500



1,500











Total contractual obligations

$
38,328


$
21,341


$
15,166


$
1,519


$
302     (1)
    
    Operating leases include minimum payments under leases for our
    facilities, automobiles and certain equipment. Our total minimum
    lease payments for the corporate headquarters are $482,000 in
    2011, $492,000 in 2012, $536,000 in 2013, $584,000 in 2014 and
    $751,000 thereafter.(2)
    
    Purchase obligations include fixed or minimum payments under
    manufacturing and supply agreements with third-party
    manufacturers of $25.5 million; clinical trial and research
    agreements with contract research organizations and consultants
    of $956,000; agreements with providers of marketing analytical
    services of $4.5 million; and open purchase orders for the
    acquisition of goods and services in the ordinary course of
    business of $1.2 million.(3)
    
    Royalty obligations include minimum royalty payments due in
    connection with certain of our agreements. See Note 9 of
    our Notes to Consolidated Financial Statements of this annual
    report on
    Form 10-K
    for additional information.(4)
    
    Other long-term liabilities include principal and interest due
    under our license agreement liability with Meiji. See
    Note 5 of our Notes to Consolidated Financial Statements of
    this annual report on
    Form 10-K
    for additional information.  and/or
  Off-Balance
    Sheet Arrangements
    Effects
    of Inflation
   73




---



##### Table of Contents



Critical
    Accounting Policies and Estimates
    Form 10-K
  Revenue
    Recognition
  ,
  Net
    Product Sales
  Product Sales.
    Product Returns. 18-month
 74




---



##### Table of Contents




    Actual and historical return rates for expired
    lots.  Our historical return rates for expired
    lots vary by product and approximate, on a product by product
    basis, our current return rates.
    Historical and forecasted product sales and consumer consumption
    data reported by external information management companies.
    Management reviews sales forecasts and consumption data on a
    product by product basis to assist it in estimating whether
    product is expected to become short-dated and thus subject to
    return.
    Estimated expiration dates or remaining shelf life of inventory
    in the distribution channel. Our products generally have
    remaining shelf lives of between 15 to 45 months at time of
    shipment.
    Levels of inventory in the distribution channel and any
    significant changes to these levels. Levels of inventory in the
    distribution channel typically range from six to eight weeks of
    product demand.
    Competitive issues such as new product entrants and other known
    changes in sales trends.               75




---



##### Table of Contents



Rebates.
    Price Adjustments and Chargebacks. and/or
      Prompt Payment Discounts. and/or
     76




---



##### Table of Contents



License
    and Royalty Agreement Revenues
        Goodwill
    and Product Rights
       77




---



##### Table of Contents



Inventory
  and/or first-in,
  Stock-Based
    Compensation
      over-the-counter;
 78




---



##### Table of Contents



Income
    Taxes
       79




---



##### Table of Contents



Recent
    Accounting Pronouncements
    ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  Interest
    Rate Risk
      Foreign
    Currency Exchange Risk
   80




---



##### Table of Contents



ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
  PageReport of Independent Registered Public Accounting Firm


82Consolidated Balance Sheets as of December 31, 2010 and 2009


83Consolidated Statements of Income for the Years ended
    December 31, 2010, 2009 and 2008


84Consolidated Statements of Stockholders Equity (Deficit)
    for the Years ended December 31, 2010, 2009 and 2008


85Consolidated Statements of Cash Flows for the Years ended
    December 31, 2010, 2009 and 2008


86Notes to Consolidated Financial Statements


87Schedule II Valuation and Qualifying Accounts


109  81




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                82




---



##### Table of Contents



CORNERSTONE
    THERAPEUTICS INC.
 CONSOLIDATED
    BALANCE SHEETS(In thousands, except share and per share
    data)  December 31,2010


2009AssetsCurrent assets:Cash and cash equivalents

$
50,945


$
18,853Accounts receivable, net


76,476



16,548Inventories, net


15,174



18,106Prepaid and other current assets


5,111



4,808Income tax receivable


197



Deferred income tax asset


6,599



3,507Total current assets


154,502



61,822Property and equipment, net


1,486



1,312Product rights, net


112,328



126,806Goodwill


13,231



13,231Amounts due from related parties


38



38Long-term accounts receivable and other assets


8,553



113Total assets

$
290,138


$
203,322Liabilities and Stockholders EquityCurrent liabilities:Accounts payable

$
7,671


$
7,172Accrued expenses


46,599



23,703Current portion of license agreement liability


1,368



1,019Current portion of capital lease


83



10Current portion of deferred revenue


37,616



Income taxes payable






1,606Total current liabilities


93,337



33,510License agreement liability, less current portion






1,341Capital lease, less current portion


146



39Deferred revenue, less current portion


19,578



Deferred income tax liability


4,679



4,564Total liabilities


117,740



39,454Commitments and contingencies, Note 9Stockholders equityPreferred stock  $0.001 par value,
    5,000,000 shares authorized; no shares issued and
    outstanding






Common stock  $0.001 par value,
    90,000,000 shares authorized; 25,472,963 and
    25,022,644 shares issued and outstanding as of
    December 31, 2010 and December 31, 2009, respectively


25



25Additional paid-in capital


160,106



157,745Retained earnings


12,267



6,098Total stockholders equity


172,398



163,868Total liabilities and stockholders equity

$
290,138


$
203,322    83




---



##### Table of Contents



CORNERSTONE
    THERAPEUTICS INC.
 CONSOLIDATED
    STATEMENTS OF INCOME(In thousands, except share and per share
    data)  Year Ended December 31,2010


2009


2008Net revenues

$
125,317


$
109,564


$
64,867Costs and expenses:Cost of product sales (exclusive of amortization of product
    rights)


32,313



19,457



5,951Selling, general and administrative


53,198



45,731



27,082Royalties


12,702



18,775



16,193Research and development


4,488



3,608



3,679Amortization of product rights


14,728



6,115



1,334Total costs and expenses


117,429



93,686



54,239Income from operations


7,888



15,878



10,628Other expenses, net:Interest expense, net


(85
)


(128
)


(1,211
)Loss on marketable security










(8
)Other expenses


(25
)






(2
)Total other expenses, net


(110
)


(128
)


(1,221
)Income before income taxes


7,778



15,750



9,407Provision for income taxes


(1,609
)


(5,547
)


(414
)Net income

$
6,169


$
10,203


$
8,993Net income per share, basic

$
0.24


$
0.58


$
1.29Net income per share, diluted

$
0.24


$
0.54


$
1.14Weighted-average common shares, basic


25,412,636



17,651,668



6,951,896Weighted-average common shares, diluted


26,036,544



18,776,588



7,861,119    84




---



##### Table of Contents



CORNERSTONE
    THERAPEUTICS INC.
 CONSOLIDATED
    STATEMENTS OF
    STOCKHOLDERS EQUITY (DEFICIT)(In thousands, except share data)  RetainedAdditional


Earnings


TotalCommon Stock


Paid-in


(Accumulated


StockholdersShares


Amount


Capital


Deficit)


Equity (Deficit)Balance as of December 31, 2007


5,934,496


$
6


$
797


$
(13,098
)

$
(12,295
)Issuance of shares in connection with the Merger (net of
    issuance costs of $504)


