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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended: December 31, 2009
 Or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 000-31191
 
 
  Delaware
    
    04-3324394(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)8 Sylvan Way
    
    07054Parsippany, New Jersey
(Address of principal executive offices)
    
    (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
 o þ
 o þ
 þ o
 o o
 o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



THE MEDICINES COMPANY
 ANNUAL REPORT ON FORM 10-K
For the Fiscal Year Ended December 31, 2009
  
 TABLE OF CONTENTS
 PagePART IITEM 1
    
    BUSINESS
    
    
    2ITEM 1A
    
    RISK FACTORS
    
    
    26ITEM 1B
    
    UNRESOLVED STAFF COMMENTS
    
    
    41ITEM 2
    
    PROPERTIES
    
    
    41ITEM 3
    
    LEGAL PROCEEDINGS
    
    
    41ITEM 4
    
    (REMOVED AND RESERVED)
    
    
    43PART IIITEM 5
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    43ITEM 6
    
    SELECTED FINANCIAL DATA
    
    
    45ITEM 7
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    46ITEM 7A
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    67ITEM 8
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    68ITEM 9
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    68ITEM 9A
    
    CONTROLS AND PROCEDURES
    
    
    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
    
    
    69PART IVITEM 15
    
    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
    
    
    70EX-10.41EX-10.42EX-21EX-23EX-31.1EX-31.2EX-32.1EX-32.2




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® ® ® ®
  1




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PART I
 
 Item 1.
    
    Business
 Our Company
 ® ®
  Product or Productin Development
    
    Development Stage
    
    Mechanism/Target
    
    Clinical Indication(s)Angiomax
    
    Marketed
    
    Direct thrombin inhibitor
    
    U.S.  for use as an anticoagulant in
patients undergoing PCIEU  for use as an anticoagulant in
patients with ACS or STEMI undergoing
primary PCICleviprex
    
    Marketed in the
United States; MAA
submitted in
European Union
    
    Calcium channel blocker
    
    Blood pressure reduction when oral
therapy is not feasible or not
desirableCangrelor
    
    Phase 3
    
    Antiplatelet agent
    
    Prevention of platelet activation and
aggregationOritavancin
    
    Phase 3
    
    Antibiotic
    
    Treatment of serious gram-positive
bacterial infections, including
ABSSSICU2010
    
    Phase 1
    
    Serine protease inhibitor
    
    Reduction of blood loss during surgeryApoA-I Milano
    
    Phase 1 /Technology
Transfer
    
    Naturally occurring
variant of a protein
found in HDL
    
    Reversal of atherosclerotic plaque
development and reduction of the risk
of coronary events in patients with
ACSReady-to-Use 
Argatroban
    
    Phase 3; NDA filed
    
    Direct thrombin inhibitor
    
    Anticoagulant for prophylaxis or
treatment of thrombosis in patients
with or at risk for HIT, and for
patients with or at risk for HIT
undergoing PCI
 Angiomax ®
 2




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Cleviprex
  Cangrelor
 Oritavancin Clostridium difficile
 CU2010.
 3




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ApoA-I Milano.
 Ready-to-Use Argatroban.
   
    
    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
  4




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®
   Medical Need
  
    
    the cardiac catheterization laboratory, where coronary angioplasties are performed;
 
    
    the emergency department, where patients with ACS, including chest pain and heart
attacks, are initially treated; and
 
    
    the operating room, where valve replacement surgery and CABG surgery are performed.
    5




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Clinical Development
  REPLACE-2.
 ACUITY.
 
    
    a control arm, Arm A, providing for the administration of heparin or enoxaparin with
GP IIb/IIIa inhibitors;
 
    
    a second arm, Arm B, providing for the administration of Angiomax with planned use of
GP IIb/IIIa inhibitors; and
 
    
    a third arm, Arm C, providing for the administration of Angiomax alone and permitting
use of GP IIb/IIIa inhibitors only in selected cases involving ischemic events during
PCI.
  6




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HORIZONS AMI.
 Additional Development
 EUROMAX
 EUROVISION
 HIT/HITTS Patients
 Cleviprex
 Overview
  7




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Medical Need
   
    
    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 anti-hypertensives in cardiac and vascular
surgery; and
 
    
    556,000 all other patients were administered intravenous anti-hypertensives.
   Clinical Development
  ESCAPE
 8




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ECLIPSE
 VELOCITY
 Additional Development
 
    
    Our ACCELERATE trial, evaluating the efficacy and safety of intravenous infusion of
Cleviprex for the treatment of acute hypertension in patients with intracerebral
hemorrhage. Interim data from this trial was presented at the Neurocritical Care Societys
2009 Annual Meeting in November 2009. These data showed that:
 
    
    100% of patients achieved target blood pressure within 30 minutes of Cleviprex
initiation;
 
    
    median time to target blood pressure was 6.5 minutes;
 
    
    97% of patients did not need additional or alternative intravenous
anti-hypertensives during the initial 30-minute period of Cleviprex therapy to reach
the target blood pressure; and
 
    
    there were no instances of hypotension and no need for supplemental therapy to
raise blood pressure in the initial 30-minute period of Cleviprex therapy;
 
    
    Our PRONTO trial, evaluating the efficacy and safety of an intravenous infusion of
Cleviprex as compared with standard-of-care intravenous antihypertensives for blood
pressure lowering in patients with acute heart failure and elevated blood pressure;
 
    
    Our SPRINT trial, which has completed its clinical phase, evaluating the pharmacokinetics and pharmacodynamics of a bolus dosing
regimen of Cleviprex for the management of blood pressure in cardiac surgery patients; and
 
    
    Our MERCURY trial, a retrospective observational registry, studying the use and impact of
Cleviprex therapy initiated in the emergency department in the management of patients with
acute blood pressure elevations, assessed through the end of the initial hospitalization.
 Cangrelor
 Overview
  9




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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 consistent relationship between increased dosage of
clopidogrel and intended effect 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.
 
    
    Oral agents like clopidogrel 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
 CHAMPION Program
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
    
    marked reductions in important secondary clinical endpoints of death, Q-wave MI,
ischemia-driven revascularization and stent thrombosis;
 
    
    superior platelet inhibition at the time of PCI; and
 
    
    no increase in major bleeding.
  BRIDGE
 Oritavancin
 Overview
  staphylococcus
aureus
  11




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Medical Need
  
    
    bacteria are increasingly becoming resistant to one or more of these existing
antibiotics;
 
    
    some of these antibiotics, referred to as bacteriostatic drugs, solely inhibit the
growth of pathogens 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;
 
    
    many of these antibiotics have a narrow spectrum, which is the range of bacteria treated
by a drug, and, as a result, are only effective against some serious pathogens but not
others;
 
    
    many of the 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
longer, with the patients being hospitalized for much or all of this period; and
 
    
    many of these antibiotics may cause serious side effects in some patients, sometimes
requiring discontinuation of therapy. Due to these side effects, health care providers are
required to engage in costly and time-consuming monitoring of blood levels and other
parameters.
  Clinical Development
     12




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CU2010
  ApoA-I Milano
  Ready-to-Use Formulation Argatroban
  Sales and Distribution
   13




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Manufacturing
  Angiomax
   Cleviprex
  14




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Cangrelor
   Oritavancin
   15




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CU2010
  ApoA-I Milano
  Ready-to-Use Argatroban
  Business Development Strategy
   2009 Business Development Activity:
  
    
    In February 2009, with our acquisition of Targanta, we acquired oritavancin, a late
stage development product candidate which we believe has the potential to provide
significant clinical advantages, including superior dosing options, over current
intravenous antibiotics that treat serious infections in the hospital setting. We expect
that, if approved, oritavancin will initially be used in critical care settings within
the hospital including the ICU, surgical suite and the emergency department, where our
sales representatives promote our current products.
 
    
    In September 2009, we licensed marketing rights in the United States and Canada to a
ready-to-use formulation of Argatroban, which, if approved, we expect will be a strategic
complement to Angiomax.
 
    
    In December 2009, we licensed ApoA-I Milano from Pfizer, which we believe has the
potential to provide rapid coronary artery disease modification in at-risk patients. We
believe ApoA-I Milano is a strategic fit because, in our development of ApoA-I Milano, we
can leverage both our pre-existing relationships in the cardiac catheterization
laboratories and with interventional cardiologists and our knowledge of clinical
development and economics in the cardiology area.
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Targanta.
  
    
    Upon approval from the EMEA for an MAA for oritavancin for the treatment of ABSSSI on or
before December 31, 2013, approximately $15.8 million in the aggregate if such approval is
granted between January 1, 2010 and June 30, 2010, and approximately $10.5 million in the
aggregate if such approval is granted between July 1, 2010 and December 31, 2013.
 
    
    Upon final approval from the FDA for an NDA for oritavancin for the treatment of ABSSSI
(1) within 40 months after the date the first patient is enrolled in a Phase 3 clinical
trial of ABSSSI that is initiated by us and (2) on or before December 31, 2013,
approximately $10.5 million in the aggregate.
 
    
    Upon FDA approval for an NDA for the use of oritavancin for the treatment of ABSSSI
administered by a single dose intravenous infusion (1) within 40 months after the date the
first patient is enrolled in a Phase 3 clinical trial of ABSSSI that is initiated by us and
(2) on or before December 31, 2013, approximately $14.7 million in the aggregate. This
payment may become payable simultaneously with the payment described in the previous bullet
above.
 
    
    If aggregate net sales of oritavancin in four consecutive calendar quarters ending on or
before December 31, 2021 reach or exceed $400 million, approximately $49.4 million in the
aggregate.
 Ready-to-Use Argatroban
 ApoA-I Milano.
 Competition
    17




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Angiomax
     Cleviprex
  Cangrelor
  Oritavancin
  Ready-to-Use Argatroban
  18




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Patents, Proprietary Rights and Licenses
  Angiomax
     Cleviprex.
 19




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Cangrelor.
 Oritavancin.
 CU2010.
 ApoA-I Milano.
 Ready-to-Use Argatroban.
     20




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® ® ® ®
 License Agreements
  Angiomax.
  Cleviprex.
  21




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Cangrelor.
   Oritavancin.
  ApoA-I Milano.
  22




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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 application, 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 or biologics license approval, or BLA;
 
    
    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 or BLA.
   23




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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.
      24




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Foreign Regulations
        Centralized
EMEA Procedure.
  National EMEA Procedures.
 
    
    Decentralised procedure.Using the decentralised procedure, an applicant may
apply for simultaneous authorization in more than one European Union country of
medicinal products that have not yet been authorized in any European Union country and
that do not fall within the mandatory scope of the centralised procedure.
 
    
    Mutual recognition procedure.In the mutual recognition procedure, a medicine is
first authorized in one European Union member state, in accordance with the national
procedures of that country. Following this, further marketing authorizations can be
sought from other European Union countries in a procedure whereby the countries
concerned agree to recognize the validity of the original, national marketing
authorization.
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Research and Development
  Employees
  Segments and Geographic Information
  Available Information
 themedicinescompany
 
 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.
 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
  26




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
    
    the outcome of our efforts to extend the patent term of the principal U.S. patent
covering Angiomax and the degree of market exclusivity in the United States provided by our
other U.S. patents covering Angiomax;
 
    
    the continued acceptance by regulators, physicians, patients and other key
decision-makers of Angiomax as a safe, therapeutic and cost-effective alternative to heparin
and other products used in current practice or currently being developed;
 
    
    our ability to further develop Angiomax for use in additional patient populations and the
clinical data we generate to support expansion of the product label;
 
    
    the overall number of PCI procedures performed;
 
    
    our success in selling and marketing Angiox in Europe;
 
    
    the impact of competition from competitive products and generic versions of Angiomax and
those competitive products; and
 
    
    the extent to which we and our international distributors are successful in marketing
Angiomax.
   Our revenue has been substantially dependent on our sole source distributor, ICS, and a
limited number of domestic wholesalers and international distributors involved in the sale of our
products, and such revenue may fluctuate from quarter to quarter based on the buying patterns of
such distributor, wholesalers and distribution partners
    Failure to achieve our revenue targets or raise additional funds in the future may require us
to delay, reduce the scope of, or eliminate one or more of our planned activities
  
    
    the extent to which Angiomax is commercially successful globally;
 
    
    the outcome of our efforts to extend the patent term of the principal U.S. patent
covering Angiomax and the degree of market exclusivity in the United States provided by our
other U.S. patents covering Angiomax;
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
    
    the terms of any settlements with Biogen Idec or the two law firms with respect to the
principal U.S. patent covering Angiomax and the PTOs denial of our application to extend
the term of the patent;
 
    
    our ability to resupply the market with Cleviprex and the extent to which Cleviprex is commercially successful in the United States;
 
    
    the extent to which we can successfully establish a commercial infrastructure outside
the United States;
 
    
    the cost of acquisitions or licensing of development-stage products, approved products,
or businesses and strategic or licensing arrangements with companies that fit within our
growth strategy;
 
    
    the progress, level, timing and cost of our research and development activities related
to our clinical trials and non-clinical studies with respect to Angiomax, Cleviprex and our
products in development;
 
    
    the cost and outcomes of regulatory submissions and reviews for approval of Cleviprex
outside the United States and New Zealand and of our products in development globally;
 
    
    the continuation or termination of third-party manufacturing and sales and marketing
arrangements;
 
    
    the size, cost and effectiveness of our sales and marketing programs globally;
 
    
    the amounts of our payment obligations to third parties as to Angiomax, Cleviprex and
our products in development; and
 
    
    our ability to defend and enforce our intellectual property rights.
  Risks Related to Commercialization
 Angiomax competes with all categories of anticoagulant drugs, which may limit the use of
Angiomax and adversely affect our revenue
    28




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Cleviprex competes with all categories of intravenous antihypertensive, or IV-AHT, drugs,
which may limit the use of Cleviprex and adversely affect our revenue
    We face substantial competition, which may result in others discovering, developing or
commercializing competing products before or more successfully than we do
  If physicians, patients and other key decision-makers do not accept clinical data from trials
of Angiomax and Cleviprex, then sales of Angiomax and Cleviprex may be adversely affected
  29




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If the number of PCI procedures performed decreases, sales of Angiomax may be negatively
impacted
  If we are unable to successfully expand our business infrastructure and develop our global
operations, our ability to generate future product revenue will be adversely affected
   
    
    continue to improve operating, administrative, and information systems;
 
    
    accurately predict future personnel and resource needs to meet contract commitments;
 
    
    track the progress of ongoing projects; and
 
    
    attract and retain qualified management, sales, professional, scientific and technical
operating personnel.
  The success of our global operations may be adversely affected by international risks and
uncertainties. If these operations are not successful, our results of operations and financial
position could be adversely affected.
  
