<PAGE>
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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549
                            ------------------------

                                   FORM 10-K

(MARK ONE)

<TABLE>
<C>        <S>
   /X/     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934
</TABLE>

                  FOR THE FISCAL YEAR ENDED: DECEMBER 31, 2000
                                       OR

<TABLE>
<C>        <S>
   / /     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934
</TABLE>

        FOR THE TRANSITION PERIOD FROM ______________ TO ______________

                        COMMISSION FILE NUMBER: 0-28494
                            ------------------------

                        MILLENNIUM PHARMACEUTICALS, INC.

             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                               <C>
                 DELAWARE                                      04-3177038
       (State or other jurisdiction                (IRS Employer Identification No.)
    of incorporation or organization)

75 SIDNEY STREET, CAMBRIDGE, MASSACHUSETTS                       02139
 (Address of principal executive offices)                      (zip code)
</TABLE>

Registrant's telephone number, including area code:    (617) 679-7000

Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, $0.001
PAR VALUE

                                                                (Title of class)
                            ------------------------

    Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/  No / /

    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /

    The aggregate market value of voting Common Stock held by non-affiliates of
the registrant was $7,101,754,245 based on the last reported sale price of the
Common Stock on the Nasdaq Stock Market on February 28, 2001.

    Number of shares outstanding of the registrant's class of Common Stock as of
February 28, 2001: 215,652,754.

                      DOCUMENTS INCORPORATED BY REFERENCE:

    Portions of the definitive Proxy Statement for the 2001       Part III

            Annual Meeting of Stockholders

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<PAGE>
                               TABLE OF CONTENTS

<TABLE>
<S>          <C>                                                           <C>
Item 1.      Business....................................................        1
             Overview....................................................        1
             Key Transactions and Developments in 2000...................        1
             Industry Background.........................................        3
             Our Strategy................................................        4
             Our Technology..............................................        6
             Therapeutics--Clinical Programs.............................        8
             Therapeutics--Research and Development Programs.............        9
             Predictive Medicine.........................................       11
             Alliances...................................................       12
             Research and Development....................................       15
             Patents and Proprietary Rights..............................       16
             Government Regulation.......................................       16
             Manufacturing...............................................       21
             Sales and Marketing.........................................       21
             Competition.................................................       22
             Employees...................................................       22
Risk Factors That May Affect Results.....................................       23
             Regulatory Risks............................................       23
             Risks Relating to Our Industry, Business and Strategy.......       24
             Risks Relating to Our Financial Results and Structure and
               Need for Financing........................................       25
             Risks Relating to Collaborators.............................       26
             Risks Relating to Intellectual Property.....................       27
             Risks Relating to Product Manufacturing, Marketing and
               Sales.....................................................       28
Item 2.      Properties..................................................       30
Item 3.      Legal Proceedings...........................................       30
Item 4.      Submission of Matters to a Vote of Security Holders.........       30
Executive Officers of the Company........................................       31
Item 5.      Market for the Company's Common Equity and Related
               Stockholder Matters.......................................       33
Item 6.      Selected Financial Data.....................................       34
Item 7.      Management's Discussion and Analysis of Financial Condition
               and Results of Operations.................................       35
Item 7A.     Quantitative and Qualitative Disclosures About Market
               Risk......................................................       42
Item 8.      Financial Statements and Supplementary Data.................       44
             Report of Independent Auditors..............................       44
             Consolidated Balance Sheets.................................       45
             Consolidated Statements of Operations.......................       46
             Consolidated Statements of Cash Flows.......................       47
             Statements of Stockholders' Equity..........................       48
             Notes to Consolidated Financial Statements..................       49
Item 9.      Changes in and Disagreements with Accountants on Accounting
               and Financial Disclosure..................................       71
Item 10.     Directors and Executive Officers............................       71
Item 11.     Executive Compensation......................................       71
Item 12.     Stock Ownership of Certain Beneficial Owners and
               Management................................................       71
Item 13.     Certain Relationships and Related Transactions..............       71
Item 14.     Exhibits, Financial Statement Schedules, and Reports on Form
               8-K.......................................................       71
Signatures...............................................................       73
Exhibit Index............................................................       74
</TABLE>

                                       i
<PAGE>
                                     PART I

ITEM 1. BUSINESS

OVERVIEW

    Our goal is to become the biopharmaceutical company of the future. We plan
to develop breakthrough drugs and predictive medicine products that ultimately
enable physicians to more closely customize medical treatment by combining
knowledge of the genetic basis for disease and the genetic characteristics of a
particular patient. We plan to achieve this goal of delivering personalized
medicine to patients by building on our broad scientific and technological
capabilities and methods, which we call our "technology platform." We use many
of the elements of our technology platform throughout our business, from the
discovery of disease-related genes, to the development of drugs to specifically
address these diseases, to the development of predictive medicine products and
services to enable clinicians and pharmaceutical researchers to make better
informed decisions about drug treatment for patients affected by these diseases.
As a result, we speak of our technological approach as being applicable from
"gene to patient."

    We have entered into research, development and commercialization
arrangements with major pharmaceutical and biotechnology companies relating to a
broad range of therapeutic and predictive medicine products and services. These
alliances provide us with the opportunity to receive royalties and/or share
profits if our collaborations are successful in developing and commercializing
products. In many cases, we also retain product rights for ourselves from these
alliances. We have also entered into technology development and technology
transfer arrangements with major pharmaceutical and biotechnology companies.
Under each of these arrangements we work cooperatively with the other party to
enhance our technology platform or provide such party a license to use our
technology platform in exchange for fees and, in some cases, the opportunity to
receive royalties if the other party is successful in developing and
commercializing products using our technology platform.

    References in this Annual Report on Form 10-K to we, us, our, and the like
include, where applicable, references to our Millennium Predictive Medicine
division, or MPMx, and its predecessor entity, Millennium Predictive
Medicine, Inc., which was a wholly-owned subsidiary of ours before it was merged
with and into Millennium Pharmaceuticals, Inc. in January 2001.

    In this Annual Report on Form 10-K, we incorporate by reference certain
information from parts of other documents filed with the Securities and Exchange
Commission. The SEC allows us to disclose important information by referring to
it in that manner. Please refer to such information.

    We were incorporated in Delaware in 1993 and our principal executive offices
are located at 75 Sidney Street, Cambridge, Massachusetts 02139.

KEY TRANSACTIONS AND DEVELOPMENTS IN 2000 AND 2001

    STRATEGIC ALLIANCES

    AVENTIS.  In June 2000, we formed an alliance with Aventis
Pharmaceuticals Inc., the pharmaceutical subsidiary of Aventis S.A., by signing
agreements covering:

    - joint development and commercialization of drugs for the treatment of
      specified inflammatory diseases;

    - a five-year program for the joint development of new drug discovery
      technologies;

    - the grant to Aventis of rights to our drug discovery technologies in
      exchange for payments of up to $200 million over a five-year period; and

    - an investment by Aventis of $250 million in our common stock, of which:

     - Aventis made an investment on July 27, 2000 of $150.0 million to purchase
       2,516,356 shares of our common stock,

     - Aventis made an investment on January 4, 2001 of $50.0 million to
       purchase 753,522 shares of our common stock, and
<PAGE>
     - Aventis has agreed to make a final investment of $50.0 million later in
       2001.

    ABBOTT.  In March 2001, we formed an alliance with Abbott Laboratories by
signing agreements covering:

    - joint development and commercialization of drugs and predictive medicine
      products for the treatment and management of specified metabolic diseases;

    - an exchange of rights to certain components of each party's drug discovery
      technologies and a program for the development of a new drug discovery
      technology; and

    - an investment by Abbott of $250 million in our common stock, of which:

     - Abbott has agreed to make an initial investment of $50.0 million in
       April 2001, and

     - Abbott has agreed to make additional investments totalling $200 million
       in seven quarterly installments from later in 2001 through 2003.

    REACQUISITION OF MINORITY INTEREST IN MPMX AND RESTRUCTURING OF MPMX

    On June 2, 2000, we reacquired the outstanding minority equity interest in
Millennium Predictive Medicine, Inc., through a merger of MPMx into a
newly-organized, wholly-owned subsidiary of Millennium. In the merger, we issued
an aggregate of approximately 2,240,760 shares of our common stock to the former
MPMx shareholders, including Becton Dickinson and Company. In addition, we
assumed MPMx's outstanding employee stock options, which are exercisable for
444,214 shares of our common stock. As a result of the merger, we were able to
align more closely our therapeutic and predictive medicine discovery and
development efforts.

    We recently restructured MPMx, and we now operate MPMx as an unincorporated
division of our business.

    ACQUISITION OF CAMBRIDGE DISCOVERY CHEMISTRY

    On July 27, 2000, we acquired Cambridge Discovery Chemistry Ltd., a
subsidiary of Oxford Molecular Group, plc, by purchasing all of the issued and
outstanding share capital of CDC for $50.0 million in cash. We renamed CDC
"Millennium Pharmaceuticals Limited." Through this acquisition we added
approximately 85 expert chemists, many with significant pharmaceutical chemistry
experience, to our drug discovery team, bringing our total chemistry capability
to over 150 scientists at completion of the acquisition. By substantially
increasing our capabilities in medicinal and computational chemistry, we expect
this acquisition to accelerate our downstream drug discovery efforts. We believe
that it also establishes a presence for us in one of the strongest and most
innovative pharmaceutical and technology centers in Europe.

    CONVERTIBLE NOTE OFFERING

    On January 14, 2000, we completed a Rule 144A offering to qualified
institutional buyers of $400 million of 5.5% Convertible Subordinated Notes due
January 15, 2007. The notes are convertible into our common stock at a price
equal to $42.07 per share. We can redeem the notes at any time after
January 15, 2003. The holders of the notes can, under specified circumstances,
require us to repurchase the notes if a change of control occurs. During 2000,
we paid an aggregate of $54.9 million to induce the early conversion by holders
of $304.1 million of notes. As a result, on December 31, 2000, $95.9 million of
these notes remained outstanding.

    COMMON STOCK OFFERING

    On October 11, 2000, we completed a public offering of 11,000,000 shares of
our common stock at a purchase price of $64.00 per share. On October 17, 2000,
we sold an additional 1,465,500 shares of our common stock pursuant to the
underwriters' exercise of their over-allotment option. We realized

                                       2
<PAGE>
net proceeds of $767.4 million from the offering, after deducting the
underwriting discount and our offering-related expenses.

INDUSTRY BACKGROUND

    The discovery and development of new drugs typically involves several steps
and many years of work. The first step is the identification of a drug "target"
for therapeutic intervention--a molecule or structure somewhere in the body,
inside or on the surface of cells, which is either directly related to the
disease or lies in a biochemical pathway involved in the disease. The next step
is to identify compounds which interact with this drug target and modulate the
drug target's activity in a manner that might help reverse, inhibit or prevent
the disease process. This step is normally accomplished by screening large
collections, referred to as libraries, of synthetic chemicals and natural
products in a trial-and-error process designed to identify those compounds that
can interact with the drug target.

    The most promising compounds to emerge from this time-consuming process are
advanced to the next stage, in which synthetic derivatives of these compounds
are generated and tested to arrive at one or a few so-called lead compounds.
Positive interactions of these lead compounds with the drug target and the
subsequent activity in animal or cellular models of the disease may suggest that
these compounds can be developed successfully into new drugs. The best of these
lead compounds are then subjected to rigorous testing, first in animals and then
in humans, to establish their safety and efficacy as drugs.

    The selection of new targets for drug discovery historically has been an
inefficient process because of the lack of knowledge of the underlying disease
causes. Drug targets have often been selected based on speculation that they
might be involved in disease processes, rather than because of any clear,
well-documented association with specific diseases. As a result, many drug
candidates fail during clinical trials because they turn out to be ineffective
or unsafe. Moreover, many drugs that do reach the market treat only the symptoms
of diseases rather than their underlying causes.

    In recent years, however, the drug discovery process has changed, beginning
with the process for discovering drug targets. Fueled by a broad interest in
determining the entire DNA sequence of the human genome, scientists have made
major improvements in the technologies available for identifying and cataloguing
genes in complex organisms. These technologies include high-throughput methods
for sequencing genes, for monitoring and comparing the expression of genes in
different situations and for following the inheritance of genes in families
prone to particular diseases. The integration of molecular biology with
robotics, information technology and analytical instrumentation is crucial to
these technologies. The combination of these disciplines provides powerful
capabilities for generating, capturing and analyzing large volumes of data
concerning genes and their expression, making it possible for the first time to
mount a systematic search to discover and characterize the genes and biochemical
pathways which underlie human diseases.

    Major advances have also recently been made in the technologies available
for screening synthetic chemical and natural-product libraries to identify
compounds active against specific drug targets and for the subsequent generation
of lead compounds optimized for their activity against these drug targets. As
with the advances in target discovery, the advances in drug discovery depend
heavily on robotics, information technology and analytical instrumentation,
coupled with novel combinatorial approaches to the synthesis of chemical
libraries.

    Another important recent development in biotechnology has been the emergence
of monoclonal antibody-based drugs as successful therapeutics. Monoclonal
antibodies, which are specially produced proteins that play a role in the immune
system, have long held great potential as drugs because, by their nature, they
recognize and interact with target molecules in a highly specific way. However,
early therapeutic monoclonal antibodies were generated in non-human animals and,
therefore, were recognized by the body as foreign and neutralized by the immune
system. Recently, it has become possible to produce humanized monoclonal
antibodies that appear less foreign to the body, and even to

                                       3
<PAGE>
produce completely human monoclonal antibodies in quantity. As a result,
monoclonal antibodies are now realizing their potential as drugs, with several
successfully on the market, and many more in advanced clinical development.

    We believe that the combined effect of these developments has reduced and
will continue to reduce the risk, time and expense associated with the
development of new drugs. These developments have created an opportunity for
biopharmaceutical companies with cutting edge technologies to deliver new
classes of drugs which are safe and effective for treating a broad range of
important diseases in diverse individuals.

OUR STRATEGY

    We combine a variety of proprietary and non-proprietary technologies and
know-how to systematically study genes in the context of disease and to discover
and develop proprietary therapeutic and diagnostic human healthcare products and
services. We believe that our platform is unique in the breadth and diversity of
the technologies that it encompasses, and the degree to which we have integrated
these technologies. We use advanced capabilities in information technology,
robotics, genetics, genomics, molecular biology, cell biology, immunology,
biochemistry, chemistry, microfluidics and analytical instrumentation. By
combining these capabilities, we have created a series of high-throughput
processes that we believe have the potential to improve the efficiency of the
discovery and development of therapeutic and diagnostic products, as well as the
quality of these products. We believe that these products will change the
practice of medicine.

    Our business is built around three principal areas of focus:

    TECHNOLOGY.  We use many technologies in each step of the therapeutic and
diagnostic product discovery and development processes. We seek the most
advanced methods available to integrate into our technology platform, whether
developed internally or licensed from third parties, in order to increase the
efficiency and productivity of these processes. We believe that our platform
will enable us to:

    - identify commercially important genes;

    - elucidate their functions;

    - validate targets for product development;

    - identify and develop drug and diagnostic candidates for clinical
      development; and

    - bring novel personalized medicines to the market.

    THERAPEUTICS.  We have three fields of major emphasis: cancer, metabolic
diseases, including obesity, and inflammation. We also have significant programs
in infectious diseases, cardiovascular diseases and diseases of the central
nervous system. We seek to discover disease-related genes, produce validated
drug targets and drug leads, and develop and commercialize new, proprietary
drugs to treat major human illnesses. We direct these efforts at both
small-molecule drugs, which are typically formulated into pills for oral
consumption, as well as monoclonal antibodies and proteins, which are typically
only available in injectable form.

    PREDICTIVE MEDICINE.  We seek to develop products and services that will
provide clinicians and pharmaceutical researchers with information that enables
them to make better informed decisions about drug treatment and other aspects of
patient management. Our core areas of focus include
Diagnomics-Registered Trademark- products and pharmacogenomics. A
Diagnomics-Registered Trademark- product is a gene-based diagnostic test to
determine the patient's medical status and facilitate cost-effective treatment.
Pharmacogenomics is the identification of genes, or their activity, associated
with responsiveness to particular drugs. We believe that predictive medicine
products and services will enable physicians to customize medical treatment by
providing them with the ability to identify the genetic basis for a patient's
disease and select the most appropriate drugs and treatment regimen for the
particular patient.

                                       4
<PAGE>
    The key initiatives to implement our strategy are:

    ESTABLISH AND EXPAND STRATEGIC ALLIANCES.  Based on the strength of our
technology platform and product development pipeline, we have established a
series of strategic alliances with major pharmaceutical and biotechnology
companies. These alliances provide us with substantial revenues and other
financing, furnish us with access to important technology, broaden our product
development pipeline and reduce our product development risks. These alliances
also enhance our ability to bring products to market because of our
collaborators' substantial resources and expertise in research, preclinical and
clinical development, regulatory issues, manufacturing and marketing.

    EXPAND DOWNSTREAM PIPELINE AND OTHER SKILLS THROUGH ACQUISITIONS.  We
continually consider joint development, merger and other acquisition
opportunities that may provide us with access to products currently on the
market or which are in later stages of commercial development or may bring us
scientific or other skills that enhance our existing capabilities. For example,
through our merger with LeukoSite, Inc. in December 1999, we obtained six drug
candidates in clinical development and more than 12 preclinical development
programs. In addition, as a result of the LeukoSite merger, we augmented our
capabilities in the areas of immunology, preclinical and clinical development
and regulatory affairs. Our acquisition of Cambridge Discovery Chemistry Ltd. in
July 2000 added approximately 85 expert chemists, many with significant
pharmaceutical chemistry experience, to our drug discovery team, substantially
increasing our capabilities in medicinal and computational chemistry. We believe
that integrating these acquired capabilities with our other resources will
facilitate bringing our internally developed products to market quickly and
efficiently.

    ENHANCE PROPRIETARY TECHNOLOGY PLATFORM.  We are committed to continually
enhancing our technology platform by incorporating the latest technological
advances. Our technology enhancement activities are based on our own internal
development efforts and our program to identify, evaluate and integrate
technologies licensed from third parties. The quality of our technology platform
has been central to our ability to attract a broad range of strategic alliances
with major pharmaceutical and biotechnology companies. Our platform also has
enabled us to create a technology transfer alliance in the area of agriculture
with Monsanto Company, and a broad technology transfer alliance with Aventis.

                                       5
<PAGE>
OUR TECHNOLOGY

    Our comprehensive and industrialized technology platform is based on
multiple, parallel approaches to high-throughput product discovery and
development which are integrated through the latest advances in enabling
technologies and informatics. The enabling technologies include robotics,
fluidics, miniaturization and analytical instrumentation. Informatics consists
of the tracking, synthesizing and interpretation of the enormous volumes of data
generated in high-throughput discovery of genes, drug targets and drugs.

    The following chart illustrates how we apply various processes of our
technology platform to the principal steps in the discovery and development of
drugs, spanning from gene to patient.

[Graphic depiction of a chart which summarizes the application of various
processes of our technology platform (described on page 6 and 7) to the
principal steps in the drug discovery and development process]

    - HUMAN, MOUSE AND MICROBIAL GENETICS involve the identification of genes
      associated with diseases or with the ability of microbes to survive.

    - HIGH-THROUGHPUT SEQUENCING enables the rapid determination of DNA sequence
      information from large numbers of genes.

    - EXPRESSION CLONING means the isolation and identification of genes
      according to the biological properties of the proteins they encode.

    - TRANSCRIPTIONAL PROFILING is the rapid identification of genes whose
      activity in the body changes under disease conditions.

                                       6
<PAGE>
    - FUNCTIONAL GENOMICS are the assignment of biochemical functions and
      disease roles to gene products and the selection of the relatively small
      number of gene products that will be appropriate targets for therapeutic
      intervention.

    - PROTEOMICS constitutes the identification of proteins, or changes to
      proteins, associated with particular diseases.

    - COMPUTATIONAL BIOLOGY is the rapid analysis of the DNA sequences of genes
      to identify those which encode potential targets for drugs.

    - BENCH BIOLOGY, using cellular and animal models, is utilized for the
      experimental confirmation of hypotheses that particular genes or proteins
      could be good targets for drugs.

    - PATHWAY PROFILING identifies multiple genes that may be involved in the
      initiation, progression or maintenance of a disease.

    - PHARMACOGENOMICS constitutes the identification of genes, or their
      activity, associated with responsiveness to particular drugs.

    - CHEMISTRY is utilized for the identification and optimization of
      small-molecule compounds active against particular drug targets.

    - COMPUTATIONAL CHEMISTRY is employed to enable the modeling and analysis of
      chemical structures and their interactions with drug targets.

    - PREDICTIVE PHARMACOLOGY enables the prediction of likely behaviors of drug
      candidates when they are administered to humans.

    - CLINICAL RESEARCH is conducted to assess the safety and efficacy of drugs
      in humans.

    - REGULATORY AFFAIRS is the process of gaining necessary approvals from the
      appropriate governmental agencies that regulate the testing and marketing
      of drugs.

                                       7
<PAGE>
THERAPEUTICS--CLINICAL PROGRAMS

    We have six drug candidates in clinical development. The following chart
identifies each of these clinical drug candidates, and the respective disease
indication, our partners or collaborators for these clinical programs and the
current phase of the clinical programs.

<TABLE>
<CAPTION>
                              DISEASE
PRODUCT                     INDICATION        PARTNER/COLLABORATOR      CLINICAL PHASE
-------                ---------------------  ---------------------  ---------------------
<S>                    <C>                    <C>                    <C>
CAMPATH-Registered Trademark- Cancer (Chronic 50/50 partnership      Biologics License
(alemtuzumab)          lymphocytic leukemia)  between Millennium     Application submitted
monoclonal antibody                           and ILEX Products,     December 1999; on
                                              Inc.; distribution     December 14, 2000,
                                              agreement with         the Oncologic Drugs
                                              Schering AG/Berlex     Advisory Committee to
                                              Laboratories           the FDA recommended
                                                                     accelerated approval
                                                                     for patients with
                                                                     chronic lymphocytic
                                                                     leukemia who have
                                                                     been unsuccessfully
                                                                     treated with
                                                                     alkylating agents and
                                                                     have not responded to
                                                                     therapy with the drug
                                                                     fludarabine; on
                                                                     February 20, 2001,
                                                                     the FDA issued a
                                                                     Class I complete
                                                                     response letter

CAMPATH-Registered Trademark- Multiple sclerosis Same as above       Phase II
(alemtuzumab)
monoclonal antibody

CAMPATH-Registered Trademark- Transplantation Same as above          Phase II
(alemtuzumab)
monoclonal antibody

LDP-02                 Inflammatory bowel     Genentech              Phase IIb
                       disease

LDP-977                Asthma                 Marketing agreement    Phase IIa
                                              with Taisho in Asia
                                              and Europe

LDP-01                 Stroke                 none                   Phase IIa

LDP-341                Cancer                 none                   Phase II

LDP-519                Stroke                 none                   Phase I
</TABLE>

    Human clinical trials typically are conducted in three sequential phases,
although phases may overlap. Phase I trials consist of testing the product in a
small number of patients or healthy volunteers, primarily for safety, in one or
more dosages, as well as characterization of a drug's pharmacokinetic or
pharmacodynamic profile. In Phase II, in addition to safety, the efficacy of the
product is evaluated. Phase III trials typically involve additional testing for
safety and clinical efficacy in an expanded population.

                                       8
<PAGE>
THERAPEUTICS--RESEARCH AND DEVELOPMENT PROGRAMS

    Using our advanced technology platform, we seek to discover and develop
proprietary therapeutic and diagnostic human healthcare products and services to
detect, treat and manage a broad array of illnesses. We have three fields of
major emphasis: cancer; metabolic diseases, including obesity; and inflammation.
We also have significant programs in infectious diseases, cardiovascular
diseases and diseases of the central nervous system. The following is a summary
of our principal research and development programs:

    CANCER

    In the field of cancer, or oncology, we are engaged in clinical development
of two compounds, and in target and drug discovery, primarily through strategic
alliances. Our programs address a variety of cancers, including leukemia,
prostate, breast, lung, colorectal, multiple myeloma, non-Hodgkin's lymphoma and
melanoma.

    The following two cancer product candidates are in clinical trials:

    The CAMPATH-REGISTERED TRADEMARK- (alemtuzumab) product candidate is a
humanized monoclonal antibody being evaluated for the treatment of patients with
chronic lymphocytic leukemia, which is the most prevalent form of adult
leukemia. The CAMPATH-Registered Trademark- monoclonal antibody is being
developed by Millennium & ILEX Partners, L.P., our joint venture with ILEX
Products, Inc., a subsidiary of ILEX Oncology, Inc. The partnership completed
the submission to the U.S. Food and Drug Administration in December 1999 of a
biologics license application for the CAMPATH-Registered Trademark- product
candidate for patients who are not responsive to traditional therapy. The FDA
has granted fast track status to its review of this application. On
December 14, 2000, the Oncologic Drugs Advisory Committee to the FDA recommended
accelerated approval for patients with chronic lymphocytic leukemia who have
been unsuccessfully treated with alkylating agents and have not responded to
therapy with the drug fludarabine. On February 20, 2001, the FDA issued a
Class I complete response letter. In the letter, the FDA indicated that the
timeframe for accelerated approval has been extended for a 60-day period.
Millennium & ILEX Partners expects to complete ongoing discussions with the FDA
on final package labeling and design of a post-marketing confirmatory study for
CAMPATH-Registered Trademark- during this time. The partnership has entered into
a worldwide, other than the Far East, distribution agreement with Schering AG
and its affiliate, Berlex Laboratories. The CAMPATH-Registered Trademark-
monoclonal antibody has received an orphan drug designation from the FDA, which
may entitle Millennium & ILEX Partners to a seven-year marketing exclusivity
period in the United States for the CAMPATH-Registered Trademark- product
candidate.

    LDP-341 is a small-molecule drug candidate for the treatment of diverse
cancers. LDP-341 has a unique mechanism of action, inhibition of the proteasome,
which is the cellular component responsible for protein degradation. We
completed Phase I clinical trials of LDP-341 for the treatment of multiple
myeloma in early 2001. We began a Phase II clinical trial of LDP-341 for the
treatment of multiple myeloma in the first quarter of 2000, and we expect to
begin a series of Phase I/II and Phase II clinical trials of LDP-341 for the
treatment of additional oncology indications in solid tumors as well as
hematological malignancies as both a single agent and in combination with other
chemotherapeutic agents later in 2001.

    We have entered into two strategic alliances for target and drug discovery
in cancer:

    LILLY.  We have an alliance with Lilly focused on finding small-molecule
drug targets in select areas of cancer, including prostate cancer and mechanisms
of drug resistance. We received four milestone payments from Lilly during 2000
under this alliance for the delivery of three cancer drug candidate genes and
the acceptance of one validated target for cancer drugs.

    BAYER.  Our multi-disease alliance with Bayer includes discovery of
small-molecule drug targets for areas of cancer that fall outside of our Lilly
collaboration.

                                       9
<PAGE>
    METABOLIC DISEASES

    The field of metabolic diseases includes obesity, type 2 diabetes and
wasting disorders, such as cancer cachexia. In March 2001, we entered into a
broad alliance with Abbott Laboratories that includes joint development and
commercialization of drugs for the treatment and management of obesity and
type 2 diabetes. Both companies are contributing their research pipelines in
these disease areas to the collaboration, which will include more than
35 projects at the outset. Other targets in the field of metabolic diseases that
we are pursuing independently of our agreement with Abbott include MC4, a target
for the regulation of food intake that we are pursuing for cancer cachexia and
other wasting disorders.

    INFLAMMATION

    Inflammation encompasses a broad spectrum of human diseases and conditions,
including rheumatoid arthritis, asthma and chronic obstructive pulmonary
disease, multiple sclerosis, inflammatory bowel disease and stroke. In
June 2000, we entered into a broad agreement in the field of inflammation with
Aventis Pharmaceuticals that includes joint development and commercialization of
drugs for the treatment of specified inflammatory diseases. Our agreement with
Aventis covers a substantial portion of our research and development program in
inflammation.

    In the field of inflammation, we have four products in clinical development:

    - LDP-977 is a small-molecule drug candidate for the treatment of asthma.
      LDP-977 is designed to selectively inhibit the production of leukotrienes,
      a class of molecules that plays an important role in bronchial asthma. A
      Phase IIa trial of LDP-977 has been completed and we expect to begin Phase
      IIb trials in patients with asthma later this year. In January 2000, we
      entered into an agreement with Taisho Pharmaceutical Company, Ltd.
      relating to the development, marketing and sale of LDP-977 in Europe and
      Asia.