4,325,498



4



22,971







22,975Exercise of common stock warrants


316,101







52







52Stock-based compensation










749







749Conversion of related party note payable to common stock


1,443,913



2



8,950







8,952Issuance of common stock to employees under stock incentive plan


3,959















Restricted stock buyback


(220
)














Net income














8,993



8,993Balance as of December 31, 2008


12,023,747


$
12


$
33,519


$
(4,105
)

$
29,426Issuance of shares for acquisition of product rights


12,172,425



12



119,271







119,283Cash settlement of common stock warrants










(41
)






(41
)Stock-based compensation










3,291







3,291Issuance of common stock to employees under stock incentive plan


826,472



1



436







437Tax effect of stock-based awards










1,269







1,269Net income














10,203



10,203Balance as of December 31, 2009


25,022,644


$
25


$
157,745


$
6,098


$
163,868Stock-based compensation










1,339







1,339Issuance of common stock to employees under stock incentive plan


450,319







544







544Tax effect of stock-based awards










478







478Net income














6,169



6,169Balance as of December 31, 2010


25,472,963


$
25


$
160,106


$
12,267


$
172,398    85




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##### Table of Contents



CORNERSTONE
    THERAPEUTICS INC.
 CONSOLIDATED
    STATEMENTS OF CASH FLOWS(In thousands)  Year Ended December 31,2010


2009


2008Cash flows from operating activitiesNet income

$
6,169


$
10,203


$
8,993Adjustments to reconcile net income to net cash provided by
    operating activities:Amortization and depreciation


14,778



6,392



1,425Provision for prompt payment discounts


3,903



3,157



1,887Provision for inventory allowances


1,340



1,474



599Loss on marketable security










8Write-off of acquired in-process research and development










1,900Loss on sale of property and equipment


25







Impairment of property and equipment










56Impairment of product rights


350







Stock-based compensation


1,339



3,291



749Benefit from deferred income taxes


(2,977
)


(3,632
)


(3,310
)Changes in operating assets and liabilities:Accounts receivable


(63,831
)


(6,718
)


(9,067
)Inventories


1,592



(8,202
)


(2,523
)Prepaid expenses, long-term accounts receivable and other assets


(8,743
)


(3,121
)


1,749Accounts payable


499



(3,116
)


2,573Accrued expenses


23,154



2,053



4,505Income taxes payable/receivable


(1,803
)


(1,331
)


3,085Deferred revenue


57,194







Net cash provided by operating activities


32,989



450



12,629Cash flows from investing activitiesAdvances to related parties










(19
)Proceeds from collection of advances to related parties










657Proceeds from sale of marketable securities






300



Proceeds from sale of property and equipment


2







Purchase of property and equipment


(375
)


(635
)


(638
)Purchase of product rights


(250
)


(5,169
)


(2,450
)Collection of deposits










223Payment of deposits










(237
)Cash acquired in connection with the Merger, net of costs paid










2,118Net cash used in investing activities


(623
)


(5,504
)


(346
)Cash flows from financing activitiesProceeds from issuance of shares of common stock






15,465



Proceeds from exercise of common stock options and warrants


544



437



52Payments for cancellation of warrants






(41
)


Excess tax benefit from stock-based compensation


478



1,269



Principal payments on license agreement liability


(1,250
)


(2,500
)


(576
)Principal payments on capital lease obligation


(46
)


(9
)


Principal payments on notes payable










(460
)Proceeds from line of credit










7,250Principal payments on line of credit










(9,000
)Payment of stock issuance costs in connection with the Merger










(504
)Net cash (used in) provided by financing activities


(274
)


14,621



(3,238
)Net increase in cash and cash equivalents


32,092



9,567



9,045Cash and cash equivalents as of beginning of year


18,853



9,286



241Cash and cash equivalents as of end of year

$
50,945


$
18,853


$
9,286Supplemental disclosure of cash flow informationCash paid during the year for interest

$
318


$
531


$
2,734Cash paid during the year for income taxes

$
6,780


$
9,260


$
644Supplemental schedule of non-cash investing and financing
    activitiesPurchase of property and equipment with capital leases

$
226


$



$
Related party note payable converted to common stock in
    connection with the Merger

$



$



$
8,952Common stock issued in connection with the Merger

$



$



$
23,479Acquisition of product rights through equity issued and
    liabilities assumed

$



$
110,050


$
    86




---



##### Table of Contents



CORNERSTONE
    THERAPEUTICS INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  NOTE 1:
    ORGANIZATION
    AND BASIS OF PRESENTATION  Nature of
    Operations
    Principles
    of Consolidation
    Merger
       87




---



##### Table of Contents



CORNERSTONE
    THERAPEUTICS INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Reclassifications
    NOTE 2:
    SUMMARY
    OF SIGNIFICANT ACCOUNTING POLICIES  Use of
    Estimates
    Segment
    and Geographic Information
      Concentrations
    of Credit Risk and Limited Suppliers
       88




---



##### Table of Contents



CORNERSTONE
    THERAPEUTICS INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2010


2009


2008


December 31,Gross


Gross


Gross


2010


2009Product


Product


Product


Accounts


AccountsSales


Sales


Sales


Receivable


ReceivableCardinal Health


43
%


34
%


40
%


50
%


26
%McKesson Corporation


29
%


34
%


31
%


30
%


37
%Amerisource Bergen Corporation


22
%


20
%


15
%


15
%


24
%Total


94
%


88
%


86
%


95
%


87
%   Cash and
    Cash Equivalents
    Accounts
    Receivable
  and/or
      2010


2009Accounts receivable

$
78,491


$
16,932Less allowance for prompt payment discounts


(2,015
)


(384
)Accounts receivable, net

$
76,476


$
16,548   ® ®
 89




---



##### Table of Contents



CORNERSTONE
    THERAPEUTICS INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Inventories
  first-in, and/or
      2010


2009Raw materials

$
5,542


$
5,597Work in process


1,575



2,007Finished goods:Pharmaceutical products  trade


8,635



9,962Pharmaceutical products  samples


1,267



2,342Total


17,019



19,908Inventory allowances


(1,845
)


(1,802
)Inventories, net

$
15,174


$
18,106   Property
    and Equipment
      Useful Life (Years)

2010


2009Computers and software

3

$
995


$
535Machinery and equipment

5


287



236Furniture and fixtures

5-7


905



906Leasehold improvements

Lesser of lease term or 5


127



100Total




2,314



1,777Less accumulated depreciation




(828
)


(465
)Property and equipment, net



$
1,486


$
1,312    90




---



##### Table of Contents



CORNERSTONE
    THERAPEUTICS INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Product
    Rights
    Impairment
    of Long-Lived Assets
      Revenue
    Recognition
    Year Ended December 31,2010


2009


2008Gross product sales

$
187,856


$
148,652


$
82,547Sales allowances


(64,112
)


(39,364
)


(19,342
)Net product sales


123,744



109,288



63,205License and royalty agreement revenues


1,573



276



1,662Net revenues

$
125,317


$
109,564


$
64,867   ,
 91




---



##### Table of Contents



CORNERSTONE
    THERAPEUTICS INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Net
    Product Sales
  Product Sales.
    Product Returns. 18-month
  Rebates.
  Price Adjustments and Chargebacks. ® and/or
  point-of-sale
 92




