##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended: June 30, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from            to
 Commission file number 000-31191
 THE MEDICINES COMPANY
  Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    04-3324394
(I.R.S. Employer
Identification No.)8 Sylvan Way 
Parsippany, New Jersey
(Address of principal executive offices)
    
    07054
(Zip Code)
 (973) 290-6000
  þ o
  o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
  o þ




---



##### 



THE MEDICINES COMPANY
  Part I. Financial InformationItem 1 - Financial Statements
    
    
    1Item 2 - Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 3 - Quantitative and Qualitative Disclosures about Market Risk
    
    
    31Item 4 - Controls and Procedures
    
    
    32Part II. Other InformationItem 1 - Legal Proceedings
    
    
    33Item 1A - Risk Factors
    
    
    34Item 5 - Other Information
    
    
    50Item 6 - Exhibits
    
    
    50Signatures
    
    
    51Exhibit Index
    
    
    52EX-31.1EX-31.2EX-32.1EX-32.2
  2




---



##### Table of Contents



Item 1. Financial Statements
 THE MEDICINES COMPANY
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
 June 30,
    
    
    December 31,2010
    
    
    2009(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    101,696
    
    
    $
    72,225Available for sale securities
    
    
    117,107
    
    
    
    103,966Accrued interest receivable
    
    
    1,256
    
    
    
    922Accounts receivable, net of allowances of
approximately $19.1 million and $6.4 million
at June 30, 2010 and December 31, 2009,
respectively
    
    
    20,719
    
    
    
    29,789Inventory
    
    
    28,423
    
    
    
    25,836Prepaid expenses and other current assets
    
    
    6,029
    
    
    
    9,984Total current assets
    
    
    275,230
    
    
    
    242,722Fixed assets, net
    
    
    22,166
    
    
    
    25,072Intangible assets, net
    
    
    83,802
    
    
    
    84,678Goodwill
    
    
    14,671
    
    
    
    14,934Restricted cash
    
    
    7,049
    
    
    
    7,049Other assets
    
    
    257
    
    
    
    321Total assets
    
    $
    403,175
    
    
    $
    374,776LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    7,945
    
    
    $
    8,431Accrued expenses
    
    
    71,680
    
    
    
    77,088Deferred revenue
    
    
    505
    
    
    
    1,100Total current liabilities
    
    
    80,130
    
    
    
    86,619Contingent purchase price
    
    
    25,145
    
    
    
    23,667Deferred tax liabilities
    
    
    19,252
    
    
    
    18,395Other liabilities
    
    
    5,784
    
    
    
    5,706Total liabilities
    
    
    130,311
    
    
    
    134,387Stockholders equity:Preferred stock, $1.00 par value per share,
5,000,000 shares authorized; no shares issued
and outstanding
    
    
    
    
    
    
    Common stock, $0.001 par value per share,
125,000,000 shares authorized; 53,347,132 and
52,830,376 issued and outstanding at June 30,
2010 and December 31, 2009, respectively
    
    
    53
    
    
    
    53Additional paid-in capital
    
    
    592,267
    
    
    
    584,678Accumulated deficit
    
    
    (319,319
    )
    
    
    (344,177
    )Accumulated other comprehensive loss
    
    
    (137
    )
    
    
    (165
    )Total stockholders equity
    
    
    272,864
    
    
    
    240,389Total liabilities and stockholders equity
    
    $
    403,175
    
    
    $
    374,776
  1




---



##### Table of Contents



THE MEDICINES COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net revenue
    
    $
    110,135
    
    
    $
    104,175
    
    
    $
    212,223
    
    
    $
    203,392Operating expenses:Cost of revenue
    
    
    33,568
    
    
    
    30,353
    
    
    
    62,337
    
    
    
    58,650Research and development
    
    
    20,575
    
    
    
    21,784
    
    
    
    37,452
    
    
    
    46,221Selling, general and administrative
    
    
    39,409
    
    
    
    45,910
    
    
    
    85,530
    
    
    
    99,504Total operating expenses
    
    
    93,552
    
    
    
    98,047
    
    
    
    185,319
    
    
    
    204,375Income (loss) from operations
    
    
    16,583
    
    
    
    6,128
    
    
    
    26,904
    
    
    
    (983
    )Other (expense) income
    
    
    (117
    )
    
    
    734
    
    
    
    (428
    )
    
    
    1,903Income before income taxes
    
    
    16,466
    
    
    
    6,862
    
    
    
    26,476
    
    
    
    920Provision for income taxes
    
    
    (1,040
    )
    
    
    (3,051
    )
    
    
    (1,618
    )
    
    
    (458
    )Net income
    
    $
    15,426
    
    
    $
    3,811
    
    
    $
    24,858
    
    
    $
    462Basic earnings per common share
    
    $
    0.29
    
    
    $
    0.07
    
    
    $
    0.47
    
    
    $
    0.01Diluted earnings per common share
    
    $
    0.29
    
    
    $
    0.07
    
    
    $
    0.47
    
    
    $
    0.01Weighted average number of common shares outstanding:Basic
    
    
    52,819
    
    
    
    52,232
    
    
    
    52,658
    
    
    
    52,187Diluted
    
    
    52,924
    
    
    
    52,532
    
    
    
    52,823
    
    
    
    52,534
 .
 2




---



##### Table of Contents



THE MEDICINES COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 Six Months EndedJune 30,2010
    
    
    2009Cash flows from operating activities:Net income
    
    $
    24,858
    
    
    $
    462Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    3,725
    
    
    
    2,767Amortization of net premiums and discounts on available for sale securities
    
    
    1,596
    
    
    
    867Unrealized foreign currency transaction (gains) losses, net
    
    
    (785
    )
    
    
    318Non-cash stock compensation expense
    
    
    5,080
    
    
    
    10,888Loss on disposal of fixed assets
    
    
    6
    
    
    
    11Deferred tax provision
    
    
    857
    
    
    
    234Tax effect of option exercises
    
    
    
    
    
    
    (83
    )Adjustment to contingent purchase price
    
    
    1,478
    
    
    
    481Changes in operating assets and liabilities:Accrued interest receivable
    
    
    (335
    )
    
    
    404Accounts receivable
    
    
    8,741
    
    
    
    3,546Inventory
    
    
    (2,629
    )
    
    
    2,657Prepaid expenses and other current assets
    
    
    3,654
    
    
    
    (891
    )Accounts payable
    
    
    (427
    )
    
    
    (4,432
    )Accrued expenses
    
    
    (4,698
    )
    
    
    (255
    )Deferred revenue
    
    
    (577
    )
    
    
    (5,085
    )Other liabilities
    
    
    78
    
    
    
    (121
    )Net cash provided by operating activities
    
    
    40,622
    
    
    
    11,768Cash flows from investing activities:Purchases of available for sale securities
    
    
    (65,855
    )
    
    
    (64,372
    )Proceeds from maturities and sales of available for sale securities
    
    
    51,100
    
    
    
    83,786Purchases of fixed assets
    
    
    (119
    )
    
    
    (34
    )Adjustment to goodwill
    
    
    263
    
    
    
    Acquisition of business, net of cash acquired
    
    
    
    
    
    
    (38,223
    )Increase in restricted cash
    
    
    
    
    
    
    (3,000
    )Net cash used in investing activities
    
    
    (14,611
    )
    
    
    (21,843
    )Cash flows from financing activities:Proceeds from issuances of common stock, net
    
    
    2,510
    
    
    
    890Net cash provided by financing activities
    
    
    2,510
    
    
    