    - LDP-519 is a small-molecule drug candidate for the treatment of
      post-ischemic reperfusion injury, which is inflammatory damage that occurs
      when blood supply to a tissue is restored after an interruption such as
      that resulting from organ transplantation, stroke or myocardial
      infarction. We completed a Phase I clinical trial of LDP-519 in 2000. As
      with LDP-341, LDP-519 acts through the inhibition of the proteasome.

    - LDP-02 is a humanized monoclonal antibody for the treatment and management
      of patients with inflammatory bowel disease, including ulcerative colitis
      and Crohn's disease. We have a collaboration agreement with
      Genentech, Inc. for the development and commercialization of LDP-02. We
      are currently enrolling patients for both a Phase II clinical trial of
      LDP-02 for the treatment of Crohn's disease and a Phase IIb clinical trial
      for the treatment of ulcerative colitis.

    - LDP-01 is a humanized monoclonal antibody for prevention of post-ischemic
      reperfusion injury. We completed a Phase IIa clinical trial of LDP-01 in
      renal transplantation 1999. In 2000 we completed enrollment of a
      Phase I/II study in patients with stroke.

    Outside of our collaboration with Aventis, we are also engaged in two other
strategic alliances for target-specific drug discovery and development in the
field of inflammation:

    ROCHE BIOSCIENCE.  We have an alliance with Roche Bioscience to develop a
small-molecule antagonist of a chemokine receptor known as CCR3 to block the
recruitment of inflammatory cells for the treatment of patients with asthma and
allergies.

    KYOWA HAKKO.  We have a collaboration agreement with Kyowa Hakko for the
discovery and development of small-molecule antagonists to chemokine receptors
for the treatment of inflammatory and autoimmune diseases.

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<PAGE>
    INFECTIOUS DISEASES

    BACTERIAL INFECTIONS.  We are engaged in identifying and validating new
targets for antibacterial drugs and in high-throughput screening to identify
potential lead compounds. We are conducting these activities in collaboration
with American Home Products. During the first four years of this alliance we
have delivered twelve antibacterial targets to American Home Products, and have
received multiple milestone and bonus payments in return. In January 2001, we
identified one pre-clinical antibacterial compound.

    VIRAL INFECTIONS.  Our multi-disease collaboration with Bayer includes the
discovery of drug targets that may enable the development of novel
small-molecule compounds for the treatment of patients with viral diseases.

    CARDIOVASCULAR DISEASES

    In the field of cardiovascular diseases, we are engaged in the
identification and validation of new drug targets. We are conducting this
activity in collaboration with Eli Lilly in connection with congestive heart
failure and with Bayer in connection with other cardiovascular diseases.

    CENTRAL NERVOUS SYSTEM DISEASES

    In the field of central nervous system diseases, we are engaged in the
identification and validation of new drug targets for the treatment of affective
disorders, schizophrenia, generalized depression, epilepsy and neurodegenerative
disorders, such as Alzheimer's disease. We have a strategic alliance with
American Home Products in the area of central nervous system diseases. We have
delivered seven novel genes to American Home Products under this alliance,
receiving milestone payments in return. The area of pain is also included in our
multi-disease alliance with Bayer.

PREDICTIVE MEDICINE

    An important strategic focus for us is the application of our technology
platform to develop products and services that will provide clinicians and
pharmaceutical researchers with information that enables them to make better
informed decisions about drug treatment and other aspects of patient management.
We are conducting this work through our MPMx division.

    MPMx is focusing its efforts on diagnostics and pharmacogenomic services and
expects to expand into the provision of information services related to patient
management.

    DIAGNOMICS-REGISTERED TRADEMARK- PRODUCTS

    Many current diagnostic tests are directed towards the symptoms, rather than
the causes, of the diseases that they are used to diagnose or monitor. As a
result, these tests generally provide information only about a patient's current
condition. In contrast, we are developing gene-based diagnostic tests, which we
call Diagnomics-Registered Trademark- tests, to assess the underlying causes of
diseases. We believe that Diagnomics-Registered Trademark- products and services
will provide information with inherent prognostic, therapeutic and economic
implications, facilitating a shift in medical care towards planned and
cost-effective treatment of the underlying causes of disease.

    We are engaged in two strategic collaborations as part of our
Diagnomics-Registered Trademark- program.

    BECTON DICKINSON.  In February 1999, we entered into a strategic alliance
with Becton Dickinson focused primarily on Diagnomics-Registered Trademark-
products for specified cancers. Under this agreement, we are undertaking
research to identify and deliver clinically validated diagnostic markers to
Becton Dickinson for skin, cervical, breast, ovarian, uterine and prostate
cancers. A diagnostic marker is a molecule or substance whose presence or
concentration can be measured in a biological sample taken from a

                                       11
<PAGE>
patient, providing useful information about the patient's status or future
prospects with respect to a particular disease or diseases. For example, under
license from Millennium, Becton Dickinson is developing the
Melastatin-Registered Trademark- product, a clinical marker to diagnose
melanoma. In June 2000, we entered into a licensing agreement with Becton
Dickinson in the area of colon cancer diagnostics. Under this agreement, Becton
Dickinson paid us a licensing fee in exchange for research and development
rights to select diagnostic markers and related intellectual property that we
develop in this disease area. We have also granted Becton Dickinson an option to
obtain a royalty-bearing, worldwide license from us to commercialize diagnostic
markers arising out of the research and development program.

    ROCHE DIAGNOSTICS.  In December 2000, we entered into a collaborative
research agreement with Roche Diagnostics, relating to the development of
diagnostic products for rheumatoid arthritis. Under the agreement, we have
granted Roche research and development rights to select diagnostic markers and
related intellectual property developed by us in this disease area. Roche has
agreed to pay us a licensing fee, funding for research, milestone payments and
royalties. We have granted Roche the right to commercialize, on a worldwide
basis, any diagnostic products resulting from the alliance. The research and
development program is for a term of three years.

    PHARMACOGENOMICS

    Different people often respond in different ways to the same drug. A drug
that is safe and effective in one patient may be toxic or ineffective in
another. We believe that these differences in response, in part, reflect genetic
variations between the individuals concerned. Pharmacogenomic studies seek to
establish correlations between specific genetic variations and specific
responses to drugs. By establishing such correlations, pharmacogenomics may
permit both new and existing drugs to be targeted to those patients in whom they
are most likely to be both effective and safe. In November 1999, we entered into
a strategic alliance with Bristol-Myers Squibb focused primarily on the
application of pharmacogenomics to cancer treatments.

ALLIANCES

    A fundamental component of our business strategy is to form alliances with
major pharmaceutical and biotechnology companies. In general, our alliances fall
into three categories:

    - Alliances focused on particular diseases, in which we perform drug
      discovery research funded by our collaborators. The principal terms of our
      largest disease-focused alliances, with Bayer, Aventis and Abbott, are as
      follows:

     - We formed the Bayer alliance in September 1998. This alliance is for a
       five-year term and covers several disease areas, including cardiovascular
       disease, cancer, pain, blood diseases and viral infections. Under this
       alliance, we are eligible to receive up to $465 million from Bayer. Bayer
       has already made a $96.6 million equity investment and paid a portion of
       the research and development funding. By the end of 2000, we had
       delivered to Bayer more than 80 disease-relevant qualified drug targets
       for assay configuration, of which 15 qualified drug targets had moved
       into high-throughput screening or lead identification. In January 2001,
       we and Bayer announced our discovery of the first genome-derived
       small-molecule drug candidate to emerge from our joint research alliance.

     - We formed the Aventis alliance in June 2000. This alliance is for a
       five-year term and is primarily for collaborative research and
       development in the area of inflammation. In North America, we have agreed
       to share the responsibility for and cost of developing, manufacturing and
       marketing products arising from the alliance. Outside of North America,
       Aventis is responsible for and will bear the cost of developing,
       manufacturing and marketing products arising from the alliance, and has a
       royalty obligation to us. Our arrangement with Aventis also includes an
       equity investment by Aventis, under which we are eligible to receive up
       to

                                       12
<PAGE>
       $250 million, and a technology transfer agreement, under which we are
       eligible to receive up to $200 million. We have already received a
       portion of this funding.

     - We formed the Abbott alliance in March 2001. This alliance is for a
       five-year term, and is primarily for collaborative research and
       development in the area of metabolic diseases. We and Abbott have agreed
       to share equally the cost of developing, manufacturing and marketing
       products on a worldwide basis. Our arrangement with Abbott also includes
       an equity investment by Abbott, under which we are eligible to receive up
       to $250 million, and a technology exchange and development agreement.

    - Alliances focused on drug discovery for specific targets or the
      development of a specific product candidate. For example, we have an
      alliance with Roche Bioscience to develop a small-molecule antagonist of a
      chemokine receptor known as CCR3 to block the recruitment of inflammatory
      cells for the treatment of patients with asthma and allergies. One of our
      key product development alliances is with ILEX Products, Inc., focused on
      the clinical development of the CAMPATH-Registered Trademark- monoclonal
      antibody for the treatment of chronic lymphocytic leukemia.

    - Alliances based on the transfer of our technology platform. The principal
      terms of our largest technology transfer alliances, with Monsanto Company
      and Aventis, are as follows:

     - We formed a five-year alliance with Monsanto in October 1997. In
       connection with this collaboration, Monsanto established a wholly-owned
       subsidiary, Cereon Genomics, based in Cambridge, Massachusetts. We have
       granted Cereon and Monsanto an exclusive royalty-bearing worldwide
       license to use our genomics technologies in the fields of plant
       agriculture and aspects of dairy agriculture. We also granted a
       non-exclusive worldwide license to Monsanto to apply our genomics
       technologies outside of these fields. Under this collaboration, we are
       eligible to receive up to $218 million, plus royalties. We have already
       received a substantial portion of this funding.

     - We formed a five-year alliance with Aventis in June 2000. This alliance
       includes a broad non-exclusive technology transfer arrangement under
       which we are transferring key elements of our technology platform to
       Aventis to enhance Aventis's current capabilities. This alliance also
       includes a technology development component under which we will work
       collaboratively with Aventis to develop further enhancements to our
       technology platform. Of the total $450 million we are eligible to receive
       under the alliance with Aventis, we are eligible to receive up to
       $200 million in funding in connection with the technology transfer
       arrangement. We have already received a portion of this funding.

    Our disease-focused alliance agreements and our target-specific and
product-specific alliance agreements generally provide for the funding by our
collaborator of some portion of a research program to be conducted by us in
conjunction with the collaborator, and the grant of license rights by us to our
collaborator to develop and commercialize specified products and services
resulting from discoveries made in the research program. In many cases, we have
retained development and commercialization rights for ourselves to certain
therapeutic and diagnostic applications of discoveries made in the research
program. In some cases, if specified research, product development or regulatory
milestones are achieved, our collaborators are obligated to make milestones
payments to us. In addition, our alliance agreements generally entitle us to
royalties or a share of profits on product sales, which are payable for the life
of the applicable patents or a specified period of time.

    The agreements governing these alliances are subject to various
contingencies, including in some cases, early termination rights. We have
generally agreed with our collaborators that, for a specified period of time
while the alliance is in place, we will not conduct research, independently or
with third parties, in the fields covered by the alliance agreement.

                                       13
<PAGE>
    Our technology transfer alliance agreements generally provide for the
non-exclusive grant of license rights by us to our collaborator to use our
technology platform for biotechnology research and development. Typically, our
collaborators are obligated to make periodic payments to us and/or to pay us
royalties on products they develop using our technology platform.

    Our ability to obtain ongoing funding for our sponsored research and
technology transfer programs and certain milestone payments under these
programs, if any, depends on these alliances continuing for their full term and
on our ability to achieve specified research objectives.

    Since inception, substantially all of our revenues have been derived from
our strategic alliances. For the twelve-month period ended December 31, 2000,
revenues from our strategic alliance with Bayer accounted for approximately 27%
of our total revenues, revenues from our strategic alliance with Monsanto
accounted for approximately 22% of our total revenues, and revenues from our
strategic alliance with Aventis accounted for approximately 10% of our total
revenues.

                                       14
<PAGE>
    The following table sets forth information about our principal current
alliances:

<TABLE>
<CAPTION>
        YEAR
     ESTABLISHED               COLLABORATOR               ALLIANCE TYPE                  SUBJECT
---------------------   --------------------------  --------------------------  --------------------------
<C>                     <S>                         <C>                         <C>
        2001            Abbott                      Disease-focused,            Metabolic diseases,
                                                    technology exchange and     technology
                                                    development
        2000            Roche Diagnostics           Disease-focused             Rheumatoid arthritis
                                                                                diagnostics
        2000            Becton Dickinson            Disease-focused             Colon cancer diagnostics
        2000            Aventis                     Disease-focused,            Inflammation, technology
                                                    technology transfer and
                                                    technology development
        2000            Taisho Pharmaceutical       Product development         LDP-977 for asthma
        1999            Schering AG/Berlex          Product distribution        CAMPATH-Registered Trademark-
                        Laboratories                                            monoclonal antibody
        1999            Bristol-Myers Squibb        Disease-focused             Cancer pharmacogenomics
        1999            Becton Dickinson            Disease-focused             Cancer diagnostics
        1998            Bayer                       Disease-focused             Cardiovascular diseases,
                                                                                cancer, pain, blood
                                                                                diseases and viral
                                                                                infections
        1997            Kyowa Hakko                 Target-specific discovery   CCR1 and CXCR3 chemokine
                                                                                receptors
        1997            Monsanto                    Technology transfer         Agriculture
        1997            Genentech                   Product development         LDP-02
        1996            American Home Products      Disease-focused             Bacterial diseases
        1996            ILEX Products, Inc.         Product development         CAMPATH-Registered Trademark-
                                                                                monoclonal antibody
        1996            Roche Bioscience            Target-specific discovery   CCR3 chemokine receptor
        1996            American Home Products      Disease-focused and         Central nervous system
                                                    technology transfer         diseases, technology
        1996            Eli Lilly                   Disease-focused             Cancer
        1995            Aventis                     Target-specific discovery   NF-kB Inflammation
        1995            Eli Lilly                   Disease-focused and         cardiovascular diseases,
                                                    technology transfer         technology
</TABLE>

RESEARCH AND DEVELOPMENT

    Company-sponsored research and development expenses totaled $77.0 million in
2000 and $19.3 million in 1999. Our strategic collaborator-sponsored research
and development expenditures totaled $191.7 million in 2000 and $140.6 million
in 1999. Substantially all of our research and development expenses were
sponsored by our strategic collaborators in 1998. In calculating strategic-
collaborator sponsored research and development expenditures, we have included
expenditures in programs for which we receive current funding as well as
programs for which we may receive future compensation as milestone payments,
royalties or otherwise even though we provide the current funding. Our research
and development expenditures in 2000 increased significantly over 1999 as we
added personnel and expanded research and development activities to accommodate
existing and added strategic alliances and development efforts, and as a result
of the addition, through our acquisition of LeukoSite, Inc., in December 1999,
of several preclinical product candidates and six product candidates in clinical
trials.

                                       15
<PAGE>
PATENTS AND PROPRIETARY RIGHTS

    We generally seek United States and foreign patent protection for the genes,
proteins, antibodies and small-molecule drug leads that we discover, as well as
therapeutic, diagnostic and pharmacogenomic products and processes, drug
screening methodologies and other inventions based on such genes, proteins,
antibodies and small-molecules. We also seek patent protection or rely upon
trade secret rights to protect certain other technologies which may be used to
discover and characterize genes, proteins, antibodies and small-molecules and
which may be used to develop novel therapeutic, diagnostic and pharmacogenomic
products and processes. As of December 31, 2000, we and our subsidiaries owned
138 U.S. patents and 10 foreign patents, and more than 1,400 pending U.S. and
foreign patent applications. Our issued U.S. and foreign patents expire on
various dates between 2012 and 2019.

    We own three issued U.S. patents and several pending U.S. and foreign patent
applications related to the Melastatin-Registered Trademark- product. We are an
exclusive licensee under two issued U.S. patents and pending U.S. and foreign
patent applications related to LDP-01. The LDP-01 license extends through the
expiration of the licensed patents in 2016. We also own pending U.S. and foreign
patent applications related to LDP-02. We also own issued U.S. patents, granted
foreign patents and pending U.S. and foreign applications related to LDP-977 and
LDP-341. We also are the exclusive licensee of an issued U.S. patent and pending
U.S. and foreign applications and we own an issued U.S. patent and pending U.S.
and foreign applications related to LDP-519. The LDP-519 license extends through
the expiration of the licensed patents in 2015.

    We have entered into several license agreements under which we have acquired
certain rights to use proprietary technologies and compounds. In particular, we
have exclusive and non-exclusive licenses as set forth in an agreement with BTG
International Ltd. to make, use and sell products containing the
CAMPATH-Registered Trademark- monoclonal antibody. This license extends through
the expiration of the licensed patents in 2015. The agreement requires the
payment of royalties to BTG. In addition, BTG may terminate the license
agreement under certain circumstances, including in the event of a breach of the
agreement or if there is a failure to meet commercialization requirements.

    In the event our in-licensed rights were terminated or modified, our ability
to manufacture and sell products using the covered technologies would be
materially adversely affected.

    We also currently own the following trademarks and servicemarks: "Changing
the Practice of Medicine"(SM), Chemoprediction-TM-,
Cytomed-Registered Trademark-, DGx-Registered Trademark-,
Diagnomics-Registered Trademark-, Expression Explorer-Registered Trademark-,
G2P-TM-, "Gene to Patient"-TM-, the Millennium "M" logo and design (registered),
MBio-TM-, Melastatin-Registered Trademark-, Millennium-Registered Trademark-,
Millennium Biotherapeutics-Registered Trademark-, Millennium Information-TM-,
Millennium Pharmaceuticals-Registered Trademark-, Millennium Predictive
Medicine-Registered Trademark-, MPMx-Registered Trademark-,
Pharmacoinformatics-TM-, Protein Explorer-TM-, RADE-TM-, Sequence
Explorer-Registered Trademark-, SmartChip-Registered Trademark-, and
"Transcending the Limits of Medicine"(SM). CAMPATH-Registered Trademark- is a
registered trademark, and MABCAMPATH-TM- is a trademark, of Millennium & ILEX
Partners.

GOVERNMENT REGULATION

    OVERVIEW OF FDA REGULATIONS

    Biological and non-biological drugs, including our products under
development, and medical devices, are subject to extensive and rigorous
regulation by the federal government, principally the FDA, and by state and
local governments. Federal and state statutes and regulations govern, among
other things, the research, development, testing, manufacture, storage,
recordkeeping, reporting, labeling, distribution, promotion and marketing of
pharmaceutical and diagnostic device products. If these products are marketed
abroad, they also are subject to export requirements and to regulation by
foreign governments. Failure to comply with applicable regulatory requirements
may subject a company to administrative or judicially imposed sanctions, such as
warning letters, product recalls, product seizure, injunctions, civil penalties,
criminal prosecution, suspension of production, license revocation, or FDA
refusal to approve pending marketing applications.

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<PAGE>
    The applicable regulatory clearance process, which must be completed prior
to the commercialization of a product, is lengthy and expensive. FDA
requirements for our products under development vary depending upon whether the
product is a non-biological drug or biological drug. Our monoclonal antibody
product candidates currently in human clinical or late preclinical development
(I.E., the CAMPATH-Registered Trademark- monoclonal antibody, LDP-01 and LDP-02)
are regulated by the FDA as biological drugs. We believe that products under
development in our small-molecule antagonist program will be regulated as
non-biological drugs. We are also developing diagnostic products that will be
regulated as medical devices.

    REGULATION OF NON-BIOLOGICAL DRUGS AND BIOLOGICAL DRUGS

    Non-biological drugs and biological drugs are subject to some of the same
laws and regulations. Ultimately, however, they are approved under somewhat
different regulatory frameworks. Product development and approval within either
regulatory framework takes a number of years, involves the expenditure of
substantial resources and is uncertain. Many non-biological drugs and biological
drugs that initially appear promising ultimately do not reach the market because
they are not found to be safe or effective under the standards applied by FDA,
or cannot meet the FDA's other regulatory requirements for product manufacture
and sale. In addition, the current regulatory framework may change or additional
regulations may arise at any stage of our product development that may affect
approval, delay the submission or review of an application or require additional
expenditures by us.

    The activities required before a new non-biological drug or biological drug
can be marketed in the United States begin primarily with preclinical testing.
Preclinical tests include laboratory evaluation of product chemistry, toxicology
and other characteristics. Animal studies are used to assess the potential
safety and efficacy of the product as formulated. Many preclinical studies are
regulated by the FDA under the current Good Laboratory Practice, or GLP,
regulations. Violations of these regulations can, in some cases, lead to
invalidation of the studies, requiring such studies to be replicated if the data
are to be submitted to the FDA in support of a marketing application.

    The entire body of preclinical development work necessary to administer
investigational non-biological drugs and biological drugs to human volunteers or
patients is summarized in an investigational new drug application, or IND,
submitted to the FDA. FDA regulations provide that human clinical trials may
begin 30 days following submission of an IND application, unless the FDA advises
otherwise or requests additional information, clarification or additional time
to review the application. Once trials have commenced, investigators must
promptly report all unanticipated risks and adverse events that occur to human
subjects to the Institutional Review Board, or IRB, and the drug sponsor during
clinical trials. The sponsor must promptly report an adverse event that is
unexpected, serious, and possibly drug-related to the FDA. The FDA may stop the
trials by placing a "clinical hold" on such trials because of concerns about,
for example, the safety of the product being tested. Such holds can cause
substantial delay and in some cases may require abandonment of a product.

    Clinical testing in humans involves the administration of the
investigational non-biological drug or biological drug to healthy volunteers or
to patients under the supervision of a qualified principal investigator, usually
a physician, pursuant to an FDA reviewed protocol. Each clinical study is
conducted under the auspices of an IRB at each academic center, hospital or
other research facility at which the study will be conducted. The IRB must
approve the protocol and informed consent documents before a clinical trial can
proceed. An IRB will consider, among other things, ethical factors, the safety
of human subjects, whether informed consent was properly obtained, and the
possible liability of the institution.

    Human clinical trials typically are conducted in three sequential phases,
but the phases may overlap. Phase I clinical trials consist of testing the
product in a small number of patients or normal volunteers, primarily for
safety, in one or more dosages, as well as characterization of a drug's
pharmacokinetic and/or pharmacodynamic profile. In Phase II clinical trials, in
addition to safety, the

                                       17
<PAGE>
efficacy of the product is evaluated in a patient population. Phase III clinical
trials typically involve additional testing for safety and clinical efficacy in
an expanded population at multiple geographically dispersed sites. A clinical
plan, or "protocol," is submitted to the FDA prior to commencement of each
clinical trial. The FDA may order the temporary or permanent discontinuation of
a clinical trial at any time for a variety of reasons, particularly if safety
concerns exist.

    Upon completion of clinical trials, a company seeking FDA approval to market
a new non-biological drug must file a new drug application, or NDA, with the
FDA. In addition to reports of the preclinical and clinical trials conducted
under the U.S. IND application, the NDA includes information pertaining to the
preparation of the drug substance, analytical methods, drug product formulation,
detail on the manufacture of finished products and proposed product packaging
and labeling. In addition to reports of the preclinical and clinical trials
conducted under the U.S. IND application, the marketing application also
includes other data and information relating to the product's safety and
efficacy. The manufacturing facility must also pass an FDA current Good
Manufacturing Practices (cGMP) inspection before the marketing application can
be approved.

    A company seeking FDA approval to market a biological drug is required to
prepare and submit additional information for inclusion in a single biologics
license application, or BLA, which is similar in content to the NDA. To approve
a BLA, the FDA must determine that the product is effective and that the
manufacturing establishment and product meet applicable requirements to ensure
the safety, purity, and potency of the product.

    Submission of a standard NDA or BLA does not assure FDA approval for
marketing. After the application is submitted, the FDA initially determines
whether all pertinent data and information have been submitted before accepting
the application for filing. After the application is considered filed, the FDA
begins its substantive review. The FDA also typically will request a review and
recommendation by an advisory committee consisting of outside experts. The FDA
may accept or reject the advisory committee's recommendations, or accept them
with modifications. The application review process generally takes one to three
years to complete, although reviews of non-biological drugs and biological drugs
that meet a medical need for serious or life-threatening diseases may be
accelerated or prioritized for a six month review. However, the process may take
substantially longer if, among other things, the review is complex, the
information is not complete, or the FDA has questions or concerns about the
safety or efficacy of a product. In order to gain approval, the FDA may require
post-marketing studies to be conducted and may impose other conditions as well.
Expedited or accelerated approvals may require additional larger confirmatory
clinical studies to be conducted following approval.

    In addition, the FDA may, in some circumstances, impose restrictions on the
use of the non-biological drug or biological product that may be difficult and
expensive to administer. Product approval may be withdrawn if compliance with
regulatory requirements is not maintained or if adverse events are reported
after the product reaches the market. The FDA requires reporting of certain
safety and other information that becomes known to a manufacturer of an approved
non-biological drug or biological product. These reports may be voluntarily
provided to the company and/or the FDA by physicians and other healthcare
professionals. Manufacturing and sale may also be disrupted, or delayed, in the
event of failure to comply with all required current Good Manufacturing
Practices as determined by FDA investigators in periodic inspections of
manufacturing facilities. In addition, changes in the product or the
manufacturing facility may require the submission of a supplemental NDA or BLA.

    Upon approval, a prescription non-biological drug or biological product may
only be marketed for the approved indications in the approved dosage forms and
at the approved dosage. In addition, the nature of marketing claims that we will
be permitted to make in the labeling and advertising of our products will be
limited to those specified in an FDA clearance or approval. Claims exceeding
those that are cleared or approved will constitute violation of the Food, Drug
and Cosmetic Act.

                                       18
<PAGE>
    ORPHAN DRUG ACT

    Under the Orphan Drug Act, a sponsor of a marketing application may seek to
obtain a seven-year period of marketing exclusivity for a non-biological or
biological drug intended to treat a rare disease or condition, which is defined
as a disease or condition that occurs in fewer than 200,000 patients. Orphan
drugs provide significant tax advantages to a sponsor. Before a product can
receive marketing exclusivity associated with orphan product status, it must
receive orphan product designation. If a drug is designated as an orphan drug or
biologic by the FDA, the sponsor of the first FDA approved application of the
drug or biologic for the specified indication receives seven years of marketing
exclusivity, subject to certain limitations.

    Millennium & ILEX Partners, L.P. has obtained orphan product designation for
the CAMPATH-Registered Trademark- monoclonal antibody for the treatment of
patients with chronic lymphocytic leukemia. We may seek such designation for
other products as well. However, other companies may also receive orphan
designation and obtain the FDA marketing approval before we obtain such
approval. If another company obtains marketing approval for the same drug or
biologic first and receives seven-year marketing exclusivity, we would not be
permitted by the FDA to market our product in the United States for the same use
during the exclusivity period. In addition, we could incur substantial costs in
asserting any rights to prevent such uses we may have under the Orphan Drug Act.
If we receive seven-year marketing exclusivity, FDA may rescind the period of
exclusivity under certain circumstances, including our failure to assure a
sufficient quantity of the drug.

    The Orphan Drug Act is subject to amendment by Congress, which has
periodically considered amendments that would change the substantive provisions
of the law, including the market exclusivity provisions. There can be no
assurance that the market exclusivity provisions under this Act will still be
the same when the CAMPATH-Registered Trademark- monoclonal antibody or other
product candidates are approved.

    FOREIGN REGULATIONS

    We will also be subject to a variety of foreign regulations governing
clinical trials and sales of our products. Whether or not FDA approval has been
obtained, approval of a product by the comparable regulatory authorities of
foreign countries must be obtained prior to the commencement of marketing of the
product in those countries. The approval process varies from country to country
and the time may be longer or shorter than that required for FDA approval.

    OTHER REGULATIONS

    In addition to regulations enforced by the FDA, we also are subject to
regulation under the Occupational Safety and Health Act, the Environmental
Protection Act, the Toxic Substances Control Act, the Resource Conservation and
Recovery Act and other present and potential future federal, state or local
regulations. Millennium's research and development involves the controlled use
of hazardous materials, chemicals and various radioactive compounds. Although we
believe that our safety procedures for storing, handling, using and disposing of
such materials comply with the standards prescribed by applicable regulations,
the risk of accidental contaminations or injury from these materials cannot be
completely eliminated. In the event of such an accident, we could be held liable
for any damages that result and any such liability could have a material adverse
effect.