---



##### Table of Contents



CORNERSTONE
    THERAPEUTICS INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Prompt Payment Discounts.
  License
    and Royalty Agreement Revenues
        Research
    and Development
      Advertising
   93




---



##### Table of Contents



CORNERSTONE
    THERAPEUTICS INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Shipping
    and Handling Costs
    Stock-Based
    Compensation
    Income
    Taxes
        Fair
    Value of Financial Instruments
   94




---



##### Table of Contents



CORNERSTONE
    THERAPEUTICS INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  NOTE 3:
    GOODWILL
    AND PRODUCT RIGHTS  Goodwill
    Product
    Rights
    December 31, 2010Weighted-Gross








AverageCarrying


Accumulated


Net


AmortizationAmount


Amortization


Amount


Period (yrs.)CUROSURF

$
107,606


$
14,347


$
93,259



10.0FACTIVE®


7,613



2,061



5,552



4.8SPECTRACEF®


4,505



2,017



2,488



10.0ZYFLO®


11,500



3,477



8,023



7.1Products under development


3,000







3,000



n/aOther


75



69



6



4.3Total

$
134,299


$
21,971


$
112,328



9.5   December 31, 2009Weighted-Gross








AverageCarrying


Accumulated


Net


AmortizationAmount


Amortization


Amount


Period (yrs.)CUROSURF

$
107,606


$
3,587


$
104,019



10.0FACTIVE


7,613



486



7,127



4.8SPECTRACEF


4,505



1,597



2,908



10.0ZYFLO


11,500



1,872



9,628



7.1Propoxyphene/acetaminophen products


7,550



7,550







n/aProducts under development


3,100







3,100



n/aOther


75



51



24



4.3Total

$
141,949


$
15,143


$
126,806



9.5      95




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##### Table of Contents



CORNERSTONE
    THERAPEUTICS INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      2011

$
14,3662012


14,3602013


14,3602014


14,6122015


12,785Thereafter


38,845$
109,328   NOTE 4:
    ACCRUED
    EXPENSES    2010


2009Accrued product returns

$
15,025


$
10,962Accrued rebates


3,034



1,013Accrued price adjustments and chargebacks


21,520



3,503Accrued compensation and benefits


2,760



2,486Accrued royalties


3,303



5,547Accrued expenses, other


957



192Total accrued expenses

$
46,599


$
23,703     NOTE 5:
    LICENSE
    AGREEMENT LIABILITY  Meiji
     96




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##### Table of Contents



CORNERSTONE
    THERAPEUTICS INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  and/or
      2010


2009License agreement liability to Meiji; imputed interest at 12%
    per annum; principal and interest payable


1,368



2,360Less current portion


(1,368
)


(1,019
)Long-term

$



$
1,341     NOTE 6:
    STOCKHOLDERS
    EQUITY  Authorized
    Capital
    Warrants
    to Purchase Common Stock
     97




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##### Table of Contents



CORNERSTONE
    THERAPEUTICS INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  NOTE 7:
    STOCK-BASED
    COMPENSATION  Overview
    of Stock-Based Compensation Plans
  2000
    Equity Plan and 2003 Stock Incentive Plan Assumed from Critical
    Therapeutics in the Merger
    2004
    Stock Incentive Plan Assumed from Critical Therapeutics in the
    Merger
        2005
    Stock Option Plan and 2005 Stock Incentive Plan
       98




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##### Table of Contents



CORNERSTONE
    THERAPEUTICS INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Stock
    Options
      Year Ended December 31,2010


2009


2008Estimated dividend yield


0.0%



0.0%



0.0%Expected stock price volatility


80-85%



75%



75%Risk-free interest rate


1.73% - 2.60%



2.31% - 2.85%



1.43% - 3.05%Expected life of option (in years)


5.00



4.84



6.00Weighted-average grant date fair value per share


$3.57



$4.85



$2.50        99




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##### Table of Contents



CORNERSTONE
    THERAPEUTICS INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Weighted-AverageRemainingWeighted


Contractual


AggregateNumber of


Average


Life


Intrinsic ValueOptions


Exercise Price


(in Years)


(in thousands)Outstanding at January 1, 2010


2,046,664


$
3.36Granted


718,950


$
5.48Exercised


(410,319
)

$
1.32Forfeited


(130,598
)

$
7.21Expired


(26,156
)

$
8.38Outstanding at December 31, 2010


2,198,541


$
4.15



7.54


$
4,714Vested or expected to vest at December 31, 2010


2,147,389


$
4.11



7.50


$
4,694Exercisable December 31, 2010


1,269,784


$
2.94



6.53


$
4,327       OutstandingWeighted-





ExercisableAverage


Weighted-





Weighted-Contractual Life


Average





AverageNumber of Options


Outstanding


Exercise


Options


ExerciseExercise Price

Outstanding


(In Years)


Price


Exercisable


Price$0.43-$1.06


236,929



4.74


$
0.48



236,929


$
0.48$1.77


627,582



6.21



1.77



596,930



1.77$2.02-$5.19


342,826



8.03



3.74



260,873



3.57$5.26


419,000



9.17



5.26







$5.59-$7.09


404,249



8.90



6.53



105,047



6.77$7.28-$10.60


162,175



8.21



8.75



64,273



8.88$10.61-$70.50


5,780



4.08



60.23



5,732



60.552,198,541



7.54



4.15



1,269,784



2.94   Stock
    Purchase Agreements
   100




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##### Table of Contents



CORNERSTONE
    THERAPEUTICS INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Restricted
    Stock
      Weighted-AverageNumber of


Grant DateShares


Fair ValueUnvested  January 1, 2010


212,500


$
6.32Granted






Vested


(40,000
)


6.07Forfeited






Unvested  December 31, 2010


172,500


$
6.38     Stock-Based
    Compensation Expense
    For the Year Ended December 31,2010


2009


2008Employee

$
1,279


$
3,227


$
728Non-employee


60



64



21Total

$
1,339


$
3,291


$
749     NOTE 8:
    EMPLOYEE
    BENEFIT PLANS     101




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##### Table of Contents



CORNERSTONE
    THERAPEUTICS INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    NOTE 9:
    COMMITMENTS
    AND CONTINGENCIES  Lease
    Obligations
      OperatingYear Ending

Leases2011

$
6272012


5572013


5562014


5842015


599Thereafter


152Total minimum lease payments

$
3,075   Supply
    Agreements
    Royalty
    Agreements
    Collaboration
    Agreements
   102




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##### Table of Contents



CORNERSTONE
    THERAPEUTICS INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  and/or
    Co-Promotion
    and Marketing Services Agreements
      Severance
    NOTE 10:
    INCOME
    TAXES    2010


2009


2008Current:Federal

$
4,340


$
8,400


$
3,161State


246



779



563Total


4,586



9,179



3,724Deferred:Federal


(2,793
)


(3,164
)


(2,930
)State


(184
)


(468
)


(380
)Total


(2,977
)


(3,632
)


(3,310
)Total tax provision

$
1,609


$
5,547


$
414  103




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##### Table of Contents



CORNERSTONE
    THERAPEUTICS INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2010