    890Effect of exchange rate changes on cash
    
    
    950
    
    
    
    (680
    )Increase (decrease) in cash and cash equivalents
    
    
    29,471
    
    
    
    (9,865
    )Cash and cash equivalents at beginning of period
    
    
    72,225
    
    
    
    81,018Cash and cash equivalents at end of period
    
    $
    101,696
    
    
    $
    71,153Supplemental disclosure of cash flow information:Taxes paid
    
    $
    200
    
    
    $
    125
 3




---



##### Table of Contents



THE MEDICINES COMPANY
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 ® ® ® ®
 1. Nature of Business
 ® ®
 2. Significant Accounting Policies
  Basis of Presentation
    Use of Estimates
  4




---



##### Table of Contents



Reclassifications
  Recent Accounting Pronouncements
  3. Stock-Based Compensation
    4. Earnings per Share
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009(in thousands, except per share amounts)Basic and dilutedNet income
    
    $
    15,426
    
    
    $
    3,811
    
    
    $
    24,858
    
    
    $
    462Weighted average common shares outstanding, basic
    
    
    52,819
    
    
    
    52,232
    
    
    
    52,658
    
    
    
    52,187Plus: net effect of dilutive stock options and
restricted common shares
    
    
    105
    
    
    
    300
    
    
    
    165
    
    
    
    347Weighted average common shares outstanding, diluted
    
    
    52,924
    
    
    
    52,532
    
    
    
    52,823
    
    
    
    52,534Earnings per share, basic
    
    $
    0.29
    
    
    $
    0.07
    
    
    $
    0.47
    
    
    $
    0.01Earnings per share, diluted
    
    $
    0.29
    
    
    $
    0.07
    
    
    $
    0.47
    
    
    $
    0.01
  5




---



##### Table of Contents



5. Comprehensive Income (Loss)
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,Comprehensive Income (Loss)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009(in thousands)Net income
    
    $
    15,426
    
    
    $
    3,811
    
    
    $
    24,858
    
    
    $
    462Unrealized loss on available for sale securities
    
    
    (12
    )
    
    
    (157
    )
    
    
    (19
    )
    
    
    (761
    )Foreign currency translation adjustment
    
    
    (10
    )
    
    
    (1
    )
    
    
    47
    
    
    
    (300
    )Comprehensive income (loss)
    
    $
    15,404
    
    
    $
    3,653
    
    
    $
    24,886
    
    
    $
    (599
    )
 6. Income Taxes
   7. Acquisitions
 Targanta Therapeutics Corporation
   
    
    Upon approval from the European Agency for the Evaluation of Medical Products (EMEA) for
a Marketing Authorization Application (MAA) for oritavancin for the treatment of serious
gram-positive bacterial infections, including acute bacterial skin and skin structure
infections (ABSSSI) (which were formerly referred to as complicated skin and skin structure
infections, or
 6




---



##### Table of Contents



cSSSI) on or before December 31, 2013, approximately $10.5 million if such approval is granted
between July 1, 2010 and December 31, 2013. As of June 30, 2010, the Company has not filed an
application with the EMEA for oritavancin for the treatment of ABSSSI.
 
    
    Upon final approval from the FDA for a new drug application, or NDA, for oritavancin for
the treatment of ABSSSI (1) within 40 months after the date the first patient is enrolled in
a Phase 3 clinical trial of ABSSSI that is initiated by the Company and (2) on or before
December 31, 2013, approximately $10.5 million in the aggregate.
 
    
    Upon final FDA approval for an NDA for the use of oritavancin for the treatment of ABSSSI
administered by a single dose intravenous infusion (1) within 40 months after the date the
first patient is enrolled in a Phase 3 clinical trial of ABSSSI that is initiated by the
Company and (2) on or before December 31, 2013, approximately $14.7 million in the
aggregate. This payment may become payable simultaneously with the payment described in the
previous bullet above.
 
    
    If aggregate net sales of oritavancin in four consecutive calendar quarters ending on or
before December 31, 2021 reach or exceed $400.0 million, approximately $49.4 million in the
aggregate.
  (in thousands)Acquired Assets:Cash and cash equivalents
    
    $
    4,815Available for sale securities
    
    
    397Prepaid expenses & other current assets
    
    
    2,440Fixed assets, net
    
    
    1,960In-process research and development
    
    
    69,500Goodwill
    
    
    14,671Other assets
    
    
    70Total assets
    
    
    93,853Liabilities Assumed:Accounts payable
    
    
    3,280Accrued expenses
    
    
    6,976Contingent purchase price
    
    
    23,181Deferred tax liability
    
    
    17,877Other liabilities
    
    
    556Total liabilities
    
    
    51,870Total cash purchase price paid upon acquisition
    
    $
    41,983
    7




---



##### Table of Contents



Project
    
    (in thousands)ABSSSI
    
    $
    54,000Bacteremia
    
    
    5,900Anthrax
    
    
    6,400Clostridium difficileinfections
    
    
    3,200Total
    
    $
    69,500
   Three Months Ended June 30,
    
    
    Six Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009(in thousands, except per share amounts)Net revenue
    
    $
    110,135
    
    
    $
    104,175
    
    
    $
    212,223
    
    
    $
    203,392Income (loss) from operations
    
    
    16,583
    
    
    
    6,149
    
    
    
    26,904
    
    
    
    (11,633
    )Net income (loss)
    
    
    15,426
    
    
    
    3,760
    
    
    
    24,858
    
    
    
    (10,706
    )Basic and diluted loss per share:Basic earnings (loss) per share
    
    $
    0.29
    
    
    $
    0.07
    
    
    $
    0.47
    
    
    $
    (0.21
    )Diluted earnings (loss) per share
    
    $
    0.29
    
    
    $
    0.07
    
    
    $
    0.47
    
    
    $
    (0.20
    )Weighted average number of common shares outstanding:Basic
    
    
    52,819
    
    
    
    52,232
    
    
    
    52,658
    
    
    
    52,187Diluted
    
    
    52,924
    
    
    
    52,533
    
    
    
    52,823
    
    
    
    52,534
  8. Cash, Cash Equivalents and Available for Sale Securities
   8




---



##### Table of Contents



As of June 30, 2010
    
    
    As of December 31, 2009Carrying
    
    
    Unrealized
    
    
    
    
    
    
    
    
    
    
    Carrying
    
    
    UnrealizedCost
    
    
    Fair Value
    
    
    Value
    
    
    Gain
    
    
    Cost
    
    
    Fair Value
    
    
    Value
    
    
    Gain(in thousands)U.S.
government agency
notes
    
    $
    81,347
    
    
    $
    81,392
    
    
    $
    81,392
    
    
    $
    45
    
    
    $
    103,936
    
    
    $
    103,965
    
    
    $
    103,965
    
    
    $
    29Corporate debt
securities
    
    $
    35,748
    
    
    $
    35,715
    
    
    $
    35,715
    
    
    $
    (33
    )
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Total
    
    $
    117,095
    
    
    $
    117,107
    
    
    $
    117,107
    
    
    $
    12
    
    
    $
    103,936
    
    
    $
    103,966
    
    
    $
    103,966
    
    
    $
    29
 Restricted Cash
  9. Inventory
  9




---



##### Table of Contents



June 30,
    
    
    December 31,Inventory
    
    2010
    
    
    2009(in thousands)Raw materials
    
    $
    10,749
    
    
    $
    13,609Work-in-progress
    
    
    11,906
    
    
    
    8,646Finished goods
    
    
    5,768
    
    
    