    REGULATION OF DIAGNOSTICS

    The FDA regulates the development, manufacture, and marketing of medical
devices including diagnostic products and reagents. The FDA has regulations that
set varying requirements for medical devices according to potential risk class.
Class I devices represent the lowest potential risk devices and are therefore
subject only to the general controls that include establishment registration,
product listing, the prohibition of mislabeling or adulteration, and a
requirement to comply with current federal Good

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Manufacturing Practices regulations. Premarket notification is required for some
Class I clinical diagnostic devices. Class II devices present greater risk than
Class I devices and are subject to special controls, such as guidelines or
performance standards, as well as the same general controls that are applicable
to Class I devices. Class II devices require premarket clearance to demonstrate
to the FDA the manufacturer's claims that the device is substantially equivalent
to other legally marketed devices, and meets generally accepted performance
criteria that may be required to demonstrate that the device is safe and
effective. Class III devices present a higher level of risk and are additionally
subject to rigorous demonstration of safety and effectiveness through the
premarket approval process.

    For some Class I and most Class II devices, a premarket notification must be
submitted to the FDA. Usually within 90 days of the receipt of this
notification, the FDA makes the determination whether the device submitted is
substantially equivalent to a legally marketed predicate device. A legally
marketed predicate device is one which was marketed prior to the passage of the
Medical Device Amendments of 1976, or a post-1976 device that has been
determined by the FDA to be substantially equivalent to the previously cleared
devices. A determination of substantial equivalence requires several FDA
findings: First, that the device has the same intended use as the legally
marketed device; and second, either that the device has the same technological
characteristics as the legally marketed predicate device, or, if it does not,
that the device is as safe and effective as the legally marketed predicate
device and does not present different questions about safety and effectiveness.
Class III devices require extensive clinical testing to prove safety and
effectiveness, and submission of the resulting data to the FDA as a premarket
approval application, or PMA. The FDA ordinarily will refer a new device PMA to
an advisory panel of outside experts for a recommendation on whether to approve
the application or to request additional testing.

    Where a PMA is required, FDA regulations require the demonstration of safety
and effectiveness, typically based upon extensive clinical trials. Fulfilling
the requirements of the PMA are costly and both the preparation and review are
time consuming, commonly taking from one to several years. Before granting
premarket approval, the FDA must inspect and find acceptable the proposed
manufacturing procedures and facilities. The FDA can also impose conditions of
approval, such as requirements for postmarketing study, or restrictions on sale,
distribution or use. The premarket approval regulations also require FDA
approval of most changes made after the tests have been approved.

    Analyte specific reagents, or ASRs, that are used by clinical laboratories
to conduct in-house assays or "home brew" tests are regulated by FDA under this
device classification scheme, and their sale, distribution, and use are
restricted under FDA regulations. The majority of ASRs are Class I and exempt
from premarket notification requirements, although they remain subject to other
FDA requirements such as good manufacturing practices, labeling, and reporting.
Some ASRs are Class II (for example, for blood bank tests) or Class III (for
example, for HIV and tuberculosis tests) and are subject to FDA premarket
review. ASRs for genetic testing or predictive genetic testing currently are
Class I and exempt from premarket review, although FDA has announced that the
agency may propose additional regulation of genetic tests if determined
appropriate following its ongoing evaluation of pertinent reports and
recommendations.

    MANUFACTURING REGULATION

    The manufacture of diagnostic products and reagents must be in accordance
with quality system regulations and current federal Good Manufacturing Practices
regulations. Diagnostic products and reagents are also subject to various
postmarketing requirements, such as complaint handling and reporting of adverse
events. Premarket approval products are also subject to annual reports. The FDA
typically inspects manufacturing facilities every two years.

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    CLINICAL LABORATORY IMPROVEMENT AMENDMENTS OF 1988

    All medical testing in the United States is regulated by the Health Care
Financing Administration according to the complexity of the testing as specified
under the Clinical Laboratory Improvement Amendments of 1988. CLIA regulations
establish three categories of laboratory tests, for which regulatory
requirements become increasingly stringent as the complexity of the test rises:
(1) tests that require little or no operator skill, which allows for a
certificate waiver of the regulations; (2) tests of moderate complexity; and
(3) high complexity tests which require significant operator skill or training.
Complexity categorization of diagnostic tests has been the responsibility of the
Centers for Disease Control and Prevention although that responsibility has
recently been transferred to the FDA. CLIA regulatory requirements apply to
facilities such as clinical laboratories, hospitals, and physician offices which
perform laboratory tests. All laboratories are subject to periodic inspection.
In addition, all laboratories performing tests of moderate or high complexity
must register with HCFA or an organization to whom HCFA has delegated such
authority. They also must meet requirements relating to personnel
qualifications, proficiency testing, quality assurance, and quality control. We
expect all genetic tests to be categorized as having moderate to high
complexity. "Home brew" tests using analyte specific reagents must be conducted
in a clinical laboratory meeting the requirements for high-complexity tests. In
practical terms, performing a test of high complexity means that the individual
supervising the test (generally, the physician, pathologist or laboratory
director) must be appropriately educated and trained, and the laboratory must be
certified for high complexity testing under CLIA.

    STATE REGULATION

    In addition to federal regulation, certain diagnostic tests will be subject
to a variety of state laws and regulations in those states where our products
may be marketed, sold or used. States also impose requirements on clinical
laboratories and regulate the ordering of laboratory tests, reporting of test
results and confidentiality of medical records.

MANUFACTURING

    We have limited manufacturing capabilities and ourselves produce only a few
of our compounds for research and development and preclinical testing. We rely
on third parties to manufacture most of our compounds for research, development,
preclinical and clinical trials. We generally expect to rely on our
collaborators or other third parties to maintain current Good Manufacturing
Practices and to manufacture the products for which we obtain regulatory
approval to market and sell. Our partnership with ILEX Products has entered into
a supply agreement with Boehringer Ingleheim for the production of the
CAMPATH-Registered Trademark- monoclonal antibody. Under most of our
collaboration agreements, our collaborators have the exclusive right to
manufacture products that result from their programs.

SALES AND MARKETING

    We do not currently have significant sales or marketing capabilities.

    We expect to rely on our strategic collaborators or on other third parties
to market most products that we may develop. For example, our partnership for
the CAMPATH-Registered Trademark- product candidate has entered into a
distribution agreement with Schering AG and its affiliate, Berlex Laboratories,
to distribute the CAMPATH-Registered Trademark- product candidate on a worldwide
basis, other than the Far East.

    At some time in the future, we plan to co-promote or ourselves market
several of the products that we may develop. We will be required to incur
significant additional expenditures in building sales, marketing and commercial
infrastructure to support this effort.

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COMPETITION

    We face intense competition from a wide range of pharmaceutical,
biotechnology and diagnostic companies, as well as academic and research
institutions and government agencies. Our competitors include organizations that
are pursuing the same or similar technologies as those which constitute our
technology platform and from organizations that are pursuing pharmaceutical or
diagnostic products that are competitive with our potential products. Many of
our competitors compete against us for strategic collaborators for their
research and development and commercialization programs.

    Principal competitive factors in our industry include:

    - the quality and breadth of an organization's technology;

    - the skill of an organization's employees and its ability to recruit and
      retain skilled employees;

    - an organization's intellectual property estate;

    - the range of capabilities from target identification and validation to
      drug discovery and development to manufacturing and marketing; and

    - the availability of substantial capital resources to fund discovery,
      development and commercialization activities.

    We believe that the quality and breadth of our technology platform, the
skill of our employees and our ability to recruit and retain skilled employees,
our aggressive program of seeking patent protection for gene discoveries, our
capabilities for early stage research and drug discovery and our capital
resources are competitive strengths. However, many large pharmaceutical and
biotechnology companies have significantly larger intellectual property estates
than we do, more substantial capital resources than we have, and greater
capabilities and experience than we do in preclinical and clinical development,
sales, marketing, manufacturing and regulatory affairs.

EMPLOYEES

    As of December 31, 2000, we had approximately 1,330 full-time employees, of
whom approximately 400 hold Ph.D. or M.D. degrees and approximately 340 hold
other advanced degrees. Approximately 1,070 of our employees are engaged in
research and development activities and approximately 260 are engaged in
business development, finance, operations support and administration. None of
our employees is represented by a collective bargaining agreement, nor have we
experienced work stoppages. We believe that relations with our employees are
good.

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<PAGE>
RISK FACTORS THAT MAY AFFECT RESULTS

    This Annual Report on Form 10-K, together with the accompanying letter to
shareholders, contains forward-looking statements, including statements about
our growth and future operating results, discovery and development of products,
potential acquisitions, strategic alliances and intellectual property. For this
purpose, any statement that is not a statement of historical fact should be
considered a forward-looking statement. We often use the words "believes,"
"anticipates," "plans," "expects," "intends" and similar expressions to help
identify forward-looking statements.

    There are a number of important factors that could cause Millennium's actual
results to differ materially from those indicated or implied by forward-looking
statements. Factors that could cause or contribute to such differences include
those discussed below, as well as those discussed elsewhere in this Form 10-K.
We disclaim any intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.

REGULATORY RISKS

WE HAVE NOT YET RECEIVED MARKETING APPROVAL FOR ANY PRODUCT OR SERVICE RESULTING
FROM OUR DEVELOPMENT EFFORTS AND MAY NOT BE ABLE TO OBTAIN ANY SUCH APPROVAL.

    We have completed development of only one product candidate, the
CAMPATH-Registered Trademark- monoclonal antibody, which we developed in our
partnership with ILEX Products, Inc. In December 1999, this partnership applied
to the U.S. Food and Drug Administration for approval to market this product. On
February 20, 2001, the FDA issued a Class I complete response letter. However,
it is possible that the FDA will not grant this marketing approval or, in order
to gain approval, the FDA may require post-marketing studies or larger
confirmatory clinical studies to be conducted and may impose other conditions
and restrictions that may be difficult and expensive to administer.

    All of the products that we are developing will require additional research
and development, extensive preclinical studies and clinical trials and
regulatory approval prior to any commercial sales. This process is lengthy,
often taking a number of years, and expensive. In some cases, the length of time
that it takes for us to achieve various regulatory approval milestones affects
the payments that we are eligible to receive under our strategic alliance
agreements.

    We may need to successfully address a number of technological challenges in
order to complete development of our products. Moreover, these products may not
be effective in treating any disease or may prove to have undesirable or
unintended side effects, toxicities or other characteristics that may preclude
our obtaining regulatory approval or prevent or limit commercial use.

WE HAVE ONLY LIMITED EXPERIENCE IN REGULATORY AFFAIRS, AND SOME OF OUR PRODUCTS
MAY BE BASED ON NEW TECHNOLOGIES; THESE FACTORS MAY AFFECT OUR ABILITY OR THE
TIME WE REQUIRE TO OBTAIN NECESSARY REGULATORY APPROVALS.

    We have only limited experience in filing and prosecuting the applications
necessary to gain regulatory approvals. Moreover, certain of the products that
are likely to result from our research and development programs may be based on
new technologies and new therapeutic approaches that have not been extensively
tested in humans. The regulatory requirements governing these types of products
may be more rigorous than for conventional products. As a result, we may
experience a longer regulatory process in connection with any products that we
develop based on these new technologies or new therapeutic approaches.

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<PAGE>
RISKS RELATING TO OUR INDUSTRY, BUSINESS AND STRATEGY

BECAUSE DISCOVERING DRUGS BASED UPON GENOMICS IS NEW, IT IS POSSIBLE THAT THIS
DISCOVERY PROCESS WILL NOT RESULT IN COMMERCIAL PRODUCTS OR SERVICES.

    The process of discovering drugs based upon genomics is new and evolving
rapidly. We focus our genomics research primarily on diseases that may be linked
to several or many genes working in combination. Both we and the general
scientific and medical communities have only a limited understanding relating to
the role of genes and their products in these diseases. To date, we have not
commercialized any products or services, and we may not be successful in doing
so in the future. In addition, relatively few products based on gene discoveries
have been developed and commercialized by others. Rapid technological
development by us or others may result in compounds, products or processes
becoming obsolete before we recover our development expenses.

OUR PLAN TO GROW THROUGH ACQUISITIONS OF OTHER COMPANIES WILL NOT BE SUCCESSFUL
IF WE ARE UNABLE TO INTEGRATE ACQUIRED COMPANIES WITH OUR OTHER OPERATIONS OR IF
THE TECHNOLOGY OR PERSONNEL OF ACQUIRED COMPANIES DO NOT MEET OUR EXPECTATIONS.

    We completed our merger with LeukoSite, Inc. on December 22, 1999. In
addition, on July 27, 2000 we acquired the business of Cambridge Discovery
Chemistry Limited, a subsidiary of Oxford Molecular Group plc. We may not be
able to successfully integrate or profitably manage these businesses. In
addition, the combination of our business with these businesses may not achieve
revenues, net income or loss levels, efficiencies or synergies that justify the
merger. The combined company may experience slower rates of growth as compared
to the historical rates of growth of Millennium and these businesses
independently. We plan to make additional acquisitions in the future, which will
entail similar risks.

COMPETITION FOR SCIENTIFIC AND MANAGERIAL PERSONNEL IN OUR INDUSTRY IS INTENSE;
WE WILL NOT BE ABLE TO SUSTAIN OUR OPERATIONS AND GROW IF WE ARE NOT ABLE TO
ATTRACT AND RETAIN KEY PERSONNEL.

    Our success substantially depends on the ability, experience and performance
of our senior management and other key personnel. If we lose one or more of the
members of our senior management or other key employees, our business and
operating results could be seriously harmed.

    In addition, our future success will depend heavily on our ability to
continue to hire, train, retain and motivate additional skilled managerial and
scientific personnel. The pool of personnel with the skills that we require is
limited. Competition to hire from this limited pool is intense.

WE FACE SUBSTANTIAL COMPETITION, WHICH MAY RESULT IN OTHERS DISCOVERING,
DEVELOPING OR COMMERCIALIZING PRODUCTS AND SERVICES BEFORE OR MORE SUCCESSFULLY
THAN WE DO.

    The fields of genomics, biotechnology and pharmaceuticals are highly
competitive. Many of our competitors are substantially larger than we are and
have substantially greater capital resources, research and development staffs
and facilities than we have. Furthermore, many of our competitors are more
experienced than we are in drug discovery, development and commercialization,
obtaining regulatory approvals and product manufacturing and marketing. As a
result, our competitors may identify genes associated with diseases or discover,
develop and commercialize products or services based on such genes before we do.
In addition, our competitors may discover, develop and commercialize products or
services that render non-competitive or obsolete the products or services that
we or our collaborators are seeking to develop and commercialize.

WE MAY NOT BE ABLE TO OBTAIN BIOLOGICAL MATERIAL, INCLUDING HUMAN AND ANIMAL DNA
SAMPLES, REQUIRED FOR OUR GENETIC STUDIES, WHICH COULD DELAY OR IMPEDE OUR DRUG
DISCOVERY EFFORTS.

    Our gene identification strategy includes genetic studies of families and
populations prone to particular diseases. These studies require the collection
of large numbers of DNA samples from

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affected individuals, their families and other suitable populations as well as
animal models. The availability of DNA samples and other biological material is
important to our ability to discover the genes responsible for human diseases
through human genetic approaches and other studies. Competition for these
resources is intense. Access to suitable populations, materials and samples
could be limited by forces beyond our control, including governmental actions.
Some of our competitors may have obtained access to significantly more family
and population resources and biological materials than we have obtained. As a
result, we may not be able to obtain access to DNA samples necessary to support
our human gene discovery programs.

RISKS RELATING TO OUR FINANCIAL RESULTS AND STRUCTURE AND NEED FOR FINANCING

WE HAVE INCURRED SUBSTANTIAL LOSSES AND EXPECT TO CONTINUE TO INCUR LOSSES. WE
WILL NOT BE SUCCESSFUL UNLESS WE REVERSE THIS TREND.

    We have incurred losses in five of the last seven years. We expect to
continue to incur substantial operating losses in future periods. To date,
substantially all of our revenues have resulted from payments from
collaborators. We have not received any revenues from the sale of products or
clinical or diagnostic services.

    We expect to increase our spending significantly as we continue to expand
our infrastructure, research and development programs and commercialization
activities. As a result, we will need to generate significant revenues to pay
these costs and achieve profitability. We cannot be certain whether or when we
will become profitable because of the significant uncertainties with respect to
our ability to generate revenues from the sale of products and services and from
existing and potential future strategic alliances.

OUR SUBSTANTIAL INDEBTEDNESS MAY ADVERSELY AFFECT OUR CASH FLOW AND OPERATIONS
AND BE DIFFICULT FOR US TO REPAY, WHICH COULD ADVERSELY AFFECT THE VALUE OF YOUR
INVESTMENT IN US.

    We have substantial amounts of outstanding indebtedness. As of December 31,
2000, this consisted primarily of $95,927,000 of 5.50% convertible subordinated
notes due January 15, 2007. We also may obtain additional long-term debt and
working capital lines of credit. As a result of this indebtedness, we have
substantial principal and interest payment obligations. We may be unable to
generate cash sufficient to pay the principal of, interest on and other amounts
due in respect of our indebtedness when due.

    Our substantial leverage could have significant negative consequences,
including:

    - increasing our vulnerability to general adverse economic and industry
      conditions;

    - limiting our ability to obtain additional financing;

    - requiring the dedication of a substantial portion of our cash from
      operations to service our indebtedness, thereby reducing the amount of our
      cash available for other purposes, including capital expenditures;

    - limiting our flexibility in planning for, or reacting to, changes in our
      business and the industry in which we compete; and

    - placing us at a possible competitive disadvantage vis-a-vis less leveraged
      competitors and competitors that have better access to capital resources.

WE MAY NEED ADDITIONAL FINANCING, WHICH MAY BE DIFFICULT TO OBTAIN. OUR FAILURE
TO OBTAIN NECESSARY FINANCING OR DOING SO ON UNATTRACTIVE TERMS COULD ADVERSELY
AFFECT OUR DISCOVERY AND DEVELOPMENT PROGRAMS AND OTHER OPERATIONS.

    We will require substantial funds to conduct research and development,
including preclinical testing and clinical trials of our potential products. We
will also require substantial funds to meet our obligations to our collaborators
and maximize the prospective benefits to us from these alliances,

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<PAGE>
manufacture and market any products and services that are approved for
commercial sale and meet our debt service obligations. Additional financing may
not be available when we need it or may not be available on terms that are
favorable to us.

    If we are unable to obtain adequate funding on a timely basis, we may be
required to significantly curtail one or more of our discovery or development
programs. We could be required to seek funds through arrangements with
collaborators or others that may require us to relinquish rights to certain of
our technologies, product candidates or products which we would otherwise pursue
on our own.

RISKS RELATING TO COLLABORATORS

WE DEPEND SIGNIFICANTLY ON OUR COLLABORATORS TO DEVELOP AND COMMERCIALIZE
PRODUCTS AND SERVICES BASED ON OUR WORK. OUR BUSINESS MAY SUFFER IF ANY OF OUR
COLLABORATORS BREACHES ITS AGREEMENT OR FAILS TO SUPPORT OR TERMINATES ITS
ALLIANCE WITH US.

    We conduct most of our discovery and development activities through
strategic alliances. The success of these programs depends heavily on the
efforts and activities of our collaborators. Each of our collaborators has
significant discretion in determining the efforts and resources that they will
apply to the alliance. Our existing and any future alliances may not be
scientifically or commercially successful.

    The risks that we face in connection with these alliances include:

    - All of our strategic alliance agreements are subject to termination under
      various circumstances, including, in many cases, on short notice without
      cause.

    - In our strategic alliance agreements, we generally agree not to conduct
      specified types of research and development in the field that is the
      subject of the alliance. These agreements may have the effect of limiting
      the areas of research and development we may pursue, either alone or in
      collaboration with third parties.

    - Our collaborators may develop and commercialize, either alone or with
      others, products and services that are similar to or competitive with the
      products and services that are the subject of the alliance with us.

    - Our collaborators may change the focus of their development and
      commercialization efforts. Pharmaceutical and biotechnology companies
      historically have re-evaluated their priorities following mergers and
      consolidations, which have been common in recent years in these
      industries.

    - We will rely on our collaborators to manufacture most products covered by
      our alliances. For example, Becton Dickinson has the sole right to
      develop, manufacture and commercialize our
      Melastatin-Registered Trademark- gene detection product. Therefore, we
      cannot control the timing of the introduction of this product.

WE MAY NOT BE SUCCESSFUL IN ESTABLISHING ADDITIONAL STRATEGIC ALLIANCES, WHICH
COULD ADVERSELY AFFECT OUR ABILITY TO DEVELOP AND COMMERCIALIZE PRODUCTS AND
SERVICES.

    An important element of our business strategy is entering into strategic
alliances for the development and commercialization of products and services
based on our discoveries. We face significant competition in seeking appropriate
collaborators. Moreover, these alliance arrangements are complex to negotiate
and time-consuming to document. We may not be successful in our efforts to
establish additional strategic alliances or other alternative arrangements. The
terms of any additional strategic alliances or other arrangements that we
establish may not be favorable to us. Moreover, such strategic alliances or
other arrangements may not be successful.

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RISKS RELATING TO INTELLECTUAL PROPERTY

IF WE ARE UNABLE TO OBTAIN PATENT PROTECTION FOR OUR DISCOVERIES, THE VALUE OF
OUR TECHNOLOGY AND PRODUCTS WILL BE ADVERSELY AFFECTED. IF WE INFRINGE PATENT OR
OTHER INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES, WE MAY NOT BE ABLE TO
DEVELOP AND COMMERCIALIZE OUR PRODUCTS AND SERVICES OR THE COST OF DOING SO MAY
INCREASE.

    Our patent positions, and those of other pharmaceutical and biotechnology
companies, are generally uncertain and involve complex legal, scientific and
factual questions.

    Our ability to develop and commercialize products and services depends in
significant part on our ability to:

    - obtain patents;

    - obtain licenses to the proprietary rights of others on commercially
      reasonable terms;

    - operate without infringing upon the proprietary rights of others;

    - prevent others from infringing on our proprietary rights; and

    - protect trade secrets.

THERE IS SIGNIFICANT UNCERTAINTY ABOUT THE VALIDITY AND PERMISSIBLE SCOPE OF
GENOMICS PATENTS IN OUR INDUSTRY, WHICH MAY MAKE IT DIFFICULT FOR US TO OBTAIN
PATENT PROTECTION FOR OUR DISCOVERIES.

    The validity and permissible scope of patent claims in the pharmaceutical
and biotechnology fields, including the genomics field, involve important
unresolved legal principles and are the subject of public policy debate in the
United States and abroad. For example, there is significant uncertainty both in
the United States and abroad regarding the patentability of gene sequences in
the absence of functional data and the scope of patent protection available for
full-length genes and partial gene sequences. Moreover, certain groups have made
certain gene sequences available in publicly accessible databases. These and
other disclosures may adversely affect our ability to obtain patent protection
for gene sequences claimed by us in patent applications that we file subsequent
to such disclosures. There is also some uncertainty as to whether human clinical
data will be required for issuance of patents for human therapeutics. If such
data are required, our ability to obtain patent protection could be delayed or
otherwise adversely affected.

THIRD PARTIES MAY OWN OR CONTROL PATENTS OR PATENT APPLICATIONS AND REQUIRE US
TO SEEK LICENSES, WHICH COULD INCREASE OUR DEVELOPMENT AND COMMERCIALIZATION
COSTS, OR PREVENT US FROM DEVELOPING OR MARKETING OUR PRODUCTS OR SERVICES.

    We may not have rights under some patents or patent applications related to
our proposed products, processes or services. Third parties may own or control
these patents and patent applications in the United States and abroad.
Therefore, in some cases, such as those described below, to develop,
manufacture, sell or import certain of our proposed products, processes or
services, we or our collaborators may choose to seek, or be required to seek,
licenses under third party patents issued in the United States and abroad or
those that might issue from United States and foreign patent applications. In
such event, we would be required to pay license fees or royalties or both to the
licensor. If licenses are not available to us on acceptable terms, we or our
collaborators may not be able to develop, manufacture, sell or import these
products, processes or services.

    With respect to our product candidate LDP-01, we are aware of third party
patents and patent applications which relate to certain anti-CD18 antibodies and
their use in various methods of treatment including methods of reperfusion
therapy and methods of treating focal ischemic stroke. In addition, our LDP-01,
LDP-02, and CAMPATH-Registered Trademark- product candidates are humanized
monoclonal antibodies. We

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<PAGE>
are aware of third party patents and patent applications that relate to certain
humanized or modified antibodies, products useful for making humanized or
modified antibodies, and processes for making and using humanized or modified
antibodies. We are also aware of third party patents and patent applications
relating to certain manufacturing processes, products thereof and materials
useful in such processes.

    Our product candidates LDP-341 and LDP-519 are small molecule drug
candidates. With respect to LDP-341, we are aware of third party patents or
patent applications that relate to either intermediates or synthetic processes
used in the synthesis of this compound. Additionally, for the use of LDP-341 and
LDP-519 in the treatment of infarctions we are aware of the existence of a
potentially interfering patent application filed by one of our former
consultants.

WE MAY BECOME INVOLVED IN EXPENSIVE PATENT LITIGATION OR OTHER PROCEEDINGS,
WHICH COULD RESULT IN OUR INCURRING SUBSTANTIAL COSTS AND EXPENSES OR
SUBSTANTIAL LIABILITY FOR DAMAGES OR REQUIRE US TO STOP OUR DEVELOPMENT AND
COMMERCIALIZATION EFFORTS.

    There has been substantial litigation and other proceedings regarding the
patent and other intellectual property rights in the pharmaceutical and
biotechnology industries. We may become a party to patent litigation or other
proceedings regarding intellectual property rights. For example, we believe that
we hold patent applications that cover genes that are also claimed in patent
applications filed by others. Interference proceedings before the United States
Patent and Trademark Office may be necessary to establish which party was the
first to invent these genes.

    The cost to us of any patent litigation or other proceeding, even if
resolved in our favor, could be substantial. Some of our competitors may be able
to sustain the cost of such litigation or proceedings more effectively than we
can because of their substantially greater financial resources. If a patent
litigation or other proceeding is resolved against us, we or our collaborators
may be enjoined from developing, manufacturing, selling or importing our
products, processes or services without a license from the other party and we
may be held liable for significant damages. We may not be able to obtain any
required license on commercially acceptable terms or at all.

    Uncertainties resulting from the initiation and continuation of patent
litigation or other proceedings could have a material adverse effect on our
ability to compete in the marketplace. Patent litigation and other proceedings
may also absorb significant management time.

RISKS RELATING TO PRODUCT MANUFACTURING, MARKETING AND SALES

BECAUSE MANY OF THE PRODUCTS AND SERVICES THAT WE DEVELOP WILL BE BASED ON NEW
TECHNOLOGIES AND THERAPEUTIC APPROACHES, THE MARKET MAY NOT BE RECEPTIVE TO
THESE PRODUCTS AND SERVICES UPON THEIR INTRODUCTION.

    The commercial success of any of our products and services that may be
approved for marketing will depend upon their acceptance by physicians,
patients, third party payors, reimbursors and governments as clinically useful,
cost effective and safe. Many of the products and services that we are
developing are based upon new technologies or therapeutic approaches. As a
result, it may be more difficult for us to achieve market acceptance of our
products and services, particularly the first products and services that we
introduce to the market based on new technologies and therapeutic approaches.
Our efforts to educate the medical community on these potentially unique
approaches may require greater resources than would be typically required for
products and services based on conventional technologies or therapeutic
approaches.

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BECAUSE WE HAVE LIMITED SALES, MARKETING OR DISTRIBUTION EXPERIENCE AND
CAPABILITIES, WE WILL DEPEND ON THIRD PARTIES TO SUCCESSFULLY PERFORM THESE
FUNCTIONS ON OUR BEHALF OR WILL BE REQUIRED TO INCUR SIGNIFICANT COSTS AND
DEVOTE SIGNIFICANT EFFORTS TO DEVELOP THESE CAPABILITIES.

    We have limited sales, marketing or distribution experience and
capabilities. We plan to rely significantly on sales, marketing and distribution
arrangements with our collaborators and other third parties for the products and
services that we are developing. For example, our partnership that holds the
CAMPATH-Registered Trademark- monoclonal antibody will rely solely upon Schering
AG and its U.S. affiliate, Berlex Laboratories, for the marketing, distribution
and sale of the CAMPATH-Registered Trademark- product candidate throughout the
world other than the Far East. If in the future we elect to perform sales,
marketing and distribution functions ourselves, we would face a number of
additional risks, including the need to recruit experienced marketing and sales
personnel.

BECAUSE WE HAVE LIMITED MANUFACTURING CAPABILITIES, WE WILL BE DEPENDENT ON
THIRD-PARTY MANUFACTURERS TO MANUFACTURE PRODUCTS FOR US OR WILL BE REQUIRED TO
INCUR SIGNIFICANT COSTS AND DEVOTE SIGNIFICANT EFFORTS TO ESTABLISH OUR OWN
MANUFACTURING FACILITIES AND CAPABILITIES.

