CELGENE CORP /DE/ (Form: 10-K, Received: 03/15/2006 17:14:47)

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K

Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (Fee Required) For the fiscal year ended December 31, 2005

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (No Fee Required) For the transition period from ___________ to

Commission File No. 0-16132

CELGENE CORPORATION
(Exact name of registrant as specified in its charter)

              Delaware                                  22-2711928
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(State or other jurisdiction of             (I.R.S. Employer Identification)
 incorporation or organization)

         86 Morris Avenue
         Summit, New Jersey                                07901
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(Address of principal executive offices)                 (Zip Code)

(908) 673-9000
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $.01 per share
(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes X No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes No X

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes X No

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in rule 12b-2 of the Exchange Act.

Large accelerated filer X Accelerated filer Non-accelerated filer

Indicate by check mark whether the registrant is a shell company (as defined in 12b-2 of the Act).

Yes No X

The aggregate market value of voting stock held by non-affiliates of the registrant on June 30, 2005, the last business day of the registrant's most recently completed second quarter, was $6,826,916,901 based on the last reported sale price of the registrant's Common Stock on the NASDAQ National Market on that date. There were 344,969,790 shares of Common Stock outstanding as of March 3, 2006, reflecting the two-for-one Common Stock split effective February 17, 2006.

DOCUMENTS INCORPORATED BY REFERENCE

The registrant intends to file a definitive proxy statement pursuant to Regulation 14A within 120 days of the end of the fiscal year ended December 31, 2005. The proxy statement is incorporated herein by reference into the following parts of the Form 10K:

Part III, Item 10, Directors and Executive Officers of the Registrant;
Part III, Item 11, Executive Compensation;
Part III, Item 12, Security Ownership of Certain Beneficial Owners and

Management and Related Stockholder Matters;

Part III, Item 13, Certain Relationships and Related Transactions;
Part III, Item 14, Principal Accountant Fees and Services.

CELGENE CORPORATION
ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

Item No. Page
------- ----

Part I

1. Business 1
1a. Risk Factors 17
1b. Unresolved Staff Comments 29
2. Properties 29
3. Legal Proceedings 30
4. Submission of Matters to a Vote of
Security Holders 30
Part II

5. Market for Registrant's Common Equity
and Related Stockholder Matters 30
6. Selected Consolidated Financial Data 31
7. Management's Discussion and Analysis
of Financial Condition and Results of Operations 33
7a. Quantitative and Qualitative Disclosures About Market Risk 48
8. Financial Statements and Supplementary Data 49
9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 50
9a. Controls and Procedures 50
9b. Other Information 54

Part III

10. Directors and Executive Officers of the
Registrant 54
11. Executive Compensation 54
12. Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters 54
13. Certain Relationships and Related
Transactions 54
14. Principal Accountant Fees and Services 54

Part IV

15. Exhibits and Financial Statement Schedules 54
Signatures 61

PART I

ITEM 1. BUSINESS

We are a multinational integrated biopharmaceutical company, incorporated in 1986 as a Delaware corporation. We are primarily engaged in the discovery, development and commercialization of innovative therapies designed to treat cancer and immune-inflammatory-related diseases. Over the last several years, total revenues have steadily grown led by sales of THALOMID(R) (thalidomide), our lead product, which is currently marketed for the treatment of erythema nodosum leprosum, or ENL, but more widely used off-label for treating multiple myeloma and other cancers. The sales growth of THALOMID(R) has enabled us to make substantial investments in research and development, which has advanced our broad portfolio of drug candidates in our product pipeline, including a pipeline of IMiDs(R) compounds, which are a class of compounds proprietary to us and having certain immunomodulatory and other biologically important properties.

We had total revenue of $536.9 million and net income of $63.7 million for the year ended December 31, 2005. We had an accumulated deficit of $170.8 million at December 31, 2005 and have since our inception in 1986 financed our working capital requirements primarily through product sales, private and public sales of our debt and equity securities, income earned on the investment of the proceeds from the sale of such securities and revenues from research contracts and license payments.

On December 27, 2005, the U.S. Food and Drug Administration, or the FDA, approved REVLIMID(R) (lenalidomide), our most clinically advanced IMiDs(R) compound, for the treatment of patients with transfusion-dependent anemia due to low-or intermediate-1- risk myelodysplastic syndromes, or MDS, associated with a deletion 5q cytogenetic abnormality with or without additional cytogenetic abnormalities. REVLIMID(R) will be distributed through contracted pharmacies under the RevAssist(sm) program, which is a proprietary risk-management distribution program tailored specifically to help ensure the safe use of REVLIMID(R). We believe that REVLIMID(R) has significant commercial sales potential as a result of the clinical data presented at major medical meetings and the clinical findings reported in major peer-reviewed medical publications. We are executing our REVLIMID(R) launch strategy in the United States by leveraging our U.S. hematological-oncology sales force.

We are dedicated to innovative research and development designed to bring new therapies to market. We are involved in research in several scientific areas that may deliver proprietary next-generation therapies, such as cellular signaling biology, immunomodulation and placental stem cell research. The drugs we develop are designed to treat life-threatening diseases or chronic debilitating conditions where patients are poorly served by current therapies. Building on our growing knowledge of the biology underlying hematological and solid tumor cancers, we are investing in a range of innovative therapeutic programs that are investigating ways to attack the disease source through multiple mechanisms of action and intracellular pathways.

ACQUISITIONS

On August 31, 2000, we acquired Signal Pharmaceuticals, Inc., now Celgene Research San Diego, a privately held San Diego-based biopharmaceutical company focused on the discovery and development of drugs that regulate genes and proteins associated with diseases. Celgene Research San Diego now operates as a wholly owned subsidiary of Celgene Corporation.

On December 31, 2002, we acquired Anthrogenesis Corp., now Celgene Cellular Therapeutics, a privately held New Jersey-based biotherapeutics company and cord blood banking business, which is developing the technology for the recovery of stem cells from human placental tissues following the completion of full-term, successful pregnancies. Celgene Cellular Therapeutics, or CCT, now operates as a wholly owned subsidiary of Celgene Corporation.

On October 21, 2004, we acquired all of the outstanding shares of Penn T Limited, the UK-based supplier of THALOMID(R). This acquisition expanded our corporate capabilities and enabled us to control manufacturing for THALOMID(R) worldwide. Through manufacturing contracts acquired in this purchase, we also increased our participation in the potential growth of THALOMID(R) revenues in key international markets. Penn T Limited, or Penn T, now operates as Celgene U.K. Manufacturing II, or CUK II.

COMMERCIAL STAGE PROGRAMS

Our commercial programs include pharmaceutical sales of REVLIMID(R), THALOMID(R), and ALKERAN(R) and sales of FOCALIN(TM) to Novartis Pharma AG, or Novartis; a licensing agreement with Novartis which entitles us to royalties on FOCALIN XR(TM) and the entire RITALIN(R) family of drugs; a licensing and product supply agreement with Pharmion Corporation for its sales of thalidomide; and sales of bio-therapeutic products and services through our Cellular Therapeutics subsidiary.

REVLIMID(R) (LENALIDOMIDE): REVLIMID(R) is an oral immunomodulatory drug recently granted approval by the FDA for the treatment of patients with transfusion-dependent anemia due to low- or intermediate-1-risk myelodysplastic syndromes associated with a deletion 5q cytogenetic abnormality with or without additional cytogenetic abnormalities, or MDS, with the 5q chromosomal deletion. REVLIMID(R) is being distributed through contracted pharmacies under the RevAssist(sm) program, which is a proprietary risk-management distribution program tailored specifically for REVLIMID(R). The FDA based its decision to grant marketing approval on data from the open label Phase II trial (MDS-003) that evaluated REVLIMID(R) in transfusion-dependent patients with myelodysplastic syndromes with deletion 5q chromosomal abnormality.

We have filed a Supplemental New Drug Application, or sNDA, with the FDA seeking approval to market REVLIMID(R) as a treatment for relapsed or refractory multiple myeloma. The FDA has granted this sNDA Priority Review designation and has set a Prescription Drug User Fee Act, or PDUFA date of June 30, 2006. Other efforts directed toward gaining additional regulatory approval of REVLIMID(R) include the acceptance of our Marketing Authorization Application, or MAA, on October 26, 2005 by the European Medicines Agency, or EMEA, for the treatment of patients with MDS with the 5q chromosomal deletion and plans to submit an MAA to the EMEA as a treatment in relapsed or refractory multiple myeloma based on clinical data from two Phase III Special Protocol Assessment, or SPA, trials (MM-009 and MM-010), in the first quarter of 2006. We also submitted an MAA for REVLIMID(R) to the Swiss Intercantonal Medicines Control Office seeking approval to market REVLIMID(R) as a treatment for patients with MDS with the 5q chromosomal deletion. Plans are being developed to submit REVLIMID(R) for regulatory approval in other international markets.

REVLIMID(R) continues to be investigated in clinical trials as a potential treatment for blood cancers that affect more than 700,000 patients worldwide. The most advanced clinical studies evaluating REVLIMID(R) are Phase III trials - in the United States (MM-009) and in Europe (MM-010) for previously treated multiple myeloma patients, and Phase III trials in Europe (MDS-004) in MDS. There are more than 50 clinical trials currently evaluating REVLIMID(R) either alone or in combination with one or more other therapies in the treatment of a broad range of debilitating diseases, including multiple myeloma,

myelodysplastic syndromes, chronic lymphocytic leukemia, non-Hodgkin's lymphoma, amyloidosis, myeloid fibrosis and other cancers. The Southwest Oncology Group, the Eastern Cooperative Oncology Group and the Cancer and Leukemia Group B, three of the largest adult cancer clinical trial organizations in the world, are evaluating REVLIMID(R) for large clinical studies in randomized controlled Phase III trials designed to evaluate the safety and efficacy of REVLIMID(R) in multiple myeloma.

THALOMID(R) (THALIDOMIDE): THALOMID(R), which had net product sales totaling $387.8 million, $308.6 million and $223.7 million for the years ended December 31, 2005, 2004 and 2003, respectively, was approved by the FDA in July 1998 for the treatment of acute cutaneous manifestations of moderate to severe erythema nodosum leprosum, or ENL, an inflammatory complication of leprosy. Although leprosy is relatively rare in the United States, the disease afflicts millions worldwide. ENL occurs in about 30% of leprosy patients and is characterized by skin lesions, acute inflammation, fever and anorexia. While approved for the treatment of ENL, THALOMID(R) is widely prescribed off-label for treating multiple myeloma and other cancers. The FDA is currently reviewing our sNDA for THALOMID(R) in multiple myeloma and has set a Prescription Drug User Fee Act, or PDUFA, date of May 25, 2006.

Working with the FDA, we developed S.T.E.P.S.(R), or "SYSTEM FOR THALIDOMIDE EDUCATION AND PRESCRIBING SAFETY," which is a proprietary strategic comprehensive education and risk-management distribution program with the objective of providing for the safe and appropriate use of THALOMID(R).

On January 9, 2006, we announced that an external Independent Data Monitoring Committee, or IDMC, analysis of a Phase III pivotal trial (MM-003), which is a multi-centered, randomized, placebo-controlled Phase III study comparing thalidomide plus dexamethasone versus dexamethasone alone as induction therapy for previously untreated multiple myeloma, determined that the trial met the pre-established efficacy-stopping rule for the primary endpoint of time to disease progression. The IDMC found a statistically significant improvement in time to disease progression in patients receiving thalidomide plus dexamethasone versus patients receiving dexamethasone alone. As a result of these findings, the trials were unblinded to give patients currently not on THALOMID(R) the opportunity to add THALOMID(R) to their dexamethasone regimen. Multiple myeloma is an incurable disease, and it is the second most common blood cancer, affecting approximately 50,000 people in the United States. About 14,000 new cases of multiple myeloma are diagnosed each year and there are an estimated 12,000 deaths per year in the United States.

ALKERAN(R): In March 2003, we entered into a supply and distribution agreement with GlaxoSmithKline, or GSK, to distribute, promote and sell ALKERAN(R) (melphalan) in all dosage forms in the United States under the Celgene label. ALKERAN(R) is approved by the FDA for the palliative treatment of multiple myeloma and of carcinoma of the ovary. ALKERAN(R) use in combination with other therapies for the treatment of hematological diseases continues to grow, driven by clinical data reported at major medical conferences around the world. Under the terms of the agreement, we purchase ALKERAN(R) tablets and ALKERAN(R) for injection from GSK and distribute the products in the United States under the Celgene label. The agreement has been extended through March 31, 2009.

RITALIN(R) FAMILY OF DRUGS: We developed FOCALIN(TM), which is formulated by isolating the active d-isomer of methylphenidate using advanced single-isomer chemistry technology. Isomers are any of two or more chemical substances that are composed of the same elements in the same proportions but can differ in properties because of differences in the arrangement of atoms. FOCALIN(TM) provides favorable

tolerability and dosing flexibility at half the dose of RITALIN(R). In April 2000, we licensed to Novartis the worldwide rights (excluding Canada) to FOCALIN(TM) and FOCALIN XR(TM), the extended release version, in exchange for milestone payments, a FOCALIN(TM) product supply agreement (whereby we supply FOCALIN(TM) exclusively to Novartis) and royalties on FOCALIN XR(TM) and the entire RITALIN(R) family of drugs including RITALIN(R), RITALIN LA(R) and RITALIN SR(R). We have retained the exclusive commercial rights to FOCALIN(TM) and FOCALIN XR(TM) for oncology-related disorders, such as chronic fatigue associated with chemotherapy. On November 15, 2001, FOCALIN(TM) was approved by the FDA for the treatment of attention deficit hyperactivity disorder, or ADHD, in children and adolescents. On May 27, 2005, FOCALIN XR(TM) was approved by the FDA for the treatment of ADHD in adults, adolescents and children.

PRECLINICAL-AND CLINICAL-STAGE PIPELINE:

Our preclinical and clinical-stage pipeline of new drug candidates, in addition to our cell therapies, is highlighted by multiple classes of small molecule, orally administered therapeutic agents designed to selectively regulate disease-associated genes and proteins. The drug candidates in our pipeline are at various stages of preclinical and clinical development. Successful results in preclinical or Phase I/II clinical studies may not be an accurate predictor of the ultimate safety or effectiveness of a drug candidate.

o PHASE I CLINICAL TRIALS If the FDA allows a request to initiate clinical investigations of a new drug candidate to become effective, Phase I human clinical trials can begin. These tests usually involve between 20 and 80 healthy volunteers or patients. The tests study a drug's safety profile, and may include preliminary determination of a drug candidate's safe dosage range. The Phase I clinical studies also determine how a drug is absorbed, distributed, metabolized and excreted by the body, and the duration of its action.

o PHASE II CLINICAL TRIALS In Phase II clinical trials, controlled studies are conducted on a limited number of patients with the targeted disease. An initial evaluation of the drug's effectiveness on patients is performed and additional information on the drug's safety and dosage range is obtained.

o PHASE III CLINICAL TRIALS This phase typically includes controlled multi-center trials and involves a larger target patient population to ensure that study results are statistically significant. During the Phase III clinical trials, physicians monitor patients to determine efficacy and to gather further information on safety.

IMiDs(R): IMiDs(R) compounds are proprietary novel small molecule, orally available compounds that modulate the immune system and other biologically important targets through multiple mechanisms of action. We have advanced four IMiDs(R) compounds into development: REVLIMID(R) (CC-5013), CC-4047 and CC-11006 are being evaluated in human clinical trials and CC-10015 is advancing toward potential clinical testing.

Our IMiDs(R) compounds are covered by an extensive and comprehensive intellectual property estate of U.S. and foreign-issued patents and pending patent applications including composition-of-matter, use and other patents and patent applications.

CC-4047: is one of the most potent IMiDs(R) compounds that we are developing. We are planning Phase II trials to determine CC-4047 potential safety and efficacy as an orally available treatment for sickle cell

anemia, myelofibrosis and prostate cancer. CC-4047 and REVLIMID(R) have different activity profiles which may lead to their evaluation in different diseases or stages of disease.

CC-11006: is a molecule we have identified as a potential treatment for hematological malignances and chronic inflammatory diseases, many of which have unmet medical needs. CC-11006 entered Phase I human clinical trials in 2004. Following the completion of additional preclinical and Phase I trials, we will evaluate our development options.

ANTI-INFLAMMATORY: Our anti-inflammatory program potentially provides an oral approach for treating chronic inflammatory diseases. CC-10004 - our lead investigational drug in this class of anti-inflammatory compounds - a novel orally available small molecule - that inhibits the production of multiple proinflammatory mediators including PDE-4, TNF-alpha, interleukin-2, interferon-gamma, leukotrienes, and nitric oxide synthase. CC-10004 is being studied in Phase II proof of principle clinical trials for chronic inflammatory diseases. Based on promising results from our psoriasis proof-of-principle studies, Celgene is advancing the clinical development of CC-10004 in moderate to severe plaque-type psoriasis. Early stage studies in healthy human volunteers found CC-10004 to be safe and well tolerated with good bioavailability and pharmacokenetics.

BENZOPYRANS: CC-8490, our lead investigational compound in this category, is in Phase I clinical trials for glioblastoma, a form of brain cancer. Based on findings from this study, we will evaluate whether to advance a second compound, CC-113, which has broad anti-tumor activity and which is currently in pre-clinical development.

KINASE INHIBITORS: At Celgene Research San Diego, we have multiple target and drug discovery projects underway in the field of kinase inhibition. Kinases are molecules used by cells to regulate gene expression and protein production. Our kinase inhibitor platform includes inhibitors of the c-Jun N-terminal kinase, or JNK, pathway and inhibitors of the NFkB pathway. Both pathways have been associated with the regulation of a number of important disease indications. In the case of JNK, CC-401 our lead JNK inhibitor, successfully completed a Phase I trial in healthy volunteers. We are currently evaluating the clinical potential of CC-401 in acute myelogenous leukemia, a blood cancer, in a phase II clinical trial. Two other JNK compounds, CC-359 and CC-930 are in pre-clinical development advancing toward clinical testing.

LIGASE INHIBITORS: In addition, at Celgene Research San Diego, we are conducting extensive discovery research in the field of ligases, intracellular protein complexes that control the function and degradation of a wide variety of proteins within cells. We are identifying drug targets and compounds that regulate ligase pathways with the goal of controlling cellular proliferation and survival. Such compounds have the potential to be an important new class of anti-cancer and anti-inflammatory therpeutics.

STEM CELLS AND BIOMATERIALS: Stem cell based therapies offer the potential to provide disease-modifying outcomes for serious diseases which today lack adequate therapy. At CCT, we are researching stem cells derived from the human placenta and umbilical cord. Our studies of placental stem cells over the past two years have uncovered biological activities with therapeutic promise. In December 2004, we filed an investigational new drug application, or IND, with the FDA for our initial stem cell trial in sickle cell anemia. In sickle cell anemia, our research has shown that our IMiDs(R) compounds can interact with stem cells and modulate them in such a way that they differentiate into erythrocytes, or red blood cells. We have also discovered a method of expanding the stem cell population in cord blood, to help generate the increased number and type of stem cells that may be necessary for treating patients with cancer and other indications in the future.

CCT has developed proprietary methods for producing placental biomaterials for organ and tissue repair that include products such as BIOVANCE(TM). In addition, CCT has developed proprietary technology for collecting, processing and storing placental stem cells with potentially broad therapeutic applications in cancer, autoimmune, cardiovascular, neurological and other diseases.

CELGENE PRODUCT OVERVIEW

The commercial status of REVLIMID(R), THALOMID(R), ALKERAN(R), Ritalin(R) / FOCALIN(TM) and the target disease indications and the development of our leading drug candidates are outlined in the following table:

ALKERAN(R) Multiple Myeloma & Ovarian GlaxoSmithKline Marketed.
Cancer

RITALIN(R) /
FOCALIN(TM)

Focalin(TM) ADHD Novartis Marketed.
Cancer Fatigue Phase II trials completed.

Focalin XR(TM) ADHD Novartis Marketed.

Ritalin LA(R) ADHD Novartis Marketed.

IMiDs COMPOUNDS:

REVLIMID(R) Myelodysplastic Marketed in del 5q MDS.
Syndromes Phase III trial in del 5q MDS
on-going.
Phase II trials in non-del 5q MDS
planned.

Multiple Myeloma sNDA pending.
Phase II completed and Pivotal
Phase III SPA trials ongoing.

Southwest Oncology Group
("SWOG") Major Phase III trial.
Eastern Cooperative
Oncology Group ("ECOG") Major Phase III trial.
Cancer & Leukemia Group B
("CALGB") Major Phase III trial.
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DISEASE
PRODUCT INDICATION COLLABORATOR STATUS
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REVLIMID(R) Chronic Lymphocytic Leukemia Phase II trials ongoing and
Phase III planned.
Non-Hodgkins Lymphoma Phase II trials ongoing and
Phase III planned.
Solid Tumor Cancers Phase I/II trials ongoing and
expanded. Additional trials
planned.
Cutaneous T Cell Lymphoma Phase II trials ongoing and
Phase III planned.
Amyloidosis Phase II trials ongoing and
Phase III planned.

CC-4047 Prostate Cancer Phase II trials ongoing.
Myelofibrosis Phase II trial planned.
Sickle Cell Anemia Phase I/II trial planned.

CC-11006 Hematological Malignances Pre-clinical studies and Phase I
and Inflammatory Diseases trial ongoing.

CC-10015 Inflammatory Diseases Pre-clinical studies ongoing.

ANTI-INFLAMMATORY:

CC-10004 Psoriasis Additional Phase II trial
planned.

CC-11050 Inflammatory Diseases Preclinical studies ongoing.

BENZOPYRANS:

CC-8490 Cancer National Cancer Phase I/II trial ongoing.
Institute ("NCI")

CC-113 Cancer Preclinical studies ongoing.

KINASE INHIBITORS:

JNK 401 Acute Myelogenous Leukemia Phase II trials ongoing.

JNK 359 Ischemia / Reperfusion Preclinical studies ongoing.

JNK 930 Fibrotic Diseases Preclinical studies ongoing.

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                                  DISEASE
           PRODUCT               INDICATION                       COLLABORATOR                       STATUS
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LIGASE INHIBITORS:

   E2 Ligase Inhibitors        Cancer                                                   Preclinical Studies ongoing.

STEM CELL AND TISSUE
PRODUCTS:

   Lifebank USA(TM)            Stem Cell Banking                                        Marketed.

   Cord Blood Cells            Sickle Cell Anemia                                       Phase I trials initiating.

   BIOVANCE(TM)                Wound Covering                                           Regulatory strategy being
                                                                                        finalized.

   Stem Cell Transplants(R)    Cancer                                                   Transplant units available through
                                                                                        national registry.

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PATENTS AND PROPRIETARY TECHNOLOGY

Patents and other proprietary rights are important to our business. It is our policy to seek patent protection for our inventions, and also to rely upon trade secrets, know-how, continuing technological innovations and licensing opportunities to develop and maintain our competitive position.

We own or have exclusively licensed more than 128 U.S. patents and 100 additional U.S. patent applications. Our U.S. patents include patents for a method of delivering a teratogenic drug to a patient while preventing fetal exposure as well as patents for delivering drugs to patients while restricting access to the drug to those for whom the drug is contra-indicated. We also have patent applications pending which are directed to these inventions, and are seeking worldwide protection. While we have a policy to seek worldwide patent protection for our inventions, we have foreign patent rights corresponding to most but not all of our U.S. patents. Further, although THALOMID(R) is approved for use associated with ENL, we do not have patent protection relating to the use of THALOMID(R) to treat ENL.

Our research at Celgene Research San Diego has led us to seek patent protection for molecular targets and drug discovery technologies, as well as therapeutic and diagnostic products and processes. More specifically, proprietary technology has been developed for use in molecular target discovery, the identification of regulatory pathways in cells, assay design and the discovery and development of pharmaceutical product candidates. As of December 2005, included in those inventions described above, our San Diego subsidiary owned, in whole or in part, over 32 issued U.S. patents and approximately 47 U.S. patent applications. An increasing percentage of our San Diego subsidiary's recent patent applications have been related to potential product candidates or compounds. It also holds licenses to U.S. patents and U.S. patent applications, some of which are licensed exclusively or sub-licensed to third parties in connection with sponsored or collaborative research relationships.

CCT, our cellular therapeutics subsidiary (legally known as Anthrogenesis Corp.), seeks patent protection for the collection, processing and uses of mammalian placental tissue and placental stem cells, as well as cells and biomaterials derived from the placenta. As of December 2005, CCT owned, in whole or in part, more than 28 U.S. patent applications including pending provisional applications, and holds licenses to

U.S. patents and U.S. patent applications, including certain patents and patent applications related to cord blood collection and storage.

In August 2001, we entered into an agreement, termed the New Thalidomide Agreement, with EntreMed, Inc., Children's Medical Center Corporation, or CMCC, and Bioventure Investments, KFT relating to patents and patent applications owned by CMCC, which agreement superceded several agreements already in place between CMCC, EntreMed and us. Pursuant to the New Thalidomide Agreement, CMCC directly granted to us an exclusive worldwide, royalty-bearing license under the relevant patents and patent applications relating to thalidomide. Several U.S. patents have been issued to CMCC in this patent family and certain of these patents expire in 2014. Corresponding foreign patent applications and additional U.S. patent applications are still pending.

In addition to the New Thalidomide Agreement, we entered into an agreement, entitled the New Analog Agreement, with CMCC and EntreMed in December 2002, pursuant to which we have been granted an exclusive worldwide, royalty-bearing license to certain CMCC patents and patent applications relating to thalidomide analogs, or the New Analog Agreement. The New Analog Agreement was executed in connection with the settlement of certain pending litigation by and among us, EntreMed and the U.S. Patent and Trademark Office relating to the allowance of certain CMCC patent applications covering thalidomide analogs. These patent applications had been licensed exclusively to EntreMed in the field of thalidomide analogs. In conjunction with the settlement of these suits, we acquired equity securities in EntreMed, and EntreMed terminated its license agreements with CMCC relating to thalidomide analogs. In turn, under the New Analog Agreement, CMCC exclusively licensed to Celgene these patents and patent applications, which relate to analogs, metabolites, precursors and hydrolysis products of thalidomide, and stereoisomers thereof. Under the New Analog Agreement, we are obligated to comply with certain milestones and royalties, including those for REVLIMID(R) approval and sales.

The New Analog Agreement grants us control over the prosecution and maintenance of the licensed thalidomide analog patent rights. The New Analog Agreement also grants us an option to inventions in the field of thalidomide analogs that may be developed at CMCC in the laboratory of Dr. Robert D'Amato, pursuant to the terms and conditions of a separate Sponsored Research Agreement negotiated between CMCC and us.

Under an agreement with The Rockefeller University, pursuant to which we have made a lump sum payment and issued stock options to The Rockefeller University and certain inventors, we have obtained certain exclusive rights and licenses to manufacture, have manufactured, use, offer for sale and sell products that are based on compounds which were identified in research carried out by The Rockefeller University and us that have activity associated with TNF(alpha). In particular, The Rockefeller University identified a method of using thalidomide and certain thalidomide-like compounds to treat certain symptoms associated with abnormal concentrations of TNF(alpha), including those manifested in septic shock, cachexia and HIV infection. In 1995, The Rockefeller University was issued a U.S. patent which claims such methods. This U.S. patent expires in 2012 and is included in the patent rights exclusively licensed to us under the agreement with The Rockefeller University. The Rockefeller University did not seek corresponding patents in any other country.

Our success will depend, in part, on our ability to obtain and enforce patents, protect trade secrets, obtain licenses to technology owned by third parties where necessary and conduct our business without infringing the proprietary rights of others. The patent positions of pharmaceutical and biotechnology firms, including ours, can be uncertain and involve complex legal and factual questions. In addition, the coverage sought in a patent application can be significantly reduced before the patent is issued. Consequently, we do not know whether any of our owned or licensed pending patent applications will result in the issuance of patents or, if any patents are issued, whether they will be dominated by third-

party patent rights, whether they will provide significant proprietary protection or commercial advantage or whether they will be circumvented or infringed upon by others.

Consequently, we do not know whether any of our owned or licensed pending patent applications, which have not already been allowed, will result in the issuance of patents or, if any patents are issued, whether they will be dominated by third-party patent rights, whether they will provide significant proprietary protection or commercial advantage or whether they will be circumvented or infringed by others. Finally, we cannot guarantee that our patents or pending applications will not be involved in, or be defeated as a result of, any interference proceedings before the U.S. Patent and Trademark Office.

With respect to patents and patent applications we have licensed-in, there can be no assurance that additional patents will be issued to any of the third parties from whom we have licensed patent rights, either with respect to thalidomide or thalidomide analogs, or that, if any new patents are issued, such patents will not be dominated by third-party patent rights or provide us with significant proprietary protection or commercial advantage. Moreover, there can be no assurance that any of the existing licensed patents will provide us with proprietary protection or commercial advantage. Nor can we guarantee that these licensed patents will not be either infringed, invalidated or circumvented by others, or that the relevant agreements will not be terminated. Any termination of the licenses granted to Celgene by CMCC could have a material adverse effect on our business, financial condition and results of operations.

Since patent applications filed in the United States on or before November 28, 2000 are maintained in secrecy until patents issue, and since publication of discoveries in the scientific or patent literature often lag behind actual discoveries, we cannot be certain that we, or our licensors, were the first to make the inventions covered by each of the issued patents or pending patent applications or that we, or our licensors, were the first to file patent applications for such inventions. In the event a third party has also filed a patent for any of our inventions, we, or our licensors, may have to participate in interference proceedings before the U.S. Patent and Trademark Office to determine priority of invention, which could result in the loss of a U.S. patent or loss of any opportunity to secure U.S. patent protection for the invention. Even if the eventual outcome is favorable to us, such interference proceedings could result in substantial cost to us.

We are aware of U.S. patents that have been issued to third parties claiming subject matter relating to the NFeB pathway, which could overlap with technology claimed in some of our owned or licensed NFeB patents or patent applications. We believe that one or more interference proceedings have been initiated by the U.S. Patent and Trademark Office to determine priority of invention for this subject matter. While we cannot predict the outcome of any such proceedings, in the event we do not prevail, we believe that we can use alternative methods for our NFeB drug discovery program for which we have issued U.S. patents that are not claimed by the subject matter of the third-party patents. We are also aware of third-party U.S patents that relate to the use of certain TNF(alpha) inhibitors to treat inflammation or conditions such as asthma.

We may in the future have to prove that we are not infringing patents or we may be required to obtain licenses to such patents. However, we do not know whether such licenses will be available on commercially reasonable terms, or at all. Prosecution of patent applications and litigation to establish the validity and scope of patents, to assert patent infringement claims against others and to defend against patent infringement claims by others can be expensive and time-consuming. There can be no assurance that, in the event that claims of any of our owned or licensed patents are challenged by one or more third parties, any court or patent authority ruling on such challenge will determine that such patent claims are valid and enforceable. An adverse outcome in such litigation could cause us to lose exclusivity relating to the subject matter delineated by such patent claims and may have a material adverse effect on our

business. If a third party is found to have rights covering products or processes used by us, we could be forced to cease using the products or processes covered by the disputed rights, subject to significant liabilities to such third party and/or be required to license technologies from such third party. Also, different countries have different procedures for obtaining patents, and patents issued by different countries provide different degrees of protection against the use of a patented invention by others. There can be no assurance, therefore, that the issuance to us in one country of a patent covering an invention will be followed by the issuance in other countries of patents covering the same invention or that any judicial interpretation of the validity, enforceability or scope of the claims in a patent issued in one country will be similar to the judicial interpretation given to a corresponding patent issued in another country. Competitors may choose to file oppositions to patent applications, which have been deemed allowable by foreign patent examiners. Furthermore, even if our owned or licensed patents are determined to be valid and enforceable, there can be no assurance that competitors will not be able to design around such patents and compete with us using the resulting alternative technology. Additionally, for these same reasons, we cannot be sure that patents of a broader scope than ours may be issued and thereby create freedom to operate issues. If this occurs we may need to reevaluate pursuing such technology, which is dominated by others' patent rights, or alternatively, seek a license to practice our own invention, whether or not patented.

We also rely upon unpatented, proprietary and trade secret technology that we seek to protect, in part, by confidentiality agreements with our collaborative partners, employees, consultants, outside scientific collaborators, sponsored researchers and other advisors. There can be no assurance that these agreements provide meaningful protection or that they will not be breached, that we would have adequate remedies for any such breach or that our trade secrets, proprietary know-how and technological advances will not otherwise become known to others. In addition, there can be no assurance that, despite precautions taken by us, others have not and will not obtain access to our proprietary technology or that such technology will not be found to be non-proprietary or not a trade secret.

GOVERNMENTAL REGULATION

Regulation by governmental authorities in the United States and other countries is a significant factor in the manufacture and marketing of pharmaceuticals and in our ongoing research and development activities. Most, if not all, of our therapeutic products require regulatory approval by governmental agencies prior to commercialization. In particular, human therapeutic products are subject to rigorous preclinical testing and clinical trials and other pre-marketing approval requirements by the FDA and regulatory authorities in other countries. In the United States, various federal and in some cases state statutes and regulations also govern or impact upon the manufacturing, testing for safety and effectiveness, labeling, storage, record-keeping and marketing of such products. The lengthy process of seeking required approvals, and the continuing need for compliance with applicable statutes and regulations, require the expenditure of substantial resources. Regulatory approval, when and if obtained, may be limited in scope which may significantly limit the indicated uses for which a product may be marketed. Further, approved drugs, as well as their manufacturers, are subject to ongoing review and discovery of previously unknown problems with such products or the manufacturing or quality control procedures used in their production may result in restrictions on their manufacture, sale or use or in their withdrawal from the market. Any failure by us, our suppliers of manufactured drug product, collaborators or licensees to obtain or maintain, or any delay in obtaining, regulatory approvals could adversely affect the marketing of our products and our ability to receive product revenue, license revenue or profit sharing payments.

The activities required before a pharmaceutical may be marketed in the United States begin with preclinical testing not involving human subjects. Preclinical tests include laboratory evaluation of a product candidate's chemistry and its biological activities and the conduct of animal studies to assess the

potential safety and efficacy of a product candidate and its formulations. The results of these studies must be submitted to the FDA as part of an investigational new drug application, or IND, which must be reviewed by the FDA primarily for safety considerations before proposed clinical trials in humans can begin.

Typically, clinical trials involve a three-phase process. In Phase I, clinical trials are generally conducted with a small number of individuals, usually healthy human volunteers, to determine the early safety and tolerability profile and the pattern of drug distribution and metabolism within the body. If the Phase I trials are satisfactory, Phase II clinical trials are conducted with groups of patients in order to determine preliminary efficacy, dosing regimes and expanded evidence of safety. In Phase III, large-scale, multi-center, adequately powered and typically placebo-controlled comparative clinical trials are conducted with patients in an effort to provide enough data for the statistical proof of efficacy and safety required by the FDA and others for marketing approval. In some limited circumstances, Phase III clinical trials may be modified to allow the evaluation of safety and efficacy based upon (i) comparisons with approved drugs, (ii) comparison with the historical progression of the disease in untreated patients, or (iii) the use of surrogate markers, together with a commitment for post-approval studies. In some cases, as a condition for New Drug Application, or NDA, approval, further studies (Phase IV) are required to provide additional information concerning the drug. The FDA requires monitoring of all aspects of clinical trials, and reports of all adverse events must be made to the agency before drug approval. After drug approval, the Company has ongoing reporting obligations concerning adverse reactions associated with the drug, including expedited reports for serious and unexpected adverse events. Additionally, we may have limited control over studies conducted with our proprietary compounds if such studies are performed by others, (e.g., cooperative groups and the like).

The results of the preclinical testing and clinical trials are submitted to the FDA as part of an NDA for evaluation to determine if the product is sufficiently safe and effective for approval to commence commercial sales. In responding to an NDA, the FDA may grant marketing approval, request additional information or deny the application if it determines that the application does not satisfy its regulatory approval criteria. When an NDA is approved, the NDA holder must a) employ a system for obtaining reports of experience and side effects associated with the drug and make appropriate submissions to the FDA and b) timely advise the FDA if any marketed drug fails to adhere to specifications established by the NDA internal manufacturing procedures.

Pursuant to the Orphan Drug Act, a sponsor may request that the FDA designate a drug intended to treat a "rare disease or condition" as an "orphan drug." A rare disease or condition is defined as one which affects less than 200,000 people in the United States, or which affects more than 200,000 people, but for which the cost of developing and making available the drug is not expected to be recovered from sales of the drug in the United States. Upon the approval of the first NDA for a drug designated as an orphan drug for a specified indication, the sponsor of that NDA is entitled to exclusive marketing rights in the United States for such drug for that indication for seven years unless the sponsor cannot assure the availability of sufficient quantities of the drug to meet the needs of persons with the disease. This period of exclusivity is concurrent with any patent exclusivity that relates to the drug. Orphan drugs may also be eligible for federal income tax credits for costs associated with the drug's development. Possible amendment of the Orphan Drug Act by the U.S. Congress and possible reinterpretation by the FDA has been discussed by regulators and legislators. FDA regulations reflecting certain definitions, limitations and procedures for orphan drugs initially went into effect in January 1993 and were amended in certain respects in 1998. Therefore, there is no assurance as to the precise scope of protection that may be afforded by orphan drug status in the future or that the current level of exclusivity and tax credits will remain in effect. Moreover, even if we have an orphan drug designation for a particular use of a drug, there can be no assurance that another company also holding orphan drug designation will not receive approval prior to us for the same indication. If that were to happen, our applications for that indication could not be approved until the

competing company's seven-year period of exclusivity expired. Even if we are the first to obtain approval for the orphan drug indication, there are certain circumstances under which a competing product may be approved for the same indication during our seven-year period of exclusivity. First, particularly in the case of large molecule drugs, a question can be raised whether the competing product is really the "same drug" as that which was approved. In addition, even in cases in which two products appear to be the same drug, the agency may approve the second product based on a showing of clinical superiority compared to the first product.

Among the conditions for NDA approval is the requirement that the prospective manufacturer's quality control and manufacturing procedures continually conform with the FDA's current Good Manufacturing Practice, or cGMP (cGMP are regulations established by the FDA that govern the manufacture, processing, packing, storage and testing of drugs intended for human use). In complying with cGMP, manufacturers must devote extensive time, money and effort in the area of production and quality control and quality assurance to maintain full technical compliance. Manufacturing facilities and company records are subject to periodic inspections by the FDA to ensure compliance. If a manufacturing facility is not in substantial compliance with these requirements, regulatory enforcement action may be taken by the FDA, which may include seeking an injunction against shipment of products from the facility and recall of products previously shipped from the facility.

Failure to comply with applicable FDA regulatory requirements can result in enforcement actions such as warning letters, recalls or adverse publicity issued by the FDA or in legal actions such as seizures, injunctions, fines based on the equitable remedy of disgorgement, restitution and criminal prosecution.

Approval procedures similar to those in the United States must be undertaken in virtually every other country comprising the market for our products before any such product can be commercialized in those countries. The approval procedure and the time required for approval vary from country to country and may involve additional testing. There can be no assurance that approvals will be granted on a timely basis or at all. In addition, regulatory approval of drug pricing is required in most countries other than the United States. There can be no assurance that the resulting pricing of our drugs would be sufficient to generate an acceptable return to us.

COMPETITION

The pharmaceutical and biotechnology industries in which we compete are each highly competitive. Our competitors include major pharmaceutical and biotechnology companies, many of which have considerably greater financial, scientific, technical and marketing resources than us. We also experience competition in the development of our products and processes from universities and other research institutions and, in some instances, compete with others in acquiring technology from such sources.

Competition in the pharmaceutical industry, and specifically in the oncology and immune-inflammatory areas being addressed by us, is particularly intense. Numerous pharmaceutical, biotechnology and generic companies have extensive anti-cancer and anti-inflammatory drug discovery, development and commercial resources. Bristol-Myers Squibb Co., Amgen Inc., Genentech, Inc., Sanofi-Aventis SA., Novartis AG, AstraZeneca PLC., Eli Lilly and Company, F. Hoffmann-LaRoche Ltd, Millennium Pharmaceuticals, Inc., SuperGen, Inc., Vertex Pharmaceuticals Inc., Biogen Idec Inc., Merck and Co., Inc. and Pfizer Inc. are among some of the companies researching and developing new compounds in the oncology and immunology fields.

The pharmaceutical and biotechnology industries have undergone, and are expected to continue to undergo, rapid and significant technological change. Also, consolidation and competition are expected to intensify as technical advances in each field are achieved and become more widely known. In order to

compete effectively, we will be required to continually upgrade and expand our scientific expertise and technology, identify and retain capable personnel and pursue scientifically feasible and commercially viable opportunities.

Our competition will be determined in part by the indications and geographic markets for which our products are developed and ultimately approved by regulatory authorities. An important factor in competition will be the timing of market introduction of our or our competitors' products. Accordingly, the relative speed with which we can develop products, complete clinical trials and approval processes and supply commercial quantities of products to the market are expected to be important competitive factors. Competition among products approved for sale will be based, among other things, on product efficacy, safety, convenience, reliability, availability, price, third-party reimbursement and patent and non-patent exclusivity.

SIGNIFICANT ALLIANCES

From time to time we enter into strategic alliances with third parties whereby we either grant rights to certain of our compounds in exchange for rights to receive payments, or acquire rights to compounds owned by other pharmaceutical or biotechnology companies in exchange for obligations to make payments to the partnering companies in the form of upfront payments, milestone payments contingent upon the achievement of pre-determined criteria and/or research and development funding. Under these arrangements, one of the parties may also purchase product and pay royalties on product sales. The following are our most significant alliances:

NOVARTIS: In April 2000, we entered into an agreement with Novartis in which we granted to Novartis an exclusive worldwide license (excluding Canada) to further develop and market FOCALIN(TM) (d-methylphenidate, or d- MPH) and FOCALIN XR(TM), the long-acting drug formulation. We have retained the exclusive commercial rights to FOCALIN(TM) and FOCALIN XR(TM) for oncology-related disorders, such as chronic fatigue associated with chemotherapy. We also granted Novartis rights to all of our related intellectual property and patents, including new formulations of the currently marketed RITALIN(R). Under the agreement, we have received upfront and regulatory achievement milestone payments totaling $55.0 million and are entitled to additional payments upon attainment of certain other milestone events. We also sell FOCALIN(TM) to Novartis as well as receive royalties on all of Novartis' FOCALIN XR(TM) and RITALIN(R) family of ADHD-related products. The research portion of the agreement terminated in June 2003.

PHARMION: In November 2001, we licensed to Pharmion Corporation exclusive rights relating to the development and commercial use of our intellectual property covering thalidomide and S.T.E.P.S(R). Under the terms of the agreement, as amended in December 2004, we receive a royalty of 8% of Pharmion's net thalidomide sales in countries where Pharmion has received regulatory approval and a S.T.E.P.S(R) license fee of 8% in all other licensed territories. Separately in December 2004, following our acquisition of Penn T Limited, our wholly-owned subsidiary Celgene UK Manufacturing II Limited, or CUK II, entered into an amended thalidomide supply agreement with Pharmion whereby in exchange for a reduction in Pharmion's purchase price of thalidomide to 15.5% of its net sales of thalidomide, we received a one-time payment of $77.0 million. Pursuant to another December 2004 agreement, we also received a one-time payment of $3.0 million in return for granting license rights to Pharmion to develop and market thalidomide in additional territories and eliminating certain of our license termination rights. Under the agreements, as amended, the territory licensed to Pharmion is for all countries other than the United States, Canada, Mexico, Japan and all provinces of China other than Hong Kong. The agreements with Pharmion terminate upon the ten-year anniversary following receipt of the first regulatory approval for thalidomide in the United Kingdom.

To support the further clinical development of thalidomide, Pharmion has also provided research funding under various agreements of approximately $10.7 million through December 31, 2005 and is required to fund an additional $2.7 million in each of 2006 and 2007.

On December 31, 2005, we held 1,939,600 shares of Pharmion common stock received in connection with the conversion of a five-year Senior Convertible Promissory Note purchased in April 2003 under a Securities Purchase Agreement with Pharmion and the exercise of warrants received in connection with the November 2001 thalidomide license and April 2003 Securities Purchase Agreement.

