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

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended:
    December 31, 2008Oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number
    000-31191
      
 (Exact name of registrant as
    specified in its charter)
   Delaware(State or other jurisdiction ofincorporation or organization)8 Sylvan WayParsippany, New Jersey(Address of principal executive offices)

04-3324394(I.R.S. EmployerIdentification No.)07054(Zip Code)    Registrants telephone number, including area code:
    (973) 290-6000
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, $.001 Par Value Per Share

NASDAQ Global Select Market    Securities registered pursuant to Section 12(g) of the
    Act:
 None
   þ o
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  12b-2
  Large
    accelerated
    filer þ
    Accelerated
    filer o
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K:




---



##### 





THE
    MEDICINES COMPANY
  ANNUAL
    REPORT ON
    FORM 10-K
 For the
    Fiscal Year Ended December 31, 2008
  TABLE OF
    CONTENTS
   
 PagePART IITEM 1

BUSINESS


2ITEM 1A

RISK FACTORS


23ITEM 1B

UNRESOLVED STAFF COMMENTS


40ITEM 2

PROPERTIES


40ITEM 3

LEGAL PROCEEDINGS


41ITEM 4

SUBMISSION OF MATTERS TO A VOTE OF SECURITY
    HOLDERS


42PART IIITEM 5

MARKET FOR REGISTRANTS COMMON EQUITY,
    RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
    SECURITIES


42ITEM 6

SELECTED FINANCIAL DATA


44ITEM 7

MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS


45ITEM 7A

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
    MARKET RISK


67ITEM 8

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


67ITEM 9

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
    ACCOUNTING AND FINANCIAL DISCLOSURE


68ITEM 9A

CONTROLS AND PROCEDURES


68ITEM 9B

OTHER INFORMATION


68PART IIIITEM 10

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
    GOVERNANCE


69ITEM 11

EXECUTIVE COMPENSATION


69ITEM 12

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
    AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS


69ITEM 13

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
    AND DIRECTOR INDEPENDENCE


69ITEM 14

PRINCIPAL ACCOUNTANT FEES AND SERVICES


70PART IVITEM 15

EXHIBITS AND FINANCIAL STATEMENT
    SCHEDULES


70EX-10.18: LEASEEX-10.24: FORM OF AMENDED AND RESTATED MANAGEMENT SEVERANCE AGREEMENTEX-10.25: FORM OF AMENDED AND RESTATED MANAGEMENT SEVERANCE AGREEMENTEX-10.38: AMENDMENT NO.2 TO LICENSE AGREEMENTEX-10.40: AMENDMENT TO LEASEEX-10.42: SEVERANCE AGREEMENTEX-21: SUBSIDIARIESEX-23: CONSENT OF ERNST & YOUNG LLPEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION




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® ® ® ® and/or Form 10-K Form 10-K
  Form 10-K
 1




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PART I  Item 1.
    Business  Our
    Company
  ® ®
  ®
     2




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
    are effective, safe and predictable;
    enable shorter periods of treatment;
    are easier to use than current products;
    reduce the length of hospital stay; and
    lower hospital costs.    Angiomax
  Overview
   3




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30-day
 4




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5




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Medical
    Need
            Clinical
    Development
     6




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30-day, 6-month 12-month follow-up
    30-day 30-day
       7




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follow-up
  Cleviprex
  Overview
        Medical
    Need
     8




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
    1.7 million medically managed patients were administered
    intravenous anti-hypertensives.
    1.1 million surgical intervention patients were
    administered intravenous anti-hypertensives in connection with
    surgical procedures, and of these, approximately
    475,000 patients were treated with intravenous
    antihypertensives in cardiac and vascular surgery.
    556,000 all other patients were administered
    intravenous antihypertensives.      Clinical
    Development
         9




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Cangrelor
  Overview
      
    an immediate inhibitory effect on platelets;
    an inhibitory effect on platelet activation and aggregation that
    is proportional to the dose administered;
    inhibitory effects that are sustainable through the period of
    infusion;
    a plasma half-life of less than five minutes; and
    platelet function recovery in less than an hour.  Medical
    Need
      
    Clopidogrel requires liver metabolism to form the active agent;
    therefore, the pre-loading dose may require up to six hours to
    achieve its full effect.
    There does not appear to be a clear relationship between
    increased dosage and intended effect that is consistent across
    different patient groups.
    The inhibition of platelet function is irreversible, meaning the
    agent remains bound to receptors for the life of the platelet,
    which is typically ten days. This may impede patient management
    and treatment flexibility, as well as increase the potential for
    bleeding, especially if a patient needs cardiac surgery, which
    is usually delayed for days awaiting the generation and release
    of new platelets from the bone marrow. 10




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
    Oral agents are difficult to administer in the critical care
    setting because they need to be swallowed by patients who may
    have received light anesthesia. This is especially true when
    there is a need to swallow multiple tablets in a restricted
    period of time.      Clinical
    Development
  9,000-patient CHAMPION-PCI
      Oritavancin
  Overview
     11




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Staphylococcus aureus
  .
  Medical
    Need
    
    Increasing resistance of bacteria to one or more existing
    antibiotics.
    Some antibiotics solely inhibit the growth of pathogens
    (bacteriostatic) and rely on the immune system to actually kill
    the bacteria. Bacteriostatic drugs are less effective in
    treating patients with compromised immune systems that cannot
    rid their bodies of the pathogens.
    The range of bacteria treated by a drug is called its
    spectrum. Many antibiotics are effective against
    some serious pathogens but not others.
    Many of the existing antibiotics used to treat serious
    infections are difficult or inconvenient to administer, as they
    must be administered twice daily for seven to fourteen days, or
    more, and patients can be hospitalized for much or all of this
    period.
    Existing antibiotics may cause serious side effects in some
    patients, sometimes requiring discontinuation of therapy. Due to
    these side effects, costly and time-consuming monitoring of
    blood levels and other parameters is required with the use of a
    number of currently available therapies.    Clinical
    Development
       12




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CU-2010
  CU-2010
  Sales
         13




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Manufacturing
    Angiomax
        Cleviprex
  scale-up
  scale-up
  Cangrelor
  scale-up
 14




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Oritavancin
        CU-2010
    Business
    Development
      Recent
    Acquisitions
  Targanta.
    n
    If we or a MDCO Affiliated Party (meaning an affiliate of ours,
    a successor or assigns of ours, or a licensee or collaborator of
    ours) obtain approval from the EMEA for a MAA for oritavancin
    for the treatment of cSSSI on or before December 31, 2013,
    each former Targanta shareholder will be entitled 15




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to receive a cash payment equal to (1) $1.00 per share if
    such approval is granted on or before December 31, 2009,
    (2) $0.75 per share if such approval is granted between
    January 1, 2010 and June 30, 2010, or (3) $0.50
    per share if such approval is granted between July 1, 2010
    and December 31, 2013, a payment of approximately
    $21.0 million in the aggregate, approximately
    $15.8 million in the aggregate, or approximately
    $10.5 million in the aggregate, respectively.  n
    If we or a MDCO Affiliated Party obtain final approval from the
    FDA for a new drug application, or NDA, for oritavancin for the
    treatment of cSSSI (1) within 40 months after the date
    the first patient is enrolled in a Phase III clinical trial
    of cSSSI that is initiated by us or a MDCO Affiliate Party after
    the date of our merger agreement with Targanta and (2) on
    or before December 31, 2013, each former Targanta
    shareholder will be entitled to receive a cash payment equal to
    $0.50 per share, or approximately $10.5 in the aggregate.n
    If we obtain final FDA approval for an NDA for the use of
    oritavancin for the treatment of cSSSI administered by a single
    dose intravenous infusion (1) within 40 months after
    the date the first patient is enrolled in a Phase III
    clinical trial of cSSSI that is initiated by us or a MDCO
    Affiliated Party after the date of our merger agreement with
    Targanta and (2) on or before December 31, 2013, each
    former Targanta shareholder will be entitled to receive a cash
    payment equal to $0.70 per share, or approximately
    $14.7 million in the aggregate. This payment may become
    payable simultaneously with the payment described in the
    previous bullet above.n
    If aggregate net sales of oritavancin in four consecutive
    calendar quarters ending on or before December 31, 2021
    reach or exceed $400 million, each former Targanta
    shareholder will be entitled to receive a cash payment equal to
    $2.35 per share, or approximately $49.4 million in the
    aggregate.  Curacyte Discovery. follow-up
  License
    Agreements
  Angiomax. country-by-country
 16




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Cleviprex. country-by-country country-by-country
  Cangrelor. country-by-country country-by-country
  Oritavancin.
  country-by-country
 17




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Competition
          Angiomax
    Direct thrombin inhibitors.
  Indirect thrombin inhibitors.
  Platelet inhibitors.
 18




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Cleviprex
    Cangrelor
    Oritavancin
    Patents,
    Proprietary Rights and Licenses
       19




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® ® ® ® and/or
   20




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Customers
    Government
    Regulation
    
    pre-clinical laboratory tests, animal studies and formulation
    studies;
    submission to the FDA of an investigational new drug exemption,
    or IND, for human clinical testing, which must become effective
    before human clinical trials may begin;
    adequate and well-controlled clinical trials to establish the
    safety and efficacy of the drug for each indication;
    submission to the FDA of an NDA;
    satisfactory completion of an FDA inspection of the
    manufacturing facility or facilities at which the drug is
    produced to assess compliance with current good manufacturing
    practices, or cGMP; and
    FDA review and approval of the NDA.   21




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
    evaluate dosage tolerance and appropriate dosage;
    identify possible adverse effects and safety risks; and
    evaluate preliminarily the efficacy of the drug for specific
    indications.           22