2009Current:Deferred tax assets:Accounts receivable, net

$
752


$
144Inventories, net


1,223



1,171Accrued expenses


5,605



3,173Total current deferred tax assets


7,580



4,488Deferred tax liabilities:Acquired intellectual property


(981
)


(981
)Net current deferred tax assets

$
6,599


$
3,507Noncurrent:Deferred tax assets:Tax loss carryforwards

$
60,966


$
61,610Tax credits


1,900



1,900Stock-based compensation


974



935Product license rights, net


1,263



1,557Valuation allowance


(62,866
)


(63,510
)Total noncurrent deferred tax assets


2,237



2,492Deferred tax liabilities:Acquired intellectual property


(6,500
)


(6,868
)Property and equipment, net


(416
)


(188
)Total noncurrent deferred tax liabilities


(6,916
)


(7,056
)Net deferred tax liability  noncurrent


(4,679
)


(4,564
)Total net deferred tax liability

$
1,920


$
(1,057
)      104




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##### Table of Contents



CORNERSTONE
    THERAPEUTICS INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      2010


2009


2008Federal statutory taxes


35.0
%


35.0
%


34.0
%State income taxes, net of federal benefit


2.3



2.3



4.4Permanent differences


1.3



2.6



4.3Acquired in-process research and development










7.7Change in estimated federal and state NOL utilization


(7.4
)






Change in valuation allowance


(8.3
)


(1.8
)


(45.0
)Other


(2.2
)


(2.9
)


(1.0
)20.7
%


35.2
%


4.4
%             NOTE 11:
    RELATED
    PARTY TRANSACTIONS  Stockholders
   105




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##### Table of Contents



CORNERSTONE
    THERAPEUTICS INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Other
    Related Parties
        ® ®
  NOTE 12:
    NET
    INCOME PER SHARE   106




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##### Table of Contents



CORNERSTONE
    THERAPEUTICS INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2010


2009


2008Numerator:Net income

$
6,169


$
10,203


$
8,993Denominator:Weighted-average common shares, basic


25,412,636



17,651,668



6,951,896Dilutive effect of stock options, warrants and restricted stock


623,908



1,124,920



909,223Weighted-average common shares, diluted


26,036,544



18,776,588



7,861,119Net income per share, basic

$
0.24


$
0.58


$
1.29Net income per share, diluted

$
0.24


$
0.54


$
1.14Anti-dilutive weighted-average shares


1,489,258



1,136,792



94,244   NOTE 13:
    SUBSEQUENT
    EVENTS    NOTE 14:
    RECENT
    ACCOUNTING PRONOUNCEMENTS   107




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##### Table of Contents



CORNERSTONE
    THERAPEUTICS INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  NOTE 15:
    QUARTERLY
    RESULTS OF OPERATIONS  (UNAUDITED)    First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter


Total2010Net product sales

$
36,392


$
28,460


$
26,410


$
32,482


$
123,744Cost of product sales (exclusive of amortization of product
    rights)


6,819



8,153



7,742



9,599



32,313Income (loss) from operations


8,063



(540
)


98



267



7,888Net income (loss)


5,013



(400
)


764



792



6,169Net income (loss) per share, basic


0.20



(0.02
)


0.03



0.03



0.24Net income (loss) per share, diluted


0.19



(0.02
)


0.03



0.03



0.242009Net product sales

$
30,469


$
24,992


$
23,078


$
30,749


$
109,288Cost of product sales (exclusive of amortization of product
    rights)


3,201



2,901



4,143



9,212



19,457Income (loss) from operations


10,359



3,087



(1,042
)


3,474



15,878Net income (loss)


6,315



1,738



(538
)


2,688



10,203Net income (loss) per share, basic


0.53



0.14



(0.03
)


0.11



0.58Net income (loss) per share, diluted


0.48



0.13



(0.03
)


0.10



0.54    108




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##### Table of Contents



CORNERSTONE
    THERAPEUTICS INC.
  SCHEDULE II 
    VALUATION AND QUALIFYING ACCOUNTS
 (In
    thousands)
  AdditionsCharged to


Charged toBeginning


Costs and


Other





EndingBalance


Expenses


Accounts(1)


Deductions


BalanceYear Ended December 31, 2010Reserves:Allowance for product returns

$
10,962


$



$
20,131
(2)

$
16,068


$
15,025Allowance for rebates


1,013







5,230
(3)


3,209



3,034Allowance for price adjustments and chargebacks


3,503







51,235
(4)


33,218



21,520Deducted from asset accounts:Allowance for prompt payment discounts


384







5,665
(5)


4,034



2,015Inventory allowance


1,802



1,340







1,297



1,845Year Ended December 31, 2009Reserves:Allowance for product returns

$
5,043


$



$
15,417
(6)

$
9,498


$
10,962Allowance for rebates


884







1,407



1,278



1,013Allowance for price adjustments and chargebacks


4,307







21,838



22,642



3,503Deducted from asset accounts:Allowance for prompt payment discounts


302







3,157



3,075



384Inventory allowance


677



1,474



234
(7)


583



1,802Year Ended December 31, 2008Reserves:Allowance for product returns

$
4,913


$



$
7,277
(8)

$
7,147


$
5,043Allowance for rebates


303







1,661
(9)


1,080



884Allowance for price adjustments and chargebacks


828







9,054
(10)


5,575



4,307Deducted from asset accounts:Allowance for prompt payment discounts


81







1,887



1,666



302Inventory allowance


201



599







123



677     (1)
    
    All activity is netted against gross product sales unless
    otherwise stated.(2)
    
    Includes a provision of $8,865 relating to sales made in prior
    periods.(3)
    
    Includes a deferred provision of $493 relating to sales made
    during 2010 for which revenue has been deferred.(4)
    
    Includes a deferred provision of $16,731 relating to sales made
    during 2010 for which revenue has been deferred.(5)
    
    Includes a deferred provision of $1,763 relating to sales made
    during 2010 for which revenue has been deferred.(6)
    
    Includes a provision of $2,333 relating to sales made in prior
    periods and $2,455 which was recorded in connection with the
    acquisition of FACTIVE product rights.(7)
    
    Represents an allowance of $234 recorded in connection with the
    Companys acquisition of FACTIVE product rights and related
    inventory.(8)
    
    Includes a provision of $1,401 relating to sales made in prior
    periods and a provision of $353 that was acquired in the Merger.(9)
    
    Includes a provision of $51 that was acquired in the Merger.(10)
    
    Includes a provision of $133 that was acquired in the Merger. 109




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##### Table of Contents



ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    ITEM 9A.
    CONTROLS
    AND PROCEDURES  Conclusion
    Regarding the Effectiveness of Disclosure Controls and
    Procedures
  Rule 13a-15(b)
  Changes
    in Internal Control Over Financial Reporting
  Rules 13a-15(f) 15d-15(f)
  Managements
    Report on Internal Control Over Financial Reporting
  Rule 13a-15(f).
  ITEM 9B.
    OTHER
    INFORMATION   110




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##### Table of Contents



PART III  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE  Directors
    and Executive Officers
  Form 10-K.
  Compliance
    With Section 16(a) of the Exchange Act
    Code of
    Ethics
  Form 8-K,
  Director
    Nominees
    Audit
    Committee
    ITEM 11.
    EXECUTIVE
    COMPENSATION    ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS   111