GLAXOSMITHKLINE: In March 2003, we entered into a supply and distribution agreement with GSK to distribute, promote and sell ALKERAN(R) (melphalan), a therapy approved by the FDA for the palliative treatment of multiple myeloma and carcinoma of the ovary. Under the terms of the agreement, we purchase ALKERAN(R) tablets and ALKERAN(R) for infusion from GSK and distribute the products in the United States under the Celgene label. The agreement requires us to purchase certain minimum quantities each year under a take-or-pay arrangement. The agreement has been extended through March 31, 2009. On December 31, 2005, the remaining minimum purchase requirements under the agreement totaled $102.0 million, consisting of $13.7 million from the initial agreement and the following subsequent extensions:

o April 1, 2006 - December 31, 2006 $21,000,000
o January 1, 2007 - December 31, 2007 $29,050,000
o January 1, 2008 - December 31, 2008 $30,525,000
o January 1, 2009 - March 31, 2009 $ 7,725,000

MANUFACTURING

Currently, we do not manufacture any of our products on a commercial scale. We have contracted with third-party manufacturers to supply the raw materials and finished products to meet our needs and, while a site has been purchased in Neuchatel, Switzerland, where we are constructing a drug product manufacturing facility, we intend to continue to utilize outside manufacturers as needed to produce certain of our products on a commercial scale. Our third-party manufacturers meet the FDA's current Good Manufacturing Practices, or cGMP regulations and guidelines. cGMP regulations requires that all manufacturers of pharmaceuticals for sale in or from the United States achieve and maintain compliance with regulations governing the manufacturing, processing, packaging, storing and testing of drugs intended for human use.

The active pharmaceutical ingredient, or API, for THALOMID(R) is manufactured by Eagle Picher Pharmaceutical Services, a Division of Eagle-Picher Incorporated, which has filed to reorganize under Chapter 11 of the Bankruptcy Code. We currently have adequate supplies of API for THALOMID(R) on hand to support our projected long-term requirements and do not believe that the Eagle-Picher Chapter 11 bankruptcy filing will result in any supply disruptions for the foreseeable future. In addition, a second supplier is currently being qualified. We rely on two drug product manufacturers, Penn Pharmaceuticals Services Limited and Institute of Drug Technology Australia Limited for the formulation and encapsulation of the finished dosage form of THALOMID(R) capsules, and on one contract packager, Sharp Corporation, for the packaging of the final product.

The API for REVLIMID(R) is manufactured by Evotec OAI, Ltd. We have contracted with OSG Norwich Pharmaceuticals and Penn Pharmaceuticals Services Ltd. for the manufacture of REVLIMID(R) finished product.

The API for FOCALIN(TM) is currently obtained from two suppliers, Johnson Matthey Inc. and Seigfried USA, Inc., and we rely on a single manufacturer, Mikart, Inc., for the tableting and packaging of FOCALIN(TM) finished product. We obtain the API for FOCALIN XR(TM) from Johnson Matthey Inc., on behalf of Novartis for the manufacture of FOCALIN XR(TM) finished product.

INTERNATIONAL OPERATIONS

We have established our international headquarters in Neuchatel, Switzerland where, among other things, we are constructing a facility to perform formulation, encapsulation, packaging, warehousing and distribution of future products. We are also in the process of establishing our international regulatory, clinical and commercial infrastructure, which includes the hiring of our management team for international operations and establishing legal entities beginning in Europe and throughout the world.

We also have a strategic alliance with Pharmion Corporation to expand the THALOMID(R) franchise in all countries other than the United States, Canada, Mexico, Japan and all provinces of China other than Hong Kong. The strategic partnership combines Pharmion's global development and marketing expertise and our intellectual property. The alliance is designed to accelerate the establishment of THALOMID(R) as an important therapy in the international markets. To date, Pharmion has received regulatory approval in Australia, New Zealand, Turkey and Israel to market and distribute Thalidomide for the treatment of multiple myeloma after the failure of standard therapies, as well as for the treatment of complications of leprosy. In October 2004, we acquired Penn T Limited, a worldwide supplier of THALOMID(R). Through manufacturing agreements entered into with a third party in connection with this acquisition, we are able to control manufacturing for THALOMID(R) worldwide and we also increased our participation in the potential sales growth of THALOMID(R) in key international markets.

SALES AND COMMERCIALIZATION

We have a 234-person (including CCT) U.S. pharmaceutical commercial organization. These individuals have considerable experience in the pharmaceutical industry, and many have experience with oncological and immunological products. We expect to expand our sales and commercialization group to support products we develop to treat oncological and immunological diseases. We intend to market and sell the products we develop for indications with accessible patient populations. For drugs with indications involving larger patient populations, we may partner with other pharmaceutical companies. In addition, we are positioned to accelerate the expansion of these sales and marketing resources as appropriate to take advantage of product in-licensing and product acquisition opportunities.

EMPLOYEES

As of February 1, 2006, we had 944 full-time employees, 531 of who were engaged primarily in research and development activities, 234 (including CCT) who were engaged in sales and commercialization activities and the remainder of who were engaged in executive and general and administrative activities. We also maintain consulting arrangements with a number of researchers at various universities and other research institutions in Europe and the United States.

FORWARD-LOOKING STATEMENTS

Certain statements contained or incorporated by reference in this annual report are forward-looking statements concerning our business, financial condition, results of operations, economic performance and financial condition. Forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and within the meaning of Section 21E of the Securities Exchange Act of 1934 are included, for example, in the discussions about:

o our strategy;

o new product discovery, development or product introduction;

o product manufacturing

o product sales, royalties and contract revenues;

o expenses and net income;

o our credit risk management;

o our liquidity;

o our asset/liability risk management; and

o our operational and legal risks.

These and other forward-looking statements involve risks and uncertainties. Actual results may differ materially from those expressed or implied in those statements. Factors that could cause such differences include, but are not limited to, those discussed under "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations."

ITEM 1A. RISK FACTORS

ALTHOUGH WE ARE CURRENTLY PROFITABLE, WE HAVE A HISTORY OF OPERATING LOSSES AND AN ACCUMULATED DEFICIT.

For the years ended December 31, 2005, 2004 and 2003, we posted net income of $63.7 million, $52.8 million and $25.7 million, respectively. Prior to 2003, we had sustained losses in each year since our incorporation in 1986. In addition, we had an accumulated deficit of $170.8 million at December 31, 2005 compared with $234.4 million at December 31, 2004. We expect to make substantial expenditures to further develop and commercialize our products. We also expect that our rate of spending will accelerate as the result of increased clinical trial costs and expenses associated with regulatory approval and commercialization of products now in development and products discovered, licensed or acquired by us in the future.

WE MAY EXPERIENCE SIGNIFICANT FLUCTUATIONS IN OUR QUARTERLY OPERATING RESULTS.

We have historically experienced, and expect to continue for the foreseeable future to experience, significant fluctuations in our quarterly operating results. These fluctuations are due to a number of factors, many of which are outside our control, and may result in volatility of our stock price. Future operating results will depend on many factors, including:

o demand for our products;

o regulatory approvals for our products;

o the timing and level of research and development and sales and marketing, including product launch costs;

o the timing and level of reimbursement from third-party payors for our products;

o the timing of the introduction and market acceptance of new products by us or competing companies;

o the development or expansion of business infrastructure in new clinical and geographic markets;

o the acquisition of new products and companies;

o tax rates in the jurisdictions in which we operate;

o the timing and recognition of certain research and development milestones and license fees; and

o our ability to control our costs.

IF WE ARE UNSUCCESSFUL IN DEVELOPING AND COMMERCIALIZING OUR PRODUCTS, OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS COULD BE MATERIALLY ADVERSELY AFFECTED WHICH COULD HAVE A NEGATIVE IMPACT ON THE VALUE OF OUR SECURITIES.

Many of our products and processes are in the early or mid-stages of research and development and will require the commitment of substantial financial resources, extensive research, development, preclinical testing, clinical trials, manufacturing scale-up and regulatory approval prior to being ready for sale. With the exception of REVLIMID(R), THALOMID(R), ALKERAN(R), FOCALIN(TM) and FOCALIN XR(TM) (the extended release version), all of our other product candidates will require further development, clinical testing and regulatory approvals before initial commercial marketing in the United States and internationally. Moreover, REVLIMID(R) requires further preclinical and clinical testing as a condition of approval and all of our commercially available products will require further development, clinical testing and regulatory approvals as we seek approvals in new indications and geographic markets. If it becomes too expensive to sustain our present commitment of resources on a long-term basis, we will be unable to continue certain necessary research and development activities. Furthermore, we cannot be certain that our clinical testing will render satisfactory results, or that we will receive required regulatory approvals for our new products or new indications. If any of our products, even if developed and approved, cannot be successfully commercialized, our business, financial condition, results of operations and liquidity could be materially adversely affected which could have a negative impact on the value of our common stock or debt securities obligations.

DURING THE NEXT SEVERAL YEARS, WE WILL BE VERY DEPENDENT ON THE COMMERCIAL SUCCESS OF REVLIMID(R), THALOMID(R), ALKERAN(R), FOCALIN(TM), AND FOCALIN XR(TM).

At our present and anticipated level of operations, we may not be able to maintain profitability without continued growth in our revenues. The growth of our business during the next several years will be largely dependent on the commercial success of REVLIMID(R) and our other products. REVLIMID(R) was approved by the FDA on December 27, 2005 for the treatment of certain myelodysplastic syndromes, or MDS, associated with a deletion 5q cytogenetic abnormality. REVLIMID(R) will be distributed through contracted pharmacies under the RevAssist(sm) program, which is a proprietary risk-management distribution program tailored specifically to help ensure the safe use of REVLIMID(R). We do not have long-term data on the use of the product and cannot predict whether REVLIMID(R) will gain widespread acceptance, which will mostly depend on the acceptance of regulators, physicians, patients and other key opinion leaders as a relatively safe and effective drug that has certain advantages as compared to existing

or future therapies. In addition, some of our products compete with one another as therapies designed to treat cancer. For example, market acceptance of REVLIMID(R) may result to the detriment of THALOMID(R) and ALKERAN(R). We are also seeking to market REVLIMID(R) in Europe as well as for other indications in the United States. A delay in gaining the requisite regulatory approvals could negatively impact our growth plans and the value of our common stock or debt securities obligations.

THALOMID(R) is currently approved as a therapy for the treatment of ENL. However, the market for the use of THALOMID(R) in patients suffering from ENL is relatively small and we are dependent on revenues generated from its off-label use in treating multiple myeloma and other forms of cancer. We have filed an sNDA with the FDA seeking to market THALOMID(R) as a treatment in multiple myeloma and are awaiting FDA action. If THALOMID(R) does not receive market approval, its off-label use in treating multiple myeloma and other forms of cancer may diminish over time. In addition, if adverse experiences are reported in connection with the use of THALOMID(R) by patients, this could undermine physician and patient comfort with the product, could limit the commercial success of the product and could even impact the acceptance of our other products, including REVLIMID(R). Also, we are dependent upon sales of ALKERAN(R), which we license from GSK, and royalties based on Novartis' sales of FOCALIN XR(TM), which we cannot directly impact.

Our revenues and profits would be negatively impacted if generic versions of any of these products were to be approved and launched.

WE FACE THE RISK OF PRODUCT LIABILITY CLAIMS.

We may be subject to a variety of product liability or other claims based on allegations that the use of our technology or products has resulted in adverse effects, whether by participants in our clinical trials, by patients using our products or by other persons exposed to our products. Thalidomide, when used by pregnant women, has resulted in serious birth defects. Therefore, necessary and strict precautions must be taken by physicians prescribing the drug and pharmacies dispensing the drug to women with childbearing potential. These precautions may not be observed in all cases or, if observed, may not be effective. Use of thalidomide has also been associated, in a limited number of cases, with other side effects, including nerve damage. Although we have product liability insurance that we believe is sufficient, we may be unable to maintain existing coverage or obtain additional coverage on commercially reasonable terms if required, or our coverage may be inadequate to protect us in the event of a multitude of claims being asserted against us. Our obligation to defend against or pay any product liability or other claim may be expensive and divert the efforts of our management and technical personnel.

IF OUR PRODUCTS ARE NOT ACCEPTED BY THE MARKET, DEMAND FOR OUR PRODUCTS WILL DETERIORATE OR NOT MATERIALIZE AT ALL.

It is necessary that our and our distribution partners' products, including REVLIMID(R), THALOMID(R), ALKERAN(R), FOCALIN(TM) and FOCALIN XR(TM), and the RITALIN(R) family of drugs achieve and maintain market acceptance. A number of factors can render the degree of market acceptance of our products uncertain, including the products' efficacy, safety and advantages, if any, over competing products, as well as the reimbursement policies of third-party payors, such as government and private insurance plans. In particular, thalidomide, when used by pregnant women, has resulted in serious birth defects, and the negative history associated with thalidomide and birth defects may decrease the market acceptance of THALOMID(R). In addition, the products that we are attempting to develop through our Celgene Cellular Therapeutics subsidiary may represent substantial departures from established treatment methods and will compete with a number of traditional drugs and therapies which are now, or may be in the future, manufactured and marketed by major pharmaceutical and biopharmaceutical companies. Furthermore, public attitudes may be influenced by claims that stem cell therapy is unsafe, and stem cell therapy may not gain the acceptance of the public

or the medical community. If our products are not accepted by the market, demand for our products will deteriorate or not materialize at all.

WE HAVE NO COMMERCIAL MANUFACTURING FACILITIES AND IF THE THIRD-PARTY MANUFACTURERS UPON WHOM WE RELY FAIL TO PRODUCE ON A TIMELY BASIS THE RAW MATERIALS OR FINISHED PRODUCTS IN THE VOLUMES THAT WE REQUIRE OR FAIL TO MEET QUALITY STANDARDS AND MAINTAIN NECESSARY LICENSURE FROM REGULATORY AUTHORITIES, WE MAY BE UNABLE TO MEET DEMAND FOR OUR PRODUCTS, POTENTIALLY RESULTING IN LOST REVENUES.

We do not currently manufacture any of our products on a commercial scale and have contracted with third-party manufacturers to supply the raw materials and finished products to meet our needs. Although a site has been purchased in Neuchatel, Switzerland, and we are constructing a drug product manufacturing facility, we cannot utilize this facility to manufacture our marketed products until we obtain necessary FDA clearance. Additionally, we intend to continue to utilize outside manufacturers as needed to produce certain of our products on a commercial scale.

We have entered into an agreement with Evotec OAI Limited for the supply of REVLIMID(R) API, and have contracted with OSG Norwich Pharmaceuticals and Penn Pharmaceuticals Services Limited for the manufacture of REVLIMID(R) finished product.

In all the countries where we sell our products, governmental regulations exist to define standards for manufacturing, packaging and labeling and storing. All of our suppliers of raw materials and contract manufacturers must comply with these regulations. Failure to do so could result in supply interruptions. In the United States, the FDA requires that all suppliers of pharmaceutical bulk material and all manufacturers of pharmaceuticals for sale in or from the United States achieve and maintain compliance with the FDA's current Good Manufacturing Practices (cGMP) regulations and guidelines. Failure of our third-party manufacturers to comply with applicable regulations could result in sanctions being imposed on them or us, including fines, injunctions, civil penalties, disgorgement, suspension or withdrawal of approvals, license revocation, seizures or recalls of products, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of our products. In addition, before any product batch produced by our manufacturers can be shipped, it must conform to release specifications pre-approved by regulators for the content of the pharmaceutical product. If the operations of one or more of our manufacturers were to become unavailable for any reason, any required FDA review and approval of the operations of an alternative supplier could cause a delay in the manufacture of our products. If our outside manufacturers do not meet our requirements for quality, quantity or timeliness, or do not achieve and maintain compliance with all applicable regulations, demand for our products or our ability to continue supplying such products could substantially decline.

WE HAVE LIMITED MARKETING AND DISTRIBUTION CAPABILITIES.

Although we have a 234-person (including CCT) U.S. pharmaceutical commercial organization to support our products, we may be required to seek one or more corporate partners to provide marketing services with respect to certain of our products. Any delay in securing these resources could substantially delay or curtail the marketing of these products. We have contracted with Ivers Lee Corporation, d/b/a Sharp, a specialty distributor, to distribute THALOMID(R) and REVLIMID(R). If Sharp does not perform its obligations, our ability to distribute THALOMID(R) and REVLIMID(R) may be severely restricted.

WE RECEIVE SIGNIFICANT REVENUES FROM COLLABORATIONS AND MAY BE DEPENDENT ON COLLABORATIONS AND LICENSES WITH THIRD PARTIES.

Our ability to fully commercialize our preclinical and clinical-stage pipeline, if developed, may depend to some extent upon our entering into collaborations with other pharmaceutical and biopharmaceutical companies with the requisite experience and financial and other resources to obtain regulatory approvals and to manufacture and market such products. Our collaborations and licenses include an exclusive license (excluding Canada) to Novartis for the development and commercialization of FOCALIN(TM) and FOCALIN XR(TM); an agreement with Pharmion Corporation to expand the THALOMID(R) franchise internationally; and an agreement with GSK enabling us to distribute, promote and sell ALKERAN(R). Our present and future arrangements may be jeopardized if any or all of the following occur:

o we are not able to enter into additional joint ventures or other arrangements on acceptable terms, if at all;

o our joint ventures or other arrangements do not result in a compatible working relationship;

o our partners change their business priorities, fail to perform as agreed upon or experience financial difficulties that disrupt necessary business operations;

o our joint ventures or other arrangements do not lead to the successful development and commercialization of any products;

o we are unable to obtain or maintain proprietary rights or licenses to technology or products developed in connection with our joint ventures or other arrangements; or

o we are unable to preserve the confidentiality of any proprietary rights or information developed in connection with our joint ventures or other arrangements.

WE MAY CONTINUE TO MAKE STRATEGIC ACQUISITIONS OF OTHER COMPANIES BUSINESSES OR PRODUCTS AND THESE ACQUISITIONS INTRODUCE SIGNIFICANT RISKS AND UNCERTAINTIES, INCLUDING RISKS RELATED TO INTEGRATING THE ACQUIRED BUSINESSES AND PRODUCTS AND TO ACHIEVING BENEFITS FROM THE ACQUISITIONS.

To take advantage of external growth opportunities, we have made, and may continue to make, strategic acquisitions that involve significant risks and uncertainties. These risks and uncertainties include: (1) the difficulty in integrating newly-acquired businesses and operations in an efficient and effective manner; (2) the challenges in achieving strategic objectives, cost savings and other benefits from acquisitions; (3) the risk that the technologies acquired do not evolve as anticipated; (4) contracts, agreements, assets and liabilities are not as represented; (5) the potential loss of key employees of the acquired businesses; (6) the risk of diverting the attention of senior management from our other operations; (7) the risks of

entering new markets in which we have limited experience; (8) difficulties in expanding information technology systems and other business processes to accommodate the acquired businesses; (9) future impairments of goodwill and other intangibles of an acquired business; and, (10) the impact that possible in-process research and development charges may have on future earnings.

Many acquisition candidates in the biopharmaceuticals industry carry high price to earnings valuations. As a result, acquiring a business that has a high valuation may be dilutive to our earnings, especially when the acquired business has little or no revenue.

Key employees of acquired businesses may receive substantial value in connection with a transaction in the form of change-in-control agreements, acceleration of stock options and the lifting of restrictions on other equity-based compensation rights. To retain such employees and integrate the acquired business, we may offer additional, sometimes costly, retention incentives.

THE HAZARDOUS MATERIALS WE USE IN OUR RESEARCH, DEVELOPMENT AND OTHER BUSINESS OPERATIONS COULD RESULT IN SIGNIFICANT LIABILITIES WHICH COULD EXCEED OUR INSURANCE COVERAGE AND FINANCIAL RESOURCES.

We use certain hazardous materials in our research, development and general business activities. While we believe we are currently in substantial compliance with the federal, state and local laws and regulations governing the use of these materials, we cannot be certain that accidental injury or contamination will not occur. Any such accident or contamination could result in substantial liabilities that could exceed our insurance coverage and financial resources. Additionally, the cost of compliance with environmental and safety laws and regulations may increase in the future, requiring us to expend more financial resources either in compliance or in purchasing supplemental insurance coverage.

THE PHARMACEUTICAL INDUSTRY IS SUBJECT TO EXTENSIVE GOVERNMENT REGULATION WHICH PRESENTS NUMEROUS RISKS TO US.

The discovery, preclinical development, clinical trials, manufacturing, marketing and labeling of pharmaceuticals and biologics are all subject to extensive regulation by numerous governmental authorities and agencies in the United States and other countries. If we or our contractors and collaborators are delayed in receiving, or are unable to obtain at all, necessary governmental approvals, we will be unable to effectively market our products.

The testing, marketing and manufacturing of our products require regulatory approval, including approval from the FDA and, in some cases, from the U.S. Environmental Protection Agency, or the EPA, or governmental authorities outside of the United States that perform roles similar to those of the FDA and EPA. Certain of our pharmaceutical products, such as FOCALIN(TM), fall under the Controlled Substances Act of 1970 that requires authorization by the U.S. Drug Enforcement Agency, or DEA, of the U.S. Department of Justice in order to handle and distribute these products. The regulatory approval process presents several risks to us:

o In general, preclinical tests and clinical trials can take many years, and require the expenditure of substantial resources, and the data obtained from these tests and trials can be susceptible to varying interpretation that could delay, limit or prevent regulatory approval;

o Delays or rejections may be encountered during any stage of the regulatory process based upon the failure of the clinical or other data to demonstrate compliance with, or upon the failure of the product to meet, a regulatory agency's requirements for safety, efficacy and quality or, in the case of a product seeking an orphan drug indication, because another designee received approval first;

o Requirements for approval may become more stringent due to changes in regulatory agency policy, or the adoption of new regulations or legislation;

o The scope of any regulatory approval, when obtained, may significantly limit the indicated uses for which a product may be marketed and reimbursed and may impose significant limitations in the nature of warnings, precautions and contra-indications that could materially affect the sales and profitability of the drug;

o Pricing and reimbursement controls;

o Approved drugs, as well as their manufacturers, are subject to continuing and ongoing review, and discovery of previously unknown problems with these products or the failure to adhere to manufacturing or quality control requirements may result in restrictions on their manufacture, sale or use or in their withdrawal from the market;

o Regulatory authorities and agencies may promulgate additional regulations restricting the sale of our existing and proposed products;

o Once a product receives marketing approval, we may not market that product for broader or different applications, and the FDA may not grant us approval with respect to separate product applications that represent extensions of our basic technology. In addition, the FDA may withdraw or modify existing approvals in a significant manner or promulgate additional regulations restricting the sale of our present or proposed products;

o Products, such as REVLIMID(R), that are subject to accelerated approval can be subject to an expedited withdrawal if the post-marketing study commitments are not completed with due diligence, the post-marketing restrictions are not adhered to or are shown to be inadequate to assure the safe use of the drug, or evidence demonstrates that the drug is not shown to be safe and effective under its conditions of use. Additionally, promotional materials for such drugs are subject to enhanced surveillance, including pre-approval review of all promotional materials used within 120 days following marketing approval and a requirement for the submissions 30 days prior to initial dissemination of all promotional materials disseminated after 120 days following marketing approval.

o Our labeling and promotional activities relating to our products are regulated by the FDA and state regulatory agencies and, in some circumstances, by the DEA, and are subject to associated risks. If we fail to comply with FDA regulations prohibiting promotion of off-label uses and the promotion of products for which marketing clearance has not been obtained, the FDA, or the Office of the Inspector General of the Department of Health and Human Services or the state Attorneys General could bring an enforcement action against us that could inhibit our marketing capabilities as well as result in significant penalties.

The FDA's Center for Biologics Evaluation and Research currently regulates under 21 CFR Parts 1270 and 1271 human tissue intended for transplantation that is recovered, processed, stored or distributed by methods that do not change tissue function or characteristics and that is not currently regulated as a human drug, biological product or medical device. Certain stem cell activities fall within this category. Part 1270 requires tissue establishments to screen and test donors, to prepare and follow written procedures for the prevention of the spread of communicable disease and to maintain records. It also provides for inspection by the FDA of tissue establishments. Part 1271 requires human cells, tissue and

cellular and tissue-based product establishments (HCT/Ps) to register with the agency and list their HCT/Ps.

Currently, we are required to be, and are, licensed to operate in New York and New Jersey, two of the states in which we currently collect placentas and umbilical cord blood for our allogeneic and private stem cell banking businesses. If other states adopt similar licensing requirements, we would need to obtain such licenses to continue operating. If we are delayed in receiving, or are unable to obtain at all, necessary licenses, we will be unable to provide services in those states and this would impact negatively on our revenues.

WE MAY NOT BE ABLE TO PROTECT OUR INTELLECTUAL PROPERTY AND OUR PRODUCTS MAY BE SUBJECT TO GENERIC COMPETITION.

Our success depends, in part, on our ability to obtain and enforce patents, protect trade secrets, obtain licenses to technology owned by third parties and to conduct our business without infringing upon the proprietary rights of others. The patent positions of pharmaceutical and biopharmaceutical firms, including ours, can be uncertain and involve complex legal and factual questions.

Under the current U.S. patent laws, patent applications in the United States are maintained in secrecy from four to eighteen months, and publication of discoveries in the scientific and patent literature often lag behind actual discoveries. Thus, we may discover sometime in the future that we, or the third parties from whom we have licensed patents or patent applications, were not the first to make and/or file the inventions covered by the patents and patent applications in which we have or seek rights. In the event that a third party has also filed a patent application for any of the inventions claimed in our patents or patent applications, or those we have licensed-in, we could become involved in an interference proceeding declared by the U.S. Patent and Trademark Office to determine priority of invention or an opposition proceeding in other places such as Europe. Such an interference or opposition could result in the loss of an issued U.S. or foreign patent, respectively, or loss of any opportunity to secure U.S. patent protection for that invention. Even if the eventual outcome is favorable to us, such proceedings could result in substantial cost and delay to us and limit the scope of the claimed subject matter.

In addition, the coverage sought in a patent application may not be obtained or may be significantly reduced before the patent is issued. Consequently, if our pending applications, or pending application that we have licensed-in from third parties, do not result in the issuance of patents or if any patents that are issued do not provide significant proprietary protection or commercial advantage, our ability to sustain the necessary level of intellectual property rights upon which our success depends may be restricted.

Moreover, different countries have different procedures for obtaining patents, and patents issued in different countries provide different degrees of protection against the use of a patented invention by others. Therefore, if the issuance to us or our licensors, in a given country, of a patent covering an invention is not followed by the issuance in other countries of patents covering the same invention, or if any judicial interpretation of the validity, enforceability or scope of the claims in a patent issued in one country is not similar to the interpretation given to the corresponding patent issued in another country, our ability to protect our intellectual property in other countries may be limited.

Furthermore, even if our patents, or those we have licensed-in, are issued, our competitors may still challenge the scope, validity or enforceability of such patents in court, requiring us to engage in complex, lengthy and costly litigation. Alternatively, our competitors may be able to design around such patents and compete with us using the resulting alternative technology. If any of our issued or licensed patents are infringed, we may not be successful in enforcing our or our licensor's intellectual property rights or

defending the validity or enforceability of our issued patents and subsequently not be able to develop or market applicable product exclusively.

FDA regulatory exclusivity for thalidomide has expired so that generic drug companies can file an abbreviated new drug application, or ANDA, to seek approval to market thalidomide in the United States. However, such an ANDA filer will need to challenge the validity or enforceability of our United States patents relating to our S.T.E.P.S.(R) program or to demonstrate that they do not use an infringing risk management program. We cannot predict whether an ANDA challenge to our patents will be made, nor can we predict whether our S.T.E.P.S.(R) patents can be circumscribed or invalidated or otherwise rendered unenforceable. However, if such an ANDA was filed and approved by the FDA, and the generic company was successful in challenging our patents listed in the Orange Book for THALOMID(R), the generic company would be permitted to sell a generic thalidomide product.

Further, we rely upon unpatented proprietary and trade secret technology that we try to protect, in part, by confidentiality agreements with our collaborative partners, employees, consultants, outside scientific collaborators, sponsored researchers and other advisors. If these agreements are breached, we may not have adequate remedies for any such breach. Despite precautions taken by us, others may obtain access to or independently develop our proprietary technology or such technology may be found to be non-proprietary or not a trade secret.

Our right to practice the inventions claimed in certain patents that relate to THALOMID(R) arises under licenses granted to us by others, including The Rockefeller University and Children's Medical Center Corporation, or CMCC. In addition to these patents, which relate to thalidomide, we have also licensed from CMCC certain patents relating to thalidomide analogs. In December 2002, we entered into an exclusive license agreement with CMCC and EntreMed Inc. pursuant to which CMCC exclusively licensed to us certain patents and patent applications that relate to analogs, metabolites, precursors and hydrolysis products of thalidomide, and all stereoisomers thereof. Our license under the December 2002 agreement is worldwide and royalty-bearing, and we have complete control over the prosecution of the licensed thalidomide analog patent rights. Under this December 2002 agreement, we are obligated to comply with certain milestones for a REVLIMID(R) approval and royalties with respect to sales of REVLIMID(R). The December 2002 agreement also grants us an option for a certain time period to inventions in the field of thalidomide analogs that may be developed at CMCC in the laboratory of Dr. Robert D'Amato, pursuant to the terms and conditions of a separate Sponsored Research Agreement negotiated between CMCC and us.

Further, while we believe these confidentiality agreements and license agreements to be valid and enforceable, our rights under these agreements may not continue or disputes concerning these agreements may arise. If any of the foregoing should occur, we may be unable to rely upon our unpatented proprietary and trade secret technology, or we may be unable to use the third-party proprietary technology we have licensed-in, either of which may prevent or hamper us from successfully pursuing our business.

On August 19, 2004, we, together with our exclusive licensee Novartis, filed an infringement action in the United States District Court of New Jersey against Teva Pharmaceuticals USA, Inc., in response to notices of Paragraph IV certifications made by Teva in connection with the filing of an ANDA for FOCALIN(TM). The notification letters contend that United States Patent Nos. 5,908,850, or '850 patent, and 6,355,656, or '656 patent, were invalid. The '656 patent is currently the subject of reexamination proceedings in the United States Patent and Trademark Office. After the suit was filed, Novartis listed another patent, United States Patent No. 6,528,530, or '530 patent, in the Orange Book in association with the FOCALIN(TM) NDA. Neither the '656 patent nor the '530 patent is part of the patent infringement action against Teva. This case does not involve an ANDA for RITALIN LA(R) or FOCALIN XR(TM) as such an ANDA has not been filed. Recently, Teva amended its answer to contend that the '850 patent was not

infringed by the filing of its ANDA, and that the '850 patent is not enforceable due to an allegation of inequitable conduct. Fact discovery expired on February 28, 2006. No trial date has been set. If successful, Teva will be permitted to sell a generic version of FOCALIN(TM), which could significantly reduce our sales of FOCALIN(TM) to Novartis.

It is also possible that third-party patent applications and patents could issue with claims that broadly cover certain aspects of our business or of the subject matter claimed in the patents or patent applications owned or optioned by us or licensed to us, which may limit our ability to conduct our business or to practice under our patents, and may impede our efforts to obtain meaningful patent protection of our own. If patents are issued to third parties that contain competitive or conflicting claims, we may be legally prohibited from pursuing research, development or commercialization of potential products or be required to obtain licenses to these patents or to develop or obtain alternative technology. We may be legally prohibited from using patented technology, may not be able to obtain any license to the patents and technologies of third parties on acceptable terms, if at all, or may not be able to obtain or develop alternative technologies. Consequently, if we cannot successfully defend against any patent infringement suit that may be brought against us by a third-party, we may lose the ability to continue to conduct our business as we presently do, or to practice certain subject matter delineated by patent claims that we have exclusive rights to, whether by ownership or by license, and that may have a material adverse effect on our business.

We rely upon trademarks and service marks to protect our rights to the intellectual property used in our business. On October 29, 2003, we filed a lawsuit against Centocor, Inc. to prevent Centocor's use of the term "I.M.I.D.s" in connection with Centocor's products, which use, we believe, is likely to cause confusion with our IMiDs(R) registered trademark for compounds (including REVLIMID(TM)) developed or being developed by us to treat cancer and inflammatory diseases. If we are not successful in this suit, it may be necessary for us to adopt a different trademark for that class of compounds and thereby lose the value we believe we have built in the "IMiDs(R)" mark.

On January 15, 2004, an opposition proceeding was brought by Celltech R&D Ltd. against granted European Patent 0728143 which we have licensed from the University of California relating to JNK 1 and JNK 2 polypeptides. This proceeding is directed solely to our claims for JNK 2 and not JNK 1. An oral hearing occurred in October of 2005 in which the European Patent Office advised us of its intent to revoke certain of our claims. We await a written decision. The written decision may be appealed. We do have other JNK 1 and JNK European patent application claims pending.

THE PHARMACEUTICAL AND BIOTECH INDUSTRY IS HIGHLY COMPETITIVE AND SUBJECT TO RAPID AND SIGNIFICANT TECHNOLOGICAL CHANGE.

The pharmaceutical industry in which we operate is highly competitive and subject to rapid and significant technological change. Our present and potential competitors include major pharmaceutical and biotechnology companies, as well as specialty pharmaceutical firms, including but not limited to:

o Amgen, which potentially competes with our TNF(alpha) and kinase inhibitors;

o Novartis, which potentially competes with our IMiDs(R) compounds and kinase programs;

o Bristol Myers Squibb Co., which potentially competes in clinical trials with our IMiDs(R) compounds and TNF(alpha) inhibitors;

o Genentech, Inc., which potentially competes in clinical trials with our IMiDs(R) compounds and TNF(alpha) inhibitors;

o AstraZeneca plc, which potentially competes in clinical trials with our IMiDs(R) compounds and TNF(alpha) inhibitors;

o Millennium Pharmaceuticals Inc., which potentially competes in clinical trials with our IMiDs(R) compounds as well as with THALOMID(R);

o Vertex Pharmaceuticals Inc. and Pfizer Inc., which potentially compete in clinical trials with our kinase inhibitors; and

o Biogen IDEC Inc. and Genzyme Corporation, both of which are generally developing drugs that address the oncology and immunology markets.

Many of these companies have considerably greater financial, technical and marketing resources than we. We also experience competition from universities and other research institutions, and in some instances, we compete with others in acquiring technology from these sources. The pharmaceutical industry has undergone, and is expected to continue to undergo, rapid and significant technological change, and we expect competition to intensify as technical advances in the field are made and become more widely known. The development of products or processes by our competitors with significant advantages over those that we are seeking to develop could cause the marketability of our products to stagnate or decline.

SALES OF OUR PRODUCTS ARE DEPENDENT ON THIRD-PARTY REIMBURSEMENT.

Sales of our products will depend, in part, on the extent to which the costs of our products will be paid by health maintenance, managed care, pharmacy benefit and similar health care management organizations, or reimbursed by government health administration authorities, private health coverage insurers and other third-party payors. These health care management organizations and third-party payors are increasingly challenging the prices charged for medical products and services. Additionally, the containment of health care costs has become a priority of federal and state governments, and the prices of drugs have been a focus in this effort. If these organizations and third-party payors do not consider our products to be cost-effective or competitive with other available therapies, they may not reimburse providers or consumers of our products or, if they do, the level of reimbursement may not be sufficient to allow us to sell our products on a profitable basis.

WE HAVE GROWN RAPIDLY, AND IF WE FAIL TO ADEQUATELY MANAGE THAT GROWTH OUR BUSINESS COULD BE ADVERSELY IMPACTED.

We have an aggressive growth plan that has included substantial and increasing investments in research and development, sales and marketing, and facilities. We plan to continue to grow and our plan has a number of risks, some of which we cannot control. For example:

o we will need to generate higher revenues to cover a higher level of operating expenses, and our ability to do so may depend on factors that we do not control;

o we will need to assimilate new staff members;

o we will need to manage complexities associated with a larger and faster growing multinational organization; and

o we will need to accurately anticipate demand for the products we manufacture and maintain adequate manufacturing capacity, and our ability to do so may depend on factors that we do not control.

THE PRICE OF OUR COMMON STOCK MAY FLUCTUATE SIGNIFICANTLY, WHICH MAY MAKE IT DIFFICULT FOR YOU TO SELL THE COMMON STOCK WHEN YOU WANT OR AT PRICES YOU FIND ATTRACTIVE.

There has been significant volatility in the market prices for publicly traded shares of biopharmaceutical companies, including ours. We expect that the market price of our common stock will continue to fluctuate. After adjusting prices to reflect our two-for-one stock split effected on February 17, 2006, the intra-day price of our common stock fluctuated from a high of $32.68 per share to a low of $12.35 per share in 2005. On December 31, 2005, our common stock closed at a split-adjusted price of $32.40 per share. The price of our common stock may not remain at or exceed current levels. The following key factors may have an adverse impact on the market price of our common stock:

o results of our clinical trials or adverse events associated with our marketed products;

o announcements of technical or product developments by our competitors;

o market conditions for pharmaceutical and biotechnology stocks;

o market conditions generally;

o governmental regulation;

o health care legislation;

o public announcements regarding medical advances in the treatment of the disease states that we are targeting;

o patent or proprietary rights developments;

o changes in pricing and third-party reimbursement policies for our products; or

o fluctuations in our operating results.

In addition, the stock market in general and the biotechnology sector in particular has experienced extreme volatility that has often been unrelated to the operating performance of a particular company. These broad market fluctuations may adversely affect the market price of our common stock.

THE NUMBER OF SHARES OF OUR COMMON STOCK ELIGIBLE FOR FUTURE SALE COULD ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON STOCK.

Future sales of substantial amounts of our common stock or debt or other securities convertible into common stock could adversely affect the market price of our common stock. As of December 31, 2005, after adjusting prices to reflect our two-for-one stock split effected on February 17, 2006, there were outstanding stock options and warrants for 50,999,074 shares of common stock, of which 49,865,160 were currently exercisable at an exercise price range between $0.04 per share and $35.67 per share, with a weighted average exercise price of $13.95 per share. In addition, in June 2003, we issued $400.0 million

of unsecured convertible notes that are currently convertible into 33,022,360 shares of our common stock at the conversion price of $12.1125. The conversion of some or all of these notes will dilute the ownership interest of existing stockholders.

OUR SHAREHOLDER RIGHTS PLAN AND CERTAIN CHARTER AND BY-LAW PROVISIONS MAY DETER A THIRD-PARTY FROM ACQUIRING US AND MAY IMPEDE THE STOCKHOLDERS' ABILITY TO REMOVE AND REPLACE OUR MANAGEMENT OR BOARD OF DIRECTORS.

Our board of directors has adopted a shareholder rights plan, the purpose of which is to protect stockholders against unsolicited attempts to acquire control of us that do not offer a fair price to all of our stockholders. The rights plan may have the effect of dissuading a potential acquirer from making an offer for our common stock at a price that represents a premium to the then current trading price.

Our board of directors has the authority to issue, at any time, without further stockholder approval, up to 5,000,000 shares of preferred stock, and to determine the price, rights, privileges and preferences of those shares. An issuance of preferred stock could discourage a third-party from acquiring a majority of our outstanding voting stock. Additionally, our board of directors has adopted certain amendments to our by-laws intended to strengthen the board's position in the event of a hostile takeover attempt. These provisions could impede the stockholders' ability to remove and replace our management and/or board of directors.

Furthermore, we are subject to the provisions of Section 203 of the Delaware General Corporation Law, an anti-takeover law, which may also dissuade a potential acquirer of our common stock.

BEGINNING IN JANUARY 2006, WE WILL BE REQUIRED TO EXPENSE THE FAIR VALUE OF STOCK OPTIONS GRANTED UNDER OUR STOCK INCENTIVE PLANS AND OUR NET INCOME AND EARNINGS PER SHARE WILL BE SIGNIFICANTLY REDUCED AS A RESULT.

In December 2004, the Financial Accounting Standards Board, or FASB, issued Statement of Financial Accounting Standards No. 123R, "Share-Based Payment," or SFAS 123R. SFAS 123R requires compensation cost relating to share-based payment transactions be recognized in financial statements based on the fair value of the equity or liability instruments issued. SFAS 123R covers a wide range of share-based compensation arrangements including stock options, restricted stock plans, performance-based awards, stock appreciation rights, and employee stock purchase plans. SFAS 123R replaces SFAS No. 123, "Accounting for Stock-Based Compensation," and supersedes APB Opinion No. 25, "Accounting for Stock Issued to Employees." SFAS No. 123, as originally issued in 1995, established as preferable a fair-value-based method of accounting for share-based payment transactions with employees. However, SFAS No. 123 permitted entities to continue to apply the guidance in APB Opinion No. 25, as long as the footnotes to financial statements disclosed what net income would have been had the preferable fair-value-based method been used. We will be required to adopt the provisions of SFAS No. 123R in the first quarter of fiscal year 2006. Management is currently evaluating the requirements of SFAS No. 123R. The adoption of SFAS No. 123R is expected to have a material effect on our consolidated financial statements. See Note 1, Nature of Business and Summary of Significant Accounting Policies, to the Consolidated Financial Statements included elsewhere in this Annual Report for the pro forma impact on net income and net income per share from calculating stock-based compensation cost under the fair value method of SFAS No. 123. However, the calculation of compensation cost for share-based payment transactions after the effective date of SFAS No. 123R may be different from the calculation of compensation cost under SFAS No. 123.

In December 2005, in recognition of the significance of the REVLIMID(R) regulatory approval, the Board of Directors approved a resolution to grant the 2006 annual stock option awards in 2005 pursuant to the 1998 Stock Incentive Plan, or the 1998 Plan, and the 1998 Non-Employee Directors' Incentive Plan. All stock options awarded pursuant to the 1998 Plan were granted fully vested, with half issued at an exercise price, or strike price, of $34.05 per option and the other half issued at a strike price of $35.67 per option, which was at a premium to the closing price of $32.43, adjusted for the February 17, 2006 two-for-one stock split, of our common stock on the Nasdaq National Market on the grant date of December 29, 2005. The Board's decision to grant these options was in recognition of the REVLIMID(R) regulatory approval and in response to a review of our long-term incentive compensation programs in light of changes in market practices and recently issued changes in accounting rules resulting from the issuance of FASB No. 123R, which we are required to adopt effective the first quarter of 2006. Management believes that granting these options prior to the adoption of FASB No. 123R will result in our not being required to recognize cumulative compensation expense of approximately $70.8 million for the four-year period ending December 31, 2009.

AVAILABLE INFORMATION

Our current reports on Form 8-K, quarterly reports on Form 10-Q and annual reports on Form 10-K are electronically filed with or furnished to the Securities and Exchange Commission, or SEC, and all such reports and amendments to such reports filed have been and will be made available, free of charge, through our website (http://www.celgene.com) as soon as reasonably practicable after such filing. Such reports will remain available on our website for at least twelve months. The contents of our website are not incorporated by reference into this annual report. The public may read and copy any materials filed by us with the SEC at the SEC's Public Reference Room at 100 F Street, NW, Washington, D.C. 20549.

The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

In November 2004, we purchased approximately 45 acres of land and several buildings located in Summit, New Jersey, at a cost of $25.0 million. The purchase of this site enables us to consolidate our New Jersey locations into one corporate headquarters and provide the space needed to accommodate future expansion. In September 2005, we purchased a site in Neuchatel, Switzerland, for a U.S. dollar equivalency of approximately $3.2 million where we are currently constructing a drug product manufacturing facility, which is scheduled for completion during 2006. We also occupy the following facilities under lease arrangements that have remaining lease terms greater than one-year.

o 73,500-square feet of laboratory and office space in Warren, New Jersey. The two leases for this facility have terms ending in May 2007 and July 2010, respectively, and each have two five-year renewal options. Annual rent for these facilities is approximately $0.8 million.

o 78,202-square feet of laboratory and office space in San Diego, California. The lease for this facility has a term ending in August 2012 with one five-year renewal option. Annual rent for this facility is approximately $2.0 million and is subject to specified annual rental increases.

o 20,234-square feet of office and laboratory space in Cedar Knolls, New Jersey. The leases for this facility have terms ending between September 2007 and April 2009 with renewal options ranging from either one or two additional five-year terms. Annual rent for this facility is approximately $0.3 million and is subject to specified annual rental increases.

o 11,000-square feet of office and laboratory space in Baton Rouge, Louisiana. The lease for this facility has a term ending in May 2008 with one three-year renewal option. Annual rent for this facility is approximately $0.1 million.

Under these lease arrangements, we also are required to reimburse the lessors for real estate taxes, insurance, utilities, maintenance and other operating costs. All leases are with unaffiliated parties.

ITEM 3. LEGAL PROCEEDINGS

We are not engaged in any material legal proceedings.

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

None

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED

STOCKHOLDER MATTERS

Our common stock is traded on the NASDAQ National Market under the symbol "CELG." The following table sets forth, for the periods indicated, the split-adjusted intra-day high and low prices per share of common stock on the NASDAQ National Market:

-------------------------------------------------------------------------
                                                 HIGH           LOW
                                          -------------------------------
2005
Fourth Quarter                                  $32.68        $22.59
Third Quarter                                    29.41         19.77
Second Quarter                                   21.62         16.60
First Quarter                                    17.62         12.35

2004
Fourth Quarter                                  $16.29        $12.87
Third Quarter                                    15.05         11.66
Second Quarter                                   15.15         11.25
First Quarter                                    12.23          9.37
-------------------------------------------------------------------------

The last reported sales price per share of common stock on the NASDAQ National Market on March 3, 2006 was $40.11. As of January 17, 2006, there were approximately 47,965 holders of record of our common stock.