    3,581Total
    
    $
    28,423
    
    
    $
    25,836
  10. Intangible Assets and Goodwill
  As of June 30, 2010
    
    
    As of December 31, 2009Gross
    
    
    
    
    
    
    Net
    
    
    Gross
    
    
    
    
    
    
    NetWeighted Average
    
    
    Carrying
    
    
    Accumulated
    
    
    Carrying
    
    
    Carrying
    
    
    Accumulated
    
    
    CarryingUseful Life
    
    
    Amount
    
    
    Amortization
    
    
    Amount
    
    
    Amount
    
    
    Amortization
    
    
    Amount(in thousands)Identifiable intangible assetsCustomer relationships(1)
    
    8 years
    
    $
    7,457
    
    
    $
    (1,288
    )
    
    $
    6,169
    
    
    $
    7,457
    
    
    $
    (861
    )
    
    $
    6,596Distribution agreements(1)
    
    8 years
    
    
    4,448
    
    
    
    (768
    )
    
    
    3,680
    
    
    
    4,448
    
    
    
    (514
    )
    
    
    3,934Trademarks(1)
    
    8 years
    
    
    3,024
    
    
    
    (522
    )
    
    
    2,502
    
    
    
    3,024
    
    
    
    (349
    )
    
    
    2,675Cleviprex milestones(2)
    
    13 years
    
    
    2,000
    
    
    
    (49
    )
    
    
    1,951
    
    
    
    2,000
    
    
    
    (27
    )
    
    
    1,973Total
    
    9 years
    
    $
    16,929
    
    
    $
    (2,627
    )
    
    $
    14,302
    
    
    $
    16,929
    
    
    $
    (1,751
    )
    
    $
    15,178
 
 (1)
    
    The Company amortizes intangible assets related to Angiox based on the ratio
of annual forecasted revenue compared to total forecasted revenue from the sale of Angiox
through the end of its patent life.(2)
    
    The Company amortizes intangible assets related to the Cleviprex approval over the
remaining life of the patent.   As of June 30, 2010
    
    
    As of December 31, 2009Gross
    
    
    
    
    
    
    Net
    
    
    Gross
    
    
    
    
    
    
    NetCarrying
    
    
    Accumulated
    
    
    Carrying
    
    
    Carrying
    
    
    Accumulated
    
    
    CarryingAmount
    
    
    Amortization
    
    
    Amount
    
    
    Amount
    
    
    Amortization
    
    
    Amount(in thousands)Intangible
assets not subject
to amortization:In-process
research and
development
    
    $
    69,500
    
    
    $
    
    
    
    $
    69,500
    
    
    $
    69,500
    
    
    $
    
    
    
    $
    69,500Total
    
    $
    69,500
    
    
    $
    
    
    
    $
    69,500
    
    
    $
    69,500
    
    
    $
    
    
    
    $
    69,500
  10




---



##### Table of Contents



June 30,
    
    
    December 31,2010
    
    
    2009(in thousands)Balance at beginning of period
    
    $
    14,934
    
    
    $
    Goodwill acquired during the year
    
    
    
    
    
    
    14,934Adjustment to goodwill
    
    
    (263
    )
    
    
    Balance at end of period
    
    $
    14,671
    
    
    $
    14,934
  11. Fair Value Measurements
  Level 1
    
    Quoted prices in active markets for identical assets or
liabilities. The Companys Level 1 assets and liabilities consist
of money market investments.Level 2
    
    Observable inputs other than Level 1 prices, such as quoted prices
for similar assets or liabilities; quoted prices in markets that
are not active; or other inputs that are observable or can be
corroborated by observable market data for substantially the full
term of the assets or liabilities. The Companys Level 2 assets
and liabilities consist of U.S. government agency and corporate
debt securities.Level 3
    
    Unobservable inputs that are supported by little or no market
activity and that are significant to the fair value of the assets
or liabilities. The Companys Level 3 assets and liabilities
consist of the contingent purchase price associated with the
Targanta acquisition (note 7). The fair value of the contingent
purchase price was determined utilizing a probability weighted
discounted financial model.
  SignificantQuoted Prices In
    
    
    Other
    
    
    SignificantActive Markets for
    
    
    Observable
    
    
    UnobservableIdentical Assets
    
    
    Inputs
    
    
    Inputs
    
    
    Balance atAssets and Liabilities
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    June 30, 2010(in thousands)Assets:Money market
    
    $
    11,216
    
    
    $
    
    
    
    $
    
    
    
    $
    11,216U.S. government agency
    
    $
    
    
    
    $
    81,392
    
    
    $
    
    
    
    $
    81,392Corporate debt securities
    
    $
    
    
    
    $
    39,713
    
    
    $
    
    
    
    $
    39,713Total assets at fair value
    
    $
    11,216
    
    
    $
    121,105
    
    
    $
    
    
    
    $
    132,321Liabilities:Contingent purchase price
    
    $
    
    
    
    $
    
    
    
    $
    25,145
    
    
    $
    25,145Total liabilities at fair value
    
    $
    
    
    
    $
    
    
    
    $
    25,145
    
    
    $
    25,145
  11




---



##### Table of Contents



Level 3(in thousands)Balance at December 31, 2009
    
    $
    23,667Contingent purchase price related to acquisition of Targanta
    
    
    Fair value adjustment to contingent purchase price included in net income
    
    
    1,478Balance at June 30, 2010
    
    $
    25,145
  12. Restructuring Costs and Other, Net
     Balance as
    
    
    Expenses
    
    
    
    
    
    
    
    
    
    
    Balance as ofof January
    
    
    (Income),
    
    
    
    
    
    
    
    
    
    
    June 30,1, 2009
    
    
    Net
    
    
    Cash
    
    
    Noncash
    
    
    2010(in thousands)Employee severance and other personnel benefits:2010 Programs
    
    $
    
    
    
    $
    5,939
    
    
    $
    5,387
    
    
    $
    
    
    
    $
    552Leases and equipment write-offs
    
    
    
    
    
    
    1,164
    
    
    
    115
    
    
    
    945
    
    
    
    104Total
    
    $
    
    
    
    $
    7,103
    
    
    $
    5,502
    
    
    $
    945
    
    
    $
    656
 13. Segment and Geographic Information
   12




---



##### Table of Contents



Three Months Ended June 30,
    
    
    
    
    
    
    Six Months Ended June 30,2010
    
    
    
    
    
    
    2009
    
    
    
    
    
    
    2010
    
    
    
    
    
    
    2009(in thousands)Net revenue:United States
    
    $
    104,375
    
    
    
    94.8
    %
    
    $
    99,716
    
    
    
    95.7
    %
    
    $
    200,831
    
    
    
    94.6
    %
    
    $
    195,727
    
    
    
    96.2
    %Europe
    
    
    4,727
    
    
    
    4.3
    %
    
    
    3,268
    
    
    
    3.2
    %
    
    
    9,595
    
    
    
    4.5
    %
    
    
    5,776
    
    
    
    2.9
    %Other
    
    
    1,033
    
    
    
    0.9
    %
    
    
    1,191
    
    
    
    1.1
    %
    
    
    1,797
    
    
    
    0.9
    %
    
    
    1,889
    
    
    
    0.9
    %Total net revenue
    
    
    110,135
    
    
    
    
    
    
    
    104,175
    
    
    
    
    
    
    
    212,223
    
    
    
    
    
    
    
    203,392June 30,
    
    
    
    
    
    
    December 31,2010
    
    
    
    
    