    
    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 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.
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Our ability to generate future product revenue will be affected by reimbursement and drug
pricing
    
    
    controls on government-funded reimbursement for drugs;
    
    new or increased obligations to pay prescription drug rebates to government health care
programs;
    
    limitations on or challenges to the pricing of drug; and
    
    controls on healthcare providers.
  If we do not comply with federal, state and foreign laws and regulations relating to the
health care business, we could face substantial penalties
  
    
    the Federal Anti-Kickback Law, which prohibits persons from knowingly and willfully
soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash
or in kind, to induce either the referral of an individual or furnishing or arranging for a
good or service for which payment may be made under federal health care programs such as
Medicare and Medicaid;
 
    
    other Medicare laws and regulations that prescribe the requirements for coverage and
payment for services performed by our customers, including the amount of such payment;
 
    
    the Federal False Claims Act, which imposes civil and criminal liability on individuals
and entities who submit, or cause to be submitted, false or fraudulent claims for payment
to the government;
 
    
    the Federal False Statements Act, which prohibits knowingly and willfully falsifying,
concealing or covering up a material fact or making any materially false statement in
connection with delivery of or payment for health care benefits, items or services; and
 
    
    various state laws that impose similar requirements and liability with respect to state
healthcare reimbursement and other programs.
  31




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If we are unable to obtain insurance at acceptable costs and adequate levels or otherwise
protect ourselves against potential product liability claims, we could be exposed to significant
liability
    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.
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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
    
    
    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
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
    
    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;
    
    untitled or warning letters;
    
    injunctions;
    
    fines and other monetary penalties;
    
    the imposition of civil or criminal penalties; and
    
    unanticipated expenditures.
 Risks Related to our Dependence on Third Parties for Manufacturing, Research and Development, and
Distribution Activities
 We depend on single source suppliers for the production of bulk drug substance for Angiomax,
Cleviprex and our other products in development and a limited number of suppliers to carry out all
fill-finish activities
   34




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If third parties on whom we rely to manufacture and support the development and
commercialization of our products do not fulfill their obligations, the development and
commercialization of our products may be terminated or delayed, and the costs of development and
commercialization may increase.
     
    
    delay or otherwise adversely impact the manufacturing, development or commercialization
of Angiomax, Cleviprex, our products in development or any additional products that we may
acquire or develop;
    
    require us to seek a new collaborator or undertake unforeseen additional
responsibilities or devote unforeseen additional resources to the manufacturing,
development or commercialization of our products; or
    
    result in the termination of the development or commercialization of our products.
 Use of third-party manufacturers may increase the risk that we will not have appropriate
supplies of our products or our product candidates
  
    
    reliance on the third party for regulatory compliance and quality assurance;
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
    
    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.
    In order to satisfy some regulatory authorities, we may need to reformulate the way in which
our oritavancin bulk drug substance is created to remove animal source product, which may delay
marketing approval of our products and increase our costs
   If we use hazardous and biological materials in a manner that causes injury or violates
applicable law, we may be liable for damages
  36




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Risks Related to Our Intellectual Property
 If we are unable to extend the patent term of the principal U.S. patent covering Angiomax or
to maintain market exclusivity for Angiomax in the United States through the enforcement of our
other U.S. patents covering Angiomax, then Angiomax could be subject to generic competition as
early as September 2010. Generic competition for Angiomax would have an adverse effect on our
business, financial condition and results of operations
     If we breach any of the agreements under which we license rights to products or technology
from others, we could lose license rights that are material to our business or be subject to claims
by our licensors
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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.
     We may be unable to utilize the Chemilog process if Lonza Braine breaches our agreement
  38




---



##### Table of Contents



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
    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
    39




---



##### Table of Contents




    
    manufactured or produced economically;
    
    successfully commercialized; or
    
    widely accepted in the marketplace.
  We may not be able to manage our business effectively if we are unable to attract and retain
key personnel and consultants
  Risks Related to Our Common Stock
 Fluctuations in our operating results could affect the price of our common stock
  Our stock price has been and may in the future be volatile. This volatility may make it
difficult for you to sell common stock when you want or at attractive prices
  
    
    changes in securities analysts estimates of our financial performance;
    
    changes in valuations of similar companies;
    
    variations in our operating results;
    
    acquisitions and strategic partnerships;
    
    announcements of technological innovations or new commercial products by us or our
competitors;
    
    disclosure of results of clinical testing or regulatory proceedings by us or our
competitors;
    
    the timing, amount and receipt of revenue from sales of our products and margins on
sales of our products;
 40




---



##### Table of Contents




    
    governmental regulation and approvals;
    
    developments in patent rights or other proprietary rights, particularly with
respect to the principal U.S. Angiomax patent;
    
    the terms of any settlement with Biogen Idec or the two law firms with respect
to the principal U.S. patent covering Angiomax and the PTOs denial of our application to
extend the term of the patent;
    
    developments or issues with our contract manufacturers;
    
    changes in our management; and
    
    general market conditions.
  Our corporate governance structure, including provisions in our certificate of incorporation
and by-laws and Delaware law, may prevent a change in control or management that security holders
may consider desirable
   
 Item 1B.
    
    Unresolved Staff Comments
  
 Item 2.
    
    Properties
    
 Item 3.
    
    Legal Proceedings
  41




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##### Table of Contents



Teva Parenteral Medicines, Inc.
   Pliva Hrvatska d.o.o.
   APP Pharmaceuticals, LLC
  PTO, FDA and U.S. Department of Health and Human Services, et al.
  42




---



##### Table of Contents



Item 4.
    
    (Removed and Reserved)
 
 PART II
 
 Item 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
 Market Information and Holders
  Common StockPriceHigh
    
    LowYear Ended December 31, 2008First Quarter
    
    $
    21.41
    
    
    $
    16.38Second Quarter
    
    
    21.13
    
    
    
    17.18Third Quarter
    
    
    28.00
    
    
    
    19.07Fourth Quarter
    
    
    24.18
    
    
    
    11.37Year Ended December 31, 2009First Quarter
    
    $
    16.77
    
    
    $
    8.73Second Quarter
    
    
    11.50
    
    
    
    6.15Third Quarter
    
    
    12.12
    
    
    
    7.36Fourth Quarter
    
    
    11.24
    
    
    
    7.00
  Dividends
  Performance Graph
  43




---



##### Table of Contents



COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*

Among Medicines Company (The). NASDAQ Composite Index

And The NASDAQ Biotechnology Index
 
 
 *
    
    Fiscal year ended December 31. 44




---



##### Table of Contents



12/04
    
    12/05
    
    12/06
    
    12/07
    
    12/08
    
    12/09The Medicines Company
    
    
    100.00
    
    
    
    60.59
    
    
    
    110.14
    
    
    
    66.53
    
    
    
    51.15
    
    
    
    28.96NASDAQ Composite
    
    
    100.00
    
    
    
    101.33
    
    
    
    114.01
    
    
    
    123.71
    
    
    
    73.11
    
    
    
    105.61NASDAQ Biotechnology
    
    
    100.00
    
    
    
    117.54
    
    
    
    117.37
    
    
    
    121.37
    
    
    
    113.41
    
    
    
    124.58
  
 Item 6.
    
    Selected Financial Data
   Year Ended December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005(In thousands, except per share data)Statements of Operations DataNet revenue
    
    $
    404,241
    
    
    $
    348,157
    
    
    $
    257,534
    
    
    $
    213,952
    
    
    $
    150,207Operating expenses:Cost of revenue
    
    
    118,148
    
    
    
    88,355
    
    
    
    66,502
    
    
    
    51,812
    
    
    
    34,762Research and development
    
    
    117,610
    
    
    
    105,720
    
    
    
    77,255
    
    
    
    63,536
    
    
    
    64,389Selling, general and administrative
    
    
    193,832
    
    
    
    164,903
    
    
    
    141,807
    
    
    
    88,265
    
    
    
    63,053Total operating expenses
    
    
    429,590
    
    
    
    358,978
    
    
    
    285,564
    
    
    
    203,613
    
    
    
    162,204(Loss) income from operations
    
    
    (25,349
    )
    
    
    (10,821
    )
    
    
    (28,030
    )
    
    
    10,339
    
    
    
    (11,997
    )Other (expense) income
    
    
    (2,818
    )
    
    
    5,235
    
    
    
    10,653
    
    
    
    7,319
    
    
    
    4,344(Loss) income before income taxes
    
    
    (28,167
    )
    
    
    (5,586
    )
    
    
    (17,377
    )
    
    
    17,658
    
    
    
    (7,653
    )(Provision for) benefit from income taxes
    
    
    (48,062
    )
    
    
    (2,918
    )
    
    
    (895
    )
    
    
    46,068
    
    
    
    (100
    )Net (loss) income
    
    $
    (76,229
    )
    
    $
    (8,504
    )
    
    $
    (18,272
    )
    
    $
    63,726
    
    
    $
    (7,753
    )Basic (loss) earnings per common share
    
    $
    (1.46
    )
    
    $
    (0.16
    )
    
    $
    (0.35
    )
    
    $
    1.27
    
    
    $
    (0.16
    )Diluted (loss) earnings per common share
    
    $
    (1.46
    )
    
    $
    (0.16
    )
    
    $
    (0.35
    )
    
    $
    1.25
    
    
    $
    (0.16
    )Shares used in computing basic (loss) earnings per common share
    
    
    52,269
    
    
    
    51,904
    
    
    
    51,624
    
    
    
    50,300
    
    
    
    49,443Shares used in computing diluted (loss) earnings per common share
    
    
    52,269
    
    
    
    51,904
    
    
    
    51,624
    
    
    
    51,034
    
    
    
    49,443
 As of December 31,2009
    
    2008
    
    2007
    
    2006
    
    2005(In thousands)Balance Sheet DataCash and cash
equivalents, available
for sale securities and
accrued interest
receivable
    
    $
    177,113
    
    
    $
    217,542
    
    
    $
    223,711
    
    
    $
    198,231
    
    
    $
    141,012Working capital
    
    
    156,103
    
    
    
    212,222
    
    
    
    208,568
    
    
    
    228,523
    
    
    
    169,912Total assets
    
    
    374,776
    
    
    
    387,404
    
    
    
    361,516
    
    
    
    318,568
    
    
    
    208,707Accumulated deficit
    
    
    (344,177
    )
    
    
    (267,948
    )
    
    
    (259,444
    )
    
    
    (241,172
    )
    
    
    (304,898
    )Total stockholders equity
    
    
    240,389
    
    
    
    298,025
    
    
    
    277,896
    
    
    
    269,951
    
    
    
    170,899
  45




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##### 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
 Our Business
 ® ®
    Angiomax Patent Term
  46




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##### Table of Contents



Distribution and Sales
      47




---



##### Table of Contents



Business Development Activity
  Curacyte Discovery Acquisition.   
  Targanta Acquisition. Clostridium difficile
  48




---



##### Table of Contents




    
    Upon approval from the EMEA for a MAA for oritavancin for the treatment of ABSSSI on or
before December 31, 2013, approximately $15.8 million if such approval is granted between
January 1, 2010 and June 30, 2010, or approximately $10.5 million if such approval is
granted between July 1, 2010 and December 31, 2013. As of March 1, 2010, we have not filed
an application with the EMEA for oritavancin for the treatment of ABSSSI.
    
    Upon final approval from the FDA for a new drug application, or NDA, for oritavancin for
the treatment of ABSSSI (1) within 40 months after the date the first patient is enrolled in
a Phase 3 clinical trial of ABSSSI that is initiated by us and (2) on or before December 31,
2013, approximately $10.5 million in the aggregate.
    