DIVIDEND POLICY

We have never declared or paid any cash dividends on our common stock. We currently intend to retain any future earnings for funding growth and, therefore, do not anticipate paying any cash dividends on our common stock in the foreseeable future.

EQUITY COMPENSATION PLAN INFORMATION

The following table summarizes the equity compensation plans under which our common stock may be issued as of December 31, 2005:

-----------------------------------------------------------------------------------------------------------------
                                                NUMBER OF              WEIGHTED-          NUMBER OF SECURITIES
                                               SECURITIES          AVERAGE EXERCISE     REMAINING AVAILABLE FOR
                                            TO BE ISSUED UPON          PRICE OF           FUTURE ISSUANCE UNDER
                                               EXERCISE OF           OUTSTANDING       EQUITY COMPENSATION PLANS,
                                           OUTSTANDING OPTIONS,         OPTIONS,          EXCLUDING SECURITIES
            PLAN CATEGORY                  WARRANTS AND RIGHTS    WARRANTS AND RIGHTS    REFLECTED IN COLUMN (a)
                                                   (a)                    (b)                     (c)
-----------------------------------------------------------------------------------------------------------------
Equity compensation plans approved by
  security holders                               47,835,010                $13.91                     2,547,992
Equity compensation plans not approved
   by security holders                            3,164,064                $ 9.11                            --
                                          -----------------------------------------------------------------------
Total                                            50,999,074                $13.61                     2,547,992
=================================================================================================================

The Anthrogenesis Corporation Qualified Employee Incentive Stock Option Plan has not been approved by our stockholders. As a result of the acquisition of Anthrogenesis on December 31, 2002, we acquired the Anthrogenesis Qualified Employee Incentive Stock Option Plan, or the Qualified Plan, and the Non-Qualified Recruiting and Retention Stock Option Plan, or the Non-Qualified Plan. No future awards will be granted under the Non-Qualified Plan. The Qualified Plan authorizes the award of incentive stock options, which are stock options that qualify for special federal income tax treatment. The exercise price of any stock option granted under the Qualified Plan may not be less than the fair market value of the common stock on the date of grant. In general, options granted under the Qualified Plan vest evenly over a four-year period and expire ten years from the date of grant, subject to earlier expiration in case of termination of employment. The vesting period is subject to certain acceleration provisions if a change in control occurs. No award will be granted under the Qualified Plan on or after December 31, 2008.

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

The following Selected Consolidated Financial Data should be read in conjunction with our Consolidated Financial Statements and the related Notes thereto, Management's Discussion and Analysis of Financial Condition and Results of Operations and other financial information included elsewhere in this Annual Report. The data set forth below with respect to our Consolidated Statement of Operations for the year ended December 31, 2005, 2004 and 2003 and the Consolidated Balance Sheet data as of December 31, 2005 and 2004 are derived from our Consolidated Financial Statements

which are included elsewhere in this Annual Report and are qualified by reference to such Consolidated Financial Statements and related Notes thereto. The data set forth below with respect to our Consolidated Statements of Operations for the years ended December 31, 2002 and 2001 and the Consolidated Balance Sheets data as of December 31, 2003, 2002 and 2001 are derived from our Consolidated Financial Statements, which are not included elsewhere in this Annual Report. Our historical results are not necessarily indicative of future results of operations.

------------------------------------------------------------------------------------------------------------------------------------
                                                                                      YEARS ENDED DECEMBER 31,
 IN THOUSANDS, EXCEPT PER SHARE DATA                               2005           2004         2003           2002           2001
------------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS DATA:
  Total revenue                                                 $ 536,941      $ 377,502     $ 271,475     $ 135,746      $ 114,243
  Costs and operating expenses                                    453,357        334,774       274,124       250,367        139,186
  Other income, net                                                 7,551         20,443        28,310        23,031         20,807
  Equity in losses of associated company                            6,923             --            --            --             --
  Income tax provision (benefit)                                   20,556         10,415           718           (98)        (1,232)
                                                               ---------------------------------------------------------------------
  Income (loss) from continuing
   Operations                                                      63,656         52,756        24,943       (91,492)        (2,904)
  Discontinued operations:
   Gain on sale of chiral assets                                       --           --             750         1,000            992
                                                               ---------------------------------------------------------------------
   Net income (loss) applicable to common
   stockholders                                                 $  63,656      $  52,756     $  25,693     $ (90,492)     $  (1,912)
                                                                ====================================================================

  Income (loss) from continuing operations
  per common share(1):
   Basic                                                        $    0.19      $    0.16     $    0.08     $   (0.30)     $   (0.01)
   Diluted                                                      $    0.18      $    0.15     $    0.07     $   (0.30)     $   (0.01)
   Discontinued operations per common share(1):
   Basic                                                        $      --      $      --     $    0.01     $      --      $      --
                                                                $      --      $      --     $    0.01     $      --      $      --
  Net income (loss) applicable to common
  stockholders(1):
   Basic                                                        $    0.19      $    0.16     $    0.08     $   (0.29)     $   (0.01)
   Diluted                                                      $    0.18      $    0.15     $    0.08     $   (0.29)     $   (0.01)

  Weighted average number of shares of
  common stock outstanding (1):
   Basic                                                          335,512        327,738       323,548       309,348        300,432
   Diluted                                                        390,585        345,710       341,592       309,348        300,432
------------------------------------------------------------------------------------------------------------------------------------

(1) Amounts have been adjusted for the two-for-one stock splits effected in February 2006 and October 2004.

------------------------------------------------------------------------------------------------------------------
                                                                    YEARS ENDED DECEMBER 31,
IN THOUSANDS                                   2005           2004           2003           2002           2001
------------------------------------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS DATA
  Cash, cash equivalents, and marketable
  securities                               $   724,260    $   748,537    $   666,967    $   261,182    $   310,041
Total assets                                 1,246,637      1,107,293        813,026        336,795        353,982
  Long-term obligations under capital
    leases and equipment notes payable               2              4             16             40             46
  Convertible notes                            399,984        400,000        400,000           --           11,714
  Accumulated deficit                         (170,754)      (234,410)      (287,166)      (312,859)      (222,367)
  Stockholders' equity                         635,775        477,444        331,744        281,814        310,425
------------------------------------------------------------------------------------------------------------------

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

INTRODUCTION

We are a multi-national integrated biopharmaceutical company primarily engaged in the discovery, development and commercialization of innovative therapies designed to treat cancer and immune-inflammatory related diseases. Our lead products are: REVLIMID(R), which gained recent FDA approval in MDS patients with the 5q chromosomal deletion and is under review by the FDA for multiple myeloma and THALOMID(R) (thalidomide), which is currently marketed for the treatment of erythema nodosum leprosum, or ENL, and under review by the FDA for the treatment of multiple myeloma. Over the past several years, THALOMID(R) net sales have grown steadily driven mainly by its off-label use for treating multiple myeloma and other cancers. The sales growth of THALOMID(R) has enabled us to make substantial investments in research and development, which has advanced our broad portfolio of drug candidates in our product pipeline, including a pipeline of IMiDs(R) compounds, which are a class of compounds proprietary to us and having certain immunomodulatory and other biologically important properties. We believe that the sales growth of THALOMID(R), the growth potential for REVLIMID(R), the depth of our product pipeline, near-term regulatory activities and clinical data reported at major medical conferences provide the catalyst for future growth.

FACTORS AFFECTING FUTURE RESULTS

Future operating results will depend on many factors, including demand for our products, regulatory approvals of our products, the timing and market acceptance of new products launched by us or competing companies, the timing of research and development milestones, challenges to our intellectual property and our ability to control costs. See also the Risk Factors discussion in Part I, Item 1A of this Annual Report on Form 10-K. Some of the more salient factors that we are focused on are: the ability of REVLIMID(R) to successfully penetrate relevant markets; competitive risks; and our ability to advance clinical and regulatory programs.

THE ABILITY OF REVLIMID(R) TO SUCCESSFULLY PENETRATE RELEVANT MARKETS:
REVLIMID(R) was approved by the FDA on December 27, 2005 for the treatment of certain myelodysplastic syndromes, or MDS, associated with a deletion 5q cytogenetic abnormality and we have begun to execute our product launch strategies, which includes among other things: registering physicians in the RevAssist(sm) program, which is a proprietary risk-management distribution program tailored specifically to help ensure the safe use of

REVLIMID(R); sponsoring numerous medical education programs designed to educate physicians on MDS; and, partnering with contracted pharmacies to ensure safe and rapid distribution of REVLIMID(R). In addition, we have implemented an expanded access program to provide patients with relapsed or refractory multiple myeloma free access to REVLIMID(R) while the FDA reviews our sNDA for that indication. We do not, however, have long-term data on the use of the product and cannot predict whether REVLIMID(R) will gain widespread acceptance, which will mostly depend on the acceptance of regulators, physicians, patients and opinion leaders. The success of REVLIMID(R) will also depend, in part, on prescription drug coverage by government health agencies, commercial and employer health plans, and other third-party payers. As an oral targeted cancer agent, REVLIMID(R) qualifies as a Medicare Part D drug. Each Part D plan will review REVLIMID(R) for addition to their formulary. As with all new products introduced into the market, there may be some lag time before being reviewed on each plan's formulary. We are encouraged that during this formulary review process, patients have been given access to REVLIMID(R) and there have been no reported denials for coverage.

COMPETITIVE RISKS: The landscape for the treatment of multiple myeloma and other cancer and immune-inflammatory related diseases is highly competitive. While competition could reduce THALOMID(R) sales and limit REVLIMID(R) launch expectations, we do not believe that competing products will eliminate REVLIMID(R) and THALOMID(R) use entirely. In addition, generic competition could reduce THALOMID(R) sales. However, we own intellectual property which includes, for example, U.S. patents covering our S.T.E.P.S.(R) distribution program for the safer delivery of thalidomide, which all patients receiving thalidomide in the United States must follow. We also have exclusive rights to several issued patents covering the use of THALOMID(R) in oncology and other therapeutic areas. Even if generic competition were able to enter the market, we expect REVLIMID(R), which is now available commercially, to at least partially replace THALOMID(R) sales.

ABILITY TO ADVANCE CLINICAL AND REGULATORY PROGRAMS: A major objective of our on-going clinical trials programs is to broaden our knowledge about the full potential of REVLIMID(R) and to continue to evaluate the drug in a broad range of indications including lymphocytic leukemia, Non-Hodgkin's Lymphoma, Amyloidosis and myelofibrosis. The significant near-term regulatory catalysts that we are focused on include: the FDA's decision regarding our sNDA for THALOMID(R) in multiple myeloma (a Prescription Drug User Fee Act, or PDUFA, date of May 25, 2006 has been set); the FDA's decision regarding our sNDA for REVLIMID(R) in relapsed or refractory multiple myeloma; and from an international perspective, the European Medicines Agency, or EMEA, decision regarding our Marketing Authorization Application, or MAA, for REVLIMID(R) in MDS with the 5q chromosomal deletion.

COMPANY BACKGROUND

In 1986, we were spun off from Celanese Corporation and in July 1987 we completed an initial public offering. Initially, our operations involved research and development of chemical and biotreatment processes for the chemical and pharmaceutical industries. Between 1990 and 1998, our revenues were derived primarily from the development and supply of chirally pure intermediates to pharmaceutical companies for use in new drug development. By 1998, sales of chirally pure intermediates became a less integral part of our strategic focus and, in January 1998 we sold the chiral intermediates business to Cambrex Corporation.

In July 1998, we received approval from the FDA to market THALOMID(R) for use in ENL, a complication of the treatment of leprosy, and in September 1998 we commenced sales of THALOMID(R) in the United States. Since then, sales of THALOMID(R) have grown significantly each year. In 2003, 2004 and 2005 we recorded net THALOMID(R) sales of $223.7 million, $308.6 million and $387.8 million, respectively.

In April 2000, we signed a licensing and development agreement with Novartis Pharma AG in which we granted to Novartis a license for FOCALIN(TM), our chirally pure version of RITALIN(R). The agreement provided for significant upfront and milestone payments to us based on the achievement of various stages in the regulatory approval process. It also provided for us to receive royalties on the entire family of RITALIN(R) products. Pursuant to the agreement we retained the rights to FOCALIN(TM) and FOCALIN XR(TM) in oncology indications.

In August 2000, we acquired Signal Pharmaceuticals, Inc., now Celgene Research San Diego, a privately held biopharmaceutical company focused on the discovery and development of drugs that regulate genes associated with disease. In November 2001, we licensed to Pharmion Corporation exclusive rights relating to the development and commercial use of our intellectual property covering thalidomide and S.T.E.P.S(R) in all countries outside of North America, Japan, China, Taiwan and Korea (see our references below to the December 2004 amendment with respect to these territories). In December 2002, we acquired Anthrogenesis Corp., a privately held biotherapeutics company developing processes for the recovery of stem cells from human placental tissue following the completion of a successful full-term pregnancy for use in stem cell transplantation, regenerative medicine and biomaterials for organ and wound repair.

In March 2003, we entered into a supply and distribution agreement with GlaxoSmithKline, or GSK, to distribute, promote and sell ALKERAN(R), or melphalan, a therapy approved by the FDA for the palliative treatment of multiple myeloma and carcinoma of the ovary. The agreement requires that we purchase ALKERAN(R) from GSK and distribute the products in the United States under the Celgene label. The agreement has been extended through March 31, 2009.

In October 2004, we acquired Penn T Limited, or Penn T, a worldwide supplier of THALOMID(R). Through manufacturing agreements entered into with a third party in connection with this acquisition, we are able to control manufacturing for THALOMID(R) worldwide and we also increase our participation in the potential sales growth of THALOMID(R) in key international markets. In December 2004, following our acquisition of Penn T, we amended the thalidomide supply agreement with Pharmion and granted them license rights in additional territories. As amended, the territory licensed to Pharmion is for all countries other than the United States, Canada, Mexico, Japan and all provinces of China other than Hong Kong.

On December 27, 2005, the FDA approved REVLIMID(R) for the treatment of patients with transfusion-dependent anemia due to low- or intermediate-1-risk myelodysplastic syndromes associated with a deletion 5q cytogenetic abnormality with or without additional cytogenetic abnormalities.

Until 2003, we had sustained losses in each year since our incorporation in 1986. For the years ended December 31, 2003, 2004 and 2005 we posted net income of $25.7 million, $52.8 million and $63.7 million, respectively, and at December 31, 2005 we had an accumulated deficit of $170.8 million. We expect to make substantial additional expenditures to further develop and commercialize our products. We expect that our rate of spending will accelerate as a result of increases in clinical trial costs, expenses associated with regulatory approval and expenses related to commercialization of products currently in development. However, we anticipate these expenditures to be more than offset by increased product sales, royalties, revenues from various research collaborations and license agreements with other pharmaceutical and biopharmaceutical companies, and investment income.

STOCK SPLIT

On December 27, 2005, we announced that the Board of Directors approved a two-for-one stock split payable in the form of a 100 percent stock dividend. Stockholders received one additional share for every share they owned as of the close of business on February 17, 2006. The additional shares were distributed on February 24, 2006. As a result, our authorized shares increased from 280,000,000 to 580,000,000 and shares outstanding increased from 172,057,726 shares to 344,115,452 shares as of the close of business on February 24, 2006. All share and per share amounts in the consolidated financial statements have been restated to reflect the two-for-one stock split effective February 17, 2006.

RESULTS OF OPERATIONS -
FISCAL YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003

TOTAL REVENUE: Total revenue and related percentages for the years ended December 31, 2005, 2004 and 2003, were as follows:

% CHANGE

2004 2003
TO TO

(IN THOUSANDS $)             2005       2004       2003        2005     2004
--------------------------------------------------------------------------------
Net product sales:
   THALOMID(R)             $387,816   $308,577   $223,686      25.7%    38.0%
   FOCALIN(TM)                4,210      4,177      2,383       0.8%    75.3%
   ALKERAN(R)                49,748     16,956     17,827     193.4%    (4.9%)
   REVLIMID(R)                2,862         --         --       N/A
   Other                        989        861        557      14.9%    54.6%
                           ------------------------------
Total net product sales    $445,625   $330,571   $244,453      34.8%    35.2%
Collaborative agreements
   and other revenue         41,334     20,012     15,174     106.5%    31.9%
Royalty revenue              49,982     26,919     11,848      85.7%   127.2%
                           ------------------------------
Total revenue              $536,941   $377,502   $271,475      42.2%    39.1%
================================================================================

NET PRODUCT SALES:

2005 COMPARED TO 2004: THALOMID(R) net sales were higher in 2005, as compared to 2004, primarily due to price increases implemented as we move towards a cost of therapy pricing structure as opposed to a price per milligram. Sales volumes decreased due to lower average daily doses; however, the total number of prescriptions for 2005 remained essentially flat when compared to the prior year period. Partially offsetting the increase in THALOMID(R) sales were higher gross to net sales accruals for sales returns, Medicaid rebates and distributor chargebacks, which are recorded based on historical data. Included in 2005 were sales of $8.7 million from our U.K. subsidiary, CUK II, to Pharmion Corporation. Focalin(TM) net sales, which are dependent on the timing of orders from Novartis for their commercial distribution, were essentially flat when compared to the prior year period. ALKERAN(R) net sales were higher in 2005, as compared to 2004, due to price increases implemented during 2005 and an increase in sales volumes. ALKERAN(R) use in combination therapies for the treatment of hematological diseases continues to grow driven by clinical data reported at major medical conferences around the world. Also contributing to the increase in ALKERAN(R) sales volumes was the resolution of supply disruptions experienced in 2004, which resolution led to more consistent supplies of ALKERAN(R) for injection and consequently more consistent end-market buying patterns. REVLIMID(R) was approved by the FDA on December 27, 2005 and the first commercial sales were recorded relating to initial stocking at certain

contracted pharmacies that were registered under the RevAssist(TM) program. Other net product sales consist of sales of dehydrated human amniotic membrane for use in ophthalmic applications, which are generated through our Celgene Cellular Therapeutics division.

2004 COMPARED TO 2003: THALOMID(R) net sales were higher in 2004, as compared to 2003, primarily due to price increases implemented in the second half of 2003 and in the first nine months of 2004. The total number of prescriptions, which increased 9.4% from the prior year period, was offset by lower average daily doses. FOCALIN(TM) net sales were higher in 2004, as compared to 2003, due to the timing of shipments to Novartis for their commercial distribution. ALKERAN(R) net sales were lower in 2004, as compared to 2003, due to supply disruptions earlier in the year, which lead to inconsistent supplies of ALKERAN(R) IV and consequently inconsistent end-market buying patterns. Other net product sales consist of sales of dehydrated human amniotic membrane for use in ophthalmic applications, which are generated through our Celgene Cellular Therapeutics division.

GROSS TO NET SALES ACCRUALS: We record gross to net sales accruals for sales returns, sales discounts, Medicaid rebates and distributor charge-backs and services. Allowance for sales returns are based on the actual returns history for consumed lots and the trend experience for lots where product is still being returned. Sales discounts accruals are based on payment terms extended to customers. Medicaid rebate accruals are based on historical payment data and estimates of future Medicaid beneficiary utilization. Distributor charge-back accruals are based on the differentials between product acquisition prices paid by wholesalers and lower government contract pricing paid by eligible customers covered under federally qualified programs. Distributor services accruals are based on actual fees paid to wholesale distributors for services provided. Medicaid rebates and distributor charge-backs increased due to higher sales volumes and price increases, which increase the respective rebate and chargeback amounts. The gross to net accrued balances were $34.2 million and $19.7 million at December 31, 2005 and 2004, respectively. Gross to net sales accruals for the years ended December 31, 2005, 2004 and 2003 were as follows:

% CHANGE

2004 2003
TO TO

(IN THOUSANDS $)                2005       2004       2003        2005    2004
--------------------------------------------------------------------------------
Gross product sales           $548,853   $385,055   $283,208      42.5%   36.0%
Less: Gross to net sales
 accruals
   Returns and allowances       21,256     16,279     12,659      30.6%   28.6%
   Discounts                    10,948      7,448      5,503      47.0%   35.3%
   Medicaid rebates             35,098     15,780     12,975     122.4%   21.6%
   Distributor charge-backs     33,658     14,977      7,618     124.7%   96.6%
   Distributor services          2,268         --         --       N/A     N/A
                              ------------------------------
Total net product sales       $445,625   $330,571   $244,453      34.8%   35.2%
================================================================================

COLLABORATIVE AGREEMENTS AND OTHER REVENUE: Revenues from collaborative agreements and other sources in 2005 included a $20.0 million milestone payment from Novartis for the NDA approval of Focalin XR(TM); $13.9 million related to our sponsored research, license and other agreements with Pharmion Corporation; $5.1 million from umbilical cord blood enrollment, collection and storage fees generated through our LifeBank USA(SM) business; $0.9 million for licensing to EntreMed, Inc. rights to develop and commercialize our tubulin inhibitor compounds; $0.5 million related to the agreements providing manufacturers of isotretinoin, a non-exclusive license to our S.T.E.P.S.(R) patent portfolio encompassing restrictive drug distribution systems; and, $0.9 million from other miscellaneous research and development agreements. Revenues from collaborative agreements and other sources in 2004 included a

$7.5 million milestone payment from Novartis related to their FOCALIN(R) XR NDA submission; $7.5 million related to our sponsored research, license and other agreements with Pharmion Corporation; $3.7 million of umbilical cord blood enrollment, collection and storage fees generated through our Celgene Cellular Therapeutics division; $0.5 million related to the agreements providing manufacturers of isotretinoin, a non-exclusive license to our S.T.E.P.S.(R) patent portfolio encompassing restrictive drug distribution systems; and $0.8 million from other miscellaneous research and development and licensing agreements. Revenues from collaborative agreements and other sources in 2003 included $6.0 million related to the agreement to terminate the Gelclair(TM) co-promotion agreement with OSI Pharmaceuticals Inc.; $4.3 million of thalidomide research and development funding and S.T.E.P.S. licensing fees received in connection with the Pharmion collaboration agreements; $1.3 million of reimbursements from Novartis for shipments of bulk raw material used in the formulation of FOCALIN(R) XR and utilized in clinical studies conducted by Novartis; $2.9 million of umbilical cord blood enrollment, collection and storage fees generated through our Stem Cell Therapies segment; and $0.7 million from other miscellaneous research and development and licensing agreements.

ROYALTY REVENUE: Royalty revenue in 2005 included $48.5 million of royalties received from Novartis on sales of their entire family of Ritalin(R) drugs and Focalin XR(TM), which gained FDA approval on May 27, 2005; $0.6 million of royalties received from Pharmion on their commercial sales of THALOMID(R), and $0.8 million of miscellaneous other royalties. Royalty revenue in 2004 and 2003 was $26.9 million and $11.8 million, respectively, and consisted solely of royalties received from Novartis on sales of their entire family of RITALIN(R) drugs. The year-over-year increases in Ritalin(R) royalty revenue was due to increases in the royalty rate on both Ritalin(R) and Ritalin(R) LA as well as an increase in Ritalin(R) LA sales by Novartis.

COST OF GOODS SOLD: Cost of goods sold and related percentages for the years ended December 31, 2005, 2004 and 2003 were as follows:

---------------------------------------------------------------------------
(IN THOUSANDS $)                            2005        2004        2003
---------------------------------------------------------------------------

Cost of goods sold                      $    80,727  $  59,726  $   52,950

Increase from prior year                $    21,001  $   6,776  $   32,083

Percentage increase from prior year           35.2%      12.8%      153.7%

Percentage of net product sales               18.1%      18.1%       21.7%
===========================================================================

2005 COMPARED TO 2004: Cost of goods sold were higher in 2005, as compared to 2004, primarily due to higher royalties on THALOMID(R) net sales and higher ALKERAN(R) costs as a result of higher sales volumes. As a percentage of net product sales, cost of goods sold in 2005 were in line with 2004.

2004 COMPARED TO 2003: Cost of goods sold increased in 2004 from 2003, primarily as a result of higher royalties paid on THALOMID(R), partially offset by lower ALKERAN(R) costs. As a percentage of net product sales, however, cost of goods sold decreased primarily due to lower ALKERAN(R) costs. Profit margins on THALOMID(R) remained flat, as the increase in cost of goods sold (resulting from higher royalties paid) were offset by higher net sales (which were due to price increases implemented in the second half of 2003 and in the first nine months of 2004).

RESEARCH AND DEVELOPMENT: Research and development expenses consist primarily of salaries and benefits, contractor fees (paid principally to contract research organizations to assist in our clinical development programs), costs of drug supplies for our clinical and preclinical programs, costs of other

consumable research supplies, regulatory and quality expenditures and allocated facilities charges such as building rent and utilities.

Research and development expenses and related percentages for the years ended December 31, 2005, 2004 and 2003 were as follows:

------------------------------------------------------------------------------
(IN THOUSANDS $)                           2005        2004          2003
------------------------------------------------------------------------------
Research and development expenses       $  190,834  $  160,852   $  122,700

Increase from prior year                $   29,982  $   38,152   $   37,776

Percentage increase from prior year          18.6%       31.1%        44.5%

Percentage of total revenue                  35.5%       42.6%        45.2%
==============================================================================

2005 COMPARED TO 2004: Research and development expenses were higher in 2005, as compared to 2004, primarily due to higher costs to support further clinical development and regulatory advancement of REVLIMID(R) Phase II and Phase III programs in myelodysplastic syndromes and multiple myeloma, including the ongoing pivotal Phase III MDS deletion 5q trial to support our MAA seeking approval to market REVLIMID(R) in Europe. Research and development expenses are targeted to increase 20 to 25 percent in 2006 in support of our ongoing global regulatory filings, late stage clinical trials and clinical progress in multiple proprietary development programs.

2004 COMPARED TO 2003: Research and development expenses increased by $38.2 million in 2004 from 2003, primarily due to increased spending in various late-stage regulatory programs such as Phase II regulatory programs for REVLIMID(R) in myelodysplastic syndromes and multiple myeloma, including ongoing REVLIMID(R) Phase III SPA trials in multiple myeloma.

Research and development expenses in 2005 consisted of $73.9 million spent on human pharmaceutical clinical programs; $69.1 million spent on other pharmaceutical programs, including toxicology, analytical research and development, drug discovery, quality assurance and regulatory affairs; $36.9 million spent on biopharmaceutical discovery and development programs; and $10.9 million spent on placental stem cell and biomaterials programs. These expenditures support multiple core programs, including REVLIMID(R), THALOMID(R), CC-10004, CC-4047, CC-11006, TNF(alpha) inhibitors, other investigational compounds, such as kinase inhibitors, benzopyranones and ligase inhibitors and placental and cord blood derived stem cell programs. Research and development expenses in 2004 consisted of $67.0 million spent on human pharmaceutical clinical programs; $44.7 million spent on other human pharmaceutical programs, including toxicology, analytical research and development, drug discovery, quality assurance and regulatory affairs; $40.6 million spent on biopharmaceutical discovery and development programs; and $8.6 million spent on placental stem cell and biomaterials programs. In 2003, $47.6 million was spent on human pharmaceutical clinical programs; $34.4 million was spent on other human pharmaceutical programs, including toxicology, analytical research and development, drug discovery, quality assurance and regulatory affairs; $33.7 million was spent on biopharmaceutical discovery and development programs; and $7.0 million was spent on placental stem cell and biomaterials programs.

As total revenue increases, research and development expense may continue to decrease as a percentage of total revenue, however the actual dollar amount may continue to increase as earlier stage compounds are moved through the preclinical and clinical stages. Due to the significant risk factors and uncertainties inherent in preclinical tests and clinical trials associated with each of our research and development projects, the cost to complete such projects can vary. The data obtained from these tests and trials may be susceptible to varying interpretation that could delay, limit or prevent a project's advancement through

the various stages of clinical development, which would significantly impact the costs incurred to bring a project to completion.

For information about the commercial and development status and target diseases of our drug compounds, refer to the product overview table contained in Part I, Item I of this annual report.

In general, the estimated times to completion within the various stages of clinical development are as follows:

-------------------------------------------------------------------------------
CLINICAL PHASE                                      ESTIMATED COMPLETION
                                                            TIME
-------------------------------------------------------------------------------
Phase I                                                   1-2 years
Phase II                                                  2-3 years
Phase III                                                 2-3 years
-------------------------------------------------------------------------------

Due to the significant risks and uncertainties inherent in preclinical testing and clinical trials associated with each of our research and development projects, the cost to complete such projects is not reasonably estimable. The data obtained from these tests and trials may be susceptible to varying interpretation that could delay, limit or prevent a project's advancement through the various stages of clinical development, which would significantly impact the costs incurred in completing a project.

SELLING, GENERAL AND ADMINISTRATIVE: Selling expenses consist primarily of salaries and benefits for sales and marketing and customer service personnel and other commercial expenses to support our sales force. General and administrative expenses consist primarily of salaries and benefits, outside services for legal, audit, tax and investor activities and allocations of facilities costs, principally for rent, utilities and property taxes.

Selling, general and administrative expenses and related percentages for the years ended December 31, 2005, 2004 and 2003 were as follows:

-----------------------------------------------------------------------------
(IN THOUSANDS $)                           2005         2004          2003
-----------------------------------------------------------------------------
Selling, general and administrative
   expenses                             $ 181,796  $   114,196    $   98,474

Increase from prior year                $  67,600  $    15,722    $   32,302

Percentage increase from prior year         59.2%        16.0%         48.8%

Percentage of total revenue                 33.9%        30.3%         36.3%
=============================================================================

2005 COMPARED TO 2004: Selling, general and administrative expenses were higher in 2005, as compared to 2004, primarily due to the inclusion in 2005 of approximately $40.0 million of REVLIMID(R) pre-launch commercial expenses, such as global market research, marketing and educational programs and sales and marketing training and an increase of approximately $22.7 million in general administrative expenses resulting from higher professional and other miscellaneous outside service fees, higher personnel-related expenses, higher facility related expenses and higher insurance costs, offset by lower THALOMID(R) and ALKERAN(R) related marketing expenses. Included in selling, general and administrative expenses in 2005 was $2.5 million of expense related to accelerated depreciation of leasehold improvements at four New Jersey locations being consolidated into our new corporate headquarters. Selling, general and administrative expenses are targeted to increase 10 to 15 percent in 2006; in addition, international selling, general and administrative expenses are expected to be in a range

of $30 to $35 million for ongoing expansion of commercial and manufacturing capabilities in Europe. Actual expenses will be dependent on the progress of discussions with the international regulatory authorities.

2004 COMPARED TO 2003: Selling, general and administrative expenses increased by $15.7 million in 2004 from 2003, as a result of an increase of approximately $12.0 million in general administrative and medical affairs expenses primarily due to higher headcount-related expenses and an increase of approximately $3.6 million in sales force expenses primarily due to the creation of a sales operations group. The sales operations group, among other things, manages pricing and reimbursement, corporate accounts, customer service and government affairs, as well as sales fleet expenses.

INTEREST AND OTHER INCOME, NET: Interest and other income, net in 2005 included $27.7 million of interest and realized gains on our cash, and cash equivalents and marketable securities portfolio, offset by unrealized losses of $6.9 million for changes in the estimated value of our investment in EntreMed, Inc. warrants prior to our March 31, 2005 exercise, $3.1 million for other-than-temporary impairment write-downs recognized on two securities held in our available-for-sales marketable securities portfolio and $0.7 million of foreign exchange and other miscellaneous net losses. Interest and other income, net in 2004 included $28.3 million of interest and realized gains on our cash, and cash eqivalents and marketable securities portfolio and $3.6 million of foreign exchange and other miscellaneous net gains, offset by an unrealized losses of $1.9 million for changes in the estimated value of our investment in EntreMed, Inc. warrants. Interest and other income, net in 2003 included $21.8 million of interest and realized gains on our cash, and cash equivalents and marketable securities portfolio and $16.6 million of unrealized gains for changes in the estimated value of our investment in EntreMed, Inc. warrants.

EQUITY IN LOSSES OF AFFILIATED COMPANIES: On March 31, 2005, we exercised warrants to purchase 7,000,000 shares of EntreMed, Inc. common stock. Since we also hold 3,350,000 shares of EntreMed voting preferred shares that are convertible into 16,750,000 shares of common stock, we determined that we have significant influence over EntreMed and are applying the equity method of accounting to our common stock investment effective March 31, 2005. Under the equity method of accounting, we recorded equity losses of $6.9 million in 2005, which includes a charge of $4.4 million to write down the value of the investment ascribed to in-process research and development, $0.2 million related to amortization of acquired intangible assets, $1.6 million to record our share of EntreMed losses and a charge of $0.7 million to eliminate our share of THALOMID(R) royalties payable to EntreMed, Inc. During 2003, we recorded $4.4 million for our share of the EntreMed losses until the investment was written down to zero in the third quarter of 2003.

On February 2, 2006 we, along with a group of other investors, entered into an agreement to invest $30.0 million in EntreMed in return for newly issued EntreMed common stock and warrants to purchase additional shares of EntreMed common stock at a conversion price of $2.3125 per warrant. Our portion of the investment was $2.0 million for which we received 864,864 shares of EntreMed common stock and 432,432 warrants. The warrants will be accounted for at fair value with changes in fair value recorded through earnings.

INTEREST EXPENSE: Interest expense was $9.5 million, $9.6 million and $5.7 million in 2005, 2004 and 2003, respectively, and primarily reflects interest expense and amortization of debt issuance costs on the $400 million convertible notes issued on June 3, 2003. Interest expense in 2003 only includes seven months of interest expense and amortization of debt issuance costs.

INCOME TAX BENEFIT (PROVISION): The income tax provision for 2005 was $20.6 million and reflects tax expense impacted by certain expenses incurred outside the United States for which no tax benefits can be recorded offset by the benefit from elimination of valuation allowances totaling $42.6 million as of March 31, 2005, which was based on the fact that we determined it was more likely than not that certain benefits of our deferred tax assets

would be realized. This determination was based upon the external Independent Data Monitoring Committee's, or IDMC, analyses of two Phase III Special Protocol Assessment multiple myeloma trials and the conclusion that these trials exceeded the pre-specified stopping rule. The IDMC found a statistically significant improvement in time to disease progression -- the primary endpoint of these Phase III trials -- in patients receiving REVLIMID(R) plus dexamethasone compared to patients receiving dexamethasone alone. This, in concert with our nine consecutive quarters of profitability, led to the conclusion that is was more likely than not that we will generate sufficient taxable income to realize the benefits of our deferred tax assets. The elimination of valuation allowances relating to certain historical acquisitions were first offset against goodwill and intangibles with the balance applied to reduce income tax expense. The elimination of valuation allowances relating to tax deductions that arose in connection with stock option exercises were offset against components of equity. The income tax provision for 2004 was $10.4 million, which reflects an effective underlying tax rate of 16.5%. Our tax rate in 2004 rose from 2003 primarily due to federal tax expense and decreases in the valuation allowance available to offset income tax expense. In 2003, our income tax provision was $0.7 million and included income tax expense of $1.1 million for federal and state purposes, offset by a tax benefit of $0.4 million from the sale of certain state net operating loss carryforwards.

GAIN ON SALE OF CHIRAL ASSETS: In January 1998, we completed the sale of our chiral intermediate business to Cambrex Corporation. Pursuant to the minimum royalty provisions of the agreement, we received $0.8 million in 2003.

NET INCOME: Net income and per common share amounts for the years ended December 31, 2005, 2004 and 2003 were as follows:

---------------------------------------------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)    2005       2004       2003
---------------------------------------------------------------------------

Net income                                $ 63,656   $ 52,756   $ 24,943
Per common share amounts:
     Basic                                $   0.19   $   0.16   $   0.08
     Diluted                              $   0.18   $   0.15   $   0.08
Weighted average number of shares of
     common stock utilized to calculate
     per common share amounts:

     Basic                                 335,512    327,738    323,548

     Diluted                               390,585    345,710    341,592
===========================================================================

Amounts have been adjusted for the two-for-one stock splits effected in February 2006 and October 2004.

2005 COMPARED TO 2004: Net income and per common share amounts were higher in 2005, as compared to 2004, primarily due to an increase in total revenues of $159.4 million (driven primarily by a $79.2 million increase in THALOMID(R) net sales, a $32.8 million increase in ALKERAN(R) net sales, a $21.8 million increase in royalty revenues received from Novartis related to the Ritalin(R) line of drugs and Focalin XR(TM) and a $12.5 million increase in milestone payments from Novartis related to Focalin XR(TM)) offset by higher operating expenses of $118.6 million (driven by REVLIMID(R) clinical and regulatory research and development costs and REVLIMID(R) pre-launch selling, general and administrative costs) and unrealized losses recorded in 2005 of $6.9 million for changes in the estimated value of our investment in EntreMed, Inc. warrants prior to our March 31, 2005 exercise, $3.1 million for other-than-temporary impairment write-downs recognized on two securities held in our available-for-sales marketable securities portfolio and our share of equity losses of EntreMed, Inc. of $6.9 million.

2004 COMPARED TO 2003: Income from continuing operations increased in 2004 from 2003 due to an increase in total revenue of $106.0 million (attributable primarily to an increase in THALOMID(R) net sales) partly offset by higher operating expenses of $60.7 million and a decrease in interest and other income, net of $7.9 million (attributable to a $1.9 million decrease in fair value of EntreMed warrants versus a prior year increase of $16.6 million partly offset by an increase in interest income and foreign exchange gains and the inclusion in 2003 of equity losses of associated companies of $4.4 million).

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities was $41.9 million in 2005, as compared to $155.9 million in 2004. The decrease was primarily due to higher working capital levels and higher income taxes paid, partially offset by higher net income in 2005. Net cash provided by operating activities in 2004 increased $137.2 million from 2003. The increase in 2004 compared to 2003 was primarily due to higher earnings, the receipt of $80.0 million in connection with the December 2004 THALOMID(R) development and commercialization collaboration with Pharmion and a decrease in net working capital levels.

Net cash used in investing activities was $103.1 million in 2005 and included cash outflows of $35.9 million for capital expenditures, $7.2 million for acquisition costs and working capital adjustments related to the October 2004 acquisition of Penn T, $49.5 million for net purchases of available-for-sale marketable securities and $10.5 million for the exercise of warrants to purchase 7,000,000 shares of EntreMed common stock. Net cash used in investing activities was $92.6 million in 2004 and included cash outflows of $109.9 million for the October 2004 acquisition of Penn T, $7.0 million for an investment and $36.0 million for capital expenditures. Partially offsetting these outflows were cash inflows of $60.3 million from net sales of available-for-sale marketable securities. Net cash used in investing activities was $443.6 million in 2003 and included cash outflows of $421.2 million for net purchases of available-for-sale marketable securities, $12.0 million for the purchase of a Pharmion Corporation senior convertible note and $11.2 million for capital expenditures.

Net cash provided by financing activities was $52.6 million, $16.0 million and $399.7 million in 2005, 2004 and 2003, respectively, and included cash inflows from the exercise of common stock options and warrants of $52.6 million, $16.0 million and $12.0 million in 2005, 2004 and 2003, respectively. Included in 2003 were cash inflows of $387.8 million from net proceeds of the issuance of our convertible notes on June 3, 2003.

Currency rate changes negatively impacted our cash and cash equivalents balances by $3.3 million and $4.4 million in 2005 and 2004, respectively. At December 31, 2005, cash, cash equivalents and

marketable securities were $724.3 million, a decrease of $24.3 million from December 31, 2004 levels. The decrease was primarily due to a decrease in cash and cash equivalents and a reduction in unrealized gains on our available-for-sale marketable securities portfolio.

We expect increased research and product development costs, clinical trial costs, expenses associated with the regulatory approval process and commercialization of products and capital investments. In addition, we expect increased commercial expenses, such as marketing and market research. However, existing cash, cash equivalents and marketable securities available for sale, combined with expected net product sales and revenues from various research, collaboration and royalties agreements are expected to provide sufficient capital resources to fund our operations for the foreseeable future.

CONTRACTUAL OBLIGATIONS

The following table sets forth our contractual obligations as of December 31, 2005:

--------------------------------------------------------------------------------
                                            PAYMENT DUE BY PERIOD
                                            ---------------------
                             LESS THAN                      MORE THAN
(IN MILLIONS $)               1 YEAR    1-3 YEARS 3-5 YEARS  5 YEARS     TOTAL
--------------------------------------------------------------------------------
Convertible note obligations  $    --   $  400.0   $   --   $     --   $  400.0

Operating leases                  3.4        5.5      5.0        3.9       17.8

ALKERAN(R) supply agreements     34.7       67.3       --         --      102.0

Other contract commitments        4.5        7.3      2.0         --       13.8
                             ---------------------------------------------------
                              $  42.6   $  480.1   $  7.0   $    3.9   $  533.6
================================================================================

OPERATING (FACILITIES) LEASES: We occupy the following facilities under lease arrangements that have remaining lease terms greater than one year.

o 78,202-square feet of laboratory and office space in San Diego, California. The lease for this facility has a term ending in August 2012 with one five-year renewal option. Annual rent for this facility is $2.0 million and is subject to specified annual rental increases.

o 20,000-square feet of office and laboratory space in Cedar Knolls, New Jersey. The leases for this facility have terms ending between September 2007 and April 2009 with renewal options ranging from either one or two additional five-year terms. Annual rent for this facility is $0.3 million and is subject to specified annual rental increases.

o 11,000 square feet of laboratory space in Baton Rouge, Louisiana. The lease for this facility has a term ending in May 2008 with one three-year renewal option. Annual rent for this facility is $0.1 million.

For a schedule of payments related to operating leases, refer to Note 18 of the Notes to the Consolidated Financial Statements.

ALKERAN(R) PURCHASE COMMITMENTS: In March 2003, we entered into a supply and distribution agreement with GlaxoSmithKline, or GSK, to distribute, promote and sell ALKERAN(R) (melphalan), a therapy approved by the FDA for the palliative treatment of multiple myeloma and carcinoma of the ovary. Under the terms of the agreement, we purchase ALKERAN(R) tablets and ALKERAN(R) for infusion from GSK and distributes the products in the United States under the Celgene label. The agreement requires us to purchase certain minimum quantities each year under a take-or-pay arrangement. The agreement has been extended through March 31, 2009. On December 31, 2005, the remaining minimum purchase requirements under the agreement totaled $102.0 million.

OTHER CONTRACT COMMITMENTS: We signed an exclusive license agreement with CMCC, which terminated any existing thalidomide analog agreements between CMCC and EntreMed and directly granted to Celgene an exclusive worldwide license for the analog patents. Under the agreement, we are required to pay CMCC $2.0 million between 2005 and 2006. The outstanding balance related to this agreement was $1.0 million at December 31, 2005. Additional payments are possible under the agreement depending on the successful development and commercialization of thalidomide analogs.

In connection with the acquisition of Penn T on October 21, 2004, we entered into a Technical Services Agreement with Penn Pharmaceutical Services Limited, or PPSL, and Penn Pharmaceutical Holding Limited pursuant to which PPSL provides the services and facilities necessary for the manufacture of THALOMID(R) and other thalidomide formulations. The total cost to be incurred over the five-year minimum agreement period is approximately $11.0 million. At December 31, 2005, the remaining cost to be incurred was approximately $7.8 million.

In October 2003, we signed an agreement with Institute of Drug Technology Australia Limited, or IDT, for the manufacture of finished dosage form of THALOMID(R) capsules. The agreement requires minimum payments for THALOMID(R) capsules of $4.7 million for the three-year term commencing with the FDA's approval of IDT as an alternate supplier. The FDA granted IDT approval to manufacture THALOMID(R) capsules in April 2005. The agreement provides us with additional capacity and reduces our dependency on one manufacturer for the production of THALOMID(R). At December 31, 2005, the remaining minimum obligation under this agreement was $4.0 million.

NEW ACCOUNTING PRINCIPLES

However, SFAS No. 123 permitted entities to continue to apply the guidance in APB Opinion No. 25, as long as the footnotes to financial statements disclosed what net income would have been had the preferable fair-value-based method been used. We will be required to adopt the provisions of SFAS No. 123R in the first quarter of fiscal year 2006. Management is currently evaluating the requirements of SFAS No. 123R. The adoption of SFAS No. 123R is expected to have a material effect on our consolidated financial statements. See Note 1, Nature of Business and Summary of Significant Accounting Policies, to the Consolidated Financial Statements included elsewhere in this Annual Report for the pro forma impact on net income and net income per share from calculating stock-based compensation cost under the fair value method of SFAS No. 123. However, the calculation of compensation cost for share-based payment transactions after the effective date of SFAS No. 123R may be different from the calculation of compensation cost under SFAS No. 123.