    
    2009(in thousands)Long-lived assets:United States
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    119,345
    
    
    
    98.7
    %
    
    $
    122,968
    
    
    
    98.4
    %Europe
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,295
    
    
    
    1.1
    %
    
    
    1,684
    
    
    
    1.3
    %Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    256
    
    
    
    0.2
    %
    
    
    353
    
    
    
    0.3
    %Total long-lived assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    120,896
    
    
    
    
    
    
    $
    125,005
 14. Relocation of Principal Offices
  15. Contingencies
   16. Subsequent Events
  13




---



##### Table of Contents



14




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 You should read the following discussion and analysis of our financial condition and
results of operations together with our financial statements and accompanying notes included
elsewhere in this quarterly report. In addition to the historical information, the discussion in
this quarterly report contains certain forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those anticipated by the
forward-looking statements due to our critical accounting estimates discussed below and important
factors set forth in this quarterly report, including under Risk Factors in Part II, Item 1A of
this quarterly report.
 Overview
 Our Business
 ® ®
  Product orProduct in
    
    DevelopmentDevelopment
    
    Stage
    
    Mechanism/Target
    
    Clinical Indication(s)Angiomax
    
    Marketed
    
    Direct thrombin inhibitor
    
    U.S.  for use as an anticoagulant in
combination with aspirin in patients
with unstable angina undergoing
percutaneous coronary intervention,
or PCI, with or at risk of heparin
induced thrombocytopenia and
thrombosis syndrome, or HIT/HITTS

EU  for use as an anticoagulant in
patients with acute coronary
syndrome, or ACS, or ST-segment
elevation myocardial infarction, or
STEMI, undergoing primary PCICleviprex
    
    Marketed in the
U.S.; MAA submitted
in the European
Union
    
    Calcium channel blocker
    
    Blood pressure reduction when oral
therapy is not feasible or not
desirableCangrelor
    
    Phase 3
    
    Antiplatelet agent
    
    Prevention of platelet activation and
aggregation
 15




---



##### Table of Contents



Product orProduct in
    
    DevelopmentDevelopment
    
    Stage
    
    Mechanism/Target
    
    Clinical Indication(s)Oritavancin
    
    Phase 3
    
    Antibiotic
    
    Treatment of serious gram-positive
bacterial infections, including acute
bacterial skin and skin structure
infections, or ABSSSI (which were
formerly referred to as complicated
skin and skin structure infections,
or cSSSI)MDCO-2010
    
    Phase 1
    
    Serine protease inhibitor
    
    Reduction of blood loss during surgeryMDCO-216
    
    Phase 1
    
    Naturally occurring
variant of a protein
found in human
high-density lipoprotein
(HDL)
    
    Reversal of atherosclerotic plaque
development and reduction of the risk
of coronary events in patients with
ACSReady-to-Use 
Argatroban
    
    Phase 3; NDA filed
    
    Direct thrombin inhibitor
    
    Anticoagulant for prophylaxis or
treatment of thrombosis in patients
with or at risk for HIT and for
patients with or at risk for HIT
undergoing PCI
    Angiomax Patent Term
  16




---



##### Table of Contents



Cleviprex Recall
  Distribution and Sales
    Business Development Activity
  Targanta Acquisition.
 17




---



##### Table of Contents



Clostridium difficile
  
    
    Upon approval from the EMEA for a MAA for oritavancin
for the treatment of ABSSSI on or before December 31,
2013, approximately $10.5 million if such approval is
granted between July 1, 2010 and December 31, 2013. As
of June 30, 2010, we had not filed an application with
the EMEA for oritavancin for the treatment of ABSSSI.
    
    Upon final approval from the FDA for a new drug
application, or NDA, for oritavancin for the treatment
of ABSSSI (1) within 40 months after the date the first
patient is enrolled in a Phase 3 clinical trial of
ABSSSI that is initiated by us and (2) on or before
December 31, 2013, approximately $10.5 million in the
aggregate.
    
    Upon final FDA approval for an NDA for the use of
oritavancin for the treatment of ABSSSI administered by
a single dose intravenous infusion (1) within 40 months
after the date the first patient is enrolled in a Phase
3 clinical trial of ABSSSI that is initiated by us and
(2) on or before December 31, 2013, approximately
$14.7 million in the aggregate. This payment may become
payable simultaneously with the payment described in the
previous bullet above.
    
    If aggregate net sales of oritavancin in four
consecutive calendar quarters ending on or before
December 31, 2021 reach or exceed $400 million,
approximately $49.4 million in the aggregate.
   Licensing Arrangement with Eagle.
 Licensing Arrangement with Pfizer.
 Workforce Reductions
  18




---



##### Table of Contents



Results of Operations
 Three Months Ended June 30, 2010 and 2009
 Net Revenue:
  Net Revenue
 Three Months Ended June 30,Change
    
    
    Change2010
    
    
    2009
    
    
    $
    
    
    %(in thousands)
    
    
    (in thousands)
    
    
    (in thousands)Net RevenueU.S. sales
    
    $
    104,375
    
    
    $
    99,716
    
    
    $
    4,659
    
    
    
    4.7
    %International net revenue
    
    
    5,760
    
    
    
    4,459
    
    
    
    1,301
    
    
    
    29.2
    %Total net revenue
    
    $
    110,135
    
    
    $
    104,175
    
    
    $
    5,960
    
    
    
    5.7
    %
      Cost of Revenue:
  19




---



##### Table of Contents



Cost of Revenue
 Three Months Ended June 30,% of Total
    
    
    
    
    
    
    % of Total2010
    
    
    Cost
    
    
    2009
    
    
    Cost(in thousands)
    
    
    
    
    
    
    (in thousands)Cost of RevenueManufacturing
    
    $
    8,092
    
    
    
    24
    %
    
    $
    6,650
    
    
    
    22
    %Royalty
    
    
    21,963
    
    
    
    65
    %
    
    
    20,430
    
    
    
    67
    %Logistics
    
    
    3,513
    
    
    
    11
    %
    
    
    3,273
    
    
    
    11
    %Total Cost of Revenue
    
    $
    33,568
    
    
    
    100
    %
    
    $
    30,353
    
    
    
    100
    %
  Research and Development Expenses:
    Research and Development Spending
 Three Months Ended June 30,% of
    
    
    
    
    
    
    % of2010
    
    
    Total R&D
    
    
    2009
    
    
    Total R&D(in thousands)
    
    
    
    
    
    
    (in thousands)Research and DevelopmentAngiomaxClinical trials
    
    $
    1,823
    
    
    
    9
    %
    
    $
    1,073
    
    
    
    5
    %Manufacturing development
    
    
    2,718
    
    
    
    13
    %
    
    
    1,270
    
    
    
    6
    %Administrative and headcount costs
    
    
    521
    
    
    
    3
    %
    
    
    1,546
    
    
    
    7
    %Total Angiomax
    
    
    5,062
    
    
    
    25
    %
    
    
    3,889
    
    
    
    18
    %CleviprexClinical trials
    
    
    473
    
    
    
    2
    %
    
    
    1,873
    
    
    
    9
    %Manufacturing development
    
    
    472
    
    
    
    2
    %
    
    
    330
    
    
    
    2
    %Administrative and headcount costs
    
    
    560
    
    
    
    3
    %
    
    
    1,123
    
    
    
    5
    %Total Cleviprex
    
    
    1,505
    
    
    
    7
    %
    
    
    3,326
    
    
    
    16
    %CangrelorClinical trials
    
    
    1,535
    
    
    