    We have limited manufacturing experience and no commercial scale
manufacturing capabilities. In order to continue to develop products and
services, apply for regulatory approvals and, ultimately, commercialize any
products and services, we will need to develop, contract for or otherwise
arrange for the necessary manufacturing capabilities.

    We currently rely upon third parties to produce material for preclinical
testing purposes and expect to continue to do so in the future. We also expect
to rely upon other third parties, including our collaborators, to produce
materials required for clinical trials and for the commercial production of
certain of our products if we succeed in obtaining necessary regulatory
approvals. Our partnership with ILEX Products relies on Boehringer Ingelheim as
the sole source manufacturer of the CAMPATH-Registered Trademark- monoclonal
antibody.

    There are a limited number of manufacturers that operate under the FDA's
good manufacturing practices regulations capable of manufacturing for us. As a
result, we have experienced some difficulty finding manufacturers for our
products with adequate capacity for our anticipated future needs. If we are
unable to arrange for third party manufacturing of our products, or to do so on
commercially reasonable terms, we may not be able to complete development of our
products or market them.

    Reliance on third party manufacturers entails risks to which we would not be
subject if we manufactured products ourselves, including reliance on the third
party for regulatory compliance and quality assurance, the possibility of breach
of the manufacturing agreement by the third party because of factors beyond our
control and the possibility of termination or nonrenewal of the agreement by the
third party, based on its own business priorities, at a time that is costly or
inconvenient for us.

    We may in the future elect to manufacture certain of our products in our own
manufacturing facilities. We will require substantial additional funds and need
to recruit qualified personnel in order to build or lease and operate any
manufacturing facilities.

IF WE FAIL TO OBTAIN AN ADEQUATE LEVEL OF REIMBURSEMENT FOR OUR FUTURE PRODUCTS
OR SERVICES BY THIRD PARTY PAYORS, THERE MAY BE NO COMMERCIALLY VIABLE MARKETS
FOR OUR PRODUCTS OR SERVICES.

    The availability and levels of reimbursement by governmental and other third
party payors affect the market for any pharmaceutical product or healthcare
service. These third party payors continually attempt to contain or reduce the
costs of healthcare by challenging the prices charged for medical products and
services. In certain foreign countries, particularly the countries of the
European Union, the pricing of prescription pharmaceuticals is subject to
governmental control. We may not be able to sell our products and services
profitably if reimbursement is unavailable or limited in scope or amount.

                                       29
<PAGE>
    In both the United States and certain foreign jurisdictions, there have been
a number of legislative and regulatory proposals to change the healthcare
system. Further proposals are likely. The potential for adoption of these
proposals affects or will affect our ability to raise capital, obtain additional
collaborators and market our products.

    If we or our collaborators obtain marketing approvals for our products and
services, we expect to experience pricing pressure due to the trend toward
managed health care, the increasing influence of health maintenance
organizations and additional legislative proposals.

ETHICAL, LEGAL AND SOCIAL ISSUES RELATED TO GENETIC TESTING MAY CAUSE OUR
DIAGNOSTIC PRODUCTS TO BE REJECTED BY CUSTOMERS OR PROHIBITED OR CURTAILED BY
GOVERNMENTAL AUTHORITIES.

    Diagnostic tests that evaluate genetic predisposition to disease raise
issues regarding the use and confidentiality of the information provided by such
tests. Insurance carriers and employers might discriminate on the basis of such
information, resulting in a significant barrier to the acceptance of such tests
by customers. This type of discrimination could cause governmental authorities
to prohibit or limit the use of such tests.

ITEM 2.  PROPERTIES

    We lease a total of approximately 710,000 square feet of laboratory and
office space in several buildings located in Cambridge, Massachusetts, with the
majority of this space subject to long term leases expiring in 2003, 2004, 2008,
2011, 2013 and 2014. We have signed two long term leases for two buildings to be
constructed in Cambridge, each building consisting of approximately 200,000
square feet of office and laboratory space, expiring in 2019 and 2020. We expect
to occupy the first of these buildings in Q3 2002 and the second building in
Q3/Q4 2003.

    In addition to our Cambridge, Massachusetts properties, we lease
approximately 22,000 square feet of laboratory and office space in Cambridge,
England for our subsidiary, Millennium Pharmaceuticals Limited under leases
expiring in 2001 and 2002. In February 2001, we signed an agreement to lease a
building to be constructed in Cambridge, England comprising 90,000 square feet
of office and laboratory space which we expect to occupy in early 2003 and which
will replace our current Cambridge, England location. This agreement for lease
includes options for expansion into additional space at the same location.

    We believe our currently-leased and occupied facilities, and the facilities
to be constructed in Cambridge, Massachusetts and Cambridge, England, are
suitable and adequate to meet our requirements for the near term.

ITEM 3.  LEGAL PROCEEDINGS

    We are not a party to any material legal proceedings.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    No matters were submitted to a vote of our security holders, through
solicitation of proxies or otherwise, during the last quarter of the year ended
December 31, 2000.

                                       30
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY

    The following table sets forth the names, ages and positions of our
executive officers.

<TABLE>
<CAPTION>
NAME                                          AGE                    POSITIONS HELD
----                                        --------   ------------------------------------------
<S>                                         <C>        <C>
Mark J. Levin.............................     50      Chairman of the Board of Directors,
                                                       President and Chief Executive Officer
Kenneth J. Conway.........................     52      Senior Vice President and President of
                                                       MPMx
John B. Douglas III.......................     47      Senior Vice President and General Counsel
Paul R. Hamelin...........................     46      Senior Vice President, Commercial
                                                       Operations
Steven H. Holtzman........................     47      Chief Business Officer
John Maraganore, Ph.D.....................     38      Senior Vice President, Strategic Product
                                                       Development
Linda K. Pine.............................     49      Senior Vice President, Human Resources
Kevin P. Starr............................     38      Senior Vice President and Chief Financial
                                                       Officer
Robert Tepper, M.D........................     45      Senior Vice President and Chief Scientific
                                                       Officer
Susan J. Ward, Ph.D.......................     45      Senior Vice President, Strategy Leadership
</TABLE>

    MR. LEVIN has served as our Chairman of the Board of Directors since
March 1996, as our Chief Executive Officer since November 1994 and as a director
of the Company since its inception. From 1987 to 1994, Mr. Levin was a partner
at Mayfield, a venture capital firm, and co-director of its Life Science Group.
While employed with Mayfield, Mr. Levin was the founding Chief Executive Officer
of several biotechnology and biomedical companies, including Cell Genesys Inc.,
Stem Cells, Inc. (formerly CytoTherapeutics Inc.), Tularik Inc. and Focal, Inc.
Mr. Levin holds an M.S. in Chemical and Biomedical Engineering from Washington
University. Mr. Levin also serves on the Board of Directors of StemCells, Inc.
and Tularik, Inc.

    MR. CONWAY has served as President and Founder of Millennium Predictive
Medicine, Inc., a subsidiary of the Company that now operates as an
unincorporated division of the Company, since September 1997. He served more
than 26 years with Chiron Diagnostics Corporation (formerly Ciba Corning), a
medical diagnostics company, most recently as Senior Vice President and General
Manager of Immuno Diagnostics from 1996 to 1997. Previously, Mr. Conway was a
Member of the Office of the President while President of the U.S. group of
Chiron from 1991 to 1996. Other positions he held at Chiron include Vice
President of several business units, as well as Vice President of manufacturing
at the former Corning Medical.

    MR. DOUGLAS has served as our General Counsel since May 1999 and Senior Vice
President since June 2000. Prior to joining us, Mr. Douglas was engaged in the
private practice of law as a sole practitioner and as a partner at the Boston
law firm of Hutchins, Wheeler & Dittmar from October 1997 until May 1999.
Mr. Douglas was previously Senior Vice President and General Counsel of Apple
Computer, Inc., a computer hardware company, from January to October 1997.
Mr. Douglas was Senior or Executive Vice President and General Counsel of Reebok
International Ltd., a sports and fitness products company, from 1994 to
January 1997, and was responsible for several other corporate staff functions
for most of this period, including Real Estate, Tax, Human Resources and Public
Affairs, and he was Vice President and General Counsel of Reebok from 1986 to
1994. Mr. Douglas received his J.D. from Harvard Law School and his A.B. from
Colgate University.

    MR. HAMELIN joined the Company in December 2000 as our Senior Vice
President, Commercial Operations. Most recently Mr. Hamelin served as Senior
Vice President, Global Medical Marketing for Pharmacia/Monsanto, a global
pharmaceutical company, from June 1999 to November 2000. He served as Vice
President Global Marketing for Searle/Monsanto, a pharmaceutical company, from
1997 to

                                       31
<PAGE>
1999. From 1995 to 1996, Mr. Hamelin served as General Manager and Vice
President of Worldwide CV Franchise for Searle/Monsanto.

    MR. HOLTZMAN has served as Chief Business Officer of the Company since
May 1994. From 1986 to 1993, Mr. Holtzman was with DNX Corporation, a biomedical
company, and its subsidiaries. He was founder and first employee of DNX, where
he served as a member of the Board of Directors and Executive Vice President.
Mr. Holtzman received his graduate B.Phil. degree in Philosophy from Oxford
University, which he attended as a Rhodes Scholar. Mr. Holtzman currently serves
as the sole biotechnology and pharmaceutical industry representative appointed
to the National Bioethics Advisory Commission and is a member of the Board of
Trustees of the Hastings Center.

    DR. MARAGANORE was appointed Senior Vice President, Strategic Product
Development of the Company in December 2000 after serving as Vice President,
Strategic Product Development from June 2000 to December 2000. He served as our
Vice President, Strategic Planning and M&A from December 21, 1999 to June 2000.
From July 1997 to December 21, 1999, he served as a director and from May 1997
to December 21, 1999, he served as Vice President and General Manager, of
Millennium BioTherapeutics Inc., a majority-owned subsidiary of the Company
which merged into the Company on December 21, 1999. Dr. Maraganore served from
1987 to 1997 at Biogen, Inc., a biopharmaceutical company, serving from 1995 to
1997 as Director of Marketing and Business Development and from 1992 to 1995 as
Director of Biological Research. Dr. Maraganore received his Ph.D. from the
University of Chicago.

    MS. PINE has served as Senior Vice President, Human Resources of the Company
since October 1994. From 1990 to 1994, Ms. Pine served as Vice President of
Consulting Services for The Survey Group, a regional human resources survey and
consulting firm. From 1982 to 1990, she was Vice President of Human Resources
and Corporate Relations with Collaborative Research, Inc. (now Genome
Therapeutics Corporation). She earned her B.A. from Brandeis University and her
M.P.A. from Northeastern University.

    MR. STARR has served as Chief Financial Officer of the Company since
December 1998 and Senior Vice President since June 2000. From March 1998 to
December 1998, he served as the Vice President, Finance of Millennium
BioTherapeutics, Inc., while it was a majority-owned subsidiary of Millennium.
Prior to joining Millennium BioTherapeutics, Mr. Starr held the positions of
Corporate Controller and Manager of Financial Analysis at Biogen from 1991 to
1998. Mr. Starr holds a B.A. degree in mathematics and business from Colby
College and an M.S. degree in corporate finance from Boston College.

    DR. TEPPER has served as Senior Vice President of the Company since
June 2000 and Chief Scientific Officer of the Company since March 1999. He
joined us in August 1994 as Director, Biology, served as Vice President, Biology
from January 1996 to November 1997 and served as Chief Scientific Officer,
Pharmaceuticals from November 1997 to March 1999. From 1990 to 1994, Dr. Tepper
served as Director of the Laboratory of Tumor Biology at Massachusetts General
Hospital Cancer Center where he was the recipient of a Lucille P. Markey
Biomedical Scholar award. Dr. Tepper is also a founder and member of the
Scientific Advisory Board of Cell Genesys Inc. Dr. Tepper received his M.D. from
Harvard Medical School and completed his residency in medicine at Massachusetts
General Hospital where he was Chief Resident.

    DR. WARD has served as our Senior Vice President, Strategy Leadership since
April 2000. Most recently she was Vice President, Project Management,
Wyeth-Ayerst Research, the principal pharmaceutical research and development
division of American Home Products Corporation, from 1997 to 2000. Previously,
she served as Vice President CNS Disorders at Wyeth-Ayerst Research, UK, from
1993 to 1995, then as Vice President, Strategy at Wyeth-Ayerst from 1995 to
1997. She also served as head of Neuroscience and Inflammation Discovery at
Sterling-Winthrop, a pharmaceutical company, from 1982 to 1993.

                                       32
<PAGE>
ITEM 5.  MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

(A) MARKET PRICE OF AND DIVIDENDS ON MILLENNIUM'S COMMON STOCK AND RELATED
    STOCKHOLDER MATTERS

    Our Common Stock is traded on the Nasdaq National Market under the symbol
"MLNM". The following table reflects the range of the reported high and low last
sale prices on the Nasdaq National Market for the periods indicated.

<TABLE>
<CAPTION>
                                                                     2000                  1999
                                                              -------------------   -------------------
                                                                HIGH       LOW        HIGH       LOW
                                                              --------   --------   --------   --------
<S>                                                           <C>        <C>        <C>        <C>
First quarter...............................................   $78.64     $29.12     $ 9.53     $ 6.36
Second quarter..............................................    72.09      26.19      10.09       7.50
Third quarter...............................................    78.49      48.13      19.35       9.19
Fourth quarter..............................................    86.50      41.44      35.42      15.56
</TABLE>

    On February 28, 2001, the closing price per share of our Common Stock was
$33.75, as reported on the Nasdaq National Market and we had approximately 600
stockholders of record.

    We have never declared or paid any cash dividends on our Common Stock. We
anticipate that, in the foreseeable future, we will continue to retain any
earnings for use in the operation of our business and will not pay any cash
dividends.

    On February 28, 2000 and September 7, 2000, the Board of Directors of the
Company declared two-for-one stock splits of our Common Stock. These stock
splits were effected in the form of 100% stock dividends paid on April 18, 2000
and October 4, 2000, respectively, to stockholders of record as of March 28,
2000 and September 27, 2000, respectively. All references to per share amounts
have been restated to reflect these stock splits.

                                       33
<PAGE>
ITEM 6.  SELECTED FINANCIAL DATA

                        MILLENNIUM PHARMACEUTICALS, INC.
                            SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                                             YEAR ENDED DECEMBER 31,
                                                             --------------------------------------------------------
                                                               1996       1997        1998       1999         2000
                                                             --------   ---------   --------   ---------   ----------
                                                                     (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                                          <C>        <C>         <C>        <C>         <C>
Statement of Operations Data:
Revenue under strategic alliances..........................  $ 31,764   $  89,933   $133,682   $ 183,679   $  196,269

Costs and expenses:
  Research and development.................................    34,803      74,828    114,190     159,877      268,740
  General and administrative...............................     7,973      16,517     24,419      32,896       49,315
  Amortization of intangibles..............................        --       2,397      2,702       3,816       55,123
  Acquired in-process R&D..................................        --      83,800         --     350,503           --
                                                             --------   ---------   --------   ---------   ----------
                                                               42,776     177,542    141,311     547,092      373,178
                                                             --------   ---------   --------   ---------   ----------
Loss from operations.......................................   (11,012)    (87,609)    (7,629)   (363,413)    (176,909)
Other income (expense), net................................     2,244       6,387     17,967      11,453       29,834
Debt conversion expense....................................        --          --         --          --      (54,852)
                                                             --------   ---------   --------   ---------   ----------
Income (loss) before cumulative effect of change in
  accounting principle(1)..................................    (8,768)    (81,222)    10,338    (351,960)    (201,927)
Cumulative effect of change in accounting principle(1).....        --          --         --          --     (107,692)
                                                             --------   ---------   --------   ---------   ----------
Net income (loss)..........................................    (8,768)    (81,222)    10,338    (351,960)    (309,619)
Deemed preferred stock dividend............................        --          --         --     (27,944)     (45,668)
                                                             --------   ---------   --------   ---------   ----------
Net income (loss) attributable to common stockholders......  $ (8,768)  $ (81,222)  $ 10,338   $(379,904)  $ (355,287)
                                                             ========   =========   ========   =========   ==========

AMOUNTS PER COMMON SHARE:
Income (loss) before cumulative effect of change in
  accounting principle, basic(2,3).........................  $  (0.10)  $   (0.72)  $   0.09   $   (2.42)  $    (1.05)
Cumulative effect of change in accounting principle........        --          --         --          --        (0.56)
Deemed preferred stock dividend............................        --          --         --       (0.19)       (0.23)
                                                             --------   ---------   --------   ---------   ----------
Net income (loss) attributable to common stockholders,
  basic(2,3)...............................................  $  (0.10)  $   (0.72)  $   0.09   $   (2.61)  $    (1.84)
                                                             ========   =========   ========   =========   ==========
Weighted average shares, basic(2,3)........................    86,788     113,292    121,276     145,412      192,835
                                                             ========   =========   ========   =========   ==========
Net income (loss) attributable to common stockholders,
  diluted(2,3).............................................  $  (0.10)  $   (0.72)  $   0.08   $   (2.61)  $    (1.84)
                                                             ========   =========   ========   =========   ==========
Weighted average shares, diluted(2,3)......................    86,788     113,292    126,032     145,412      192,835
                                                             ========   =========   ========   =========   ==========
PRO FORMA AMOUNTS ASSUMING THE ACCOUNTING CHANGE IS APPLIED
  RETROACTIVELY:
Net loss attributable to common stockholders...............  $ (8,487)  $(117,415)  $(10,461)  $(417,147)  $ (247,595)
                                                             ========   =========   ========   =========   ==========
Net loss per weighted share attributable to common
  stockholders, basic and diluted..........................  $  (0.10)  $   (1.04)  $  (0.09)  $   (2.87)  $    (1.28)
                                                             ========   =========   ========   =========   ==========

Consolidated Balance Sheet Data:
Cash, cash equivalents and marketable securities...........  $ 63,848   $  96,557   $190,964   $ 261,716   $1,452,367
Total assets...............................................    87,744     144,513    257,954     541,625    1,811,922
Capital lease obligations, net of current portion..........     9,308      19,809     24,827      27,488       29,369
Long-term debt.............................................        --          --         --          --       95,927
Stockholders' equity.......................................    66,639      91,755    206,362     439,406    1,462,283
</TABLE>

------------------------------

(1) The cumulative effect of change in accounting principle is a one-time,
    noncash charge relating to Millennium's adoption of Staff Accounting
    Bulletin No. 101 ("SAB 101"). SAB 101 was issued by the Securities and
    Exchange Commission ("SEC") in December 1999. SAB 101 provides guidance
    related to revenue recognition policies based on interpretations and
    practices followed by the SEC. The impact of Millennium's adoption of
    SAB 101 was to defer revenue recognition for certain portions of the revenue
    previously recognized by Millennium under its strategic alliances into
    future accounting periods. Refer to Note 6 of the 2000 consolidated
    financial statements.

(2) Pro forma in 1996.

(3) All per share data have been restated to reflect the two-for-one stock
    splits of Millennium's Common Stock in the form of 100% stock dividends that
    were paid on April 18, 2000 and October 4, 2000, respectively.

                                       34
<PAGE>
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

OVERVIEW

    Millennium Pharmaceuticals, Inc. was founded in 1993. We incorporate
large-scale genetics, genomics, high throughput screening, and informatics in an
integrated science and technology platform, which we apply primarily in
discovering and developing proprietary therapeutic and diagnostic human
healthcare products and services.

    During 2000, we expanded our operations through internal growth, additional
strategic alliances and acquisitions. We also hired additional staff in research
and drug discovery, informatics, biotherapeutics and diagnostics/prognostics, as
well as in other support areas.

    We currently derive our revenue primarily from payments from strategic
alliances with major pharmaceutical companies. We have not received any revenue
from the sale of products. Significant strategic alliances include the
following: two agreements with the Wyeth-Ayerst Division of American Home
Products ("AHP") in certain disorders of the central nervous system and in
bacterial diseases, respectively; an agreement with Bayer, AG ("Bayer") in
cardiovascular disease, and certain areas of oncology, osteoporosis, pain, liver
fibrosis, hematology and viral infections; a research alliance and technology
transfer agreement with Monsanto Company ("Monsanto") in plant agriculture; a
technology transfer agreement and joint development and commercialization
agreement with Aventis Pharmaceuticals, Inc. ("Aventis") in inflammatory
disease; Millennium and ILEX Partners, L.P. ("M&I"), a joint venture partnership
with ILEX Products, Inc. ("ILEX") for development of the
CAMPATH-Registered Trademark- (alemtuzumab) product candidate, a monoclonal
antibody for use in the treatment of chronic lymphocytic leukemia, for which the
partnership is currently seeking approval from the Food and Drug Administration
("FDA"); and an agreement, through our joint venture partnership with ILEX, with
Schering AG for distribution of the CAMPATH-Registered Trademark- product
candidate. In addition, we have a number of other strategic alliances. Our
strategic alliance agreements have provided us with various combinations of
equity investments, license fees and research funding, and may provide certain
additional payments contingent upon our attainment of research and regulatory
milestones and royalty and/or profit sharing payments based on sales of any
products resulting from the collaborations.

    In December 2000, the Oncologic Drugs Advisory Committee (ODAC) to the FDA
recommended accelerated approval of M&I's CAMPATH-Registered Trademark- product
candidate. In February 2001, M&I received a Class I complete response letter
from the FDA. In the letter, the FDA indicated that the timeframe for
accelerated approval has been extended for a 60-day period. M&I expects to
complete ongoing discussions with the FDA on final package labeling and design
of a post-marketing confirmatory study for the CAMPATH-Registered Trademark-
product during this time.

    Our goal is to become an integrated biopharmaceutical company. As a result,
we expect to continue to pursue additional alliances and to consider joint
development, merger, or acquisition opportunities that may provide us with
access to products on the market or in later stages of commercial development
than those represented within our current programs. We expect that we will incur
increasing expenses and may incur increasing operating losses for at least the
next several years, primarily due to expansion of facilities and research and
development programs and as a result of our efforts to advance acquired products
or our own development programs to commercialization. Our results of operations
for any period may not be indicative of future results because our revenues
under strategic alliance and licensing arrangements and from product sales, to
the extent that we receive product sales in future periods, may fluctuate from
period to period or year to year.

                                       35
<PAGE>
RESULTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 2000 AND DECEMBER 31, 1999

    Effective October 1, 2000, we changed our method of accounting for revenue
recognition in accordance with Staff Accounting Bulletin (SAB) No. 101 ("SAB
101"), REVENUE RECOGNITION IN FINANCIAL STATEMENTS. Previously, we had
recognized revenue relating to non-refundable, up-front, license and milestone
payments and certain research funding payments from our strategic partners in
accordance with the contract. Under the new accounting method adopted
retroactively to January 1, 2000, we now recognize revenue from non-refundable,
up-front, license and milestone payments, not specifically tied to a separate
earnings process, ratably over the term of the research contract. When payments
are specifically tied to a separate earnings process, revenue is recognized when
earned. In addition, when appropriate, we recognize revenue from certain
research payments based upon the level of research services performed during the
research contract. The cumulative effect of the change resulted in a charge to
income of $107.7 million and relates to revenue previously recognized by us that
was deferred into future periods. The pro forma amounts presented in the
consolidated statements of operations were calculated assuming the accounting
change was made retroactively to prior periods. Included in 2000 revenue is
$20.0 million of revenue that was recognized in prior years relating to the
adoption of SAB 101. The amount of revenue to be recognized in future years that
was included in the cumulative effect of change in accounting principle is
$41.6 million, $37.3 million, $9.2 million and $.5 million in 2001, 2002, 2003
and 2004, respectively.

    The following discussions relating to the net loss attributable to common
stockholders and revenue for the year ended December 31, 2000 (the "2000
Period") and the net loss attributable to common stockholders and revenue for
the year ended December 31, 1999 (the "1999 Period") reflect pro forma results
as if we had followed SAB 101 from our inception.

    For the 2000 Period, we had a net loss attributable to common stockholders
of $247.6 million or $1.28 per basic and diluted share compared to a net loss
attributable to common stockholders of $417.1 million or $2.87 per basic and
diluted share for the 1999 Period. Operating results for the 2000 Period
represent the first reported year of fully combined revenues and expenses
related to our acquisition of LeukoSite, Inc. ("LeukoSite") and five months of
combined revenues and expenses related to our acquisition of Cambridge Discovery
Chemistry Ltd. ("CDC").

    Revenue under strategic alliances increased to $196.3 million for the 2000
Period from $146.4 million for the 1999 Period. The increase is primarily
attributable to revenue from a new alliance with Aventis, other new alliance
revenue and an increase in the revenue recognized under the Bayer alliance
during the 2000 Period. Revenues may fluctuate from period to period and we
cannot assure you that strategic alliance agreements will continue for their
initial term or beyond.

                                       36
<PAGE>
    Research and development expenses increased to $268.7 million for the 2000
Period from $159.9 million for the 1999 Period. The increase was primarily
attributable to our continued investment in clinical trials and preclinical
product candidates, increased personnel and facilities expenses, increased
purchases of laboratory supplies, increased technology license payments and
increased professional fees. Research and development expenses for the 2000
Period represent the first reported year of fully combined expenses related to
the acquisition of LeukoSite and five months of combined expenses related to the
acquisition of CDC. We expect research and development expenses to continue to
increase as we add personnel and expand our research and development activities
to accommodate our existing and future strategic alliances and development
efforts to move our product candidates to commercialization.

    General and administrative expenses increased to $49.3 million for the 2000
Period from $32.9 million for the 1999 Period. The increase was primarily
attributable to increased expenses for additional management and administrative
personnel associated with the expansion and increased complexity of our
operations and business development efforts. General and administrative expenses
for the 2000 Period represent the first reported year of fully combined expenses
related to the acquisition of LeukoSite and five months of combined expenses
related to the acquisition of CDC. We expect general and administrative expenses
to continue to increase as we add capabilities to support the further
advancement of our development efforts.

    On December 22, 1999, we acquired LeukoSite for an aggregate purchase price
of $550.4 million, primarily consisting of 26,707,732 shares of Common Stock and
3,536,348 shares of Common Stock issuable upon the exercise of assumed LeukoSite
options and warrants. We recorded the transaction as a purchase for accounting
purposes and accordingly, we allocated the purchase price to the assets
purchased and liabilities assumed based upon their respective fair values. We
allocated the excess of the purchase price over the estimated fair market value
of net tangible assets to specific intangible assets and goodwill. We are
amortizing intangible assets and goodwill on a straight-line basis over four
years. Amortization expense for the 2000 Period of $55.1 million is primarily
related to the LeukoSite acquisition. We also recorded a one-time, noncash
charge to operations in 1999 of $350.5 million for acquired in-process research
and development. With respect to the value of the purchased research and
development, we considered, among other factors, the research and development
project's stage of completion, the complexity of the work completed to date, the
costs already incurred, the projected costs to complete, the contribution of
core technologies and other acquired assets, the projected date to market and
the estimated useful life. We then discounted the respective after-tax cash
flows back to present value using a risk-adjusted discount rate. As of
December 31, 2000, the status of our research and development projects acquired
is expected to continue in line with our original estimates set forth in the
1999 Period. Our ability to successfully complete the research and development
projects will be dependent upon numerous factors over which we may have limited
or no control. If we do not successfully develop these projects, we may not
realize the value assigned to the in-process technology. Additionally, the value
of the other intangible assets acquired may also become impaired.

    On July 27, 2000, we acquired CDC, a subsidiary of Oxford Molecular
Group, plc, for an aggregate purchase price of $50.0 million in cash. We
recorded the transaction as a purchase for accounting purposes and accordingly,
we allocated the purchase price to the assets purchased and liabilities assumed
based upon their respective fair values. We allocated the excess of the purchase
price over the estimated fair market value of tangible assets acquired and
liabilities assumed to intangible assets, resulting in $5.5 million of specific
intangible assets and $48.9 million of goodwill. The acquisition did not result
in an in-process research and development charge. We are amortizing intangible
assets and goodwill on a straight-line basis over four years. We expect the
acquisition to provide us with the capabilities in medicinal and computational
chemistry necessary to accelerate our downstream drug discovery efforts.

                                       37
<PAGE>
    Through our 1999 acquisition of LeukoSite, we became a party to a joint
venture partnership (M&I) with ILEX for development of the
CAMPATH-Registered Trademark- product candidate. Under the terms of the
partnership, we are required to fund fifty percent of M&I's working capital
requirements. We account for our investment in the joint venture under the
equity method of accounting. Equity in operations of the joint venture was a
loss of $5.4 million for the 2000 Period. The loss is primarily attributable to
pre-product launch marketing and sales activities.