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Research
    and Development
    Employees
      Segments
    and Geographic Information
    Available
    Information
  http://www. themedicinescompany Form 10-K, Form 10-K, Form 10-Q, Form 8-K
  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 annual 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.
 23




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Risks
    Related to Our Financial Results
  We
    have a history of net losses and may not maintain profitability
    on an annual basis
    Our
    business is very dependent on the commercial success of
    Angiomax
    
    its continued acceptance by regulators, physicians, patients and
    other key decision-makers 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, including our ability to obtain
    EMEA approval of Angiox for the treatment of STEMI patients
    undergoing PCI;
    the overall number of PCI procedures performed;
    our ability sell and market of Angiox in Europe; 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 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
   24




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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 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 expansion of our sales force in connection with the
    expansion of our sales and marketing efforts in Europe and the
    sale of Cleviprex in the United States;
    our plan to continue to seek possible acquisitions of
    development-stage products, approved products, or businesses and
    possible additional strategic or licensing arrangements with
    companies that fit within our growth strategy, such as our
    acquisitions of Curacyte Discovery and Targanta;
    the progress, level and timing of our research and development
    activities related to our clinical trials with respect to
    Angiomax, Cleviprex, cangrelor, oritavancin and CU-2010;
    the cost and outcomes of regulatory submissions and reviews,
    approval of Cleviprex internationally and approval of our
    product candidates globally;
    the continuation or termination of third-party manufacturing or
    sales and marketing arrangements;
    the size, cost and effectiveness of our sales and marketing
    programs in the United States and internationally;
    the status of competitive products;
    the success of obtaining regulatory approval of oritavancin and
    the extent of the commercial success of oritavancin, if and when
    it is approved, which could result in the cash payment to former
    Targanta shareholders; and
    our ability to defend and enforce our intellectual property
    rights.   25




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Risks
    Related to Commercialization
  Angiomax competes with all categories of anticoagulant
    drugs, which may limit the use of Angiomax
      Because the market for thrombin inhibitors is competitive,
    Angiomax may not obtain widespread use
      Cleviprex competes with all categories of IV
    antihypertensive, or IV-AHT, drugs, which may limit the use of
    Cleviprex
  IV-AHT
   26




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Because the IV-AHT market is competitive and many of the
    IV-AHT drugs with which we expect Cleviprex to compete have been
    widely used in patient care for many years and are generic, our
    product may not obtain widespread use
  and/or
  The market for Cleviprex will depend significantly on its
    inclusion on hospital formularies
    Near-term growth in our sales of Angiomax and Cleviprex is
    dependent on acceptance by physicians, patients and other key
    decision-makers of clinical data
      We face substantial competition, which may result in
    others discovering, developing or commercializing competing
    products before or more successfully than we do
   27




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Our ability to generate future revenue from products will
    be affected by our ability to develop our international
    operations
    
    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.    Our future growth depends, in part, on our ability to
    penetrate foreign markets, particularly in Europe. However, we
    have limited experience marketing, servicing and distributing
    our products and otherwise conducting our business outside the
    United States, where we are subject to additional regulatory
    burdens and other risks
    
    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. 28




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Our ability to generate future revenue from products will
    be affected by reimbursement and drug pricing
        We must comply with federal, state and foreign laws and
    regulations relating to the health care business, and, if we do
    not fully comply with such laws and regulations, 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; and
    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. 29




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We could be exposed to significant liability if we are
    unable to obtain insurance at acceptable costs and adequate
    levels or otherwise protect ourselves against potential product
    liability claims
        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. 30




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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
    Clinical trials of product candidates are expensive and
    time-consuming, and the results of these trials are
    uncertain
     31




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
    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;
    interruption of production;
    operating restrictions;
    warning letters;
    injunctions; 32




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
    fines and other monetary penalties;
    criminal prosecutions; and
    unanticipated expenditures.  Risks
    Related to our Dependence on Third Parties for Manufacturing,
    Research and Development, and Distribution Activities
  We depend on single suppliers for the production of
    Angiomax, Cleviprex, cangrelor and oritavancin bulk drug
    substance and a limited number of suppliers to carry out all
    fill-finish activities
             33




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The development and commercialization of our products may
    be terminated or delayed, and the costs of development and
    commercialization may increase, if third parties on whom we rely
    to manufacture and support the development and commercialization
    of our products do not fulfill their obligations
          
    delay or otherwise adversely impact the manufacturing,
    development or commercialization of Angiomax, Cleviprex,
    cangrelor, oritavancin, CU-2010 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 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. 34




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In order to satisfy regulatory authorities, we may need to
    reformulate the way in which our oritavancin bulk drug substance
    is created to remove animal source product
  non-U.S. regulatory
    If we use hazardous and biological materials in a manner
    that causes injury or violates applicable law, we may be liable
    for damages
   35




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Risks
    Related to Our Intellectual Property
  A breach of any of the agreements under which we license
    commercialization rights to products or technology from others
    could cause us to lose license rights that are important to our
    business or subject us to claims by our licensors
  and/or
  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
    prevent others from infringing our proprietary rights.       36




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and/or
  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
   37




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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
    and/or
 38




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
    manufactured or produced economically;
    successfully commercialized; or
    widely accepted in the marketplace.    We may undertake strategic acquisitions in the future and
    any difficulties from integrating such acquisitions could damage
    our ability to attain or maintain profitability
    We may not be able to manage our business effectively if
    we are unable to attract and retain key personnel and
    consultants
    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
   39




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
    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;
    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
      Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties     40




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Item 3.
    Legal
    Proceedings    09-0269-BLS)
  and/or
  Schedule 14D-9
   41




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Item 4.
    Submission
    of Matters to a Vote of Security Holders   PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Market
    Information and Holders
  mark-up,
  Common StockPriceHigh


LowYear Ended December 31, 2007First Quarter

$
34.73


$
23.88Second Quarter


27.40



17.25Third Quarter


21.30



14.26Fourth Quarter


19.90



16.68Year Ended December 31, 2008First Quarter


21.41



16.38Second Quarter


21.13



17.18Third Quarter


28.00



19.07Fourth Quarter


24.18



11.37     Dividends
   42




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Performance
    Graph
  5-year
  COMPARISON
    OF 5 YEAR CUMULATIVE TOTAL RETURN* Among
    The Medicines Company, The NASDAQ Composite Index
    And The NASDAQ Biotechnology Index
  
    *
    
    Fiscal year ended December 31.  12/03


12/04


12/05


12/06


12/07


12/08The Medicines Company


100.00



97.76



59.23



107.67



65.04



50.00NASDAQ Composite


100.00



110.08



112.88



126.51



138.13



80.47NASDAQ Biotechnology


100.00



112.17



130.53



130.05



132.24



122.10    43




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Item 6.
    Selected
    Financial Data      Year Ended December 31,2008


2007


2006


2005


2004(In thousands, except per share data)Statements of Operations DataNet revenue

$
348,157


$
257,534


$
213,952


$
150,207


$
144,251Operating expenses:Cost of revenue


88,355



66,502



51,812



34,762



29,123Research and development


105,720



77,255



63,536



64,389



49,290Selling, general and administrative


164,903



141,807



88,265



63,053



50,275Total operating expenses


358,978



285,564



203,613



162,204



128,688(Loss) income from operations


(10,821
)


(28,030
)


10,339



(11,997
)


15,563Other income


5,235



10,653



7,319



4,344



2,126(Loss) income before income taxes


(5,586
)


(17,377
)


17,658



(7,653
)


17,689(Provision for) benefit from income taxes


(2,918
)


(895
)


46,068



(100
)


(690
)Net (loss) income

$
(8,504
)

$
(18,272
)

$
63,726


$
(7,753
)

$
16,999Basic (loss) earnings per common share

$
(0.16
)

$
(0.35
)

$
1.27


$
(0.16
)

$
0.36Shares used in computing basic (loss) earnings per common share


51,904



51,624



50,300



49,443



47,855Diluted (loss) earnings per common share

$
(0.16
)

$
(0.35
)

$
1.25


$
(0.16
)

$
0.34Shares used in computing diluted (loss) earnings per common share


51,904



51,624



51,034



49,443



49,772   As of December 31,2008


2007


2006


2005


2004(In thousands)Balance Sheet DataCash and cash equivalents, available for sale securities and
    accrued interest receivable

$
217,542


$
223,711


$
198,231


$
141,012


$
161,224Working capital


206,451



208,568



228,523



169,912



173,349Total assets


387,404



361,516



318,568



208,707



210,044Accumulated deficit


(267,948
)


(259,444
)


(241,172
)


(304,898
)


(297,145
)Total stockholders equity


298,025



277,896



269,951



170,899



171,671    44




---



##### Table of Contents



Item 7.
    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
    Selected Consolidated Financial Data and our
    financial statements and accompanying notes included elsewhere
    in this annual report. In addition to the historical
    information, the discussion in this annual 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 annual report, including under
    Risk Factors in Item 1A of this annual
    report.
  Overview
  ® ® ®
         45




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46




---



##### Table of Contents



follow-up
      
    If we or a MDCO Affiliated Party (meaning an affiliate of ours,
    a successor or assigns of ours, or a licensee or collaborator of
    ours) obtain approval from the EMEA for a MAA for oritavancin
    for the treatment of cSSSI on or before December 31, 2013,
    each former Targanta shareholder will be entitled to receive a
    cash payment equal to (1) $1.00 per share if such approval
    is granted on or before December 31, 2009, (2) $0.75
    per share if such approval is granted between January 1,
    2010 and June 30, 2010, or (3) $0.50 per share if such
    approval is granted between July 1, 2010 and
    December 31, 2013, a payment of approximately
    $21.0 million in the aggregate, approximately
    $15.8 million in the aggregate, or approximately
    $10.5 million in the aggregate, respectively.
    If we or a MDCO Affiliated Party obtain final approval from the
    FDA for a new drug application, or NDA, for oritavancin for the
    treatment of cSSSI (1) within 40 months after the date
    the first patient is 47