In December 2005, in recognition of the significance of the REVLIMID(R) regulatory approval, the Board of Directors approved a resolution to grant the 2006 annual stock option awards in 2005 pursuant to the 1998 Stock Incentive Plan, or the 1998 Plan, and the 1995 Non-Employee Directors' Incentive Plan. All stock options awarded pursuant to the 1998 Plan were granted fully vested, with half issued at an exercise price, or strike price, of $34.05 per option and the other half issued at a strike price of $35.67 per option, which was at a premium to the closing price of $32.43 per share, adjusted for the February 17, 2006 two-for-one stock split, of our common stock on the Nasdaq National Market on the grant date of December 29, 2005. The Board's decision to grant these options was in recognition of the REVLIMID(R) regulatory approval and in response to a review of our long-term incentive compensation programs in light of changes in market practices and recently issued changes in accounting rules resulting from the issuance of FASB No. 123R, which we are required to adopt effective the first quarter of 2006. Management believes that granting these options prior to the adoption of FASB No. 123R will result in our not being required to recognize cumulative compensation expense of approximately $70.8 million for the four-year period ending December 31, 2009.

In November 2004, the FASB issued SFAS No. 151, "Inventory Costs-An Amendment of ARB No. 43. This Statement amends the guidance in ARB No. 43, Chapter 4, "Inventory Pricing," to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). The new rule requires that items such as idle facility expense, excessive spoilage, double freight, and rehandling costs be recognized as current-period charges regardless of whether they meet the criterion of "so abnormal" as stated in ARB No. 43. Additionally, SFAS 151 requires that the allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. SFAS 151 is effective for fiscal years beginning after June 15, 2005. The Company is currently evaluating the potential impact of this pronouncement on its financial position and results of operations.

Emerging Issues Task Force, or EITF, Issue No. 03-01, "The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments," or EITF 03-01, was issued in February 2004. The provisions of EITF 03-01 for measuring and recognizing an other-than-temporary impairment proved controversial and as a result, FASB Staff Position ("FSP") FSP 115-1 and FSP 124-1 "The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments" was issued in November 2005, clarifying the requirements of EITF 03-01 concerning the evaluation of whether an impairment is other-than-temporary. FSP FAS 115-1 and FAS 124-1 refers to SEC Staff Accounting Bulletin ("SAB") Topic 5M, "Other Than Temporary Impairment of Certain Investments In Debt And Equity Securities," and EITF Issue No. 99-20, "Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interest in Securitized Financial Assets," to evaluate whether an impairment is other than temporary. We are in compliance with these requirements and continue to monitor these developments to assess the possible impact on our financial position and results of operations.

CRITICAL ACCOUNTING POLICIES

A critical accounting policy is one which is both important to the portrayal of our financial condition and results of operation and requires management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. While our significant accounting policies are more fully described in Note 1 of the Notes to the Consolidated Financial Statements included in this annual report, we believe the following accounting policies to be critical:

REVENUE RECOGNITION ON COLLABORATION AGREEMENTS: We have formed collaborative research and development agreements and alliances with several pharmaceutical companies. These agreements are in the form of research and development and license agreements. The agreements are for both early- and late-stage compounds and are focused on specific disease areas. For the early-stage compounds, the agreements are relatively short-term agreements that are renewable depending on the success of the compounds as they move through preclinical development. The agreements call for nonrefundable upfront payments, milestone payments on achieving significant milestone events, and in some cases ongoing research funding. The agreements also contemplate royalty payments on sales if and when the compound receives FDA marketing approval.

Our revenue recognition policies for all nonrefundable upfront license fees and milestone arrangements are in accordance with the guidance provided in the Securities and Exchange Commission's Staff Accounting Bulletin, or SAB, No. 101, "Revenue Recognition in Financial Statements," as amended by SAB No. 104, "Revenue Recognition," or SAB 104. In addition, we follow the provisions of Emerging Issues Task Force Issue, or EITF, 00-21, "Revenue Arrangements with Multiple Deliverables," or EITF 00-21, for multiple element revenue arrangements entered into or materially amended after June 30, 2003. EITF 00-21 provides guidance on how to determine when an arrangement that involves multiple revenue-generating activities or deliverables should be divided into separate units of accounting for revenue recognition purposes, and if this division is required, how the arrangement consideration should be allocated among the separate units of accounting. If the deliverables in a revenue arrangement constitute separate units of accounting according to the EITF's separation criteria, the revenue-recognition policy must be determined for each identified unit. If the arrangement is a single unit of accounting, the revenue-recognition policy must be determined for the entire arrangement.

In accordance with SAB 104, upfront payments are recorded as deferred revenue and recognized over the estimated service period of the last item of performance to be delivered. If the estimated service period is subsequently modified, the period over which the upfront fee is recognized is modified accordingly on a prospective basis. Revenues from the achievement of research and development milestones, which represent the achievement of a significant step in the research and development process are recognized when and if the milestones are achieved.

GROSS TO NET SALES ACCRUALS FOR SALES RETURNS, MEDICAID REBATES AND CHARGEBACKS:
We record an allowance for sales returns based on the actual returns history for consumed lots and the trend experience for lots where product is still being returned. We record sales discounts accruals based on payment terms extended to customers. We record Medicaid rebate accruals based on historical payment data and estimates of Medicaid beneficiary utilization. We record distributor charge-back accruals based on the differentials between product acquisition prices paid by wholesalers and lower government contract pricing paid by eligible customers covered under federally qualified programs. We record distributor services accruals based on actual fees paid to wholesale distributors for services provided.

INCOME TAXES: We utilize the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect for years in which the temporary differences are expected to reverse. We provide a valuation allowance when it is more likely than not that deferred tax assets will not be realized.

OTHER-THAN-TEMPORARY IMPAIRMENTS OF AVAILABLE-FOR-SALE MARKETABLE SECURITIES: A decline in the market value of any available-for-sale marketable security below its cost that is deemed to be other-than-temporary results in a reduction in carrying amount to fair value. The impairment is charged to earnings and a new cost basis for the security established. Factors evaluated to determine if an investment is other-than-temporarily impaired include significant deterioration in the earnings performance, credit rating, asset quality, or business prospects of the issuer; adverse changes in the general market condition in which the issuer operates; the intent and ability to retain the investment for a sufficient period of time to allow for recovery in the market value of the investment; and, issues that raise concerns about the issuer's ability to continue as a going concern. At the end of 2005, we determined that two securities with an amortized cost basis of $7.0 million had sustained an other-than-temporary impairment and recognized a $3.1 million impairment loss, which was recorded in interest and other income, net.

ACCOUNTING FOR LONG-TERM INCENTIVE PLANS: The recorded liability for long-term incentive plans was $8.3 million as of December 31, 2005. Plan payouts may be in the range of 0% to 200% of the participant's salary for the 2005 Plan, 0% to 150% of the participant's salary for the 2006 Plan and 0% to 200% of the participant's salary for the 2007 Plan. The 2006 performance cycle was approved by the Management Compensation and Development Committee of the Board of Directors on January 19, 2006 and began on January 1, 2006 and will end on December 31, 2008, or the 2008 Plan. Plan payouts may be in the range of 0% to 200% of the participant's salary for the 2008 Plan. The estimated payout for the 2005 Plan is $4.5 million and maximum potential payouts are $4.5 million, $6.8 million and $7.2 million for the 2006, 2007 and 2008 Plans, respectively. The Company accrues the long-term incentive liability over each three-year cycle. Prior to the end of a three-year cycle, our accrual is based on an estimate of our level of achievement during the cycle. Upon a change in control, participants will be entitled to an immediate payment equal to their target award, or, if higher, an award based on actual performance through the date of the change in control.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The following discussion provides forward-looking quantitative and qualitative information about our potential exposure to market risk. Market risk represents the potential loss arising from adverse changes in the value of financial instruments. The risk of loss is assessed based on the likelihood of adverse changes in fair values, cash flows or future earnings.

We have established guidelines relative to the diversification and maturities of investments to maintain safety and liquidity. These guidelines are reviewed periodically and may be modified depending on market conditions. Although investments may be subject to credit risk, our investment policy specifies credit quality standards for our investments and limits the amount of credit exposure from any single issue, issuer or type of investment. At December 31, 2005, our market risk sensitive instruments consisted of marketable securities available for sale and unsecured convertible notes issued by us.

The Company may periodically utilize foreign currency denominated forward contracts to hedge currency fluctuations of transactions denominated in currencies other than the functional currency. At December 31, 2005, we had one foreign currency forward contract outstanding to buy U.S. dollars and sell Swiss francs for a notional amount of $62.0 million. The forward contract expires on April 13, 2006 and is an economic hedge of a U.S. dollar payable of a Swiss foreign entity, which is remeasured through earnings each period based on changes in the spot rate. The unrealized loss on the forward contract, based on its fair value at December 31, 2005, was approximately $0.2 million, and was recorded in accrued expenses with the offsetting loss recorded in earnings. Assuming that the year-end exchange rates between the U.S. dollar and the Swiss franc were to adversely change by a hypothetical ten percent, the change in the fair value of the contract would decrease by approximately $6.4 million. However, since the contract hedges foreign currency payables, any change in the fair value of the contract would be offset by a change in the underlying value of the hedged item.

MARKETABLE SECURITIES AVAILABLE FOR SALE: At December 31, 2005, our marketable securities available for sale consisted of U.S. government agency securities, mortgage-backed obligations, corporate debt securities and 1,939,600 shares of Pharmion common stock. Marketable securities available for sale are carried at fair value, are held for an indefinite period of time and are intended to be used to meet our ongoing liquidity needs. Unrealized gains and losses on available for sale securities, which are deemed to be temporary, are reported as a separate component of stockholders' equity, net of tax. The cost of all

debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. The amortization, along with realized gains and losses, is included in interest and other income, net. At the end of 2005, we determined that two securities with an amortized cost basis of $7.0 million had sustained an other-than-temporary impairment and recognized a $3.1 million impairment loss related to these securities due to reductions in their future estimated cash flows.

As of December 31, 2005, the principal amounts, fair values and related weighted average interest rates of our investments in debt securities classified as marketable securities available-for-sale were as follows:

------------------------------------------------------------------------------------------------------------------
                                                            DURATION
                             --------------------------------------------------------------------
                              LESS THAN 1      1 TO 3        3 TO 5        5 TO 7        OVER 7
(IN THOUSANDS $)                 YEAR          YEARS         YEARS         YEARS         YEARS          TOTAL
------------------------------------------------------------------------------------------------------------------
Principal amount             $   272,760      $74,904       $227,402       $3,000        $2,900       $580,966
Fair value                   $   272,857      $75,714       $213,070       $1,980        $2,856       $566,477
Average interest rate               4.4%         4.7%           4.4%         7.1%           N/A           4.5%

PHARMION COMMON STOCK: At December 31, 2005, we held a total of 1,939,600 shares of Pharmion Corporation common stock, which had an estimated fair value of approximately $34.5 million (based on the closing price reported by the National Association of Securities Dealers Automated Quotations, or NASDAQ system, and, which exceeded the cost by approximately $14.3 million. The amount by which the fair value exceeded the cost (i.e., the unrealized gain) was included in Accumulated Other Comprehensive Income in the Stockholders' Equity section of the Consolidated Balance Sheet. The fair value of the Pharmion common stock investment is subject to market price volatility and any increase or decrease in Pharmion's common stock quoted market price will have a similar percentage increase or decrease in the fair value of our investment.

CONVERTIBLE DEBT: In June 2003, we issued an aggregate principal amount of $400.0 million of unsecured convertible notes. The convertible notes have a five-year term and a coupon rate of 1.75% payable semi-annually. The convertible notes can be converted at any time into 33,022,360 shares of common stock at a stock-split adjusted conversion price of $12.1125 per share (for more information see Note 10 of the Notes to the Consolidated Financial Statements). At December 31, 2005, the fair value of the convertible notes exceeded the carrying value of $400.0 million by approximately $660.0 million, which we believe reflects the increase in the market price of our common stock to $32.40 per share, on a split-adjusted basis, as of December 31, 2005. Assuming other factors are held constant, an increase in interest rates generally results in a decrease in the fair value of fixed-rate convertible debt, but does not impact the carrying value, and an increase in our stock price generally results in an increase in the fair value of convertible debt, but does not impact the carrying value.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Part IV, Item 15 of this Annual Report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

ITEM 9A. CONTROLS AND PROCEDURES

CONCLUSION REGARDING THE EFFECTIVENESS OF DISCLOSURE CONTROLS AND PROCEDURES

As of the end of the period covered by this annual report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)). Based upon the foregoing evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of internal control over financial reporting. As defined by the Securities and Exchange Commission, internal control over financial reporting is a process designed by, or under the supervision of our principal executive and principal financial officers and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the consolidated financial statements in accordance with U.S. generally accepted accounting principles.

Our internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of the consolidated financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In connection with the preparation of our annual consolidated financial statements, management has undertaken an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or the COSO Framework. Management's assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of those controls.

Based on this evaluation, management has concluded that our internal control over financial reporting was effective as of December 31, 2005.

KPMG LLP, the independent registered public accounting firm that audited our consolidated financial statements included in this report, has issued their report on management's assessment of and the effectiveness of internal control over financial reporting, a copy of which is included herein.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders
Celgene Corporation:

We have audited management's assessment, included in the accompanying Management's Report on Internal Control Over Financial Reporting, that Celgene Corporation and subsidiaries maintained effective internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO. Celgene Corporation's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management's assessment and an opinion on the effectiveness of the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management's assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) 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 company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

In our opinion, management's assessment that Celgene Corporation and subsidiaries maintained effective internal control over financial reporting as of December 31, 2005, is fairly stated, in all material respects, based on criteria established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO. Also, in our opinion, Celgene Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or
COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Celgene Corporation and subsidiaries as of

December 31, 2005 and 2004, and the related consolidated statements of operations, cash flows and stockholders' equity for each of the years in the three-year period ended December 31, 2005, and the related consolidated financial statement schedule, and our report dated March 15, 2006 expressed an unqualified opinion on those consolidated financial statements and related schedule.

/s/ KPMG LLP

Short Hills, New Jersey
March 15, 2006

CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING

There have not been any changes in our internal control over financial reporting during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Pursuant to Paragraph G(3) of the General Instructions to Form 10-K, the information required by Part III (Items 10, 11, 12 , 13 and 14) is being incorporated by reference herein from our definitive proxy statement (or an amendment to our Annual Report on Form 10-K) to be filed with the Securities and Exchange Commission within 120 days of the end of the fiscal year ended December 31, 2005 in connection with our 2006 Annual Meeting of Stockholders.

ITEM 11. EXECUTIVE COMPENSATION

See Item 10.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

See Item 10.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

See Item 10.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

See Item 10.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)(1),(a)(2) See Index to Consolidated Financial Statements and Consolidated Financial Statement Schedule immediately following Signatures and Power of Attorney.

(a)(3) Exhibits

The following exhibits are filed with this report or incorporated by reference:

EXHIBIT
NO.                                 EXHIBIT DESCRIPTION
--------          --------------------------------------------------------------

2.1               Purchase Option Agreement and Plan of Merger, dated April 26,
                  2002, among the Company, Celgene Acquisition Corp. and
                  Anthrogenesis Corp. (incorporated by reference to Exhibit 2.1
                  to the Company's Registration Statement on Form S-4 dated
                  November 13, 2002 (No. 333-101196)).

2.2               Amendment to the Purchase Option Agreement and Plan of Merger,
                  dated September 6, 2002, among the Company, Celgene
                  Acquisition Corp. and Anthrogenesis Corp. (incorporated by
                  reference to Exhibit 2.2 to the Company's Registration
                  Statement on Form S-4 dated November 13, 2002 (No.
                  333-101196)).

2.3               Asset Purchase Agreement by and between the Company and
                  EntreMed, Inc., dated as of December 31, 2002 (incorporated by
                  reference to Exhibit 99.6 to the Company's Schedule 13D filed
                  on January 3, 2003).

2.4               Securities Purchase Agreement by and between EntreMed, Inc.
                  and the Company, dated as of December 31, 2002 (incorporated
                  by reference to Exhibit 99.2 to the Company's Schedule 13D
                  filed on January 3, 2003).

2.5               Share Acquisition Agreement for the Purchase of the Entire
                  Issued Share Capital of Penn T Limited among Craig Rennie and
                  Others, Celgene UK Manufacturing Limited and the Company dated
                  October 21, 2004 (incorporated by reference to Exhibit 99.1 to
                  the Company's Current Report on Form 8-K dated October 26,
                  2004).

3.1*              Certificate of Incorporation of the Company, as amended
                  through February 16, 2006.

3.2               Bylaws of the Company (incorporated by reference to Exhibit 2
                  to the Company's Current Report on Form 8-K, dated September
                  16, 1996).

4.1               Rights Agreement, dated as of September 16, 1996, between the
                  Company and American Stock Transfer & Trust Company
                  (incorporated by reference to the Company's Registration
                  Statement on Form 8A, filed on September 16, 1996), as amended
                  on February 18, 2000 (incorporated by reference to Exhibit 99
                  to the Company's Current Report on Form 8-K filed on February
                  22, 2000), as amended on August 13, 2003 (incorporated by
                  reference to Exhibit 4.1 to the Company's Current Report on
                  Form 8-K filed on August 14, 2003).

4.2               Indenture dated as of June 3, 2003 between the Company and The
                  Bank of New York, Trustee (incorporated by reference to
                  Exhibit 4.1 to the Company's Registration Statement on Form
                  S-3 dated August 14, 2003 (No. 333-107977)).

10.1              Purchase and Sale Agreement between Ticona LLC, as Seller, and
                  the Company, as Buyer, relating to the purchase of the
                  Company's Summit, New Jersey, real property (incorporated by
                  reference to Exhibit 10.1 to the Company's Quarterly Report on
                  Form 10-Q for the quarter ended September 30, 2004).

                                       55

10.2              1986 Stock Option Plan (incorporated by reference to Exhibit A
                  to the Company's Proxy Statement dated April 13, 1990).

10.3              1992 Long-Term Incentive Plan (incorporated by reference to
                  Exhibit A to the Company's Proxy Statement, dated May 30,
                  1997).

10.4              1995 Non-Employee Directors' Incentive Plan (incorporated by
                  reference to Exhibit A to the Company's Proxy Statement, dated
                  May 24, 1999).

10.5              Form of indemnification agreement between the Company and each
                  officer and director of the Company (incorporated by reference
                  to Exhibit 10.12 to the Company's Annual Report on Form 10-K
                  for the year ended December 31, 1996).

10.6              Amended and Restated Employment Agreement dated as of May 1,
                  2003 between the Company and John W. Jackson (incorporated by
                  reference to Exhibit 10.7 to the Company's Annual Report on
                  Form 10-K for the year ended December 31, 2003).

10.7              Amended and Restated Employment Agreement dated as of May 1,
                  2003 between the Company and Sol J. Barer (incorporated by
                  reference to Exhibit 10.8 to the Company's Annual Report on
                  Form 10-K for the year ended December 31, 2003).

10.8              Amended and Restated Employment Agreement dated as of May 1,
                  2003 between the Company and Robert J. Hugin (incorporated by
                  reference to Exhibit 10.9 to the Company's Annual Report on
                  Form 10-K for the year ended December 31, 2003).

10.9              Celgene Corporation Replacement Stock Option Plan
                  (incorporated by reference to Exhibit 99.1 to the Company's
                  Registration Statement on Form S-3 dated May 18, 1998 (No.
                  333-52963)).

10.10             Form of Stock Option Agreement to be issued in connection with
                  the Celgene Corporation Replacement Stock Option Plan
                  (incorporated by reference to Exhibit 99.2 to the Company's
                  Registration Statement on Form S-3 dated May 18, 1998 (No.
                  333-52963)).

10.11             1998 Stock Incentive Plan, Amended and Restated as of April
                  23, 2003 (incorporated by reference to Exhibit A to the
                  Company's Proxy Statement, filed April 30, 2003).

10.12             Stock Purchase Agreement dated June 23, 1998 between the
                  Company and Biovail Laboratories Incorporated (incorporated by
                  reference to Exhibit 10 to the Company's Current Report on
                  Form 8-K filed on July 17, 1998).

10.13             Registration Rights Agreement dated as of July 6, 1999 between
                  the Company and the Purchasers in connection with the issuance
                  of the Company's 9.00% Senior Convertible Note Due June 30,
                  2004 (incorporated by reference to Exhibit 10.27 to the
                  Company's Annual Report on Form 10-K for the year ended
                  December 31, 1999).

10.14             Development and License Agreement between the Company and
                  Novartis Pharma AG, dated April 19, 2000 (incorporated by
                  reference to Exhibit 10.21 to the Company's Annual Report on
                  Form 10-K for the year ended December 31, 2000).

                                       56

10.15             Collaborative Research and License Agreement between the
                  Company and Novartis Pharma AG, dated December 20, 2000
                  (incorporated by reference to Exhibit 10.22 to the Company's
                  Annual Report on Form 10-K for the year ended December 31,
                  2000).

10.16             Custom Manufacturing Agreement between the Company and Johnson
                  Matthey Inc., dated March 5, 2001 (incorporated by reference
                  to Exhibit 10.24 to the Company's Annual Report on Form 10-K
                  for the year ended December 31, 2001).

10.17             Manufacturing and Supply Agreement between the Company and
                  Mikart, Inc., dated as of April 11, 2001 (incorporated by
                  reference to Exhibit 10.25 to the Company's Annual Report on
                  Form 10-K for the year ended December 31, 2001).

10.18             Distribution Services Agreement between the Company and Ivers
                  Lee Corporation, d/b/a Sharp, dated as of June 1, 2000
                  (incorporated by reference to Exhibit 10.26 to the Company's
                  Annual Report on Form 10-K for the year ended December 31,
                  2001).

10.19             Amendment No. 1 to the 1992 Long-Term Incentive Plan,
                  effective as of June 22, 1999 (incorporated by reference to
                  Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q
                  for the quarter ended September 30, 2002).

10.20             Amendment No. 1 to the 1995 Non-Employee Directors' Incentive
                  Plan, effective as of June 22, 1999 (incorporated by reference
                  to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q
                  for the quarter ended September 30, 2002).

10.21             Amendment No. 2 to the 1995 Non-Employee Directors' Incentive
                  Plan, effective as of April 18, 2000 (incorporated by
                  reference to Exhibit 10.3 to the Company's Quarterly Report on
                  Form 10-Q for the quarter ended September 30, 2002).

10.22             Celgene Corporation 2005 Deferred Compensation Plan, effective
                  as of January 1, 2005.

10.23             Anthrogenesis Corporation Qualified Employee Incentive Stock
                  Option Plan (incorporated by reference to Exhibit 10.35 to the
                  Company's Annual Report on Form 10-K for the year ended
                  December 31, 2002).

10.24             Agreement dated August 2001 by and among the Company,
                  Children's Medical Center Corporation, Bioventure Investments
                  KFT and EntreMed Inc. (certain portions of the agreement have
                  been omitted and filed separately with the Securities and
                  Exchange Commission pursuant to a request for confidential
                  treatment, which request has been granted) (incorporated by
                  reference to Exhibit 10.1 to the Company's Quarterly Report on
                  Form 10-Q for the quarter ended March 31, 2002).

10.25             Exclusive License Agreement among the Company, Children's
                  Medical Center Corporation and, solely for purposes of certain
                  sections thereof, EntreMed, Inc., effective December 31, 2002
                  (incorporated by reference to Exhibit 10.32 to the Company's
                  Annual Report on Form 10-K for the year ended December 31,
                  2002).

10.26             Supply Agreement between the Company and Sifavitor s.p.a.,
                  dated as of September 28, 1999 (incorporated by reference to
                  Exhibit 10.32 to the Company's Annual Report on Form 10-K for
                  the year ended December 31, 2002).

                                       57

10.27             Supply Agreement between the Company and Seigfried (USA),
                  Inc., dated as of January 1, 2003 (incorporated by reference
                  to Exhibit 10.33 to the Company's Annual Report on Form 10-K
                  for the year ended December 31, 2002).

10.28             Distribution and Supply Agreement by and between SmithKline
                  Beecham Corporation, d/b/a GlaxoSmithKline and Celgene
                  Corporation, entered into as of March 31, 2003 (incorporated
                  by reference to Exhibit 10.1 to the Company's Quarterly Report
                  on Form 10-Q for the quarter ended March 31, 2003).

10.29             Securities Purchase Agreement dated as of April 8, 2003
                  between the Company and Pharmion Corporation in connection
                  with the purchase by the Company of Pharmion's Senior
                  Convertible Promissory Note in the principal amount of
                  $12,000,000 (incorporated by reference to Exhibit 10.1 to the
                  Company's Quarterly Report on Form 10-Q for the quarter ended
                  June 30, 2003).

10.30             Purchase Agreement dated May 28, 2003 between the Company and
                  Morgan Stanley & Co. Incorporated, as Initial Purchaser, in
                  connection with the purchase of $400,000,000 principal amount
                  of the Company's 1 3/4% Convertible Note Due 2008
                  (incorporated by reference to Exhibit 10.4 to the Company's
                  Quarterly Report on Form 10-Q for the quarter ended June 30,
                  2003).

10.31             Registration Rights Agreement dated as of June 3, 2003 between
                  the Company, as Issuer, and Morgan Stanley & Co. Incorporated,
                  as Initial Purchaser (incorporated by reference to Exhibit 4.2
                  to the Company's Registration Statement on Form S-3 dated
                  August 14, 2003 (No. 333-107977)).

10.32             Form of 1 3/4% Convertible Note Due 2008 (incorporated by
                  reference to Exhibit 4.1 to the Company's Registration
                  Statement of Form S-3 dated August 14, 2003).

10.33             Technical Services Agreement among the Company, Celgene UK
                  Manufacturing II, Limited (f/k/a Penn T Limited), Penn
                  Pharmaceutical Services Limited and Penn Pharmaceutical
                  Holding Limited dated October 21, 2004.

10.34             Purchase and Sale Agreement between Ticona LLC and the Company
                  dated August 6, 2004, with respect to the Summit, New Jersey
                  property (incorporated by reference to Exhibit 10.1 to the
                  Company's Quarterly Report on Form 10-Q for the quarter ended
                  September 31, 2003).

10.35             Letter Agreement among the Company, Pharmion Corporation and
                  Pharmion GmbH dated December 3, 2004.

10.36*            License Agreement among the Company, Pharmion Corporation and
                  Pharmion GmbH, dated as of November 16, 2001.

10.37*            Amendment No. 1, dated March 3, 2003, to License Agreement
                  among the Company, Pharmion Corporation and Pharmion GmbH,
                  dated as of November 16, 2001.

10.38*            Letter Agreement, dated March 3, 2003, to License Agreement
                  among the Company, Pharmion Corporation and Pharmion GmbH,
                  dated as of November 16, 2001.

                                       58

10.39*            Amendment No. 2, dated April 8, 2003, to License Agreement
                  among the Company, Pharmion Corporation and Pharmion GmbH,
                  dated as of November 16, 2001, as further amended.

10.40*            Letter Agreement, dated August 18, 2003, to License Agreement
                  among the Company, Pharmion Corporation and Pharmion GmbH,
                  dated as of November 16, 2001, as further amended.

10.41             Letter Agreement, dated December 2, 2004, to License Agreement
                  among the Company, Pharmion Corporation and Pharmion GmbH,
                  dated as of November 16, 2001, as further amended
                  (incorporated by reference to Exhibit 10.36 to the Company's
                  Annual Report on Form 10-K for the year ended December 31,
                  2004).

10.42             Letter Agreement among the Company, Pharmion Corporation and
                  Pharmion GmbH dated December 3, 2004 (incorporated by
                  reference to Exhibit 10.37 to the Company's Annual Report on
                  Form 10-K for the year ended December 31, 2004).

10.43             Amendment No. 2 to the Amended and Restated Distribution and
                  License Agreement dated as of November 16, 2001, as amended
                  March 4, 2003 and supplemented June 18, 2003, by and between
                  Pharmion GmbH and Celgene UK Manufacturing II, Limited, dated
                  December 3, 2004 (incorporated by reference to Exhibit 10.38
                  to the Company's Annual Report on Form 10-K for the year ended
                  December 31, 2004).

10.44             Sublease between Gateway, Inc. ("Sublandlord") and Celgene
                  Corporation ("Subtenant"), entered into as of December 10,
                  2001, with respect to the San Diego property (incorporated
                  by reference to Exhibit 10.39 to the Company's Annual Report
                  on Form 10-K for the year ended December 31, 2004).

10.45             Lease Agreement, dated January 16, 1987, between the Company
                  and Powder Horn Associates, with respect to the Warren, New
                  Jersey property (incorporated by reference to Exhibit 10.17 to
                  the Company's Registration Statement on Form S-1, dated July
                  24, 1987) (incorporated by reference to Exhibit 10.40 to the
                  Company's Annual Report on Form 10-K for the year ended
                  December 31, 2004).

10.46             Amendment No. 3 to the 1995 Non-Employee Directors' Incentive
                  Plan, effective as of April 23, 2003 (incorporated by
                  reference to Exhibit 10.1 to the Company's Quarterly Report on
                  Form 10-Q for the quarter ended March 31, 2005).

10.47             Amendment No. 4 to the 1995 Non-Employee Directors' Incentive
                  Plan, effective as of April 5, 2005 (incorporated by reference
                  to Exhibit 99.2 to the Company's Registration Statement on
                  Form S-8 (No. 333-126296).

10.48             Amendment No. 1 to the 1998 Stock Incentive Plan, Amended and
                  Restated as of April 23, 2003, effective as of April 14, 2005
                  (incorporated by reference to Exhibit 99.2 to the Company's
                  Registration Statement on Form S-8 (No. 333-126296).

10.49             Forms of Award Agreement for the 1998 Stock Incentive Plan
                  (incorporated by reference to Exhibit 99.1 to the Company's
                  Post-Effective Amendment to the Registration Statement on Form
                  S-3 dated December 30, 2005 (Registration No. 333-75636).

                                       59

10.50*            Supply Agreement between the Company and Evotec OAI Limited,
                  dated August 1, 2004 (certain portions of the agreement have
                  been redacted and filed separately with the Securities and
                  Exchange Commission pursuant to a request for confidential
                  treatment, which request is still pending).

10.51*            Commercial Contract Manufacturing Agreement between the
                  Company and OSG Norwich Pharmaceuticals, Inc., dated April 26,
                  2004 (certain portions of the agreement have been redacted and
                  filed separately with the Securities and Exchange Commission
                  pursuant to a request for confidential treatment, which
                  request is still pending).

10.52*            Finished Goods Supply Agreement (Revlimid(TM)) between the
                  Company and Penn Pharmaceutical Services Limited, dated
                  September 8, 2004 (certain portions of the agreement have been
                  redacted and filed separately with the Securities and Exchange
                  Commission pursuant to a request for confidential treatment,
                  which request is still pending).

10.53*            Distribution Services and Storage Agreement between the
                  Company and Sharp Corporation, dated January 1, 2005 (certain
                  portions of the agreement have been redacted and filed
                  separately with the Securities and Exchange Commission
                  pursuant to a request for confidential treatment, which
                  request is still pending).

14.1              Code of Ethics (incorporated by reference to Exhibit 14.1 to
                  the Company's Annual Report on Form 10-K for the year ended
                  December 31, 2004).

21.1*             List of Subsidiaries.

23.1*             Consent of KPMG LLP.

24.1*             Power of Attorney (included in Signature Page).

31.1*             Certification by the Company's Chief Executive Officer.

31.2*             Certification by the Company's Chief Financial Officer.

32.1*             Certification by the Company's Chief Executive Officer
                  pursuant to 18 U.S.C. Section 1350.

32.2*             Certification by the Company's Chief Financial Officer
                  pursuant to 18 U.S.C. Section 1350.

* Filed herewith.

(c) See Financial Statements immediately following Index to Consolidated Financial Statements and Consolidated Financial Statement Schedule.

SIGNATURES AND POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person or entity whose signature appears below constitutes and appoints John W. Jackson, Sol J. Barer and Robert J. Hugin, and each of them, its true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for it and in its name, place and stead, in any and all capacities, to sign any and all amendments to this Form 10-K and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all contents and purposes as it might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CELGENE CORPORATION

                                               By:  /s/ John W. Jackson
                                                    ----------------------------
                                                    John W. Jackson
                                                    Chairman of the Board and
                                                    Chief Executive Officer

Date:  March 15, 2006

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature                Title                                 Date
---------                -----                                 ----

/s/ John W. Jackson      Chairman of the Board and Chief       March 15, 2006
----------------------   Executive Officer
John W. Jackson

/s/ Sol J. Barer         Director, Chief Operating Officer     March 15, 2006
----------------------
Sol J. Barer

/s/ Robert J. Hugin      Director, Chief Financial Officer     March 15, 2006
----------------------
Robert J. Hugin

/s/ Jack L. Bowman       Director                              March 15, 2006
----------------------
Jack L. Bowman

                                       61

Signature                       Title                          Date
---------                       -----                          ----

/s/ Michael D. Casey            Director                       March 15, 2006
-----------------------------
Michael D. Casey

/s/ Arthur Hull Hayes, Jr.      Director                       March 15, 2006
-----------------------------
Arthur Hull Hayes, Jr.

/s/ Gilla Kaplan                Director                       March 15, 2006
-----------------------------
Gilla Kaplan

/s/ Richard C. E. Morgan        Director                       March 15, 2006
-----------------------------
Richard C. E. Morgan

/s/ Walter L. Robb              Director                       March 15, 2006
-----------------------------
Walter L. Robb


/s/ James R. Swenson            Controller (Chief Accounting   March 15, 2006

----------------------------- Officer) James R. Swenson

The foregoing constitutes a majority of the directors.

CELGENE CORPORATION AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                                                                          PAGE

Consolidated Financial Statements
   Report of Independent Registered Public Accounting Firm                                                                 F-2
   Consolidated Balance Sheets as of December 31, 2005 and 2004                                                            F-3
   Consolidated Statements of Operations - Years Ended December 31, 2005, 2004, and 2003                                   F-4
   Consolidated Statements of Cash Flows - Years Ended December 31, 2005, 2004, and 2003                                   F-5
   Consolidated Statements of Stockholders' Equity - Years Ended December 31, 2005, 2004, and 2003                         F-7
   Notes to Consolidated Financial Statements                                                                              F-8

Consolidated Financial Statement Schedule
   Schedule II - Valuation and Qualifying Accounts                                                                        F-38

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders
Celgene Corporation:

We have audited the accompanying consolidated balance sheets of Celgene Corporation and subsidiaries as of December 31, 2005 and 2004, and the related consolidated statements of operations, cash flows and stockholders' equity for each of the years in the three-year period ended December 31, 2005. In connection with our audits of the consolidated financial statements, we also have audited the consolidated financial statement schedule, "Schedule II - Valuation and Qualifying Accounts." These consolidated financial statements and consolidated financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and consolidated financial statement schedule based on our audits.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Celgene Corporation and subsidiaries as of December 31, 2005 and 2004, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2005, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Celgene Corporation and subsidiaries' internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO, and our report dated March 15, 2006 expressed an unqualified opinion on management's assessment of, and the effective operation of, internal control over financial reporting.

/s/ KPMG LLP

Short Hills, New Jersey
March 15, 2006

F-2

CELGENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)

-----------------------------------------------------------------------------------------------------------------------------------
December 31,                                                                                          2005                  2004
-----------------------------------------------------------------------------------------------------------------------------------
ASSETS

  Current assets:
   Cash and cash equivalents                                                                       $  123,316            $  135,227
   Marketable securities available for sale                                                           600,944               613,310
   Accounts receivable, net of allowance of $3,739 and $2,208
     at December 31, 2005 and December 31, 2004, respectively                                          77,913                46,074
   Inventory                                                                                           20,242                24,404
   Deferred income taxes                                                                              113,059                 4,082
   Other current assets                                                                                37,363                26,783
-----------------------------------------------------------------------------------------------------------------------------------
      Total current assets                                                                            972,837               849,880
-----------------------------------------------------------------------------------------------------------------------------------

   Property, plant and equipment, net                                                                  77,477                53,738
   Investment in affiliated company                                                                    17,017                  --
   Intangible assets, net                                                                              96,988               108,955
   Goodwill                                                                                            33,815                41,258
   Deferred income taxes                                                                               31,260                14,613
   Other assets                                                                                        17,243                38,849
-----------------------------------------------------------------------------------------------------------------------------------
       Total assets                                                                                $1,246,637            $1,107,293
-----------------------------------------------------------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY

  Current liabilities:

   Accounts payable                                                                                $   16,414            $   18,650
   Accrued expenses                                                                                    92,908                68,534
   Income taxes payable                                                                                14,715                41,188
   Current portion of deferred revenue                                                                  6,473                 6,926
   Deferred income taxes                                                                                   --                 5,447
   Other current liabilities                                                                            5,127                   670
-----------------------------------------------------------------------------------------------------------------------------------
       Total current liabilities                                                                      135,637               141,415
-----------------------------------------------------------------------------------------------------------------------------------

   Long term convertible notes                                                                        399,984               400,000
   Deferred revenue, net of current portion                                                            59,067                73,992
   Other non-current liabilities                                                                       16,174                14,442
-----------------------------------------------------------------------------------------------------------------------------------
       Total liabilities                                                                              610,862               629,849
-----------------------------------------------------------------------------------------------------------------------------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:

   Preferred stock, $.01 par value per share, 5,000,000 shares
     authorized; none outstanding at December 31, 2005 and 2004                                             --                   --
   Common stock, $.01 par value per share, 575,000,000 and 275,000,000 shares
     authorized at December 31, 2005 and 2004, respectively; issued 344,125,158
     and 165,079,198 shares at December 31, 2005 and 2004, respectively                                  3,441                1,651
   Common stock in treasury, at cost;  1,953,282 and 10,564 shares
     at December 31, 2005 and December 31,  2004, respectively                                         (50,601)                (306)
   Additional paid-in capital                                                                          853,601              641,907
   Accumulated deficit                                                                                (170,754)            (234,410)
   Accumulated other comprehensive income                                                                   88               68,602
-----------------------------------------------------------------------------------------------------------------------------------
       Total stockholders' equity                                                                      635,775              477,444
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
       Total liabilities and stockholders' equity                                                   $1,246,637          $ 1,107,293
-----------------------------------------------------------------------------------------------------------------------------------

See accompanying Notes to Consolidated Financial Statements

F-3

CELGENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)

------------------------------------------------------------------------------------------------------------------------------------
Years ended December 31,                                                          2005                 2004                  2003
------------------------------------------------------------------------------------------------------------------------------------
Revenue:

   Net product sales                                                            $ 445,625            $ 330,571            $ 244,453
   Collaborative agreements and other revenue                                      41,334               20,012               15,174
   Royalty revenue                                                                 49,982               26,919               11,848
------------------------------------------------------------------------------------------------------------------------------------
      Total revenue                                                               536,941              377,502              271,475
------------------------------------------------------------------------------------------------------------------------------------

Expenses:

   Cost of goods sold                                                              80,727               59,726               52,950
   Research and development                                                       190,834              160,852              122,700
   Selling, general and administrative                                            181,796              114,196               98,474
------------------------------------------------------------------------------------------------------------------------------------
      Total expenses                                                              453,357              334,774              274,124
------------------------------------------------------------------------------------------------------------------------------------

Operating income (loss)                                                            83,584               42,728               (2,649)

Other income and expense:
   Interest and other income, net                                                  17,048               29,994               38,369
   Equity in losses of affiliated company                                           6,923                   --                4,392
   Interest expense                                                                 9,497                9,551                5,667

------------------------------------------------------------------------------------------------------------------------------------
Income before income taxes                                                         84,212               63,171               25,661
------------------------------------------------------------------------------------------------------------------------------------

Income tax provision                                                               20,556               10,415                  718

------------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations                                                  63,656               52,756               24,943
------------------------------------------------------------------------------------------------------------------------------------

Discontinued operations:
   Gain on sale of chiral assets                                                       --                   --                  750

------------------------------------------------------------------------------------------------------------------------------------
Net income                                                                      $  63,656            $  52,756            $  25,693
====================================================================================================================================

Income from continuing operations per
   common share:
      Basic                                                                     $    0.19            $    0.16            $    0.08
      Diluted                                                                   $    0.18            $    0.15            $    0.07
Discontinued operations per common share:
      Basic                                                                     $      --            $      --            $    0.01
      Diluted                                                                   $      --            $      --            $    0.01
Net income per common share:
      Basic                                                                     $    0.19            $    0.16            $    0.08
      Diluted                                                                   $    0.18            $    0.15            $    0.08

See accompanying Notes to Consolidated Financial Statements

F-4

CELGENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)

------------------------------------------------------------------------------------------------------------------------------------
Years Ended December 31,                                                                      2005           2004            2003
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                           (Revised)
Cash flows from operating activities:
Net income                                                                                  $  63,656      $  52,756      $  25,693
Discontinued operations                                                                            --             --           (750)
                                                                                            ----------     ----------     ----------
Income from continuing operations                                                              63,656         52,756         24,943

Adjustments to reconcile income from continuing  operations to net cash provided
  by operating activities:
    Depreciation and amortization of long-term assets                                          14,286          9,690          8,027
    Provision for accounts receivable allowances                                               11,463          8,315          5,951
    Realized loss (gain) on marketable securities available for sale                            1,853         (3,050)        (7,355)
    Unrealized loss (gain) on value of EntreMed warrants                                        6,875          1,922        (16,574)
    Equity losses of affiliated company                                                         6,923           --            4,392
    Non-cash stock-based compensation expense                                                    (243)           449            704
    Amortization of premium/discount on marketable
      securities available for sale, net                                                        1,763          2,085          1,238
    Loss on asset disposals                                                                       290           --               84
    Amortization of debt issuance cost                                                          2,443          2,443          1,422
    Amortization of discount on note obligation                                                    53            108            137
    Deferred income taxes                                                                     (91,356)       (79,847)          --
    Shares issued for employee benefit plans                                                    3,506          4,267          2,775

Change in current assets and liabilities, excluding the effect
  of acquisition:
    Increase in accounts receivable                                                           (43,496)       (13,051)       (23,776)
    Decrease (increase) in inventory                                                            4,125        (11,192)        (4,891)
    (Increase) decrease in other operating assets                                             (21,514)        59,978         (9,253)
    Increase in accounts payable and accrued expenses                                          11,809          1,454         30,599
    Increase (decrease) in income tax payable                                                  74,155         40,404           (196)
    (Decrease) increase in deferred revenue                                                    (4,674)        79,208            498
------------------------------------------------------------------------------------------------------------------------------------
        Net cash provided by operating activities                                              41,917        155,939         18,725
------------------------------------------------------------------------------------------------------------------------------------

Cash flows from investing activities:
    Capital expenditures                                                                      (35,861)       (36,015)       (11,227)
    Purchase of intangible assets                                                                (122)            --             --
    Business acquisition                                                                       (7,152)      (109,882)            --
    Proceeds from the sale of equipment                                                            --             --            138
    Proceeds from sales and maturities of marketable securities
      available for sale                                                                      598,319        539,200        415,595
    Purchases of marketable securities available for sale                                    (647,815)      (478,939)      (836,827)
    Investment in affiliated company                                                          (10,500)          --          (12,000)
    Purchase of investment securities                                                            --           (7,000)          --
    Proceeds from the sale of discontinued operations -chiral assets                             --             --              750
------------------------------------------------------------------------------------------------------------------------------------
        Net cash used in investing activities                                                (103,131)       (92,636)      (443,571)
------------------------------------------------------------------------------------------------------------------------------------

Cash flows from financing activities:
    Net proceeds from exercise of common stock options and warrants                            52,640         16,036         11,970
    Proceeds from convertible notes                                                              --             --          400,000
    Debt issuance cost                                                                           --             --          (12,212)
    Proceeds from notes receivable from stockholders                                             --             --               42
    Repayment of capital lease and note obligations                                                (9)           (34)          (101)
------------------------------------------------------------------------------------------------------------------------------------
        Net cash provided by financing activities                                              52,631         16,002        399,699
------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------
Effect of currency rate changes on cash and cash equivalents                                   (3,328)        (4,406)            --
------------------------------------------------------------------------------------------------------------------------------------

Net (decrease) increase in cash and cash equivalents                                          (11,911)        74,899        (25,147)

Cash and cash equivalents at beginning of period                                              135,227         60,328         85,475
------------------------------------------------------------------------------------------------------------------------------------

Cash and cash equivalents at end of period                                                  $ 123,316      $ 135,227      $  60,328
====================================================================================================================================

See accompanying Notes to Consolidated Financial Statements

F-5

CELGENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)
(Dollars in thousands)

------------------------------------------------------------------------------------------------------------------------------------
Years Ended December 31,                                                            2005                 2004               2003
------------------------------------------------------------------------------------------------------------------------------------
Supplemental schedule of non-cash investing and
  financing activity:
    Change in net unrealized (loss) gain on marketable
      securities available for sale                                             $     (60,098)     $      53,312       $     (3,584)
                                                                              ------------------------------------------------------

    Matured shares tendered for stock option exercises
      and employee tax withholdings                                                   (50,295)              (306)                --
                                                                              ------------------------------------------------------

    Conversion of convertible notes                                                        16                 --                 --
                                                                              ------------------------------------------------------

    Accrual for business acquisition                                                       --              7,499                 --
                                                                              ------------------------------------------------------
    Accrual for license acquisition                                                     4,250                 --                 --
                                                                              ------------------------------------------------------

    Equipment acquisition on capital leases                                                --                 --                110
                                                                              ------------------------------------------------------

Supplemental disclosure of cash flow information:
    Interest paid                                                               $       7,000      $       7,000       $      3,584
                                                                              ------------------------------------------------------

    Income taxes paid                                                                  36,258              5,493               (653)
                                                                              ------------------------------------------------------

See accompanying Notes to Consolidated Financial Statements

F-6

CELGENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollars in thousands)

                                                                                                                Accumulated
                                                                                                     Notes         Other
                                                                           Additional              Receivable  Comprehensive
                                                 Common       Treasury      Paid-in   Accumulated     from        Income
Years Ended December 31, 2005, 2004 and 2003      Stock         Stock       Capital     Deficit    Stockholders   (Loss)    Total

------------------------------------------------------------------------------------------------------------------------------------
Balances at December 31, 2002                    $     802    $      --    $ 591,277   $(312,859)   $  (42)     $  7,028  $ 286,206
====================================================================================================================================
Net income                                                                                25,693                             25,693
Other comprehensive income:
  Net change in unrealized gain on
    available for sale securities, net of tax                                                                     10,939     10,939
  Less: reclassification adjustment for gain
    included in net income                                                                                        (7,355)    (7,355)
                                                                                                                          ---------
Comprehensive income                                                                                                      $  29,277
Exercise of stock options and warrants                  11                    11,959                                         11,970
Issuance of common stock for employee
  benefit plans                                          1                     2,774                                          2,775
Expense related to non-employee stock options
  and restricted stock granted to employees                                      704                                            704
Income tax benefit upon exercise of
  stock options                                                                  770                                            770
Collection of notes receivable from
  stockholders                                                                                          42                       42
------------------------------------------------------------------------------------------------------------------------------------
Balances at December 31, 2003                    $     814    $      --    $ 607,484   $(287,166)   $   --      $ 10,612  $ 331,744
====================================================================================================================================
Net income                                                                                52,756                             52,756
Other comprehensive income:
  Net change in unrealized gain on
    available for sale securities, net of tax                                                                     56,362     56,362
  Less: reclassification adjustment for gain
    included in net income                                                                                        (3,050)    (3,050)
Currency translation adjustments                                                                                   4,678      4,678
                                                                                                                          ---------
Comprehensive income                                                                                                      $ 110,746
Treasury stock -mature shares tendered related                                                                                   --
  to option exercise                                               (306)                                                       (306)
Issuance of common stock related to the 2:1
  stock split                                          823                      (823)                                            --
Exercise of stock options and warrants                  13                    16,329                                         16,342
Issuance of common stock for employee
  benefit plans                                          1                     4,266                                          4,267
Expense related to non-employee stock options
  and restricted stock granted to employees                                      449                                            449
Income tax benefit upon exercise of
  stock options                                                               14,202                                         14,202
------------------------------------------------------------------------------------------------------------------------------------
Balances at December 31, 2004                    $   1,651    $    (306)   $ 641,907   $(234,410)   $   --      $ 68,602  $ 477,444
====================================================================================================================================
Net income                                                                                63,656                             63,656
Other comprehensive income:
  Net change in unrealized (loss) on
    available for sale securities, net of tax                                                                    (46,171)   (46,171)
  Less: reclassification adjustment for gain
    included in net income                                                                                         1,853      1,853
Income tax benefit upon recognition
  of deferred tax assets and liabilities                                                                         (14,775)   (14,775)
  Currency translation adjustments                                                                                (9,421)    (9,421)
                                                                                                                          ---------
Comprehensive income                                                                                                      $  (4,858)
Recognition of deferred tax asset                                             30,199                                         30,199
Treasury stock - mature shares tendered related                                                                                  --
  to option exercise                                            (50,295)                                                    (50,295)
Issuance of common stock related to the 2:1
  stock split                                        1,720                    (1,720)                                            --
Conversion of long-term convertible notes                                         16                                             16
Exercise of stock options and warrants                  69                    76,346                                         76,415
Issuance of common stock for employee
  benefit plans                                          1                     3,506                                          3,507
Expense related to restricted stock granted
  to employees                                                                  (243)                                          (243)
Income tax benefit upon exercise of
  stock options                                                              103,590                                        103,590
------------------------------------------------------------------------------------------------------------------------------------
Balances at December 31, 2005                    $   3,441    $ (50,601)   $ 853,601   $(170,754)   $   --      $     88  $ 635,775
====================================================================================================================================

See accompanying Notes to Consolidated Financial Statements

F-7

CELGENE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, UNLESS OTHERWISE INDICATED)

(1) NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS AND BASIS OF PRESENTATION: Celgene Corporation and its subsidiaries (collectively "Celgene" or the "Company") is an integrated biopharmaceutical company primarily engaged in the discovery, development and commercialization of innovative therapies designed to treat cancer and immune-inflammatory diseases through regulation of cellular, genomic and proteomic targets. The Company's commercial stage programs include pharmaceutical sales of REVLIMID(R), THALOMID(R), and ALKERAN(R) and sales of FOCALIN(TM) to Novartis Pharma AG, or Novartis; a licensing agreement with Novartis which entitles us to royalties on FOCALIN XR(TM) and the entire RITALIN(R) family of drugs; a licensing and product supply agreement with Pharmion for its sales of thalidomide; and sales of bio-therapeutic products and services through its Cellular Therapeutics subsidiary.