    Interest income increased to $55.0 million for the 2000 Period from
$12.5 million for the 1999 Period. The increase resulted primarily from a higher
level of invested funds due to net proceeds from our public stock offering in
October 2000 of $767.4 million (including the underwriters' exercise of their
over-allotment option) and $388.7 million in net proceeds from our convertible
debt offering which closed in January 2000. Interest expense increased to
$19.7 million for the 2000 Period from $3.0 million for the 1999 Period due to
increased obligations arising primarily from the convertible debt.

    During the 2000 Period, we paid an aggregate of $54.9 million in cash to
certain holders of our convertible notes in order to induce the conversion of
their notes into our Common Stock. These cash payments were expensed during the
2000 Period.

    The minority interest in 2000 includes the minority shareholder interest of
Becton, Dickinson and Company ("Becton Dickinson") in the net income for the
2000 Period of our then majority-owned subsidiary, Millennium Predictive
Medicine, Inc. ("MPMx"). On June 2, 2000, we acquired the outstanding Preferred
and Common Stock of our MPMx subsidiary that we did not already own, making MPMx
a wholly-owned subsidiary of the Company. We recorded a deemed preferred stock
dividend of $45.7 million in 2000 relating to the excess of the fair value of
our Common Stock over the carrying value of the MPMx minority interest acquired
from Becton Dickinson.

    The minority interest of $2.0 million in 1999 includes the minority
shareholder interest of Eli Lilly and Company ("Lilly") in the net loss for the
1999 Period of our then majority-owned subsidiary, Millennium
BioTherapeutics, Inc. ("MBio"), as well as the minority shareholder interest of
Becton Dickinson in the net income for the 1999 Period of our then
majority-owned subsidiary, MPMx. In October 1999, we issued Lilly approximately
1,500,000 shares of Millennium Common Stock in exchange for all MBio shares
owned by it. In December 1999, we merged MBio with and into Millennium. We
recorded a deemed preferred stock dividend of $27.9 million in 1999 relating to
the excess of the fair value of our Common Stock over the carrying value of the
MBio minority interest acquired from Lilly.

YEARS ENDED DECEMBER 31, 1999 AND DECEMBER 31, 1998

    The following discussions relating to the net loss attributable to common
stockholders and revenue for the 1999 Period and the net loss and revenue for
the year ended December 31, 1998 (the "1998 Period") reflect pro forma results
as if we had followed SAB 101 from our inception.

    For the 1999 Period we had a net loss attributable to common stockholders of
$417.1 million or $2.87 per basic and diluted share, as compared to a net loss
of $10.5 million or $0.09 per basic share and diluted share for the 1998 Period.

    Revenue under strategic alliances increased to $146.4 million for the 1999
Period from $112.9 million for the 1998 Period. The increase is primarily
attributable to a full year of revenue under the Bayer alliance as compared to
two months of Bayer revenue in the 1998 Period.

    Research and development expenses increased to $159.9 million for the 1999
Period from $114.2 million for the 1998 Period. The increase was primarily
attributable to increased personnel and facilities expenses, increased purchases
of laboratory supplies, costs of external collaborations and increased equipment
depreciation.

                                       38
<PAGE>
    General and administrative expenses increased to $32.9 million for the 1999
Period from $24.4 million for the 1998 Period. The increase was primarily
attributable to increased expenses for additional management and administrative
personnel, as well as to increased facilities expenses, consulting, and other
professional fees associated with the expansion and increased complexity of our
operations and business development efforts.

    On December 22, 1999, we acquired LeukoSite for an aggregate purchase price
of $550.4 million primarily consisting of 26,707,732 shares of Common Stock and
3,536,348 shares of Common Stock issuable upon the exercise of LeukoSite options
and warrants. We recorded the transaction as a purchase for accounting purposes
and the consolidated financial statements include LeukoSite's operating results
from the date of the acquisition. We allocated the purchase price, based upon an
independent valuation, to the assets purchased and liabilities assumed based
upon their respective fair values, with the excess of the purchase price over
the estimated fair market value of net tangible assets allocated to in-process
research and development, assembled workforce, core technology and goodwill.

    We are amortizing amounts allocated to goodwill, assembled workforce, and
core technology on a straight-line basis over a period of four years. The 1999
amortization expense related to these intangibles was $1.1 million. We incurred
a one-time, noncash charge to operations in 1999 of $350.5 million for acquired
in-process research and development. The valuation of acquired in-process
research and development represents the estimated fair value related to
incomplete projects that, at the time of the acquisition, had no alternative
future use and for which technological feasibility had not been established.

    The cost approach was used to value assembled workforce. This approach
establishes the fair value of an asset by calculating the recruiting and loss of
productivity costs avoided by obtaining a pre-existent, trained, and fully
efficient team. The income approach was used to establish the fair values of
core technology and in-process research and development. This approach
establishes the fair value of an asset by estimating the after-tax cash flows
attributable to the asset over its useful life and then discounting these
after-tax cash flows back to a present value.

    With respect to the value of purchased research and development, we
considered, among other factors, the research and development project's stage of
completion, the complexity of the work completed to date, the costs already
incurred, the projected costs to complete, the contribution of core technologies
and other acquired assets, the projected date to market and the estimated useful
life. The respective after-tax cash flows were then discounted back to present
value using a risk-adjusted discount rate. The discount rates used in the
LeukoSite analysis ranged from 19% to 23 1/4%, depending upon the risk profile
of the asset.

    We believed and continue to believe that the assumptions used to value the
acquired intangibles were reasonable at the time of the acquisition. We cannot
assure you, however, that the underlying assumptions we used to estimate
projected revenues, development costs or profitability, or other events
associated with such projects, will transpire as estimated. For these reasons,
among others, actual results may vary from the projected results.

    The in-process technology we acquired from LeukoSite consisted of five
significant research and development projects with values assigned of
$14.8 million to $136.3 million for each project. These include humanized
monoclonal antibodies for the treatment of refractory chronic lymphocytic
leukemia, inflammatory bowel disease and the prevention of post-ischemic
reperfusion, small molecule chemotherapeutic agents, and a small molecule
compound for treatment of bronchial asthma. Acquired in-process technologies
related to preclinical projects consisted of treatments primarily for
inflammatory and autoimmune conditions and diseases, as well as treatments for
asthma and allergies and were assigned a value of $85.8 million. Through the
acquisition date, LeukoSite had spent approximately $150 million on in-process
research and development projects. We expect to incur approximately $10 million
to $45 million for each of the four remaining significant projects and
approximately

                                       39
<PAGE>
$45 million for all of the projects in preclinical development to develop the
in-process technology into commercially viable projects.

    The estimated stage of completion for acquired research and development
projects ranged from 45% to 95%. Of the five projects acquired, one project
reached completion in late 1999 with the filing of a BLA, while the others,
which are in various stages of Phase I and Phase II clinical trials, are
expected to reach completion in 2003 through 2006. The first of the molecules
comprising the preclinical development portfolio is expected to reach completion
in 2006. To successfully complete the aforementioned projects we will be
required to undertake and complete a number of significant activities, including
product validation, the successful completion of clinical trials and
governmental regulatory approvals.

    Our ability to successfully complete the research and development projects
will be dependent upon numerous factors over which we may have limited or no
control. If these projects are not successfully developed, we may not realize
the value assigned to the in-process technology. Additionally, the value of the
other intangible assets acquired may also become impaired.

    Interest income increased to $12.5 million for the 1999 Period from
$6.2 million for the 1998 Period. The increase resulted from an increase in our
average balance of cash, cash equivalents and marketable securities. Interest
expense increased to $3.0 million for the 1999 Period from $2.4 million for the
1998 Period due to increased capital lease obligations.

    The minority interest of $2.0 million in 1999 includes the minority
shareholder interest of Lilly in the net loss for the 1999 Period of our then
majority-owned subsidiary, MBio, as well as the minority shareholder interest of
Becton Dickinson in the net income for the 1999 Period of our then majority-
owned subsidiary, MPMx. In October 1999, we issued Lilly approximately 1,500,000
shares of Millennium Common Stock in exchange for all MBio shares owned by it.
In December 1999, we merged MBio with and into Millennium. We recorded a deemed
preferred stock dividend of $27.9 million in 1999 relating to the excess of the
fair value of our Common Stock over the carrying value of the MBio minority
interest acquired from Lilly. The minority interest of $14.2 million in 1998
represents the entire net loss of MBio. This loss is attributed completely to
the minority stockholder because the minority stockholder provided all equity
funding for MBio during 1998.

LIQUIDITY AND CAPITAL RESOURCES

    As of December 31, 2000, we had approximately $1.5 billion in cash, cash
equivalents and marketable securities, an increase of approximately
$1.2 billion from December 31, 1999. This excludes $29.6 million of
interest-bearing marketable securities classified as restricted cash on the
balance sheet, which serve as collateral for letters of credit securing leased
facilities.

    The increase in cash, cash equivalents and marketable securities is
primarily due to $919.4 million of proceeds from sales of Common Stock and
exercises of warrants, $388.7 million of net proceeds from the convertible debt
offering, $75.7 million of proceeds from employee stock purchases relating to
the exercise of options, offset by cash outflows of $108.7 million for operating
activities, $51.8 million relating to the acquisition of CDC, purchases of
$31.6 million of property and equipment and other long term assets, and
$12.3 million to pay capital lease obligations.

    In January 2000, we completed a sale, pursuant to Rule 144A of the
Securities Act of 1933, of $400.0 million of 5.5% convertible subordinated notes
due January 15, 2007 which resulted in net proceeds of $388.7 million. The notes
are convertible into shares of our Common Stock at any time prior to maturity at
a price equal to $42.07 per share, subject to adjustment, unless previously
repurchased or redeemed by us under certain circumstances. Under the terms of
the notes, we are required to make semi-annual interest payments on the
outstanding principal balance of the notes on January 15 and July 15 of each
year. To date, all required interest payments have been made. The net

                                       40
<PAGE>
proceeds of this offering will be used for working capital and other corporate
purposes including financing our growth, accelerating the expansion of our
technology platform, developing products, including conducting preclinical
testing and clinical trials, and acquisitions of businesses, products and
technologies that complement or expand our business.

    During the 2000 Period, we paid an aggregate of $54.9 million in cash to
certain holders of our convertible notes in order to induce the conversion of
their notes into our Common Stock. These cash payments were expensed during the
2000 Period. These conversions resulted in the retirement of $304.1 million of
outstanding principal of our convertible notes, the issuance of approximately
7.2 million shares of our Common Stock, and the reclassification of deferred
debt issuance costs of $7.0 million to additional paid-in capital.

    On June 23, 2000, we entered into an alliance with Aventis covering the
joint development and commercialization of drugs for the treatment of
inflammatory diseases; joint development of new drug discovery technologies;
transfer of key elements of our technology platform to Aventis to enhance its
existing capabilities; and purchase of an equity interest in us by Aventis. In
North America, we have agreed to share the responsibility for and cost of
developing, marketing and manufacturing products arising from the alliance, as
well as profits. Outside of North America, Aventis is responsible for developing
and marketing products arising from the alliance, with a royalty obligation to
us. Under a Technology Transfer Agreement, we agreed to provide Aventis with
rights to our drug discovery technologies in exchange for payments of up to
$200.0 million over a five-year period. Under an Investment Agreement, Aventis
agreed to invest $250.0 million in our Common Stock. As part of this
$250.0 million equity investment, Aventis made a $150.0 million stock purchase
in the third quarter of 2000 and made a $50.0 million stock purchase in
January 2001. Aventis is required to make an additional $50.0 million stock
purchase in July 2001.

    On August 4, 2000, we entered into lease agreements, relating to two
buildings to be constructed for laboratory and office space in Cambridge,
Massachusetts. The rent obligation for each building is expected to commence on
the earlier of (a) September 1, 2002 or October 1, 2003, respectively or
(b) the date on which we commence occupancy of the respective building. Both
leases are for a term of seventeen years. We are responsible for a portion of
the construction costs for both buildings. The cost to complete one of the
buildings is expected to be approximately $31.0 million. The other building is
currently in the design phase and construction costs are currently being
estimated. Rent is calculated on an escalating scale ranging from approximately
$7.6 million, per building per year, to approximately $9.7 million, per building
per year.

    On October 11, 2000, we completed a public offering of 11,000,000 shares of
our Common Stock resulting in net proceeds to us of $677.1 million. On
October 17, 2000 the underwriters exercised their over-allotment option with
respect to an additional 1,465,500 shares of Common Stock, resulting in net
proceeds to us of an additional $90.3 million. We plan to use the net proceeds
of this offering for working capital and other corporate purposes including
financing our growth, accelerating the expansion of our technology platform,
developing products, including conducting preclinical testing and clinical
trials, and acquisitions of businesses, products and technologies that
complement or expand our business.

    As of December 31, 2000, we had net operating loss carryforwards of
approximately $720.0 million to offset future federal taxable income expiring in
2004 through 2020 and $660.0 million to offset future state taxable income
expiring in 2001 through 2005. Due to the degree of uncertainty related to the
ultimate realization of such prior losses, no benefit has been recognized in the
financial statements as of December 31, 2000. We would allocate any subsequently
recognized tax benefits to operations, goodwill and additional paid-in capital.
Moreover, our ability to utilize these losses in future years may be limited
under the change of stock ownership rules of the Internal Revenue Service.

                                       41
<PAGE>
    We believe that existing cash, our investment securities and the anticipated
cash payments from our current strategic alliances will be sufficient to support
our operations and fund our capital commitments for the near term. Our actual
future cash requirements, however, will depend on many factors, including the
progress of our disease research programs, the number and breadth of these
programs, achievement of milestones under strategic alliance arrangements,
acquisitions, our ability to establish and maintain additional strategic
alliance and licensing arrangements, the progress of our development efforts and
the development efforts of our strategic partners, and our ability to repay our
long-term debt at maturity.

    We may require additional financing in the future, which we may seek to
raise through public or private security offerings, debt financings, additional
strategic alliances or other financing sources. However, additional financing,
strategic alliances or licensing arrangements may not be available when needed
or, if available, such financing may not be obtained on terms favorable to our
stockholders or us.

ACCOUNTING PRONOUNCEMENTS

    In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities." The effective date of this
statement was deferred to fiscal years beginning after June 15, 2000 by SFAS
No. 137 "Accounting for Derivative Instruments and Hedging Activities--Deferral
of Effective Date of SFAS No. 133." SFAS No. 133 was amended by SFAS No. 138
"Accounting for Certain Derivative Instruments and Certain Hedging Activities."
We believe the adoption of this new accounting standard will not have a
significant effect on our financial statements.

SUBSEQUENT EVENTS

    In January 2001, Aventis made a $50.0 million purchase of Millennium Common
Stock pursuant to the Investment Agreement between Aventis and us.

    In February 2001, we entered into an Agreement for Lease, relating to a
building to be constructed for laboratory and office space in Cambridge,
England. The lease is expected to have a 20 year term and to commence in 2003.
We are responsible for a portion of the construction costs, which we estimate to
be approximately $21.0 million. Rent is expected to be approximately
$2.4 million per year and is subject to market adjustments at the end of the
5th, 10th and 15th years.

    In February 2001, M&I received a Class I complete response letter from the
FDA relating to the CAMPATH-Registered Trademark- product. In the letter, the
FDA indicated that the timeframe for accelerated approval has been extended for
a 60-day period. M&I expects to complete ongoing discussions with the FDA on
final package labeling and design of a post-marketing confirmatory study for the
CAMPATH-Registered Trademark- product during this time.

    In March 2001, we entered into a strategic alliance with Abbott
Laboratories. This alliance is for a five-year term, and is primarily for
collaborative research and development in the area of metabolic diseases. We and
Abbott have agreed to share equally the cost of developing, manufacturing and
marketing products on a worldwide basis. Our arrangement with Abbott also
includes a technology exchange and development agreement and an equity
investment by Abbott, under which we are eligible to receive up to
$250 million. As part of this $250.0 million equity investment, Abbott has
agreed to make an initial investment of $50.0 million in April 2001 and
additional investments totalling $200 million in seven quarterly installments
from later in 2001 through 2003.

                                       42
<PAGE>
ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    We maintain an investment portfolio in accordance with our Investment
Policy. The primary objectives of our Investment Policy are to preserve
principal, maintain proper liquidity to meet operating needs and maximize
yields. Although our investments are subject to credit risk, our Investment
Policy specifies credit quality standards for our investments and limits the
amount of credit exposure from any single issue, issuer or type of investment.
Our investments are also subject to interest rate risk and will decrease in
value if market interest rates increase. A hypothetical 100 basis point increase
in interest rates would result in an approximate $21.1 million decrease in the
fair value of our investments as of December 31, 2000. However, due to the
conservative nature of our investments and relatively short duration, interest
rate risk is mitigated. We do not own derivative financial instruments in our
investment portfolio.

    The interest rates on our convertible subordinated notes and capital lease
obligations are fixed and therefore not subject to interest rate risk.

    Accordingly, we do not believe that there is any material market risk
exposure with respect to derivative or other financial instruments which would
require disclosure under this item.

                                       43
<PAGE>
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                        MILLENNIUM PHARMACEUTICALS, INC.
                         REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholders
Millennium Pharmaceuticals, Inc.

    We have audited the accompanying consolidated balance sheets of Millennium
Pharmaceuticals, Inc. as of December 31, 2000 and 1999, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the three years in the period ended December 31, 2000. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

    We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

    In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Millennium Pharmaceuticals, Inc. at December 31, 2000 and 1999, and the
consolidated results of operations, stockholders' equity and cash flows for each
of the three years in the period ended December 31, 2000, in conformity with
accounting principles generally accepted in the United States.

    As discussed in Note 2 to the consolidated financial statements, in 2000 the
Company changed its method of accounting for revenue recognition.

                                              Ernst & Young LLP

January 22, 2001
Boston, Massachusetts

                                       44
<PAGE>
                        MILLENNIUM PHARMACEUTICALS, INC.

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                     DECEMBER 31,
                                                              --------------------------
                                                                  2000          1999
                                                              ------------   -----------
                                                              (IN THOUSANDS, EXCEPT PER
                                                                    SHARE AMOUNTS)
<S>                                                           <C>            <C>
ASSETS
Current assets:
Cash and cash equivalents...................................   $  166,086     $  56,775
Marketable securities.......................................    1,286,281       204,941
Due from strategic alliance partners........................       21,901        11,579
Prepaid expenses and other current assets...................       11,312        13,215
                                                               ----------     ---------
Total current assets........................................    1,485,580       286,510
Property and equipment, net.................................       85,803        59,543
Restricted cash.............................................       29,635        11,173
Other assets................................................        4,964         1,792
Goodwill, net...............................................      177,083       161,125
Intangible assets, net......................................       28,857        21,482
                                                               ----------     ---------
Total assets................................................   $1,811,922     $ 541,625
                                                               ==========     =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................   $   20,256     $  22,953
Accrued expenses............................................       18,278        14,062
Acquisition related contingencies...........................       12,937            --
Obligation to fund joint venture............................        8,653         3,244
Deferred revenue............................................       61,842         7,936
Current portion of capital lease obligations................       14,208        10,968
                                                               ----------     ---------
Total current liabilities...................................      136,174        59,163
Deferred revenue............................................       88,169            --
Capital lease obligations, net of current portion...........       29,369        27,488
Long term debt..............................................       95,927            --
Minority interest...........................................           --        15,568

Commitments and contingencies

Stockholders' Equity:
Preferred Stock, $0.001 par value; 5,000 shares authorized,
  none issued...............................................           --            --
Common Stock, $0.001 par value; 500,000 shares authorized:
  213,979 shares in 2000 and 178,602 shares in 1999 issued
  and outstanding...........................................          214           179
Additional paid-in capital..................................    2,203,902       883,035
Deferred compensation.......................................       (1,296)       (1,055)
Notes receivable from officers..............................         (385)       (1,026)
Accumulated other comprehensive income (loss)...............       10,455          (739)
Accumulated deficit.........................................     (750,607)     (440,988)
                                                               ----------     ---------
Total stockholders' equity..................................    1,462,283       439,406
                                                               ----------     ---------
Total liabilities and stockholders' equity..................   $1,811,922     $ 541,625
                                                               ==========     =========
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                       45
<PAGE>
                        MILLENNIUM PHARMACEUTICALS, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                  YEAR ENDED DECEMBER 31,
                                                              --------------------------------
                                                                2000        1999        1998
                                                              ---------   ---------   --------
                                                              (IN THOUSANDS, EXCEPT PER SHARE
                                                                          AMOUNTS)
<S>                                                           <C>         <C>         <C>
Revenue under strategic alliances...........................  $ 196,269   $ 183,679   $133,682
Costs and expenses:
  Research and development..................................    268,740     159,877    114,190
  General and administrative................................     49,315      32,896     24,419
  Amortization of intangible assets.........................     55,123       3,816      2,702
  Acquired in-process R&D...................................         --     350,503         --
                                                              ---------   ---------   --------
                                                                373,178     547,092    141,311
                                                              ---------   ---------   --------
Loss from operations........................................   (176,909)   (363,413)    (7,629)
Equity in operations of joint venture.......................     (5,409)         --         --
Interest income.............................................     54,987      12,511      6,198
Interest expense............................................    (19,681)     (3,038)    (2,410)
Debt conversion expense.....................................    (54,852)         --         --
Minority interest...........................................        (63)      1,980     14,179
                                                              ---------   ---------   --------
Income (loss) before cumulative effect of change in
  accounting principle......................................   (201,927)   (351,960)    10,338
Cumulative effect of change in accounting principle.........   (107,692)         --         --
                                                              ---------   ---------   --------
Net income (loss)...........................................   (309,619)   (351,960)    10,338
Deemed preferred stock dividend.............................    (45,668)    (27,944)        --
                                                              ---------   ---------   --------
Net income (loss) attributable to common stockholders.......  $(355,287)  $(379,904)  $ 10,338
                                                              =========   =========   ========

AMOUNTS PER COMMON SHARE:
Income (loss) before cumulative effect of change in
  accounting principle......................................  $   (1.05)  $   (2.42)  $   0.09
Cumulative effect of change in accounting principle.........      (0.56)         --         --
Deemed preferred stock dividend.............................      (0.23)      (0.19)        --
                                                              ---------   ---------   --------
Net income (loss) attributable to common stockholders,
  basic.....................................................  $   (1.84)  $   (2.61)  $   0.09
                                                              =========   =========   ========
Weighted average shares, basic..............................    192,835     145,412    121,276
                                                              =========   =========   ========
Net income (loss) attributable to common stockholders,
  diluted...................................................  $   (1.84)  $   (2.61)  $   0.08
                                                              =========   =========   ========
Weighted average shares, diluted............................    192,835     145,412    126,032
                                                              =========   =========   ========

PRO FORMA AMOUNTS ASSUMING THE ACCOUNTING CHANGE IS APPLIED
  RETROACTIVELY:
Net loss attributable to common stockholders................  $(247,595)  $(417,147)  $(10,461)
                                                              =========   =========   ========
Net loss per weighted share attributable to common
  stockholders, basic and diluted...........................  $   (1.28)  $   (2.87)  $  (0.09)
                                                              =========   =========   ========
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                       46
<PAGE>
                        MILLENNIUM PHARMACEUTICALS, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                   YEAR ENDED DECEMBER 31,
                                                              ----------------------------------
                                                                 2000         1999        1998
                                                              -----------   ---------   --------
                                                                        (IN THOUSANDS)
<S>                                                           <C>           <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)...........................................  $  (309,619)  $(351,960)  $ 10,338
Adjustments to reconcile net income (loss) to cash provided
  by (used in) operating activities:
Acquired in-process R&D.....................................           --     350,503         --
Depreciation and amortization...............................       79,346      20,951     16,284
Minority interest...........................................           63      (1,980)   (14,179)
Net loss on asset disposal..................................           --          --         97
Stock compensation expense..................................        2,786       4,041      2,029
Equity in operations of joint venture.......................        5,409          --         --
Changes in operating assets and liabilities:
  Prepaid expenses and other current assets.................        5,669      (6,166)      (438)
  Due from strategic alliance partners......................       (9,722)     (4,919)    (5,882)
  Restricted cash and other assets..........................      (18,388)     (1,126)    (6,276)
  Accounts payable, accrued expenses and other..............       (4,242)      9,993      5,645
  Deferred revenue..........................................      139,977       2,654       (552)
                                                              -----------   ---------   --------
Net cash provided by (used in) operating activities.........     (108,721)     21,991      7,066
                                                              -----------   ---------   --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in marketable securities........................   (1,418,693)   (217,805)   (84,932)
Proceeds from sales and maturities of marketable
  securities................................................      348,856      84,950     59,606
Purchase of property and equipment and other long term
  assets....................................................      (31,559)    (21,418)    (7,590)
Net cash used in Cambridge Discovery Chemistry Ltd.
  acquisition...............................................      (51,835)         --         --
Net cash acquired in LeukoSite, Inc. acquisition............           --      11,234         --
                                                              -----------   ---------   --------
Net cash used in investing activities.......................   (1,153,231)   (143,039)   (32,916)
                                                              -----------   ---------   --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of convertible subordinated notes, net of issuance
  costs.....................................................      388,695          --         --
Proceeds from sales of common stock and exercises of
  warrants..................................................      919,447          --     96,600
Proceeds from sale of subsidiary stock......................           --      15,000         --
Net proceeds from employee stock purchases..................       75,693      34,105      5,699
Principal payments on capital leases........................      (12,263)     (9,566)    (7,401)
                                                              -----------   ---------   --------
Net cash provided by financing activities...................    1,371,572      39,539     94,898
                                                              -----------   ---------   --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS............      109,620     (81,509)    69,048
Equity adjustment from foreign currency translation.........         (309)         --         --
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR................       56,775     138,284     69,236
                                                              -----------   ---------   --------
CASH AND CASH EQUIVALENTS, END OF YEAR......................  $   166,086   $  56,775   $138,284
                                                              ===========   =========   ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest......................................  $    17,043   $   3,038   $  2,410

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING
  ACTIVITIES:
Equipment acquired under capital leases.....................  $    15,079   $  12,818   $ 15,229
Deferred compensation relating to issuance of stock
  options...................................................        1,160       1,059         --
Write off of capital assets.................................        1,453          --         --
Issuance of common stock to Abgenix, Inc....................       10,000          --         --
Buyout of Becton Dickinson interest in MPMx, including
  deemed preferred stock dividend...........................       61,160          --         --
MPI buyout of common stock interest in MPMx.................       82,400          --         --
Conversion of subordinated debt to common stock.............      304,070          --         --
Acquisition and additional goodwill of Cambridge Discovery
  Chemistry Ltd.............................................        2,178          --         --
Acquisition and additional goodwill of LeukoSite, Inc.
  including direct transaction costs of $2,700 in 1999......       15,880     550,371         --
Reclassification of debt issuance costs to additional
  paid-in capital...........................................        7,021          --         --
Deemed preferred stock dividend resulting from MPI buyout of
  Eli Lilly interest in MBio................................           --      27,944         --
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                       47
<PAGE>
                        MILLENNIUM PHARMACEUTICALS, INC.
                       STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
                                                                                                                 ACCUMULATED
                                          COMMON STOCK                                              NOTES           OTHER
                                     ----------------------     ADDITIONAL        DEFERRED       RECEIVABLE     COMPREHENSIVE
(IN THOUSANDS, EXCEPT SHARES)          SHARES       AMOUNT    PAID-IN CAPITAL   COMPENSATION    FROM OFFICERS   INCOME (LOSS)
-----------------------------        -----------   --------   ---------------   -------------   -------------   --------------
<S>                                  <C>           <C>        <C>               <C>             <C>             <C>
Balance at December 31, 1997.......  116,677,592     $116       $  193,167         $(1,992)        $  (166)        $    (4)
Net income.........................
Unrealized gain on marketable
  securities.......................                                                                                     33
    Total comprehensive income.....
Issuance of common stock...........   19,830,640       20           96,580
Repurchase of common stock.........     (220,800)                      (23)
Exercise of stock warrants.........       92,360
Employee stock purchases...........    3,187,752        4            5,626
Forgiveness of notes from
  officers.........................                                                                     79
Stock compensation expense.........                                    565
Write off deferred stock
  compensation.....................                                   (182)            182
Stock compensation earned..........                                                    853
401K stock match...................      125,272                       532
                                     -----------     ----       ----------         -------         -------         -------
Balance at December 31, 1998.......  139,692,816      140          296,265            (957)            (87)             29
                                     -----------     ----       ----------         -------         -------         -------
Net loss...........................
Unrealized loss on marketable
  securities.......................                                                                                   (768)
    Total comprehensive loss.......
Issuance of common stock...........   37,811,996       39          580,494
Repurchase of common stock.........      (10,828)                       (1)
Exercise of stock warrants.........      504,456
Employee stock purchases...........      491,524                     2,226
Issuance of Common Stock in
  exchange for note from officer...                                                                 (1,026)
Forgiveness of notes from
  officers.........................                                                                     87
Deferred stock compensation........                                  1,059          (1,059)
Stock compensation expense.........                                  1,815
Write off deferred stock
  compensation.....................                                    (33)             33
Stock compensation earned..........                                                    928
401K stock match...................      112,504                     1,210
                                     -----------     ----       ----------         -------         -------         -------
Balance at December 31, 1999.......  178,602,468      179          883,035          (1,055)         (1,026)           (739)
                                     -----------     ----       ----------         -------         -------         -------
Net loss...........................
Unrealized gain on marketable
  securities.......................                                                                                 11,503
Foreign currency translation.......                                                                                   (309)
    Total comprehensive loss.......
Issuance of common stock...........   17,548,846       17          944,987
Issuance of common stock pursuant
  to conversion of subordinated
  notes............................    7,227,689        7          297,055
Repurchase of common stock.........     (132,572)                      (52)
Exercise of stock warrants.........      530,505        1              167
Employee stock purchases...........   10,153,296       10           75,683
Repayment of notes from officers...                                                                    641
Deferred stock compensation........                                  1,160          (1,160)
Stock compensation earned..........                                                    919
401K stock match...................       48,761                     1,867
                                     -----------     ----       ----------         -------         -------         -------
Balance at December 31, 2000.......  213,978,993     $214       $2,203,902         $(1,296)        $  (385)        $10,455
                                     ===========     ====       ==========         =======         =======         =======