---



##### Table of Contents



enrolled in a Phase III clinical trial of cSSSI that is
    initiated by us or a MDCO Affiliate Party after the date of our
    merger agreement with Targanta and (2) on or before
    December 31, 2013, each former Targanta shareholder will be
    entitled to receive a cash payment equal to $0.50 per share, or
    approximately $10.5 million in the aggregate.  
    If we obtain final FDA approval for an NDA for the use of
    oritavancin for the treatment of cSSSI administered by a single
    dose intravenous infusion (1) within 40 months after
    the date the first patient is enrolled in a Phase III
    clinical trial of cSSSI that is initiated by us or a MDCO
    Affiliated Party after the date of our merger agreement with
    Targanta and (2) on or before December 31, 2013, each
    former Targanta shareholder will be entitled to receive a cash
    payment equal to $0.70 per share, or 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, each former Targanta
    shareholder will be entitled to receive a cash payment equal to
    $2.35 per share, or approximately $49.4 million in the
    aggregate.        Recent
    Accounting Pronouncements
     48




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##### Table of Contents



No. FAS 142-3, (FAS 142-3). FAS 142-3 FAS 142-3 FAS 142-3 FAS 142-3
    EITF 03-6-1, (EITF 03-6-1). EITF 03-6-1 EITF 03-6-1, EITF 03-6-1 EITF 03-6-1, EITF 03-6-1
  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
    the impact of the estimates and assumptions on financial
    condition or operating performance is material. 49




---



##### Table of Contents



Form 10-K.
  Revenue
    Recognition
  Product Sales.
          
    Product returns.  Our customers have the right
    to return any unopened product during the
    18-month
    period beginning six months prior to the labeled expiration date
    and ending 12 months after the labeled expiration date. As
    a result, in calculating the accrual for product returns, we
    must estimate the likelihood that product sold might not be used
    within six months of expiration and analyze the likelihood that
    such product will be returned within 12 months after
    expiration. 50




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##### Table of Contents




    Chargebacks and rebates.  Although we primarily
    sell products to a sole source distributor in the United States,
    we typically enter into agreements with hospitals, either
    directly or through group purchasing organizations acting on
    behalf of their hospital members, in connection with the
    hospitals purchases of products. Based on these
    agreements, most of our hospital customers have the right to
    receive a discounted price for product and volume-based rebates
    on product purchases. In the case of discounted pricing, we
    typically provide a credit to the sole source distributor, or a
    chargeback, representing the difference between the sole source
    distributors acquisition list price and the discounted
    price. In the case of the volume-based rebates, we typically pay
    the rebate directly to the hospitals.        
    Fees-for-service.  We offer discounts to
    certain wholesalers and our sole source distributor based on
    contractually determined rates for certain services. We estimate
    our fee-for-service accruals and allowances based on historical
    sales, wholesaler and distributor inventory levels and the
    applicable discount rate. Our discounts are accrued at the time
    of the sale and are typically settled with the wholesalers or
    sole source distributor within 60 days after the end of
    each respective quarter. Our fee-for-service accruals and
    allowances were $2.0 million and $1.7 million at
    December 31, 2008 and December 31, 2007, respectively.
    A 10% change in our fee-for-service accruals and allowances
    would have had an approximate $0.2 million effect on our
    reported net revenue for the year ended December 31, 2008.   51




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##### Table of Contents



Fees-for-Returns


Chargebacks


Rebates


ServiceBalance at January 1, 2006

$
217


$
506


$
1,454


$
1052006 allowances


404



4,240



2,247



7,063Actual credits issued for prior years sales


(212
)


(737
)


(1,318
)


(103
)Actual credits issued for sales during 2006


(8
)


(3,681
)


(1,549
)


(5,291
)Balance at December 31, 2006


401



328



834



1,7742007 allowances


3,132



4,485



4,571



4,507Actual credits issued for prior years sales


(459
)


(427
)


(849
)


(929
)Actual credits issued for sales during 2007


(14
)


(3,789
)


(2,894
)


(3,695
)Balance at December 31, 2007


3,060



597



1,662



1,6572008 allowances


(1,824
)


5,751



1,413



6,562Actual credits issued for prior years sales


(261
)


(720
)


(1,397
)


(721
)Actual credits issued for sales during 2008






(4,442
)


(1,247
)


(5,542
)Balance at December 31, 2008

$
975


$
1,186


$
431


$
1,956     International Distributors.
      Reimbursement Revenue. mark-up EITF 01-14
 52




---



##### Table of Contents



EITF 99-19
  Revenue from Collaborations.
  Inventory
  first-in, work-in-progress
    Stock-Based
    Compensation
       53




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##### Table of Contents



Assumption

Method of Estimating   Estimated expected term of options

   Employees historical exercise
    experience and, at times, estimates of future exercises of
    unexercised options based on the midpoint between the vesting
    date and end of the contractual term   Expected volatility

   Historic price of our common stock and
    the implied volatility of the stock of our peer group   Risk-free interest rate

   Yields of U.S. Treasury securities
    corresponding with the expected life of option grants   Forfeiture rates

   Historical forfeiture data     Income
    Taxes
         54




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##### Table of Contents



Results
    of Operations
  Years
    Ended December 31, 2008 and 2007
  Net Revenue.
  Net
    Revenue
  Year Ended December 31,% of Total





% of TotalNet Revenue

2008


Revenue


2007


Revenue(In thousands)





(In thousands)Angiomax and CleviprexU.S. sales

$
334,582



96
%

$
254,975



99
%International net revenue


9,750



3
%


32



Revenue from collaborations, net


3,825



1
%


2,527



1
%Total net revenue

$
348,157



100
%

$
257,534



100
%      55




---



##### Table of Contents



Cost of Revenue.
  Cost of
    Revenue
  Year Ended December 31,% of Total





% of TotalCost of Revenue

2008


Cost


2007


Cost(In thousands)





(In thousands)Manufacturing

$
22,518



25
%

$
20,205



30
%Royalty


53,642



61
%


40,318



61
%Logistics


12,195



14
%


5,979



9
%Total cost of revenue

$
88,355



100
%

$
66,502



100
%     Research and Development Expenses.
 56




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##### Table of Contents



Research
    and Development Spending
  Year Ended December 31,% of





% ofResearch and Development

2008


Total R&D


2007


Total R&D(In thousands)





(In thousands)AngiomaxClinical trials

$
4,959



5
%

$
10,394



14
%Manufacturing development


3,924



4
%


703



1
%Administrative and headcount costs


3,711



3
%


4,162



5
%Total Angiomax


12,594



12
%


15,259



20
%CleviprexClinical trials


3,031



3
%


2,803



3
%Manufacturing development


2,484



2
%


2,890



4
%Administrative and headcount costs


6,214



6
%


9,290



12
%Total Cleviprex


11,729



11
%


14,983



19
%CangrelorClinical trials


37,090



35
%


30,135



39
%Manufacturing development


2,661



3
%


4,240



6
%Administrative and headcount costs


4,658



4
%


3,971



5
%Total Cangrelor


44,409



42
%


38,346



50
%CU-2010Clinical trials






0
%






0
%Manufacturing development






0
%






0
%Administrative and headcount costs


1,180



1
%






0
%Acquisition related in-process research and development t


21,373



20
%






0
%Total CU-2010


22,553



21
%






0
%Other


14,435



14
%


8,667



11
%Total

$
105,720



100
%

$
77,255



100
%   Angiomax
   57




---



##### Table of Contents



Cleviprex
    Cangrelor
        CU-2010
   58




---



##### Table of Contents



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 product candidates;
    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.
 59




---



##### Table of Contents



Other Income.
  Provision for Income Tax.
    Results
    of Operations
  Years
    Ended December 31, 2007 and 2006
  Net Revenue.
  Net
    Revenue
  Year Ended December 31,% of Total





% of TotalNet Revenue

2007


Revenue


2006


Revenue(In thousands)





(In thousands)AngiomaxU.S. sales

$
254,975



99
%

$
200,727



94
%International net revenue


32







11,277



5
%Reimbursement










1,948



1
%Revenue from collaborations, net


2,527



1
%






Total net revenue

$
257,534



100
%

$
213,952



100
%    60




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##### Table of Contents



Cost of Revenue.
  Cost of
    Revenue
  Year Ended December 31,% of Total





% of TotalCost of Revenue

2007


Cost


2006


Cost(In thousands)





(In thousands)Manufacturing

$
20,205



30
%

$
18,508



36
%Royalty


40,318



61
%


27,216



52
%Logistics


5,979



9
%


6,088



12
%Total cost of revenue

$
66,502



100
%

$
51,812



100
%    61




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##### Table of Contents



Research and Development Expenses.
    Research
    and Development Spending
  Year Ended December 31,% of





% ofResearch and Development

2007


Total R&D


2006


Total R&D(In thousands)





(In thousands)AngiomaxClinical trials

$
10,394



14
%

$
14,954



24
%Manufacturing development


703



1
%


1,331



2
%Administrative and headcount costs


4,162



5
%


2,695



4
%Total Angiomax


15,259



20
%


18,980



30
%CleviprexClinical trials


2,803



3
%


9,870



16
%Manufacturing development


2,890



4
%


1,108



2
%Administrative and headcount costs


9,290



12
%


4,512



7
%Total Cleviprex


14,983



19
%


15,490



25
%CangrelorClinical trials


30,135



39
%


14,222



22
%Manufacturing development


4,240



6
%


2,153



3
%Administrative and headcount costs


3,971



5
%


3,579



6
%Total Cangrelor


38,346



50
%


19,954



31
%Other


8,667



11
%


9,112



14
%Total

$
77,255



100
%

$
63,536



100
%   Angiomax
  12-month follow-up
     62




---



##### Table of Contents



Cleviprex
      Cangrelor
  and/or
    Other
   63




---



##### Table of Contents



Selling, General and Administrative
    Expenses.
  Other Income.
  (Provision for) Benefit from Income Tax.
  Liquidity
    and Capital Resources
  Sources of Liquidity.
  Cash Flows.
   64