    7
    %
    
    
    8,007
    
    
    
    37
    %Manufacturing development
    
    
    662
    
    
    
    3
    %
    
    
    737
    
    
    
    3
    %
 20




---



##### Table of Contents



Three Months Ended June 30,% of
    
    
    
    
    
    
    % of2010
    
    
    Total R&D
    
    
    2009
    
    
    Total R&D(in thousands)
    
    
    
    
    
    
    (in thousands)Administrative and headcount costs
    
    
    855
    
    
    
    4
    %
    
    
    1,087
    
    
    
    5
    %Milestone
    
    
    3,000
    
    
    
    15
    %
    
    
    
    
    
    
    0
    %Total Cangrelor
    
    
    6,052
    
    
    
    29
    %
    
    
    9,831
    
    
    
    45
    %OritavancinClinical trials
    
    
    458
    
    
    
    2
    %
    
    
    
    
    
    
    0
    %Manufacturing development
    
    
    848
    
    
    
    4
    %
    
    
    
    
    
    
    0
    %Administrative and headcount
    
    
    1,434
    
    
    
    7
    %
    
    
    1,201
    
    
    
    5
    %Total Oritavancin
    
    
    2,740
    
    
    
    13
    %
    
    
    1,201
    
    
    
    5
    %MDCO-2010Clinical trials
    
    
    413
    
    
    
    2
    %
    
    
    
    
    
    
    0
    %Manufacturing development
    
    
    265
    
    
    
    1
    %
    
    
    
    
    
    
    0
    %Administrative and headcount
    
    
    1,182
    
    
    
    6
    %
    
    
    860
    
    
    
    4
    %Government subsidy
    
    
    (265
    )
    
    
    (1
    )%
    
    
    
    
    
    
    0
    %Total MDCO-2010
    
    
    1,595
    
    
    
    8
    %
    
    
    860
    
    
    
    4
    %MDCO-216Administrative and headcount
    
    
    587
    
    
    
    3
    %
    
    
    
    
    
    
    0
    %Total MDCO-216
    
    
    587
    
    
    
    3
    %
    
    
    
    
    
    
    0
    %Ready-to-Use ArgatrobanManufacturing development
    
    
    477
    
    
    
    2
    %
    
    
    
    
    
    
    0
    %Total Ready-to-Use Argatroban
    
    
    477
    
    
    
    2
    %
    
    
    
    
    
    
    0
    %Other
    
    
    2,557
    
    
    
    13
    %
    
    
    2,677
    
    
    
    12
    %Total
    
    $
    20,575
    
    
    
    100
    %
    
    $
    21,784
    
    
    
    100
    %
 Angiomax
   Cleviprex
  21




---



##### Table of Contents



Cangrelor
  Oritavancin
  MDCO-2010
  MDCO-216
  Ready-to-Use Argatroban
  Other
   
    
    the scope, rate of progress and cost of our clinical trials and other research and development activities;
    
    future clinical trial results;
    
    the terms and timing of any collaborative, licensing and other arrangements that we may establish;
    
    the cost and timing of regulatory approvals;
    
    the cost and timing of establishing and maintaining sales, marketing and distribution capabilities;
    
    the cost of establishing and maintaining clinical and commercial supplies of our products and product candidates;
 22




---



##### Table of Contents




    
    the effect of competing technological and market developments; and
    
    the cost of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights.
 Selling, General and Administrative Expenses:
 Three Months Ended June 30,Change
    
    Change2010
    
    2009
    
    $
    
    %(in thousands)Selling, general and administrative expenses
    
    $
    39,409
    
    
    $
    45,910
    
    
    $
    (6,501
    )
    
    
    (14.2
    )%
  Other (expense) income:
 Three Months Ended June 30,Change
    
    Change2010
    
    2009
    
    $
    
    %(in thousands)Other (expense) income
    
    $
    (117
    )
    
    $
    734
    
    
    $
    (851
    )
    
    
    (115.9
    )%
  Provision for Income Tax:
 Three Months Ended June 30,Change
    
    Change2010
    
    2009
    
    $
    
    %(in thousands)Provision for Income Tax
    
    $
    (1,040
    )
    
    $
    (3,051
    )
    
    $
    2,011
    
    
    
    65.9
    %
   23




---



##### Table of Contents



Six Months Ended June 30, 2010 and 2009
 Net Revenue:
  Net Revenue
 Six Months Ended June 30,Change
    
    
    Change2010
    
    
    2009
    
    
    $
    
    
    %(in thousands)
    
    
    (in thousands)
    
    
    (in thousands)Net RevenueU.S. sales
    
    $
    200,831
    
    
    $
    195,727
    
    
    $
    5,104
    
    
    
    2.6
    %International net revenue
    
    
    11,392
    
    
    
    7,665
    
    
    
    3,727
    
    
    
    48.6
    %Total net revenue
    
    $
    212,223
    
    
    $
    203,392
    
    
    $
    8,831
    
    
    
    4.3
    %
   Cost of Revenue:
  24




---



##### Table of Contents



Cost of Revenue
 Six Months Ended June 30,% of Total
    
    
    
    
    
    
    % of Total2010
    
    
    Cost
    
    
    2009
    
    
    Cost(in thousands)
    
    
    
    
    
    
    (in thousands)Cost of RevenueManufacturing
    
    $
    14,368
    
    
    
    23
    %
    
    $
    12,845
    
    
    
    22
    %Royalty
    
    
    41,876
    
    
    
    67
    %
    
    
    39,620
    
    
    
    68
    %Logistics
    
    
    6,093
    
    
    
    10
    %
    
    
    6,185
    
    
    
    10
    %Total Cost of Revenue
    
    $
    62,337
    
    
    
    100
    %
    
    $
    58,650
    
    
    
    100
    %
  Research and Development Expenses:
   Research and Development Spending
 Six Months Ended June 30,% of
    
    
    
    
    
    
    % of2010
    
    
    Total R&D
    
    
    2009
    
    
    Total R&D(in thousands)
    
    
    
    
    
    
    (in thousands)Research and DevelopmentAngiomaxClinical trials
    
    $
    3,299
    
    
    
    9
    %
    
    $
    1,714
    
    
    
    4
    %Manufacturing development
    
    
    3,974
    
    
    
    10
    %
    
    
    3,634
    
    
    
    8
    %Administrative and headcount costs
    
    
    1,407
    
    
    
    4
    %
    
    
    2,609
    
    
    
    6
    %Total Angiomax
    
    
    8,680
    
    
    
    23
    %
    
    
    7,957
    
    
    
    18
    %CleviprexClinical trials
    
    
    1,087
    
    
    
    3
    %
    
    
    3,553
    
    
    
    8
    %Manufacturing development
    
    
    721
    
    
    
    2
    %
    
    
    616
    
    
    
    1
    %Administrative and headcount costs
    
    
    1,089
    
    
    
    3
    %
    
    
    2,900
    
    
    
    6
    %Total Cleviprex
    
    
    2,897
    
    
    
    8
    %
    
    
    7,069
    
    
    
    15
    %CangrelorClinical trials
    
    
    3,353
    
    
    
    9
    %
    
    
    16,934
    
    
    
    37
    %Manufacturing development
    
    
    961
    
    
    
    3
    %
    
    
    1,988
    
    
    
    4
    %Administrative and headcount costs
    
    
    2,012
    
    
    
    5
    %
    
    
    2,352
    
    
    
    5
    %Milestone
    
    
    3,000
    
    
    
    8
    %
    
    
    