<CAPTION>

                                                        TOTAL
                                     ACCUMULATED    STOCKHOLDERS'
(IN THOUSANDS, EXCEPT SHARES)          DEFICIT         EQUITY
-----------------------------        ------------   -------------
<S>                                  <C>            <C>
Balance at December 31, 1997.......   $ (99,366)     $   91,755
Net income.........................      10,338          10,338
Unrealized gain on marketable
  securities.......................                          33
                                                     ----------
    Total comprehensive income.....                      10,371
Issuance of common stock...........                      96,600
Repurchase of common stock.........                         (23)
Exercise of stock warrants.........
Employee stock purchases...........                       5,630
Forgiveness of notes from
  officers.........................                          79
Stock compensation expense.........                         565
Write off deferred stock
  compensation.....................
Stock compensation earned..........                         853
401K stock match...................                         532
                                      ---------      ----------
Balance at December 31, 1998.......     (89,028)        206,362
                                      ---------      ----------
Net loss...........................    (351,960)       (351,960)
Unrealized loss on marketable
  securities.......................                        (768)
                                                     ----------
    Total comprehensive loss.......                    (352,728)
Issuance of common stock...........                     580,533
Repurchase of common stock.........                          (1)
Exercise of stock warrants.........
Employee stock purchases...........                       2,226
Issuance of Common Stock in
  exchange for note from officer...                      (1,026)
Forgiveness of notes from
  officers.........................                          87
Deferred stock compensation........
Stock compensation expense.........                       1,815
Write off deferred stock
  compensation.....................
Stock compensation earned..........                         928
401K stock match...................                       1,210
                                      ---------      ----------
Balance at December 31, 1999.......    (440,988)        439,406
                                      ---------      ----------
Net loss...........................    (309,619)       (309,619)
Unrealized gain on marketable
  securities.......................                      11,503
Foreign currency translation.......                        (309)
                                                     ----------
    Total comprehensive loss.......                    (298,425)
Issuance of common stock...........                     945,004
Issuance of common stock pursuant
  to conversion of subordinated
  notes............................                     297,062
Repurchase of common stock.........                         (52)
Exercise of stock warrants.........                         168
Employee stock purchases...........                      75,693
Repayment of notes from officers...                         641
Deferred stock compensation........
Stock compensation earned..........                         919
401K stock match...................                       1,867
                                      ---------      ----------
Balance at December 31, 2000.......   $(750,607)     $1,462,283
                                      =========      ==========
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                       48
<PAGE>
                        MILLENNIUM PHARMACEUTICALS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               DECEMBER 31, 2000

[1]  THE COMPANY

    Millennium Pharmaceuticals, Inc. ("Millennium" or the "Company")
incorporates large-scale genetics, genomics, high throughput screening, and
informatics in an integrated science and technology platform. Millennium applies
this technology platform primarily in discovering and developing proprietary
therapeutic and diagnostic human healthcare products and services.

[2]  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

    The consolidated financial statements include the accounts of Millennium and
its majority-owned subsidiaries and other subsidiaries controlled by the
Company. The ownership of the other interest holders of the consolidated
subsidiaries is reflected as minority interest. There were no such other
interest holders as of December 31, 2000. All significant intercompany accounts
and transactions have been eliminated in consolidation. Investment in the
Company's unconsolidated joint venture is accounted for using the equity method
(see Note 6).

    The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.

CASH EQUIVALENTS AND MARKETABLE SECURITIES

    Cash equivalents consist principally of money market funds and corporate
bonds with original maturities of three months or less at the date of purchase.
Marketable securities consist of high-grade corporate bonds, asset-backed and
U.S. government agency securities.

    Management determines the appropriate classification of marketable
securities at the time of purchase and reevaluates such designation at each
balance sheet date. Marketable securities at December 31, 2000 and 1999 are
classified as "available-for-sale." Available-for-sale securities are carried at
fair value, with the unrealized gains and losses, net of tax, reported in a
separate component of stockholders' equity. The cost of debt securities in this
category is adjusted for amortization of premiums and accretion of discounts to
maturity. Such amortization and accretion is included in investment income.
Realized gains and losses and declines in value judged to be
other-than-temporary on available-for-sale securities are included in investment
income. The cost of securities sold is based on the specific identification
method. Interest and dividends on securities classified as available-for-sale
are included in investment income.

    There have been no significant realized gains or losses on sales of any
marketable securities in 2000, 1999, and 1998.

CONCENTRATIONS OF CREDIT RISK

    Cash and cash equivalents are primarily maintained with two major financial
institutions in the United States. Deposits with banks may exceed the amount of
insurance provided on such deposits. Generally, these deposits may be redeemed
upon demand and, therefore, bear minimal risk. Financial instruments that
potentially subject the Company to concentrations of credit risk consist
principally of marketable securities. Marketable securities consist of
high-grade corporate bonds, asset-backed and U.S. government agency securities.
The Company's investment policy, approved by the Board of

                                       49
<PAGE>
                        MILLENNIUM PHARMACEUTICALS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 2000

[2]  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Directors, limits the amount the Company may invest in any one type of
investment, thereby reducing credit risk concentrations.

SEGMENT INFORMATION

    The Company has identified three operating segments which, under the
applicable provision of SFAS No. 131, have been aggregated into one reportable
segment. Substantially all of the Company's revenues have been derived from its
strategic alliances. Revenues from Aventis accounted for approximately 10% of
consolidated revenues for the 2000 Period. Revenues from Bayer accounted for
approximately 27%, 45% and 25% of consolidated revenues in the years 2000, 1999
and 1998, respectively. Revenues from Monsanto accounted for approximately 22%,
20% and 29% of consolidated revenues in the years 2000, 1999 and 1998,
respectively. The 1999 and 1998 revenue precentages do not reflect the impact of
SAB 101. There were no other significant customers in 2000, 1999 and 1998.

FAIR VALUE OF FINANCIAL INSTRUMENTS

    The carrying amounts reported in the Company's balance sheets for other
current assets and long-term debt approximate their fair value. The fair values
of the Company's long-term debt are estimated using discounted cash flow
analyses based on the Company's current incremental borrowing rates for similar
types of borrowing arrangements.

PROPERTY AND EQUIPMENT

    Property and equipment are stated at cost. Equipment consists principally of
assets held under capitalized leases and those assets are stated at the present
value of future minimum lease obligations. Application development costs
incurred for computer software developed or obtained for internal use are
capitalized in accordance with Statement of Position ("SOP") No. 98-1,
"Accounting for the Costs of Computer Software Developed for Internal Use."
Leasehold improvements are stated at cost and are amortized over the remaining
life of the building lease. Depreciation is recorded on the straight-line method
over the shorter of the estimated useful life of the asset or the term of the
lease as follows:

<TABLE>
<S>                                                           <C>
Equipment...................................................  3 to 4 years
Capitalized software........................................  3 to 5 years
Leasehold improvements......................................  4 to 15 years
</TABLE>

INTANGIBLE ASSETS

    Intangible assets at December 31, 2000 consist of goodwill and other
intangible assets. Amortization is computed using the straight-line method over
the useful lives of the respective assets, generally four years. Amortization
expense for all intangible assets was $55.1 million, $3.8 million, and
$2.7 million in 2000, 1999, and 1998, respectively. Accumulated amortization was
$64.0 million and $8.9 million at December 31, 2000 and 1999, respectively. On a
periodic basis, the Company estimates the future undiscounted cash flows of the
businesses to which the intangible assets relate in order to ensure that the
carrying value of such intangible assets has not been impaired.

                                       50
<PAGE>
                        MILLENNIUM PHARMACEUTICALS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 2000

[2]  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REVENUE RECOGNITION

    Effective October 1, 2000, Millennium changed its method of accounting for
revenue recognition in accordance with Staff Accounting Bulletin (SAB) No. 101
("SAB 101"), REVENUE RECOGNITION IN FINANCIAL STATEMENTS. Previously, the
Company had recognized revenue relating to non-refundable, up-front, license and
milestone payments and certain research funding payments from its strategic
partners in accordance with the contract. Under the new accounting method
adopted retroactively to January 1, 2000, the Company recognizes revenue from
non-refundable, up-front, license and milestone payments, not specifically tied
to a separate earnings process, ratably over the term of the research contract.
When payments are specifically tied to a separate earnings process, revenue is
recognized when earned. In addition, when appropriate, the Company recognizes
revenue from certain research payments based upon the level of research services
performed during the period of the research contract. The cumulative effect of
the change on prior years resulted in a charge to income of $107.7 million,
which is included in the loss for the year ended December 31, 2000.

INCOME TAXES

    The liability method is used to account for income taxes. Deferred tax
assets and liabilities are determined based on differences between financial
reporting and income tax basis of assets and liabilities, as well as net
operating loss carryforwards, and are measured using the enacted tax rates and
laws that will be in effect when the differences reverse. Deferred tax assets
are reduced by a valuation allowance to reflect the uncertainty associated with
their ultimate realization.

NET INCOME (LOSS) PER SHARE

    Basic net income (loss) per common share is computed using the weighted
average number of common shares outstanding during the period. Diluted net
income (loss) per common share is computed using the weighted average number of
common and dilutive common equivalent shares from stock options, warrants and
convertible debt using the treasury stock method. The 2000 and 1999 net loss
attributable to common stockholders is calculated by including the deduction of
a deemed preferred stock dividend relating to the excess of the fair value of
the Company's common stock over the carrying value of the MPMx and MBio minority
interests acquired, respectively. At December 31, 2000 and 1999, diluted net
loss per share is the same as basic net loss per share, as the inclusion of
outstanding Common Stock options, warrants and convertible debt would be
antidilutive. At December 31, 1998, the difference between basic and diluted
shares used in the computation of earnings per share is approximately
4.8 million weighted-average common stock equivalent shares resulting from
outstanding Common Stock options and warrants.

STOCK DIVIDENDS

    On April 12, 2000, the Company filed a Certificate of Amendment of
Certificate of Incorporation increasing the authorized Common Stock, $0.001 par
value per share, of the Company from 100,000,000 shares to 500,000,000 shares.
On February 28, 2000 and September 7, 2000, the Board of Directors of the
Company declared two-for-one stock splits of the Company's Common Stock. These
stock splits were effected in the form of 100% stock dividends paid on
April 18, 2000 and October 4, 2000, respectively, to stockholders of record as
of March 28, 2000 and September 27, 2000, respectively. Stockholders' equity has
been restated to give retroactive application to each stock split in prior
periods by reclassifying from additional paid-in capital to Common Stock the par
value of the additional shares

                                       51
<PAGE>
                        MILLENNIUM PHARMACEUTICALS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 2000

[2]  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
arising from the stock splits. In addition, all references in the consolidated
financial statements to the number of shares and per share amounts have been
restated.

FOREIGN CURRENCY TRANSLATION

    For operations outside the U.S. that prepare financial statements in
currencies other than the U.S. dollar, results of operations and cash flows are
translated at average exchange rates during the period, and assets and
liabilities are translated at end of period exchange rates. Foreign currency
transaction gains and losses are included in the results of operations and are
not material to the Company's consolidated financial statements. Translation
adjustments are excluded from the determination of net loss and are accumulated
in a separate component of accumulated other comprehensive income (loss) in
stockholders' equity.

COMPREHENSIVE INCOME (LOSS)

    Comprehensive income (loss) is comprised of net income (loss), unrealized
gains and losses on marketable securities and cumulative foreign currency
translation adjustments. Accumulated other comprehensive income as of
December 31, 2000 included $10.8 million and $0.3 million of unrealized gains on
marketable securities and cumulative foreign currency translation adjustments,
respectively. Comprehensive income (loss) is reflected in the consolidated
statements of stockholders' equity.

STOCK-BASED COMPENSATION

    The Company has elected to follow Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" (APB 25), in accounting for
its stock-based compensation plans, rather than the alternative fair value
accounting method provided for under Financial Accounting Standards Board
("FASB") Statement of Financial Accounting Standards ("SFAS") No. 123,
"Accounting for Stock-Based Compensation." Under APB 25, when the exercise price
of options granted under these plans equals the market price of the underlying
stock on the date of grant, no compensation expense is required. In accordance
with Emerging Issues Task Force ("EITF") 96-18, the Company records compensation
expense equal to the fair value of options granted to non-employees over the
vesting period, which is generally the period of service.

ACCOUNTING PRONOUNCEMENTS

    In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." The effective date of this statement was
deferred to fiscal years beginning after June 15, 2000 by SFAS No. 137
"Accounting for Derivative Instruments and Hedging Activities--Deferral of
Effective Date of SFAS No. 133." SFAS No. 133 was amended by SFAS No. 138
"Accounting for Certain Derivative Instruments and Certain Hedging Activities."
The Company believes the adoption of this new accounting standard will not have
a significant effect on its financial statements.

[3]  SUBSIDIARIES

MILLENNIUM BIOTHERAPEUTICS, INC.

    In May 1997, the Company established Millennium BioTherapeutics, Inc.
("MBio") as a subsidiary and, pursuant to a Technology Transfer and License
Agreement, transferred and/or licensed certain technology to MBio in exchange
for 9,000,000 shares of the subsidiary's Series A Convertible Preferred Stock.
At that time, MBio entered into a strategic alliance with Eli Lilly and Company
("Lilly") for the

                                       52
<PAGE>
                        MILLENNIUM PHARMACEUTICALS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 2000

[3]  SUBSIDIARIES (CONTINUED)
discovery and development of novel therapeutic proteins. Under the terms of a
related stock purchase agreement, Lilly purchased $20 million of Series B
Convertible Preferred Stock of MBio for an approximate 18% equity interest in
MBio. The accompanying consolidated financial statements for 1999 and 1998
include the accounts of MBio since inception. The minority interest in the
accompanying consolidated statements of operations includes the minority
stockholder's interest in the net loss of MBio for the years ended December 31,
1999 and 1998. In 1998, MBio's entire net loss was attributed completely to the
minority stockholder because the minority stockholder provided all equity
funding for MBio in 1998.

    In October 1999, Lilly was issued approximately 1,500,000 shares of
Millennium Common Stock in exchange for all shares of MBio Series B Convertible
Preferred Stock owned by it. Also in October 1999, MBio amended the terms of its
strategic alliance with Lilly. Under the amendment, the research program was
refocused from the discovery of new therapeutic proteins to further development
of the therapeutic proteins which had been identified in the course of the
research program. In December 1999, MBio was merged with and into Millennium.
The Company recorded a deemed preferred stock dividend of $27.9 million in 1999
relating to the excess of the fair value of its Common Stock over the carrying
value of the MBio minority interest acquired from Lilly.

    The Company had entered into certain agreements with this subsidiary to
provide specific services and facilities at negotiated fees. Such fees amounted
to $10.5 million and $12.5 million in 1999 and 1998, respectively. The Company
had subleased approximately $0.6 million of equipment to MBio under an existing
capital lease agreement. All such intercompany transactions have been eliminated
in consolidation.

MILLENNIUM PREDICTIVE MEDICINE, INC.

    In September 1997, the Company established a wholly-owned subsidiary,
Millennium Predictive Medicine, Inc. ("MPMx"), to develop products and services
to optimize the prevention, diagnosis, treatment and management of disease. In
February 1999, MPMx announced the formation of a strategic alliance in the
diagnostic field with Becton, Dickinson and Company ("Becton Dickinson"). In
March 1999, Becton Dickinson made an equity investment in MPMx of
$15.0 million, representing approximately an 11% voting interest in MPMx, and
paid a $3.0 million licensing fee to MPMx. The minority interest in the
accompanying consolidated balance sheets represents the equity interest of
Becton Dickinson in MPMx as of December 31, 1999 and the minority interest in
the accompanying consolidated statements of operations includes the minority
stockholder's interest in the net income of MPMx for the years ended
December 31, 2000 and 1999. All intercompany transactions with this subsidiary
have been eliminated in consolidation.

    On June 2, 2000, the Company acquired the outstanding Preferred and Common
Stock of its MPMx subsidiary that it did not already own, making MPMx a
wholly-owned subsidiary of the Company. The transaction was a stock-for-stock
merger. Under the terms of the agreement, MPMx shareholders, including Becton
Dickinson, received 0.8 shares of Millennium Common Stock in exchange for each
MPMx share. The total value of Millennium Common Stock received by MPMx's
stockholders in the merger, based upon the fair value of Millennium Common Stock
on the date of the announcement of the merger, March 2, 2000, was approximately
$143.6 million. The Company recorded a deemed preferred stock dividend of
$45.7 million in 2000 relating to the excess of the fair value of its Common
Stock over the carrying value of the MPMx minority interest acquired from Becton
Dickinson.

                                       53
<PAGE>
                        MILLENNIUM PHARMACEUTICALS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 2000

[4]  LEUKOSITE ACQUISITION

    On December 22, 1999, the Company acquired LeukoSite, Inc. ("LeukoSite") for
an aggregate purchase price of $550.4 million primarily consisting of 26,707,732
shares of Common Stock and 3,536,348 shares of Common Stock issuable upon the
exercise of LeukoSite options and warrants. The value of the Common Stock issued
in connection with this merger was calculated using a fair value of $18.63 per
share. This per share fair value represents the average closing price of the
Company's Common Stock when the merger was announced. Common Stock issuable upon
exercise of LeukoSite options and warrants was assigned a fair value using the
Black-Scholes method. The transaction was recorded as a purchase for accounting
purposes and the consolidated financial statements include LeukoSite's operating
results from the date of the acquisition. The purchase price was allocated to
the assets purchased and liabilities assumed based upon their respective fair
values, with the excess of the purchase price over the estimated fair market
value of net tangible assets allocated to specific intangible assets and
goodwill as follows (in thousands):

<TABLE>
<S>                                                           <C>
Goodwill....................................................  $159,080
Assembled workforce.........................................     2,920
Core technology.............................................    18,712
In-process research and development.........................   350,503
                                                              --------
Total Allocated to Intangibles..............................  $531,215
                                                              ========
</TABLE>

    During 2000, the Company determined that certain LeukoSite contingent
liabilities related to previous acquisitions made by LeukoSite were probable. As
a result, the Company accrued $15.9 million of contingent liabilities through an
increase to goodwill. Amounts allocated to goodwill, assembled workforce, and
core technology are being amortized on a straight-line basis over a period of
four years. Amortization expense related to these items was $46.6 million and
$1.1 million in 2000 and 1999, respectively. The Company also incurred a
one-time, noncash charge to operations in 1999 of $350.5 million for acquired
in-process research and development. The valuation of acquired in-process
research and development represents the estimated fair value related to
incomplete projects that, at the time of the acquisition, had no alternative
future use and for which technological feasibility had not been established.

    The cost approach was used to value assembled workforce. This approach
establishes the fair value of an asset by calculating the recruiting and loss of
productivity costs avoided by obtaining a pre-existent, trained, and fully
efficient team. To calculate avoided recruiting costs, a unit cost for hiring an
employee equivalent to each of those transferred to the Company was calculated
and applied to each employee acquired. The avoided loss in productivity was
calculated by quantifying the time required for an employee to reach full
productivity and applying the amount to each employee's total average cost.

    The income approach was used to establish the fair values of core technology
and in-process research and development. This approach establishes the fair
value of an asset by estimating the after-tax cash flows attributable to the
asset over its useful life and then discounting these after-tax cash flows back
to a present value. The discounting process uses a rate of return commensurate
with the time value of money and investment risk factors. Accordingly, for the
purpose of establishing the fair value of core technology and in-process
research and development, revenues for each future period were estimated, along
with costs, expenses, taxes and other charges. Revenue estimates were based on

                                       54
<PAGE>
                        MILLENNIUM PHARMACEUTICALS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 2000

[4]  LEUKOSITE ACQUISITION (CONTINUED)
estimates of relevant market sizes and growth factors, expected trends in
technology and the nature and expected timing of new product introductions by
the Company and its competitors.

    With respect to the value of purchased research and development, the Company
considered, among other factors, the research and development project's stage of
completion, the complexity of the work completed to date, the costs already
incurred, the projected costs to complete, the contribution of core technologies
and other acquired assets, the projected date to market and the estimated useful
life. The respective after-tax cash flows were then discounted back to present
value using a risk-adjusted discount rate. The discount rates used in the
LeukoSite analysis ranged from 19% to 23 1/4%, depending upon the risk profile
of the asset.

    The most significant purchased research and developments projects that were
in-process at the date of the acquisition consisted of a chemotherapeutic agent,
a humanized monoclonal antibody for oncology and non-oncology indications, and
10 molecules in preclinical development. In aggregate these projects represented
approximately 83% of the in-process value. The chemotherapeutic agent
represented approximately 39% of the in-process research and development value.
Key assumptions used in the analysis of the chemotherapeutic agent included
gross margin of 95% and a discount rate of 22%. The chemotherapeutic agent is a
new class of small molecules that acts by inhibiting the proteasome, the complex
of a cell which regulates the breakdown of proteins that are critical for cell
proliferation. As of the date of the acquisition, the project was expected to be
completed and commercially available in the U.S. in 2006, with an estimated cost
to complete of approximately $15.0 to $20.0 million. During 2000, the Company
reprioritized and expanded its clinical development strategy for this
chemotherapeutic agent and now believes the estimated costs to complete the
original project are approximately $40.0 million to $45.0 million.

    The humanized monoclonal antibody represented approximately 20% of the
in-process research and development value. Key assumptions used in the analysis
of this project included gross margins of 100%, as revenue is royalty based, and
a discount rate of 19%. The primary indication for this humanized monoclonal
antibody, CAMPATH-Registered Trademark-, relates to the treatment of refractory
chronic lymphocytic leukemia for which Millennium & ILEX Partners, L.P. ("M&I")
currently is seeking FDA approval. The antibody works by binding to an antigen
found on leukemia cells, thus triggering their destruction. As of the date of
the acquisition, the Biologics License Application ("BLA") for the
CAMPATH-Registered Trademark- product was expected to be completed by the end of
1999 and the Company anticipated that the CAMPATH-Registered Trademark- product
would be commercially available in the U.S. in 2000. In December 2000, the FDA
Advisory Committee recommended accelerated approval of the
CAMPATH-Registered Trademark- product. The clinical trials for the other
indications for the humanized monoclonal antibody are expected to be completed
and products commercially available in the U.S. between 2003 and 2004. As the
BLA for the CAMPATH-Registered Trademark- product was near completion at the
time of the acquisition and the clinical trials for the other indications build
substantially on work already performed, the estimated cost to complete these
projects was not considered to be significant at the time of acquisition, nor is
it considered to be significant now.

    The portfolio of molecules in preclinical development represented
approximately 24% of the in-process research and development value. As these
products are expected to be partnered, revenue will be royalty based. Therefore,
gross margins of 100% were used in the analysis. The discount rate used in
valuing the portfolio of preclinical molecules was 23 1/4%.

                                       55
<PAGE>
                        MILLENNIUM PHARMACEUTICALS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 2000

[4]  LEUKOSITE ACQUISITION (CONTINUED)
    Molecules in preclinical development relate primarily to treatments for
inflammatory and autoimmune conditions and diseases, as well as treatments for
asthma and allergies. Of the ten molecules in the preclinical portfolio, the
first molecules are expected to be completed and commercially available in the
U.S. in 2005 with the remaining molecules expected to be completed and
commercially available in the U.S. between 2006 and 2008. At the date of
acquisition and at December 31, 2000, the estimated cost to complete all
projects in preclinical development was approximately $40 to $45 million.

    The major risk associated with the timely completion and commercialization
of these products is the ability to confirm the safety and efficacy of the
technology based on the data of long-term clinical trials. If these projects are
not successfully developed, future results of operations of the Company may be
adversely affected. Additionally, the value of the other intangible assets
acquired may become impaired.

    The Company believes that the assumptions used to value the acquired
intangibles and in-process research and development were reasonable at the time
of the acquisition and remain reasonable at December 31, 2000. No assurance can
be given, however, that the underlying assumptions used to estimate expected
project revenues, development costs or profitability, or the events associated
with such projects, will transpire as estimated. For these reasons, among
others, actual results may vary from the projected results.

    The following unaudited pro forma consolidated results of operations have
been prepared as if the acquisition of LeukoSite had occurred on January 1, 1998
(in thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                 YEAR ENDED DECEMBER 31,
                                            ---------------------------------
                                                 1999              1998
                                            ---------------   ---------------
<S>                                         <C>               <C>
Pro Forma:
Revenues under strategic alliances........     $198,150          $147,266
Costs and expenses........................      278,401           203,532
                                               --------          --------
Net loss..................................     $(80,251)         $(56,266)
                                               ========          ========
Net loss per share........................     $  (0.47)         $  (0.38)
Shares used in calculating net loss per
  share...................................      171,464           147,584
</TABLE>

    The pro forma net loss and net loss per share amounts for each period above
exclude the acquired in-process research and development charge and do not
reflect the impact of SAB 101. The pro forma consolidated results do not purport
to be indicative of results that would have occurred had the acquisition been in
effect for the periods presented, nor do they purport to be indicative of the
results that will be obtained in the future.

[5]  CDC ACQUISITION

    On July 27, 2000, the Company acquired Cambridge Discovery Chemistry Ltd.
("CDC"), a subsidiary of Oxford Molecular Group, plc, for an aggregate purchase
price of $50.0 million. The transaction was recorded as a purchase for
accounting purposes and accordingly, the purchase price was allocated to the
assets purchased and liabilities assumed based upon their respective fair
values. The excess of the purchase price over the estimated fair market value of
tangible assets acquired and

                                       56
<PAGE>
                        MILLENNIUM PHARMACEUTICALS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 2000

[5]  CDC ACQUISITION (CONTINUED)
liabilities assumed was allocated to intangible assets resulting in
$5.5 million of specific intangible assets relating to contracts and assembled
workforce and $48.9 million of goodwill. The acquisition did not result in an
in-process research and development charge. Intangible assets and goodwill are
being amortized on a straight-line basis over four years. The Company has not
presented pro forma results of operations as though CDC was acquired on
January 1, 1999 because the pro forma results are not materially different than
the actual results of operations recorded. The consolidated financial statements
include CDC's operating results from the date of acquisition.

[6]  REVENUES AND STRATEGIC ALLIANCES

    The Company has formed strategic alliances with major participants in
marketplaces where its discovery expertise and technology platform are
applicable. These agreements include alliances based on the transfer of
technology platforms, alliances which combine technology transfer with a focus
on a specific disease or therapeutic approach, and disease-focused programs
under which the Company conducts research funded by its partners. The Company's
disease-based alliances and alliances which combine technology-transfer with a
disease focus are generally structured as research collaborations. Under these
arrangements, the Company performs research in a specific disease area aimed at
discoveries leading to novel pharmaceutical (small molecule) products. These
alliances generally provide research funding over an initial period, with
renewal provisions, varying by agreement. Under these agreements, the Company's
partners may make up-front payments, additional payments upon the achievement of
specific research and product development milestones, ongoing research funding
and/or pay royalties or in some cases profit-sharing payments to the Company
based upon any product sales resulting from the collaboration.