---



##### Table of Contents



Funding Requirements.
  
    the extent to which Angiomax is commercially successful globally;
    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 expansion of our sales force in connection with the
    expansion of our sales and marketing efforts in Europe and the
    sale of Cleviprex in the United States;
    our plan to continue to evaluate possible acquisitions of
    development-stage products, approved products, or businesses and
    possible additional strategic or licensing arrangements with
    companies that fit within our growth strategy, such as our
    acquisitions of Curacyte Discovery and Targanta;
    the progress, level and timing of our research and development
    activities related to our clinical trials with respect to
    Angiomax, Cleviprex, cangrelor, oritavancin and CU-2010;
    the cost and outcomes of regulatory submissions and reviews,
    including our efforts to obtain approval of the expansion of the
    Angiomax product label in the United States to include an
    additional dosing regimen in the treatment of ACS initiated in
    the emergency department in the United States, approval of
    Cleviprex internationally and approval of our product candidates
    globally;
    the continuation or termination of third-party manufacturing or
    sales and marketing arrangements;
    the size, cost and effectiveness of our sales and marketing
    programs in the United States and internationally;
    the status of competitive products;
    the success of obtaining regulatory approval of oritavancin and
    the extent of the commercial success of oritavancin, if and when
    it is approved, which could result in the cash payment to former
    Targanta shareholders; and
    our ability to defend and enforce our intellectual property
    rights.   65




---



##### Table of Contents



Contractual
    Obligations
      Less Than








More ThanContractual Obligations (in thousands)

Total


1 Year


1 - 3 Years


3 - 5 Years


5 YearsInventory related commitments

$
43,479


$
28,936


$
13,543


$
1,000



Research and development


22,529



17,444



5,085







Operating leases


79,511



7,509



14,667



10,819



46,516Selling, general and administrative


6,009



5,269



740







Restricted cash


3,000



3,000











Income tax contingencies


167







167







Milestone payments


22,250



16,750



5,500







Total contractual obligations

$
176,945


$
78,908


$
39,702


$
11,819


$
46,516          66




---



##### Table of Contents



Item 7A.
    Quantitative
    and Qualitative Disclosure About Market Risk      Item 8.
    Financial
    Statements and Supplementary Data  Form 10-K
 67




---



##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Disclosure
    Controls and Procedures
  Rules 13a-15(e) 15d-15(e)
  Managements
    Annual Report on Internal Control Over Financial
    Reporting
  Form 10-K
  Attestation
    Report of Independent Registered Public Accounting
    Firm
  Form 10-K
  Changes
    in Internal Control Over Financial Reporting
  Rules 13a-15(f) 15d-15(f)
  Item 9B.
    Other
    Information    
    a lump sum payment equal to one year of her current annual base
    salary, less all applicable statutory tax withholdings and
    deductions;
    a lump sum bonus payment in the amount of $53,865 earned in
    accordance with our annual cash bonus plan;
    for the shorter of a period of twelve months after the
    termination date or until Ms. Newberry commences employment
    with a new employer, reimbursement of COBRA health insurance
    premiums actually paid by Ms. Newberry and payment for
    reasonable outplacement services; and 68




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##### Table of Contents




    accelerated vesting of all stock options that Ms. Newberry
    held immediately prior to termination which would have vested
    within one year after the termination date if Ms. Newberry
    had continued to be employed by us during such one-year period.   PART III  Form 10-K,
  Item 10.
    Directors,
    Executive Officers and Corporate Governance    www.themedicinescompany.com
  Form 8-K Form 8-K
  Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence   69




---



##### 



Item 14.
    Principal
    Accountant Fees and Services   PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules    Financial Statements.
   
 PageManagements Report on Consolidated Financial Statements
    and Internal Control over Financial Reporting


F-2Report of Independent Registered Public Accounting Firm


F-3Report of Independent Registered Public Accounting Firm on
    Internal Control over Financial Reporting


F-4Consolidated Balance Sheets


F-5Consolidated Statements of Operations


F-6Consolidated Statements of Stockholders Equity


F-7Consolidated Statements of Cash Flows


F-8Notes to Consolidated Financial Statements


F-9    Financial Statement Schedule.
  Exhibits.
 70




---



##### Table of Contents



SIGNATURES
      By:
    /s/
    Clive A. Meanwell   Chief Executive Officer
    Signature

Title(s)/s/  Clive
    A. MeanwellClive
    A. Meanwell

Chief Executive Officer and Chairman of the Board of
    Directors
    (Principal Executive Officer)

March 2, 2009/s/  Glenn
    P. SblendorioGlenn
    P. Sblendorio

Executive Vice President, Chief Financial Officer and
    Treasurer
    (Principal Financial and Accounting Officer)

March 2, 2009/s/  John
    P. KelleyJohn
    P. Kelley

President, Chief Operating Officer and Director

March 2, 2009/s/  William
    W. CrouseWilliam
    W. Crouse

Director

March 2, 2009/s/  Robert
    J. HuginRobert
    J. Hugin

Director

March 2, 2009/s/  T.
    Scott JohnsonT.
    Scott Johnson

Director

March 2, 2009/s/  Armin
    M. KesslerArmin
    M. Kessler

Director

March 2, 2009/s/  Robert
    G. SavageRobert
    G. Savage

Director

March 2, 2009/s/  Hiroaki
    ShigetaHiroaki
    Shigeta

Director

March 2, 2009/s/  Melvin
    K. SpigelmanMelvin
    K. Spigelman

Director

March 2, 2009/s/  Elizabeth
    H.S. WyattElizabeth
    H.S. Wyatt

Director

March 2, 2009  71




---



##### 



APPENDIX A
  INDEX TO
    THE CONSOLIDATED FINANCIAL STATEMENTS OF
    THE MEDICINES COMPANY
   
 PageManagements Report on Consolidated
    Financial Statements and Internal Control over Financial
    Reporting


F-2Report of Independent Registered Public
    Accounting Firm


F-3Report of Independent Registered Public
    Accounting Firm on Internal Control over Financial Reporting


F-4Consolidated Balance Sheets


F-5Consolidated Statements of Operations


F-6Consolidated Statements of Stockholders
    Equity


F-7Consolidated Statements of Cash Flows


F-8Notes to Consolidated Financial Statements


F-9Schedule II


F-42   F-1




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##### Table of Contents



Managements
    Report on Consolidated Financial Statements and
    Internal Control over Financial Reporting    Rule 13a-15(f) 15d-15(f)
  
    pertain to the maintenance of records that in reasonable detail
    accurately and fairly reflect the transactions and dispositions
    of the assets of The Medicines Company;
    provide reasonable assurance that transactions are recorded as
    necessary to permit preparation of financial statements in
    accordance with generally accepted accounting principles, and
    that receipts and expenditures of The Medicines Company are
    being made only in accordance with authorizations of management
    and directors of The Medicines Company; and
    provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use or disposition of The
    Medicines Companys assets that could have a material
    effect on the financial statements.      /s/  Clive
    A. MeanwellChairman
    and
    Chief Executive Officer

/s/  Glenn
    P. SblendorioExecutive
    Vice President and
    Chief Financial Officer    F-2




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm  The Board of Directors and Stockholders of The Medicines
    Company
            
    F-3




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
    on Internal Control over Financial Reporting  The Board of Directors and Stockholders of The Medicines
    Company
              
    F-4




---



##### Table of Contents



THE
    MEDICINES COMPANY



CONSOLIDATED
    BALANCE SHEETS  December 31,2008


2007(In thousands, except share and per share amounts)ASSETSCurrent assets:Cash and cash equivalents

$
81,018


$
88,127Available for sale securities


135,188



133,986Accrued interest receivable


1,336



1,598Accounts receivable, net of allowances of approximately
    $1.9 million and $1.2 million at December 31,
    2008 and 2007


33,657



25,584Inventory


28,229



35,468Prepaid expenses and other current assets


16,402



7,425Total current assets


295,830



292,188Fixed assets, net


27,331



3,245Intangible assets, net


16,349



14,929Restricted cash


5,000



5,000Deferred tax assets


37,657



46,018Other assets


5,237



136Total assets

$
387,404


$
361,516LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
12,968


$
9,793Accrued expenses


66,799



73,827Deferred revenue


9,612



Total current liabilities


89,379



83,620Commitments and contingenciesStockholders equity:Preferred stock, $1.00 par value per share,
    5,000,000 shares authorized; no shares issued and
    outstanding






Common stock, $.001 par value per share,
    125,000,000 shares authorized; 52,280,006 and 51,866,398
    issued and outstanding at December 31, 2008 and 2007,
    respectively


52



52Additional paid-in capital


565,083



537,027Accumulated deficit


(267,948
)


(259,444
)Accumulated other comprehensive income


838



261Total stockholders equity


298,025



277,896Total liabilities and stockholders equity

$
387,404


$
361,516    F-5




---



##### Table of Contents



THE
    MEDICINES COMPANY



CONSOLIDATED
    STATEMENTS OF OPERATIONS  Year Ended December 31,2008


2007


2006(In thousands, except per share amounts)}Net revenue

$
348,157


$
257,534


$
213,952Operating expenses:Cost of revenue


88,355



66,502



51,812Research and development


105,720



77,255



63,536Selling, general and administrative


164,903



141,807



88,265Total operating expenses


358,978



285,564



203,613(Loss) income from operations


(10,821
)