REVLIMID(R) is an oral immunomodulatory drug approved by the U.S. Food and Drug Administration, or FDA, on December 27, 2005 for the treatment of patients with transfusion-dependent anemia due to low- or intermediate-1-risk myelodysplastic syndromes associated with a deletion 5q cytogenetic abnormality with or without additional cytogenetic abnormalities distributed through contracted pharmacies under the RevAssist(sm) program, which is a proprietary risk-management distribution program tailored specifically for REVLIMID(R). THALOMID(R) (thalidomide), approved by the FDA for the treatment of acute cutaneous manifestations of moderate to severe erythema nodosum leprosum, or ENL, an inflammatory complication of leprosy, is widely prescribed for treating multiple myeloma and other cancers. Net THALOMID(R) product sales accounted for approximately 72%, 82% and 82% of total revenues in 2005, 2004 and 2003, respectively. In October 2004, the Company acquired all of the outstanding shares of Penn T Limited, the UK-based manufacturer of THALOMID(R). This acquisition expanded the Company's corporate capabilities and enabled the Company to control manufacturing for THALOMID(R) worldwide. In March 2003, the Company entered into a supply and distribution agreement with GlaxoSmithKline, or GSK, to distribute, promote and sell in the United States ALKERAN(R) (melphalan), a therapy approved for the palliative treatment of multiple myeloma and of carcinoma of the ovary. FOCALIN(TM) is approved by the FDA for the treatment of attention deficit hyperactivity disorder, or ADHD, in children and adolescents. FOCALIN XR(TM), an extended release version is approved for the treatment of ADHD in adults, adolescents and children. FOCALIN(TM) and FOCALIN XR(TM) are marketed by Novartis. Under the agreement with Novartis, the Company receives royalty payments on the entire RITALIN(R) family line of products. In December 2002, the Company acquired Anthrogenesis Corp., or Celgene Cellular Therapeutics, a privately held New Jersey based biotherapeutics company and cord blood banking business, which is pioneering the recovery of stem cells from human placental tissues following the completion of full-term, successful pregnancies. The portfolio of products in the Company's preclinical and clinical-stage pipeline includes IMiDs(R) compounds, TNF(alpha) inhibitors, benzopyrans, kinases inhibitors and ligase inhibitors.

On December 27, 2005, the Company announced that the Board of Directors approved a two-for-one stock split payable in the form of a 100 percent stock dividend. Stockholders received one additional share for every share they owned as of the close of business on February 17, 2006. The additional shares were distributed on February 24, 2006. As a result, the Company's authorized shares increased from 280,000,000 to 580,000,000 and shares outstanding increased from 172,057,726 shares to 344,115,452 shares as of the close of business on February 24, 2006. All share and per share amounts in the consolidated financial statements have been restated to reflect the two-for-one stock split effective February 17, 2006.

F-8

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, UNLESS OTHERWISE INDICATED)

The consolidated financial statements include the accounts of Celgene Corporation and its subsidiaries. All inter-company transactions and balances have been eliminated. The equity method of accounting is used for the Company's investment in EntreMed common shares. Certain reclassifications have been made to prior years' financial statements in order to conform to the current year's presentation.

The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. The Company is subject to certain risks and uncertainties such as uncertainty of product development, uncertainties regarding regulatory approval, no assurance of market acceptance of products, risk of product liability, uncertain scope of patent and proprietary rights, intense competition, and rapid technological change.

CASH FLOW STATEMENT REVISION: The Company reports cash flows from operations using the indirect method as permitted under Statement of Financial Accounting Standards, or SFAS, No. 95, "Statement of Cash Flows". The Company previously followed the common practice of starting with income from continuing operations to reconcile to net operating cash flows. Upon further review, it was determined that cash flows from operations, under the indirect method, should be reported by reconciling from net income to net operating cash flows and therefore, the Company has revised its Consolidated Statement of Cash Flows for the year ended December 31, 2003. The revision does not result in a change to net cash provided by operating activities for the year then ended.

CASH EQUIVALENTS: At December 31, 2005 and 2004, cash equivalents were $83.6 million and $24.8 million, respectively, and consisted principally of highly liquid funds invested in commercial paper, money market funds, and U.S. government securities such as treasury bills and notes. These instruments have maturities of three months or less when purchased and are stated at cost, which approximates market value because of the short maturity of these investments.

FINANCIAL INSTRUMENTS: Certain financial instruments reflected in the Consolidated Balance Sheets, (e.g., cash and cash equivalents, accounts receivable, certain other assets, accounts payable and certain other liabilities) are recorded at cost, which approximate fair value due to their short-term nature. The fair values of financial instruments other than marketable securities are determined through a combination of management estimates and information obtained from third parties using the latest market data. The fair value of available for sale marketable securities is based on quoted market prices. The fair value of the following financial instruments are disclosed in the following footnotes: marketable securities (Note 4); EntreMed, Inc. common stock (Note 7); EntreMed, Inc. warrants (Note 8); convertible debt (Note 9); and a foreign currency forward contract is disclosed in the following paragraph.

DERIVATIVE INSTRUMENTS: The Company may periodically utilize foreign currency denominated forward contracts to hedge currency fluctuations of transactions denominated in currencies other than the functional currency. At December 31, 2005, the Company had one foreign currency forward contract outstanding to buy U.S. dollars and sell Swiss francs for a notional amount of $62.0 million. The forward contract expires on April 13, 2006 and is an economic hedge of a U.S. dollar payable of a Swiss foreign entity, which is remeasured through earnings each period based on changes in the spot rate. The unrealized loss on the forward contract, based on its fair value at December 31, 2005, was approximately $0.2 million, and was recorded in accrued expenses with the offsetting loss recorded in earnings.

MARKETABLE SECURITIES: The Company's marketable securities are all classified as securities available for sale in current assets and are carried at fair value. Such securities are held for an indefinite period of time and are intended to be used to meet the ongoing liquidity needs of the Company. Unrealized gains and losses (which are deemed to be temporary), if any, are reported in a separate component of stockholders' equity. The cost of investments in debt securities is adjusted for amortization of premiums and accretion of discounts

F-9

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, UNLESS OTHERWISE INDICATED)

to maturity. The amortization, along with realized gains and losses, is included in interest and other income. The cost of securities is based on the specific identification method.

Premiums and discounts are amortized or accreted over the life of the related available-for-sale security as an adjustment to yield using the effective-interest method. Dividend and interest income are recognized when earned.

A decline in the market value of any available-for-sale security below cost that is deemed to be other-than-temporary results in a reduction in carrying amount to fair value. The impairment would be charged to earnings and a new cost basis for the security established. Factors evaluated to determine if an investment is other-than-temporarily impaired include significant deterioration in the earnings performance, credit rating, asset quality, or business prospects of the issuer; adverse changes in the general market condition in which the issuer operates; the intent and ability to retain the investment for a sufficient period of time to allow for recovery in the market value of the investment; and, issues that raise concerns about the issuer's ability to continue as a going concern. At the end of 2005, the Company determined that two securities with an amortized cost basis of $7.0 million had sustained an other-than-temporary impairment and recognized a $3.1 million impairment loss, which was recorded in interest and other income, net.

CONCENTRATION OF CREDIT RISK: Cash, cash equivalents, and marketable securities are financial instruments that potentially subject the Company to concentration of credit risk. The Company invests its excess cash primarily in U.S. government agency securities, mortgage obligations and marketable debt securities of financial institutions and corporations with strong credit ratings. The Company may also invest in unrated or below investment grade securities, such as collateralized debt obligations or equity in private companies. The Company has established guidelines relative to diversification and maturities to maintain safety and liquidity. These guidelines are reviewed periodically and may be modified to take advantage of trends in yields and interest rates. The Company has the ability to sell these investments before maturity and has therefore classified the investments as available for sale. The Company has not realized any significant losses on disposal of its investments.

As is typical in the pharmaceutical industry, the Company sells its products primarily through wholesale distributors and therefore, wholesale distributors account for a large portion of the Company's trade receivables and net product revenues. In light of this concentration, the Company continuously monitors the creditworthiness of its customers and has internal policies regarding customer credit limits. The Company estimates an allowance for doubtful accounts based on the creditworthiness of its customers as well as general economic conditions. An adverse change in those factors could affect the Company's estimate of its bad debts.

INVENTORY: Inventories are carried at the lower of cost or market. Cost is determined using the first-in, first-out, or FIFO, method.

PROPERTY, PLANT AND EQUIPMENT: Plant and equipment are stated at cost. Depreciation of plant and equipment is provided using the straight-line method. Leasehold improvements are depreciated over the lesser of the economic useful life of the asset or the remaining term of the lease. The estimated useful lives of fixed assets are as follows:

Buildings                                       40 years
Building and operating equipment                15 years
Machinery and equipment                          5 years
Furniture and fixtures                           5 years
Computer equipment and software                  3 years

F-10

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, UNLESS OTHERWISE INDICATED)

Maintenance and repairs are charged to operations as incurred, while renewals and improvements are capitalized.

INVESTMENT IN AFFILIATED COMPANY: On March 31, 2005, the Company exercised warrants to purchase 7,000,000 shares of EntreMed, Inc. common stock. Since the Company also holds 3,350,000 shares of EntreMed voting preferred shares convertible into 16,750,000 shares of common stock, the Company determined that it has significant influence over its investee and is applying the equity method of accounting to its common stock investment effective March 31, 2005. As prescribed under the equity method of accounting, the Company began recording its share of EntreMed gains and losses based on the Company's common stock ownership percentage in the second quarter of 2005.

The investment is reviewed to determine whether an other-than-temporary decline in value of the investment has been sustained. If it is determined that the investment has sustained an other-than-temporary decline in its value, the investment will be written down to its fair value. Such an evaluation is judgmental and dependent on the specific facts and circumstances. Factors that the Company considers in determining whether an other-than-temporary decline in value has occurred include: the market value of the security in relation to its cost basis, the period of time that the market value is below cost, the financial condition of the investee and the intent and ability to retain the investment for a sufficient period of time to allow for recovery in the market value of the investment. The Company evaluates information that it is aware of in addition to quoted market prices, if any, in determining whether an other-than-temporary decline in value exists. After reviewing these factors, the Company has determined that as of December 31, 2005 no adjustment to its investment is required.

GOODWILL AND OTHER INTANGIBLE ASSETS: Goodwill represents the excess of cost of an acquired entity over the fair value of identifiable assets acquired and liabilities assumed in a business combination. Under SFAS No. 142, "Goodwill and Other Intangible Assets", or SFAS 142, goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but instead are tested for impairment at least annually in accordance with the provisions of SFAS 142. SFAS 142 also requires that intangible assets with estimable useful lives be amortized to their estimated residual values over their respective estimated useful lives, and reviewed for impairment in accordance with SFAS No. 144, "Accounting for Impairment or Disposal of Long-Lived Assets", or SFAS 144.

The Company's intangible assets are categorized as either supply agreements, contract based agreements or technology. Amortization periods related to these categories range from 12 to 14 years.

IMPAIRMENT OF LONG-LIVED ASSETS: In accordance with SFAS No. 144, long-lived assets, such as property, plant, and equipment, software costs and purchased intangibles subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future undiscounted net cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the consolidated balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed group classified as held for sale would be presented separately in the appropriate asset and liability sections of the consolidated balance sheet.

BUSINESS COMBINATIONS: SFAS No. 141, "Business Combinations", or SFAS 141, requires that all business combinations be accounted for using the purchase method of accounting. The Company's acquisitions of Penn T Limited on October 21, 2004 and Anthrogenesis Corp. on December 31, 2002, were accounted for using the purchase method.

F-11

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, UNLESS OTHERWISE INDICATED)

FOREIGN CURRENCY TRANSLATION: Operations in non-U.S. subsidiaries are generally recorded in local currencies which are also the functional currencies for financial reporting purposes. The results of operations for non-U.S. subsidiaries are translated from local currencies into U. S. dollars using the average currency rate during each period which approximates the results that would be obtained using actual currency rates on the dates of individual transactions. Assets and liabilities are translated using currency rates at the end of the period with translation adjustments recorded as a component of other comprehensive income. Transaction gains and losses are recorded as incurred in interest and other income, net in the Consolidated Statement of Operations.

ACQUIRED IN-PROCESS RESEARCH AND DEVELOPMENT ("IPR&D"): The value assigned to acquired in-process research and development is determined by identifying those acquired specific in-process research and development projects that would be continued and for which (a) technological feasibility has not been established at the acquisition date, (b) there is no alternative future use, and (c) the fair value is estimable with reasonable reliability. Amounts assigned to IPR&D are charged to expense at the acquisition date.

RESEARCH AND DEVELOPMENT COSTS: All research and development costs are expensed as incurred. These include all internal costs, external costs related to services contracted by the Company and research services conducted for others. Research and development costs consist primarily of salaries and benefits, contractor fees (paid principally to contract research organizations to assist in our clinical development programs), cost of drug supplies for our clinical and pre-clinical programs, costs of other consumable research supplies, regulatory and quality control expenditures and allocated facilities charges such as building rent and utilities. Upfront and milestone payments made to third parties in connection with research and development collaborations are expensed as incurred up to the point of regulatory approval. Payments made to third parties subsequent to regulatory approval are capitalized and amortized over the remaining useful life of the related product.

INCOME TAXES: The Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect for years in which the temporary differences are expected to reverse. A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax asset will not be realized. Research and development tax credits will be recognized as a reduction of the provision for income taxes when realized.

REVENUE RECOGNITION: Revenue from the sale of products is recognized upon product shipment. Provisions for discounts for early payments, rebates and sales returns under terms customary in the industry are provided for in the same period the related sales are recorded. Provisions recorded in 2005, 2004 and 2003 totaled approximately $103.2 million, $54.5 million and $38.8 million, respectively. Revenue under research contracts is recorded as earned under the contracts, as services are provided. In accordance with SEC Staff Accounting Bulletin ("SAB") No. 104 upfront nonrefundable fees associated with license and development agreements where the Company has continuing involvement in the agreement, are recorded as deferred revenue and recognized over the estimated service period of the last item of performance to be delivered. If the estimated service period is subsequently modified, the period over which the up-front fee is recognized is modified accordingly on a prospective basis.

SAB No. 104 requires companies to identify separate units of accounting based on the consensus reached on Emerging Issues Task Force, or EITF, Issue No. 00-21, "REVENUE ARRANGEMENTS WITH MULTIPLE DELIVERABLES", or EITF 00-21. EITF 00-21 provides guidance on how to determine when an arrangement that involves multiple revenue-generating activities or deliverables should be divided into separate units of accounting for revenue recognition purposes, and if this division is required, how the arrangement consideration should be allocated among the separate units of accounting. EITF 00-21 is effective for

F-12

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, UNLESS OTHERWISE INDICATED)

revenue arrangements entered into in quarters beginning after June 15, 2003. If the deliverables in a revenue arrangement constitute separate units of accounting according to the EITF's separation criteria, the revenue-recognition policy must be determined for each identified unit. If the arrangement is a single unit of accounting, the revenue-recognition policy must be determined for the entire arrangement. Revenues from the achievement of research and development milestones, which represent the achievement of a significant step in the research and development process, are recognized when and if the milestones are achieved.

Continuation of certain contracts and grants are dependent upon the Company achieving specific contractual milestones; however, none of the payments received to date are refundable regardless of the outcome of the project. Grant revenue is recognized in accordance with the terms of the grant and as services are performed, and generally equals the related research and development expense.

STOCK-BASED COMPENSATION: The Company applies the intrinsic value-based method of accounting prescribed by Accounting Principles Board, or APB, Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations, in accounting for its fixed stock option plans. As such, compensation expense for grants to employees or members of the Board of Directors would be recorded on the date of grant only if the current market price of the Company's stock exceeded the exercise price. SFAS No. 123, "Accounting for Stock-Based Compensation", or SFAS 123, as amended, establishes accounting and disclosure requirements using a fair value-based method of accounting for stock-based employee compensation plans. As permitted under SFAS 123, the Company has elected to continue to apply the intrinsic value-based method of accounting described above, and has adopted the disclosure requirements of SFAS 123, as amended.

If the exercise price of employee or director stock options is less than the fair value of the underlying stock on the grant date, the Company amortizes such differences to expense over the vesting period of the options. Options or stock awards issued to non-employees and consultants are recorded at fair value as determined in accordance with SFAS 123 and EITF No. 96-18, "Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services," and expensed over the related vesting period.

The following table illustrates the effect on net income and net income per share as if the fair-value-based method under SFAS 123 had been applied. Option forfeitures are accounted for as they occurred and no amounts of compensation expense have been capitalized into inventory or other assets, but instead are considered period expenses in the pro forma amounts. Per share data has been adjusted to reflect the February 17, 2006 two-for-one stock split.

F-13

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, UNLESS OTHERWISE INDICATED)

------------------------------------------------------------------------------------------------------------------------------------
                                                                                    2005                2004                2003
------------------------------------------------------------------------------------------------------------------------------------


 Net income, as reported                                                         $   63,656          $   52,756          $   25,693
   Add stock-based employee compensation (credit)
    expense included in reported net income (2005 net of
    tax)                                                                               (143)                250                 250
   Deduct total stock-based employee compensation
    expense determined under the fair value-based
    method (2005 net of tax) (1)                                                    (52,746)            (26,027)            (21,226)
                                                                               -----------------------------------------------------
 Pro forma net income                                                            $   10,767          $   26,979          $    4,717
                                                                               =====================================================

------------------------------------------------------------------------------------------------------------------------------------
Net income per common share:
   Basic, as reported                                                            $     0.19                0.16                0.08
   Basic, pro forma                                                                    0.03                0.08                0.01
   Diluted, as reported                                                                0.18                0.15                0.08
   Diluted, pro forma                                                                  0.03                0.08                0.01
------------------------------------------------------------------------------------------------------------------------------------

(1) Includes benefit attributable to recognizing deferred tax assets in 2005.

The weighted-average fair value per share was $9.60, $5.22 and $3.64 for stock options granted in 2005, 2004 and 2003, respectively. The Company estimated the fair values using the Black-Scholes option-pricing model based on the following assumptions:

----------------------------------------------------------------------------
                                          2005         2004        2003
----------------------------------------------------------------------------
Risk-free interest rate                   4.24%        3.05%       2.39%
Expected stock price volatility           40.6%        47.4%       52.5%
Expected term until exercise (years)      4.20         3.70        3.50
Expected dividend yield                      0%           0%          0%
============================================================================

EARNINGS PER SHARE: Basic earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding during the period increased to include all additional common shares that would have been outstanding assuming potentially dilutive common shares had been issued and any proceeds thereof used to repurchase common stock at the average market price during the period. The proceeds used to repurchase common stock are assumed to be the sum of the amount to be paid to the Company upon exercise of options, the amount of compensation cost attributed to future services and not yet recognized and, if applicable, the amount of income taxes that would be credited to or deducted from capital upon exercise.

COMPREHENSIVE INCOME (LOSS): Comprehensive income (loss), which represents the change in equity from non-owner sources, consists of net income (losses), changes in currency translation adjustments and the change in net unrealized gains (losses) on marketable securities classified as available for sale. Comprehensive income (loss) is presented in the Consolidated Statements of Stockholders' Equity.

CAPITALIZED SOFTWARE COSTS: Capitalized software costs are capitalized in accordance with Statement of Position No. 98-1, ACCOUNTING FOR THE COSTS OF COMPUTER SOFTWARE DEVELOPED AND OBTAINED FOR INTERNAL USE, are included in other assets and are amortized over their estimated useful life of three years from the date the systems are ready for their intended use.

F-14

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, UNLESS OTHERWISE INDICATED)

NEW ACCOUNTING PRINCIPLES: In December 2004 the FASB, issued SFAS No. 123R, "Share-Based Payment", or SFAS 123R. SFAS 123R requires compensation cost relating to share-based payment transactions be recognized in financial statements based on the fair value of the equity or liability instruments issued. SFAS 123R covers a wide range of share-based compensation arrangements including stock options, restricted stock plans, performance-based awards, stock appreciation rights, and employee stock purchase plans. SFAS 123R replaces SFAS 123, and supersedes APB Opinion No. 25, "Accounting for Stock Issued to Employees." SFAS 123, as originally issued in 1995, established as preferable a fair-value-based method of accounting for share-based payment transactions with employees. However, SFAS 123 permitted entities to continue to apply the guidance in APB Opinion No. 25, as long as the footnotes to financial statements disclosed what net income would have been had the preferable fair-value-based method been used. The Company will be required to adopt the provisions of SFAS 123R in the first quarter of fiscal year 2006. Management is currently evaluating the requirements of SFAS 123R. The adoption of SFAS 123R is expected to have a material effect on our consolidated financial statements as noted elsewhere in this footnote. However, the calculation of compensation cost for share-based payment transactions after the effective date of SFAS 123R may be different from the calculation of compensation cost under SFAS 123.

In November 2004, the FASB issued SFAS No. 151, "Inventory Costs--An Amendment of ARB No. 43. This Statement amends the guidance in ARB No. 43, Chapter 4, "Inventory Pricing," to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). The new rule requires that items such as idle facility expense, excessive spoilage, double freight, and rehandling costs be recognized as current-period charges regardless of whether they meet the criterion of "so abnormal" as stated in ARB No. 43. Additionally, SFAS 151 requires that the allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. SFAS 151 is effective for fiscal years beginning after June 15, 2005. The Company is currently evaluating the potential impact of this pronouncement on its financial position and results of operations.

EITF Issue No. 03-01, "The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments," or EITF 03-01, was issued in February 2004. The provisions of EITF 03-01 for measuring and recognizing an other-than-temporary impairment proved controversial and as a result, FASB Staff Position ("FSP") FSP FAS 115-1 and FAS 124-1, "The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments," was issued in November 2005, clarifying the requirements of EITF 03-01 concerning the evaluation of whether an impairment is other-than-temporary. FSP FAS 115-1 and FAS 124-1 refers to SEC Staff Accounting Bulletin ("SAB") Topic 5M, "Other Than Temporary Impairment of Certain Investments In Debt And Equity Securities," and EITF Issue No. 99-20, "Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interest in Securitized Financial Assets," to evaluate whether an impairment is other than temporary. We are in compliance with these requirements and continue to monitor these developments to assess the possible impact on our financial position and results of operations.

(2) ACQUISITIONS AND DISPOSITIONS

PENN T LIMITED: On October 21, 2004, the Company, through an indirect wholly-owned subsidiary, acquired all of the outstanding shares of Penn T Limited, or Penn T, a worldwide supplier of THALOMID(R), from a consortium of private investors for a US dollar equivalency of approximately $117.0 million in cash, net of cash acquired and including working capital adjustments and transaction costs paid during the first quarter of 2005. Penn T was subsequently renamed Celgene UK Manufacturing II, Limited, or CUK II. The results of CUK II after October 21, 2004 are included in the consolidated financial statements.

F-15

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, UNLESS OTHERWISE INDICATED)

The purchase price allocation resulted in the following amounts being allocated to the assets received and liabilities assumed based upon their respective fair values.

             --------------------------------------------------------
             Current assets, net of cash acquired         $  16,855
             Intangible assets                               99,841
             Goodwill                                        35,465
             --------------------------------------------------------
             Assets acquired                                152,161
             --------------------------------------------------------
             Current liabilities                              1,983
             Deferred taxes                                  33,144
             --------------------------------------------------------
             Liabilities assumed                             35,127
             --------------------------------------------------------
             Net assets acquired                           $117,034
             ========================================================

Prior to the  acquisition,  Celgene and Penn T were  parties to a  manufacturing

agreement pursuant to which Penn T manufactured THALOMID(R) for Celgene. Through a manufacturing agreement entered into with a third party in connection with the acquisition, the Company is able to control manufacturing for THALOMID(R) worldwide and increases its participation in the potential growth of THALOMID(R) opportunities in key international markets. This acquisition was accounted for using the purchase method of accounting for business combinations.

The intangible assets consist principally of a product supply agreement that is being amortized over its useful life, which is 13 years. The resulting goodwill and intangible asset have been assigned to the Company's Human Pharmaceuticals operating segment.

The following unaudited pro forma information presents a summary of consolidated results of operations for the year ended December 31, 2004 as if the acquisition of Penn T had occurred on January 1, 2004, adjusted to reflect the February 17, 2006 two-for-one stock split. The unaudited pro forma results of operations is presented for illustrative purposes only and is not necessarily indicative of the operating results that would have occurred if the transaction had been consummated at the date indicated, nor is it necessarily indicative of future operating results of the combined companies and should not be construed as representative of these amounts for any future dates or periods.

               ----------------------------------------------------
               Pro forma (UNAUDITED)                     2004
               ----------------------------------------------------

               Total revenues                        $  394,097
               Net income                                56,661
               Net income per diluted share          $     0.16
               ====================================================

The  unaudited  pro forma  information  includes  an  adjustment  to reflect the

amortization of intangible assets resulting from the acquisition.

DISPOSITION OF CHIRAL INTERMEDIATES BUSINESS: In January 1998, the Company completed the sale of its chiral intermediate business to Cambrex Corporation. The Company received $7.5 million upon the closing of the transaction and is entitled to future royalties, with a present value not exceeding $7.5 million and certain minimum royalty payments due in 2000 through 2003. Included in the transaction were the rights to Celgene's enzymatic technology for the production of chirally pure intermediates for the pharmaceutical industry, including the pipeline of third party products and the equipment and personnel associated with the business. Pursuant to the minimum royalty provision of the agreement, the Company received

F-16

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, UNLESS OTHERWISE INDICATED)

approximately $0.8 million during 2003. The chiral intermediates business is presented as a discontinued operation in the consolidated financial statements.

(3) EARNINGS PER SHARE (EPS)

------------------------------------------------------------------------------------------------------------------------------------
                                                                                        2005               2004              2003
------------------------------------------------------------------------------------------------------------------------------------
INCOME AVAILABLE TO COMMON STOCKHOLDERS:

Income from continuing operations                                                     $ 63,656           $ 52,756           $ 24,943
Discontinued Operations - gain on sale of chiral assets                                     --                 --                750
                                                                                   -------------------------------------------------
Net income                                                                              63,656             52,756             25,693
Interest expense on convertible debt, net of tax                                         5,571                 --                 --
                                                                                   -------------------------------------------------
Net income available to common stockholders                                           $ 69,227           $ 52,756           $ 25,693
                                                                                   =================================================

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:

Basic:                                                                                 335,512            327,738            323,548
Effect of dilutive securities:
    Options                                                                             21,204             17,062             17,480
    Warrants                                                                               353                436                372
    Restricted shares and other long-term incentives                                       494                474                192
    Convertible debt                                                                    33,022                 --                 --
                                                                                   -------------------------------------------------
Diluted:                                                                               390,585            345,710            341,592
                                                                                   =================================================

EARNINGS PER SHARE:
Income from continuing operations
    Basic                                                                             $   0.19           $   0.16           $   0.08
    Diluted                                                                           $   0.18           $   0.15           $   0.07
Discontinued operations
    Basic                                                                             $     --           $     --           $     --
    Diluted                                                                           $     --           $     --           $   0.01
Net income
    Basic                                                                             $   0.19           $   0.16           $   0.08
    Diluted                                                                           $   0.18           $   0.15           $   0.08
------------------------------------------------------------------------------------------------------------------------------------

The potential common shares related to the convertible notes issued June 3, 2003 (see Note 9) were anti-dilutive and were excluded from the diluted earnings per share computation for the years 2004 and 2003. The total number of potential common shares excluded from the diluted earnings per share computation because their inclusion would have been anti-dilutive was 10,224, 41,686,756 and 42,257,440 shares in 2005, 2004 and 2003, respectively. Share and per share amounts have been adjusted to reflect the February 17, 2006 two-for-one stock split.

F-17

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, UNLESS OTHERWISE INDICATED)

(4) MARKETABLE SECURITIES AVAILABLE FOR SALE

The amortized cost, gross unrealized holding gains, gross unrealized holding losses and estimated fair value of available-for-sale securities by major security type and class of security at December 31, 2005 and 2004 was as follows:

-------------------------------------------------------------------------------------------------------
                                                                     GROSS       GROSS      ESTIMATED
                                                      AMORTIZED   UNREALIZED   UNREALIZED     FAIR
DECEMBER 31, 2005                                       COST         GAIN         LOSS        VALUE
-------------------------------------------------------------------------------------------------------
Mortgage-backed obligations                           $ 118,222   $     366    $  (1,459)   $ 117,129
Government agency bonds and notes                        95,961          39       (2,373)      93,627
Corporate debt securities                               128,292         192       (5,338)     123,146
Auction rate notes                                      232,575          --           --      232,575
Marketable equity securities                             20,212      14,255           --       34,467
                                                  -----------------------------------------------------
                                                      $ 595,262   $  14,852    $   (9,170)  $ 600,944
                                                  =====================================================

-------------------------------------------------------------------------------------------------------
                                                                     GROSS       GROSS      ESTIMATED
                                                      AMORTIZED   UNREALIZED   UNREALIZED     FAIR
DECEMBER 31, 2004                                       COST         GAIN         LOSS        VALUE
-------------------------------------------------------------------------------------------------------
Mortgage-backed obligations                           $ 166,959   $   1,107    $    (904)   $ 167,162
Government agency bonds and notes                           798          --           (7)         791
Corporate debt securities                               147,864       2,723         (650)     149,937
Auction rate notes                                      213,550          --           --      213,550
Marketable equity securities                             20,212      61,658           --       81,870
                                                  -----------------------------------------------------
                                                      $ 549,383   $  65,488    $  (1,561)   $ 613,310
                                                  =====================================================

The fair value of available-for-sale securities with unrealized losses at December 31, 2005 was as follows:

------------------------------------------------------------------------------------------------------------------------
                                                        LESS THAN 12 MONTHS   12 MONTHS OR LONGER          TOTAL
                                                      ---------------------- --------------------- ---------------------
                                                       ESTIMATED    GROSS    ESTIMATED    GROSS    ESTIMATED    GROSS
                                                          FAIR    UNREALIZED   FAIR     UNREALIZED   FAIR     UNREALIZED
DECEMBER 31, 2005                                        VALUE      LOSS       VALUE      LOSS       VALUE      LOSS
------------------------------------------------------------------------------------------------------------------------
Mortgage-backed
obligations                                            $ 26,211   $    218   $ 46,699   $  1,241   $ 72,910   $  1,459
Government agency bonds
   and notes                                             78,469      2,364        236          9     78,705      2,373
Corporate debt securities                               100,875      4,633     14,295        705    115,170      5,338
                                                       -----------------------------------------------------------------
                                                       $205,555   $  7,215   $ 61,230   $  1,955   $266,785   $  9,170
                                                       =================================================================

Government agency bonds and notes include U.S. Treasury and U.S. government agency obligations. Unrealized losses for mortgage-backed obligations and government agency bonds and notes were primarily due to increases in interest rates. Unrealized losses for corporate debt securities were primarily due to increases in interest rates as well as downgrades by corporate bond rating agencies. Celgene has more then sufficient liquidity and the intent to hold these securities until the market value recovers. Moreover, the Company does not believe it is probable that it will be unable to collect all amounts due according to the contractual terms of the individual investments.

F-18

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, UNLESS OTHERWISE INDICATED)

Duration of debt securities classified as available-for-sale were as follows at December 31, 2005:

             -------------------------------------------------------------------
                                                      AMORTIZED        FAIR
                                                        COST           VALUE
             -------------------------------------------------------------------

             Duration of one year or less           $    273,007   $    272,857
             Duration of one through three years          76,632         75,714
             Duration of three through five years        219,569        213,070
             Duration of five through seven years          2,985          1,980
             Duration greater than seven years             2,857          2,856
                                                   -----------------------------
                                                    $    575,050   $    566,477
                                                   =============================

(5)      INVENTORY

Inventory at December 31, 2005 and 2004 consisted of the following:

             -------------------------------------------------------------------
                                                        2005           2004
             -------------------------------------------------------------------

             Raw materials                          $      5,044   $      4,081
             Work in process                               1,644          4,356
             Finished goods                               13,554         15,967
                                                   -----------------------------
                                                    $     20,242   $     24,404
                                                   =============================

(6)      PLANT AND EQUIPMENT

Plant and equipment at December 31, 2005 and 2004 consisted of the following:

             -------------------------------------------------------------------
                                                         2005            2004
             -------------------------------------------------------------------

             Land                                   $     17,836   $     14,700
             Buildings                                    12,509         10,658
             Building and operating equipment              2,618            -
             Leasehold improvements                        8,741         14,355
             Machinery and equipment                      27,603         22,955
             Furniture and fixtures                        6,751          3,865
             Computer equipment and software              22,370         11,989
             Construction in progress                      7,103             63
                                                   -----------------------------
                                                         105,531         78,585
             Less:  accumulated depreciation and
                       Amortization                       28,054         24,847
                                                   -----------------------------
                                                    $     77,477   $     53,738
                                                   =============================


(7)      INVESTMENT IN AFFILIATED COMPANY

On March 31, 2005, the Company exercised warrants to purchase 7,000,000 shares of EntreMed, Inc. common stock at an aggregate cost of $10.5 million. The fair value of the warrants at the time of exercise was estimated to be approximately $12.9 million. As a result, the total value ascribed to the Company's investment was $23.4 million. Since the Company also holds 3,350,000 shares of EntreMed voting preferred shares that are convertible into 16,750,000 shares of common stock, the Company determined that it has significant influence over its investee and is applying the equity method of accounting to its common stock

F-19

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, UNLESS OTHERWISE INDICATED)

investment effective March 31, 2005. At March 31, 2005, the residual investment, after taking a charge of approximately $4.4 million to write down the portion of the investment ascribed to in-process research and development (the charge was included in equity losses of affiliated company), exceeded the Company's proportionate share of the EntreMed net assets by approximately $13.4 million and consisted of goodwill and intangibles of approximately $12.6 million and $0.8 million, respectively. As prescribed under the equity method of accounting, the Company began recording its share of EntreMed gains and losses based on the Company's common stock ownership percentage subsequent to that date. The investment in EntreMed had a carrying value of approximately $17.0 million at December 31, 2005, which exceeds estimated fair value of the Company's common stock investment by approximately $3.4 million based on the closing share price of EntreMed common stock on December 31, 2005. The Company deems this decline below carrying value to be temporary. Financial results of the EntreMed equity method investment are included in the human pharmaceuticals segment.

A summary of EntreMed's financial information follows:

                                                        December 31, 2005
-----------------------------------------------------------------------------
                                                         (Unaudited)
Current assets                                       $        35,326
Noncurrent assets                                              1,106
                                                     ------------------------
Total assets                                         $        36,432
-----------------------------------------------------------------------------

Current liabilities                                  $         6,649
Noncurrent liabilities                                           230
Minority interest                                                 17
Total equity                                                  29,536
                                                     ------------------------
Total liabilities and equity                         $        36,432
-----------------------------------------------------------------------------
                                                           (Audited)
Interest in EntreMed equity (1)                      $         4,025
Excess of investment over share of EntreMed equity            12,992
                                                     ------------------------
Total investment                                     $        17,017
=============================================================================

                                                       Nine-Month Period
                                                             Ended
                                                       December 31, 2005
-----------------------------------------------------------------------------
                                                          (Unaudited)
Total revenues                                       $         5,893
Operating loss                                                11,648
Net loss                                                      10,792
-----------------------------------------------------------------------------
                                                            (Audited)
Celgene share of EntreMed, Inc. losses (1)           $          1,617
Amortization of intangibles                                       236
Write-off of in-process research and development                4,383
Elimination of inter-company transaction                          687
                                                     ------------------------
Equity in losses of affiliated company               $          6,923
=============================================================================

(1) The Company records its share of losses based on its common stock ownership of approximately 14% at December 31, 2005.

On February 2, 2006 the Company, along with a group of investors, entered into an agreement to invest $30.0 million in EntreMed in return for newly issued EntreMed common stock and warrants to purchase additional shares of EntreMed common stock at a conversion price of $2.3125 per warrant. The Company's portion of the investment was $2.0 million for which it received 864,864 shares of EntreMed common stock

F-20

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, UNLESS OTHERWISE INDICATED)

and 432,432 warrants. The warrants will be accounted for at fair value with changes in fair value recorded through earnings.

(8) OTHER FINANCIAL INFORMATION

Accrued expenses at December 31, 2005 and 2004 consisted of the following:

--------------------------------------------------------------------------
                                                 2005            2004
--------------------------------------------------------------------------

Professional and consulting fees              $     3,906   $     2,026
Accrued compensation                               22,087        15,783
Accrued interest, royalties and license fees       18,181        12,840
Accrued sales returns                               5,017         9,595
Accrued rebates and chargebacks                    27,763         9,255
Accrued acquisition related costs                      --         8,010
Accrued clinical trial costs                       10,866         7,440
Accrued insurance and taxes                         2,256         1,882
Other                                               2,832         1,703
                                             -----------------------------
                                              $    92,908   $    68,534
                                             =============================

Other assets at December 31, 2005 and 2004 consisted of the following:

      --------------------------------------------------------------------------
                                                       2005            2004
      --------------------------------------------------------------------------

      Long-term investments                         $     7,000   $     7,000
      Long-term deposits                                  1,754         1,495
      Debt issuance costs                                 5,904         8,347
      EntreMed Inc. warrants                                 --        19,768
      Other                                               2,585         2,239
                                                   -----------------------------
                                                    $    17,243   $    38,849
                                                   =============================

On March 31, 2005, the Company  exercised the EntreMed Inc. warrants to purchase
7,000,000  shares of EntreMed  common stock and has applied the equity method of
accounting to its common stock  investment in EntreMed  subsequent to that date.

Interest and other income, net included unrealized losses of $6.9 million and $1.9 million related to EntreMed warrants for the years ended December 31, 2005 and 2004, respectively.

(9) CONVERTIBLE DEBT

In June 2003, the Company issued an aggregate principal amount of $400.0 million of unsecured convertible notes. The notes have a five-year term and a coupon rate of 1.75% payable semi-annually on June 1 and December 1. Each $1,000 principal amount of convertible notes is convertible into 82.5592 shares of common stock as adjusted, or a conversion rate of $12.1125 per share, which represented a 50% premium to the closing price on May 28, 2003 of the Company's common stock of $8.075, after adjusting prices for the two-for-one stock splits affected on February 17, 2006 and October 22, 2004. The debt issuance costs related to these convertible notes, which totaled approximately $12.2 million, are classified under "Other Assets" on the consolidated balance sheet and are being amortized over five years, assuming no conversion. Under the terms of the purchase agreement, the noteholders can convert the outstanding notes at any time into 33,022,360 shares of common stock at the conversion price. In addition, the noteholders have the right to require the Company to redeem the notes in cash at a price equal to 100% of the principal amount to be

F-21

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, UNLESS OTHERWISE INDICATED)

redeemed, plus accrued interest, prior to maturity in the event of a change of control and certain other transactions defined as a "fundamental change", within the agreement. The Company registered the notes and common stock issuable upon conversion of the notes with the Securities and Exchange Commission, and is required to use reasonable best efforts to keep the related registration statement effective for the defined period. During the year ended December 31, 2005, an immaterial amount of principal was converted into common stock.