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##### Table of Contents



ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE    ITEM 14.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES   PART IV  ITEM 15.
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES  Financial Statements.
  Form 10-K.
  Financial Statement Schedules
  Form 10-K.
  Exhibits.
  Form 10-K
 112




---



##### Table of Contents



SIGNATURES      By:
    /s/  CRAIG
    A. COLLARD            Signature

Title

Date/s/  CRAIG
    A. COLLARDCraig
    A. Collard

President, Chief Executive Officer and Director (Principal
    Executive Officer)

March 3, 2011/s/  VINCENT
    T. MORGUSVincent
    T. Morgus

Executive Vice President,
    Finance and
    Chief Financial Officer
    (Principal Financial Officer)

March 3, 2011/s/  IRA
    DUARTEIra
    Duarte

Director of Accounting (Principal Accounting Officer)

March 3, 2011/s/  ALESSANDRO
    CHIESIAlessandro
    Chiesi

Director

March 3, 2011/s/  CHRISTOPHER
    CODEANNEChristopher
    Codeanne

Director

March 3, 2011/s/  MICHAEL
    ENRIGHTMichael
    Enright

Director

March 3, 2011/s/  ANTON
    GIORGIO FAILLAAnton
    Giorgio Failla

Director

March 3, 2011 113




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##### Table of Contents



Signature

Title

Date/s/  MICHAEL
    HEFFERNANMichael
    Heffernan

Director

March 3, 2011/s/  ROBERT
    STEPHANRobert
    Stephan

Director

March 3, 2011/s/  MARCO
    VECCHIAMarco
    Vecchia

Director

March 3, 2011  114




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##### Table of Contents



Exhibit Index  Exhibit No

Description2
.1*

Agreement and Plan of Merger among the Registrant, Neptune
    Acquisition Corp. and Cornerstone BioPharma Holdings, Inc. dated
    May 1, 2008 (incorporated by reference to Exhibit 2.1
    to the Registrants Current Report on
    Form 8-K
    dated May 1, 2008).2
.2

Amendment No. 1, dated August 7, 2008, to Agreement
    and Plan of Merger among the Registrant, Neptune Acquisition
    Corp. and Cornerstone BioPharma Holdings, Inc. dated May 1,
    2008 (incorporated by reference to Exhibit 2.2 to the
    Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2008).2
.3

Form of Merger Partner Stockholder Agreement among the
    Registrant, Cornerstone BioPharma Holdings, Inc. and certain
    stockholders of Cornerstone BioPharma Holdings, Inc. (included
    in Exhibit 2.1 hereto).2
.4

Merger Partner Noteholder Agreement among the Registrant,
    Cornerstone BioPharma Holdings, Inc., Cornerstone BioPharma,
    Inc. and Carolina Pharmaceuticals Ltd. dated May 1, 2008
    (incorporated by reference to Exhibit 2.4 to the
    Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2008).2
.5

Amendment No. 1, dated August 7, 2008, to Merger
    Partner Noteholder Agreement among the Registrant, Cornerstone
    BioPharma Holdings, Inc., Cornerstone BioPharma, Inc. and
    Carolina Pharmaceuticals Ltd. dated May 1, 2008
    (incorporated by reference to Exhibit 2.5 to the
    Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2008).2
.6

Form of Public Company Stockholder Agreement among Cornerstone
    BioPharma Holdings, Inc., the Registrant and certain
    stockholders of the Registrant (included in Exhibit 2.1
    hereto).3
.1

Amended and Restated Certificate of Incorporation of the
    Registrant (incorporated by reference to Exhibit 3.1 to the
    Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2004).3
.2

Amendment to the Registrants Certificate of Incorporation,
    effecting a 10-to-1 reverse stock split of the Registrants
    common stock (incorporated by reference to Exhibit 3.1 to
    the Registrants Current Report on
    Form 8-K
    dated October 30, 2008).3
.3

Amendment to the Registrants Certificate of Incorporation,
    changing the name of the corporation from Critical Therapeutics,
    Inc. to Cornerstone Therapeutics Inc. (incorporated by reference
    to Exhibit 3.2 to the Registrants Current Report on
    Form 8-K
    dated October 30, 2008).3
.4

Amendment to the Registrants Certificate of Incorporation,
    effecting certain changes pursuant to the Governance Agreement
    among Chiesi Farmaceutici S.p.A., the Registrant and certain
    other stockholders of the Registrant dated May 6, 2009
    (incorporated by reference to Exhibit 3.1 to the
    Registrants Current Report on
    Form 8-K
    dated August 27, 2009).3
.5

Fourth Amended and Restated Bylaws of the Registrant dated
    July 28, 2009 (incorporated by reference to
    Exhibit 3.1 to the Registrants Current Report on
    Form 8-K
    dated July 27, 2009).4
.1

Form of the Registrants Stock Certificate (incorporated by
    reference to Exhibit 4.1 to the Registrants Current
    Report on
    Form 8-K
    dated October 30, 2008).10
.1+

Co-Promotion and Marketing Services Agreement between the
    Registrant and Dey, L.P. dated March 13, 2007 (incorporated
    by reference to Exhibit 10.2 to the Registrants
    Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2007).10
.2+

Amendment No. 1, dated June 25, 2007, to Co-Promotion
    and Marketing Services Agreement between the Registrant and Dey,
    L.P. dated March 13, 2007 (incorporated by reference to
    Exhibit 10.5 to the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2007).10
.3+

Amendment No. 2, dated May 4, 2009, to Co-Promotion
    and Marketing Services Agreement between the Registrant and Dey,
    L.P. dated March 13, 2007 (incorporated by reference to
    Exhibit 10.1 to the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2009).10
.4+

License and Supply Agreement between Meiji Seika Kaisha, Ltd.
    and Cornerstone BioPharma, Inc. dated October 12, 2006
    (incorporated by reference to Exhibit 10.6 to the
    Registrants Current Report on
    Form 8-K
    dated October 30, 2008).




---



##### Table of Contents



Exhibit No

Description10
.5

Amendment No. 1, dated July 27, 2007, to License and
    Supply Agreement between Meiji Seika Kaisha, Ltd. and
    Cornerstone BioPharma, Inc. dated October 12, 2006
    (incorporated by reference to Exhibit 10.7 to the
    Registrants Current Report on
    Form 8-K
    dated October 30, 2008).10
.6

Amendment No. 2, dated January 28, 2010 and effective
    November 16, 2009, to License and Supply Agreement between
    Meiji Seika Kaisha, Ltd. and Cornerstone BioPharma, Inc. dated
    October 12, 2006 (incorporated by reference to
    Exhibit 10.2 to the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2010).10
.7+

Letter Agreement between Meiji Seika Kaisha, Ltd. and
    Cornerstone BioPharma, Inc. dated July 27, 2007
    (incorporated by reference to Exhibit 10.8 to the
    Registrants Current Report on
    Form 8-K
    dated October 30, 2008).10
.8+

Addendum, dated August 14, 2008, to License and Supply
    Agreement between Meiji Seika Kaisha, Ltd. and Cornerstone
    BioPharma, Inc. dated October 12, 2006 (incorporated by
    reference to Exhibit 10.10 to the Registrants Current
    Report on
    Form 8-K
    dated October 30, 2008).10
.9+