    Effective October 1, 2000, Millennium changed its method of accounting for
revenue recognition in accordance with SAB 101. The cumulative effect of the
change resulted in a charge to income of $107.7 million and relates to revenue
previously recognized by the Company that was deferred into future periods. The
pro forma amounts presented in the consolidated statements of operations were
calculated assuming the accounting change was made retroactively to prior
periods. Included in the 2000 revenue is $20.0 million of revenue that was
recognized in prior years relating to the adoption of SAB 101. The amount of
revenue to be recognized in future years that was included in the cumulative
effect of change in accounting principle is $41.6 million, $37.3 million,
$9.2 million and $.5 million in 2001, 2002, 2003 and 2004, respectively.

SIGNIFICANT ALLIANCES BEGINNING IN 2000

    On June 23, 2000, the Company entered into an alliance with Aventis
Pharmaceuticals Inc. ("Aventis"), the pharmaceutical company of Aventis S.A.,
covering the joint development and commercialization of drugs for the treatment
of inflammatory diseases; joint development of new drug discovery technologies;
transfer of key elements of the Company's technology platform to Aventis to
enhance its existing capabilities; and purchase of an equity interest in the
Company by Aventis. The companies have agreed to share the responsibility for
and cost of developing, marketing and manufacturing products arising from the
alliance, as well as profits in North America. Outside of North America, Aventis
is responsible for developing and marketing products arising from the alliance,
with a royalty obligation to the Company. Under a Technology Transfer Agreement,
the Company agreed to provide Aventis with rights to its drug discovery
technologies in exchange for payments of up to

                                       57
<PAGE>
                        MILLENNIUM PHARMACEUTICALS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 2000

[6]  REVENUES AND STRATEGIC ALLIANCES (CONTINUED)
$200.0 million over a five-year period. Under an Investment Agreement, Aventis
agreed to invest $250.0 million in the Company's Common Stock. As part of this
$250.0 million equity investment, a $150.0 million stock purchase was made in
the third quarter of 2000 and a $50.0 million stock purchase was made in
January 2001. An additional $50.0 million stock purchase is required to be made
in July 2001.

SIGNIFICANT ALLIANCES BEGINNING IN 1999

    On February 22, 1999, MPMx and Becton Dickinson formed a strategic alliance
in the diagnostic field. The five-year, genomics-based research collaboration
focuses on several areas of oncology. Under the alliance, MPMx has agreed to
undertake a research program to identify genetic markers and related assays that
may be used to develop diagnostic products for several types of cancer. Becton
Dickinson has agreed to manufacture and market any products that result from the
research of MPMx, and MPMx will receive a royalty based upon gross profits from
any related product sales. On March 31, 1999, Becton Dickinson made a fair
market value equity investment in MPMx of $15.0 million, representing
approximately an 11% voting interest in MPMx, and paid a $3.0 million licensing
fee to MPMx. On June 2, 2000 the Company acquired the outstanding Preferred and
Common Stock of MPMx. Becton Dickinson received 0.8 shares of Millennium Common
Stock in exchange for each MPMx share. Becton Dickinson has agreed to pay MPMx
up to $51.5 million in research funding and additional annual license fees over
the term, provided the alliance continues for the full five-year term. Becton
Dickinson has agreed to pay milestones and royalties to MPMx in connection with
the commercialization and sale of any products developed through the alliance.

    Through its merger with LeukoSite, the Company became a party to a joint
venture agreement with ILEX Products, Inc. (ILEX) to form Millennium and ILEX
Partners, L.P. ("M&I") for the purpose of developing and commercializing the
CAMPATH-Registered Trademark- product, a monoclonal antibody for use in the
treatment of chronic lymphocytic leukemia. In August 1999, M&I and Schering AG
entered into a distribution and development agreement which grants Schering AG
exclusive marketing and distribution rights to the CAMPATH-Registered Trademark-
product in the U.S., Europe and the rest of the world except Japan and East
Asia, where M&I has retained rights. In the United States, Berlex
Laboratories, Inc., Schering's U.S. affiliate, and M&I will share in the profits
from the sale of the CAMPATH-Registered Trademark- product. On sales made in the
rest of the territory, Schering AG has agreed to pay royalties equivalent to the
rate of profit sharing expected in the U.S. Under the terms of the agreement,
Schering has agreed to make payments of up to $30.0 million, of which
$20.0 million had been received at December 31, 2000, for rights to the
CAMPATH-Registered Trademark- product upon the achievement of certain regulatory
milestones. The joint venture currently intends to use these funds to pay for
ongoing development activities. The Company accounts for its investment in the
joint venture under the equity method of accounting. During the year ended
December 31, 2000, the Company recognized $5.6 million of revenue from research
and development activities performed on behalf of and to be reimbursed by M&I.
At December 31, 2000 and 1999, the Company had an amount receivable of
$3.8 million and $0.3 million, respectively, included in Due from strategic
alliance partners, for amounts due from M&I, for such work.

    In December 2000, the Oncologic Drugs Advisory Committee (ODAC) to the FDA
recommended accelerated approval of M&I's CAMPATH-Registered Trademark- product.
In February 2001, M&I received a Class I complete response letter from the FDA.
In the letter, the FDA indicated that the timeframe for accelerated approval has
been extended for a 60-day period. M&I expects to complete ongoing discussions
with the FDA on final package labeling and design of a post-marketing
confirmatory study for the CAMPATH-Registered Trademark- product during this
time.

                                       58
<PAGE>
                        MILLENNIUM PHARMACEUTICALS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 2000

[6]  REVENUES AND STRATEGIC ALLIANCES (CONTINUED)

SIGNIFICANT ALLIANCES BEGINNING IN 1998 AND EARLIER

    In September 1998, the Company entered into a strategic alliance with Bayer
AG ("Bayer"). In November 1998, Bayer made an equity investment of
$96.6 million for approximately 19.8 million shares of Millennium Common Stock.
The primary goal of the alliance is for the Company to supply 225 drug targets
to Bayer over a period of five years. These targets will be identified as
relevant for cardiovascular disease, areas of oncology not covered by
Millennium's alliance with Lilly, osteoporosis, pain, liver fibrosis, hematology
and viral infections. Future anticipated payments over the full alliance term
include $219 million of ongoing research program funding, as well as a potential
of up to $116 million of success fee payments for delivery of targets. Bayer has
the right to cancel the agreement after two and three years if certain minimum
target delivery objectives are not met.

    In October 1997, the Company entered into a technology transfer alliance
through a collaborative agreement with Monsanto Company ("Monsanto"). Under this
agreement, the Company granted to Monsanto exclusive rights to its technologies
in the field of plant agriculture, as well as a nonexclusive license to its
technologies outside the plant agriculture field. The Company has agreed to
collaborate exclusively with Monsanto in the application of those technologies
through the establishment of a subsidiary wholly owned by Monsanto. Monsanto
agreed to pay $118 million in up-front, licensing and technology transfer fees
over the five-year term of the agreement. Monsanto may also pay the Company up
to $100 million over five years, contingent upon the achievement of mutually
agreed-upon research objectives. Millennium may also receive royalty payments
from the sale of products, if any, originating from the research conducted by
the Monsanto subsidiary.

    In July 1996, the Company entered into a strategic alliance with American
Home Products ("AHP") to discover and develop targets and assays to identify and
develop small molecule drugs and vaccines for treatment and prevention of
disorders of the central nervous system. In addition, this agreement provides
for the license and transfer of certain technology to AHP. If certain specified
research objectives are not met, AHP may terminate the agreement in
September 2001. In August 1999, the Company extended the collaboration in the
area of central nervous system disorders for at least an additional two years.

                                       59
<PAGE>
                        MILLENNIUM PHARMACEUTICALS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 2000

[7]  MARKETABLE SECURITIES

    The following is a summary of available-for-sale securities (in thousands):

<TABLE>
<CAPTION>
                                                   DECEMBER 31, 2000
                                   -------------------------------------------------
                                                  GROSS        GROSS
                                                UNREALIZED   UNREALIZED   ESTIMATED
                                      COST        GAINS        LOSSES     FAIR VALUE
                                   ----------   ----------   ----------   ----------
<S>                                <C>          <C>          <C>          <C>
Corporate bonds:
  Due in one year or less........  $   73,225     $   397      $   (88)   $   73,534
  Due in one to three years......     851,862       8,805       (1,001)      859,666
Asset-backed securities
  Due in one year or less........         677          --           --           677
  Due in one to three years......     305,222       1,957         (108)      307,071
U.S. government agency securities
  Due in one year or less........       2,462          13           --         2,475
  Due in one to three years......      42,069         792           (3)       42,858
                                   ----------     -------      -------    ----------
                                   $1,275,517     $11,964      $(1,200)   $1,286,281
                                   ==========     =======      =======    ==========
</TABLE>

<TABLE>
<CAPTION>
                                                     DECEMBER 31, 1999
                                      -----------------------------------------------
                                                   GROSS        GROSS
                                                 UNREALIZED   UNREALIZED   ESTIMATED
                                        COST       GAINS        LOSSES     FAIR VALUE
                                      --------   ----------   ----------   ----------
<S>                                   <C>        <C>          <C>          <C>
Corporate bonds:
  Due in one year or less...........  $ 64,918       $49         $ (57)     $ 64,910
  Due in one to three years.........   140,762         3          (734)      140,031
                                      --------       ---         -----      --------
                                      $205,680       $52         $(791)     $204,941
                                      ========       ===         =====      ========
</TABLE>

[8]  PROPERTY AND EQUIPMENT

    Property and equipment consists of the following at December 31 (in
thousands):

<TABLE>
<CAPTION>
                                                             2000       1999
                                                           --------   --------
<S>                                                        <C>        <C>
Equipment................................................  $105,803   $76,636
Capitalized software.....................................     8,064       458
Leasehold improvements and construction in progress......    35,056    24,116
                                                           --------   -------
                                                            148,923   101,210
Less accumulated depreciation and amortization...........    63,120    41,667
                                                           --------   -------
                                                           $ 85,803   $59,543
                                                           ========   =======
</TABLE>

    Depreciation expense was $23.2 million, $17.1 million, and $13.3 million in
2000, 1999 and 1998, respectively.

[9]  COMMITMENTS

LEASE COMMITMENTS

    The Company conducts the majority of its operations in leased facilities
with leased equipment. At December 31, 2000 and 1999, respectively, the Company
has capitalized leased equipment totaling

                                       60
<PAGE>
                        MILLENNIUM PHARMACEUTICALS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 2000

[9]  COMMITMENTS (CONTINUED)
$74.3 million and $59.2 million, with related accumulated amortization of
$39.4 million and $29.2 million.

    The Company leases its laboratory and office space under operating lease
agreements with various terms and renewal options, including major facilities
with lease expirations ranging from 2002 through 2020. In addition to minimum
lease commitments, these lease agreements require the Company to pay its pro
rata share of property taxes and building operating expenses.

    On August 4, 2000 the Company entered into lease agreements relating to two
buildings to be constructed for laboratory and office space. The leases commence
on the earlier of September 1, 2002 or the date on which the Company commences
occupancy. Both leases are for a term of seventeen years. The Company is
responsible for a portion of the construction costs for both buildings. The cost
to complete one of the buildings is expected to be approximately $31.0 million
and as the other building is in the design phase, construction costs are
currently being estimated for that building. Rent is calculated on an escalating
scale ranging from approximately $7.6 million, per building per year, to
approximately $9.7 million, per building per year. These amounts have been
excluded from the table below.

    At December 31, 2000, the Company has pledged $29.6 million of marketable
securities, included in restricted cash, as collateral for letters of credit for
certain leased facilities.

    At December 31, 2000, future minimum commitments under leases with
noncancelable terms of more than one year, excluding the August 4, 2000 leases
described above, are as follows (in thousands):

<TABLE>
<CAPTION>
                                                           CAPITAL    OPERATING
                                                            LEASES     LEASES
                                                           --------   ---------
<S>                                                        <C>        <C>
Year:
  2001                                                     $17,276    $ 24,654
  2002                                                      15,004      24,748
  2003                                                      10,638      21,126
  2004                                                       4,873      22,880
  2005                                                       2,305      21,510
  Thereafter.............................................       --     127,250
                                                           -------    --------
Total....................................................   50,096    $242,168
                                                                      ========
Less amount representing interest........................    6,519
                                                           =======
Present value of minimum lease payments..................   43,577
Less current portion of capital lease obligations........   14,208
                                                           =======
Capital lease obligations, net of current portion........  $29,369
                                                           =======
</TABLE>

    Total rent expense was $24.3 million, $15.1 million and $8.5 million in
2000, 1999 and 1998, respectively. Sublease rental income was $0.4 million and
$0.5 million in 2000 and 1999, respectively. Interest paid under all financing
and leasing arrangements during 2000, 1999 and 1998 approximated interest
expense.

                                       61
<PAGE>
                        MILLENNIUM PHARMACEUTICALS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 2000

[9]  COMMITMENTS (CONTINUED)

EXTERNAL COLLABORATIONS

    The Company funds research efforts of various academic collaborators in
connection with its research and development programs. Total future fixed
commitments under these agreements approximate $7.4 million in 2001,
$1.8 million in 2002 and $0.2 million in 2003.

[10]  CONVERTIBLE DEBT

    In January 2000, the Company completed a sale, pursuant to Rule 144A of the
Securities Act of 1933, of $400.0 million of 5.5% convertible subordinated notes
due January 15, 2007. The notes are convertible into Millennium Common Stock at
any time prior to maturity at a price equal to $42.07 per share, subject to
adjustment, unless previously repurchased or redeemed by the Company under
certain circumstances. The notes are subordinated in right of payment to all
existing and future senior indebtedness of the Company. Under the terms of the
notes, the Company is required to make semi-annual interest payments on the
outstanding principal balance of the notes on January 15 and July 15 of each
year. To date, all required interest payments have been made.

    During 2000, the Company paid an aggregate of $54.9 million in cash to
certain holders of Millennium's convertible notes in order to induce the
conversion of their notes into Millennium Common Stock. These cash payments were
expensed during 2000. Interest accrued through the date of conversion was
charged to interest expense and was paid upon conversion. These conversions
resulted in the retirement of $304.1 million of outstanding principal of
Millennium convertible notes, the issuance of approximately 7.2 million shares
of Millennium Common Stock, and the reclassification of deferred debt issuance
costs of $7.0 million to additional paid-in capital.

[11]  STOCKHOLDERS' EQUITY

PREFERRED STOCK

    The Company has 5,000,000 authorized shares of Preferred Stock, $0.001 par
value, issuable in one or more series, each of such series to have such rights
and preferences, including voting rights, dividend rights, conversion rights,
redemption privileges and liquidation preferences, as shall be determined by the
Board of Directors.

COMMON STOCK

    On October 11, 2000, Millennium completed a public offering of 11,000,000
shares of its Common Stock resulting in net proceeds to the Company of
approximately $677.1 million. On October 17, 2000 the underwriters exercised
their over-allotment option with respect to an additional 1,465,500 shares of
Common Stock, resulting in net proceeds to the Company of an additional
$90.3 million. The Company expects to use the net proceeds of this offering for
working capital and other corporate purposes including financing the Company's
growth, accelerating the expansion of its technology platform, developing
products, including conducting preclinical testing and clinical trials, and
acquisitions of businesses, products and technologies that complement or expand
the Company's business.

                                       62
<PAGE>
                        MILLENNIUM PHARMACEUTICALS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 2000

[11]  STOCKHOLDERS' EQUITY (CONTINUED)
COMMON STOCK WARRANTS

    At December 31, 2000, the Company has outstanding exercisable warrants to
purchase 871,866 shares of Common Stock with a weighted-average exercise price
of $5.31 per share, which expire through 2007.

STOCK OPTION PLANS

    The 1993 Incentive Stock Plan (the 1993 Plan) allows for the granting of
incentive and nonstatutory options to purchase up to 21,600,000 shares of Common
Stock. In December 1995, the Company amended the terms of outstanding option
agreements to allow option holders the right to immediately exercise outstanding
options, with the subsequent share issuances being subject to a repurchase
option by the Company under certain conditions according to the original option
vesting schedule and exercise price. At December 31, 2000, there are no longer
any shares subject to the Company's repurchase option. At December 31, 2000, a
total of 1,458,795 shares of Common Stock have been reserved for issuance under
the 1993 Plan.

    The 1996 Equity Incentive Plan (the 1996 Plan) is substantially consistent
with the terms of the 1993 Plan and, as amended, provides for the granting of
options to purchase 22,400,000 shares of Common Stock. At December 31, 2000, a
total of 13,177,864 shares of Common Stock have been reserved for issuance under
the 1996 Plan.

    The 1997 Equity Incentive Plan (the 1997 Plan), as amended, provides for the
granting of 16,000,000 options to purchase shares of Common Stock. The terms and
conditions of the 1997 Plan are substantially consistent with those of the 1993
Plan and the 1996 Plan. At December 31, 2000, a total of 9,582,874 shares of
Common Stock have been reserved for issuance under the 1997 Plan.

    The 2000 Incentive Stock Plan (the 2000 Plan) allows for the granting of
incentive and nonstatutory stock options, restricted stock awards and other
stock-based awards, including the grant of shares based upon certain conditions,
the grant of securities convertible into Common Stock and the grant of stock
appreciation rights. The number of stock option shares authorized is equal to 5%
of the number of shares outstanding on April 12, 2000 plus an annual increase to
be made on January 1, 2001, 2002, and 2003 equal to 5% of the number of shares
outstanding or a lesser amount determined by the Board of Directors. At
December 31, 2000, a total of 9,136,588 shares of Common Stock have been
reserved for issuance under the 2000 Plan.

    The 1996 Director Option Plan (the Director Plan) provides that, upon
adoption, each then-eligible nonemployee director be granted a nonstatutory
option to purchase 80,000 shares of Common Stock. Thereafter, each new
nonemployee director will be granted a nonstatutory option to purchase 120,000
shares of Common Stock upon election to the Board of Directors. Upon completion
of the vesting of each option grant under the Director Plan, each nonemployee
director will be granted a new nonstatutory option to purchase 80,000 shares of
Common Stock. All options will be issued at the then fair market value of the
Common Stock, vest ratably over four years and expire ten years after date of
grant. At December 31, 2000, a total of 915,000 shares of Common Stock have been
reserved for issuance under the Director Plan.

    Under the Employee Stock Purchase Plan (the Stock Purchase Plan), eligible
employees may purchase Common Stock at a price per share equal to 85% of the
lower of the fair market value of the

                                       63
<PAGE>
                        MILLENNIUM PHARMACEUTICALS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 2000

[11]  STOCKHOLDERS' EQUITY (CONTINUED)
Common Stock at the beginning or end of each offering period. Participation in
the offering is limited to 10% of the employee's compensation or $25,000 in any
calendar year. The first offering period began on October 1, 1996. A total of
2,600,000 shares of Common Stock have been reserved for issuance under the
Purchase Plan, as amended. At December 31, 2000, subscriptions were outstanding
for an estimated 19,080 shares at $57.72 per share.

    In connection with the mergers of MBio and MPMx into the Company, MBio's
1997 Equity Incentive Plan (the MBio 1997 Plan) and MPMx's 1997 Equity Incentive
Plan (the MPMx 1997 Plan) were assumed by Millennium. In December 1999, in
connection with the merger of LeukoSite and the Company, Millennium assumed the
LeukoSite 1993 Stock Option Plan. The Plans, as assumed, allow for the granting
of incentive and nonstatutory options to purchase up to 5,293,950 shares of
Millennium Common Stock. At December 31, 2000, a total of 2,451,063 shares of
Common Stock have been reserved for issuance under these assumed Plans.

    Options granted to employees generally vest over a four-year period. Options
granted to consultants and other nonemployees generally vest over the period of
service to the Company and the Company records compensation expense equal to the
fair value of these options.

    During 1995 and 1996, the Company granted options to purchase 6,322,728
shares of Common Stock at exercise prices below the deemed fair value for
accounting purposes of the stock options at the date of grant. The Company
recorded an increase to additional paid-in capital and a corresponding charge to
deferred compensation in the amount of approximately $3.5 million to recognize
the aggregate difference between such deemed fair value and the exercise price.
The deferred compensation was amortized over the option vesting period of four
years.

    During 1999, MBio granted options to purchase 76,180 shares of MBio Common
Stock at exercise prices below the deemed fair value for accounting purposes of
the stock options at the date of the grant. These options were converted to
59,788 options to purchase Common Stock of Millennium in connection with the
merger of MBio and the Company. During 2000, MPMx granted options to purchase
93,730 shares of MPMx Common Stock at exercise prices below the deemed fair
value for accounting purposes of the stock options at the date of the grant.
These options were converted to 74,984 options to purchase Common Stock of
Millennium in connection with the merger of MPMx and the Company. The Company
recorded increases to additional paid-in capital and a corresponding charge to
deferred compensation in the amount of approximately $1.1 million and $345,000,
respectively to recognize the aggregate difference between such deemed fair
value and the exercise price. The deferred compensation is being amortized over
the option vesting period of four years.

                                       64
<PAGE>
                        MILLENNIUM PHARMACEUTICALS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 2000

[11]  STOCKHOLDERS' EQUITY (CONTINUED)
    The following table presents the combined activity of the 1993 Plan, 1996
Plan, 1997 Plan, the 2000 Plan, the LeukoSite Plan, the MBio 1997 Plan, the MPMx
1997 Plan and the Director Plan for the years ended December 31, 2000, 1999 and
1998:

<TABLE>
<CAPTION>
                                                2000                     1999                     1998
                                       ----------------------   ----------------------   ----------------------
                                                    WEIGHTED-                WEIGHTED-                WEIGHTED-
                                                     AVERAGE                  AVERAGE                  AVERAGE
                                                    EXERCISE                 EXERCISE                 EXERCISE
                                         SHARES       PRICE       SHARES       PRICE       SHARES       PRICE
                                       ----------   ---------   ----------   ---------   ----------   ---------
<S>                                    <C>          <C>         <C>          <C>         <C>          <C>
Outstanding at January 1.............  27,468,636    $ 7.20     24,452,780    $ 3.78     21,854,540     $3.23
Granted..............................  13,611,995     47.52     13,188,624     10.93      7,589,460      4.69
Exercised............................  (9,966,672)     7.23     (8,553,856)     3.79     (2,774,472)     1.46
Canceled.............................  (1,574,719)    17.85     (1,618,912)     4.14     (2,216,748)     4.34
                                       ----------               ----------               ----------
Outstanding at December 31...........  29,539,240     25.22     27,468,636      7.20     24,452,780      3.78
                                       ==========               ==========               ==========
Options exercisable at December 31...   9,420,873    $11.80     10,297,760    $ 4.12      9,742,616     $2.88
                                       ==========               ==========               ==========
</TABLE>

    The weighted-average per share fair value of options granted during 2000,
1999, and 1998 was $31.68, $9.10 and $2.74, respectively.

    The following table presents weighted-average price and life information
about significant option groups outstanding at December 31, 2000 for the above
plans:

<TABLE>
<CAPTION>
                                OPTIONS OUTSTANDING             OPTIONS EXERCISABLE
                        ------------------------------------   ---------------------
                                      WEIGHTED-
                                       AVERAGE     WEIGHTED-               WEIGHTED-
                                      REMAINING     AVERAGE                 AVERAGE
  RANGE OF EXERCISE                  CONTRACTUAL   EXERCISE                EXERCISE
       PRICES             NUMBER     LIFE (YRS)      PRICE      NUMBER       PRICE
---------------------   ----------   -----------   ---------   ---------   ---------
<S>                     <C>          <C>           <C>         <C>         <C>
$0.03 - $4.00........    3,046,955       5.96      $    2.28   2,155,251     $2.08
4.13 - 4.72.........     4,068,464       6.82           4.44   2,581,305      4.39
4.75 - 7.53.........     3,060,296       7.13           5.48   1,609,028      5.34
7.57 - 9.00.........     3,473,777       8.27           8.26     934,991      8.17
9.09 - 30.00........     3,228,660       8.80          18.74     604,343     15.81
30.40 - 43.75.......     1,716,827       9.17          34.98     236,194     31.77
44.00 - 44.00.......     4,522,582       9.20          44.00     726,085     44.00
45.00 - 48.13.......     3,529,520       9.24          47.16     382,394     46.78
48.56 - 72.56.......     2,272,867       9.37          63.03     189,610     63.68
73.03 - 73.03.......       619,292       9.75          73.03       1,672     73.03
                        ----------                             ---------
                        29,539,240                             9,420,873
                        ==========                             =========
</TABLE>

    At December 31, 2000, 37,594,050 shares of Common Stock were reserved for
issuance upon exercise of stock options and warrants.

                                       65
<PAGE>
                        MILLENNIUM PHARMACEUTICALS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 2000

[11]  STOCKHOLDERS' EQUITY (CONTINUED)
SFAS NO. 123 DISCLOSURES

    Pursuant to the requirements of SFAS No. 123, the following are the pro
forma consolidated net income (loss) and consolidated net income (loss) per
share for 2000, 1999, and 1998 as if the compensation cost for the stock option
and stock purchase plans had been determined based on the fair value at the
grant date for grants in 2000, 1999, and 1998 (in thousands, except per share
amounts):

<TABLE>
<CAPTION>
                                                 2000                    1999                   1998
                                         ---------------------   ---------------------   -------------------
                                            AS          PRO         AS          PRO         AS        PRO
                                         REPORTED      FORMA     REPORTED      FORMA     REPORTED    FORMA
                                         ---------   ---------   ---------   ---------   --------   --------
<S>                                      <C>         <C>         <C>         <C>         <C>        <C>
Net income (loss) attributable to
  common stockholders..................  $(355,287)  $(556,676)  $(379,904)  $(400,972)  $10,338    $(6,782)
Basic net income (loss) per share......      (1.84)      (2.89)      (2.61)      (2.76)     0.09      (0.06)
Diluted net income (loss) per share....      (1.84)      (2.89)      (2.61)      (2.76)     0.08      (0.06)
</TABLE>

    The fair value of stock options and common shares issued pursuant to the
Stock Option and Stock Purchase Plans at the date of grant were estimated using
the Black-Scholes model with the following weighted-average assumptions:

<TABLE>
<CAPTION>
                                                              STOCK OPTIONS                          STOCK PURCHASE PLAN
                                                   ------------------------------------      ------------------------------------
                                                     2000          1999          1998          2000          1999          1998
                                                   --------      --------      --------      --------      --------      --------
<S>                                                <C>           <C>           <C>           <C>           <C>           <C>
Expected life (years)........................         4.5           4.4           4.4           0.5           0.5           0.5
Interest rate................................        6.43%         5.59%         5.36%         5.72%         4.83%         5.15%
Volatility...................................         .84           .67           .70           .84           .67           .70
</TABLE>

    The Company has never declared cash dividends on any of its capital stock
and does not expect to do so in the foreseeable future.

    The effects on 2000, 1999 and 1998 pro forma net income (loss) and net
income (loss) per share of expensing the estimated fair value of stock options
and common shares issued pursuant to the Stock Option and Stock Purchase Plans
are not necessarily representative of the effects on reported results of
operations for future years as the periods presented include only two, three and
four years, respectively, of option grants and share purchases under the
Company's plans.

[12]  INCOME TAXES

    The difference between the Company's "expected" tax provision (benefit), as
computed by applying the U.S. federal corporate tax rate of 34% to income (loss)
before minority interest, the

                                       66
<PAGE>
                        MILLENNIUM PHARMACEUTICALS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 2000

[12]  INCOME TAXES (CONTINUED)
cumulative effect of accounting change and provision for income taxes, and
actual tax is reconciled in the following chart (in thousands):

<TABLE>
<CAPTION>
                                                                2000        1999        1998
                                                              ---------   ---------   --------
<S>                                                           <C>         <C>         <C>
Loss before minority interest and cumulative effect of
  accounting change.........................................  $(201,927)  $(353,940)  $(3,841)
                                                              ---------   ---------   -------
Expected tax benefit at 34%.................................  $ (68,655)  $(120,340)  $(1,306)
State tax benefit net of federal benefit....................        110          11      (231)
Write off of purchased research and development.............         --     119,171        --
Amortization of goodwill....................................     15,857       1,298     1,081
Change in valuation allowance for deferred tax assets
  allocated to tax expense..................................     52,315        (543)     (458)
Stock compensation expense..................................        280         285       788
Nondeductible expenses......................................         93         118       126
                                                              ---------   ---------   -------
Income tax provision........................................  $      --   $      --   $    --
                                                              =========   =========   =======
</TABLE>

    At December 31, 2000, the Company has unused net operating loss
carryforwards of approximately $720.0 million available to reduce federal
taxable income expiring in 2004 through 2020 and $660.0 million available to
reduce state taxable income expiring in 2001 through 2005. The Company also has
federal and state research tax credits of approximately $32.3 million available
to offset federal and state income taxes, both of which expire beginning in
2005. Due to the degree of uncertainty related to the ultimate use of the loss
carryforwards and tax credits, the Company has fully reserved these tax
benefits. No income tax payments were made in 2000 and 1999.