At December 31, 2005 and 2004, the fair value of the Company's convertible notes exceeded the carrying value of $400.0 million by approximately $660.0 million and $117.0 million respectively.

(10) GOODWILL AND INTANGIBLE ASSETS

INTANGIBLE ASSETS: At December 31, 2005, the Company's intangible assets primarily related to the October 21, 2004 acquisition of Penn T and are being amortized over their estimated useful lives. In December 2005, the Company recognized a $4.3 million intangible for a licensing agreement with Children's Medical Center Corporation, or CMCC, which is being amortized over the patent life of the related product. Intangible asset balances related to the acquisition of Anthrogenesis Corp. were eliminated during the first quarter of 2005 as prescribed by SFAS 109 "Accounting for Income Taxes" due to reversal of the valuation allowance for deferred tax assets recorded at time of acquisition. The gross carrying value and accumulated amortization by major intangible asset class at December 31, 2005 and 2004 were as follows:

----------------------------------------------------------------------------------------------------------------------
                                                           2005
----------------------------------------------------------------------------------------------------------------------
                                        Gross                             Cumulative       Intangible      Weighted
                                       Carrying        Accumulated       Translation         Assets,        Average
                                        Value         Amortization        Adjustment           Net        Life (Years)
----------------------------------------------------------------------------------------------------------------------
   Penn T supply agreements            $ 99,841         $ (2,787)         $ (4,435)         $ 92,619           12.9
   License                                4,250             --                  --             4,250           13.8
   Technology                               122               (3)               --               119           12.0
----------------------------------------------------------------------------------------------------------------------
Total                                  $104,213         $ (2,790)         $ (4,435)         $ 96,988           13.0
======================================================================================================================


----------------------------------------------------------------------------------------------------------------------
                                                           2004
----------------------------------------------------------------------------------------------------------------------
                                        Gross                             Cumulative       Intangible      Weighted
                                       Carrying        Accumulated       Translation         Assets,        Average
                                        Value         Amortization        Adjustment           Net        Life (Years)
----------------------------------------------------------------------------------------------------------------------
Penn T acquisition:
   Supply agreements                   $ 99,841         $    (75)         $  6,802          $106,568          12.9
Anthrogenesis acquisition:
   Supplier relationships                   710             (284)               --               426           5.0
   Customer lists                         1,700             (227)               --             1,473          15.0
   Technology                               609             (121)               --               488          10.0
----------------------------------------------------------------------------------------------------------------------
Total                                  $102,860         $   (707)         $  6,802          $108,955          12.9
======================================================================================================================

Amortization of acquired intangible assets was approximately $2.1 million and $0.4 million for the years ended December 31, 2005 and 2004, respectively. Assuming no changes in the gross carrying amount of intangible assets, the amortization of intangible assets for the next five fiscal years is estimated to be approximately $8.5 million for 2006 and $8.1 million for each of the years 2007 through 2010.

GOODWILL: At December 31, 2005, the Company's recorded goodwill related to the acquisition of Penn T on October 21, 2004 and has been allocated to the Company's human pharmaceuticals segment. Goodwill

F-22

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, UNLESS OTHERWISE INDICATED)

related to the acquisition of Anthrogenesis Corp. was eliminated during the first quarter of 2005 as prescribed by SFAS 109, "Accounting for Income Taxes," due to reversal of the valuation allowance for deferred tax assets that had been recorded at time of acquisition. The changes in the carrying value of goodwill are summarized as follows:

----------------------------------------------------------------------------------------------------
                                                           Human        Stem Cell
                                                      Pharmaceuticals    Therapy        Total
----------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2003                                $     --       $  3,490       $  3,490
Proceeds from sale of net operating loss tax benefit            --           (484)          (484)
Penn T acquisition                                          35,812             --         35,812
Foreign currency translation                                 2,440             --          2,440
                                                      ----------------------------------------------
BALANCE, DECEMBER 31, 2004                                $ 38,252       $  3,006       $ 41,258
Reversal of deferred tax asset valuations                     --           (3,006)        (3,006)
Purchase accounting adjustments                               (347)            --           (347)
Foreign currency translation                                (4,090)            --         (4,090)
                                                      ----------------------------------------------
BALANCE, DECEMBER 31, 2005                                $ 33,815       $     --       $ 33,815
====================================================================================================

(11) RELATED PARTY TRANSACTIONS: EntreMed earns royalty income relating to THALOMID(R). As prescribed under the equity method of accounting, the Company eliminates its share of EntreMed's royalty income.

In March 2005, the Company licensed to EntreMed rights to develop and commercialize its tubulin inhibitor compounds. Under the terms of the agreement, Celgene received an up-front license payment of $1.0 million and is entitled to additional payments upon successful completion of certain clinical, regulatory and sales milestones. Under the agreement, EntreMed will provide all resources needed to conduct clinical research and regulatory activities associated with seeking marketing approvals of the tubulin inhibitors for oncology applications.

(12) STOCKHOLDERS' EQUITY

PREFERRED STOCK: The Board of Directors is authorized to issue, at any time, without further stockholder approval, up to 5,000,000 shares of preferred stock, and to determine the price, rights, privileges, and preferences of such shares.

COMMON STOCK: On December 27, 2005, the Company announced a two-for-one stock split payable in the form of a 100 percent stock dividend to shareholders of record on February 17, 2006. On February 16, 2006, the Company's shareholders approved an increase in the number of authorized common shares of stock from 275,000,000 to 575,000,000 with a par value of $.01 per share, of which 342,171,876 shares were outstanding at December 31, 2005.

TREASURY STOCK: During 2005, certain employees exercised certain stock options containing a reload feature and, pursuant to our stock option plan, tendered 1,831,054 mature shares related to stock option exercises. Such tendered shares are reflected as treasury stock. At December 31, 2005, treasury shares totaled 1,953,282.

F-23

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, UNLESS OTHERWISE INDICATED)

A summary of changes in common stock issued and treasury stock is presented below:

----------------------------------------------------------------------------------------------------------
                                                                                           Common Stock
Balance December 31,                                                      Common Stock     in Treasury
----------------------------------------------------------------------------------------------------------
2002                                                                       80,176,713               --
----------------------------------------------------------------------------------------------------------
Exercise of stock options and warrants                                      1,105,074               --
Issuance of common stock for employee benefit plans                           129,268               --
----------------------------------------------------------------------------------------------------------
2003                                                                       81,411,055               --
----------------------------------------------------------------------------------------------------------
Exercise of stock options and warrants                                      1,300,297               --
Issuance of common stock for employee benefit plans                            98,215               --
Treasury stock - mature shares tendered related to option exercises                --           (5,282)
Issuance of common stock related to 2:1 stock split                        82,269,631           (5,282)
----------------------------------------------------------------------------------------------------------
2004                                                                      165,079,198          (10,564)
----------------------------------------------------------------------------------------------------------
Exercise of stock options and warrants                                      6,850,375               --
Issuance of common stock for employee  benefit  plans                         132,346               --
Treasury  stock - mature shares tendered related to option exercises               --         (966,077)
Conversion of long-term convertible notes                                         660               --
Issuance of common stock related to 2:1 stock split                       172,062,579         (976,641)
----------------------------------------------------------------------------------------------------------
2005                                                                      344,125,158       (1,953,282)
==========================================================================================================

RIGHTS PLAN: During 1996, the Company adopted a shareholder rights plan, or Rights Plan. The Rights Plan involves the distribution of one Right as a dividend on each outstanding share of the Company's common stock to each holder of record on September 26, 1996. Each Right shall entitle the holder to purchase one-tenth of a share of common stock. The Rights trade in tandem with the common stock until, and are exercisable upon, certain triggering events, and the exercise price is based on the estimated long-term value of the Company's common stock. In certain circumstances, the Rights Plan permits the holders to purchase shares of the Company's common stock at a discounted rate. The Company's Board of Directors retains the right at all times prior to acquisition of 15% of the Company's voting common stock by an acquirer, to discontinue the Rights Plan through the redemption of all rights or to amend the Rights Plan in any respect. The Rights Plan, as amended on February 17, 2000, increased the exercise price per Right from $100.00 to $700.00 and extended the final expiration date of the Rights Plan to February 17, 2010. On August 13, 2003, the Rights Plan was further amended to permit a qualified institutional investor to beneficially own up to 17% of the Company's common stock outstanding without being deemed an "acquiring person," if such institutional investor meets certain requirements.

(13) STOCK-BASED COMPENSATION

STOCK OPTIONS AND RESTRICTED STOCK AWARDS: The Company has one shareholder approved equity incentive plan, or the Incentive Plan, that provides for the granting of options, restricted stock awards, stock appreciation rights, performance awards and other stock-based awards to employees and officers of the Company to purchase not more than an aggregate of 69,700,000 shares of common stock under the 1998 plan, as amended, subject to adjustment under certain circumstances. The Management Compensation and Development Committee of the Board of Directors, or the Compensation Committee, determines the type, amount and terms, including vesting, of any awards made under the Incentive Plans. The 1998 Plan will terminate in 2008.

F-24

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, UNLESS OTHERWISE INDICATED)

With respect to options granted under the Incentive Plan, the exercise price may not be less than the market price of the common stock on the date of grant. In general, options granted under the Incentive Plan vest over periods ranging from immediate vesting to four-year vesting and expire ten years from the date of grant, subject to earlier expiration in case of termination of employment. The vesting period for options and restricted stock awards granted under the Plans is subject to certain acceleration provisions if a change in control, as defined in the Plans, occurs.

As a result of the acquisition of Anthrogenesis, the Company assumed the former Anthrogenesis Qualified Employee Incentive Stock Option Plan and the Anthrogenesis Non-Qualified Recruiting and Retention Stock Option Plan. Options granted under the Anthrogenesis plans prior to Celgene's acquisition of Anthrogenesis generally vested immediately and expire ten years from the date of grant. The Anthrogenesis options converted into Celgene options at an exchange ratio of 0.4545 on a pre-October 2004 and February 2006 stock split basis. No future awards will be granted under the Non-Qualified Plan. The Qualified Plan authorizes the award of incentive stock options, which are stock options that qualify for special federal income tax treatment. The exercise price of any stock options granted under the Qualified Plan may not be less than the fair value of the common stock on the date of grant. In general, options granted under the Qualified Plan vest evenly over a four-year period and expire ten years from the date of grant, subject to earlier expiration in case of termination of employment. The vesting period is subject to certain acceleration provisions if a change in control occurs. No award will be granted under the Qualified Plan on or after December 31, 2008.

Stock options granted to executives at the vice-president level and above, after September 18, 2000, contain a reload feature which provides that if (1) the optionee exercises all or any portion of the stock option (a) at least six months prior to the expiration of the stock option, (b) while employed by the Company and (c) prior to the expiration date of the 1998 Incentive Plan and (2) the optionee pays the exercise price for the portion of the stock option exercised or pays applicable withholding taxes by using common stock owned by the optionee for at least six months prior to the date of exercise, the optionee shall be granted a new stock option under the 1998 Incentive Plan on the date all or any portion of the stock option is exercised to purchase the number of shares of common stock equal to the number of shares of common stock exchanged by the optionee to exercise the stock option or to pay withholding taxes thereon. The reload stock option will be exercisable on the same terms and conditions as apply to the original stock option except that (x) the reload stock option will become exercisable in full on the day which is six months after the date the original stock option is exercised, (y) the exercise price shall be the fair value (as defined in the 1998 Incentive Plan) of the common stock on the date the reload stock option is granted and (z) the expiration of the reload stock option will be the date of expiration of the original stock option. An optionee may not reload the reload stock option unless otherwise permitted by the Compensation Committee. As of December 31, 2005, the Company has issued 10,876,300 stock options to executives that contain the reload features noted above, of which 6,232,004 are still outstanding.

In June 1995, the stockholders of the Company approved the 1995 Non-Employee Directors' Incentive Plan, which, as amended, provides for the granting of non-qualified stock options to purchase an aggregate of not more than 4,100,000 shares of common stock (subject to adjustment under certain circumstances) to directors of the Company who are not officers or employees of the Company, or Non-Employee Directors. Each new Non-Employee Director, upon the date of election or appointment, receives an option to purchase 20,000 shares of common stock, which vest in four equal annual installments commencing on the first anniversary of the date of grant. Additionally, upon the date of each annual meeting of stockholders, each continuing Non-Employee Director receives an option to purchase 10,000 shares of common stock (or a pro rata portion thereof for service less than one year), which vest in full on the date of the first annual meeting of stockholders held following the date of grant. As amended in 2003, continuing Non-Employee Directors receive quarterly grants of 3,750 options aggregating 15,000 options annually, instead of receiving one

F-25

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, UNLESS OTHERWISE INDICATED)

annual grant of 15,000 options and vesting occurs one year from the date of grant instead of on the date of the first annual meeting of stockholders held following the date of grant. The 1995 Non-Employee Directors' Incentive Plan also provides for a discretionary grant upon the date of each annual meeting of an additional option to purchase up to 5,000 shares to a Non-employee Director who serves as a member (but not a chairman) of a committee of the Board of Directors and up to 10,000 shares to a Non-employee Director who serves as the chairman of a committee of the Board of Directors. All options are granted at an exercise price that equals the fair value of the Company's common stock at the grant date and expire ten years after the date of grant. This plan terminates on June 30, 2015. In December 2005, in recognition of the significance of the REVLIMID(R) regulatory approval, continuing Non-Employee Directors received the 2006 annual stock option award of 15,000 shares, which were granted at an exercise price equal to the fair value of the Company's common stock on December 29, 2005 and vest pursuant to the standard terms of the plan.

In June 2005, the stockholders of the Company approved amendments to the 1998 Stock Incentive Plan, or the 1998 Plan, and the 1995 Non-Employee Directors' Incentive Plan, or the 1995 Plan, to among other things, increase, on a pre-split basis, the number of shares of common stock that may be subject to awards from 25,000,000 to 31,000,000 for the 1998 Plan and from 3,600,000 to 3,850,000 for the 1995 Plan.

The following table summarizes the stock option activity for the aforementioned Plans:

--------------------------------------------------------------------------------
                                                      OPTIONS OUTSTANDING
                                                --------------------------------
                                                                 WEIGHTED
                                   SHARES                        AVERAGE
                                 AVAILABLE                       EXERCISE
Balance December 31,             FOR GRANT        SHARES      PRICE PER SHARE
-------------------------------------------------------------------------------
2002                             1,160,723      10,829,432        $21.37
-------------------------------------------------------------------------------
    Authorized                   4,000,000             ---           ---
    Expired                       (308,857)            ---           ---
    Granted                     (2,424,027)      2,424,027         36.60
    Exercised                          ---      (1,041,618)        10.69
    Cancelled                      172,826        (200,092)        26.78
-------------------------------------------------------------------------------
2003                             2,600,665      12,011,749        $25.28
-------------------------------------------------------------------------------
    Stock split impact           2,600,665      11,324,297           ---
    Granted                     (4,073,768)      4,073,768         27.36
    Exercised                          ---      (1,300,297)         7.99
    Cancelled                      793,837        (844,799)        19.27
-------------------------------------------------------------------------------
2004                             1,921,399      25,264,718        $15.15
-------------------------------------------------------------------------------
    Authorized                   6,250,000             ---           ---
    Granted                     (7,302,665)      7,302,665         54.32
    Exercised                          ---      (6,840,682)        11.16
    Cancelled                      405,262        (429,512)        23.72
    Stock split impact           1,273,996      25,297,189           ---
-------------------------------------------------------------------------------
2005                             2,547,992      50,594,378        $13.70
================================================================================

F-26

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, UNLESS OTHERWISE INDICATED)

The following table summarizes information concerning options outstanding under the Incentive Plans at December 31, 2005:

------------------------------------------------------------------------------
                        OPTIONS OUTSTANDING            OPTIONS EXERCISABLE
                 ----------------------------------- -------------------------
                               WEIGHTED   WEIGHTED                   WEIGHTED
                               AVERAGE     AVERAGE                   AVERAGE
  RANGE OF         NUMBER      EXERCISE   REMAINING    NUMBER        EXERCISE

EXERCISE PRICES OUTSTANDING PRICE TERM (YRS.) EXERCISABLE PRICE

$ 0.04 - 5.00      9,773,502  $   2.15      4.0        9,753,502    $   2.15
  5.01 - 10.00    12,174,984      6.88      5.8       12,134,434        6.92
 10.01 - 15.00    11,177,106     12.65      7.9       10,950,572       12.91
 15.01 - 20.00     6,086,396     16.52      7.2        5,694,516       17.65
 20.01 - 30.00     4,982,196     25.10      8.5        4,739,246       26.38
 30.01 - 35.67     6,400,194     34.62      9.9        6,188,194       35.81
                 -------------------------------------------------------------
                  50,594,378  $  13.70      6.9       49,460,464    $  14.02
                 =============================================================

In December 2005, in recognition of the significance of the REVLIMID(R) regulatory approval, the Board of Directors approved a resolution to grant the 2006 annual stock option awards in 2005. All stock options awarded were granted fully vested. Half of the options granted had an exercise price, or strike price, of $34.05 per option, which was at a 5% premium to the split-adjusted closing price of the Company's common stock of $32.43 on the grant date of December 29, 2005, the remaining options granted had a strike price of $35.67 per option, which was at a 10% premium to the split-adjusted closing price of the Company's common stock of $32.43 on the grant date of December 29, 2005. The Board's decision to grant these options was in recognition of the REVLIMID(R) regulatory approval and in response to a review of the Company's long-term incentive compensation programs in light of changes in market practices and recently issued changes in accounting rules resulting from the issuance of SFAS 123R, which the Company is required to adopt effective in the first quarter of 2006. In addition, the Company granted certain options to key-employees at exercise prices equal to the market price of the Company's common stock on the date of grant that also vested immediately. Management believes that granting fully vested options prior to the adoption of SFAS 123R will result in the Company not being required to recognize cumulative compensation expense of approximately $76.0 million for the four-year period ending December 31, 2009.

During 2001, the Company issued to certain employees an aggregate of 210,000 restricted stock awards of which 120,000 are still outstanding. Such restricted stock awards will vest on September 19, 2006, unless certain conditions that would trigger accelerated vesting are otherwise met prior to such date. The fair value of these restricted stock awards at the grant date was $0.8 million, which is being amortized as compensation expense over the contractual vesting period and classified in selling, general and administrative expenses. The Company recorded a $0.2 million credit to compensation expense for the year ended December 31, 2005 due to cancellation of 90,000 restricted stock awards during the year. The Company recorded compensation expense of $0.3 million for the years ended December 31, 2004 and 2003, respectively.

WARRANTS: In connection with its acquisition of Anthrogenesis, the Company assumed the Anthrogenesis warrants outstanding, which were converted into warrants to purchase 867,356 shares of the Company's common stock. Anthrogenesis had issued warrants to investors at exercise prices equivalent to the per share price of their investment. As of December 31, 2005, Celgene had 404,696 warrants outstanding to acquire an equivalent number of shares of Celgene common stock at a weighted average exercise price of $2.95 per warrant. These warrants expire on various dates from 2008 to 2012.

F-27

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, UNLESS OTHERWISE INDICATED)

(14) EMPLOYEE BENEFIT PLANS

The Company sponsors an investment savings plan, which qualifies under Section 401(k) of the Internal Revenue Code, as amended. The Company's contributions to the savings plan are discretionary and have historically been made in the form of the Company's common stock. Such contributions are based on specified percentages of employee contributions and aggregated a total expense charged to operations of $6.5 million in 2005, $3.5 million in 2004 and $4.2 million in 2003.

During 2000, the Company's Board of Directors approved a deferred compensation plan effective September 1, 2000. In February, 2005, the Company's Board of Directors adopted the Celgene Corporation 2005 Deferred Compensation Plan, effective as of January 1, 2005, which operates as the Company's ongoing deferred compensation plan and which is intended to comply with the American Jobs Creation Act of 2004, which added new Section 409A to the Internal Revenue Code, changing the income tax treatment, design and administration of certain plans that provide for the deferral of compensation. The Company's Board of Directors also froze the 2000 deferred compensation plan, effective as of December 31, 2004, so that no additional contributions or deferrals can be made to that plan. Accrued benefits under the frozen plan will continue to be governed by the terms under the tax laws in effect prior to the enactment of
Section 409A. Eligible participants, which include certain top-level executives of the Company as specified by the plan, can elect to defer up to 25% of the participant's base salary, 100% of cash bonuses and restricted stock and stock options gains (both subject to a minimum deferral of 50% of each award of restricted stock or stock option gain approved by the Compensation Committee for deferral). Company contributions to the deferred compensation plan represent a 100% match of the participant's deferral up to a specified percentage (ranging from 10% to 25%, depending on the employee's position as specified in the plan) of the participant's base salary. The Company recorded expense of $0.4 million, $0.8 million and $0.6 million associated with the matching of the deferral of compensation in 2005, 2004 and 2003, respectively. All amounts are 100% vested at all times, except with respect to restricted stock, which will not be vested until the date the applicable restrictions lapse. At December 31, 2005 and 2004, the Company had a deferred compensation liability included in other non-current liabilities in the consolidated balance sheets of approximately $11.2 million and $8.8 million, respectively, which included the participant's elected deferral of salaries and bonuses, the Company's matching contribution and earnings on deferred amounts as of that date. The plan provides various alternatives for the measurement of earnings on the amounts participants defer under the plan. The measuring alternatives are based on returns of a variety of funds that offer plan participants the option to spread their risk across a diverse group of investments.

In 2003, the Company adopted a Long-Term Incentive Plan, or LTIP designed to provide key officers and executives with performance based incentive opportunities contingent upon achievement of pre-established corporate performance objectives, and payable only if employed at the end of the performance cycle. The 2003 performance cycle began on May 1, 2003 and ended on December 31, 2005, or the 2005 Plan. The 2004 performance cycle began on January 1, 2004 and will end on December 31, 2006, or the 2006 Plan and the 2005 performance cycle began on January 1, 2005 and will end on December 31, 2007, or the 2007 Plan. The 2006 performance cycle was approved by the Management Compensation and Development Committee of the Board of Directors on January 19, 2006 and began on January 1, 2006 and will end on December 31, 2008, or the 2008 Plan. Performance measures for the Plans are based on the following components:
25% on earnings per share, 25% on net income and 50% on revenue.

Payouts may be in the range of 0% to 200% of the participant's salary for the 2005, 2007 and 2008 Plans and 0% to 150% of the participant's salary for the 2006 Plan. The estimated payout for the 2005 Plan is $4.5 million and the maximum potential payout, assuming objectives are achieved at the 150% level for the 2006 Plan and at the 200% level for the 2007 and 2008 Plans are $4.5 million, $6.8 million and $7.2 million for the 2006 Plan, 2007 Plan and 2008 Plan, respectively. Such awards are payable in cash or, at its discretion,

F-28

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, UNLESS OTHERWISE INDICATED)

the Company can elect to pay the same value in its common stock based upon the Company's common stock fair value at the payout date. The Company accrues the long-term incentive liability over each three-year cycle. Prior to the end of a three-year cycle, the accrual is based on an estimate of the Company's level of achievement during the cycle. Upon a change in control, participants will be entitled to an immediate payment equal to their target award, or, if higher, an award based on actual performance through the date of the change in control. For the years ended December 31, 2005, 2004 and 2003, the Company recognized expense related to LTIP of $4.4 million, $3.4 million and $0.5 million, respectively.

(15) ACCUMULATED COMPREHENSIVE INCOME

Other Accumulated  Comprehensive  Income at December 31, 2005 and 2004 consisted
of the following:

  ------------------------------------------------------------------------------
                                                                2005      2004
  ------------------------------------------------------------------------------
  Net unrealized gains on marketable securities, net of tax  $   4,833  $63,926
  Currency translation adjustment                               (4,745)   4,676
                                                            --------------------
                                                             $      88  $68,602
                                                            ====================

(16) SPONSORED RESEARCH, LICENSE AND OTHER AGREEMENTS

PHARMION: In November 2001, we licensed to Pharmion Corporation exclusive rights relating to the development and commercial use of our intellectual property covering thalidomide and S.T.E.P.S(R). Under the terms of the agreement, we receive a royalty of 8% of Pharmion's net thalidomide sales in countries where Pharmion has received regulatory approval and a S.T.E.P.S(R) license fee of 8% in all other licensed territories. Separately in December 2004, following our acquisition of Penn T Limited, our wholly-owned subsidiary Celgene UK Manufacturing II Limited, or CUK II, (formerly known as "Penn T Limited") entered into an amended thalidomide supply agreement with Pharmion whereby in exchange for a reduction in Pharmion's purchase price of thalidomide to 15.5% of its net sales of thalidomide, we received a one-time payment of $77.0 million. Under the December 2004 agreement, we also received a one-time payment of $3.0 million in return for granting license rights to Pharmion to develop and market thalidomide in additional territories and eliminating certain of our license termination rights. Under the agreements, as amended, the territory licensed to Pharmion is for all countries other than the United States, Canada, Mexico, Japan and all provinces of China other than Hong Kong. The agreements with Pharmion terminate upon the ten-year anniversary following receipt of the first regulatory approval for thalidomide in the United Kingdom.

At December 31, 2005 and 2004, we held 1,939,600 shares of Pharmion common stock received in connection with the conversion of a five-year Senior Convertible Promissory Note purchased in April 2003 under a Securities Purchase Agreement with Pharmion and the exercise of warrants received in connection with the November 2001 thalidomide license and April 2003 Securities Purchase Agreement.

NOVARTIS PHARMA AG: In April 2000, we entered into an agreement with Novartis in which we granted to Novartis an exclusive worldwide license (excluding Canada) to develop and market FOCALIN(TM) (d-methylphenidate, or d- MPH) and FOCALIN XR(TM), the long-acting drug formulation. We have retained the exclusive commercial rights to FOCALIN(TM) and FOCALIN XR(TM) for oncology-related disorders, such as chronic fatigue associated with chemotherapy. We also granted Novartis rights to all of our related intellectual property and patents, including new formulations of the currently marketed RITALIN(R). Under the agreement, we have received upfront and regulatory achievement milestone payments totaling $55.0

F-29

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, UNLESS OTHERWISE INDICATED)

million and are entitled to additional payments upon attainment of certain other milestone events. We also sell FOCALIN(TM) to Novartis as well as receive royalties on sales of all of Novartis' FOCALIN XR(TM) and RITALIN(R) family of ADHD-related products. The research portion of the agreement ended in June 2003.

SERONO: In late 2004, the Company assumed co-exclusive rights with Serono SA to discover and develop therapeutics that modulate the NFkB pathway utilizing technology and know-how previously licensed to Serono SA. Celgene made a one-time payment of $6.0 million to Serono SA, which was recorded as research and development expense since this relates to undeveloped technology, and will make milestone and royalty payments on the sales on any resulting products. Serono SA will have reciprocal milestone payment and royalty obligations to Celgene for any products Serono SA discovers, develops and commercializes utilizing the technology and know-how.

S.T.E.P.S. LICENSE AGREEMENTS: In late 2004, the Company entered into an agreement providing manufacturers of isotretinoin (Acutane(R)) with a non-exclusive license to its patent portfolio directed to methods for safely delivering isotretinoin (Acutane(R)) in potentially high-risk patient populations in exchange for $0.5 million. The manufacturers of isotretinoin have licensed these patents with the intention of implementing a new pregnancy risk management system to safely deliver isotretinoin in potentially high-risk patient populations. The Company is entitled to future royalties under these agreements.

(17) INCOME TAXES

The income tax provision is based on income before income taxes as follows:

--------------------------------------------------------------------------------
                                                2005        2004         2003
--------------------------------------------------------------------------------
U.S.                                         $ 135,048    $ 244,034    $  25,661
Non-U.S                                        (50,836)    (180,863)          --
                                            ------------------------------------
Income before income taxes                   $  84,212    $  63,171    $  25,661
                                            ====================================

The provision/(benefit) for taxes on income from continuing operations is as follows:

--------------------------------------------------------------------------------
                                              2005          2004          2003
--------------------------------------------------------------------------------
United States:
Taxes currently payable:
      Federal                               $ 11,538      $  6,429      $     --
      State and local                          8,609         4,067           718
Deferred income taxes                         (3,430)           --            --
--------------------------------------------------------------------------------
Total U.S. tax provision                      16,717        10,496           718
--------------------------------------------------------------------------------
International:
      Taxes currently payable                  4,926        23,486            --
      Deferred income taxes                   (1,087)      (23,567)           --
--------------------------------------------------------------------------------
Total international tax provision              3,839           (81)           --
--------------------------------------------------------------------------------
Total provision                             $ 20,556      $ 10,415      $    718
================================================================================

Amounts are reflected in the preceding tables based on the location of the taxing authorities. As of December 31, 2005, we have not made a U.S. tax provision on approximately $77.6 million of unremitted earnings of our international subsidiaries. These earnings are expected to be reinvested overseas. It is not practicable to compute the estimated deferred tax liability on these earnings.

F-30

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, UNLESS OTHERWISE INDICATED)

The Company operates under an incentive tax holiday in Switzerland that expires in 2015 and exempts the Company from certain Swiss income taxes.

Deferred taxes arise because of different treatment between financial statement accounting and tax accounting, known as "temporary differences." The company records the tax effect on these temporary differences as "deferred tax assets" (generally items that can be used as a tax deduction or credit in future periods) or "deferred tax liabilities" (generally items for which the company received a tax deduction but that have not yet been recorded in the consolidated statement of operations). The Company periodically evaluates the likelihood of the realization of deferred tax assets, and reduces the carrying amount of these deferred tax assets by a valuation allowance to the extent it believes a portion will not be realized. The Company considers many factors when assessing the likelihood of future realization of deferred tax assets, including its recent cumulative earnings experience by taxing jurisdiction, expectations of future taxable income, the carryforward periods available to it for tax reporting purposes, and other relevant factors. Significant judgment is required in making this assessment. At December 31, 2005, 2004 and 2003 the tax effects of temporary differences that give rise to deferred tax assets were as follows:

------------------------------------------------------------------------------------------------------------------------------------
                                                               2005                      2004                       2003
------------------------------------------------------------------------------------------------------------------------------------

                                                     Assets      Liabilities     Assets       Liabilities    Assets      Liabilities
                                                     ------      -----------     ------       -----------    ------      -----------
Federal and state net
   operating loss  carryforwards                    $  84,161     $      --     $  53,477     $      --     $ 141,379     $      --
Prepaid/deferred items                                 30,016            --        29,863            --            --            --
Deferred Revenue                                       19,533            --        24,174            --            --            --
Capitalized research expenses                           6,861            --         8,971            --        16,774            --
Research and experimentation tax
   credit carryforwards                                19,770            --        17,431            --         9,154            --
Plant and equipment, primarily
   differences in depreciation                            618          (295)        2,307          (295)        1,524            --
Inventory                                               1,607            --         1,362          (928)           --            --
Other Assets                                               --        (7,325)           --        (2,230)           --            --
Intangibles                                             7,910       (27,786)        3,182       (29,761)        5,615            --
Accrued and other expenses                             20,493            --        14,590            --         6,686            --
Unrealized losses/(gains) on
   securities                                              --          (848)           --       (33,385)        4,188        (8,893)
------------------------------------------------------------------------------------------------------------------------------------
Subtotal                                              190,969       (36,254)      155,357       (66,599)      185,320        (8,893)
Valuation allowance                                   (10,396)           --       (75,510)           --      (176,427)           --
------------------------------------------------------------------------------------------------------------------------------------
Total Deferred Taxes                                $ 180,573     $ (36,254)    $  79,847     $ (66,599)    $   8,893     $  (8,893)
------------------------------------------------------------------------------------------------------------------------------------
Net Deferred Tax Asset                              $ 144,319     $      --     $  13,248     $      --     $      --     $      --
====================================================================================================================================

Reconciliation of the U.S. statutory income tax rate to our effective tax rate for continuing operations is as follows:

-----------------------------------------------------------------------------
PERCENTAGES                                        2005      2004     2003
-----------------------------------------------------------------------------

US statutory rate                                  35.0%     35.0%     35.0%
Foreign losses without tax benefit                 27.2      50.5        --
State taxes, net of federal benefit                 9.6       4.3       3.3
Other                                               3.2       1.7        --
Change in valuation allowance                     (50.6)    (75.0)    (35.5)
-----------------------------------------------------------------------------
Effective income tax rate                          24.4%     16.5%      2.8%
=============================================================================

F-31

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, UNLESS OTHERWISE INDICATED)

At March 31, 2005, the Company determined it was more likely than not that certain benefits of its deferred tax assets would be realized based on favorable clinical data related to REVLIMID(R) (Lenalidomide) during the quarter in concert with the Company's nine consecutive quarters of profitability. This led to the conclusion that it was more likely than not that the Company will generate sufficient taxable income to realize the benefits of its deferred tax assets. As a result of eliminating the related valuation allowances, the Company recorded an income tax benefit in 2005 of $42.6 million and an increase to additional paid-in capital of $30.2 million. At December 31, 2005, it was more likely than not that the Company would realize its deferred tax assets, net of valuation allowances.

At December 31, 2005, the Company had federal net operating loss carryforwards of approximately $198.0 million and combined state net operating loss carryforwards of approximately $ 218.7 million that will expire in the years 2006 through 2025. The Company also has research and experimentation credit carryforwards of approximately $19.7 million that expire in the years 2006 through 2025. Ultimate utilization/availability of such net operating losses and credits may be curtailed if a significant change in ownership occurs. Signal and Anthrogenesis experienced an ownership change, as that term is defined in section 382 of the Internal Revenue Code, when acquired by Celgene, as such, there is an annual limitation on the use of these net operating losses in the amount of approximately $11.6 million and $3.4 million, respectively. Approximately $8.1 million of deferred tax assets acquired in the Anthrogenesis acquisition at December 31, 2002 consisted primarily of net operating losses; as such there may be an annual limitation on the Company's ability to utilize the acquired net operating losses in the future.

The Company realized stock option deduction benefits in 2005, 2004, and 2003 for income tax purposes and has increased paid-in capital in the amount of approximately $103.6 million, $14.2 million, and $0.8 million, respectively.

(18) COMMITMENTS AND CONTINGENCIES

LEASES: The Company leases office and research facilities under several operating lease agreements in the United States, Switzerland and United Kingdom. The minimum annual rents may be subject to specified annual rental increases. At December 31, 2005, the non-cancelable lease terms for the operating leases expire at various dates between 2006 and 2012 and include renewal options. In general, the Company is also required to reimburse the lessors for real estate taxes, insurance, utilities, maintenance and other operating costs associated with the leases.

F-32

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, UNLESS OTHERWISE INDICATED)

The Company leases certain equipment under a capital lease arrangement. Assets held under capital leases are included in plant and equipment and the amortization of these assets is included in depreciation expense. Future minimum lease payments under noncancelable operating leases (with initial or remaining lease terms in excess of one year) and future minimum capital lease payments as of December 31, 2005 are:

--------------------------------------------------------------------------------
                                                         OPERATING   CAPITAL
(In millions)                                             LEASES     LEASES
--------------------------------------------------------------------------------
              2006                                       $    3.4    $  2
              2007                                            2.9       2
              2008                                            2.6       -
              2009                                            2.5       -
              2010                                            2.5       -
              Thereafter                                      3.9       -
                                                        ------------------------
         Total minimum lease payments                    $   17.8    $  4
                                                        ===========
             Less amount representing interest                          1
                                                                    -----------
         Present value of net minimum
                capital lease payments                                  3
             Less current installments of obligations
                under capital leases                                    1
                                                                    -----------

         Obligations under capital leases,
                excluding current installments                       $  2
                                                                    ============

Total facilities rental expense under operating leases was approximately $4.5 million in 2005, $4.3 million in 2004 and $3.9 million in 2003.

CONTRACTS: In connection with the Company's acquisition of Penn T, the Company entered into a Technical Services Agreement with Penn Pharmaceutical Services Limited, or PPSL, and Penn Pharmaceutical Holding Limited pursuant to which PPSL provides the services and facilities necessary for the manufacture of THALOMID(R) and other thalidomide formulations. The total cost to be incurred over the five-year minimum agreement period is approximately $11.0 million. At December 31, 2005, the remaining cost to be incurred was approximately $7.8 million.

In March 2003, the Company entered into a supply and distribution agreement with GSK to distribute, promote and sell ALKERAN(R) (melphalan), a therapy approved by the FDA for the palliative treatment of multiple myeloma and carcinoma of the ovary. Under the terms of the agreement, the Company purchases ALKERAN(R) tablets and ALKERAN(R) for infusion from GSK and distributes the products in the United States under the Celgene label. The agreement requires the Company to purchase certain minimum quantities each year under a take-or-pay arrangement. The agreement has been extended through March 31, 2009. On December 31, 2005, the remaining minimum purchase requirements under the agreement totaled $102.0 million.

The Company signed an exclusive license agreement with CMCC, which terminated any existing thalidomide analog agreements between CMCC and EntreMed and directly granted to Celgene an exclusive worldwide license for the analog patents. Under the agreement, the Company is required to pay CMCC $2.0 million between 2005 and 2006. The outstanding balance related to this agreement was $1.0 million at December 31, 2005. Additional payments are possible under the agreement depending on the successful development and commercialization of thalidomide analogs.

F-33

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, UNLESS OTHERWISE INDICATED)

In October 2003, the Company signed an agreement with Institute of Drug Technology Australia Limited, or IDT, for the manufacture of finished dosage form of THALOMID(R) capsules. The agreement requires minimum purchases of THALOMID(R) capsules of $4.7 million for the three-year term commencing with the April 2005 FDA approval of IDT as an alternate supplier. This agreement provides the Company with additional capacity and reduces its dependency on one manufacturer for the production of THALOMID(R). The outstanding balance related to this agreement was $4.0 million at December 31, 2005.

CONTINGENCIES: The Company believes it maintains insurance coverage adequate for its current needs. The Company's operations are subject to environmental laws and regulations, which impose limitations on the discharge of pollutants into the air and water and establish standards for the treatment, storage and disposal of solid and hazardous wastes. The Company reviews the effects of such laws and regulations on its operations and modifies its operations as appropriate. The Company believes it is in substantial compliance with all applicable environmental laws and regulations.

On August 19, 2004, the Company, together with its exclusive licensee Novartis, filed an infringement action in the United States District Court of New Jersey against Teva Pharmaceuticals USA, Inc., in response to notices of Paragraph IV certifications made by Teva in connection with the filing of an ANDA for FOCALIN(TM). The notification letters contend that United States Patent Nos. 5,908,850, or '850 patent, and 6,355,656, or '656 patent, were invalid. The '656 patent is currently the subject of reexamination proceedings in the United States Patent and Trademark Office. After the suit was filed, Novartis listed another patent, United States Patent No. 6,528,530, or '530 patent, in the Orange Book in association with the FOCALIN(TM) NDA. Neither the '656 patent nor the '530 patent is part of the patent infringement action against Teva. This case does not involve an ANDA for RITALIN LA(R) or FOCALIN XR(TM) as such an ANDA has not been filed. Recently, Teva amended its answer to contend that the '850 patent was not infringed by the filing of its ANDA, and that the '850 patent is not enforceable due to an allegation of inequitable conduct. Fact discovery expired on February 28, 2006. No trial date has been set. If successful, Teva will be permitted to sell a generic version of FOCALIN(TM), which could significantly reduce the Company's sales of FOCALIN(TM) to Novartis.

(19) SEGMENTS AND RELATED INFORMATION

The Company operates in two business segments - Human Pharmaceuticals and Stem Cell Therapies. The accounting policies of the segments are the same as described in the summary of significant accounting policies.

HUMAN PHARMACEUTICALS: The Human Pharmaceutical segment is engaged in the discovery, development and commercialization of innovative therapies designed to treat cancer and immuno-inflammatory diseases through regulation of cellular, genomic and proteomic targets. The segment derives its revenues from pharmaceutical sales of REVLIMID(R), THALOMID(R), ALKERAN(R) and FOCALIN(TM); royalties from Novartis on their sales of FOCALIN XR(TM) and the entire RITALIN(R) family of drugs; and, a licensing and product supply agreement with Pharmion for its sales of thalidomide. This segment includes the EntreMed equity method investment and Signal Pharmaceuticals, LLC., a wholly-owned San Diego-based biopharmaceutical company focused on the discovery and development of drugs that regulate genes and proteins associated with diseases.

STEM CELL THERAPIES: With the acquisition of Anthrogenesis Corp. in December 2002, the Company acquired a biotherapeutics company pioneering the development of stem cell therapies and biomaterials derived from human placental tissue that now operates as Celgene Cellular Therapeutics, or CCT. CCT has organized its business into three main units: (1) stem cells banking for transplantation, (2) private stem cell banking and (3) the development of biomaterials for organ and tissue repair. CCT has developed proprietary methods for producing biomaterials for organ and tissue repair (i.e. BIOVANCE(TM)). Additionally, CCT has developed proprietary technology for collecting, processing and storing placental stem cells with potentially broad therapeutic applications in cancer, as well as autoimmune, cardiovascular, neurological, and degenerative diseases.

F-34

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, UNLESS OTHERWISE INDICATED)

Summarized segment information is as follows:

--------------------------------------------------------------------------------------------------------------
                                          Human           Stem Cell
                                      Pharmaceuticals     Therapies       Unallocated(2)        Total
--------------------------------------------------------------------------------------------------------------
2005

Total assets                           $   499,753       $     22,624     $    724,260      $  1,246,637
Revenue from external customers            530,094              6,847               --           536,941
Inter-segment revenue                           --             12,036               --            12,036
                                      ------------------------------------------------------------------------
Total revenue                          $   530,094       $     18,883     $         --      $    548,977
Income (loss) before income
taxes(1)                                   109,474            (13,226)              --            96,248
Capital expenditures                        34,491              1,370               --            35,861
Depreciation and amortization of
long-term assets                            13,209              1,077               --            14,286
--------------------------------------------------------------------------------------------------------------
2004

Total assets                           $   334,932       $     23,824     $    748,537      $  1,107,293
Revenue from external customers            372,957              4,545               --           377,502
Inter-segment revenue                           --                 --               --                --
                                      ------------------------------------------------------------------------
Total revenue                          $   372,957       $      4,545     $         --      $    377,502
Income (loss) before income
taxes(1)                                    78,810            (15,639)              --            63,171
Capital expenditures                        34,790              1,225               --            36,015
Depreciation and amortization of
long-term assets                             8,714                976               --             9,690
--------------------------------------------------------------------------------------------------------------
2003

Total assets                           $   135,123       $     10,936     $    666,967      $    813,026
Revenue from external customers            267,980              3,495               --           271,475
Inter-segment revenue                           --                 --               --                --
                                      ------------------------------------------------------------------------
Total revenue                          $   267,980       $      3,495     $         --      $    271,475
Income (loss) before income
taxes(1)                                    42,279            (16,618)              --            25,661
Capital expenditures                         8,726              2,501               --            11,227
Depreciation and amortization of
long-term assets                             7,339                688               --             8,027
==============================================================================================================

(1) Expenses incurred at the consolidated level are included in the results of the Human Pharmaceuticals segment.

(2) Unallocated corporate assets consist of cash and cash equivalents and marketable securities available for sale.

F-35

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, UNLESS OTHERWISE INDICATED)

The following table provides a reconciliation of selected segment information to corresponding amounts contained in the Company's Consolidated financial statements:

--------------------------------------------------------------------------------
                                            2005        2004         2003
--------------------------------------------------------------------------------
Total Revenue from segments              $ 548,977    $ 377,502   $ 271,475
Elimination of intersegment revenue        (12,036)          --          --
                                        ----------------------------------------
Total consolidated revenue               $ 536,941    $ 377,502   $ 271,475
                                        ----------------------------------------
Income before income taxes from
 segments                                $  96,248    $  63,171   $  25,661
Elimination of intercompany profit         (12,036)          --          --
                                        ----------------------------------------
Consolidated income before income
 taxes                                   $  84,212    $  63,171   $  25,661
                                        ========================================

OPERATIONS  BY  GEOGRAPHIC  AREA:  Revenues  outside  of North  America  consist

primarily of sales of THALOMID(R) and REVLIMID(R) in Europe and royalties from Novartis on their international sales of RITALIN(R) LA.

----------------------------------------------------------------------
REVENUES                        2005         2004           2003
----------------------------------------------------------------------

North America               $ 518,439   $  374,686     $   271,475
All Other                      18,502        2,816              --
                           -------------------------------------------
Total Revenues              $ 536,941   $  377,502     $   271,475
                           ===========================================

-------------------------------------------------------
LONG LIVED ASSETS(1)            2005          2004
-------------------------------------------------------

North America               $   73,340   $   59,131
All Other                      134,940      144,820
                           ----------------------------
Total Long Lived Assets     $  208,280   $  203,951
                           ============================

(1) Long-lived assets consist of net property, plant and equipment, intangible assets and goodwill.