Agreement for Manufacturing and Supply of Zileuton between
    Shasun Pharma Solutions Limited (formerly known as Rhodia Pharma
    Solutions Ltd.) and the Registrant dated February 8, 2005
    (incorporated by reference to Exhibit 10.41 to the
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2004).10
.10+

Amendment No. 1, dated May 9, 2007, to Agreement for
    Manufacturing and Supply of Zileuton, between Shasun Pharma
    Solutions Limited (formerly known as Rhodia Pharma Solutions
    Ltd.) and the Registrant dated February 8, 2005
    (incorporated by reference to Exhibit 10.4 to the
    Registrants Quarterly Report on
    Form 10-Q
    for the period ended March 31, 2007).10
.11+

Manufacturing and Supply Agreement among the Registrant, Jagotec
    AG and SkyePharma PLC dated August 20, 2007 (incorporated
    by reference to Exhibit 10.1 to the Registrants
    Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2007).10
.12+

Letter Amendment, dated June 12, 2009, to Manufacturing and
    Supply Agreement among the Registrant, Jagotec AG and SkyePharma
    PLC dated August 20, 2007 (incorporated by reference to
    Exhibit 10.1 to the Registrants Current Report on
    Form 8-K
    dated June 12, 2009).10
.13+

License Agreement between the Registrant and Abbott Laboratories
    dated December 18, 2003 (incorporated by reference to
    Exhibit 10.10 to the Registrants Registration
    Statement on
    Form S-1
    (SEC File
    No. 333-113727)).10
.14

Amendment No. 1, dated April 13, 2005, to License
    Agreement between the Registrant and Abbott Laboratories dated
    December 18, 2003 (incorporated by reference to
    Exhibit 10.14 to the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2006).10
.15+

Amendment No. 2, dated January 28, 2010, to License
    Agreement between the Registrant and Abbott Laboratories dated
    December 18, 2003 (incorporated by reference to
    Exhibit 10.1 to the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2010).10
.16+

License Agreement between the Registrant and Abbott Laboratories
    dated March 19, 2004 (incorporated by reference to
    Exhibit 10.11 to the Registrants Registration
    Statement on
    Form S-1
    (SEC File
    No. 333-113727)).10
.17

Amendment No. 1, dated September 15, 2004, to License
    Agreement between the Registrant and Abbott Laboratories dated
    March 19, 2004 (incorporated by reference to
    Exhibit 10.16 to the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2006).10
.18+

Agreement between the Registrant and Jagotec AG dated
    December 3, 2003 (incorporated by reference to
    Exhibit 10.13 to the Registrants Registration
    Statement on
    Form S-1
    (SEC File
    No. 333-113727)).10
.19+

Development and
    Scale-Up
    Agreement between the Registrant and Jagotec AG dated
    May 5, 2004 (incorporated by reference to
    Exhibit 10.25 to Amendment No. 2 to the
    Registrants Registration Statement on
    Form S-1
    (SEC File
    No. 333-113727)).10
.20+

Development, License and Services Agreement between Neos
    Therapeutics, L.P. and Cornerstone BioPharma, Inc. dated
    March 19, 2008 (incorporated by reference to
    Exhibit 10.15 to the Registrants Current Report on
    Form 8-K
    dated October 30, 2008).10
.21+

Development and Manufacturing Agreement among Neos Therapeutics,
    L.P., Coating Place, Inc. and Cornerstone BioPharma, Inc. dated
    February 27, 2008 (incorporated by reference to
    Exhibit 10.16 to the Registrants Current Report on
    Form 8-K
    dated October 30, 2008).




---



##### Table of Contents



Exhibit No

Description10
.22+

Amendment No. 1, dated June 16, 2009, to Development
    and Manufacturing Agreement among Neos Therapeutics, L.P.,
    Coating Place, Inc. and Cornerstone BioPharma, Inc. dated
    February 27, 2008 (incorporated by reference to
    Exhibit 10.1 to the Registrants Current Report on
    Form 8-K
    dated June 16, 2009).10
.23+

Amended and Restated Products Development Agreement between Neos
    Therapeutics, L.P. and Cornerstone BioPharma, Inc. dated
    August 27, 2008 (incorporated by reference to
    Exhibit 10.17 to the Registrants Current Report on
    Form 8-K
    dated October 30, 2008).10
.24+

Addendum, dated May 31, 2010, to Amended and Restated
    Products Development Agreement between Neos Therapeutics, L.P.
    and Cornerstone Therapeutics Inc. dated August 27, 2008
    (incorporated by reference to Exhibit 10.3 to the
    Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2010).10
.25+

License Agreement between the Registrant and The Feinstein
    Institute for Medical Research (formerly known as The North
    Shore-Long Island Jewish Research Institute) dated July 1,
    2001, as amended by the First Amendment Agreement dated
    May 15, 2003 (incorporated by reference to
    Exhibit 10.5 to the Registrants Registration
    Statement on
    Form S-1
    (SEC File
    No. 333-113727)).10
.26+

Sponsored Research and License Agreement between the Registrant
    and The Feinstein Institute for Medical Research (formerly known
    as The North Shore-Long Island Jewish Research Institute) dated
    July 1, 2001, as amended by the First Amendment Agreement
    dated July 1, 2003 (incorporated by reference to
    Exhibit 10.6 to the Registrants Registration
    Statement on
    Form S-1
    (SEC File
    No. 333-113727)).10
.27+

Sponsored Research and License Agreement between the Registrant
    and The Feinstein Institute for Medical Research (formerly known
    as The North Shore-Long Island Jewish Research Institute)
    effective January 1, 2003 (incorporated by reference to
    Exhibit 10.7 to the Registrants Registration
    Statement on
    Form S-1
    (SEC File
    No. 333-113727)).10
.28+

Amendment No. 2, dated January 8, 2007, to Sponsored
    Research and License Agreement between the Registrant and The
    Feinstein Institute for Medical Research (formerly known as The
    North Shore-Long Island Jewish Research Institute) effective
    January 1, 2003 (incorporated by reference to
    Exhibit 10.8 to the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2006).10
.29+

Amendment No. 3, dated June 29, 2007, to Sponsored
    Research and License Agreement between the Registrant and The
    Feinstein Institute for Medical Research (formerly known as The
    North Shore-Long Island Jewish Research Institute) effective
    January 1, 2003 (incorporated by reference to
    Exhibit 10.7 to the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2007).10
.30+

Amendment No. 4, dated August 3, 2010, to Sponsored
    Research and License Agreement between the Registrant and The
    Feinstein Institute for Medical Research (formerly known as The
    North Shore-Long Island Jewish Research Institute) effective
    January 1, 2003 (incorporated by reference to
    Exhibit 10.1 to the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2010).10
.31+

Amendment No. 5, dated August 3, 2010, to Sponsored
    Research and License Agreement between the Registrant and The
    Feinstein Institute for Medical Research (formerly known as The
    North Shore-Long Island Jewish Research Institute) effective
    January 1, 2003 (incorporated by reference to
    Exhibit 10.2 to the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2010).10
.32+

Amendment No. 6, dated August 3, 2010, to Sponsored
    Research and License Agreement between the Registrant and The
    Feinstein Institute for Medical Research (formerly known as The
    North Shore-Long Island Jewish Research Institute) effective
    January 1, 2003 (incorporated by reference to
    Exhibit 10.3 to the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2010).10
.33+

Exclusive License and Collaboration Agreement between the
    Registrant and MedImmune, Inc. dated July 30, 2003
    (incorporated by reference to Exhibit 10.8 to the
    Registrants Registration Statement on
    Form S-1
    (SEC File
    No. 333-113727)).