    Upon final FDA approval for an NDA for the use of oritavancin for the treatment of ABSSSI
administered by a single dose intravenous infusion (1) within 40 months after the date the
first patient is enrolled in a Phase 3 clinical trial of ABSSSI that is initiated by us and
(2) on or before December 31, 2013, approximately $14.7 million in the aggregate. This
payment may become payable simultaneously with the payment described in the previous bullet
above.
    
    If aggregate net sales of oritavancin in four consecutive calendar quarters ending on or
before December 31, 2021 reach or exceed $400 million, approximately $49.4 million in the
aggregate.
   Licensing Arrangement with Eagle
 Licensing Arrangement with Pfizer.
 Cleviprex Recall
  Workforce Reductions
  49




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##### Table of Contents



Results of Operations
 Years Ended December 31, 2009 and 2008
 Net Revenue:
  Net Revenue
 Year Ended December 31,Change
    
    
    Change2009
    
    
    2008
    
    
    $
    
    
    %(in thousands)Net RevenueU.S sales
    
    $
    385,939
    
    
    $
    334,582
    
    
    $
    51,357
    
    
    
    15.3
    %International net revenue
    
    
    18,302
    
    
    
    9,750
    
    
    
    8,552
    
    
    
    87.7
    %Revenue from collaborations, net
    
    
    
    
    
    
    3,825
    
    
    
    (3,825
    )
    
    
    (100
    )%Total net revenue
    
    $
    404,241
    
    
    $
    348,157
    
    
    $
    56,084
    
    
    
    16.1
    %
      Cost of Revenue:
  Cost of Revenue
 Year Ended December 31,% of Total
    
    
    
    
    
    
    % of TotalCost of Revenue
    
    2009
    
    
    Cost
    
    
    2008
    
    
    Cost(In thousands)
    
    
    
    
    
    
    (In thousands)Manufacturing
    
    $
    28,520
    
    
    
    24
    %
    
    $
    22,518
    
    
    
    25
    %Royalty
    
    
    77,786
    
    
    
    66
    %
    
    
    53,642
    
    
    
    61
    %Logistics
    
    
    11,842
    
    
    
    10
    %
    
    
    12,195
    
    
    
    14
    %Total cost of revenue
    
    $
    118,148
    
    
    
    100
    %
    
    $
    88,355
    
    
    
    100
    %
 50




---



##### Table of Contents



Research and Development Expenses:
    Research and Development Spending
 Year Ended December 31,% of
    
    
    
    
    
    
    % ofResearch and Development
    
    2009
    
    
    Total R&D
    
    
    2008
    
    
    Total R&D(In thousands)
    
    
    
    
    
    
    (In thousands)AngiomaxClinical trials
    
    $
    5,335
    
    
    
    4
    %
    
    $
    4,959
    
    
    
    5
    %Manufacturing development
    
    
    12,467
    
    
    
    11
    %
    
    
    3,924
    
    
    
    4
    %Administrative and headcount costs
    
    
    4,437
    
    
    
    4
    %
    
    
    3,711
    
    
    
    3
    %Total Angiomax
    
    
    22,239
    
    
    
    19
    %
    
    
    12,594
    
    
    
    12
    %CleviprexClinical trials
    
    
    4,758
    
    
    
    4
    %
    
    
    3,031
    
    
    
    3
    %Manufacturing development
    
    
    1,443
    
    
    
    1
    %
    
    
    2,484
    
    
    
    2
    %Administrative and headcount costs
    
    
    5,025
    
    
    
    4
    %
    
    
    6,214
    
    
    
    6
    %Total Cleviprex
    
    
    11,226
    
    
    
    9
    %
    
    
    11,729
    
    
    
    11
    %CangrelorClinical trials
    
    
    21,680
    
    
    
    19
    %
    
    
    37,090
    
    
    
    35
    %Manufacturing development
    
    
    2,665
    
    
    
    2
    %
    
    
    2,661
    
    
    
    3
    %Administrative and headcount costs
    
    
    4,640
    
    
    
    4
    %
    
    
    4,658
    
    
    
    4
    %Total Cangrelor
    
    
    28,985
    
    
    
    25
    %
    
    
    44,409
    
    
    
    42
    %OritavancinClinical trials
    
    
    4,593
    
    
    
    4
    %
    
    
    
    
    
    
    0
    %Manufacturing development
    
    
    3,587
    
    
    
    3
    %
    
    
    
    
    
    
    0
    %Administrative and headcount costs
    
    
    3,086
    
    
    
    3
    %
    
    
    
    
    
    
    0
    %Total Oritavancin
    
    
    11,266
    
    
    
    10
    %
    
    
    
    
    
    
    0
    %CU2010Clinical trials
    
    
    2,129
    
    
    
    2
    %
    
    
    
    
    
    
    0
    %Manufacturing development
    
    
    1,042
    
    
    
    1
    %
    
    
    
    
    
    
    0
    %Administrative and headcount costs
    
    
    2,717
    
    
    
    2
    %
    
    
    1,180
    
    
    
    1
    %Acquisition related in-process research and development
    
    
    
    
    
    
    0
    %
    
    
    21,373
    
    
    
    20
    %Clinical milestone
    
    
    5,182
    
    
    
    4
    %
    
    
    
    
    
    
    0
    %Government subsidy
    
    
    (1,432
    )
    
    
    (1
    )%
    
    
    
    
    
    
    0
    %Total CU2010
    
    
    9,638
    
    
    
    8
    %
    
    
    22,553
    
    
    
    21
    %ApoA-I MilanoAcquisition license fee
    
    
    17,500
    
    
    
    15
    %
    
    
    
    
    
    
    0
    %Total ApoA-I Milano
    
    
    17,500
    
    
    
    15
    %
    
    
    
    
    
    
    0
    %Ready-to-Use ArgatrobanAcquisition license fee
    
    
    5,000
    
    
    
    4
    %
    
    
    
    
    
    
    0
    %Total Ready-to-Use Argatroban
    
    
    5,000
    
    
    
    4
    %
    
    
    
    
    
    
    0
    %Other
    
    
    11,756
    
    
    
    10
    %
    
    
    14,435
    
    
    
    14
    %Total
    
    $
    117,610
    
    
    
    100
    %
    
    $
    105,720
    
    
    
    100
    %
 51




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##### Table of Contents



AngiomaxResearch and development spending related to Angiomax during 2009 increased by approximately
$9.6 million compared to 2008, primarily due to an increase in manufacturing development
expenses related to product lifecycle management activities. Administrative costs increased
$0.7 million primarily in connection with costs incurred in connection with the regulatory
filing related to a clinical study report for the pediatric extension filed with the FDA in the
second quarter of 2009. Clinical trial costs increased approximately $0.4 million primarily due
to increased expenditures in connection with our EUROMAX clinical trial, which commenced
enrollment on March 12, 2010, which were partially offset by decreased expenditures associated
with the investigator initiated trial, HORIZONS AMI, that we supported. During the second
quarter of 2008, we incurred $1.5 million in costs related to the final milestone payment in
connection with HORIZONS AMI.We plan to continue to incur research and development expenses relating to Angiomax in
connection with our efforts to further develop Angiomax for use in additional patient
populations and our plan to increase our product lifecycle management activities.CleviprexResearch and development expenditures for Cleviprex decreased approximately $0.5 million during
2009 compared 2008. The decrease in research and development expenditures primarily relates to
decreased manufacturing development expenses associated with product lifecycle management
activities and a decrease in administrative and headcount costs primarily due to a reduction in
administrative activity in 2009 related to our MAA for Cleviprex in the European Union, which we
submitted during the first quarter of 2009. These decreases were partially offset by increased
clinical trial expenses due to the numerous Phase 4 and other clinical studies of Cleviprex we
are conducting in areas such as intracranial hemorrhage, major cardiovascular surgery,
neurocritical care and hypertension associated with congestive heart failure, along with health
economics analyses.CangrelorResearch and development expenditures related to cangrelor decreased by approximately
$15.4 million in 2009 compared to 2008. In May 2009, we discontinued enrollment in our Phase 3
CHAMPION clinical trial program for cangrelor. Manufacturing development expenses and
administrative and headcount costs remained relatively unchanged. Subject to the completion of
ongoing discussions with the FDA, leading experts in ischemic heart disease and AstraZeneca,
which licensed cangrelor to us, we plan to initiate a new Phase 3 clinical trial of cangrelor in
2010.OritavancinWith our acquisition of Targanta in February 2009, we acquired a worldwide exclusive license to
oritavancin. Subject to the completion of ongoing discussions with the FDA, we expect to
commence a Phase 3 clinical trial of oritavancin in 2010 for the treatment of ABSSSI. In
August 2009, we withdrew the European MAA for oritavancin. Costs incurred during the year ended
December 31, 2009 primarily relate to Phase 3 clinical trials, manufacturing costs and
headcount. The results of Targantas operations are included in our consolidated financial
statements as of the acquisition date.CU2010We acquired CU2010 in August 2008 in connection with our acquisition of Curacyte Discovery.
CU2010 is a small molecule serine protease inhibitor that we are developing for the prevention
of blood loss during surgery. The acquisition of Curacyte Discovery resulted in the inclusion in
research and development expense of $21.4 million of acquisition related in-process research and
development in 2008. Costs incurred during 2009 primarily relate to a clinical milestone of $5.2
million that we paid in December 2009, our Phase 1a clinical trial of CU2010, which we commenced in July 2009, and headcount.
Such research and develop expense was partially
 52




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##### Table of Contents



offset by a $1.4 million German government research and development subsidy. We plan to submit
an IND for CU2010 to the FDA in  2010.ApoA-I MilanoIn December 2009, we paid $17.5 million in license fees to Pfizer and additional payments
to other third parties for exclusive worldwide rights to ApoA-I Milano.ArgatrobanIn September 2009, we paid a $5.0 million technology license fee to Eagle for marketing
rights for a ready-to-use formulation of Argatroban in the United States and Canada.OtherSpending in this category includes infrastructure costs in support of our product development
efforts, which includes expenses for data management, statistical analysis, analysis of
pre-clinical data, analysis of pharmacokinetic-pharmacodynamic (PK/PD) data and product safety
as well as expenses related to business development activities in connection with our efforts
to evaluate early stage and late stage compounds for development and commercialization and other
strategic opportunities. Spending in this category decreased by approximately $2.7 million
during 2009 compared to 2008, primarily due to a reduction of business development expenses.
  
    
    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:
 Year Ended December 31,Change
    
    Change2009
    
    2008
    
    $
    
    %(in thousands)Selling, general and administrative expenses
    
    $
    193,832
    
    
    $
    164,903
    
    
    $
    28,929
    
    
    
    17.5
    %
 53




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##### Table of Contents



Other (Expense) Income:
 Year Ended December 31,Change
    
    
    Change2009
    
    
    2008
    
    
    $
    
    
    %(in thousands)Other (expense) income
    
    $
    (2,818
    )
    
    $
    5,235
    
    
    $
    (8,053
    )
    
    
    (153.8
    )%
  (Provision for) Income Tax:
 Year Ended December 31,Change
    
    
    Change2009
    
    
    2008
    
    
    $
    
    
    %(in thousands)(Provision for) income tax
    
    $
    (48,062
    )
    
    $
    (2,918
    )
    
    $
    (45,144
    )
    
    
    (1,547.1
    )%
   Years Ended December 31, 2008 and 2007
 Net Revenue:
  Net Revenue
 Year Ended December 31,Change
    
    
    Change2008
    
    
    2007
    
    
    $
    
    
    %(in thousands)Net RevenueU.S sales
    
    $
    334,582
    
    
    $
    254,975
    
    
    $
    79,607
    
    
    
    31.2
    %International net revenue
    
    
    9,750
    
    
    
    32
    
    
    
    9,718
    
    
    
    303.7
    %Revenue from collaborations, net
    
    
    3,825
    
    
    
    2,527
    
    
    
    1,298
    
    
    
    51.4
    %Total net revenue
    
    $
    348,157
    
    
    $
    257,534
    
    
    $
    90,623
    
    
    
    35.2
    %
 54




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##### 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
    %
  55




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##### Table of Contents



Research and Development Expenses:
   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
    %CU2010Clinical trials
    
    
    
    
    
    
    0
    %
    
    
    
    
    
    
    0
    %Manufacturing development
    
    
    
    
    
    
    0
    %
    
    
    
    
    
    
    0
    %Administrative and headcount costs
    
    
    1,180
    
    
    
    1
    %
    
    
    
    
    
    
    0
    %Acquisition related in-process research and development
    
    
    21,373
    
    
    
    20
    %
    
    
    
    
    
    
    0
    %Total CU2010
    
    
    22,553
    
    
    
    21
    %
    
    
    
    
    
    
    0
    %Other
    
    
    14,435
    
    
    
    14
    %
    
    
    8,667
    
    
    
    11
    %Total
    
    $
    105,720
    
    
    
    100
    %
    
    $
    77,255
    
    
    