(28,030
)


10,339Other income


5,235



10,653



7,319(Loss) income before income taxes


(5,586
)


(17,377
)


17,658(Provision for) benefit from income taxes


(2,918
)


(895
)


46,068Net (loss) income

$
(8,504
)

$
(18,272
)

$
63,726Basic (loss) earnings per common share

$
(0.16
)

$
(0.35
)

$
1.27Shares used in computing basic (loss) earnings per common share


51,904



51,624



50,300Diluted (loss) earnings per common share

$
(0.16
)

$
(0.35
)

$
1.25Shares used in computing diluted (loss) earnings per common share


51,904



51,624



51,034    F-6




---



##### Table of Contents



THE
    MEDICINES COMPANY



CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS EQUITY

For The
    Years Ended December 31, 2006, 2007 and 2008  AccumulatedAdditional





Comprehensive


TotalCommon Stock


Paid-in


Accumulated


(Loss)


StockholdersShares


Amount


Capital


Deficit


Income


Equity(In thousands)Balance at January 1, 2006


49,724


$
50


$
476,012


$
(304,898
)

$
(265
)

$
170,899Employee stock purchases


1,503



1



23,964











23,965Non-cash stock compensation










8,459











8,459Tax effect of option exercises










2,641











2,641Net income














63,726







63,726Currency translation adjustment


















23



23Unrealized gain on available for sale securities (net of tax)


















238



238Comprehensive income






















63,987Balance at December 31, 2006


51,227



51



511,076



(241,172
)


(4
)


269,951Employee stock purchases


498



1



9,329











9,330Issuance of restricted stock awards


141



















Non-cash stock compensation










15,386











15,386Tax effect of option exercises










1,236











1,236Net loss














(18,272
)






(18,272
)Currency translation adjustment


















72



72Unrealized gain on available for sale securities (net of tax)


















193



193Comprehensive loss






















(18,007
)Balance at December 31, 2007


51,866



52



537,027



(259,444
)


261



277,896Employee stock purchases


321







5,541











5,541Issuance of restricted stock awards


93



















Non-cash stock compensation










22,798











22,798Tax effect of option exercises










(283
)










(283
)Net loss














(8,504
)






(8,504
)Currency translation adjustment


















(52
)


(52
)Unrealized gain on available for sale securities (net of tax)


















629



629Comprehensive loss






















(7,927
)Balance at December 31, 2008


52,280


$
52


$
565,083


$
(267,948
)

$
838


$
298,025    F-7




---



##### Table of Contents



THE
    MEDICINES COMPANY



CONSOLIDATED
    STATEMENTS OF CASH FLOWS  Year Ended December 31,2008


2007


2006(In thousands)Cash flows from operating activities:Net (loss) income

$
(8,504
)

$
(18,272
)

$
63,726Adjustments to reconcile net (loss) income to net cash provided
    by operating activities:Depreciation and amortization


2,932



1,586



1,465Acquired in-process research and development


21,373







Amortization of net premiums and discounts on available for sale
    securities


113



(1,093
)


(1,160
)Unrealized foreign currency transaction losses, net


580







Non-cash stock compensation expense


22,798



15,386



8,459Loss on disposal of fixed assets


33



33



244Loss on available for sale securities


33



2Deferred tax provision (benefit)


1,803







(49,200
)Tax effect of option exercises


(283
)


1,236



2,641Changes in operating assets and liabilities:Accrued interest receivable


262



(184
)


(492
)Accounts receivable


(6,375
)


(4,080
)


(6,893
)Inventory


6,890



6,160



6,357Prepaid expenses and other current assets


(2,475
)


5,538



(3,825
)Other assets






(4,983
)


Accounts payable


3,315



907



2,896Accrued expenses


(14,006
)


36,675



8,231Deferred revenue


9,588



(2,814
)


(328
)Net cash provided by operating activities


38,077



36,097



32,121Cash flows from investing activities:Purchases of available for sale securities


(161,822
)


(148,954
)


(149,852
)Maturities and sales of available for sale securities


161,505



137,541



144,347Purchases of fixed assets


(19,395
)


(1,571
)


(790
)Proceeds from sale of fixed assets






9Acquisition of intangible assets


(2,000
)


(14,929
)


Investment in pharmaceutical company


(5,000
)






Acquisition of business, net of cash acquired


(23,534
)






Increase in restricted cash






(5,000
)


Net cash used in investing activities


(50,246
)


(32,904
)


(6,295
)Cash flows from financing activities:Proceeds from issuances of common stock, net


5,542



9,330



23,965Net cash provided by financing activities


5,542



9,330



23,965Effect of exchange rate changes on cash


(482
)


74



33(Decrease) increase in cash and cash equivalents


(7,109
)


12,597



49,824Cash and cash equivalents at beginning of period


88,127



75,530



25,706Cash and cash equivalents at end of period

$
81,018


$
88,127


$
75,530Supplemental disclosure of cash flow information:Interest paid

$



$



$
Taxes paid

$
2,518


$
769


$
395Supplemental disclosure of non-cash investing activities:Fixed asset additions included in current liabilities

$
6,327


$
308


$
76    F-8




---



##### Table of Contents



THE
    MEDICINES COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  1.
    Nature of
    Business  ® ®
  ®
  CU-2010,
   F-9




---



##### Table of Contents



THE
    MEDICINES COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2.
    Significant
    Accounting Policies  Basis
    of Presentation
    Use of
    Estimates
    Risks
    and Uncertainties
    Concentrations
    of Credit Risk
     F-10




---



##### Table of Contents



THE
    MEDICINES COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Cash,
    Cash Equivalents and Available for Sale Securities
          UnrealizedCost


Gain


Fair Value(In thousands)2008U.S. government agency notes

$
107,513


$
978


$
108,491Corporate debt securities


26,487



210



26,697Total

$
134,000


$
1,188


$
135,188   UnrealizedCost


Gain (Loss)


Fair Value2007U.S. government agency notes

$
79,301


$
158


$
79,459Corporate debt securities


32,870



(90
)


32,780Asset backed securities


21,659



88



21,747Total

$
133,830


$
156


$
133,986  F-11




---



##### Table of Contents



THE
    MEDICINES COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Fair
    Value Measurements
  157-2 (FSP 157-2),
  Level 1
  Level 2
  Level 3
    SignificantQuoted Prices In


Other


SignificantActive Markets for


Observable


UnobservableIdentical Assets


Inputs


Inputs


Balance atAssets

(Level 1)


(Level 2)


(Level 3)


December 31, 2008(In thousands)Available for sale securities

$
135,188


$



$



$
135,188   Investments
  FAS 115-1 FAS 124-1 No. 03-1,
 F-12




---



##### Table of Contents



THE
    MEDICINES COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Restricted
    Cash
    Revenue
    Recognition
  Product Sales.
       F-13




---



##### Table of Contents



THE
    MEDICINES COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      
    Product returns.  The Companys customers
    have the right to return any unopened product during the
    18-month
    period beginning six months prior to the labeled expiration date
    and ending 12 months after the labeled expiration date. As
    a result, in calculating the accrual for product returns, the
    Company must estimate the likelihood that product sold might not
    be used within six months of expiration and analyze the
    likelihood that such product will be returned within
    12 months after expiration.      
    Chargebacks and rebates.  Although the Company
    primarily sells products to a sole source distributor in the
    United States, the Company typically enters into agreements with
    hospitals, either directly or through group purchasing
    organizations acting on behalf of their hospital members, in
    connection with the hospitals purchases of products. Based
    on these agreements, most of the Companys hospital
    customers have the right to receive a discounted price for
    products and volume-based rebates on product purchases. In the
    case of discounted pricing, the Company typically provides a
    credit to the sole source distributor, or a chargeback,
    representing the difference between the sole source
    distributors acquisition list price and the discounted
    price. In the case of the volume-based rebates, the Company
    typically pays the rebate directly to the hospitals.       F-14




---



##### Table of Contents



THE
    MEDICINES COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    
    Fees-for-service.  The Company offers discounts
    to certain wholesalers and its sole source distributor based on
    contractually determined rates for certain services. The Company
    estimates its fee-for-service accruals and allowances based on
    historical sales, wholesaler and distributor inventory levels
    and the applicable discount rate. The Companys discounts
    are accrued at the time of the sale and are typically settled
    with the wholesalers or sole source distributor within
    60 days after the end of each respective quarter. The
    Companys fee-for-service accruals and allowances were
    $2.0 million and $1.7 million at December 31,
    2008 and December 31, 2007, respectively. A 10% change in
    the Companys fee-for-service accruals and allowances would
    have had an approximate $0.2 million effect on the
    Companys reported net revenue for the year ended
    December 31, 2008.      Fees-for-Returns


Chargebacks


Rebates


ServiceBalance at January 1, 2006

$
217


$
506


$
1,454


$
1052006 allowances


404



4,240



2,247



7,063Actual credits issued for prior years sales


(212
)


(737
)


(1,318
)


(103
)Actual credits issued for sales during 2006


(8
)


(3,681
)


(1,549
)


(5,291
)Balance at December 31, 2006


401



328



834



1,7742007 allowances


3,132



4,485



4,571



4,507Actual credits issued for prior years sales


(459
)


(427
)


(849
)


(929
)Actual credits issued for sales during 2007


(14
)


(3,789
)


(2,894
)


(3,695
)Balance at December 31, 2007


3,060



597



1,662



1,6572008 allowances


(1,824
)


5,751



1,413



6,562Actual credits issued for prior years sales


(261
)


(720
)


(1,397
)


(721
)Actual credits issued for sales during 2008






(4,442
)


(1,247
)