    
    
    
    0
    %Total Cangrelor
    
    
    9,326
    
    
    
    25
    %
    
    
    21,274
    
    
    
    46
    %OritavancinClinical trials
    
    
    1,065
    
    
    
    3
    %
    
    
    
    
    
    
    0
    %Manufacturing development
    
    
    2,450
    
    
    
    6
    %
    
    
    
    
    
    
    0
    %Administrative and headcount
    
    
    3,694
    
    
    
    10
    %
    
    
    1,920
    
    
    
    4
    %Total Oritavancin
    
    
    7,209
    
    
    
    19
    %
    
    
    1,920
    
    
    
    4
    %MDCO-2010Clinical trials
    
    
    655
    
    
    
    2
    %
    
    
    
    
    
    
    0
    %
 25




---



##### Table of Contents



Six Months Ended June 30,% of
    
    
    
    
    
    
    % of2010
    
    
    Total R&D
    
    
    2009
    
    
    Total R&D(in thousands)
    
    
    
    
    
    
    (in thousands)Manufacturing development
    
    
    370
    
    
    
    1
    %
    
    
    
    
    
    
    0
    %Administrative and headcount
    
    
    2,075
    
    
    
    5
    %
    
    
    1,880
    
    
    
    4
    %Government subsidy
    
    
    (508
    )
    
    
    (1
    )%
    
    
    
    
    
    
    0
    %Total MDCO-2010
    
    
    2,592
    
    
    
    7
    %
    
    
    1,880
    
    
    
    4
    %MDCO-216Administrative and headcount
    
    
    940
    
    
    
    2
    %
    
    
    
    
    
    
    0
    %Total MDCO-216
    
    
    940
    
    
    
    2
    %
    
    
    
    
    
    
    0
    %Ready-to-Use ArgatrobanManufacturing development
    
    
    477
    
    
    
    1
    %
    
    
    
    
    
    
    0
    %Administrative and headcount
    
    
    169
    
    
    
    1
    %
    
    
    
    
    
    
    0
    %Total Ready-to-Use Argatroban
    
    
    646
    
    
    
    2
    %
    
    
    
    
    
    
    0
    %Other
    
    
    5,162
    
    
    
    14
    %
    
    
    6,121
    
    
    
    13
    %Total
    
    $
    37,452
    
    
    
    100
    %
    
    $
    46,221
    
    
    
    100
    %
 Angiomax
   Cleviprex
  Cangrelor
  Oritavancin
  MDCO-2010
  26




---



##### Table of Contents



MDCO-216
  Ready-to-Use Argatroban
  Other
  27




---



##### Table of Contents



Selling, General and Administrative Expenses:
 Six Months Ended June 30,Change
    
    Change2010
    
    2009
    
    $
    
    %(in thousands)Selling, General and Administrative expenses
    
    $
    85,530
    
    
    $
    99,504
    
    
    $
    (13,974
    )
    
    
    (14.0
    )%
  Other (expense) income:
 Six Months Ended June 30,Change
    
    Change2010
    
    2009
    
    $
    
    %(in thousands)Other (expense) income
    
    $
    (428
    )
    
    $
    1,903
    
    
    $
    (2,331
    )
    
    
    (122.5
    )%
  Provision for Income Tax:
 Six Months Ended June 30,Change
    
    Change2010
    
    2009
    
    $
    
    %(in thousands)Provision for Income Tax
    
    $
    (1,618
    )
    
    $
    (458
    )
    
    $
    (1,160
    )
    
    
    (253.3
    )%
   28




---



##### Table of Contents



Liquidity and Capital Resources
 Sources of Liquidity
  Cash Flows
     Funding Requirements
  
    
    the extent to which Angiomax is commercially successful globally;
    
    the outcome of our efforts to extend the patent term of the principal U.S. patent
covering Angiomax and the degree of market exclusivity in the United States provided by
our other U.S. patents covering Angiomax;
    
    the terms of any settlements with Biogen Idec, HRI or the two law firms with
respect to the principal U.S. patent covering Angiomax and the PTOs denial of our
application to extend the term of the patent;
    
    our ability to resupply the market with Cleviprex and the extent to which Cleviprex
is commercially successful in the United States;
    
    the extent to which we can successfully establish a commercial infrastructure
outside the United States;
    
    the cost of acquisitions or licensing of development-stage products, approved
products, or businesses and strategic or licensing arrangements with companies that fit
within our growth strategy;
    
    the progress, level, timing and cost of our research and development activities
related to our clinical trials and non-clinical studies with respect to Angiomax,
Cleviprex and our products in development;
    
    the cost and outcomes of regulatory submissions and reviews for approval of
Cleviprex outside the United States and of our products in development globally;
 29




---



##### Table of Contents




    
    the continuation or termination of third-party manufacturing and sales and
marketing arrangements;
    
    the size, cost and effectiveness of our sales and marketing programs globally;
    
    the amounts of our payment obligations to third parties as to Angiomax, Cleviprex
and our products in development; and
    
    our ability to defend and enforce our intellectual property rights.
  Certain Contingencies:
  Contractual Obligations
  Application of Critical Accounting Estimates
   
    
    the nature of the estimate or assumption is material due to the level of
subjectivity and judgment necessary to account for highly uncertain matters or the
susceptibility of such matters to change; and
 30




---



##### Table of Contents




    
    the impact of the estimates and assumptions on financial condition or operating
performance is material.
  Off-Balance Sheet Transactions
  Forward-Looking Information
  
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
   31




---



##### Table of Contents



Item 4. Controls and Procedures
 Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
  32




---



##### Table of Contents



Part II. Other Information
 
 Item 1. Legal Proceedings
  Teva Parenteral Medicines, Inc.
   Pliva Hrvatska d.o.o.
   APP Pharmaceuticals, LLC
   33




---



##### Table of Contents



Hospira, Inc.
  PTO, FDA and U.S. Department of Health and Human Services, et al.
   
 Item 1A. Risk Factors
 Investing in our common stock involves a high degree of risk. You should carefully consider
the risks and uncertainties described below in addition to the other information included or
incorporated by reference in this quarterly report. If any of the following risks actually occur,
our business, financial condition or results of operations would likely suffer. In that case, the
trading price of our common stock could fall.
 An updated description of the risk factors associated with our business is set forth below.
These risk factors have been updated from those included in our Quarterly Report on Form 10-Q for
the quarterly period ended March 31, 2010, to, among other things, update the risk factors related
to our use of third-party manufacturers for the supply of our products and our product candidates,
our ability to extend the patent term of the principal U.S. patent covering Angiomax or to maintain
market exclusivity for Angiomax in the United States through the enforcement of our other U.S.
patents covering Angiomax, and our agreements under which we license rights to products or
technology from others.
 Risks Related to Our Financial Results
 We have a history of net losses and may not maintain profitability on an annual basis
  34




---



##### Table of Contents



Our business is very dependent on the commercial success of Angiomax
  
    
    the outcome of our efforts to extend the patent term of the principal U.S. patent
covering Angiomax and the degree of market exclusivity in the United States provided by our
other U.S. patents covering Angiomax;
    
    the continued acceptance by regulators, physicians, patients and other key
decision-makers of Angiomax as a safe, therapeutic and cost-effective alternative to heparin
and other products used in current practice or currently being developed;
    
    our ability to further develop Angiomax for use in additional patient populations and the
clinical data we generate to support expansion of the product label;
    
    the overall number of PCI procedures performed;
    
    our success in selling and marketing Angiox in Europe;
    
    the impact of competition from competitive products and generic versions of Angiomax and
those competitive products; and
    
    the extent to which we and our international distributors are successful in marketing
Angiomax.
   Our revenue has been substantially dependent on our sole source distributor, ICS, and a
limited number of domestic wholesalers and international distributors involved in the sale of our
products, and such revenue may fluctuate from quarter to quarter based on the buying patterns of
such distributor, wholesalers and distribution partners
   35