    100
    %
 Angiomax
 Research and development spending related to Angiomax during 2008 decreased by approximately
$2.7 million compared to 2007. Angiomax clinical trial costs decreased by approximately $5.4
million primarily due to decreased expenditures in connection with the investigator initiated
trial called HORIZONS AMI to study Angiomax use in adult AMI patients that we supported. During
the third quarter of 2008, we incurred $1.5 million in costs related to the final milestone
payment in connection with HORIZONS AMI. The decrease in Angiomax clinical trial expenses was
also due to decreased expenditures in connection with our 13,819 patient Phase 3 ACUITY trial.
In 2007, clinical trial expenses incurred related to our Phase 3 ACUITY trial primarily related
to data analysis. We incurred no clinical trial expense in 2008 related to ACUITY. Clinical
trial expenses also decreased during 2008 due to reduced research and development expenses that
we incurred in connection with a study of Angiomax in the pediatric setting that we began in the
first half of 2007 in connection with a written request by the FDA. We completed the enrollment
of 110 patients during the third quarter of 2008 and filed a clinical study report for the
pediatric extension with the FDA in the second quarter of 2009. Costs incurred in connection
with the pediatric study were approximately $0.4 million less during 2008 compared to 2007.
 56




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##### Table of Contents



Angiomax manufacturing development expenses during 2008 increased $3.2 million compared to 2007,
primarily due to product lifecycle management activities. Administrative and headcount costs
decreased in 2008 primarily related to our efforts in 2007 to seek approval from the FDA of an
additional indication for Angiomax for the treatment of patients with ACS based on results of
our Phase 3 ACUITY trial. The FDA accepted this application to file in September 2007. In May
2008, we received a non-approvable letter from the FDA. In its letter, the FDA indicated that
the basis of its decision involved the appropriate use and interpretation of the non-inferiority
trials we relied on in support of our sNDA, including ACUITY trial. We disagree with the FDA on
these issues and continue to evaluate how to respond to the FDAs views on the ACUITY trial
 Cleviprex
 Research and development expenditures for Cleviprex decreased approximately $3.3 million during
2008 compared 2007. The decrease in research and development expenditures primarily reflected
higher spending during 2007 in preparation for filing our NDA with the FDA, which we submitted
in July 2007. On August 1, 2008, the FDA approved Cleviprex for the reduction of blood pressure
when oral therapy is not feasible or not desirable. We launched the product in the United
States in September 2008.
 Cangrelor
 Research and development expenditures related to cangrelor increased by approximately $6.1
million in 2008 compared to 2007 as enrollment continued in our two pivotal Phase 3 clinical
trials for the evaluation of cangrelors effectiveness and safety in preventing ischemic events
in patients who require PCI. Research and development spending associated with our CHAMPION-PCI
and CHAMPION-PLATFORM trials increased during 2008 primarily due to an increase in the number of
countries in which we were recruiting patients through contract research organizations for these
trials. In March 2006, we commenced enrollment of our CHAMPION-PCI trial, which we designed to
evaluate whether use of intravenous cangrelor is superior to use of clopidrogrel tablets in
patients undergoing PCI. We commenced enrollment in October 2006 of a second trial, called
CHAMPION-PLATFORM, which compares cangrelor plus usual care to placebo plus usual care in
patients who require PCI.
 As of December 31, 2008, we had enrolled approximately 8,000 patients in our CHAMPION-PCI trial
and approximately 4,100 patients in our CHAMPION-PLATFORM trial.
 CU2010
 In August 2008, we acquired Curacyte Discovery. We allocated approximately $21.4 million of the
purchase price for the acquisition to in-process research and development and expensed it during
the third quarter of 2008.
 Other
 Spending in this category consists of infrastructure costs in support of our product development
efforts, which includes expenses for data management, statistical analysis, analysis of
pre-clinical data, analysis of pharmacokinetic-pharmacodynamic (PK/PD) data and product safety
as well as expenses related to business development activities. We also incur business
development expenses in connection with our efforts to evaluate early stage and late stage
compounds for development and commercialization and other strategic opportunities. In 2008,
spending in this category increased by $5.8 million compared to the same period in 2007,
primarily related to an increase in business development activities and increased headcount in
our business development department.
 Selling, General and Administrative Expenses:
 Year Ended December 31,Change
    
    
    Change2008
    
    
    2007
    
    
    $
    
    
    %(in thousands)Selling, general and
administrative
expenses
    
    $
    164,903
    
    
    $
    141,807
    
    
    $
    23,096
    
    
    
    16.3
    %
 57




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##### Table of Contents



Other Income:
 Year Ended December 31,Change
    
    
    Change2008
    
    
    2007
    
    
    $
    
    
    %(in thousands)Other income
    
    $
    5,235
    
    
    $
    10,653
    
    
    $
    (5,418
    )
    
    
    (50.1
    )%
  (Provision for) Income Tax:
 Year Ended December 31,Change
    
    
    Change2008
    
    
    2007
    
    
    $
    
    
    %(in thousands)(Provision for) income tax
    
    $
    (2,918
    )
    
    $
    (895
    )
    
    $
    2,023
    
    
    
    226.0
    %
  Liquidity and Capital Resources
 Sources of Liquidity
  Cash Flows
  58




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##### Table of Contents



Funding Requirements:
  
    
    the extent to which Angiomax is commercially successful globally;
    
    the outcome of our efforts to extend the patent term of the principal U.S. patent
covering Angiomax and the degree of market exclusivity in the United States provided by our
other U.S. patents covering Angiomax;
    
    the terms of any settlements with Biogen Idec or the two law firms with respect to the
principal U.S. patent covering Angiomax and the PTOs denial of our application to extend
the term of the patent;
    
    our ability to resupply the market with  Cleviprex and the extent to which Cleviprex is commercially successful in the United States;
    
    the extent to which we can successfully establish a commercial infrastructure outside
the United States;
    
    the cost of acquisitions or licensing of development-stage products, approved products,
or businesses and strategic or licensing arrangements with companies that fit within our
growth strategy;
    
    the progress, level, timing and cost of our research and development activities related
to our clinical trials and non-clinical studies with respect to Angiomax, Cleviprex and our
products in development;
    
    the cost and outcomes of regulatory submissions and reviews for approval of Cleviprex
outside the United States and New Zealand and of our products in development globally;
    
    the continuation or termination of third-party manufacturing and sales and marketing
arrangements;
    
    the size, cost and effectiveness of our sales and marketing programs globally;
 59




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##### Table of Contents




    
    the amounts of our payment obligations to third parties as to Angiomax, Cleviprex and
our products in development; and
    
    our ability to defend and enforce our intellectual property rights.
  Certain Contingencies:
  Contractual Obligations
   Less Than
    
    
    
    
    
    
    
    
    
    
    More ThanContractual Obligations (in thousands)
    
    Total
    
    
    1 Year
    
    
    1 - 3 Years
    
    
    3 - 5 Years
    
    
    5 YearsInventory related commitments
    
    $
    47,966
    
    
    $
    27,897
    
    
    $
    20,069
    
    
    $
    
    
    
    
    Research and development
    
    
    24,436
    
    
    
    17,880
    
    
    
    5,788
    
    
    
    768
    
    
    
    Operating leases
    
    
    69,187
    
    
    
    6,997
    
    
    
    13,630
    
    
    
    10,458
    
    
    
    38,102Selling, general and administrative
    
    
    5,750
    
    
    
    5,246
    
    
    
    504
    
    
    
    
    
    
    
    Unrecognized tax benefits
    
    
    167
    
    
    
    
    
    
    
    167
    
    
    
    
    
    
    
    Total contractual obligations
    
    $
    147,506
    
    
    $
    58,020
    
    
    $
    40,158
    
    
    $
    11,226
    
    
    $
    38,102
   60




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Recent Accounting Pronouncements
     61




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##### Table of Contents



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.
  Revenue Recognition
 Product Sales.
 62




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##### Table of Contents




    
    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. We consider all of these factors and adjust the accrual
periodically throughout each quarter to reflect actual experience. When customers return
product, they are generally given credit against amounts owed. The amount credited is
charged to our product returns accrual.In estimating the likelihood of product being returned, we rely on information from ICS and
wholesalers regarding inventory levels, measured hospital demand as reported by third-party
sources and internal sales data. We also consider the past buying
patterns of ICS and wholesalers, the estimated remaining shelf life of product previously
shipped, the expiration dates of product currently being shipped, price changes of competitive
products and introductions of generic products.At December 31, 2009 and December 31, 2008, our accrual for product returns was $3.8 million
and $1.0 million, respectively. Included within the accrual at December 31, 2009 was a reserve
of $1.3 million that we established related to the Cleviprex
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##### Table of Contents



product recall which occurred in
December 2009. Included within the accrual at December 31, 2008 was a reserve of $0.8 million
that we established for existing inventory at Nycomed that Nycomed had the right to return at
any time. In July 2009, we reimbursed Nycomed $0.8 million for the final amount of inventory
held by Nycomed at December 31, 2008. A 10% change in our accrual for product returns would
have had an approximate $0.4 million effect on our reported net revenue for the year ended
December 31, 2009.
    
    Chargebacks and rebates. Although we primarily sell products to ICS 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 products and volume-based rebates on product purchases. In the case of
discounted pricing, we typically provide a credit to ICS, or a chargeback, representing the
difference between ICS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.As a result of these agreements, at the time of product shipment, we estimate the likelihood
that product sold to ICS might be ultimately sold to a contracting hospital or group
purchasing organization. We also estimate the contracting hospitals or group purchasing
organizations volume of purchases.We base our estimates on industry data, hospital purchases and the historic chargeback data we
receive from ICS, most of which ICS receives from wholesalers, which detail historic buying
patterns and sales mix for particular hospitals and group purchasing organizations, and the
applicable customer chargeback rates and rebate thresholds.Our allowance for chargebacks was $4.7 million and $1.2 million at December 31, 2009 and
December 31, 2008, respectively. A 10% change in our allowance for chargebacks would have had
an approximate $0.5 million effect on our reported net revenue for the year ended December 31,
2009. Our accrual for rebates was $0.0 million at December 31, 2009 and $0.4 million at
December 31, 2008.
    
    Fees-for-service.We offer discounts to certain wholesalers and ICS 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 ICS within 60 days after the end of each
respective quarter. Our fee-for-service accruals and allowances were $3.1 million and $2.0
million at December 31, 2009 and December 31, 2008, respectively. A 10% change in our
fee-for-service accruals and allowances would have had an approximate $0.3 million effect on
our net revenue for the year ended December 31, 2009.
   Fees-for-Returns
    
    
    Chargebacks
    
    
    Rebates
    
    
    ServiceBalance at January 1, 2007
    
    $
    401
    
    
    $
    328
    
    
    $
    834
    
    
    $
    1,774Allowances for sales during 2007
    
    
    113
    
    
    
    4,386
    
    
    
    4,546
    
    
    
    4,507Allowances for prior year sales
    
    
    60
    
    
    
    99
    
    
    
    25
    
    
    
    Allowances for sales in Nycomed territory
    
    
    2,959
    
    
    
    
    
    
    
    
    
    
    
    Actual credits issued for prior years 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
    
    
    
    1,657Allowances for sales during 2008
    
    
    138
    
    
    
    5,628
    
    
    
    1,413
    
    
    
    6,562Allowances for prior year sales
    
    
    159
    
    
    
    123
    
    
    
    
    
    
    
    Allowances for sales in Nycomed territory
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Actual credits issued for prior years sales
    
    
    (261
    )
    
    
    (720
    )
    
    
    (1,397
    )
    
    
    (721
    )Actual credits issued for prior years sales in Nycomed territory
    
    
    (2,121
    )
    
    
    
    
    
    
    
    
    
    
    Actual credits issued for sales during 2008
    
    
    
    
    
    
    (4,442
    )
    
    
    (1,247
    )
    
    
    (5,542
    )Balance at December 31, 2008
    
    
    975
    
    
    
    1,186
    
    
    
    431
    
    
    
    1,956Allowances for sales during 2009
    
    
    3,764
    
    
    
    13,439
    
    
    
    212
    
    
    
    9,582Allowances for prior year sales
    
    
    274
    
    
    
    
    
    
    
    
    
    
    
    Actual credits issued for prior years sales
    
    
    (1,249
    )
    
    
    (1,174
    )
    
    
    (275
    )
    
    
    (1,670
    )Actual credits issued for sales during 2009
    
    
    
    
    
    
    (8,787
    )
    
    
    (357
    )
    
    
    (6,743
    )Balance at December 31, 2009
    
    $
    3,764
    
    
    $
    4,664
    
    
    $
    11
    
    
    $
    3,125
 64




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International Distributors.
   Revenue from Collaborations.
 Inventory
  65




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##### Table of Contents



Stock-Based Compensation
     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
    
    
    
    Historical 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
   66




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##### Table of Contents



Positive:
 
    
    our deferred tax assets primarily relate to U.S. net operating losses, the oldest of
which will not expire until 2020;
    
    our second product, Cleviprex, was approved for sale in the United States; we expect
it to generate revenue well past the term of the principal U.S. patent covering Angiomax;
    
    while unsettled, if legislative actions in Congress provide the PTO with discretion to
consider patent extension applications filed late unintentionally under the Hatch-Waxman
Act, we expect future operations and profit levels during the period of Angiomax
exclusivity to be positively impacted;
 Negative:
 
    
    since inception, except for 2004 and 2006, we have incurred net losses on an annual
basis, as of December 31, 2009, we had an accumulated deficit of approximately $344.2
million;
    
    for the most recent three years, our cumulative U.S. net loss before taxes totaled
approximately $37.1 million;
    
    our primary revenue generating product, Angiomax, may face generic competition with
the expiration of its market exclusivity as early as September 23, 2010;
    
    we are currently involved in patent infringement litigation with three companies; as a
result, our future operations and profitability are highly uncertain.
  