(5,542
)Balance at December 31, 2008

$
975


$
1,186


$
431


$
1,956     International Distributors.
 F-15




---



##### Table of Contents



THE
    MEDICINES COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Reimbursement Revenue. mark-up EITF 01-14 (EITF 01-14) EITF 99-19 (EITF 99-19).
  Revenue from Collaborations.
  Cost
    of Revenue
    Advertising
    Costs
   F-16




---



##### Table of Contents



THE
    MEDICINES COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Inventory
  first-in, work-in-progress
    Inventory

2008


2007(In thousands)Raw materials

$
10,003


$
18,573Work-in-progress


10,334



11,130Finished goods


7,892



5,765Total

$
28,229


$
35,468     Fixed
    Assets
    Impairment
    of Long-Lived Assets
    Research
    and Development
    Stock-Based
    Compensation
   F-17




---



##### Table of Contents



THE
    MEDICINES COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Years Ended December 31,2008


2007


2006Expected dividend yield


0
%


0
%


0
%Expected stock price volatility


45
%


49
%


46
%Risk-free interest rate


2.78
%


4.49
%


4.77
%Expected option term (years)


4.89



4.85



3.49     Years Ended December 31,2008


2007


2006Expected dividend yield


0
%


0
%


0
%Expected stock price volatility


39
%


33
%


36
%Risk-free interest rate


2.04
%


5.08
%


4.85
%Expected option term (years)


0.5



0.5



0.5   Translation
    of Foreign Currencies
   F-18




---



##### Table of Contents



THE
    MEDICINES COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Income
    Taxes
          Comprehensive
    Income (Loss)
    Years Ended December 31,2008


2007


2006(In thousands)Net (loss) income  As reported

$
(8,504
)

$
(18,272
)

$
63,726Unrealized gain on available for sale securities


629



193



238Currency translation adjustment


(52
)


72



23Comprehensive (loss) income

$
(7,927
)

$
(18,007
)

$
63,987  F-19




---



##### Table of Contents



THE
    MEDICINES COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Segments
    and Geographic Information
      Years Ended December 31,2008


2007


2006(In thousands)Net revenues:United States

$
334,582


$
254,975


$
202,676Europe


9,051



(268
)


7,558Other


4,524



2,827



3,718Total net revenue

$
348,157


$
257,534


$
213,952Long-lived assets:United States

$
47,308


$
18,305


$
3,198Europe


1,609



5



12Total long-lived assets

$
48,917


$
18,310


$
3,210   3.
    Recent
    Accounting Pronouncements      No. FAS 142-3, (FAS 142-3). FAS 142-3
 F-20




---



##### Table of Contents



THE
    MEDICINES COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  FAS 142-3 FAS 142-3 FAS 142-3
    EITF 03-6-1, (EITF 03-6-1). EITF 03-6-1 EITF 03-6-1, EITF 03-6-1 EITF 03-6-1, EITF 03-6-1
  4.
    The
    Companys Plans and Financing   F-21




---



##### Table of Contents



THE
    MEDICINES COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  5.
    Fixed
    Assets    Estimated


December 31,Life (Years)


2008


2007(In thousands)Furniture, fixtures and equipment


3-7


$
7,689


$
2,413Computer software


3



3,174



1,795Computer hardware


3



1,629



1,503Leasehold improvements


5-15



21,235



1,270Construction in progress










1,01533,727



7,996Less: Accumulated depreciation






(6,396
)


(4,751
)$
27,331


$
3,245     6.
    Investment    7.
    Curacyte
    Discovery Acquisition  follow-up
 F-22




---



##### Table of Contents



THE
    MEDICINES COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (In thousands)Acquired Assets:Total current assets

$
1,970Fixed assets


1,273Other assets


51In-process research and development


21,373Total acquired assets


24,667Acquired Liabilities:Total current liabilities


(1,004
)Total purchase price

$
23,663     8.
    Nycomed
    Agreements       F-23




---



##### Table of Contents



THE
    MEDICINES COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          9.
    Intangible
    Assets    As of December 31, 2008


As of December 31, 2007Weighted


Gross





Net


Gross





NetAverage


Carrying


Accumulated


Carrying


Carrying


Accumulated


CarryingUseful Life


Amount


Amortization


Amount


Amount


Amortization


Amount(In thousands)Identifiable intangible assets Customer relationships


8 years


$
7,457


$
288


$
7,169


$
7,457


$



$
7,457Distribution agreement


8 years



4,448



171



4,277



4,448







4,448Trademarks


8 years



3,024



116



2,908



3,024







3,024Cleviprex milestones


13 years



2,000



5



1,995











Total


9 years


$
16,929


$
580


$
16,349


$
14,929


$



$
14,929  F-24




---



##### Table of Contents



THE
    MEDICINES COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      10.
    Accrued
    Expenses    2008


2007(In thousands)Nycomed termination and transition agreement

$



$
25,000Nycomed service agreement


2,385



6,156Royalties


15,792



14,013Research and development services


13,312



8,831Compensation related


8,889



7,164Product returns, rebates and other fees


3,286



5,704Fixed asset additions


6,165



308Legal, accounting and other


9,943



2,601Manufacturing, logistics and related fees


4,929



2,221Sales and marketing


2,098



1,829$
66,799


$
73,827   11.
    Stockholders
    Equity  Preferred
    Stock
    Common
    Stock
     F-25




---



##### Table of Contents



THE
    MEDICINES COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Stock
    Plans
    
    the 2007 Equity Inducement Plan (the 2007 Plan),
    the 2004 Stock Incentive Plan (the 2004 Plan),
    the 2001 Non-Officer,
    Non-Director
    Stock Incentive Plan (the 2001 Plan),
    the 2000 Outside Director Stock Option Plan (the
    2000 Director Plan), and
    the 1998 Stock Incentive Plan (the 1998 Plan).  10-year
  2007
    Plan
  10-year
  2004
    Plan
   F-26




---



##### Table of Contents



THE
    MEDICINES COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    10-year
    
    20,000 shares of common stock on the date of his or her
    initial election to the Board of Directors (the Initial
    Options); and
    7,500 shares of the common stock on the date of each annual
    meeting of the Companys stockholders (the Annual Options),
    except if such non-employee director was initially elected to
    the Board of Directors at such annual meeting. The lead director
    will be granted an additional option to purchase
    5,000 shares of the common stock on the date of each annual
    meeting of the Companys stockholders.    10-year
    2001
    Plan
   F-27




---



##### Table of Contents



THE
    MEDICINES COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2000 Director
    Plan
      1998
    Plan
     F-28




---



##### Table of Contents



THE
    MEDICINES COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Stock
    Option Activity
    Weighted-AverageWeighted-Average


RemainingExercise Price


Contractual


AggregateNumber of Shares


Per Share


Term


Intrinsic ValueOutstanding, January 1, 2006


7,679,136



20.85Granted


1,496,789



20.60Exercised


(1,415,605
)


16.15Forfeited and expired


(1,006,913
)


24.66Outstanding, December 31, 2006


6,753,407



21.21Granted


1,975,189



23.69Exercised


(418,126
)


19.14Forfeited and expired


(387,316
)


23.43Outstanding, December 31, 2007


7,923,154


$
21.83Granted


3,588,990



19.25Exercised


(217,160
)


18.36Forfeited and expired


(538,373
)


24.16Outstanding, December 31, 2008


10,756,611


$
20.92



7.35


$
3,985,949Exercisable, December 31, 2008


6,023,511


$
21.48



6.16


$
3,845,319Available for future grant at December 31, 2008


2,678,346      F-29




---



##### Table of Contents



THE
    MEDICINES COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Options Outstanding


Options VestedWeighted AverageNumber


Remaining


Weighted Average


Number


Weighted AverageRange of Exercise

Outstanding


Contractual Life


Exercise Price


Outstanding


Exercise PricePrices Per Share

at 12/31/08


(Years)


Per Share


at 12/31/08


Per Share$1.23  $15.50


817,035



3.58


$
10.05



706,899


$
9.51$15.59  $17.98


772,132



8.59



17.20



197,781



17.08$18.00  $18.27


1,103,008



7.28



18.25



777,271



18.26$18.29  $19.09


1,339,172



8.27



18.74



530,989



18.76$19.11  $19.98


2,133,270



8.94



19.45



505,033



19.48$20.05  $23.77


1,667,416



7.18



21.69



1,082,358



22.07$23.79  $28.01


1,434,878



6.17



26.12



1,176,361



26.30$28.02  $28.60


1,174,179



7.25



28.41



793,193



28.32$28.81  $34.95


315,521



6.25



31.26



253,626



31.4110,756,611



7.35


$
20.92



6,023,511


$
21.48     Weighted AverageNumber of


Grant-DateShares


Fair ValueOutstanding, January 1, 2006






Awarded


25,000


$
20.11Vested






Forfeited






Outstanding, December 31, 2006


25,000



20.11Awarded


141,200



25.03Vested


(6,250
)


20.11Forfeited






Outstanding, December 31, 2007


159,950



24.46Awarded


92,970



18.93Vested


(64,050
)


22.65Forfeited






Outstanding, December 31, 2008


188,870


$
22.35    F-30




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##### Table of Contents



THE
    MEDICINES COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  2000
    ESPP
      Common
    Stock Reserved for Future Issuance
    12.
    Net
    Earnings (Loss) per Share    Years Ended December 31,2008


2007


2006(In thousands, except per share amounts)Basic and dilutedNet (loss) income  As reported

$
(8,504
)

$
(18,272
)

$
63,726Weighted average common shares outstanding, basic


52,090



51,742



50,321Less: unvested restricted common shares outstanding


186



118



21Net weighted average common shares outstanding, basic


51,904



51,624



50,300Plus: net effect of dilutive stock options, restricted common
    shares and warrants










734Weighted average common shares outstanding, diluted


51,904



51,624



51,034(Loss) earnings per common share, basic

$
(0.16
)