REVENUES BY PRODUCT: Total revenue from external customers by product for the years ended December 31, 2005, 2004 and 2003, were as follows:

----------------------------------------------------------------------
(IN THOUSANDS $)               2005         2004            2003
----------------------------------------------------------------------
Net product sales:
   THALOMID(R)              $ 387,816   $  308,577     $   223,686
   FOCALIN(TM)                  4,210        4,177           2,383
   ALKERAN(R)                  49,748       16,956          17,827
   REVLIMID(R)                  2,862           --              --
   Other                          989          861             557
                           -------------------------------------------
Total net product sales     $ 445,625   $  330,571     $   244,453
Collaborative agreements
   and other revenue           41,334       20,012          15,174
Royalty revenue                49,982       26,919          11,848
                           -------------------------------------------
Total revenue               $ 536,941   $  377,502     $   271,475
                           ===========================================

MAJOR CUSTOMERS: As is typical in the pharmaceutical industry, the Company sells its products primarily through wholesale distributors and therefore, wholesale distributors account for a large portion of the Company's net product revenues. In 2005, 2004 and 2003, there were three customers that each accounted for more than 10% of the Company's total revenue. The percent of total sales to each such customer in 2005, 2004 and 2003 were as follows: Cardinal Health 39.0%, 29.5% and 32.5%; McKesson Corp. 27.3%, 18.6% and 17.4%; and Amerisource Bergen Corp. 19.9%, 17.9% and 23.7%. Sales to such customers were included in the results of the Human Pharmaceuticals segment. These same customers accounted for the following percentages of accounts receivable for the years ended December 31, 2005 and 2004, respectively: McKesson Corp. 32.8% and 25.3%; Cardinal Health 30.0% and 32.2%; and Amerisource Bergen Corp. 13.2% and 14.0%.

F-36

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, UNLESS OTHERWISE INDICATED)

(20) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

------------------------------------------------------------------------------------------------------------------------------------
                                                         1Q               2Q               3Q               4Q              YEAR
------------------------------------------------------------------------------------------------------------------------------------
2005

Total revenue                                          $ 112,396       $ 145,701        $ 129,506        $ 149,338        $ 536,941
Gross profit(1)                                           99,792         127,505          106,307          122,610          456,214
Income tax benefit (provision)                            34,172         (29,967)         (12,975)         (11,786)         (20,556)
Net income                                                48,214          10,846              668            3,928           63,656
Net earnings per common share(2) -
     basic                                             $    0.15       $    0.03        $      --        $    0.01        $    0.19
     diluted                                           $    0.13       $    0.03        $      --        $    0.01        $    0.18
Weighted average number of shares of
common stock outstanding(3) -
     basic                                               331,225         334,282          336,596          339,839          335,512
     diluted                                             382,216         352,023          359,724          359,998          390,585
------------------------------------------------------------------------------------------------------------------------------------
                                                         1Q               2Q               3Q               4Q              YEAR
------------------------------------------------------------------------------------------------------------------------------------
2004

Total revenue                                         $  82,873        $  87,753        $ 101,468        $ 105,408        $ 377,502
Gross profit(1)                                          61,726           64,916           68,637           75,566          270,845
Income tax provision                                       (801)          (1,156)          (1,974)          (6,484)         (10,415)
Net income                                                8,914            2,595           19,008           22,239           52,756
Net earnings per common share(2) -
     basic                                            $    0.03        $    0.01        $    0.06        $    0.07        $    0.16
     diluted                                          $    0.03        $    0.01        $    0.05        $    0.06        $    0.15
Weighted average number of shares of
common stock outstanding(3) -
     basic                                              325,902          327,348          328,181          329,499          327,738
     diluted                                            349,050          353,709          354,128          347,339          345,710
====================================================================================================================================

(1) Gross profit is computed by subtracting cost of goods sold from net product sales.

(2) The sum of the quarters may not equal the full year basic and diluted earnings per share since each period is calculated separately.

(3) The weighted average number of shares outstanding reflects the February 17, 2006 two- for- one stock split.

F-37

CELGENE CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(DOLLARS IN THOUSANDS)

--------------------------------------------------------------------------------------------------
                                                     Additions
                                        Balance at   Charged to                       Balance at
                                       Beginning of  Expense or                         End of
Year ended December 31,                    Year         Sales          Deductions        Year
--------------------------------------------------------------------------------------------------
2005

   Allowance for doubtful accounts    $      1,370  $      1,029      $        107   $      2,292
   Allowance for customer discounts            838        10,434             9,825          1,447
                                     -------------------------------------------------------------
   Subtotal                                  2,208        11,463             9,932          3,739
   Allowance for sales returns               9,595        21,160 (1)        25,738          5,017
                                     -------------------------------------------------------------
                                      $     11,803  $     32,623      $     35,670   $      8,756
                                     =============================================================

--------------------------------------------------------------------------------------------------
2004
   Allowance for doubtful accounts    $        873  $        867      $        370   $      1,370
   Allowance for customer discounts            657         7,448             7,267            838
                                     -------------------------------------------------------------
   Subtotal                                  1,530         8,315             7,637          2,208
   Allowance for sales returns               8,368        16,279 (1)        15,052          9,595
                                     -------------------------------------------------------------
                                      $      9,898  $     24,594      $     22,689   $     11,803
                                     =============================================================

--------------------------------------------------------------------------------------------------
2003
   Allowance for doubtful accounts    $        729  $        448      $        304   $        873
   Allowance for customer discounts            291         5,503             5,137            657
                                     -------------------------------------------------------------
   Subtotal                                  1,020         5,951             5,441          1,530
   Allowance for sales returns               2,783        12,659 (1)         7,074          8,368
                                     -------------------------------------------------------------
                                      $      3,803  $     18,610      $     12,515   $      9,898
                                     =============================================================

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

(1) Amounts are a reduction from gross sales.

F-38

EXHIBIT-3.1

DELAWARE PAGE 1 THE FIRST STATE

I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED ARE TRUE AND CORRECT COPIES OF ALL DOCUMENTS ON FILE OF "CELGENE CORPORATION" AS RECEIVED AND FILED IN THIS OFFICE.

THE FOLLOWING DOCUMENTS HAVE BEEN CERTIFIED:

CERTIFICATE OF INCORPORATION, FILED THE SEVENTEENTH DAY OF APRIL, A.D.

1986, AT 10 O'CLOCK A.M.

CERTIFICATE OF AMENDMENT, FILED THE TWENTY-EIGHTH DAY OF JANUARY, A.D.

1987, AT 10 O'CLOCK A.M.

CERTIFICATE OF AMENDMENT, FILED THE FOURTEENTH DAY OF JULY, A.D. 1987, AT

10 O'CLOCK A.M.

CERTIFICATE OF DESIGNATION, FILED THE SIXTH DAY OF MARCH, A.D. 1996, AT 9

O'CLOCK A.M.

CERTIFICATE OF DESIGNATION, FILED THE ELEVENTH DAY OF MARCH, A.D. 1996, AT

9 O'CLOCK A.M.

CERTIFICATE OF DESIGNATION, FILED THE NINTH DAY OF JUNE, A.D. 1997, AT 9

O'CLOCK A.M.

CERTIFICATE OF AMENDMENT, FILED THE FIFTEENTH DAY OF JULY, A.D. 1998, AT 9

O'CLOCK A.M.

CERTIFICATE OF AMENDMENT, FILED THE ELEVENTH DAY OF APRIL,

                                        /s/ Harriet Smith Windsor
                                        ----------------------------------------
                                        Harriet Smith Windsor Secretary of State

2088605 8100H                        [SEAL]              AUTHENTICATION: 4531444

060151758                                                         DATE: 02-17-06

DELAWARE PAGE 2 THE FIRST STATE

A.D. 2000, AT 5 O'CLOCK P.M.

CERTIFICATE OF AMENDMENT, FILED THE EIGHTEENTH DAY OF JUNE, A.D. 2004, AT

3:32 O'CLOCK P.M.

CERTIFICATE OF AMENDMENT, FILED THE TWENTY-SECOND DAY OF OCTOBER, A.D.

2004, AT 11:36 O'CLOCK A.M.

CERTIFICATE OF AMENDMENT, FILED THE SIXTEENTH DAY OF FEBRUARY, A.D. 2006,

AT 3:05 O'CLOCK P.M.

AND I DO HEREBY FURTHER CERTIFY THAT THE AFORESAID CERTIFICATES ARE THE

ONLY CERTIFICATES ON RECORD OF THE AFORESAID CORPORATION.

                                        /s/ Harriet Smith Windsor
                                        ----------------------------------------
                                        Harriet Smith Windsor Secretary of State

2088605 8100H                        [SEAL]              AUTHENTICATION: 4531444

060151758                                                         DATE: 02-17-06

CERTIFICATE OF INCORPORATION

CELGENE CORPORATION

FIRST. The name of the Corporation is CELGENE CORPORATION.

SECOND. The address of the Corporation's registered office in the State of Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company.

THIRD. The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware.

FOURTH. The aggregate number of shares which the Corporation shall have authority to issue is 30,000,000, of which 5,000,000 shares of the par value of $.01 per share shall be designated "Preferred Stock" and 25,000,000 shares of the par value of $.01 per share shall be designated

"Common Stock." Authority is hereby expressly granted to the Board of Directors from time to time to issue the Preferred Stock as Preferred Stock of any series and, in connection with the creation of each such series, to fix by the resolution or resolutions providing for the issue of shares thereof, the number of shares of such series, and the designations, powers, preferences, and rights, and the qualifications, limitations, and restrictions, of such series, to the full extent now or hereafter permitted by the laws of the State of Delaware.

FIFTH. The name and mailing address of the incorporator is Kenneth R. Koch, c/o Shea & Gould, 330 Madison Avenue, New York, New York 10017.

SIXTH. Election of directors need not be by written ballot.

SEVENTH. The Board of Directors is authorized to adopt, amend, or repeal By-Laws of the Corporation.

EIGHTH. Any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative (whether or not by or in the right of the Corporation) by reason of the fact that he is or was a director, officer, incorporator, employee, or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer,

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incorporator, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise (including an employee benefit plan), shall be entitled to be indemnified by the Corporation to the full extent then permitted by law against expenses (including attorneys' fees), judgments, fines (including excise taxes assessed on a person with respect to an employee benefit plan), and amounts paid in settlement incurred by him in connection with such action, suit, or proceeding. Such right of indemnification shall inure whether or not the claim asserted is based on matters which antedate the adoption of this Article EIGHTH. Such right of indemnification shall continue as to a person who has ceased to be a director, officer, incorporator, employee, or agent and shall inure to the benefit of the heirs and personal representatives of such a person.

NINTH. Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this Corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any

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receiver or receivers appointed for this Corporation under the provisions of
Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this Corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this Corporation, as the case may be, and also on this Corporation.

IN WITNESS WHEREOF, I have made, signed, and sealed this Certificate of Incorporation this 15th day of April, 1986.

/s/ Kenneth R. Koch           (L.S.)
------------------------------
Kenneth R. Koch, Incorporator

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CERTIFICATE OF AMENDMENT

THE CERTIFICATE OF INCORPORATION

CELGENE CORPORATION

CELGENE CORPORATION, a Delaware corporation (the "Corporation"), does hereby certify as follows:

FIRST: At a duly held meeting, the Board of Directors of the Corporation adopted resolutions proposing and declaring it advisable that the Certificate of Incorporation of the Corporation be amended as follows:

a) By striking the first sentence of Article Fourth and substituting in lieu thereof the following sentence:

"FOURTH. The aggregate number of shares which the Corporation shall have authority to issue is 40,000,000, of which 5,000,000 shares of the par value of $.01 per share shall be designated 'Preferred Stock' and 35,000,000 shares of the par value of $.01 per share shall be designated 'Common Stock.'"

b) By adding the following sentence to the end of Article EIGHTH:

"The indemnification provided by this Article Eighth shall not be deemed exclusive of any other indemnification rights which may be provided now or in the future under any provision currently in effect or hereafter adopted of the by-laws, in any agreement, by vote of stockholders, by resolution of dis-

interested directors, by provision of law, or otherwise."

c) By adding the following new Article TENTH thereto:

"TENTH: No director of the Corporation shall be liable to the Corporation or any of its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit."

SECOND: The stockholders of the Corporation have duly adopted the foregoing amendments at a Special Meeting of Stockholders duly called and held on December 19, 1986 in accordance with the provisions of Section 222 of the General Corporation Law of Delaware.

THIRD: Such amendments to the Certificate of Incorporation were duly adopted in accordance with the applicable provisions of Sections 222 and 242 of the General Corporation Law of Delaware.

FOURTH: These amendments to the Certificate of Incorporation shall be effective on and as of the date of

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filing of this Certificate of Amendment with the office of the Secretary of State of Delaware.

IN WITNESS WHEREOF, the Corporation has caused this Certificate to be executed in its name by its Vice President and attested to by its Secretary this 26th day of January, 1987 and the statements contained herein are affirmed as true under penalties of perjury.

CELGENE CORPORATION

                                               BY: /s/ Isaac Blech
                                                   ---------------------------
                                                   Isaac Blech, Vice President

ATTEST:

By: /s/ David Blech
    ---------------------------
    David Blech, Secretary

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CERTIFICATE OF AMENDMENT

THE CERTIFICATE OF INCORPORATION

CELGENE CORPORATION

(Pursuant to Section 228 and 242 of the General Corporation Law of the State of Delaware)

CELGENE CORPORATION, a Delaware corporation (the "Corporation"), does hereby certify as follows:

(a) The first sentence of Article Fourth is hereby deleted and the following is substituted therefor:

"FOURTH. The aggregate number of shares which the Corporation shall have authority to issue is 25,000,000, of which 5,000,000 shares of the par value of $.01 per share shall be designated 'Preferred Stock' and 20,000,000 shares of the par value of $.01 per share shall be designated 'Common Stock.'"

(b) The following new sentence is hereby added to the end of Article Fourth:

"Upon the filing in the office of the Secretary of the State of Delaware of the Certificate of Amendment to the Certificate of Incorporation of the Corporation whereby this Article Fourth is amended to read as set forth herein,

each six issued and outstanding shares of Common Stock of the Corporation shall thereby and thereupon be combined into one share of validly issued, fully paid, and nonassessable share of Common Stock of the Corporation. No scrip or fractional shares will be issued by reason of this amendment."

SECOND: This amendment to the Certificate of Incorporation was duly adopted in accordance with the applicable provisions of Sections 228 and 242 of the General Corporation Law of Delaware.

THIRD: This amendment to the Certificate of Incorporation shall be effective on and as of the date of filing of this Certificate of Amendment with the office of the Secretary of State of Delaware.

IN WITNESS WHEREOF, the Corporation has caused this Certificate to be executed in its name by its Vice President and attested to by its Secretary this 10th day of July, 1987 and the statements contained herein are affirmed as true under penalties of perjury.

CELGENE CORPORATION

                                                By: /s/ Isaac Blech
                                                    ---------------------------
                                                    Isaac Blech, Vice President

ATTEST:

By: /s/ David Blech
    ----------------------
    David Blech, Secretary

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STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 03/06/1996
960065500 - 2088605

CELGENE CORPORATION

CERTIFICATE OF DESIGNATION
OF
SERIES A CONVERTIBLE
PREFERRED STOCK

(Pursuant to Section 151 of the Delaware General Corporation Law)

We, John W. Jackson and Robert Eastty, the Chairman of the Board and Chief Executive Officer and the Assistant Secretary, respectively, of Celgene Corporation, a Delaware corporation, in accordance with the provisions of
Section 103 of the Delaware General Corporation Law do hereby certify that:

1. The name of the corporation (hereinafter called the "Corporation") is CELGENE CORPORATION, a corporation duly organized and existing under the laws of the State of Delaware.

2. The Certificate of Incorporation (as amended) authorizes the issuance of 5,000,000 shares of Preferred Stock of a par value of $.01 each and expressly vests in the Board of Directors of the Corporation the authority provided therein to issue any or all of said shares in one or more series and by resolution or resolutions to establish the designation, number, full or limited voting powers, or the denial of voting powers, preferences and relative, participating, optional, and other special rights and the qualifications, limitations, restrictions, and other distinguishing characteristics of each series to be issued.

3. The following is a true and correct copy of certain resolutions duly adopted by the Board of Directors of the Corporation on March 6, 1996, which constituted all necessary action on the part of the Company for adoption of such resolutions.

RESOLVED, that Four Hundred and Twenty (420) of the 5 Million (5,000,000) authorized shares of Preferred Stock of the Corporation shall be designated Series A Convertible Preferred Stock, $.01 par value per share, and shall possess the rights and privileges set forth below:

Section 1. DESIGNATION AND AMOUNT. The shares of such series shall be designated as "Series A Convertible Preferred Stock" (the "Series A Convertible Preferred Stock") and the number of shares constituting the Series A Convertible Preferred Stock (the "Shares") shall be 420, such number of shares may be increased or decreased by resolution of the Board of Directors; provided, that no decrease shall reduce the number of Shares to a number less than the number of shares then outstanding.

Section 2. RANK. The Series A Convertible Preferred Stock shall rank: (i) prior to all of the Corporation's Common Stock, par value $.01 per share ("Common Stock"); (ii) prior to any class or series of capital stock of the Corporation hereafter created specifically ranking by its terms junior to the Series A Convertible Preferred Stock (collectively, with the Common Stock, "Junior Securities'); (iii) on parity with any class or series of capital stock of the Corporation hereafter created specifically ranking by its terms on parity with the Series A Convertible Preferred Stock ("Parity Securities") and (iv) junior to any class or series of capital stock of the Corporation hereafter created specifically ranking by its terms senior to the Series A Convertible Preferred Stock ("Senior Securities"); in each case as to distributions of assets upon liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary (all such distributions being referred to collectively as "Distributions");

Section 3. DIVIDENDS. The Series A Convertible Preferred Stock will bear no dividends, and the holders of the Series A Convertible Preferred Stock shall not be entitled to receive dividends on the Series A Convertible Preferred Stock.

Section 4. LIQUIDATION PREFERENCE.

(a) In the event of any liquidation, dissolution or winding up of the Corporation, either voluntary or involuntary ("an Event"), the holders of Shares shall be entitled to receive, immediately after any distributions to Senior Securities and prior and in preference to any distribution to Junior Securities but in parity with any distribution to Parity Securities, an amount per share equal to the sum of (i) $50,000 for each outstanding Share (the "Original Series A Issue Price") and (ii) an amount equal to 4.9% of the Original Series A Issue Price per annum for the period that has passed since the date of issuance of any Series A Convertible Preferred Stock (such amount being referred to herein as the "Accretion"). If upon the occurrence of such Event, the assets and funds thus distributed among the holders of the Series A Convertible Preferred Stock and Parity Securities shall be insufficient to permit the payment to such holders of the full preferential amounts due to the holders of the Series A Convertible Preferred Stock and the Parity Securities, respectively, then the entire assets and funds of the Corporation legally available for distribution shall be distributed among the holders of the Series A Convertible Preferred Stock and the Parity Securities, pro rata, based on the respective liquidation amounts to which each such series of stock is entitled by the Corporation's Certificate of Incorporation and any Certificate(s) of Designation.

(b) Upon the completion of the distribution required by subsection 4(a), if assets remain in this Corporation, they shall be distributed to holders of Junior Securities in accordance with the Corporation's Certificate of Incorporation including any duly adopted Certificate(s) of Designation.

(c) A consolidation or merger of the Corporation with or into any other corporation or corporations, or a sale, conveyance or disposition of all or substantially all of the assets of the Corporation or the effectuation by the Corporation of a transaction or series of related transactions in which more than 50% of the voting power of the Corporation is disposed of, shall not be deemed to be a liquidation, dissolution or winding up within, the meaning of this Section 4, but shall instead be treated pursuant to Section 5(f)(ii) hereof.

Section 5. CONVERSION.

The record Holders of this Series A Convertible Preferred Stock shall have conversion rights as follows (the "Conversion Rights"):

(a) Right to Convert. The record holder of the Series A Convertible Preferred Stock shall be entitled, as set forth below, and, subject to the Company's right of redemption set forth in Section 6 and the restrictions on conversion set forth in Section 5(b) below, to convert the Shares held by such holder into that number of fully-paid and nonassessable shares of the Common Stock at the Conversion Rate as set forth below. The minimum number of Shares that may be converted is the lesser of (i) Two Shares or (ii) all of the Holder's remaining Shares. The rate at which Shares may be converted into shares of Common Stock is hereinafter referred to as the "Conversion Rate" and is computed as follows:

Number of shares of Common Stock issued upon conversion of one share of Preferred Stock = Principal Conversion Rate + Accretion Conversion Rate, where

ISSUE PRICE

"Principal Conversion Rate" = ----------------- Conversion Price,

(.049)(N/365)(Issue Price) and "Accretion Conversion Rate = -------------------------- Accretion Conversion Price

where

o N = the number of days between (i) the date that, in connection with the consummation of the initial purchase of the Preferred Stock from the Company, the escrow agent first had in its possession funds representing full payment for the Preferred Stock for which conversion is being elected, and (ii) the Date of Conversion;

o Issue Price = the Original Series A Issue Price, as defined in
Section 4(a);

o Accretion Conversion Price equals the average Closing Price for the Common Stock as that term is defined below, for the 30 calendar days prior to the Date of Conversion; and

o Conversion Price = the lesser of (x) $18.81 (the "Fixed Conversion Price") (which equals 110% of $17.1, which is the average closing bid price for the seven (7) trading days ending on February 29, 1996), or (y) 90% of the average Closing Price, as that term is defined below, of the Company's Common Stock for the seven (7) trading days immediately preceding the Date of Conversion. For purposes hereof, the term "Closing Price" shall mean the closing price of the Company's Common Stock as reported by NASDAQ (or, if not reported by NASDAQ, as reported by such other exchange or market where traded).

(b) Restrictions on Conversion. No shares of Series A Convertible Preferred Stock may be convened prior to 60 days after the Last Closing (as defined in the Subscription Agreement). Thereafter, (subject to the effectiveness of the S-3 Registration Statement as defined in the Subscription Agreement) each Holder of Series A Convertible Preferred Stock may convert one-third of his shares of Series A Convertible Preferred Stock on or after the 60th day after the Last Closing, an additional one-third on or after the 90th day after the Last Closing, and all additional remaining Series A Convertible Preferred Stock on or after the 120th day after the Last Closing.

(c) Mechanics of Conversion. In order to convert Series A Convertible Preferred Stock into shares of Common Stock, the holder shall (i) fax a copy of the fully executed notice of conversion in the form attached hereto ("Notice of Conversion") to the Company at the office of the Company and to American Stock Transfer & Trust Company (the "Exchange Agent") that he elects to convert the same, which notice shall specify the number of shares of Series A Convertible Preferred Stock to be converted and shall contain a calculation of the Conversion Rate (together with a copy of the first page of each certificate to be converted) prior to Midnight, New York City time (the "Conversion Notice Deadline") on the Date of Conversion specified on the Notice of Conversion and
(ii) surrender the original certificate or certificates therefor, duly endorsed, and the original Notice of Conversion, no later than Midnight (New York City Time) the next business day, to a common courier for overnight delivery or (if overseas) 2-day delivery to the Exchange Agent. The Company shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon such conversion unless either the certificates evidencing such Series A Convertible Preferred Stock are delivered to the Exchange Agent as provided above, or the Holder notifies the Exchange Agent that such certificates have been lost, stolen or destroyed and such Holder provides

such indemnity as is reasonably acceptable to the Company with respect to such lost, stolen or destroyed certificate. In the case of a dispute as to the calculation of the Conversion Rate, the Company's calculation shall be deemed conclusive absent manifest error. No fractional shares of Common Stock shall be issued upon conversion of this Series A Convertible Preferred Stock. In lieu of any fractional share to which the Holder would otherwise be entitled, the Company shall round up to the nearest whole share.

The Company shall issue and deliver or cause to be issued and delivered within three (3) business days after delivery to the Exchange Agent of such certificates, or after the holder has furnished such indemnity such holder of Series A Convertible Preferred Stock at the address of the Holder on the books of the Company, a certificate or certificates for the number of shares of Common Stock to which the Holder shall be entitled as provided in Section 5(a) above. The date on which conversion occurs (the "Date of Conversion") shall be deemed to be the date set forth in such Notice of Conversion, provided (i) that the advance copy of the Notice of Conversion is faxed to the Company and the Exchange Agent before midnight, New York City time, on the Date of Conversion and (ii) that the stock certificates (the "Preferred Stock Certificates") representing the Series A Convertible Preferred Stock to be converted are received by the Exchange Agent within five (5) business days thereafter. The person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such date. If the original Series A Convertible Preferred Stock Certificates to be converted are not received by the Exchange Agent or the Company within five (5) business days after the Date of Conversion, the Company may, at its option, treat the Notice of Conversion as null and void.

(d) Reservation of Stock Issuable Upon Conversion. The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the Series A Convertible Preferred Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all then outstanding shares of Series A Convertible Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of Series A Convertible Preferred Stock, the Company will take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose.

(e) Automatic Conversion. Each share of Series A Convertible Preferred Stock outstanding two years from the Date of the Last Closing automatically shall be converted into Common Stock on such date at the Conversion Price then in effect and two years from the Date of the Last Closing shall be deemed the Date of Conversion with respect to such Shares then outstanding provided that, if such date is not a business day, the next following business day shall be the operative date.

(f) Adjustment to Fixed Conversion Price.

In computing the Fixed Conversion Price for purposes of Section 5(a):

(i) If, prior to the conversion of all of the Series A Convertible Preferred Stock, the number of outstanding shares of Common Stock is adjusted by a stock split stock dividend, or other similar event, the Fixed Conversion Price shall be proportionately adjusted.

thereafter have the right to purchase and receive upon conversion of Series A Convertible Preferred Stock, upon the basis and upon the terms and conditions specified herein and in lieu of the shares of Common Stock immediately theretofore issuable upon conversion, such shares of stock and/or securities as may be issued or payable with respect to or in exchange for the number of shares of Common Stock immediately theretofore purchasable and receivable upon the conversion of Series A Convertible Preferred Stock held by such Holders had the Holders converted their Series A Preferred to Common immediately prior to such merger, consolidation, exchange of shares, recapitalization or reorganization, and in any such case appropriate provisions shall be made with respect to the rights and interests of the Holders of the Series A Convertible Preferred Stock to the end that the provisions hereof (including, without limitation, provisions for adjustment of the Fixed Conversion Price and of the number of shares issuable upon conversion of the Series A Convertible Preferred Stock) shall thereafter be applicable, as nearly as may be practicable in relation to any shares of stock or securities thereafter be deliverable upon the conversion of Series A Convertible Preferred Stock. The Company shall not effect any transaction described in this subsection 5(f) unless the resulting successor or acquiring entity (if not the Company) assumes by written instrument the obligation to deliver to the Holders of the Series A Convertible Preferred Stock such shares of stock and/or securities as, in accordance with the foregoing provisions, the Holders of the Series A Convertible Preferred Stock may be entitled to purchase.

(iii) If any adjustment under this Section 5(f) would create a fractional share of Common Stock or a right to acquire a fractional share of Common Stock, such fractional share (on an aggregate basis) shall be disregarded and the number of shares of Common Stock issuable upon conversion shall be rounded to the next higher number of shares.

Section 6. REDEMPTION BY COMPANY; LOCK UP.

(a) Company's Right to Redeem or Lock Up Conversion in the Event of Conversion.

(i) REDEMPTION UPON RECEIPT OF NOTICE OF CONVERSION. In the event the average Closing Price of the Company's Common Stock on the NASDAQ for the seven (7) trading days immediately preceding the Date of Conversion shall be at or less than the Fixed Conversion Price, the Company shall have the right, in its sole discretion, upon receipt of a Notice of Conversion pursuant to Section 5, to redeem in whole or in part any Series A Convertible Preferred Stock submitted for conversion, immediately prior to conversion. If the Company elects to redeem some, but not all, of the Series A Convertible Preferred Stock submitted for conversion, the Company shall redeem from among the Series A Convertible Preferred Stock submitted by the various shareholders for conversion on the applicable date, a pro-rata amount from each shareholder so submitting Series A Convertible Preferred Stock for conversion.

In the case of a redemption under this Section 6(a)(i). the redemption price shall equal the sum of the Principal Redemption Price plus the Accretion, where:

Principal Redemption Price =

Issue Price X Closing Price On Date Of Conversion
Conversion Price

In the event of redemption, the Accretion is payable, at the Company's option, in cash or Common Stock. If the Accretion is paid in Common Stock, the number of shares for such payment shall be calculated in accordance with the following formula:

Accretion
Accretion Conversion Price

where "N," "Issue Price," "Closing Price", "Accretion Conversion Price" and "Conversion Price" have the meanings set forth in Section 5, and "Accretion" has the meaning set forth in Section 4.

(ii) REDEMPTION OR LOCKUP BELOW SOFT FLOOR PRICE. In the event the Closing Price per share shall be at or less than $11.50 (the "Soft Floor Price"), for each of the five (5) trading days preceding the date of submission of a Notice of Conversion by a Holder, the Company shall have the right, in its sole discretion, upon receipt of such Notice of Conversion pursuant to Section 5, to elect, in lieu of conversion, either (A) or (B), as follows:

A. The Company may elect to declare such conversion null and void, and declare that no conversion of any Preferred Stock that is included in the Notice of Conversion (the "Affected Preferred Stock") shall be permitted for the subsequent ninety
(90) day period (the "90 Day Lock Up Period"). In the event the Company declares a 90 Day Lock Up Period, the Company shall issue within 10 business days, to the Holder of the Affected Preferred Stock warrants ("90 Day Lock Up Warrants"), to purchase Common Stock of the Company, as follows:

TERMS OF 90 DAY LOCK UP WARRANT

- the 90 Day Lock Up Warrant shall entitle the holder to purchase a number of shares of common stock equal to 10% of the number of shares of Common Stock that would have been issued upon conversion, of the Affected Preferred Stock at the Soft Floor Price.

- the strike price of the 90 Day Lock Up Warrant shall equal the Soft Floor Price.

- The term of the 90 Day Lock Up Warrant shall be two
(2) years.

The Company may, in its discretion, offer ("180 Day Lock Up Offer") to provide another warrant ("180 Day Lock Up Warrant"), in addition to the 90 Day Lock Up Warrant, to purchase Common Stock of the Company, to the Holder of Affected Preferred Stock in exchange for such Holder's agreement to forebear from converting its Affected Preferred Stock for an additional 90 days beyond the 90 Day Lockup Period (a "180 Day Lockup Period"). The Holder, in its discretion, may accept or reject the 180 Day Lock Up Offer. The Company shall issue to the Holder, within 10 business days of Holder's written acceptance of a 180 Day Lock Up Offer, a 180 Day Lock Up Warrant, the terms of which shall be equivalent to the terms of a 90 Day Lock Up Warrant.

After any 90 Day Lock Up Period or 180 Day Lock Up Period (as applicable), the Investor shall again be entitled to convert the Affected Preferred Stock pursuant to the terms of Section 5 above, without any further lock up restrictions.

B. Redeem such Affected Preferred Stock pursuant to Section 6(a)(i).

(iii) MECHANICS OF REDEMPTION OR LOCK UP. Any shareholder considering submitting Preferred Stock for conversion at such time as the Company's right of redemption under Section 6(a)(i) or lock up under Section 6(a)(ii) is or may be in effect may provide notice to the Company by facsimile, of his possible desire to convert a specified number of Shares, and ask the Company to determine whether or not the Company would exercise its right of redemption or lock up if the Shares were submitted for conversion. The Company shall respond within two (2) business days of the date of receipt of that notice, and State whether it would redeem or lock up the Shares, in whole or in part, or allow conversion into Common Stock without redemption or lock up, which election will be applicable to conversion by such shareholder of the number of Shares specified in his notice within the next five business days after the date of the Company's response. Failure of the Company to respond within the two (2) business day period shall be deemed an election by the Company not to redeem or lock up the Shares covered by that notice if submitted for conversion within the next five business days. If the holder does not provide advance notice of intention to convert as contemplated in this section (iii), the Company may effect redemption or lock up of Shares submitted for conversion by giving notice of its election to redeem or lock up, by facsimile within 2 business days following receipt of a Notice of Conversion from a Holder, with a copy by overnight or 2-day courier, to (A) the Holder of Series A Convertible Preferred Stock submitted for conversion at the address and facsimile number of such Holder appearing in the Company's register for the Series A Convertible Preferred Stock and (B) the Exchange Agent, Such notice shall indicate whether the Company will redeem or lock up all or part of the Series A Convertible Preferred Stock submitted for conversion.

The Company shall not be entitled to exercise its right to redeem shares submitted for conversion under this Section 6(a) unless it has (x) the full amount of the redemption price, in cash, available in a demand or other immediately available account in a bank or similar financial institution or (y) immediately available credit facilities, in the full amount of the redemption price, with a bank or similar financial institution on the date the redemption notice is sent to Holders.

(b) Company's Right to Call Redemption if the Price of the Company's Common Stock Is Greater Than the Fixed Strike Price. The Company shall have the right to redeem the Series A Convertible Preferred Stock on the following terms and conditions:

(i) at any time after nine (9) months following the Last Closing Date, if the average closing price of the Company's Common Stock for the seven (7) trading days immediately preceding the Notice Date (as defined below) is greater than the Fixed Conversion Price, the Company may, in its discretion, give written notice that it intends, at least thirty (30) but no more than forty five (45) business days from the date of such notice ("Notice Date") to redeem the Series A Convertible Preferred Stock at the redemption price listed in 6(b)(iii) below. The Company may elect to redeem some, but not all, of the Series A Convertible Preferred Stock, but in no event less than $1,500,000 per redemption. If the Company elects to redeem some, but not all, of the Series A Convertible Preferred Stock, the Company shall redeem a pro-rata amount from among all the Series A Convertible Preferred Stock holders. The holders of the Preferred Stock shall have the right to convert their Preferred Stock until the redemption date.

it has (x) the full amount of the redemption price, in cash, available in a demand or other immediately available account in a bank or similar financial institution or (y) immediately available credit facilities, in the full amount of the redemption price, with a bank or similar financial institution on the date the redemption notice is sent to shareholders. If the Company has met the requirements of the preceding sentence, and a Holder has not submitted his Series A Convertible Preferred Stock for redemption as required by this Section 6(c) by the redemption date, the Company may pay the redemption price described in (iii) below and cancel the Series A Convertible Preferred Stock subject to the redemption notice, and such redeemed Series A Convertible Preferred Stock shall be of no further validity, force or effect.

(iii) Redemption Price. In the case of a redemption under this
Section 6(b), the redemption price per share of Series A Convertible Preferred Stock shall be as follows:

  REDEMPTION PRICE         ELAPSED TIME SINCE LAST CLOSING
--------------------       -------------------------------

130% of Stated Value       9 months and 1 day - 12 months
125% of Stated Value       12 months and 1 day - 18 months
120% of Stated Value       18 months and 1 day - 24 months

For purposes of this paragraph, the "Stated Value" shall equal the Original Series A Issue Price plus the Accretion (calculated as of the effective date of such redemption).

(c) Payment of Redemption Price. The redemption price for redemptions under either Section 6(a) or 6(b) above shall be paid to the Holder of Series A Convertible Preferred Stock redeemed within 5 business days after the redemption; provided, however, that the Company shall not be obligated to deliver any portion of such redemption price unless either the certificates evidencing the Series A Convertible Preferred Stock redeemed are delivered to the Exchange Agent, or the Holder notifies the Company or the Exchange Agent that such certificates have been lost, stolen or destroyed and executes an agreement satisfactory to the Company to indemnify the Company from any loss incurred by it in connection with such certificates.

Section 7. VOTING RIGHTS. The holders of the Series A Convertible Preferred Stock have no voting rights except as required by the General Corporation Law of the State of Delaware.

Section 8. PROTECTIVE PROVISION. So long as shares of Series A Preferred Stock are outstanding, the Company shall not alter or change the rights, preferences or privileges of the shares of Series A Convertible Preferred Stock in a manner not contemplated hereby so as to affect adversely the Series A Convertible Preferred Stock.

Section 9. STATUS OF REDEEMED OR CONVERTED STOCK. In the event any shares of Series A Convertible Preferred Stock shall be redeemed or converted pursuant to
Section 5 or Section 6 hereof, the shares so converted or redeemed shall be canceled, shall return to the status of authorized but unissued Preferred Stock of no designated series, and shall not be issuable by the Corporation as Series A Convertible Preferred Stock.

FURTHER RESOLVED, that the statements contained in the foregoing resolutions creating and designating the said Series A Convertible Preferred Stock and fixing the number, powers, preferences and relative, optional, participating, and other special rights and the qualifications, limitations, restrictions, and other distinguishing characteristics thereof shall, upon the effective date of said series, be deemed to be included in and be a part of the Certificate of Incorporation of the Corporation pursuant to the provisions of the General Corporation Law of the State of Delaware.

FURTHER RESOLVED, that the officers of the Corporation be, and each acting individually hereby is, authorized and directed to take all actions necessary and advisable to effect the purpose and intent of the foregoing resolutions.

IN WITNESS WHEREOF, Celgene Corporation has caused this certificate to be signed by John P. Jackson, its Chairman of the Board and Chief Executive Officer, and attested by Robert Eastty, its Assistant Secretary, this 6th day of March, 1996.

CELGENE CORPORATION

                            By /s/ John W. Jackson
                               -----------------------------
                               John W. Jackson
                               Chairman of the Board and Chief Executive Officer

Attest:

By /s/ Robert Eastty
   ----------------------------
   Robert Eastty
   Assistant Secretary

Each of the undersigned, the Chairman of the Board and Chief Executive Officer and Assistant Secretary, respectively, of Celgene Corporation, a Delaware corporation, declares under penalty of perjury that the matters set forth in this certificate are true and correct of his own knowledge.

Executed at Warren, New Jersey on March 6, 1996.

/s/ John W. Jackson
-----------------------------
John W. Jackson
Chairman of the Board and Chief Executive Officer

/s/ Robert Eastty
-----------------------------
Robert Eastty
Assistant Secretary

STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 03/11/1996
960069734 - 2088605

CELGENE CORPORATION

AMENDED

CERTIFICATE OF DESIGNATION

SERIES A CONVERTIBLE

PREFERRED STOCK

(Pursuant to Section 151 of the Delaware General Corporation Law)

We, John W. Jackson and Sanford Kaston, the Chairman of the Board and Chief Executive Officer and the Assistant Secretary, respectively, of Celgene Corporation, a Delaware corporation, in accordance with the provisions of Section 103 of the Delaware General Corporation Law do hereby certify that:

1. The name of the corporation (hereinafter called the "Corporation") is CELGENE CORPORATION, a corporation duly organized and existing under the Laws of the State Of Delaware.

3. A Certificate of Designation setting forth the rights and privileges with respect to the Series A Convertible Preferred Stock, $.01 par value per share, of the Corporation and designating Four Hundred Twenty (420) of the 5 Million (5,000,000) authorized shares of Preferred Stock as Series A Convertible Preferred Stock, $.01 par value per share, was filed with the Secretary of State of the State of Delaware on March 6, 1996. This Amended and Restated Certificate of Designation amends and restates the Certificate of Designation that was filed on March 6, 1996.

4. The following is a true and correct copy of certain resolutions duly adopted by the Board of Directors of the Corporation on Match 11, 1996, which constituted all necessary action on the part of the Company for adoption of such resolutions.

RESOLVED, that Five Hundred and Twenty (520) of the 5 Million (5,000,000) authorized shares of Preferred Stock of the Corporation shall be designated Series A Convertible Preferred Stock, $.01 par value per share, and shall possess the rights and privileges set forth below:

Section 1. DESIGNATION AND AMOUNT. The shares of such series shall be designated as "Series A Convertible Preferred Stock" (the "Series A Convertible Preferred Stock") and the number of shares constituting the Series A Convertible Preferred Stock (the "Shares") shall be 520; such number of shares may be increased or decreased by resolution of the Board of Directors; provided, that no decrease shall reduce the number of Shares to a number less than the number of shares then outstanding.

Section 2. RANK. The Series A Convertible Preferred Stock shall rank: (i) prior to all of the Corporation's Common Stock, par value $.01 per share ("Common Stock"); (ii) prior to any Class or series of capital stock of the Corporation hereafter created specifically ranking by its terms junior to the Series A Convertible Preferred Stock (collectively, with the Common Stock, "Junior Securities"); (iii) on parity with any class or series of capital stock of the Corporation hereafter created specifically ranking by its terms on parity with the Series A Convertible Preferred Stock ("Parity Securities") and (iv) junior to any class or series of capital stock of the Corporation hereafter created specifically ranking by its terms senior to the Series A Convertible Preferred Stock ("Senior Securities"); in each case as to distributions of assets upon liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary (all such distributions being referred to collectively as "Distributions");

Section 4. LIQUIDATION PREFERENCE.

legally available for distribution shall be distributed among the holders of the Series A Convertible Preferred Stock and the Parity Securities, pro rata, based on the respective liquidation amounts to which each such series of stock is entitled by the Corporation's Certificate of Incorporation and any Certificate(s) of Designation.

(b) Upon the completion of the distribution required by subsection
4(a), if assets remain in this Corporation, they shall be distributed to holders of Junior Securities in accordance with the Corporation's Certificate of Incorporation including any duly adopted Certificate(s) of Designation.

(c) A consolidation or merger of the Corporation with or into any other corporation or corporations, or a sale, conveyance or disposition of all or substantially all of the assets of the Corporation or the effectuation by the Corporation of a transaction or series of related transactions in which more than 50% of the voting power of the Corporation is disposed of, shall not be deemed to be a liquidation, dissolution or winding up within the meaning of this
Section 4, but shall instead be treated pursuant to Section 5(f)(ii) hereof.

Section 5. CONVERSION.

The record Holders of this Series A Convertible Preferred Stock shall have conversion rights as follows (the "Conversion Rights"):

(a) Right to Convert: The record holder of the Series A Convertible Preferred Stock shall be entitled, as set forth below, and, subject to the Company's right of redemption set forth in Section 6 and the restrictions on conversion set forth in Section 5(b) below, to convert the Shares held by such holder into that number of fully-paid and nonassessable shares of the Common Stock at the Conversion Rate as set forth below. The minimum number of Shares that may be converted is the lesser of (i) Two Shares or (ii) all of the Holder's remaining Shares. The rate at which Shares may be converted into shares of Common Stock is hereinafter referred to as the "Conversion Rate" and is computed as follows:

Number of shares of Common Stock issued upon conversion of one share of Preferred Stock = Principal Conversion Rate + Accretion Conversion Rate, where

Issue Price "Principal Conversion Rate" = ---------------- Conversion Price

(.049)(N/365)(Issue Price) and "Accretion Conversion Rate = -------------------------- Accretion Conversion Price

where

o Issue Price = the Original Series A Issue Price, as defined in
Section 4(a);

o Accretion Conversion Price equals the average Closing Price for the Common Stock as that term is defined below, for the 30 calendar days prior to the Date of Conversion; and

o Conversion Price = the lesser of (x) $18.81 (the "Fixed Conversion Price") (which equals 110% of $17.1, which is the average closing price for the seven (7) trading days ending on February 29, 1996), or (y) 90% of the average Closing Price, as that term is defined below, of the Company's Common Stock for the seven (7) trading days immediately preceding the Date of Conversion. For purposes hereof, the term "Closing Price" shall mean the closing price of the Company's Common Stock as reported by NASDAQ (or, if not reported by NASDAQ, as reported by such other exchange or market where traded).

(b) Restrictions on Conversion. No shares of Series A Convertible Preferred Stock may be converted prior to 60 days after the Last Closing (as defined in the Subscription Agreement). Thereafter, (subject to the effectiveness of the S-3 Registration Statement as defined in the Subscription Agreement) each Holder of Series A Convertible Preferred Stock may convert one-third of his shares of Series A Convertible Preferred Stock on or after the 60th day after the Last Closing, an additional one-third on or after the 90th day after the Last Closing, and an additional remaining Series A Convertible Preferred Stock on or after the 120th day after the Last Closing.

of Common Stock issuable upon such conversion unless either the certificates evidencing such Series A Convertible Preferred Stock are delivered to the Exchange Agent as provided above, or the Holder notifies the Exchange Agent that such certificates have been lost, stolen or destroyed and such Holder provides such indemnity as is reasonably acceptable to the Company with respect to such lost, stolen or destroyed certificate. In the case of a dispute as to the calculation of the Conversion Rate, the Company's calculation shall be deemed conclusive absent manifest error. No fractional shares of Common Stock shall be issued upon conversion of this Series A Convertible Preferred Stock. In lieu of any fractional share to which the Holder would otherwise be entitled, the Company shall round up to the nearest whole share.

(d) Reservation of Stock Issuable Upon Conversion. The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the Series A Convertible Preferred Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all then outstanding shares of Series A Convertible Preferred Stock, and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of Series A Convertible Preferred Stock, the Company will take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose.

from the Date of the Last Closing shall be deemed the Date of Conversion with respect to such Shares then outstanding provided that, if such date is not a business day, the next following business day shall be the operative date.