 Item 7A. Quantitative and Qualitative Disclosure About Market Risk
  67




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##### Table of Contents



Item 8. Financial Statements and Supplementary Data
  
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
 Disclosure Controls and Procedures
  Managements Annual Report on Internal Control Over Financial Reporting
  Attestation Report of Independent Registered Public Accounting Firm
  Changes in Internal Control Over Financial Reporting
  68




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##### Table of Contents



PART III
  
 Item 10. Directors, Executive Officers and Corporate Governance
  www.themedicinescompany.com
  
 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
  
 Item 14. Principal Accountant Fees and Services
  69




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##### Table of Contents



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-1Report of Independent Registered Public Accounting Firm
    
    
    F-2Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting
    
    
    F-3Consolidated Balance Sheets
    
    
    F-4Consolidated Statements of Operations
    
    
    F-5Consolidated Statements of Stockholders Equity
    
    
    F-6Consolidated Statements of Cash Flows
    
    
    F-7Notes to Consolidated Financial Statements
    
    
    F-8
 Financial Statement Schedule.
 Exhibits.
 70




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##### Table of Contents



SIGNATURES
  THE MEDICINES COMPANYBy:
    /s/ Clive A. MeanwellClive A. MeanwellChief Executive Officer and President  Signature
    
    Title(s)/s/ Clive A. Meanwell

Clive A. Meanwell
    
    Chief Executive Officer, President and Chairman
of the Board of Directors
(Principal Executive Officer)
    
    March 16, 2010/s/ Glenn P. Sblendorio

Glenn P. Sblendorio
    
    Executive Vice President, Chief Financial
Officer and Treasurer
(Principal Financial and Accounting Officer)
    
    March 16, 2010/s/ William W. Crouse
 William
W. Crouse
    
    Director
    
    March 16, 2010/s/ Robert J. Hugin
 Robert
J. Hugin
    
    Director
    
    March 16, 2010/s/ Armin M. Kessler
 Armin
M. Kessler
    
    Director
    
    March 16, 2010/s/ Robert G. Savage
 Robert
G. Savage
    
    Director
    
    March 16, 2010/s/ Hiroaki Shigeta
 Hiroaki
Shigeta
    
    Director
    
    March 16, 2010/s/ Melvin K. Spigelman
 Melvin
K. Spigelman
    
    Director
    
    March 16, 2010/s/ Elizabeth H.S. Wyatt
 Elizabeth
H.S. Wyatt
    
    Director
    
    March 16, 2010




---



##### 



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-1Report of Independent Registered Public Accounting Firm
    
    
    F-2Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting
    
    
    F-3Consolidated Balance Sheets
    
    
    F-4Consolidated Statements of Operations
    
    
    F-5Consolidated Statements of Stockholders Equity
    
    
    F-6Consolidated Statements of Cash Flows
    
    
    F-7Notes to Consolidated Financial Statements
    
    
    F-8Schedule II
    
    
    F-37




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Managements Report on Consolidated Financial Statements and Internal Control over Financial Reporting
   
    
    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. Meanwell
    
    /s/ Glenn P. SblendorioChairman and 
Chief Executive Officer
    
    Executive Vice President and
Chief Financial Officer
  F-1




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 The Board of Directors and Stockholders of The Medicines Company
      /s/  Ernst & Young LLP 
 F-2




---



##### 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
       /s/  Ernst & Young LLP   F-3




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##### Table of Contents



THE MEDICINES COMPANY
 
 CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)
 December 31,2009
    
    
    2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    72,225
    
    
    $
    81,018Available for sale securities
    
    
    103,966
    
    
    
    135,188Accrued interest receivable
    
    
    922
    
    
    
    1,336Accounts receivable, net of allowances of
approximately $6.4 million and $1.9 million
at December 31, 2009 and 2008
    
    
    29,789
    
    
    
    33,657Inventory
    
    
    25,836
    
    
    
    28,229Prepaid expenses and other current assets
    
    
    9,984
    
    
    
    16,402Total current assets
    
    
    242,722
    
    
    
    295,830Fixed assets, net
    
    
    25,072
    
    
    
    27,331Intangible assets, net
    
    
    84,678
    
    
    
    16,349Goodwill
    
    
    14,934
    
    
    
    Restricted cash
    
    
    7,049
    
    
    
    5,000Deferred tax assets
    
    
    
    
    
    
    37,657Other assets
    
    
    321
    
    
    
    5,237Total assets
    
    $
    374,776
    
    
    $
    387,404LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    8,431
    
    
    $
    12,968Accrued expenses
    
    
    77,088
    
    
    
    61,028Deferred revenue
    
    
    1,100
    
    
    
    9,612Total current liabilities
    
    
    86,619
    
    
    
    83,608Contingent purchase price
    
    
    23,667
    
    
    
    Deferred tax liabilities
    
    
    18,395
    
    
    
    Other liabilities
    
    
    5,706
    
    
    
    5,771Total liabilities
    
    
    134,387
    
    
    
    89,379Stockholders 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; 52,830,376
and 52,280,006 issued and outstanding at
December 31, 2009 and 2008, respectively
    
    
    53
    
    
    
    52Additional paid-in capital
    
    
    584,678
    
    
    
    565,083Accumulated deficit
    
    
    (344,177
    )
    
    
    (267,948
    )Accumulated other comprehensive (loss) income
    
    
    (165
    )
    
    
    838Total stockholders equity
    
    
    240,389
    
    
    
    298,025Total liabilities and stockholders equity
    
    $
    374,776
    
    
    $
    387,404
  F-4




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##### Table of Contents



THE MEDICINES COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
 Year Ended December 31,2009
    
    
    2008
    
    
    2007(In thousands, except per share amounts)Net revenue
    
    $
    404,241
    
    
    $
    348,157
    
    
    $
    257,534Operating expenses:Cost of revenue
    
    
    118,148
    
    
    
    88,355
    
    
    
    66,502Research and development
    
    
    117,610
    
    
    
    105,720
    
    
    
    77,255Selling, general and administrative
    
    
    193,832
    
    
    
    164,903
    
    
    
    141,807Total operating expenses
    
    
    429,590
    
    
    
    358,978
    
    
    
    285,564Loss from operations
    
    
    (25,349
    )
    
    
    (10,821
    )
    
    
    (28,030
    )Other (loss) income
    
    
    (2,818
    )
    
    
    5,235
    
    
    
    10,653Loss before income taxes
    
    
    (28,167
    )
    
    
    (5,586
    )
    
    
    (17,377
    )Provision for income taxes
    
    
    (48,062
    )
    
    
    (2,918
    )
    
    
    (895
    )Net loss
    
    $
    (76,229
    )
    
    $
    (8,504
    )
    
    $
    (18,272
    )Basic loss per common share
    
    $
    (1.46
    )
    
    $
    (0.16
    )
    
    $
    (0.35
    )Diluted loss per common share
    
    $
    (1.46
    )
    
    $
    (0.16
    )
    
    $
    (0.35
    )Weighted average number of common shares outstanding:Shares used in computing basic loss per common share
    
    
    52,269
    
    
    
    51,904
    
    
    
    51,624Shares used in computing diluted loss per common share
    
    
    52,269
    
    
    
    51,904
    
    
    
    51,624
  F-5




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##### Table of Contents



THE MEDICINES COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
For The Years Ended December 31, 2007, 2008 and 2009
(In thousands)
 AccumulatedAdditional
    
    
    
    
    
    
    Comprehensive
    
    
    TotalCommon Stock
    
    
    Paid-in
    
    
    Accumulated
    
    
    (Loss)
    
    
    StockholdersShares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    Income
    
    
    EquityBalance at January 1, 2007
    
    
    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
    
    
    $
    298,025Employee stock purchases
    
    
    231
    
    
    
    
    
    
    
    1,803
    
    
    
    
    
    
    
    
    
    
    
    1,803Issuance of restricted stock awards
    
    
    319
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Non-cash stock compensation
    
    
    
    
    
    
    
    
    
    
    19,437
    
    
    
    
    
    
    
    
    
    
    
    19,437Tax effect of option exercises
    
    
    
    
    
    
    
    
    
    
    (1,645
    )
    
    
    
    
    
    
    
    
    
    
    (1,645
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (76,229
    )
    
    
    
    
    
    
    (76,229
    )Currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (297
    )
    
    
    (297
    )Unrealized loss on available for sale securities (net of tax)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (706
    )
    
    
    (706
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (77,232
    )Balance at December 31, 2009
    
    
    52,830
    
    
    $
    53
    
    
    $
    584,678
    
    
    $
    (344,177
    )
    
    $
    (165
    )
    
    $
    240,389
  F-6




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##### Table of Contents



THE MEDICINES COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 Year Ended December 31,2009
    
    
    2008
    
    
    2007Cash flows from operating activities:Net loss
    
    $
    (76,229
    )
    
    $
    (8,504
    )
    
    $
    (18,272
    )Adjustments to reconcile net loss to net cash provided by operating activities:Depreciation and amortization
    
    
    5,767
    
    
    
    2,932
    
    
    
    1,586Acquired in-process research and development
    
    
    
    
    
    
    21,373
    
    
    
    Impairment of investment
    
    
    5,000
    
    
    
    
    
    
    
    Amortization of net premiums and discounts on available for sale securities
    
    
    2,118
    
    
    
    113
    
    
    
    (1,093
    )Unrealized foreign currency transaction losses, net
    
    
    
    
    
    
    580
    
    
    
    Non-cash stock compensation expense
    
    
    19,437
    
    
    
    22,798
    
    
    
    15,386Loss on disposal of fixed assets
    
    
    
    
    
    
    33
    
    
    
    33Loss on available for sale securities
    
    
    33
    
    
    
    33
    
    
    
    2Deferred tax provision
    
    
    47,737
    
    
    
    1,520
    
    
    
    Tax effect of option exercises
    
    
    
    
    
    
    
    
    
    
    1,236Adjustment to contingent purchase price (see Note 6)
    
    
    486
    
    
    
    
    
    
    
    Changes in operating assets and liabilities:Accrued interest receivable
    
    
    414
    
    
    
    262
    
    
    
    (184
    )Accounts receivable
    
    
    3,182
    
    
    
    (7,614
    )
    
    
    (4,260
    )Inventory
    
    
    2,774
    
    
    
    6,890
    
    
    
    6,160Prepaid expenses and other current assets
    
    
    (1,713
    )
    
    
    (1,236
    )
    
    
    5,718Other assets
    
    
    
    
    
    
    
    
    
    
    (4,983
    )Accounts payable
    
    
    (7,851
    )
    
    
    3,315
    
    
    
    907Accrued expenses
    
    
    8,343
    
    
    
    (18,945
    )
    
    
    36,770Deferred revenue
    
    
    (8,519
    )
    
    
    9,588
    
    
    
    (2,814
    )Other liabilities
    
    
    (28
    )
    
    
    4,939
    
    
    
    (95
    )Net cash provided by operating activities
    
    
    951
    
    
    
    38,077
    
    
    
    36,097Cash flows from investing activities:Purchases of available for sale securities
    
    
    (133,700
    )
    
    
    (161,822
    )
    
    
    (148,954
    )Maturities and sales of available for sale securities
    
    
    161,646
    
    
    
    161,505
    
    
    
    137,541Purchases of fixed assets
    
    
    (342
    )
    
    
    (19,395
    )
    
    
    (1,571
    )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
    
    
    (37,168
    )
    
    
    (23,534
    )
    
    
    Increase in restricted cash
    
    
    (1,652
    )
    
    
    
    
    
    
    (5,000
    )Net cash used in investing activities
    
    
    (11,216
    )
    
    
    (50,246
    )
    
    
    (32,904
    )Cash flows from financing activities:Proceeds from issuances of common stock, net
    
    
    1,804
    
    
    
    5,542
    
    
    
    9,330Net cash provided by financing activities
    
    
    1,804
    
    
    
    5,542
    
    
    
    9,330Effect of exchange rate changes on cash
    
    
    (332
    )
    
    
    (482
    )
    
    
    74(Decrease) increase in cash and cash equivalents
    
    
    (8,793
    )
    
    
    (7,109
    )
    
    
    12,597Cash and cash equivalents at beginning of period
    
    
    81,018
    
    
    
    88,127
    
    
    
    75,530Cash and cash equivalents at end of period
    
    $
    72,225
    
    
    $
    81,018
    
    
    $
    88,127Supplemental disclosure of cash flow information:Interest paid
    
    $
    
    
    
    $
    
    
    
    $
    Taxes paid
    
    $
    358
    
    
    $
    2,518
    
    
    $
    769Supplemental disclosure of non-cash investing activities:Fixed asset additions included in current liabilities
    
    $
    
    
    
    $
    6,327
    
    
    $
    308
  F-7




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##### Table of Contents



THE MEDICINES COMPANY
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. Nature of Business
 ® ®
 2. Significant Accounting Policies
 Basis of Presentation
  Use of Estimates
  Risks and Uncertainties
  Concentrations of Credit Risk
   F-8