                                       67
<PAGE>
                        MILLENNIUM PHARMACEUTICALS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 2000

[12]  INCOME TAXES (CONTINUED)

    Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets as of December 31 are as follows (in
thousands):

<TABLE>
<CAPTION>
                                                                2000        1999        1998
                                                              ---------   ---------   --------
<S>                                                           <C>         <C>         <C>
Net operating loss carryforwards............................  $ 287,714   $  70,747   $  6,556
Research and development tax credit carryforwards...........     32,307      22,202     12,720
Capitalized research costs..................................     19,880      21,101      5,875
Property and other intangible assets........................     12,762       5,929      3,310
Deferred revenue............................................     34,726          --         --
Other.......................................................      6,649       2,570      1,739
                                                              ---------   ---------   --------
Total deferred tax assets...................................    394,038     122,549     30,200
Valuation allowance.........................................   (394,038)   (122,549)   (30,200)
                                                              ---------   ---------   --------
Net deferred tax assets.....................................  $      --   $      --   $     --
                                                              =========   =========   ========
</TABLE>

    The valuation allowance increased by $271.5 million during 2000 due
primarily to the increase in research and development tax credits, net operating
loss carryforwards related to the exercise of stock options and the cumulative
effect of accounting change. The valuation allowance increased by $92.3 million
during 1999 due primarily to the increase in research and development tax
credits, net operating loss carryforwards and the addition of various deferred
tax assets related to the LeukoSite merger offset by the utilization of net
operating loss carryforwards. The deferred tax assets acquired from LeukoSite
and ChemGenics are subject to review and possible adjustments by the Internal
Revenue Service and may be limited due to the change in ownership provisions of
the Internal Revenue Code.

    Any subsequently recognized tax benefits relating to the valuation allowance
for deferred tax assets as of December 31, 2000 would be allocated as follows
(in thousands):

<TABLE>
<S>                                                           <C>
Reported in the statement of operations.....................  $133,580
Reported as a decrease to goodwill..........................    57,285
Reported in additional paid-in capital......................   203,173
                                                              --------
                                                              $394,038
                                                              ========
</TABLE>

[13]  SUBSEQUENT EVENTS (UNAUDITED)

    On January 2001, Aventis made a $50.0 million purchase of Millennium Common
Stock pursuant to the Investment Agreement between the Company and Aventis.

    In February 2001, the Company entered into an Agreement for Lease, relating
to a building to be constructed for laboratory and office space in Cambridge,
England. The lease is expected to have a 20-year term and to commence in 2003.
The Company is responsible for a portion of the construction costs, which it
estimates to be approximately $21.0 million. Rent is expected to be
approximately $2.4 million per year and is subject to market adjustments at the
end of the 5th, 10th and 15th years.

    In February 2001, M&I received a Class I complete response letter from the
FDA relating to the CAMPATH-Registered Trademark- product. In the letter, the
FDA indicated that the timeframe for accelerated approval has been extended for
a 60-day period. M&I expects to complete ongoing discussions with the FDA on

                                       68
<PAGE>
                        MILLENNIUM PHARMACEUTICALS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 2000

[13]  SUBSEQUENT EVENTS (UNAUDITED) (CONTINUED)
final package labeling and design of a post-marketing confirmatory study for the
CAMPATH-Registered Trademark- product during this time.

    In March 2001, the Company entered into a strategic alliance with Abbott
Laboratories. This alliance is for a five-year term, and is primarily for
collaborative research and development in the area of metabolic diseases. The
Company and Abbott have agreed to share equally the cost of developing,
manufacturing and marketing products on a worldwide basis. This arrangement with
Abbott also includes a technology exchange and development agreement and an
equity investment by Abbott, under which the Company is eligible to receive up
to $250 million. As part of this $250.0 million equity investment, Abbott has
agreed to make an initial investment of $50.0 million in April 2001 and
additional investments totalling $200 million in seven quarterly installments
from later in 2001 through 2003.

                                       69
<PAGE>
[14]  QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

    The quarterly information for the four quarters of 2000 reflects the
quarters as previously reported prior to the adoption of SAB 101, and as
restated for the retroactive adoption of SAB 101 to January 1, 2000, as noted in
the column headings. The 1999 quarterly information has not been restated for
the adoption of SAB 101.
<TABLE>
<CAPTION>
                                       FIRST QUARTER ENDED        SECOND QUARTER ENDED       THIRD QUARTER ENDED
                                          MARCH 31, 2000             JUNE 30, 2000            SEPTEMBER 30, 2000
                                     ------------------------   ------------------------   ------------------------
                                     AS PREVIOUSLY      AS      AS PREVIOUSLY      AS      AS PREVIOUSLY      AS
                                       REPORTED      RESTATED     REPORTED      RESTATED     REPORTED      RESTATED
                                     -------------   --------   -------------   --------   -------------   --------
<S>                                  <C>             <C>        <C>             <C>        <C>             <C>
Statement of Operations Data:
Revenue under strategic
  alliances........................    $ 46,773      $ 47,236     $ 46,873      $ 46,473     $ 49,847      $ 43,874
Costs and expenses:
  Research and development.........      60,100        60,100       62,011        62,011       68,783        68,783
  General and administrative.......      10,823        10,823       11,057        11,057       12,439        12,439
  Amortization of intangible
    assets.........................      11,970        11,970       12,161        12,161       14,480        14,480
                                       --------      --------     --------      --------     --------      --------
Total costs and expenses...........      82,893        82,893       85,229        85,229       95,702        95,702
                                       --------      --------     --------      --------     --------      --------
Loss from operations...............     (36,120)      (35,657)     (38,356)      (38,756)     (45,855)      (51,828)
Other income, net..................       2,888         2,888        2,775         2,775        5,472         5,472
Debt conversion expense............          --            --           --            --      (49,332)      (49,332)
                                       --------      --------     --------      --------     --------      --------
Net loss...........................     (33,232)      (32,769)     (35,581)      (35,981)     (89,715)      (95,688)
Deemed preferred stock dividend....          --            --      (45,668)      (45,668)          --            --
                                       --------      --------     --------      --------     --------      --------
Net loss attributable to common
  stockholders.....................    $(33,232)     $(32,769)    $(81,249)     $(81,649)    $(89,715)     $(95,688)
                                       ========      ========     ========      ========     ========      ========
AMOUNTS PER COMMON SHARE:
Basic and diluted net loss per
  share............................    $  (0.18)     $  (0.18)    $  (0.44)     $  (0.44)    $  (0.46)     $  (0.49)
Weighted average shares, basic and
  diluted..........................     180,890       180,890      184,440       184,440      193,570       193,570

<CAPTION>
                                       FOURTH QUARTER ENDED
                                         DECEMBER 31, 2000
                                     -------------------------
                                     AS PREVIOUSLY      AS
                                       REPORTED      RESTATED
                                     -------------   ---------
<S>                                  <C>             <C>
Statement of Operations Data:
Revenue under strategic
  alliances........................    $  69,697     $  58,686
Costs and expenses:
  Research and development.........       77,846        77,846
  General and administrative.......       14,996        14,996
  Amortization of intangible
    assets.........................       16,512        16,512
                                       ---------     ---------
Total costs and expenses...........      109,354       109,354
                                       ---------     ---------
Loss from operations...............      (39,657)      (50,668)
Other income, net..................       18,699        18,699
Debt conversion expense............       (5,520)       (5,520)
                                       ---------     ---------
Net loss...........................      (26,478)      (37,489)
Deemed preferred stock dividend....           --            --
                                       ---------     ---------
Net loss attributable to common
  stockholders.....................    $ (26,478)    $ (37,489)
                                       =========     =========
AMOUNTS PER COMMON SHARE:
Basic and diluted net loss per
  share............................    $   (0.13)    $   (0.18)
Weighted average shares, basic and
  diluted..........................      211,786       211,786
</TABLE>

<TABLE>
<CAPTION>
                                         FIRST QUARTER ENDED   SECOND QUARTER ENDED    THIRD QUARTER ENDED   FOURTH QUARTER ENDED
                                           MARCH 31, 1999          JUNE 30, 1999       SEPTEMBER 30, 1999     DECEMBER 31, 1999
                                         -------------------   ---------------------   -------------------   --------------------
<S>                                      <C>                   <C>                     <C>                   <C>
Statement of Operations Data:
Revenue under strategic alliances......       $ 40,992               $ 47,273               $ 40,316              $  55,098
Costs and expenses:
  Research and development.............         35,433                 39,484                 38,359                 46,601
  General and administrative...........          7,126                  8,502                  8,279                  8,989
  Acquired in-process R&D..............             --                     --                     --                350,503
  Amortization of intangible assets....            676                    675                    676                  1,789
                                              --------               --------               --------              ---------
Total costs and expenses...............         43,235                 48,661                 47,314                407,882
                                              --------               --------               --------              ---------
Loss from operations...................         (2,243)                (1,388)                (6,998)              (352,784)
Other income, net......................          4,315                  2,392                  2,529                  2,217
                                              --------               --------               --------              ---------
Net income (loss)......................       $  2,072               $  1,004               $ (4,469)             $(350,567)
                                              ========               ========               ========              =========
Basic net income (loss) per share......       $   0.01               $   0.01               $  (0.03)             $   (2.31)
Weighted average shares, basic.........        141,260                143,276                145,480                151,532
Diluted net income (loss) per share....       $   0.01               $   0.01               $  (0.03)             $   (2.31)
Weighted average shares, diluted.......        152,774                153,964                145,480                151,532
</TABLE>

                                       70
<PAGE>
ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

    During the Company's two most recent fiscal years there have been no
disagreements with our independent accountants on accounting and financial
disclosure matters.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS

    Except as set forth below, the information required by this item is
incorporated by reference from the information under the captions "Election of
Directors" and "Section 16(a) Beneficial Ownership Reporting Compliance"
contained in our Proxy Statement to be filed with the Securities and Exchange
Commission in connection with the solicitation of proxies for the Company's 2001
Annual Meeting of Stockholders to be held on May 10, 2001 (the "Proxy
Statement").

    Certain required information about Executive Officers of the Company is
contained in Part I of this Annual Report on Form 10-K under the heading
"Executive Officers of the Company."

ITEM 11.  EXECUTIVE COMPENSATION

    The information required regarding executive compensation is incorporated by
reference from the information under the captions "Director Compensation,"
"Compensation of Executive Officers," "Compensation Committee Report on
Executive Compensation" and "Compensation Committee Interlocks and Insider
Participation" contained in the Proxy Statement.

ITEM 12.  STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    The information required by this item is incorporated by reference from the
information under the caption "Ownership of Millennium's Common Stock" contained
in the Proxy Statement.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    The information required by this item is incorporated by reference from the
information contained under the caption "Certain Relationships and Related
Transactions" contained in the Proxy Statement.

                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) The following documents are included as part of this Annual Report on
    Form 10-K.

    1.  Financial Statements:

<TABLE>
<CAPTION>
                                                               PAGE NUMBER
                                                              IN THIS REPORT
                                                              --------------
<S>                                                           <C>
Report of Independent Auditors on Financial Statements......        44
Consolidated Balance Sheets at December 31, 2000 and 1999...        45
Consolidated Statements of Operations for the years ended
  December 31, 2000, 1999, and 1998.........................        46
Consolidated Statements of Cash Flows for the years ended
  December 31, 2000, 1999, and 1998.........................        47
Statements of Stockholders' Equity for the years ended
  December 31, 2000, 1999, and 1998.........................        48
Notes to Financial Statements...............................        49
</TABLE>

                                       71
<PAGE>
    2.  All schedules are omitted as the information required is inapplicable or
       the information is presented in the consolidated financial statements or
       the related notes.

    3.  The Exhibits listed in the Exhibit Index immediately preceding the
       Exhibits are filed as a part of this Annual Report on Form 10-K.

(b) The following Current Reports on Form 8-K were filed with the Securities and
    Exchange Commission by the Company since October 1, 2000:

    1.  A Current Report on Form 8-K was filed on October 2, 2000 to report,
       pursuant to Item 5, that (i) the Company had issued a press release
       announcing a public offering of common stock and (ii) that its Board of
       Directors approved the acceleration of the dividend distribution date for
       its previously announced two-for-one stock split to October 4, 2001.

    2.  A Current Report on Form 8-K was filed on October 6, 2000 to file,
       pursuant to Item 5, an underwriting agreement for the Company's
       October 2000 public offering of common stock.

    3.  A Current Report on Form 8-K was filed on January 24, 2001 to report,
       pursuant to Item 5, that the Company adopted Staff Accounting Bulletin
       101 "Revenue Recognition in Financial Statements" in the fourth quarter
       of 2000 and recorded a cumulative effect of change in accounting
       principle related to contract revenues recognized in prior periods
       resulting in a one-time, non-cash charge of $107.7 million for the year
       ended December 31, 2000.

    4.  A Current Report on Form 8-K was filed on March 12, 2001 to report,
       pursuant to Item 5, that the Company had issued a press release
       announcing that the Company and Abbott Laboratories had entered into a
       strategic alliance for collaborative research and development in the area
       of metabolic diseases, including an equity investment by Abbott of up to
       $250 million over the first two years of the collaboration.

    THE FOLLOWING ARE TRADEMARKS OF THE COMPANY, SOME OF WHICH ARE MENTIONED IN
THIS ANNUAL REPORT ON FORM 10-K: "CHANGING THE PRACTICE OF MEDICINE"(SM),
CHEMOPREDICTION-TM-, CYTOMED-REGISTERED TRADEMARK-, DGX-REGISTERED TRADEMARK-,
DIAGNOMICS-REGISTERED TRADEMARK-, EXPRESSION EXPLORER-REGISTERED TRADEMARK-,
G2P-TM-, "GENE TO PATIENT"-TM-, THE MILLENNIUM M LOGO AND DESIGN (REGISTERED),
MBIO-TM-, MELASTATIN-REGISTERED TRADEMARK-, MILLENNIUM-REGISTERED TRADEMARK-,
MILLENNIUM BIOTHERAPEUTICS-REGISTERED TRADEMARK-, MILLENNIUM INFORMATION-TM-,
MILLENNIUM PHARMACEUTICALS-REGISTERED TRADEMARK-, MILLENNIUM PREDICTIVE
MEDICINE-REGISTERED TRADEMARK-, MPMX-REGISTERED TRADEMARK-,
PHARMACOINFORMATICS-TM-, PROTEIN EXPLORER-TM-, RADE-TM-, SEQUENCE
EXPLORER-REGISTERED TRADEMARK-, SMARTCHIP-REGISTERED TRADEMARK-, AND
"TRANSCENDING THE LIMITS OF MEDICINE"(SM). CAMPATH-REGISTERED TRADEMARK- IS A
REGISTERED TRADEMARK, AND MABCAMPATH-TM- IS A TRADEMARK, OF MILLENNIUM & ILEX
PARTNERS. OTHER TRADEMARKS USED IN THIS ANNUAL REPORT ON FORM 10-K ARE THE
PROPERTY OF THEIR RESPECTIVE OWNERS.

                                       72
<PAGE>
                                   SIGNATURES

    In accordance with the requirements of the Section 13 or 15(d) of the
Securities Exchange Act of 1934, the undersigned, duly authorized officers of
Millennium have signed this report on Millennium's behalf.

<TABLE>
<S>                                                    <C>  <C>
                                                       MILLENNIUM PHARMACEUTICALS, INC.
Date: March 14, 2001

                                                       By:              /s/ MARK J. LEVIN
                                                            -----------------------------------------
                                                                          Mark J. Levin
                                                                 CHAIRMAN OF THE BOARD, PRESIDENT
                                                                   AND CHIEF EXECUTIVE OFFICER
</TABLE>

    In accordance with the requirements of the Securities Exchange Act of 1934,
the following persons have signed this report below, on behalf of the Company,
in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
                      NAME                                       TITLE                      DATE
                      ----                                       -----                      ----
<C>                                               <S>                                  <C>
                                                  Chairman of the Board, President
               /s/ MARK J. LEVIN                    and Chief Executive Officer;
     --------------------------------------         Director (Principal Executive      March 14, 2001
                 Mark J. Levin                      Officer)

               /s/ KEVIN P. STARR                 Senior Vice President and Chief
     --------------------------------------         Financial Officer (Principal       March 14, 2001
                 Kevin P. Starr                     Financial and Accounting Officer)

               /s/ EUGENE CORDES
     --------------------------------------       Director                             March 14, 2001
                 Eugene Cordes

           /s/ A. GRANT HEIDRICH, III
     --------------------------------------       Director                             March 14, 2001
             A. Grant Heidrich, III

             /s/ RAJU KUCHERLAPATI
     --------------------------------------       Director                             March 14, 2001
               Raju Kucherlapati

               /s/ ERIC S. LANDER
     --------------------------------------       Director                             March 14, 2001
                 Eric S. Lander

           /s/ EDWARD D. MILLER, JR.
     --------------------------------------       Director                             March 14, 2001
             Edward D. Miller, Jr.

              /s/ NORMAN C. SELBY
     --------------------------------------       Director                             March 14, 2001
                Norman C. Selby

               /s/ KENNETH E. WEG
     --------------------------------------       Director                             March 14, 2001
                 Kenneth E. Weg
</TABLE>

                                       73
<PAGE>
                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
       EXHIBIT
         NO.            DESCRIPTION
---------------------   ------------
<C>                     <C>            <S>
                        ARTICLES OF INCORPORATION AND BY-LAWS
         3.1                 (2)(15)   Amended and Restated Certificate of Incorporation of the
                                       Company, as amended.

         3.2             (2)(14)(17)   Amended and Restated Bylaws of the Company, as amended.

                        INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING INDENTURES
         4.1                     (1)   Specimen Certificate for shares of Common Stock, $.001 par
                                       value, of the Company.

         4.2                    (18)   Indenture, dated as of January 20, 2000, between the Company
                                       and State Street Bank and Trust Company, as Trustee
                                       (including the form of debenture).

                        MATERIAL CONTRACTS
        10.1              (4)(5)(18)   Form of Master Equipment Lease Financing Agreement, dated
                                       September 19, 1996 by and between the Company and GE Capital
                                       Corporation, as amended.

        10.2                       *   Addendum No. 4 dated February 28, 2001 to Master Lease
                                       Agreement dated as of September 19, 1996.

        10.3              (1)(18)(9)   Lease Agreement dated August 26, 1993, as amended, by and
                                       between the Company and the Massachusetts Institute of
                                       Technology, as amended, for 640 Memorial Drive, Cambridge,
                                       MA.

        10.4                       *   Lease Extension Agreement dated December 1, 2000 by and
                                       between the Company and the Massachusetts Institute of
                                       Technology for 640 Memorial Drive, Cambridge, MA.

        10.5                 (7)(18)   Lease dated November 17, 1997 by and between the Company and
                                       FC 45/75 Sidney, Inc., as amended, for 45 and 75 Sidney
                                       Street, Cambridge, MA.

        10.6                    (17)   Lease Agreement dated August 4, 2000 by and between the
                                       Company and Forest City Enterprises, Inc. for 35 Landsdowne
                                       Street, Cambridge, MA.

        10.7                    (17)   Lease Agreement dated August 4, 2000 by and between the
                                       Company and Forest City Enterprises, Inc. for 40 Landsdowne
                                       Street, Cambridge, MA.

        10.8                       *   Agreement for Lease dated February 9, 2001 among Granta Park
                                       Limited, MEPC Limited, Millennium Pharmaceuticals Limited
                                       and the Company (including the form of lease).

        10.9                    +(3)   CNS Research, Collaboration and License Agreement effective
                                       as of August 1, 1996 by and between American Home Products
                                       Corporation and the Company.

        10.10                   +(5)   Sponsored Research Agreement by and among Whitehead
                                       Institute for Biomedical Research, Affymetrix, Inc.,
                                       Bristol-Myers Squibb Company and the Company dated April 28,
                                       1997.

        10.11                   +(5)   Consortium Member Agreement by and among Affymetrix, Inc.,
                                       Bristol-Myers Squibb Company and the Company dated April 28,
                                       1997.

        10.12                   +(6)   Agreement dated October 27, 1997 by and among the Company,
                                       Monsanto Company and Cereon Genomics Inc. (formerly Monsanto
                                       Agricultural Genomics II LLC).

        10.13               +(9)(17)   Agreement dated September 22, 1998 by and between the
                                       Company and Bayer AG, as amended.
</TABLE>

                                       74
<PAGE>

<TABLE>
<CAPTION>
       EXHIBIT
         NO.            DESCRIPTION
---------------------   ------------
<C>                     <C>            <S>
        10.14                     +*   Amendment No. 4 dated December 1, 2000 to the Agreement
                                       dated September 22, 1998 by and between the Company and
                                       Bayer AG.

        10.15                    (9)   Investment Agreement dated September 22, 1998 by and between
                                       Bayer AG and the Company.

        10.16                    (9)   Registration Rights Agreement dated November 10, 1998 by and
                                       between Bayer AG and the Company.

        10.17                  +(10)   Collaboration and License Agreement dated February 21, 1999
                                       by and between the Company (as successor to Millennium
                                       Predictive Medicine, Inc.) and Becton, Dickinson and
                                       Company.

        10.18                     +*   First Amendment dated as of November 17, 2000 to the
                                       Collaboration and License Agreement dated February 21, 1999
                                       by and between the Company (as successor to Millennium
                                       Predictive Medicine, Inc.) and Becton, Dickinson and
                                       Company.

        10.19                     +*   Second Amendment dated as of December 20, 2000 to the
                                       Collaboration and License Agreement dated February 21, 1999
                                       by and between the Company (as successor to Millennium
                                       Predictive Medicine, Inc.) and Becton, Dickinson and
                                       Company.

        10.20                  +(18)   Supply Agreement dated as of June 4, 1999 between Millennium
                                       & ILEX Partners, L.P. (formerly L&I Partners, L.P.) and
                                       Boehringer Ingelheim Pharma KG.

        10.21                  +(11)   License Agreement between the Company (as successor to
                                       LeukoSite, Inc.) and British Technology Group Limited dated
                                       March 31, 1997.

        10.22                      *   Supplemental Agreement dated May 19, 1998 between British
                                       Technology Group Limited and the Company (as successor to
                                       LeukoSite, Inc.) to the License Agreement between the
                                       Company (as successor to LeukoSite, Inc.) and British
                                       Technology Group Limited dated March 31, 1997.

        10.23                     +*   Deed of Variation dated May 19, 1998 between British
                                       Technology Group Limited and the Company (as successor to
                                       LeukoSite, Inc.) to the License Agreement between the
                                       Company (as successor to LeukoSite, Inc.) and British
                                       Technology Group Limited dated March 31, 1997.

        10.24                     +*   Further Deed of Variation dated August 23, 1999 between BTG
                                       International Limited and the Company (as successor to
                                       LeukoSite, Inc.) to the License Agreement between the
                                       Company (as successor to LeukoSite, Inc.) and British
                                       Technology Group Limited dated March 31, 1997.

        10.25                  +(11)   License Agreement, dated May 2, 1997, between Millennium &
                                       ILEX Partners, L.P. (formerly L&I Partners, L.P.) and the
                                       Company (as successor to LeukoSite, Inc.).

        10.26                      *   First Amended and Restated Agreement of Limited Partnership
                                       of Millennium & ILEX Partners L.P. (formerly L&I Partners,
                                       L.P.).

        10.27                  +(12)   Development Collaboration and License Agreement, dated as of
                                       December 18, 1997, between the Company (as successor to
                                       LeukoSite, Inc.) and Genentech, Inc.
</TABLE>

                                       75
<PAGE>

<TABLE>
<CAPTION>
       EXHIBIT
         NO.            DESCRIPTION
---------------------   ------------
<C>                     <C>            <S>
        10.28                  +(13)   Distribution and Development Agreement dated August 24, 1999
                                       between Millennium & ILEX Partners, L.P. (formerly L&I
                                       Partners, L.P.) and Schering AG.

        10.29                     +*   Amendment No. 1 dated December 19, 2000 to Distribution and
                                       Development Agreement dated August 24, 1999 between
                                       Millennium & ILEX Partners, L.P. (formerly L&I Partners,
                                       L.P.) and Schering AG.

        10.30                   (18)   Registration Rights Agreement dated January 20, 2000 between
                                       the Company and Goldman, Sachs & Co., ING Barings LLC,
                                       FleetBoston Robertson Stephens Inc., and Credit Suisse First
                                       Boston Corporation.

        10.31                  +(16)   Collaboration and License Agreement dated June 22, 2000 by
                                       and between the Company and Aventis Pharmaceuticals, Inc.

        10.32                  +(16)   Technology Development Agreement dated June 22, 2000 by and
                                       between the Company and Aventis Pharmaceuticals, Inc.

        10.33                  +(16)   Technology Transfer Agreement dated June 22, 2000 by and
                                       between the Company and Aventis Pharmaceuticals, Inc.

        10.34                   (16)   Registration Rights Agreement dated June 22, 2000 by and
                                       among the Company and Aventis Pharmaceuticals, Inc.

        10.35                   (16)   Investment Agreement dated June 22, 2000 by and between the
                                       Company and Aventis Pharmaceuticals, Inc.

                        MATERIAL CONTRACTS--MANAGEMENT CONTRACTS AND COMPENSATORY PLANS
        10.36                   (1)#   1996 Director Option Plan.

        10.37                   (1)#   Agreement dated as of April 21, 1993, by and between the
                                       Company and Raju Kucherlapati.

        10.38                   (1)#   Letter Agreement dated April 14, 1994 by and between the
                                       Company and Steven H. Holtzman.

        10.39                  (18)#   Form of Employment Offer Letter entered into with certain
                                       executive officers of the Company, together with a schedule
                                       of parties thereto.

        10.40                     *#   Form of Promissory Notes made in favor of the Company by
                                       certain executive officers of the Company, together with a
                                       schedule of parties thereto.

        10.41                     *#   Form of Stock Restriction Agreement entered into with
                                       certain executive officers of the Company, together with a
                                       schedule of parties thereto.

        10.42                     *#   Executive Employment Agreement with Paul R. Hamelin dated
                                       September 29, 2000.

        10.43                     *#   Promissory Note dated January 3, 2001 made in favor of the
                                       Company by Paul R. Hamelin.

        21                         *   Subsidiaries of the Company.

        23.1                       *   Consent of Ernst & Young LLP, Independent Auditors.
</TABLE>

------------------------

(1) Incorporated herein by reference to the Company's Registration Statement on
    Form S-1, as amended (File No. 333-2490).

(2) Incorporated herein by reference to the Company's 10-Q for the quarter
    ending March 31, 1996.

(3) Incorporated herein by reference to the Company's 10-Q for the quarter
    ending June 30, 1996.

                                       76
<PAGE>
(4) Incorporated herein by reference to the Company's 10-Q for the quarter
    ending September 30, 1996.

(5) Incorporated herein by reference to the Company's 10-Q for the quarter
    ending June 30, 1997.

(6) Incorporated hereby by reference to the Company's Amendment No. 1 to Current
    Report on Form 8-K, filed with the SEC on January 30, 1998.

(7) Incorporated herein by reference to the Company's 10-K for the fiscal year
    ending December 31, 1997.

(8) Incorporated herein by reference to the Company's 10-Q for the quarter
    ending September 30, 1998.

(9) Incorporated herein by reference to the Company's 10-K for the fiscal year
    ending December 31, 1998.

(10) Incorporated herein by reference to the Company's 10-Q for the quarter
    ending June 30, 1999.

(11) Incorporated by reference to LeukoSite's Registration Statement on
    Form S-1 (No. 333-30213).

(12) Incorporated by reference to LeukoSite's Current Report on Form 8-K dated
    January 26, 1998.

(13) Incorporated by reference to LeukoSite's Current Report on Form 8-K dated
    August 24, 1999.

(14) Incorporated herein by reference to the Company's 10-Q for the quarter
    ending March 31, 2000.

(15) Incorporated herein by reference to the Company's Currant Report on
    Form 8-K dated April 12, 2000.

(16) Incorporated herein by reference to the Company's 10-Q for the quarter
    ending June 30, 2000.

(17) Incorporated herein by reference to the Company's 10-Q for the quarter
    ending September 30, 2000.

(18) Incorporated herein by reference to the Company's 10-K for the fiscal year
    ending December 31, 1999.

#  Management contract or compensatory plan or arrangement filed as an exhibit
    to this Form pursuant to Items 14(a) and 14(c) of Form 10-K.

*   Filed herewith.

+  Confidential treatment requested as to certain portions.

                                       77