---



##### Table of Contents



Exhibit No

Description10
.34

Amendment No. 1, dated December 7, 2005, to Exclusive
    License and Collaboration Agreement between the Registrant and
    MedImmune, Inc. dated July 30, 2003 (incorporated by
    reference to Exhibit 10.50 to the Registrants Annual
    Report on
    Form 10-K
    for the year ended December 31, 2005).10
.35

Termination Agreement between the Registrant and MedImmune LLC
    effective June 1, 2010 (incorporated by reference to
    Exhibit 10.2 to the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2010).10
.36

Stock Purchase Agreement between Chiesi Farmaceutici S.p.A. and
    the Registrant dated May 6, 2009 (incorporated by reference
    to Exhibit 10.1 to the Registrants Current Report on
    Form 8-K
    dated May 6, 2009; Exhibits A, B, C, D and E thereto
    incorporated by reference to
    Exhibits 10.9-10.14,
    10.4, 10.3, 10.5 and 10.6, respectively, to the
    Registrants Current Report on
    Form 8-K
    dated May 6, 2009; and Exhibit H thereto incorporated
    by reference to Exhibit 10.2 to the Registrants
    Amendment No. 1 on
    Form 8-K/A
    to Current Report on
    Form 8-K
    dated May 6, 2009).10
.37+

License and Distribution Agreement between Chiesi Farmaceutici
    S.p.A. and the Registrant dated May 6, 2009 (incorporated
    by reference to Exhibit 10.2 to the Registrants
    Amendment No. 1 on
    Form 8-K/A
    to Current Report on
    Form 8-K
    dated May 6, 2009).10
.38

Governance Agreement among the Registrant, Chiesi Farmaceutici
    S.p.A. and, solely with respect to the sections identified
    therein, Cornerstone BioPharma Holdings, Ltd., Carolina
    Pharmaceuticals Ltd. and Lutz Family Limited Partnership dated
    May 6, 2009 (incorporated by reference to Exhibit 10.3
    to the Registrants Current Report on
    Form 8-K
    dated May 6, 2009).10
.39

Stockholders Agreement among the Registrant, Chiesi Farmaceutici
    S.p.A., Craig A. Collard, Steven M. Lutz, Cornerstone BioPharma
    Holdings, Ltd., Carolina Pharmaceuticals Ltd. and Lutz Family
    Limited Partnership dated May 6, 2009 (incorporated by
    reference to Exhibit 10.4 to the Registrants Current
    Report on
    Form 8-K
    dated May 6, 2009).10
.40

Amendment, dated June 26, 2009, to Stockholders Agreement
    among the Registrant, Chiesi Farmaceutici S.p.A., Craig A.
    Collard, Steven M. Lutz, Cornerstone BioPharma Holdings, Ltd.,
    Carolina Pharmaceuticals Ltd. and Lutz Family Limited
    Partnership dated May 6, 2009 (incorporated by reference to
    Exhibit 10.2 to the Registrants Current Report on
    Form 8-K
    dated June 26, 2009).10
.41

Registration Rights Agreement between the Registrant and Chiesi
    Farmaceutici S.p.A. dated May 6, 2009 (incorporated by
    reference to Exhibit 10.5 to the Registrants Current
    Report on
    Form 8-K
    dated May 6, 2009).10
.42

Registration Rights Agreement among the Registrant, Craig A.
    Collard, Steven M. Lutz, Cornerstone BioPharma Holdings, Ltd.,
    Carolina Pharmaceuticals Ltd. and Lutz Family Limited
    Partnership dated May 6, 2009 (incorporated by reference to
    Exhibit 10.6 to the Registrants Current Report on
    Form 8-K
    dated May 6, 2009).10
.43

Voting Agreement between the Registrant and Chiesi Farmaceutici
    S.p.A. dated May 6, 2009 (incorporated by reference to
    Exhibit 10.7 to the Registrants Current Report on
    Form 8-K
    dated May 6, 2009).10
.44

Voting Agreement among Chiesi Farmaceutici S.p.A., Craig A.
    Collard, Steven M. Lutz, Cornerstone BioPharma Holdings, Ltd.,
    Carolina Pharmaceuticals Ltd., Lutz Family Limited Partnership,
    Brian Dickson, Joshua B. Franklin, David Price, Alan Roberts
    and, solely with respect to Section 2(b) thereof, the
    Registrant dated May 6, 2009 (incorporated by reference to
    Exhibit 10.8 to the Registrants Current Report on
    Form 8-K
    dated May 6, 2009).10
.45

Stock Purchase Agreement among the Registrant, Chiesi
    Farmaceutici S.p.A., Craig A. Collard, Steven M. Lutz,
    Cornerstone BioPharma Holdings, Ltd. and Lutz Family Limited
    Partnership dated December 16, 2010.10
.46

Asset Purchase Agreement between Oscient Pharmaceuticals
    Corporation and Cornerstone BioPharma, Inc. dated July 13,
    2009 (incorporated by reference to Exhibit 10.1 to the
    Registrants Current Report on
    Form 8-K
    dated July 13, 2009).




---



##### Table of Contents



Exhibit No

Description10
.47+

License and Option Agreement between LG Life Sciences, Ltd. and
    Cornerstone BioPharma, Inc. (as assignee of Oscient
    Pharmaceuticals Corporation) dated October 22, 2002, as
    amended by Amendment No. 1 dated November 21, 2002,
    Amendment No. 2 dated December 6, 2002, Amendment
    No. 3 dated October 16, 2003, Amendment No. 4
    dated March 31, 2005, Amendment No. 5 dated
    February 3, 2006, Amendment No. 6 dated
    February 3, 2006 and Amendment No. 7 dated
    December 27, 2006 (incorporated by reference to
    Exhibit 10.2 to the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2009).10
.48

Warrant Agreement between the Registrant and Mellon Investor
    Services LLC dated October 31, 2006 (incorporated by
    reference to Exhibit 10.2 to the Registrants
    Quarterly Report on
    Form 10-Q
    for the period ended September 30, 2006).10
.49

Form of Warrant (included as Exhibit A to
    Exhibit 10.48 hereto).10
.50

Lease Agreement between Crescent Lakeside, LLC and the
    Registrant (as assignee of Cornerstone BioPharma Holdings, Inc.)
    dated May 1, 2008 (incorporated by reference to
    Exhibit 10.26 to the Registrants Current Report on
    Form 8-K
    dated October 30, 2008).10
.51

Lease Modification Agreement No. 1, dated October 31,
    2008, to Lease Agreement between Crescent Lakeside, LLC and the
    Registrant (as assignee of Cornerstone BioPharma Holdings, Inc.)
    dated May 1, 2008 (incorporated by reference to
    Exhibit 10.3 to the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2009).10
.52

Lease Modification Agreement No. 2, dated October 2,
    2009, to Lease Agreement between Crescent Lakeside, LLC and the
    Registrant (as assignee of Cornerstone BioPharma Holdings, Inc.)
    dated May 1, 2008 (incorporated by reference to
    Exhibit 10.4 to the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2009).10
.53#