$
(0.35
)

$
1.27(Loss) earnings per common share, diluted

$
(0.16
)

$
(0.35
)

$
1.25  F-31




---



##### Table of Contents



THE
    MEDICINES COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Years Ended December 31,2008


2007


2006(In thousands)Weighted average options outstanding


10,118



7,429



7,459Weighted average options included in computation of diluted
    (loss) earnings per share










2,209Weighted average options considered anti-dilutive and excluded
    from the computation of diluted (loss) earnings per share


10,118



7,429



5,250Weighted average restricted shares outstanding


186



118



21Weighted average restricted shares included in computation of
    diluted (loss) earnings per share










21Weighted average restricted shares considered anti-dilutive and
    excluded from the computation of diluted (loss) earnings per
    share


186



118



   13.
    Income
    Taxes    2008


2007


2006(In thousands)Current:Federal

$
(377
)

$
(556
)

$
(348
)State


(1,021
)


(339
)


(143
)Foreign










(1,398
)


(895
)


(491
)Deferred:Federal


(1,910
)






43,300State


390







3,259Foreign










(1,520
)






46,559Total (provision for)/benefit from income taxes

$
(2,918
)

$
(895
)

$
46,068     2008


2007


2006(In thousands)Domestic

$
7,489


$
(17,432
)

$
17,689International


(13,075
)


55



(31
)Total

$
(5,586
)

$
(17,377
)

$
17,658  F-32




---



##### Table of Contents



THE
    MEDICINES COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2008


2007


2006(In thousands)Statutory rate applied to pre-tax (loss) income

$
(1,955
)

$
(6,082
)

$
6,004Add (deduct):State income taxes, net of federal benefit


430



240



(2,057
)Foreign


4,576



(19
)


4Tax credits


(1,456
)


(1,106
)


(2,326
)Other


1,323



1,366



100Increase (decrease) to federal valuation allowance (net)






6,496



(47,793
)Income taxes


2,918


$
895


$
(46,068
)     December 31,2008


2007(In thousands)Deferred tax assets:Net operating loss carryforwards

$
56,037


$
71,085Research and development credit


16,630



15,930Intangible assets


16,818



11,820Stock based compensation


14,876



8,316Other


10,109



4,793Total deferred tax assets


114,470



111,944Deferred tax liabilities:Fixed assets

$
(1,198
)

$
Other


(494
)


Total deferred tax liabilities


(1,692
)


Total deferred tax assets, net of deferred tax liabilities


112,778



111,944Valuation allowance


(64,547
)


(61,508
)Net deferred tax assets

$
48,231


$
50,436      F-33




---



##### Table of Contents



THE
    MEDICINES COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Federal ResearchFederal Net


and DevelopmentOperating Loss


Tax CreditYear of Expiration

Carryforwards


Carryforwards(In thousands)2018

$



$
1472019






9222020


22,422



1,0832021


51,100



4772022


41,403



1,8562023


19,693



2,0312024


11



1,7952025


12,541



3,4362026


97



1,9712027


79



1,1902028






1,372$
147,346


$
16,280    F-34




---



##### Table of Contents



THE
    MEDICINES COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      GrossUnrecognizedTax Benefits(In thousands)Balance at January 1, 2007

$
1,214Additions related to current year tax positions


Additions for prior year tax positions


Reductions for prior year tax positions


Settlements


Balance at December 31, 2007


1,214Additions related to current year tax positions


167Additions for prior year tax positions


Reductions for prior year tax positions


Settlements


Balance at December 31, 2008

$
1,381     14.
    License
    Agreements  Angiomax
   F-35




---



##### Table of Contents



THE
    MEDICINES COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  country-by-country
  Cleviprex
  country-by-country country-by-country
  Cangrelor
  country-by-country country-by-country
 F-36




---



##### Table of Contents



THE
    MEDICINES COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    15.
    Strategic
    Alliances  Lonza
    Braine S.A. (formerly UCB Bioproducts)
    16.
    Commitments
    and Contingencies      Contractual Obligations

2009


2010


2011


2012


2013


Later Years


Total(In thousands)Inventory related commitments

$
28,936


$
13,343


$
200


$
400


$
600


$



$
43,479Research and development


17,444



4,964



121















22,529Operating leases


7,509



7,623



7,044



6,328



4,491



46,516



79,511Selling, general and administrative


5,269



372



368















6,009Restricted cash


3,000























3,000Income tax contingencies






167



















167Milestone payments


16,750



1,000



4,500















22,250Total contractual obligations

$
78,908


$
27,469


$
12,233


$
6,728


$
5,091


$
46,516


$
176,945  F-37




---



##### Table of Contents



THE
    MEDICINES COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
                Litigation
   F-38




---



##### Table of Contents



THE
    MEDICINES COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  17.
    Employee
    Benefit Plan    18.
    Selected
    Quarterly Financial Data (Unaudited)    Three Months EndedMar. 31,


June 30,


Sept. 30,


Dec. 31,


Mar. 31,


June 30,


Sept. 30,


Dec. 31,2008


2008


2008


2008


2007


2007


2007


2007(In thousands, except per share data)Net revenue

$
79,427


$
86,731


$
88,126


$
93,873


$
66,647


$
56,399


$
62,191


$
72,297Cost of revenue


19,092



21,939



22,089



25,235



17,780



15,094



16,157



17,471Total operating expenses


54,013



58,570



86,939



71,101



64,396



57,642



90,397



73,129Net income/(loss)


4,853



4,056



(13,217
)


(4,196
)


3,049



817



(23,643
)


1,505Basic net income/(loss) per common share

$
0.09


$
0.08


$
(0.25
)

$
(0.08
)

$
0.06


$
0.02


$
(0.46
)

$
0.03Diluted net income/(loss) per common share

$
0.09


$
0.08


$
(0.25
)

$
(0.08
)

$
0.06


$
0.02


$
(0.46
)

$
0.03Market price high

$
21.41


$
21.13


$
28.00


$
24.18


$
34.73


$
27.40


$
21.30


$
19.90Market price low

$
16.38


$
17.18


$
19.07


$
11.37


$
23.88


$
17.25


$
14.26


$
16.68   19.
    Subsequent
    Events  Targanta
    Acquisition
      
    If the Company or a MDCO Affiliated Party (meaning an affiliate
    of the Company, a successor or assigns of the Company, or a
    licensee or collaborator of the Company) obtains approval from
    the European Medicines Agency (EMEA) for a Marketing
    Authorization Application, for oritavancin for the treatment of
    cSSSI on or before December 31, 2013, each former Targanta
    shareholder will be F-39




---



##### Table of Contents



THE
    MEDICINES COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  entitled to receive a cash payment equal to (1) $1.00 per
    share if such approval is granted on or before December 31,
    2009, (2) $0.75 per share if such approval is granted
    between January 1, 2010 and June 30, 2010, or
    (3) $0.50 per share if such approval is granted between
    July 1, 2010 and December 31, 2013, a payment of
    approximately $21.0 million in the aggregate, approximately
    $15.8 million in the aggregate, or approximately
    $10.5 million in the aggregate, respectively.  
    If the Company or a MDCO Affiliated Party obtains final approval
    from the FDA for an NDA for oritavancin for the treatment of
    cSSSI (1) within 40 months after the date the first
    patient is enrolled in a Phase III clinical trial of cSSSI
    that is initiated by the Company or a MDCO Affiliated Party
    after the date of the Companys agreement with Targanta and
    (2) on or before December 31, 2013, each former
    Targanta shareholder will be entitled to receive a cash payment
    equal to $0.50 per share, a payment of approximately
    $10.5 million in the aggregate.
    If the Company or a MDCO Affiliated Party obtains final FDA
    approval for an NDA for the use of oritavancin for the treatment
    of cSSSI administered by a single dose intravenous infusion
    (1) within 40 months after the date the first patient
    is enrolled in a Phase III clinical trial of cSSSI that is
    initiated by the Company or a MDCO Affiliated Party after the
    date of the Companys agreement with Targanta and
    (2) on or before December 31, 2013, each former
    Targanta shareholder will be entitled to receive a cash payment
    equal to $0.70 per share, a payment of 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, each former Targanta
    shareholder will be entitled to receive a cash payment equal to
    $2.35 per share, a payment of approximately $49.4 million
    in the aggregate.    Shareholder
    Litigation
  09-0269-BLS) and/or
     F-40




---



##### Table of Contents



THE
    MEDICINES COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Schedule 14D-9
    Relocation
    of Principal Offices
    2009
    Equity Inducement Plan
  10-year
 F-41




---



##### Table of Contents



Schedule II



Valuation
    and Qualifying Accounts

Year
    ended December 31, 2008, 2007 and 2006  Balance at


(Credit) Charged


Other


BalanceBeginning


to Costs and


Charges


at Endof Period


Expenses(1)


(Deductions)(2)


of Period2008Allowances for chargebacks, cash discounts and doubtful accounts

$
1,192


$
15,149


$
14,425


$
1,9162007Allowances for chargebacks, cash discounts and doubtful accounts

$
800


$
10,024


$
9,632


$
1,1922006Allowances for chargebacks, cash discounts and doubtful accounts

$
851


$
8,592


$
8,643


$
800     (1)
    
    amounts presented herein were charged to and reduced revenues(2)
    
    represents actual cash discounts, chargeback credits and other
    deductions F-42




---



##### Table of Contents



INDEX TO
    EXHIBITS
  Number

Description2
.1

Sale and Purchase Agreement, dated August 4, 2008, between the
    Company and Curacyte AG (filed as Exhibit 2.1 of the
    registrants current report on Form 8-K/A, filed on
    November 10, 2008)2
.2