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##### Table of Contents



Cash, Cash Equivalents and Available for Sale Securities
     As of December 31, 2009
    
    
    As of December 31, 2008Carrying
    
    
    Unrealized
    
    
    
    
    
    
    
    
    
    
    Carrying
    
    
    UnrealizedCost
    
    
    Fair Value
    
    
    Value
    
    
    Gain
    
    
    Cost
    
    
    Fair Value
    
    
    Value
    
    
    Gain(in thousands)U.S. government agency notes
    
    $
    103,936
    
    
    $
    103,965
    
    
    $
    103,965
    
    
    $
    29
    
    
    $
    107,513
    
    
    $
    108,491
    
    
    $
    108,491
    
    
    $
    978Corporate debt securities
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    26,487
    
    
    $
    26,697
    
    
    $
    26,697
    
    
    $
    210Total
    
    $
    103,936
    
    
    $
    103,965
    
    
    $
    103,965
    
    
    $
    29
    
    
    $
    134,000
    
    
    $
    135,188
    
    
    $
    135,188
    
    
    $
    1,188
 Investments
  Restricted Cash
  F-9




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##### Table of Contents



Revenue Recognition
 Product Sales.
      F-10




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##### Table of Contents




    
    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. The Company considers all of these factors
and adjusts the accrual periodically throughout each quarter to reflect actual experience.
When customers return product, they are generally given credit against amounts owed. The
amount credited is charged to the Companys product returns accrual.In estimating the likelihood of product being returned, the Company relies on information
from ICS and wholesalers regarding inventory levels, measured hospital demand as reported by
third-party sources and internal sales data. The Company also considers the past buying
patterns of ICS and wholesalers, the estimated remaining shelf life of product previously
shipped, the expiration dates of product currently being shipped, price changes of
competitive products and introductions of generic products.At December 31, 2009 and December 31, 2008, the Companys accrual for product returns was
$3.8 million and $1.0 million, respectively. Included within the accrual at December 31, 2009
was a reserve of $1.3 million that the Company established related to the Cleviprex product
recall which occurred in December 2009. Included within the accrual at December 31, 2008 was
a reserve of $0.8 million that the Company established for existing inventory at Nycomed
Danmark ApS (Nycomed) that Nycomed had the right to return at any time. In July 2009, the
Company reimbursed Nycomed $0.8 million for the final amount of inventory held by Nycomed at
December 31, 2008. A 10% change in the Companys accrual for product returns would have had
an approximate $0.4 million effect on the Companys reported net revenue for the year ended
December 31, 2009.
    
    Chargebacks and rebates. Although the Company primarily sells products to ICS 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 ICS, or a chargeback,
representing the difference between ICS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.As a result of these agreements, at the time of product shipment, the Company estimates the
likelihood that product sold to ICS might be ultimately sold to a contracting hospital or
group purchasing organization. The Company also estimates the contracting hospitals or group
purchasing organizations volume of purchases.The Company bases its estimates on industry data, hospital purchases and the historic
chargeback data it receives from ICS, most of which ICS receives from wholesalers, which
detail historic buying patterns and sales mix for particular hospitals and group purchasing
organizations, and the applicable customer chargeback rates and rebate thresholds.The Companys allowance for chargebacks was $4.7 million and $1.2 million at December 31,
2009 and December 31, 2008, respectively. A 10% change in the Companys allowance for
chargebacks would have had an approximate $0.5 million effect on the Companys reported net
revenue for the year ended December 31, 2009. The Companys accrual for rebates was $0.0
million at December 31, 2009 and $0.4 million at December 31, 2008.
    
    Fees-for-service.The Company offers discounts to certain wholesalers and ICS 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 ICS
within 60 days after the end of each respective quarter. The Companys fee-for-service
accruals and allowances were $3.1 million and $2.0 million at December 31, 2009 and
December 31, 2008, respectively. A 10% change in the Companys fee-for-service accruals and
allowances would have had an approximate $0.3 million effect on the Companys net revenue
for the year ended December 31, 2009.
  F-11




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##### Table of Contents



Fees-for-Returns
    
    
    Chargebacks
    
    
    Rebates
    
    
    ServiceBalance at January 1, 2007
    
    $
    401
    
    
    $
    328
    
    
    $
    834
    
    
    $
    1,774Allowances for sales during 2007
    
    
    113
    
    
    
    4,386
    
    
    
    4,546
    
    
    
    4,507Allowances for prior year sales
    
    
    60
    
    
    
    99
    
    
    
    25
    
    
    
    Allowances for sales in Nycomed territory
    
    
    2,959
    
    
    
    
    
    
    
    
    
    
    
    Actual credits issued for prior years 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
    
    
    
    1,657Allowances for sales during 2008
    
    
    138
    
    
    
    5,628
    
    
    
    1,413
    
    
    
    6,562Allowances for prior year sales
    
    
    159
    
    
    
    123
    
    
    
    
    
    
    
    Allowances for sales in Nycomed territory
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Actual credits issued for prior years sales
    
    
    (261
    )
    
    
    (720
    )
    
    
    (1,397
    )
    
    
    (721
    )Actual credits issued for prior year sales in Nycomed territory
    
    
    (2,121
    )
    
    
    
    
    
    
    
    
    
    
    Actual credits issued for sales during 2008
    
    
    
    
    
    
    (4,442
    )
    
    
    (1,247
    )
    
    
    (5,542
    )Balance at December 31, 2008
    
    
    975
    
    
    
    1,186
    
    
    
    431
    
    
    
    1,956Allowances for sales during 2009
    
    
    3,764
    
    
    
    13,439
    
    
    
    212
    
    
    
    9,582Allowances for prior year sales
    
    
    274
    
    
    
    
    
    
    
    
    
    
    
    Actual credits issued for prior years sales
    
    
    (1,249
    )
    
    
    (1,174
    )
    
    
    (275
    )
    
    
    (1,670
    )Actual credits issued for sales during 2009
    
    
    
    
    
    
    (8,787
    )
    
    
    (357
    )
    
    
    (6,743
    )Balance at December 31, 2009
    
    $
    3,764
    
    
    $
    4,664
    
    
    $
    11
    
    
    $
    3,125
  International Distributors.
   F-12




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##### Table of Contents



Revenue from Collaborations.
 Cost of Revenue
  Advertising Costs
  Inventory
  Fixed Assets
  Recoverability of Long-Lived Assets
  Research and Development
  F-13




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##### Table of Contents



Stock-Based Compensation
   Translation of Foreign Currencies
  Income Taxes
     F-14




---



##### Table of Contents



Comprehensive Income (Loss)
  Recent Accounting Pronouncements
       F-15




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##### Table of Contents



3. Inventory
  Inventory
    
    2009
    
    
    2008(In thousands)Raw materials
    
    $
    13,609
    
    
    $
    10,003Work-in-progress
    
    
    8,646
    
    
    
    10,334Finished goods
    
    
    3,581
    
    
    
    7,892Total
    
    $
    25,836
    
    
    $
    28,229
  4. Fixed Assets
  Estimated
    
    
    December 31,Life (Years)
    
    
    2009
    
    
    2008(In thousands)Furniture, fixtures and equipment
    
    
    3-7
    
    
    $
    12,680
    
    
    $
    7,689Computer software
    
    
    3
    
    
    
    2,622
    
    
    
    3,174Computer hardware
    
    
    3
    
    
    
    3,549
    
    
    
    1,629Leasehold improvements
    
    
    5-15
    
    
    
    20,485
    
    
    
    21,23539,336
    
    
    
    33,727Less: Accumulated depreciation
    
    
    
    
    
    
    (14,264
    )
    
    
    (6,396
    )$
    25,072
    
    
    $
    27,331
  5. Investment
  F-16




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##### Table of Contents



6. Acquisitions
 Targanta Therapeutics Corporation
   
    
    Upon approval from the European Agency for the Evaluation of Medical Products (EMEA) for
a MAA for oritavancin for the treatment of ABSSSI on or before December 31, 2013,
approximately $15.8 million if such approval is granted between January 1, 2010 and June 30,
2010, or approximately $10.5 million if such approval is granted between July 1, 2010 and
December 31, 2013. As of March 1, 2010, the Company has not filed an application with the
EMEA for oritavancin for the treatment of ABSSSI.
    
    Upon final approval from the FDA for a new drug application, or NDA, for oritavancin for
the treatment of ABSSSI (1) within 40 months after the date the first patient is enrolled in
a Phase 3 clinical trial of ABSSSI that is initiated by the Company and (2) on or before
December 31, 2013, approximately $10.5 million in the aggregate.
    
    Upon final FDA approval for an NDA for the use of oritavancin for the treatment of ABSSSI
administered by a single dose intravenous infusion (1) within 40 months after the date the
first patient is enrolled in a Phase 3 clinical trial of ABSSSI that is initiated by the
Company and (2) on or before December 31, 2013, approximately $14.7 million in the
aggregate. This payment may become payable simultaneously with the payment described in the
previous bullet above.
    
    If aggregate net sales of oritavancin in four consecutive calendar quarters ending on or
before December 31, 2021 reach or exceed $400 million, approximately $49.4 million in the
aggregate.
  (in thousands)Acquired assets:Cash and cash equivalents
    
    $
    4,815Available for sale securities
    
    
    397Prepaid expenses & other current assets
    
    
    2,177Fixed assets, net
    
    
    1,960In-process research and development
    
    
    69,500Goodwill
    
    
    14,934Other assets
    
    
    70Total assets
    
    
    93,853Liabilities assumed:Accounts payable
    
    
    3,280Accrued expenses
    
    
    6,976Contingent purchase price
    
    
    23,181Deferred tax liability
    
    
    17,877Other liabilities
    
    
    556Total liabilities
    
    
    51,870Total cash purchase price paid upon acquisition
    
    $
    41,983
 F-17




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##### Table of Contents



Project
    
    (in thousands)ABSSSI
    
    $
    54,000Bacteremia
    
    
    5,900Anthrax
    
    
    6,400Clostridium difficileinfections
    
    
    3,200Total
    
    $
    69,500
   Years Ended December 31,2009
    
    2008(in thousands, except per share amounts)Net revenue
    
    $
    404,241
    
    
    $
    348,157Income (loss) from operations
    
    
    (36,020
    )
    
    
    (70,219
    )Net income (loss)
    
    
    (87,346
    )
    
    
    (67,317
    )Basic and diluted loss per share:Basic earnings (loss) per share
    
    $
    (1.67
    )
    
    $
    (1.30
    )Diluted earnings (loss) per share
    
    $
    (1.67
    )
    
    $
    (1.30
    )Weighted average number of
common shares outstanding:Basic
    
    
    52,269
    
    
    
    51,904Diluted
    
    
    52,269
    
    
    
    51,904
 F-18




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##### Table of Contents



Curacyte Discovery GmbH
   
  (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
  7. Nycomed Agreements
    F-19




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##### Table of Contents



8. Intangible Assets and Goodwill
  As of December 31, 2009
    
    
    As of December 31, 2008Weighted
    
    
    Gross
    
    
    
    
    
    
    Net
    
    
    Gross
    
    
    
    
    
    
    NetAverage
    
    
    Carrying
    
    
    Accumulated
    
    
    Carrying
    
    
    Carrying
    
    
    Accumulated
    
    
    CarryingUseful Life
    
    
    Amount
    
    
    Amortization
    
    
    Amount
    
    
    Amount
    
    
    Amortization
    
    
    Amount(In thousands)Identifiable intangible assetsCustomer relationships(1)
    
    8 years
    
    $
    7,457
    
    
    $
    (861
    )
    
    $
    6,596
    
    
    $
    7,457
    
    
    $
    (288
    )
    
    $
    7,169Distribution agreement(1)
    
    8 years
    
    
    4,448
    
    
    
    (514
    )
    
    
    3,934
    
    
    
    4,448
    
    
    
    (171
    )
    
    
    4,277Trademarks(1)
    
    8 years
    
    
    3,024
    
    
    
    (349
    )
    
    
    2,675
    
    
    
    3,024
    
    
    
    (116
    )
    
    
    2,908Cleviprex milestones(2)
    
    13 years
    
    
    2,000
    
    
    
    (27
    )
    
    
    1,973
    
    
    
    2,000
    
    
    
    (5
    )
    
    
    1,995Total
    
    9 years
    
    $
    16,929
    
    
    $
    (1,751
    )
    
    $
    15,178
    
    
    $
    16,929
    
    
    $
    (580
    )
    
    $
    16,349
 
 (1)
    
    The Company amortizes intangible assets related to Angiox based on the ratio
of annual forecasted revenue compared to total forecasted revenue from the sale of Angiox
through the end of its patent life.(2)
    
    The Company amortizes intangible assets related to the Cleviprex approval over the
remaining life of the patent.  F-20




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##### Table of Contents



As of December 31, 2009
    
    
    As of December 31, 2008Gross
    
    
    
    
    
    
    Net
    
    
    Gross
    
    
    
    
    