2004 Stock Incentive Plan of the Registrant (as Amended and
    Restated May 20, 2010) (incorporated by reference to
    Exhibit 10.1 to the Registrants Current Report on
    Form 8-K
    dated May 20, 2010).10
.54#

Form of Incentive Stock Option Agreement granted under the 2004
    Stock Incentive Plan (incorporated by reference to
    Exhibit 10.68 to the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2008).10
.55#

Form of Nonstatutory Stock Option Agreement granted under the
    2004 Stock Incentive Plan (incorporated by reference to
    Exhibit 10.70 to the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2008).10
.56#

Form of Nonstatutory Stock Option Agreement for a Non-Employee
    Director granted under the 2004 Stock Incentive Plan (for awards
    granted before May 20, 2010) (incorporated by reference to
    Exhibit 10.72 to the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2008).10
.57#

Form of Nonstatutory Stock Option Agreement for a Non-Employee
    Director granted under the 2004 Stock Incentive Plan (for awards
    granted on or after May 20, 2010) (incorporated by
    reference to Exhibit 10.1 to the Registrants
    Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2010).10
.58#

Form of Restricted Stock Agreement granted under 2004 Stock
    Incentive Plan (incorporated by reference to Exhibit 10.75
    to the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2009).10
.59#

Cornerstone BioPharma Holdings, Inc. 2005 Stock Incentive Plan
    (as Amended and Restated effective October 31, 2008)
    (incorporated by reference to Exhibit 10.37 to the
    Registrants Current Report on
    Form 8-K
    dated October 30, 2008).10
.60#

Form of Nonstatutory Stock Option Agreement granted under the
    Cornerstone BioPharma Holdings, Inc. 2005 Stock Incentive Plan
    (incorporated by reference to Exhibit 10.39 to the
    Registrants Current Report on
    Form 8-K
    dated October 30, 2008).10
.61#

Cornerstone BioPharma Holdings, Inc. 2005 Stock Option Plan (as
    Amended and Restated effective October 31, 2008)
    (incorporated by reference to Exhibit 10.38 to the
    Registrants Current Report on
    Form 8-K
    dated October 30, 2008).10
.62#

Form of Nonstatutory Employee Stock Option Agreement granted
    under the Cornerstone BioPharma Holdings, Inc. 2005 Stock Option
    Plan (incorporated by reference to Exhibit 10.40 to the
    Registrants Current Report on
    Form 8-K
    dated October 30, 2008).




---



##### Table of Contents



Exhibit No

Description10
.63#

Amended and Restated Non-Employee Director Compensation and
    Reimbursement Policy of the Registrant effective
    October 31, 2008 (incorporated by reference to
    Exhibit 10.80 to the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2008).10
.64#

Amended and Restated Executive Employment Agreement between the
    Registrant and Craig A. Collard dated May 6, 2009
    (incorporated by reference to Exhibit 10.9 to the
    Registrants Current Report on
    Form 8-K
    dated May 6, 2009).10
.65#

Amended and Restated Executive Employment Agreement between the
    Registrant and Joshua B. Franklin dated May 6, 2009
    (incorporated by reference to Exhibit 10.13 to the
    Registrants Current Report on
    Form 8-K
    dated May 6, 2009).10
.66#

Amended and Restated Executive Employment Agreement between the
    Registrant and Steven M. Lutz dated May 6, 2009
    (incorporated by reference to Exhibit 10.10 to the
    Registrants Current Report on
    Form 8-K
    dated May 6, 2009).10
.67#

Executive Employment Agreement between the Registrant and Andrew
    K. W. Powell dated October 30, 2009 (incorporated by
    reference to Exhibit 10.96 to the Registrants Annual
    Report on
    Form 10-K
    for the year ended December 31, 2009).10
.68#

Amended and Restated Executive Employment Agreement between the
    Registrant and David Price dated May 6, 2009 (incorporated
    by reference to Exhibit 10.11 to the Registrants
    Current Report on
    Form 8-K
    dated May 6, 2009).10
.69#

Amendment No. 1, dated June 26, 2009, to Amended and
    Restated Executive Employment Agreement, between the Registrant
    and David Price dated May 6, 2009 (incorporated by
    reference to Exhibit 10.4 to the Registrants Current
    Report on
    Form 8-K
    dated June 26, 2009).10
.70#

Amended and Restated Restricted Stock Agreement between
    Cornerstone BioPharma Holdings, Inc. and David Price dated
    October 31, 2008 (incorporated by reference to
    Exhibit 10.34 to the Registrants Current Report on
    Form 8-K
    dated October 30, 2008).10
.71#

First Amendment, dated June 12, 2009, to Amended and
    Restated Restricted Stock Agreement between Cornerstone
    BioPharma Holdings, Inc. and David Price dated October 31,
    2008 (incorporated by reference to Exhibit 10.5 to the
    Registrants Current Report on
    Form 8-K
    dated June 12, 2009).10
.72#

Second Amendment, dated July 27, 2009, to Amended and
    Restated Restricted Stock Agreement between Cornerstone
    BioPharma Holdings, Inc. and David Price dated October 31,
    2008 (incorporated by reference to Exhibit 10.5 to the
    Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2009).10
.73#

Executive Employment Agreement between the Registrant and Alan
    Roberts dated May 6, 2009 (incorporated by reference to
    Exhibit 10.14 to the Registrants Current Report on
    Form 8-K
    dated May 6, 2009).10
.74#

Executive Employment Agreement between the Registrant and
    Vincent T. Morgus dated February 1, 2011 (incorporated by
    reference to Exhibit 10.1 to the Registrants Current
    Report on
    Form 8-K
    dated February 1, 2011).10
.75#

Form of Indemnification Agreement, entered into between
    Cornerstone BioPharma Holdings, Inc. and each of Craig A.
    Collard and certain other directors of Cornerstone BioPharma
    Holdings, Inc. on April 12, 2005 (incorporated by reference
    to Exhibit 10.36 to the Registrants Current Report on
    Form 8-K
    dated October 30, 2008).21
.1

Subsidiaries of the Registrant.23
.1

Consent of Grant Thornton LLP.31
.1

Certification of Principal Executive Officer pursuant to
    Rule 13a-14(a)
    and 15d-14(a) of the Securities Exchange Act of 1934, as adopted
    pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31
.2

Certification of Principal Financial Officer pursuant to
    Rule 13a-14(a)
    and 15d-14(a) of the Securities Exchange Act of 1934, as adopted
    pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.




---



##### Table of Contents



Exhibit No

Description32
.1

Certification of Principal Executive Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.32
.2

Certification of Principal Financial Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.     *
    
    Pursuant to
    Regulation S-K,
    Item 601(b)(2), certain schedules to the Agreement and Plan
    of Merger have not been filed herewith. The Registrant agrees to
    furnish supplementally a copy of any such schedule to the
    Securities and Exchange Commission upon request; provided,
    however, that the Registrant may request confidential treatment
    of omitted items.#
    
    Management contract or compensatory plan or arrangement.+
    
    Portions of the exhibit have been omitted pursuant to a request
    for confidential treatment, which portions have been separately
    filed with the Securities and Exchange Commission.