Agreement and Plan of Merger among The Medicines Company,
    Boxford Subsidiary Corporation, and Targanta Therapeutics
    Corporation, dated as of January 12, 2009 (filed as Exhibit 2.1
    of the registrants current report on Form 8-K, filed on
    January 14, 2009)3
.1

Third Amended and Restated Certificate of Incorporation of the
    registrant, as amended (filed as Exhibit 4.1 to the Amendment
    No. 1 to the registrants registration statement on Form
    8-A/A, filed July 14, 2005)3
.2

Amended and Restated By-laws of the registrant, as amended
    (filed as Exhibit 3.2 to the registrants annual report on
    Form 10-K for the year ended December 31, 2007)10
.1*

1998 Stock Incentive Plan, as amended (filed as Exhibit 10.1 to
    the registration statement on Form S-1 filed on May 19, 2000
    (registration no. 333-37404))10
.2*

2000 Employee Stock Purchase Plan, as amended (filed as Exhibit
    10.3 to the registrants quarterly report on Form 10-Q for
    the quarter ended June 30, 2006)10
.3*

2000 Outside Director Stock Option Plan, as amended (filed as
    Exhibit 10.1 to the registrants quarterly report on Form
    10-Q for the quarter ended March 31, 2003)10
.4

2001 Non-Officer, Non-Director Employee Stock Incentive Plan
    (filed as Exhibit 99.1 to the registration statement on Form S-8
    filed December 5, 2001 (registration no. 333-74612))10
.5*

2004 Stock Incentive Plan, as amended (filed as Exhibit 10.2 to
    the registrants quarterly report on Form 10-Q for the
    quarter ended June 30, 2006)10
.6*

Form of stock option agreement under 1998 Stock Incentive Plan
    (filed as Exhibit 10.3 to the registrants quarterly report
    on Form 10-Q for the quarter ended June 30, 2004)10
.7*

Form of stock option agreement under 2004 Stock Incentive Plan
    (filed as Exhibit 10.22 to the registrants annual report
    on Form 10-K for the year ended December 31, 2004)10
.8*

Form of restricted stock agreement under 2004 Stock Incentive
    Plan (filed as Exhibit 10.1 to the registrants quarterly
    report on Form 10-Q for the quarter ended March 31, 2006)10
.9

Amended and Restated Registration Rights Agreement, dated as of
    August 12, 1998, as amended, by and among the registrant and the
    other parties thereto (filed as Exhibit 10.1 to the
    registrants quarterly report on Form 10-Q for the quarter
    ended June 30, 2002)10
.10

License Agreement, dated as of June 6, 1990, by and between
    Biogen, Inc. and Health Research, Inc., as assigned to the
    registrant (filed as Exhibit 10.6 to the registration statement
    on Form S-1 filed on May 19, 2000 (registration no. 333-37404))10
.11

License Agreement dated March 21, 1997, by and between the
    registrant and Biogen, Inc. (filed as Exhibit 10.7 to the
    registration statement on Form S-1 filed on May 19, 2000
    (registration no. 333-37404))10
.12

License Agreement effective as of March 28, 2003 by and between
    AstraZeneca AB and the registrant (filed as Exhibit 10.17 to the
    registrants annual report on Form 10-K for the year ended
    December 31, 2003)10
.13

Amendment No. 1 to License Agreement by and between AstraZeneca
    AB (filed as Exhibit 10.1 to the registrants quarterly
    report on Form 10-Q for the quarter ended June 30, 2006)10
.14

License Agreement dated as of December 18, 2003 by and between
    AstraZeneca AB and the registrant (filed as Exhibit 10.18 to the
    registrants annual report on Form 10-K for the year ended
    December 31, 2003)10
.15

Chemilog Development and Supply Agreement, dated as of December
    20, 1999, by and between the registrant and UCB Bioproducts S.A.
    (filed as Exhibit 10.5 to the registration statement on Form S-1
    filed on May 19, 2000 (registration no. 333-37404))10
.16

Lease for 8 Campus Drive dated September 30, 2002 by and between
    Sylvan/Campus Realty L.L.C. and the registrant, as amended
    (filed as Exhibit 10.15 to the registrants annual report
    on Form 10-K for the year ended December 31, 2003)10
.17

Third Amendment to Lease for 8 Campus Drive dated December 30,
    2004 by and between Sylvan/Campus Realty L.L.C. and the
    registrant (filed as Exhibit 10.18 to the registrants
    annual report on Form 10-K for the year ended December 31, 2004)




---



##### Table of Contents



Number

Description10
.18

Lease for 400 Fifth Avenue, Waltham, MA dated October 2008
    by and between Normandy Waltham Holdings, LLC and the registrant10
.19*

Employment agreement dated September 5, 1996 by and between the
    registrant and Clive Meanwell (filed as Exhibit 10.12 to the
    registration statement on Form S-1 filed on May 19, 2000
    (registration no. 333-37404))10
.20*

Letter Agreement dated December 1, 2004 by and between the
    registrant and John Kelley (filed as Exhibit 10.25 to the
    registrants annual report on Form 10-K for the year ended
    December 31, 2004)10
.21*

Letter Agreement dated February 1, 2006 by and between the
    registrant and Catharine S. Newberry (filed as Exhibit 10.22 to
    the registrants annual report on Form 10-K for the year
    ended December 31, 2005)10
.22*

Letter Agreement dated March 2, 2006 by and between the
    registrant and Glenn P. Sblendorio, (filed as Exhibit 10.23 to
    the registrants annual report on Form 10-K for the year
    ended December 31, 2005)10
.23*

Summary of Board of Director Compensation (filed as Exhibit 10.1
    to the registrants quarterly report on Form 10-Q for the
    quarter ended March 31, 2007)10
.24*

Form of Amended and Restated Management Severance Agreement by
    and between the registrant and each of Clive Meanwell, John
    Kelley and Glenn Sblendorio10
.25*

Form of Amended and Restated Management Severance Agreement by
    and between the registrant and each of Paul Antinori, William
    OConnor and Kelli Watson10
.26*

Form of Lock-Up Agreement dated as of December 23, 2005 by and
    between the registrant and each of its executive officers and
    directors (filed as Exhibit 10.27 to the registrants
    annual report on Form 10-K for the year ended December 31,
    2005)10
.27

Consulting Agreement dated April 6, 2007 between Hiroaki Shigeta
    and the registrant (filed as Exhibit 10.2 to the
    registrants quarterly report on Form 10-Q for the quarter
    ended March 31, 2007)10
.28

Termination and Transition Agreement dated July 1, 2007 between
    Nycomed Danmark ApS and the registrant (filed as Exhibit 10.1 to
    the registrants quarterly report on Form 10-Q for the
    quarter ended September 30, 2007)10
.29

Distribution Agreement dated July 1, 2007 between Nycomed
    Danmark ApS and the registrant, (filed as Exhibit 10.2 to the
    registrants quarterly report on Form 10-Q for the quarter
    ended September 30, 2007)10
.30

Services Agreement dated July 1, 2007 between Nycomed Danmark
    ApS and the registrant (filed as Exhibit 10.3 to the
    registrants quarterly report on Form 10-Q for the quarter
    ended September 30, 2007)10
.31

Amendment to License Agreement dated July 6, 2007 between
    AstraZeneca AB and the registrant (filed as Exhibit 10.4 to the
    registrants quarterly report on Form 10-Q for the quarter
    ended September 30, 2007)10
.32

Lease for 8 Sylvan Way, Parsippany, NJ dated October 11, 2007 by
    and between 8 Sylvan Way, LLC and the registrant (filed as
    Exhibit 10.32 to the registrants annual report on Form
    10-K for the year ended December 31, 2007)10
.33*

2007 Equity Inducement Plan (filed as Exhibit 10.1 to the
    registration statement on Form S-8 filed January 11, 2008
    (registration no. 333-148602))10
.34*

Form of stock option agreement under 2007 Equity Inducement Plan
    (filed as Exhibit 10.34 to the registrants annual report
    on Form 10-K for the year ended December 31, 2007)10
.35*

Form of restricted stock agreement under 2007 Equity Inducement
    Plan (filed as Exhibit 10.35 to the registrants annual
    report on Form 10-K for the year ended December 31, 2007)10
.36*

Amended and Restated 2004 Stock Incentive Plan (filed as Exhibit
    99.1 to the registrants registration statement on Form
    S-8, dated July 3, 2008)10
.37*

Summary of Annual Cash Bonus Plan (filed as Exhibit 10.2 to
    the registrants quarterly report on
    Form 10-Q
    for the quarter ended June 30, 2008)10
.38

Amendment No. 2 to License Agreement, dated October 22, 2008 by
    and between the registrant and AstraZeneca AB




---



##### Table of Contents



Number

Description10
.39

License Agreement, dated December 23, 2005 by and between
    Targanta Therapeutics Corporation (as successor to InterMune,
    Inc.) and Eli Lilly and Company (filed as Exhibit 10.11 to
    Targantas registration statement on Form S-1 (registration
    no. 333-142842), as amended, originally filed with the SEC on
    May 11, 2007)10
.40

Amendment to Lease for 8 Sylvan Way, Parsippany, NJ dated
    October 11, 2007 by and between 8 Sylvan Way, LLC and the
    registrant10
.41*

2009 Equity Inducement Plan (filed as Exhibit 10.1 to the
    registration statement on Form S-8 filed February 24, 2009
    (registration number 333-157499))10
.42*

Severance Agreement, dated February 17, 2009 by and between
    Catharine Newberry and the registrant21


Subsidiaries of the registrant23


Consent of Ernst & Young LLP, Independent Registered
    Accounting Firm31
.1

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

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 2002     *
    
    Management contract or compensatory plan or arrangement filed as
    an exhibit to this form pursuant to Items 15(a) and 15(c)
    of
    Form 10-K
    
    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.