    
    NetCarrying
    
    
    Accumulated
    
    
    Carrying
    
    
    Carrying
    
    
    Accumulated
    
    
    CarryingAmount
    
    
    Amortization
    
    
    Amount
    
    
    Amount
    
    
    Amortization
    
    
    Amount(in thousands)Intangible
assets not subject
to amortization:In-process
research and
development
    
    $
    69,500
    
    
    $
    
    
    
    $
    69,500
    
    
    $
    
    
    
    $
    
    
    
    $
    Total
    
    $
    69,500
    
    
    $
    
    
    
    $
    69,500
    
    
    $
    
    
    
    $
    
    
    
    $
    
  December 31,
    
    
    December 31,2009
    
    
    2008(in thousands)Balance at beginning of period
    
    $
    
    
    
    $
    Goodwill acquired during the year
    
    
    14,934
    
    
    
    Balance at end of period
    
    $
    14,934
    
    
    $
    
  9. Accrued Expenses
  2009
    
    
    2008(In thousands)Nycomed service agreement
    
    $
    71
    
    
    $
    2,385Royalties
    
    
    20,523
    
    
    
    15,792Research and development services
    
    
    15,208
    
    
    
    13,312Compensation related
    
    
    14,638
    
    
    
    8,889Product returns, rebates and other fees
    
    
    5,992
    
    
    
    3,286Fixed asset additions
    
    
    
    
    
    
    6,165Legal, accounting and other
    
    
    7,598
    
    
    
    4,172Manufacturing, logistics and related fees
    
    
    10,332
    
    
    
    4,929Sales and marketing
    
    
    2,726
    
    
    
    2,098$
    77,088
    
    
    $
    61,028
 F-21




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##### Table of Contents



10. Stockholders Equity
 Preferred Stock
  Common Stock
   11. Stock-Based Compensation
 Stock Plans
  
    
    the 2009 Equity Inducement Plan (the 2009 Plan),
    
    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).
  2009 Plan
  F-22




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##### Table of Contents



2007 Plan
  2004 Plan
    
    
    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.
    2001 Plan
  F-23




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##### Table of Contents



2000 Director Plan
   1998 Plan
   Stock Option Activity
  Weighted-AverageWeighted-Average
    
    
    RemainingExercise Price
    
    
    Contractual
    
    
    AggregateNumber of Shares
    
    
    Per Share
    
    
    Term
    
    
    Intrinsic ValueOutstanding, January 1, 2007
    
    
    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
    
    
    $
    20.92Granted
    
    
    1,533,850
    
    
    
    10.92Exercised
    
    
    (18,505
    )
    
    
    5.85Forfeited and expired
    
    
    (1,284,739
    )
    
    
    20.23Outstanding, December 31, 2009
    
    
    10,987,217
    
    
    $
    19.63
    
    
    
    5.58
    
    
    $
    1,259,632Exercisable, December 31, 2009
    
    
    7,453,320
    
    
    $
    21.00
    
    
    
    4.67
    
    
    $
    1,070,869Available for future grant at December 31, 2009
    
    
    3,117,328
 F-24




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##### Table of Contents



Years EndedDecember 31,2009
    
    
    2008
    
    
    2007Expected dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Expected stock price volatility
    
    
    47
    %
    
    
    45
    %
    
    
    49
    %Risk-free interest rate
    
    
    2.05
    %
    
    
    2.78
    %
    
    
    4.49
    %Expected option term (years)
    
    
    5.12
    
    
    
    4.89
    
    
    
    4.85
  Years EndedDecember 31,2009
    
    
    2008
    
    
    2007Expected dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Expected stock price volatility
    
    
    79
    %
    
    
    39
    %
    
    
    33
    %Risk-free interest rate
    
    
    0.32
    %
    
    
    2.04
    %
    
    
    5.08
    %Expected option term (years)
    
    
    0.5
    
    
    
    0.5
    
    
    
    0.5
  Options Outstanding
    
    
    Options VestedWeighted AverageNumber
    
    
    Remaining
    
    
    Weighted Average
    
    
    Number
    
    
    Weighted AverageRange of Exercise
    
    Outstanding
    
    
    Contractual Life
    
    
    Exercise Price
    
    
    Outstanding
    
    
    Exercise PricePrices Per Share
    
    at 12/31/09
    
    
    (Years)
    
    
    Per Share
    
    
    at 12/31/09
    
    
    Per Share$1.23  $15.50
    
    
    2,008,759
    
    
    
    5.82
    
    
    $
    10.04
    
    
    
    807,595
    
    
    $
    9.71$15.59  $17.98
    
    
    851,715
    
    
    
    7.22
    
    
    
    17.07
    
    
    
    388,417
    
    
    
    17.12$18.00  $18.27
    
    
    927,158
    
    
    
    4.06
    
    
    
    18.26
    
    
    
    893,638
    
    
    
    18.26$18.29  $19.06
    
    
    1,031,839
    
    
    
    6.21
    
    
    
    18.69
    
    
    
    689,545
    
    
    
    18.67$19.09  $19.89
    
    
    1,850,346
    
    
    
    6.58
    
    
    
    19.41
    
    
    
    987,166
    
    
    
    19.71$19.98  $23.79
    
    
    1,692,969
    
    
    
    5.55
    
    
    
    21.57
    
    
    
    1,365,410
    
    
    
    21.71$23.80  $28.01
    
    
    1,299,038
    
    
    
    3.58
    
    
    
    26.16
    
    
    
    1,180,722
    
    
    
    26.23$28.02  $28.60
    
    
    1,076,060
    
    
    
    5.51
    
    
    
    28.41
    
    
    
    906,514
    
    
    
    28.37$28.81  $34.95
    
    
    249,333
    
    
    
    4.66
    
    
    
    31.32
    
    
    
    234,313
    
    
    
    31.4010,987,217
    
    
    
    5.58
    
    
    $
    19.63
    
    
    
    7,453,320
    
    
    $
    21.00
 F-25




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##### Table of Contents



Weighted AverageNumber of
    
    
    Grant-DateShares
    
    
    Fair ValueOutstanding, January 1, 2007
    
    
    159,950
    
    
    
    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
    
    
    
    22.35Awarded
    
    
    408,184
    
    
    
    12.42Vested
    
    
    (77,938
    )
    
    
    21.56Forfeited
    
    
    (88,836
    )
    
    
    15.67Outstanding, December 31, 2009
    
    
    430,280
    
    
    $
    14.45
  2000 ESPP
   Common Stock Reserved for Future Issuance
  F-26




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##### Table of Contents



12. Earnings (Loss) per Share
  Years Ended December 31,2009
    
    
    2008
    
    
    2007(In thousands, except per share amounts)Basic and dilutedNet loss
    
    $
    (76,229
    )
    
    $
    (8,504
    )
    
    $
    (18,272
    )Weighted average common shares outstanding, basic
    
    
    52,722
    
    
    
    52,090
    
    
    
    51,742Less: unvested restricted common shares outstanding
    
    
    453
    
    
    
    186
    
    
    
    118Net weighted average common shares outstanding, basic
    
    
    52,269
    
    
    
    51,904
    
    
    
    51,624Plus: net effect of dilutive stock options and restricted common shares
    
    
    
    
    
    
    
    
    
    
    Weighted average common shares outstanding, diluted
    
    
    52,269
    
    
    
    51,904
    
    
    
    51,624Loss per common share, basic
    
    $
    (1.46
    )
    
    $
    (0.16
    )
    
    $
    (0.35
    )Loss per common share, diluted
    
    $
    (1.46
    )
    
    $
    (0.16
    )
    
    $
    (0.35
    )
  Years Ended December 31,2009
    
    
    2008
    
    
    2007(In thousands)Weighted average options outstanding
    
    
    11,280
    
    
    
    10,118
    
    
    
    7,429Weighted average options included in computation of diluted earnings per share
    
    
    
    
    
    
    
    
    
    
    Weighted average options considered anti-dilutive and excluded from the computation of
diluted earnings per share
    
    
    11,280
    
    
    
    10,118
    
    
    
    7,429Weighted average restricted shares outstanding
    
    
    453
    
    
    
    186
    
    
    
    118Weighted average restricted shares included in computation of diluted earnings per share
    
    
    
    
    
    
    
    
    
    
    Weighted average restricted shares considered anti-dilutive and excluded from the
computation of diluted earnings per share
    
    
    453
    
    
    
    186
    
    
    
    118
 13. Income Taxes
  2009
    
    
    2008
    
    
    2007(In thousands)Current:Federal
    
    $
    (237
    )
    
    $
    (377
    )
    
    $
    (556
    )State
    
    
    (238
    )
    
    
    (1,021
    )
    
    
    (339
    )Foreign
    
    
    150
    
    
    
    
    
    
    
    (325
    )
    
    
    (1,398
    )
    
    
    (895
    )Deferred:Federal
    
    
    (43,740
    )
    
    
    (1,910
    )
    
    
    State
    
    
    (3,997
    )
    
    
    390
    
    
    
    Foreign
    
    
    
    
    
    
    
    
    
    
    (47,737
    )
    
    
    (1,520
    )
    
    
    Total (provision for)/benefit from income taxes
    
    $
    (48,062
    )
    
    $
    (2,918
    )
    
    $
    (895
    )
  2009
    
    
    2008
    
    
    2007(In thousands)Domestic
    
    $
    (15,744
    )
    
    $
    7,489
    
    
    $
    (17,432
    )International
    
    
    (12,423
    )
    
    
    (13,075
    )
    
    
    55Total
    
    $
    (28,167
    )
    
    $
    (5,586
    )
    
    $
    (17,377
    )
 F-27




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##### Table of Contents



Year Ended December 31,2009
    
    
    2008
    
    
    2007(In thousands)Statutory rate applied to pre-tax loss
    
    $
    (9,858
    )
    
    $
    (1,955
    )
    
    $
    (6,082
    )Add (deduct):State income taxes, net of federal benefit
    
    
    2,753
    
    
    
    430
    
    
    
    240Foreign
    
    
    168
    
    
    
    4,576
    
    
    
    (19
    )Tax credits
    
    
    (1,408
    )
    
    
    (1,456
    )
    
    
    (1,106
    )Lobbying costs
    
    
    1,701
    
    
    
    219
    
    
    
    1,121Acquisition costs
    
    
    1,398
    
    
    
    558
    
    
    
    Meals and entertainment
    
    
    272
    
    
    
    191
    
    
    
    163Tax reserves
    
    
    
    
    
    
    150
    
    
    
    Other
    
    
    326
    
    
    
    205
    
    
    
    82Increase (decrease) to federal valuation allowance (net)
    
    
    52,710
    
    
    
    
    
    
    
    6,496Income tax provision
    
    $
    48,062
    
    
    $
    2,918
    
    
    $
    895
  December 31,2009
    
    
    2008(In thousands)Deferred tax assets:Net operating loss carryforwards
    
    $
    95,800
    
    
    $
    56,037Tax credits
    
    
    23,460
    
    
    
    16,630Intangible assets
    
    
    25,137
    
    
    
    16,818Stock based compensation
    
    
    18,507
    
    
    
    14,876Other
    
    
    9,500
    
    
    
    10,109Total deferred tax assets
    
    
    172,404
    
    
    
    114,470Valuation allowance
    
    
    (171,386
    )
    
    
    (64,547
    )Total deferred tax assets net of valuation allowance
    
    
    1,018
    
    
    
    49,923Deferred tax liabilities:Fixed assets
    
    $
    (1,018
    )
    
    $
    (1,198
    )Indefinite lived intangible assets
    
    
    (18,395
    )
    
    
    Other
    
    
    
    
    
    
    (494
    )Total deferred tax liabilities
    
    
    (19,413
    )
    
    
    (1,692
    )Net deferred tax (liabilities) assets
    
    $
    (18,395
    )
    
    $
    48,231
     F-28




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##### Table of Contents



Federal ResearchFederal Net
    
    
    and DevelopmentOperating Loss
    
    
    Tax CreditYear of Expiration
    
    Carryforwards
    
    
    Carryforwards(In thousands)2018
    
    $
    
    
    
    $
    952019
    
    
    
    
    
    
    9232020
    
    
    5,683
    
    
    
    1,0832021
    
    
    51,100
    
    
    
    4772022
    
    
    41,403
    
    
    
    1,8562023
    
    
    19,693
    
    
    
    2,0312024
    
    
    11
    
    
    
    1,7952025
    
    
    12,858
    
    
    
    3,4362026
    
    
    9,628
    
    
    
    1,9712027
    
    
    30,804
    
    
    
    1,1902028
    
    
    43,710
    
    
    
    1,3722029
    
    
    
    
    
    
    1,195$
    214,890
    
    
    $
    17,424
   GrossUnrecognizedTax Benefits(In thousands)Balance at January 1, 2008
    
    $
    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
    
    
    1,381Additions related to current year tax positions
    
    
    Additions for prior year tax positions
    
    
    Reductions for prior year tax positions
    
    
    Settlements
    
    
    Balance at December 31, 2009
    
    $
    1,381
  F-29




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##### Table of Contents



14. Fair Value Measurements
  Level 1
    
    Quoted prices in active markets for identical assets or
liabilities. The Companys Level 1 assets and
liabilities consist of money market investments.Level 2
    