---



##### Table of Contents



Failure to achieve our revenue targets or raise additional funds in the future may require us
to delay, reduce the scope of, or eliminate one or more of our planned activities
  
    
    the extent to which Angiomax is commercially successful globally;
    
    the outcome of our efforts to extend the patent term of the principal U.S. patent
covering Angiomax and the degree of market exclusivity in the United States provided by our
other U.S. patents covering Angiomax;
    
    the terms of any settlements with Biogen Idec, HRI or the two law firms with respect to
the principal U.S. patent covering Angiomax and the PTOs denial of our application to
extend the term of the patent;
    
    our ability to resupply the market with Cleviprex and the extent to which Cleviprex is
commercially successful in the United States;
    
    the extent to which we can successfully establish a commercial infrastructure outside
the United States;
    
    the cost of acquisitions and licenses of development-stage products, approved products,
or businesses and strategic or licensing arrangements with companies that fit within our
growth strategy;
    
    the progress, level, timing and cost of our research and development activities related
to our clinical trials and non-clinical studies with respect to Angiomax, Cleviprex and our
products in development;
    
    the cost and outcomes of regulatory submissions and reviews for approval of Cleviprex
outside the United States, Australia and New Zealand and of our products in development
globally;
    
    the continuation or termination of third-party manufacturing and sales and marketing
arrangements;
    
    the size, cost and effectiveness of our sales and marketing programs globally;
    
    the amounts of our payment obligations to third parties as to Angiomax, Cleviprex and
our products in development; and
    
    our ability to defend and enforce our intellectual property rights.
  36




---



##### Table of Contents



Risks Related to Commercialization
 Angiomax competes with all categories of anticoagulant drugs, which may limit the use of
Angiomax and adversely affect our revenue
     Cleviprex competes with all categories of intravenous antihypertensive, or IV-AHT, drugs,
which may limit the use of Cleviprex and adversely affect our revenue
    We face substantial competition, which may result in others discovering, developing or
commercializing competing products before or more successfully than we do
  37




---



##### Table of Contents



If physicians, patients and other key decision-makers do not accept clinical data from trials
of Angiomax and Cleviprex, then sales of Angiomax and Cleviprex may be adversely affected
  If the number of PCI procedures performed decrease, sales of Angiomax may be negatively
impacted
  If we are unable to successfully expand our business infrastructure and develop our global
operations, our ability to generate future product revenue will be adversely affected
   
    
    continue to improve operating, administrative, and information systems;
    
    accurately predict future personnel and resource needs to meet contract commitments;
    
    track the progress of ongoing projects; and
    
    attract and retain qualified management, sales, professional, scientific and technical
operating personnel.
  The success of our global operations may be adversely affected by international risks and
uncertainties. If these operations are not successful, our results of operations and financial
position could be adversely affected.
  38




---



##### Table of Contents




    
    our customers ability to obtain reimbursement for procedures using our products in
foreign markets;
    
    the burden of complying with complex and changing foreign legal, tax, accounting and
regulatory requirements;
    
    language barriers and other difficulties in providing long-range customer support and
service;
    
    longer accounts receivable collection times;
    
    significant currency fluctuations;
    
    reduced protection of intellectual property rights in some foreign countries; and
    
    the interpretation of contractual provisions governed by foreign laws in the event of a
contract dispute.
  Our ability to generate future product revenue will be affected by reimbursement and drug
pricing and if access to our products by governmental and other third-party payors is reduced or
terminated
     39




---



##### Table of Contents



If we do not comply with federal, state and foreign laws and regulations relating to the
health care business, we could face substantial penalties
  
    
    the Federal Anti-Kickback Law, which prohibits persons from knowingly and willfully
soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash
or in kind, to induce either the referral of an individual or furnishing or arranging for a
good or service for which payment may be made under federal health care programs such as
Medicare and Medicaid;
    
    other Medicare laws and regulations that prescribe the requirements for coverage and
payment for services performed by our customers, including the amount of such payment;
    
    the Federal False Claims Act, which imposes civil and criminal liability on individuals
and entities who submit, or cause to be submitted, false or fraudulent claims for payment
to the government;
    
    the Federal False Statements Act, which prohibits knowingly and willfully falsifying,
concealing or covering up a material fact or making any materially false statement in
connection with delivery of or payment for health care benefits, items or services; and
    
    various state laws that impose similar requirements and liability with respect to state
healthcare reimbursement and other programs.
  If we are unable to obtain insurance at acceptable costs and adequate levels or otherwise
protect ourselves against potential product liability claims, we could be exposed to significant
liability
    40




---



##### Table of Contents



Risks Related to Regulatory Matters
 If we do not obtain regulatory approvals for our product candidates, we will not be able to
market our product candidates and our ability to generate additional revenue could be materially
impaired
  
    
    delay or prevent the successful commercialization of any of our product candidates;
    
    diminish our competitive advantage; and
    
    defer or decrease our receipt of revenue.
  We cannot expand the indications for which we are marketing Angiomax unless we receive
regulatory approval for each additional indication. Failure to expand these indications will limit
the size of the commercial market for Angiomax
   41




---



##### Table of Contents



Clinical trials of product candidates are expensive and time-consuming, and the results of
these trials are uncertain
    
    
    our clinical trials may produce negative or inconclusive results, and we may decide, or
regulators may require us, to conduct additional clinical trials which even if undertaken
cannot ensure we will gain approval;
    
    data obtained from pre-clinical testing and clinical trials may be subject to varying
interpretations, which could result in the FDA or other regulatory authorities deciding not
to approve a product in a timely fashion, or at all;
    
    the cost of clinical trials may be greater than we currently anticipate;
    
    regulators or institutional review boards may not authorize us to commence a clinical
trial or conduct a clinical trial at a prospective trial site;
    
    we, or the FDA or other regulatory authorities, might suspend or terminate a clinical
trial at any time on various grounds, including a finding that participating patients are
being exposed to unacceptable health risks. For example, we have in the past voluntarily
suspended enrollment in one of our clinical trials to review an interim analysis of safety
data from the trial; and
    
    the effects of our product candidates may not be the desired effects or may include
undesirable side effects or the product candidates may have other unexpected
characteristics.
  If we or our contract manufacturers fail to comply with the extensive regulatory requirements
to which we, our contract manufacturers and our products are subject, our products could be subject
to restrictions or withdrawal from the market and we could be subject to penalties
  
    
    delay in approving or refusal to approve a product;
    
    product recall or seizure;
    
    suspension or withdrawal of an approved product from the market;
 42




---



##### Table of Contents




    
    interruption of production;
    
    operating restrictions;
    
    untitled or warning letters;
    
    injunctions;
    
    fines and other monetary penalties;
    
    the imposition of civil or criminal penalties; and
    
    unanticipated expenditures.
 Risks Related to our Dependence on Third Parties for Manufacturing, Research and Development, and
Distribution Activities
 We depend on single source suppliers for the production of bulk drug substance for Angiomax,
Cleviprex and our other products in development and a limited number of suppliers to carry out all
fill-finish activities
   If third parties on whom we rely to manufacture and support the development and
commercialization of our products do not fulfill their obligations, the development and
commercialization of our products may be terminated or delayed, and the costs of development and
commercialization may increase.
   43