    Observable inputs other than Level 1 prices, such as
quoted prices for similar assets or liabilities; quoted
prices in markets that are not active; or other inputs
that are observable or can be corroborated by
observable market data for substantially the full term
of the assets or liabilities. The Companys Level 2
assets and liabilities consist of U.S. government
agency and corporate debt securities.Level 3
    
    Unobservable inputs that are supported by little or no
market activity and that are significant to the fair
value of the assets or liabilities. The Companys Level
3 assets and liabilities consist of the contingent
purchase price associated with the Targanta acquisition
(note 6). The fair value of the contingent purchase
price was determined utilizing a probability weighted
discounted financial model.
  SignificantQuoted Prices In
    
    
    Other
    
    
    SignificantActive Markets for
    
    
    Observable
    
    
    UnobservableIdentical Assets
    
    
    Inputs
    
    
    Inputs
    
    
    Balance atAssets and Liabilities
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    December 31, 2009(in thousands)Assets:Money market
    
    $
    25,073
    
    
    $
    
    
    
    $
    
    
    
    $
    25,073U.S. government agency
    
    
    
    
    
    
    103,965
    
    
    
    
    
    
    
    103,965Corporate debt securities
    
    
    
    
    
    
    22,401
    
    
    
    
    
    
    
    22,401Total assets at fair value
    
    $
    25,073
    
    
    $
    126,366
    
    
    $
    
    
    
    $
    151,439Liabilities:Contingent purchase price
    
    $
    
    
    
    $
    
    
    
    $
    23,667
    
    
    $
    23,667Total liabilities at fair value
    
    $
    
    
    
    $
    
    
    
    $
    23,667
    
    
    $
    23,667
 F-30




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##### Table of Contents



Level 3(in thousands)Balance at December 31, 2008
    
    $
    Contingent purchase price related to acquisition of Targanta
    
    
    23,181Fair value adjustment to contingent purchase price included in net loss
    
    
    486Balance at December 31, 2009
    
    $
    23,667
 15. License Agreements
 Angiomax
  Cleviprex
  F-31




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##### Table of Contents



Cangrelor
  ApoA-I Milano
      F-32




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##### Table of Contents



16. Manufacturing Agreements
 Lonza Braine S.A. (formerly UCB Bioproducts)
  Ben Venue Laboratories, Inc.
  17. Commitments and Contingencies
   Contractual Obligations
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    Later Years
    
    
    Total(In thousands)Inventory related commitments
    
    $
    27,897
    
    
    $
    19,469
    
    
    $
    600
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    47,966Research and development
    
    
    17,880
    
    
    
    4,754
    
    
    
    1,034
    
    
    
    768
    
    
    
    
    
    
    
    
    
    
    
    24,436Operating leases
    
    
    6,997
    
    
    
    7,446
    
    
    
    6,184
    
    
    
    5,796
    
    
    
    4,662
    
    
    
    38,102
    
    
    
    69,187Selling, general and administrative
    
    
    5,246
    
    
    
    504
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,750Unrecognized tax benefits
    
    
    
    
    
    
    167
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    167Total contractual obligations
    
    $
    58,020
    
    
    $
    32,340
    
    
    $
    7,818
    
    
    $
    6,564
    
    
    $
    4,662
    
    
    $
    38,102
    
    
    $
    147,506
   F-33




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##### Table of Contents



Litigation
  Teva Parenteral Medicines, Inc.
   Pliva Hrvatska d.o.o.
  F-34




---



##### Table of Contents



APP Pharmaceuticals, LLC
  Contingencies
  18. Employee Benefit Plan
  19. Selected Quarterly Financial Data (Unaudited)
  Three Months EndedMar. 31,
    
    
    June 30,
    
    
    Sept. 30,
    
    
    Dec. 31,
    
    
    Mar. 31,
    
    
    June 30,
    
    
    Sept. 30,
    
    
    Dec. 31,2009
    
    
    2009
    
    
    2009
    
    
    2009
    
    
    2008
    
    
    2008
    
    
    2008
    
    
    2008(In thousands, except per share data)Net revenue
    
    $
    99,217
    
    
    $
    104,175
    
    
    $
    98,789
    
    
    $
    102,060
    
    
    $
    79,427
    
    
    $
    86,731
    
    
    $
    88,126
    
    
    $
    93,873Cost of revenue
    
    
    28,297
    
    
    
    30,353
    
    
    
    28,308
    
    
    
    31,190
    
    
    
    19,092
    
    
    
    21,939
    
    
    
    22,089
    
    
    
    25,235Total operating expenses
    
    
    78,031
    
    
    
    67,694
    
    
    
    69,822
    
    
    
    95,894
    
    
    
    54,013
    
    
    
    58,570
    
    
    
    86,939
    
    
    
    71,101Net income/(loss)
    
    
    (3,348
    )
    
    
    3,811
    
    
    
    (3,197
    )
    
    
    (73,494
    )
    
    
    4,853
    
    
    
    4,056
    
    
    
    (13,217
    )
    
    
    (4,196
    )Basic net income/(loss) per common share
    
    $
    (0.06
    )
    
    $
    0.07
    
    
    $
    (0.06
    )
    
    $
    (1.40
    )
    
    $
    0.09
    
    
    $
    0.08
    
    
    $
    (0.25
    )
    
    $
    (0.08
    )Diluted net income/(loss) per common share
    
    $
    (0.06
    )
    
    $
    0.07
    
    
    $
    (0.06
    )
    
    $
    (1.40
    )
    
    $
    0.09
    
    
    $
    0.08
    
    
    $
    (0.25
    )
    
    $
    (0.08
    )
 20. Segment and Geographic Information
   F-35




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##### Table of Contents



Years Ended December 31,2009
    
    
    
    
    
    
    2008
    
    
    
    
    
    
    2007(in thousands)Net revenue:United States
    
    $
    385,939
    
    
    
    95.5
    %
    
    $
    334,582
    
    
    
    96.1
    %
    
    $
    254,975
    
    
    
    99.0
    %Europe
    
    
    13,908
    
    
    
    3.4
    %
    
    
    9,051
    
    
    
    2.6
    %
    
    
    (268
    )
    
    
    (0.1)
    %Other
    
    
    4,394
    
    
    
    1.1
    %
    
    
    4,524
    
    
    
    1.3
    %
    
    
    2,827
    
    
    
    1.1
    %Total net revenue
    
    
    404,241
    
    
    
    
    
    
    
    348,157
    
    
    
    
    
    
    
    257,534
 Years Ended December 31,2009
    
    
    
    
    
    
    2008(in thousands)Long-lived assets:United States
    
    $
    122,968
    
    
    
    98.4
    %
    
    $
    47,308
    
    
    
    96.7
    %Europe
    
    
    1,684
    
    
    
    1.3
    %
    
    
    1,609
    
    
    
    3.3
    %Other
    
    
    353
    
    
    
    0.3
    %
    
    
    
    
    
    
    
    %Total long-lived assets
    
    $
    125,005
    
    
    
    
    
    
    $
    48,917
 21. Subsequent Events
 Workforce Reductions
   Litigation
  F-36




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##### Table of Contents



Schedule II
 Valuation and Qualifying Accounts
Year ended December 31, 2009, 2008 and 2007
 Balance at
    
    (Credit) Charged
    
    Other
    
    BalanceBeginning
    
    to Costs and
    
    Charges
    
    at Endof Period
    
    Expenses(1)
    
    (Deductions)(2)
    
    of Period2009Allowances for chargebacks, cash discounts and doubtful accounts
    
    $
    1,916
    
    
    $
    29,678
    
    
    $
    (25,232
    )
    
    $
    6,3622008Allowances 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
    )
    
    $
    1,192
 
 (1)
    
    amounts presented herein were charged to and reduced revenues(2)
    
    represents actual cash discounts, chargeback credits and other
deductions F-37




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##### Table of Contents



INDEX TO EXHIBITS
 Number
    
    Description2.1
    
    Sale and Purchase Agreement, dated August 4, 2008, between The Medicines Company (Leipzig) GmbH 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 registrant, 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)2.3
    
    Amendment to Sale and Purchase Agreement dated December 14, 2009 between The Medicines Company (Leipzig) GmbH and
Curacyte AG3.1
    
    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
    
    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)10.2
    
    Lease for 8 Campus Drive dated September 30, 2002 by and between Sylvan/Campus Realty L.L.C. and the registrant, as
amended by the First Amendment and Second Amendment, (filed as Exhibit 10.15 to the registrants annual report on
Form 10-K for the year ended December 31, 2003)10.3
    
    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)10.4
    
    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)10.5
    
    Amendment to Lease for 8 Sylvan Way, Parsippany, NJ dated October 11, 2007 by and between 8 Sylvan Way, LLC and the
registrant (filed as Exhibit 10.40 to the registrants annual report on Form 10-K for the year ended December 31,
2008)10.6*
    
    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))10.7*
    
    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)10.8*
    
    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)10.9*
    
    Severance Agreement, dated February 17, 2009 by and between Catharine Newberry and the registrant (filed as Exhibit
10.42 to the registrants annual report on Form 10-K for the year ended December 31, 2008)10.10*
    
    Severance Agreement, dated October 22, 2009 by and between John Kelley and the registrant (filed as Exhibit 10.1 to
the registrants quarterly report on Form 10-Q for the quarter ended September 30, 2009)10.11*
    
    Form of Amended and Restated Management Severance Agreement by and between the registrant and each of Clive Meanwell
and Glenn Sblendorio (filed as Exhibit 10.24 to the registrants annual report on Form 10-K for the year ended
December 31, 2008)10.12*
    
    Form of Amended and Restated Management Severance Agreement by and between the registrant and each of Paul Antinori,
William OConnor and Leslie Rohrbacker (filed as Exhibit 10.25 to the registrants annual report on Form 10-K for
the year ended December 31, 2008)10.13*
    
    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)10.14*
    
    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)10.15*
    
    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))




---



##### Table of Contents



Number
    
    Description10.16*
    
    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)10.17*
    
    2000 Employee Stock Purchase Plan, as amended (filed as Exhibit 10.1 of the registrants registration statement on
Form S-8, filed on September 1, 2009)10.18*
    
    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)10.19
    
    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))10.20*
    
    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)10.21*
    
    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)10.22*
    
    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)10.23*
    
    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))10.24*
    
    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)10.25*
    
    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)10.26*
    
    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))10.27*
    
    Form of stock option agreement under 2009 Equity Inducement Plan (filed as Exhibit 10.2 to the registrants
quarterly report on Form 10-Q for the quarter ended March 31, 2009)10.28*
    
    Form of stock option agreement for employees in Italy under 2009 Equity Inducement Plan (filed as Exhibit 10.3 to
the registrants quarterly report on Form 10-Q for the quarter ended March 31, 2009)10.29*
    
    Form of restricted stock agreement under 2009 Equity Inducement Plan (filed as Exhibit 10.4 to the registrants
quarterly report on Form 10-Q for the quarter ended March 31, 2009)10.30*
    
    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)10.31*
    
    Summary of Performance Measures under the registrants Annual Cash Bonus Plan (filed as Exhibit 10.1 to the
registrants quarterly report on Form 10-Q for the quarter ended June 30, 2009)10.32
    
    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))10.33
    
    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))10.34
    
    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)10.35
    
    Amendment No. 1 to License Agreement dated April 25, 2006 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)10.36
    
    Amendment No. 2 to License Agreement, dated October 22, 2008 by and between the registrant and AstraZeneca AB (filed
as Exhibit 10.38 to the registrants annual report on Form 10-K for the year ended December 31, 2008)10.37
    
    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)10.38
    
    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)




---



##### 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
    
    Contingent Payment Rights Agreement dated February 25, 2009 between the registrant and American Stock Transfer &
Trust Company (filed as Exhibit 99.1 of the registrants current report on Form 8-K, filed on March 2, 2009)10.41
    
    License Agreement dated as of December 18, 2009 between the registrant and Pfizer Inc.10.42
    
    Consent and Release Agreement dated as of December 18, 2009 between the registrant and Washington Cardiovascular
Associates, LLC, HDLT LLC, H. Bryan Brewer, Silvia Santamarina-Fojo and Michael Matin10.43
    
    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))10.44
    
    Amended and Restated Distribution Agreement dated February 28, 2007 between the registrant and Integrated
Commercialization Solutions, Inc. (filed as Exhibit 10.2 to the registrants quarterly report on Form 10-Q for the
quarter ended June 30, 2009)10.45
    
    Amendment No. 1 to Amended and Restated Distribution Agreement dated November 7, 2007 between the registrant and
Integrated Commercialization Solutions, Inc. (filed as Exhibit 10.3 to the registrants quarterly report on Form
10-Q for the quarter ended June 30, 2009)10.46
    
    Amendment No. 2 to Amended and Restated Distribution Agreement dated October 1, 2008 between the registrant and
Integrated Commercialization Solutions, Inc. (filed as Exhibit 10.4 to the registrants quarterly report on Form
10-Q for the quarter ended June 30, 2009)10.47
    
    Amendment No 3 to the Amended and Restated Distribution Agreement dated August 12, 2009 between the registrant and
Integrated Commercialization Solutions, Inc. (filed as Exhibit 10.2 to the registrants quarterly report on Form
10-Q for the quarter ended September 30, 2009)21
    
    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.