---



##### Table of Contents




    
    delay or otherwise adversely impact the manufacturing, development or commercialization
of Angiomax, Cleviprex, our products in development or any additional products that we may
acquire or develop;
    
    require us to seek a new collaborator or undertake unforeseen additional
responsibilities or devote unforeseen additional resources to the manufacturing,
development or commercialization of our products; or
    
    result in the termination of the development or commercialization of our products.
 Use of third-party manufacturers may increase the risk that we will not have appropriate
supplies of our products or our product candidates
  
    
    reliance on the third party for regulatory compliance and quality assurance;
    
    the possible breach of the manufacturing agreement by the third party; and
    
    the possible 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.
    44




---



##### Table of Contents



In order to satisfy some regulatory authorities, we may need to reformulate the way in which
our oritavancin bulk drug substance is created to remove animal source product, which may delay
marketing approval of our products and increase our costs
   If we use hazardous and biological materials in a manner that causes injury or violates
applicable law, we may be liable for damages
  Risks Related to Our Intellectual Property
 If the court order requiring the PTO to consider our application to extend the term of the principal U.S. patent covering Angiomax timely filed is successful challenged, if we are otherwise
unsuccessful in further extending the term of the principal U.S. patent covering Angiomax, or if we
are unable to maintain our market exclusivity for Angiomax in the United States through enforcement
of our other U.S. patents covering Angiomax, Angiomax could be subject to generic competition.


Generic competition for Angiomax would have an adverse effect on the our business, financial
condition and results of operations
   45




---



##### Table of Contents



If we breach any of the agreements under which we license rights to products or
technology from others, we could lose license rights that are material to our business or be
subject to claims by our licensors
    If we are unable to obtain or maintain patent protection for the intellectual property
relating to our products, the value of our products will be adversely affected
  
    
    obtain and maintain U.S. and foreign patents, including defending those patents against adverse claims;
    
    secure patent term extension for the patents covering our approved products;
    
    protect trade secrets;
    
    operate without infringing the proprietary rights of others; and
 46




---



##### Table of Contents




    
    prevent others from infringing our proprietary rights.
     We may be unable to utilize the Chemilog process if Lonza Braine breaches our agreement
  If we are not able to keep our trade secrets confidential, our technology and information
may be used by others to compete against us
  If we infringe or are alleged to infringe intellectual property rights of third parties,
it will adversely affect our business
   47




---



##### Table of Contents



Risks Related to Growth and Employees
 If we fail to acquire and develop additional product candidates or approved products it
will impair our ability to grow
    
    
    manufactured or produced economically;
    
    successfully commercialized; or
    
    widely accepted in the marketplace.
  We may not be able to manage our business effectively if we are unable to attract and
retain key personnel and consultants
  48




---



##### Table of Contents



Risks Related to Our Common Stock
 Fluctuations in our operating results could affect the price of our common stock
  Our stock price has been and may in the future be volatile. This volatility may make it
difficult for you to sell common stock when you want or at attractive prices
  
    
    changes in securities analysts estimates of our financial performance;
    
    changes in valuations of similar companies;
    
    variations in our operating results;
    
    acquisitions and strategic partnerships;
    
    announcements of technological innovations or new commercial products by us or our competitors;
    
    disclosure of results of clinical testing or regulatory proceedings by us or our competitors;
    
    the timing, amount and receipt of revenue from sales of our products and margins on sales of our products;
    
    governmental regulation and approvals;
    
    developments in patent rights or other proprietary rights, particularly with respect to the our U.S.
Angiomax patents;
    
    the terms of any settlement with Biogen Idec, HRI or the two law firms with respect to the principal U.S.
patent covering Angiomax and the PTOs denial of our application to extend the term of the patent;
    
    developments or issues with our contract manufacturers;
    
    changes in our management; and
    
    general market conditions.
  Our corporate governance structure, including provisions in our certificate of
incorporation and by-laws and Delaware law, may prevent a change in control or management that
security holders may consider desirable
   49




---



##### Table of Contents



Item 5. Other Information
  
    
    minimum net sales growth rates relative to 2009 for Angiomax in the United States and outside the
United States;
    
    with regards to Cleviprex, a minimum net sales growth rate relative to 2009;
    
    with regards to oritavancin, to secure FDA and EMEA concordance with clinical study program
and commence enrollment in such program;
    
    with regards to cangrelor, to secure AstraZeneca, FDA and EMEA concordance with clinical
study program and commence enrollment in such program;
    
    to advance a Phase I clinical program of MDCO-2010 so that we are ready to initiate a Phase II
trial of the product candidate;
    
    with regards to the ready-to-use formulation of Argatroban, to manage and support our partner
Eagle in its responses to the FDA;
    
    with regards to MDCO-216, to complete the technology transfer from Pfizer and the necessary
preclinical activities to be able to commence clinical trials;
    
    to achieve a minimum operating profit per employee;
    
    to close at least one transaction which provides near term revenue or expense leverage; and
    
    to achieve these goals while managing operating expenses within a certain range of our budget.
 
 Item 6. Exhibits
   50




---



##### Table of Contents



SIGNATURES
  THE MEDICINES COMPANYDate: August 9, 2010
    By:
    /s/ Glenn P. SblendorioGlenn P. SblendorioExecutive Vice President and Chief Financial
Officer (Principal Financial and Accounting Officer) 51




---



##### Table of Contents



EXHIBIT INDEX
 Exhibit Number
    
    Description10.1
    
    Second Amendment to License Agreement dated as of June 1,
2010 between AstraZeneca AB and the registrant10.2
    
    The Medicines Companys 2010 Employee Stock Purchase Plan
(incorporated by reference to Appendix I to the
registrants definitive proxy statement, dated and filed
with the Securities and Exchange Commission on April 30,
2010, for the registrants 2010 Annual Meeting of
Stockholders).10.3
    
    The Medicines Companys 2004 Amended and Restated Stock
Incentive Plan, as amended (incorporated by reference to
Appendix II to the registrants definitive proxy statement,
dated and filed with the Securities and Exchange Commission
on April 30, 2010, for the registrants 2010 Annual Meeting
of Stockholders).31.1
    
    Chairman and Chief Executive Officer Certification pursuant
to Rule 13a-14(a) of the Securities Exchange Act of 1934,
as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 200231.2
    
    Chief Financial Officer Certification pursuant to Rule
13a-14(a) of the Securities Exchange Act of 1934, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 200232.1
    
    Chairman and Chief Executive Officer Certification pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 200232.2
    
    Chief Financial Officer Certification pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002101*
    
    The following materials from The Medicines Company
Quarterly Report on Form 10-Q for the quarter ended June
30, 2010, formatted in XBRL (Extensible Business Reporting
Language): (i) the Consolidated Balance Sheet, (ii) the
Consolidated Statement of Operations, (iii) the
Consolidated Statement of Cash Flow, and (iv) Notes to
Consolidated Financial Statements, tagged as blocks of
text.
 
 
    
    Confidential treatment requested as to certain portions,
which portions have been omitted and filed separately with
the Securities and Exchange Commission Unless otherwise
indicated, the exhibits incorporated herein by reference
were filed under Commission file number 000-31191.*
    
    The registrant will be furnishing Exhibit 101 within 30 days of the filing
date of this Form 10-Q, as allowable under the rules of the Securities and Exchange
Commission. 52