(f) Adjustment to Fixed Conversion Price.

In computing the Fixed Conversion Price for purposes of Section 5(a):

(ii) If, prior to the conversion of all Series A Convertible Preferred Stock, there shall be any merger, consolidation, exchange of shares, recapitalization, reorganization, or other similar event, as a result of which shares of Common Stock shall be changed into the same or a different number of shares of the same or another class or classes of stock or securities of the Company or another entity, than the Holders of Series A Convertible Preferred Stock shall thereafter have the right to purchase and receive upon conversion of Series A Convertible Preferred Stock, upon the basis and upon the terms and conditions specified herein and in lieu of the shares of Common Stock immediately theretofore issuable upon conversion, such shares of stock and/or securities as may be issued or payable with respect to or in exchange for the number of shares of Common Stock immediately theretofore purchasable and receivable upon the conversion of Series A Convertible Preferred Stock held by such Holders had the Holders converted their Series A Preferred to Common immediately prior to such merger, consolidation, exchange of shares, recapitalization or reorganization, and in any such case appropriate provisions shall be made with respect to the rights and interests of the Holders of the Series A Convertible Preferred Stock to the end that the provisions hereof (including, without limitation, provisions for adjustment of the Fixed Conversion Price and of the number of shares issuable upon conversion of the Series A Convertible Preferred Stock) shall thereafter be applicable, as nearly as may be practicable in relation to any shares of stock or securities thereafter be deliverable upon the conversion of Series A Convertible Preferred Stock. The Company shall not effect any transaction described in this subsection 5(f) unless the resulting successor or acquiring entity (if not the Company) assumes by written instrument the obligation to deliver to the Holders of the Series A Convertible Preferred Stock such shares of stock and/or securities as, in accordance with the foregoing provisions, the Holders of the Series A Convertible Preferred Stock may be entitled to purchase.

Section 6. REDEMPTION BY COMPANY; LOCK UP.

(a) Company's Right to Redeem or Lock Up Conversion in the Event of Conversion.

(i) REDEMPTION UPON RECEIPT OF NOTICE OF CONVERSION. In the event the average Closing Price of the Company's Common Stock on the NASDAQ for the seven (7) trading days immediately preceding the Date of Conversion shall be at or less than the Fixed Conversion Price, the Company shall have the right, in its sole discretion, upon receipt of a Notice Conversion pursuant to Section 5, to redeem in whole or in part any Series A Convertible Preferred Stock submitted for conversion, immediately prior to conversion. If the Company elects to redeem some, but not all, of the Series A Convertible Preferred Stock submitted for conversion, the Company shall redeem from among the Series A Convertible Preferred Stock submitted by the various shareholders for conversion on the applicable date, a pro-rata amount from each shareholder so submitting Series A Convertible Preferred stock for conversion.

In the case of a redemption under this Section 6(a)(i), the redemption price shall equal the sum of the Principal Redemption Price plus the Accretion, where:

Principal Redemption Price =

Issue Price X Closing Price On Date of Conversion
Conversion Price

Accretion
Accretion Conversion Price

where "N," "Issue Price," "Closing Price", "Accretion Conversion Price" and "Conversion Price" have the meanings set forth in Section 5, and "Accretion" has the meaning set forth in Section 4.

(ii) REDEMPTION OR LOCKUP BELOW SOFT FLOOR PRICE. In the event the Closing Price per share shall be at or less than $ll.50 (the "Soft Floor Price"), for each of the five (5) trading days preceding the date of submission of a Notice of Conversion by a Holder, the Company shall have the right, in its sole discretion, upon receipt of such Notice of Conversion pursuant to Section 5, to elect, in lieu of conversion, either (A) or (B), as follows:

A. The Company may elect to declare such conversion null and

void, and declare that no conversion of any Preferred Stock that is included in the Notice of Conversion (the "Affected Preferred Stock") shall be permitted for the subsequent ninety (90) day period (the "90 Day Lock Up Period"). In the event the Company declares a 90 Day Lock Up Period, the Company shall issue within 10 business days, to the Holder of the Affected Preferred Stock warrants ("90 Day Lock Up Warrants"), to purchase Common Stock of the Company, as follows:

TERMS OF 90 DAY LOCK UP WARRANT

- the 90 Day Lock Up Warrant shall entitle the holder to purchase a number of shares of common stock equal to 10% of the number of shares of Common Stock that would have been issued upon conversion of the Affected Preferred Stock at the Soft Floor Price.

- the strike price of the 90 Day Lock Up Warrant shall equal the Soft Floor Price.

- the term of the 90 Day Lock Up Warrant shall be two (2) years.

B. Redeem such Affected Preferred Stock pursuant to Section 6(a)(i).

(iii) MECHANICS OF REDEMPTION OR LOCK UP. Any shareholder considering submitting Preferred Stock for conversion at such time as the Company's right of redemption under Section 6(a)(i) or lock up under Section 6(a)(ii) is or may be in effect may provide notice to the Company by facsimile, of his possible desire to convert a specified number of Shares, and ask the Company to determine whether or not the Company would exercise its right of redemption or lock up if the Shares were submitted for conversion. The Company shall respond within, two (2) business days of the date of receipt of that notice, and state whether it would redeem or lock up the Shares, in whole or in part, or allow conversion into Common Stock without redemption or lock up, which election will be applicable to conversion by such shareholder of the number of Shares specified in his notice within the next five business days after the date of the Company's response. Failure of the Company to respond within the two (2) business day period shall be deemed an election by the Company not to redeem or lock up the Shares covered by that notice if submitted for conversion within the next five business days. If the holder does not provide advance notice of intention to convert as contemplated in this section (iii), the Company may effect redemption or lock up of Shares submitted for conversion by giving notice of its election to redeem or lock up, by facsimile within 2 business days following receipt of a Notice of Conversion from a Holder, with a copy by overnight or 2-day courier, to (A) the Holder of Series A Convertible Preferred Stock submitted for conversion at the address and facsimile number of such Holder appearing in the Company's register for the Series A Convertible Preferred Stock and (B) the Exchange Agent. Such notice shall indicate whether the Company will redeem or lock up all or part of the Series A Convertible Preferred Stock submitted for conversion.

redeem some, but not all, of the Series A Convertible Preferred Stock, but in no event less than $1,500,000 per redemption. If the Company elects to redeem some, but not all, of the Series A Convertible Preferred Stock, the Company shall redeem a pro-rata amount from among all the Series A Convertible Preferred Stock holders. The holders of the Preferred Stock shall have the right to convert their Preferred Stock until the redemption date.

(ii) Mechanics of Redemption. The Company shall effect each such redemption by giving notice of its election to redeem, by facsimile with a copy by overnight or 2-day courier, no less than 30 business days prior to the intended redemption date. Such redemption notice shall indicate whether the Company will redeem all or part of the Series A Convertible Preferred Stock, the effective date of the redemption and the applicable redemption price. The Company shall not be entitled to send any notice of redemption and begin the redemption procedure unless it has (x) the full amount of the redemption price, in cash, available in a demand or other immediately available account in a bank or similar financial institution or (y) immediately available credit facilities, in the full amount of the redemption price, with a bank or similar financial institution on the date the redemption notice is sent to shareholders. If the Company has met the requirements of the preceding sentence, and a Holder has not submitted his Series A Convertible Preferred Stock for redemption as required by this
Section 6(c) by the redemption date, the Company may pay the redemption price described in (iii) below and cancel the Series A Convertible Preferred Stock subject to the redemption notice, and such redeemed Series A Convertible Preferred Stock shall be of no further validity, force or effect.

(iii) Redemption Price. In the case of a redemption under this
Section 6(b), the redemption price per share of Series A Convertible Preferred Stock shall be as follows:

Closing             Redemption Price           Elapsed Time Since Last
-------           --------------------        ------------------------

months            130% of Stated Value        9 months and 1 day - 12
months            125% of Stated Value        12 months and 1 day - 18
months            120% of Stated Value        18 months and 1 day - 24

For purposes of this paragraph, the "Stated Value" shall equal the Original Series A Issue Price plus the Accretion (calculated as of the effective date of such redemption).

Section 7. VOTING RIGHTS. The holders of the Series A Convertible Preferred Stock have no voting rights except as required by the General Corporation Law of the State of Delaware.

IN WITNESS WHEREOF, Celgene Corporation has caused this certificate to be signed by John W. Jackson, its Chairman of the Board and Chief Executive Officer, and attested by Sanford Kaston, its Assistant Secretary, this llth day of March, 1996.

CELGENE CORPORATION

                            By /s/ John W. Jackson
                               -----------------------------
                               John W. Jackson
                               Chairman of the Board
                               and Chief Executive Officer

Attest:

By /s/ Sanford Kaston
   --------------------------
   Sanford Kaston
   Assistant Secretary

Executed at Warren, New Jersey on March 11, 1996.

/s/ John W. Jackson
-----------------------------
John W. Jackson
Chairman of the Board and Chief Executive Officer

/s/ Sanford Kaston
-----------------------------
Sanford Kaston
Assistant Secretary

STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 06/09/1997
971187375 - 2088605

CELGENE CORPORATION

CERTIFICATE OF DESIGNATION

SERIES B CONVERTIBLE

PREFERRED STOCK

(Pursuant to Section 151 of the Delaware General Corporation Law)

We, Sol J. Barer and Robert C. Butler, the President and the Secretary, respectively, of Celgene Corporation, a Delaware corporation, in accordance with the provisions of Section 103 of the Delaware General Corporation Law do hereby certify that:

1. The name of the corporation (hereinafter called the "Company") is CELGENE CORPORATION, a corporation duly organized and existing under the laws of the State of Delaware.

2. The Certificate of Incorporation (as amended) authorizes the issuance of 5,000,000 shares of Preferred Stock of a par value of $.01 each and expressly vests in the Board of Directors of the Company the authority provided therein to issue any or all of said shares in one or more series and by resolution to establish the designation, number, full or limited voting powers, or the denial of voting powers, preferences and relative, participating, optional, and other special rights and the qualifications, limitations, restrictions, and other distinguishing characteristics of each series to be issued.

3. The following is a true and correct copy of certain resolutions duly adopted by the Board of Directors of the Company on May 30, 1997, which constituted all necessary action on the part of the Company for adoption of such resolutions.

RESOLVED, that a series of Preferred Stock, par value $.01 per share, of the Company is hereby created and the designation, number of shares, powers, preferences, rights, qualifications, limitations, and restrictions thereof (in addition to any provisions set forth in the Certificate of Incorporation of the Company which are applicable to the preferred stock of all classes and series) are as follows:

SECTION 1. DESIGNATION AND AMOUNT. The shares of such series shall be designated as "Series B Convertible Preferred Stock" (the "Series B Convertible Preferred Stock") and the number of shares constituting the Series B Convertible Preferred Stock (the "Shares") shall be Twenty Thousand (20,000); such number of shares may be increased or decreased by resolution of the Board of Directors; provided, that no decrease shall reduce the number of Shares to a number less than the number of shares then outstanding.

SECTION 2. RANK. All Series B Convertible Preferred Stock shall rank
(i) senior to the Common Stock, par value $.01 per share (the "Common Stock"), of the Company, now or hereafter issued, as to payment of dividends and distribution of assets upon liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary, and (ii) senior to the Series A Convertible Preferred Stock, par value $.01 per share, of the Company, now or hereafter issued, both as to payment of dividends and distributions of assets upon liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary.

SECTION 3. DIVIDENDS. Each Series B Convertible Preferred Stock will bear dividends, when, as and if declared by the Board of Directors at the higher of (i) a rate of 9% of the Original Series B Issue Price (as defined in Section 4(a) below) per annum, compounded quarterly, or (ii) the total of all cash dividends paid in any one calendar year per share of Common Stock, multiplied by the number of Conversion Shares into which a share of Series B Convertible Preferred Stock is convertible on December 31 of such calendar year. Dividends on the Series B Convertible Preferred Stock shall accrue cumulatively, whether or not declared, and shall be added to the Liquidation Preference as hereinafter provided.

SECTION 4. LIQUIDATION PREFERENCE.

(a) In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, or the sale of substantially all of the assets of the Company (an "Event"), the holders of Shares shall be entitled to receive out of the assets of the Company, whether such assets constitute stated capital or surplus of any nature, an amount per share of Series B Convertible Preferred Stock equal to the sum of (i) $1,000 for each outstanding Share (the "Original Series B Issue Price") and (ii) an amount equal to the accrued but unpaid dividends on such Share (such amount being referred to herein as the "Accretion") (the Original Series B Issue Price and Accretion collectively, the "Liquidation Preference"), and no more, before any payment shall be made or any assets distributed to the holders of Common Stock or any other class or series of the Company's capital stock ranking junior as to liquidation rights to the Series B Convertible Preferred Stock (collectively, the "Junior Liquidation Stock"); PROVIDED, HOWEVER, that such rights shall accrue to the holders of Series B Convertible Preferred Stock only in the event that the Company's payments with respect to the liquidation preference of the holders of capital stock of the Company ranking senior as to liquidation rights to the Series B Convertible Preferred Stock (the "Senior Liquidation Stock") are fully met. After the liquidation preferences of the Senior Liquidation Stock are fully met, the entire assets of the Company available for distribution shall be distributed ratably among the holders of the Series B Convertible Preferred Stock and any other class or series of the Company's

capital stock having parity as to liquidation rights with the Series B Convertible Preferred Stock (the "Parity Liquidation Stock") in proportion to the respective preferential amounts to which each is entitled (but only to the extent of such preferential amounts). After payment in full of the Liquidation Preference of the shares of the Series B Convertible Preferred Stock and the Parity Liquidation Stock, if assets remain in the Company, they shall be distributed ratably to holders of Series B Convertible Preferred Stock (on an as-converted basis) and to holders of Junior Liquidation Stock in accordance with the Company's Certificate of Incorporation including any duly adopted Certificate(s) of Designation.

(b) Upon consummation of a consolidation, reorganization or merger (whether or not the Company is the surviving entity) in which the stockholders of the Company immediately prior to the consolidation, reorganization or merger do not continue to own more than 50% of the voting power of the surviving entity, the holder of Shares will be entitled to cash in the amount of the Liquidation Preference and the Shares will be automatically converted to the securities to which the holders of Shares would have been entitled had the Shares been converted immediately prior to the consummation of such consolidation, reorganization or merger.

SECTION 5. CONVERSION. Except as otherwise provided in Section 10, the recordholders of the Series B Convertible Preferred Stock shall have conversion rights as follows:

(a) RIGHT TO CONVERT. The record holder of the Series B Convertible Preferred Stock shall be entitled to convert the shares of Preferred Stock held by such holder into fully-paid and nonassessable shares of the Common Stock at the Conversion Rate, as follows:

                      Original Series B Issue Price + Accretion
Conversion Rate =     -----------------------------------------
                                Conversion Price

The Conversion Price shall equal $6.50 (the "Initial Conversion Price"); provided, however, that the Conversion Price may be reset on each Reset Date in accordance with the following two paragraphs.

A "Reset Date" shall mean one or more of the following dates, if on any such date(s) the average Closing Price (as defined below) for the ten (10) trading days ending on such Reset Date is lower than the Initial Conversion Price (or the Conversion Price as reset in accordance with this paragraph):

(i) the dates of the Second Closing, Third Closing or Fourth Closing (all as defined in the Securities Purchase Agreement dated June 9, 1997 between the Company and certain investors);

(ii) June 1, 1998; and

(iii) July 9, 2002, with respect to the Shares of Preferred Stock that have not been redeemed pursuant to Section 6 below.

Upon the occurrence of a Reset Date, the Conversion Price shall thereafter equal the average Closing Price for the ten (10) trading days ending on such Reset Date(s); provided, however, that if the Conversion Price in effect on any Date of Conversion is lower than the Floor Price in effect on such Date of Conversion, then the Conversion Price shall equal the Floor Price for such Date of Conversion. For conversions occurring prior to June 2, 1998, the Floor Price shall be $6.00; for conversions occurring on a Date of Conversion on or after June 2, 1998 and prior to June 2, 1999, the Floor Price shall be $5.00; for conversions occurring on a Date of Conversion on or after June 2, 1999 and prior to June 9, 2002, the Floor Price shall be 55% of the Initial Conversion Price, For conversions occurring on a Conversion Date on or after June 9, 2002, there shall be no Floor Price.

In the event that the Company does not file a Registration Statement as required by Section 2.a. of the Registration Rights Agreement dated as of June 9, 1997, within the period therein specified, then the Conversion Price for all outstanding Series B Convertible Preferred Stock shall be reset to equal the average Closing Price for the ten trading days beginning on a date that is the first day after the date that the Securities and Exchange Commission declares effective such Registration Statement, if such average Closing Price is lower than the Conversion Price then in effect. The Conversion Price, as adjusted by this paragraph, shall remain subject to the Floor Price as set forth in the preceding paragraph.

"Closing Price" shall mean the closing price of the Company's Common Stock as reported by the Nasdaq National Market System (or, if not reported by Nasdaq, as reported by such other exchange or market where traded).

No fractional shares of Common Stock shall be issued upon conversion of this Series B Convertible Preferred Stock. In lieu of any fractional share of Common Stock to which the Investor would otherwise be entitled, the Company shall round up to the nearest whole share of Common Stock.

(b) MECHANICS OF CONVERSION. In order to convert Series B Convertible Preferred Stock into shares of Common Stock, the holder shall (i) fax a copy of the fully executed notice of conversion in the form attached hereto ("Notice of Conversion") (together with a copy of the first page of each certificate to be converted) to the Company at the office of the Company and to American Stock Transfer & Trust Company (the "Exchange Agent") that such holder elects to convert the same, which notice shall specify the number of shares of Series B Convertible Preferred Stock to be converted and shall contain a calculation of the Conversion Rate prior to Midnight, New York City time on the Date of Conversion specified on the Notice of Conversion and (ii) surrender the original certificate or certificates therefor, duly endorsed, and the original Notice of Conversion, no later than Midnight (New York City Time) the next business day, to a common courier for overnight delivery or 2-day delivery (if overseas) to the Exchange Agent.

The Company shall issue and deliver or cause to be issued and delivered within three (3) business days after delivery to the Exchange Agent of such certificates, to such holder of Series B Convertible Preferred Stock at the address of the Holder on the books of the Company, a

certificate for the number of shares of Common Stock to which the Holder shall be entitled as provided in Section 5(a) above. The date on which conversion occurs (the "Date of Conversion") shall be deemed to be the date set forth in such Notice of Conversion, provided (i) that the advance copy of the Notice of Conversion is faxed to the Company and the Exchange Agent before midnight, New York City time, on the Date of Conversion and (ii) that the stock certificates (the "Preferred Stock Certificates") representing the Series B Convertible Preferred Stock to be converted (or reasonable indemnity reasonably acceptable to the Company with respect to any lost, stolen or destroyed certificate) are received by the Exchange Agent within five (5) business days thereafter. The person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such date. If the original Series B Convertible Preferred Stock Certificates to be converted (or reasonable indemnity) are not received by the Exchange Agent or the Company within five (5) business days after the Date of Conversion, the Company may, at its option, treat the Notice of Conversion as null and void.

(c) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the Series B Convertible Preferred Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all then outstanding shares of Series B Convertible Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of Series B Convertible Preferred Stock, the Company will take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose.

(d) AUTOMATIC CONVERSION. Each outstanding share of Series B Convertible Preferred Stock (other than an Excess Share, as defined in Section 10) shall automatically be converted (the "Automatic Conversion") into Common Stock on the later of (a) June 2, 1998 or (b) the date on which the Company receives a letter from the United States Food & Drug Administration granting accelerated approval of the Company's New Drug Application to market Synovir for the AIDS/cachexia indication, at the Conversion Price in effect on the date of such automatic conversion; PROVIDED, HOWEVER, that Automatic Conversion shall not occur prior to June 2, 1999 unless the average Closing Price for the 15 trading days prior to the date of automatic conversion is equal to or above the Floor Price then in effect. Notwithstanding any of the above, but subject to
Section 10 below (i) any shares of Series B Convertible Preferred Stock outstanding on June 2, 1999 shall be automatically converted into Common Stock on any date on or after June 2, 1999 on which the average Closing Price for the 15 preceding trading days is greater than 200% of the Conversion Price then in effect, at the Conversion Price in effect on the date of such automatic conversion, and (ii) no shares of Series B Convertible Preferred Stock shall convert pursuant to this Section 5(d) if, on the date conversion would otherwise occur pursuant to this Section 5(d), the Common Stock is not listed for quotation and trading on the Nasdaq National Market; provided, however, that such conversion shall occur pursuant to this Section 5(d) on such date thereafter, if any, as the Common Stock shall become listed for quotation and trading on the Nasdaq National Market.

(e) ADJUSTMENT TO CONVERSION PRICE. In computing the Conversion Price for purposes of Section 5(a):

(i) If, prior to the conversion of all of the Series B Convertible Preferred Stock, the number of outstanding shares of Common Stock is adjusted by a stock split, stock dividend, or other similar event, the Conversion Price shall be proportionately adjusted.

(ii) If, prior to the conversion of all Series B Convertible Preferred Stock, there shall be any merger, consolidation, exchange of shares, recapitalization, reorganization, or other similar event, as a result of which shares of Common Stock shall be changed into the same or a different number of shares of the same or another class or classes of stock or securities of the Company or another entity, then the holders of Series B Convertible Preferred Stock shall thereafter have the right to purchase and receive upon conversion of Series B Convertible Preferred Stock, upon the basis and upon the terms and conditions specified herein and in lieu of the shares of Common Stock immediately theretofore issuable upon conversion, such shares of stock and/or securities as may be issued or payable with respect to or in exchange for the number of shares of Common Stock immediately theretofore purchasable and receivable upon the conversion of Series B Convertible Preferred Stock held by such Holders had the Holders converted their Series B Preferred to Common immediately prior to such merger, consolidation, exchange of shares, recapitalization or reorganization, and in any such case appropriate provisions shall be made with respect to the rights and interests of the Holders of the Series B Convertible Preferred Stock to the end that the provisions hereof (including, without limitation, provisions for adjustment of the Conversion Price and of the number of shares issuable upon conversion of the Series B Convertible Preferred Stock) shall thereafter be applicable, as nearly as may be practicable in relation to any shares of stock or securities thereafter deliverable upon the conversion of Series B Convertible Preferred Stock. The Company shall not effect any transaction described in this subsection 5(e) unless the resulting successor or acquiring entity (if not the Company) assumes by written instrument the obligation to deliver to the Holders of the Series B Convertible Preferred Stock such shares of stock and/or securities as, in accordance with the foregoing provisions, the Holders of the Series B Convertible Preferred Stock may be entitled to purchase.

SECTION 6. REDEMPTION. At the option of the Company, any Shares of Preferred Stock outstanding on June 9, 2002 may be redeemed on that date by the Company at a redemption price equal to (i) the Original Series B Issue Price, and (ii) the Accretion. Notice of redemption shall be given not more than 60 nor less than 30 days prior June 9, 2002. The number of Shares from each holder that are to be redeemed shall be in the same proportion as the total number of Shares to be redeemed bears to the total number of Shares then outstanding.

SECTION 7. VOTING RIGHTS.

(a) Except as otherwise provided in Section 10 below, each share of Series B Convertible Preferred Stock issued and outstanding shall have the number of votes equal to the number of shares of Common Stock into which it shall have been convertible as of the record date

of the stockholders' meeting at which action is proposed to be taken or for any stockholder action to be taken by written consent. Except as otherwise provided in this Section 7 or as otherwise required by law, the holders of Series B Preferred Stock and the holders of Common Stock shall vote together as one class upon all matters submitted to stockholders for a vote.

(b) Except as otherwise provided in Section 10 below, until such time after December 10, 1998 as there are outstanding shares of Series B Preferred Stock having an aggregate Original Series B Issue Price of less than $2,000,000:

(i) The holders representing 75% or more of the outstanding shares of Series B Preferred Stock (other than those which are subject to Section 10(c)(ii) below), voting as a single class, will be required:
(a) to authorize the incurrence of indebtedness (except for trade payables, lease financing and other indebtedness incurred in the ordinary course of business), (b) to authorize the issuance of securities having a preference over, or on a parity with, the Series B Convertible Preferred or to increase the number of authorized shares of Series B Preferred, (c) to reclassify any Common Stock or other securities of the Company into shares or debt (except for trade payables, lease financing and other indebtedness incurred in the ordinary course of business) having a preference or priority superior to or on parity with the Series B Convertible Preferred Stock, or (d) alter or change the rights, preferences or privileges in its shares of Series B Convertible Preferred or otherwise amend the Certificate of Incorporation of the Company in either case whether by merger, consolidation or otherwise so as to adversely affect such shares.

(ii) The holders representing a majority of the outstanding shares of Series B Preferred Stock (other than those which are subject to Section 10(c)(ii) below), voting as a single class, will be required:
(a) to effect a sale or transfer of all or substantially all of the Company's assets or to effect a merger which results in the holders of the Company's capital stock prior to the transaction owning less than 50% of the voting power of the Company's capital stock after the transaction; (b) to declare any dividend or make any other distribution other than as contemplated herein; (c) to acquire for more than $5,000,000 in cash or Celgene securities, assets or stock in any other company; or (d) to enter into any corporate event that could be considered a "liquidation" or sale of the Company (except for bankruptcy).

SECTION 8. STATUS OF REDEEMED OR CONVERTED STOCK. In the event any shares of Series B Convertible Preferred Stock shall be converted or redeemed pursuant to Section 5 or Section 6 hereof, the shares so converted or redeemed shall be canceled, shall return to the status of authorized but unissued Preferred Stock of no designated series, and shall not be issuable by the Company as Series B Convertible Preferred Stock.

SECTION 9. NO SINKING FUND. The shares of Series B Convertible Preferred Stock shall not be subject to the operation of a purchase, retirement or sinking fund.

SECTION 10. RESTRICTIONS ON CONVERSIONS AND VOTING RIGHTS. Notwithstanding anything set forth elsewhere herein, if at any time the percentage beneficial ownership of LGT Asset Management, Inc. ("LGT") (as determined in accordance with Regulation 13D-G under the Securities

Exchange Act of 1934, as may be amended from time to time) of the total outstanding Common Stock of the Company (the "LGT Beneficial Ownership") exceeds 20% (the "Series B Percentage Restriction"), then the following provisions shall apply with respect to those shares of Series B Convertible Preferred Stock which are beneficially owned by LGT and which exceed the Series B Percentage Restriction (each, an "Excess Share"):

(a) No Excess Share shall (i) be convertible pursuant to Section 5(a) hereof or (ii) be automatically converted pursuant to the Automatic Conversion set forth in Section 5(d) HEREOF;

(b) No Excess Share shall be entitled to vote in an election for directors of the Company pursuant to the voting rights set forth in Section 7(a) HEREOF;

(c) Upon the occurrence of an Automatic Conversion under Section
5(d), (i) the Conversion Rate for each Excess Share shall be fixed at the Conversion Rate (subject to antidilution adjustments as provided for herein) (the "Fixed Rate") in effect on the date of such Automatic Conversion and thereafter such Excess Shares may be converted only, if at all, at such Fixed Rate, (ii) no Excess Share shall be entitled to the voting rights set forth in
Section 7(b); and (iii) no Excess Share shall accrue dividends pursuant to
Section 3 but shall retain all previously accrued dividends;

(d) Each Excess Share shall continue to accrue liquidation preference pursuant to Section 4 (whether or not there is an Automatic Conversion);

(e) Following the passage of any consecutive 75 calendar day period (the "75-Day Period") during which the LGT Beneficial Ownership is below and has continuously remained below the Series B Percentage Restriction (the "Shortfall"), that number of Excess Shares which is equal to the difference between the Series B Percentage Restriction and the Shortfall shall become convertible pursuant to Section 5(a) hereof and shall become entitled to the rights described in (a)(ii) and (b) above (each, a "Restored Share"); PROVIDED, HOWEVER, that, if an Automatic Conversion has occurred while a share of Series B Convertible Preferred Stock was an Excess Share (whether before or during the 75-day Period), then, upon expiration of the 75-Day Period, such Excess Share that becomes a Restored Share following the expiration of the 75-Day Period shall be automatically converted at the Conversion Rate in effect on the date of the Automatic Conversion;

(f) Other than as specifically set forth above, each Excess Share shall be entitled to, and be subject to all of the powers, preferences and relative, optional, participating, and other special rights and the qualifications, limitations, restrictions, and other distinguishing characteristics set forth in this Certificate of Designation; and

(g) In calculating the Series B Percentage Restriction, all warrants issuable or issued to and held by the Series B Preferred holder pursuant to the Securities Purchase Agreement with the Company dated of even date herewith, and shares of Common Stock issuable pursuant to such warrants shall be excluded from the calculation of the LGT Beneficial Ownership.

SECTION 11. PARTICIPATION RIGHTS. The holders of Series B Convertible Preferred Stock shall have the right to participate, as provided herein, in any private placement by the Company of Common Stock or Common Stock equivalents at a price per share below the then current trading price of Common Stock (a "Subsequent Placement"). Each such holder shall have the right to participate in such Subsequent Placement on a pro-rata basis, as provided herein. The Company shall, at least ten days prior to the closing of any such Subsequent Placement, deliver written notice to each such holder describing the proposed financing, the terms thereof, and any and all disclosure or similar materials provided to proposed investors in the Subsequent Placement. Each such holder shall have the right to purchase his pro-rata share of the securities to be issued in the Subsequent Placement on the terms thereof Each such holder's pro-rata share of any Subsequent Placement shall be computed as a fraction, the numerator of which shall be the number of shares of Common Stock into which the Series B Convertible Preferred Stock of such holder is then convertible, and the denominator of which shall be the sum of the number of shares of Common Stock or Common Stock equivalents to be outstanding upon completion of the Subsequent Placement plus the number of shares of Common Stock into which all outstanding Series B Convertible Preferred Stock is then convertible.

FURTHER RESOLVED, that the statements contained in the foregoing resolutions creating and designating the said Sales B Convertible Preferred Stock and fixing the number, powers, preferences and relative, optional, participating, and other special rights and the qualifications, limitations, restrictions, and other distinguishing characteristics thereof shall, upon the effective date of said series, be deemed to be included in and be a part of the Certificate of Incorporation of the Company pursuant to the provisions of the General Corporation Law of the State of Delaware.

FURTHER RESOLVED, that the officers of the Company be, and each acting individually hereby is, authorized and directed to take all actions necessary and advisable to effect the purpose and intent of the foregoing resolutions.

IN WITNESS WHEREOF, Celgene Corporation has caused this certificate to be signed by Sol J. Barer, its President, and attested by Robert C. Butler, its Secretary, this 3rd day of June, 1997.

CELGENE CORPORATION

                                                BY /s/ Sol J. Barer
                                                   -----------------------------
                                                   Sol J. Barer
                                                   President

Attest:

By /s/ Robert C. Butler
   -----------------------------
   Robert C. Butler
   Secretary

Each of the undersigned, the President and the Secretary, respectively, of Celgene Corporation, a Delaware corporation, declares under penalty of perjury that the matters set forth in this certificate are true and correct of his own knowledge.

Executed at Warren, New Jersey on June 3, 1997.

/s/ Sol J. Barer
-----------------------------
Sol J. Barer
President

/s/ Robert C. Butler
-----------------------------
Robert C. Butler
Secretary

SECRETARY OF STATES
DIVISION OF CORPORATIONS

FILED 09:00 AM 07/15/1998
981275264 - 2088605

CERTIFICATE OF AMENDMENT

CERTIFICATE OF INCORPORATION

CELGENE CORPORATION

(Under Section 242 of the General Corporation Law of the State of Delaware)

CELGENE CORPORATION, a corporation organized and existing under the General Corporation Law of the State of Delaware, does hereby certify that:

FIRST: The name of the corporation is Celgene Corporation (the "Corporation").

SECOND: The Certificate of Incorporation, as heretofore amended (the "Certificate of Incorporation"), of the Corporation is hereby amended to increase the authorized number of shares of the Corporation's common stock, par value $0.01. from 20,000,000 to 30,000,000 by striking out the first sentence of Article FOURTH thereof and by substituting a lieu thereof the following new sentence:

FOURTH: The aggregate number of shares which the Corporation shall have authority to issue is thirty-five million (35,000,000) of which five million (5,000,000) shares, having a par value of $.01 per share, shall be designated "Preferred Stock" and thirty-million (30,000,000) shares, having a par value of $.01 per share, shall be designated "Common Stock."

THIRD: The foregoing amendment to the Certificate of Incorporation was duly adopted in accordance with Section 242 of the General Corporation Law of the State of Delaware.

IN WITNESS WHEREOF, Celgene Corporation has caused this Certificate to be signed this 15th day of July, 1998.

CELGENE CORPORATION

                                               By:/s/ John W. Jackson
                                                  ------------------------------
                                                  Name: John W. Jackson
                                                  Title: Chief Executive Officer

ATTEST:

/s/ Sol J. Barer
------------------------------
Name:  Sol J. Barer
Title: President

STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS

FILED 05:00 PM 04/11/2000
001187106 - 2088605

CERTIFICATE OF AMENDMENT

THE CERTIFICATE OF INCORPORATION

CELGENE CORPORATION

Celgene Corporation, a Delaware corporation (the "Corporation"), does hereby certify as follows:

FIRST: At a duly held meeting, the Board of Directors adopted resolutions proposing and declaring it advisable that the Certificate of Incorporation of the Corporation be amended as follows:

(a) By striking the first sentence of Article Fourth and substituting in lieu thereof the following sentences:

"FOURTH. The aggregate number of shares which the Corporation shall have the authority to issue is 125,000,000, of which 5,000,000 shares of the par value of $.01 per share shall be designated 'Preferred Stock' and 120,000,000 shares of the par value of $.01 per share shall be designated 'Common Stock.' Upon the filing in the office of the Secretary of State of Delaware of this Certificate of Amendment of the Certificate of Incorporation of the Corporation, each issued and outstanding share of Common Stock of the Corporation shall thereby and thereupon be subdivided into three shares of validly issued, fully paid, non-assessable and outstanding shares of Common Stock of the Corporation without any other action of the stockholders with respect thereto."

SECOND: The stockholders of the Corporation have duly adopted the foregoing amendment at a Special Meeting of the Stockholders duly called and held on April 10, 2000 in accordance with the provisions of Section 222 of the General Corporation Law of Delaware.

THIRD: Such amendment to the Certificate of Incorporation was duly adopted in accordance with the applicable provisions of Sections 222 and 242 of the General Corporation Law of Delaware.

FOURTH: This amendment to the Certificate of Incorporation shall be effective on and as of the date of filing of this Certificate of Amendment with the office of the Secretary of State of Delaware.

IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be executed in its name by its Chief Executive Officer and attested to by its Chief Financial Officer this 11th day of April, 2000 and the statements contained herein are affirmed as true under penalties of perjury.

CELGENE CORPORATION

                                               By: /s/ John W. Jackson
                                                  --------------------------
                                                   Name:  John W. Jackson
                                                   Title: Chairman and Chief
                                                          Executive Officer

ATTEST:

By: /s/ Robert J. Hugin
   ----------------------------------
    Name:  Robert J. Hugin
    Title: Senior Vice President and
           Chief Financial Officer

STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS

DELIVERED 03:59 PM 06/18/2004
FILED 03:32 PM 06/18/2004
SRV 040452550 - 2088605 FILE

CERTIFICATE OF AMENDMENT

THE CERTIFICATE OF INCORPORATION

CELGENE CORPORATION

Celgene Corporation, a Delaware corporation (the "Corporation"), does hereby certify as follows:

FIRST: At a duly held meeting, the Board of Directors adopted resolutions proposing and declaring it advisable that the Certificate of Incorporation of the Corporation be amended as follows:

(a) By striking the first sentence of Article Fourth and substituting in lieu thereof the following sentence:

SECOND: The stockholders of the Corporation have duly adopted the foregoing amendment at the Annual Meeting of the Stockholders duly called and held on June 15, 2004 in accordance with the provisions of Section 222 of the General Corporation Law of Delaware.

THIRD: Such amendment to the Certificate of Incorporation was duly adopted in accordance with the applicable provisions of Sections 222 and 242 of the General Corporation Law of Delaware.

FOURTH: This amendment to the Certificate of Incorporation shall be effective on and as of the date of filing of this Certificate of Amendment with the office of the Secretary of State of Delaware.

IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be executed in its name by its Chief Executive Officer and attested to by its Chief Financial Officer this 18th day of June, 2004 and the statements contained herein are affirmed as true under penalties of perjury.

CELGENE CORPORATION

                                               By: /s/ John W. Jackson
                                                  ------------------------------
                                                   Name:  John W. Jackson
                                                   Title: Chairman and Chief
                                                          Executive Officer

ATTEST:

By: /s/ Robert J. Hugin
   ----------------------------------
    Name:  Robert J. Hugin
    Title: Senior Vice President and
           Chief Financial Officer

STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
DELIVERED 11:36 AM 10/22/2004
FILED 11:36 AM 10/22/2004
SRV 040763222 - 2088605 FILE

CERTIFICATE OF AMENDMENT

THE CERTIFICATE OF INCORPORATION

CELGENE CORPORATION

Celgene Corporation, a Delaware corporation (the "Corporation"), does hereby certify as follows:

FIRST: At a duly held meeting, the Board of Directors adopted resolutions proposing and declaring it advisable that the Certificate of Incorporation of the Corporation be amended as follows:

(a) By striking the first sentence of Article Fourth and substituting in lieu thereof the following sentences:

"FOURTH. The aggregate number of shares which the Corporation shall have the authority to issue is 280,000,000, of which 5,000,000 shares of the par value of $.01 per share shall be designated 'Preferred Stock' and 275,000,000 shares of the par value of $.01 per share shall be designated 'Common Stock.' Upon the filing in the office of the Secretary of State of Delaware of this Certificate of Amendment of the Certificate of Incorporation of the Corporation, each issued and outstanding share of Common Stock of the Corporation shall thereby and thereupon be subdivided into two shares of validly issued, fully paid, non-assessable and outstanding shares of Common Stock of the Corporation without any other action of the stockholders with respect thereto."

THIRD: Such amendment to the Certificate of Incorporation was duly adopted in accordance with the applicable provisions of Sections 222 and 242 of the General Corporation Law of Delaware.

FOURTH: This amendment to the Certificate of Incorporation shall be effective on and as of the date of filing of this Certificate of Amendment with the office of the Secretary of State of Delaware.

IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be executed in its name by its Chief Executive Officer and attested to by its Chief Financial Officer this 22nd day of October, 2004 and the statements contained herein are affirmed as true under penalties of perjury.

CELGENE CORPORATION

                                             By: /s/ John W. Jackson
                                                ------------------------------
                                                     Name:  John W. Jackson
                                                     Title: Chairman and Chief
                                                            Executive Officer

ATTEST:

By: /s/ Robert J. Hugin
   ----------------------------------
        Name:  Robert J. Hugin
        Title: Senior Vice President and
               Chief Financial Officer

STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS

DELIVERED 03:06 PM 02/16/2006
FILED 03:05 PM 02/16/2006
SRV 060148262 - 2088605 FILE

CERTIFICATE OF AMENDMENT

THE CERTIFICATE OF INCORPORATION

CELGENE CORPORATION

Celgene Corporation, a Delaware corporation (the "Corporation"), does hereby certify as follows:

FIRST: At a duly held meeting, the Board of Directors adopted resolutions proposing and declaring it advisable that the Certificate of Incorporation of the Corporation be amended as follows:

(a) By striking the first two sentences of Article FOURTH and substituting in lieu thereof the following sentence:

"FOURTH. The aggregate number of shares which the Corporation shall have the authority to issue is 580,000,000, of which 5,000,000 shares of the par value of $.01 per share shall be designated 'Preferred Stock' and 575,000,000 shares of the par value of $.01 per share shall be designated 'Common Stock.'"

SECOND: The stockholders of the Corporation have duly adopted the foregoing amendment at the Special Meeting of the Stockholders duly called and held on February 16, 2006 in accordance with the provisions of Section 222 of the General Corporation Law of Delaware.

THIRD: Such amendment to the Certificate of Incorporation was duly adopted in accordance with the applicable provisions of Sections 222 and 242 of the General Corporation Law of Delaware.

FOURTH: This amendment to the Certificate of Incorporation shall be effective on and as of the date of filing of this Certificate of Amendment with the office of the Secretary of State of Delaware.

IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be executed in its name by its Chief Financial Officer this 16th day of February, 2006 and the statements contained herein are affirmed as true under penalties of perjury.

CELGENE CORPORATION

By: /s/ Robert J. Hugin
    ------------------------------
    Name:  Robert J. Hugin
    Title: Senior Vice President and
           Chief Financial Officer

EXHIBIT 10.36

LICENSE AGREEMENT

LICENSE AGREEMENT, dated November 16, 2001 (the "Agreement"), is made between Celgene Corporation, a Delaware corporation ("Celgene"), Pharmion GmbH, a Swiss limited liability company ("Pharmion"), and, solely for purposes of guaranteeing the obligations of Pharmion hereunder, Pharmion Corporation, a Delaware corporation ("Guarantor").

WHEREAS, Celgene has developed the Products (as defined herein); and

WHEREAS, Pharmion wishes to receive a license from Celgene for the Products in the Territory (as defined herein), and Celgene is willing to grant Pharmion a license for the Products in the Territory, all on the terms and conditions set forth below.

NOW THEREFORE, in consideration of the premises and of the covenants herein contained, Celgene and Pharmion mutually agree as follows:

ARTICLE I.
DEFINITIONS

For purposes of this Agreement, the following capitalized terms shall have the meanings specified below.

"AFFILIATE" shall mean any corporation or other entity which controls, is controlled by or is under common control with a party. A corporation or other entity shall be regarded as in control of another corporation or entity if it owns or directly or indirectly controls at least fifty percent (50%) of the voting stock or other ownership interest of the other corporation or entity, or if it possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the corporation or other entity or the power to elect or appoint fifty percent (50%) or more of the members of the governing body of the corporation or other entity.

"APPROVAL PERIOD" shall have the meaning ascribed thereto in Section 9.4 hereof.

"CELGENE PATENT RIGHTS" shall mean (i) the patents and patent applications listed on Exhibit A hereto, and (ii) any patents hereafter issued or patent applications hereafter filed by or on behalf of Celgene or any of its Affiliates, in either case, necessary or useful for the registration, distribution, marketing or sale of any of the Products in the Territory during the term of this Agreement.

"CELGENE TECHNOLOGY" shall mean data, manufacturing know-how, regulatory submissions and other intellectual property that is either in the possession of Celgene as of the date hereof or developed by Celgene during the term of this Agreement in connection with any additional regulatory approvals to market Products in the United

States, (including,, without limitation, S.T.E.P.S., as hereinafter defined, and any clinical data from pivotal studies relating to the Products as well as additional clinical studies relating to the Products conducted from time to time by or on behalf of Celgene or any of its Affiliates) in either case, owned or controlled by, or licensed (with the right to sublicense) to, Celgene and that is necessary or useful to register, distribute, market or sell the Products in the Territory.

"CMCC" shall have the meaning ascribed thereto in Section 3.9 hereof.

"CMCC LICENSE" shall have the meaning ascribed thereto in Section 3.9 hereof.

"EMEA" shall mean the European Agency for the Evaluation of Medicinal Products.

"ENTREMED" shall have the meaning ascribed thereto in Section 3.9 hereof.

"ENTREMED LICENSE" shall have the meaning ascribed thereto in Section 3.9 hereof.

"FIRST COMMERCIAL SALE" shall mean, with respect to any country in the Territory, the first sale of any of the Products to an unaffiliated customer in such country following Regulatory Approval in such country.

"NET SALES" shall mean Pharmion's and its Affiliates invoiced sales price of Product billed to unaffiliated customers, less: (i) to the extent such amounts are included in the invoiced sales price, actual credited allowances and/or charge-backs for spoiled, damaged, out-dated and returned product, (ii) quantity and other trade discounts and early settlement discounts (where such discounts are effectively non-discretionary and are given as a matter of course) actually allowed and taken, (iii) transportation, insurance and handling expenses to the extent chargeable to such sales, (iv) sales, value-added and other direct taxes incurred, (v) customs duties and surcharges and other governmental charges incurred in connection with the exportation or importation of any Product, and (vi) legally mandated rebates, if any.

"PRIME RATE" shall mean the prime rate announced from time to time by Citibank, N.A., plus 2%.

"PRODUCTS" shall mean each article of manufacture, substance, material, chemical, formulation or composition which is or includes Thalidomide as an active ingredient, including, without limitation, any composition that comprises Thalidomide and a non-steroidal anti-inflammatory compound(s). The term "Products" expressly excludes Thalidomide analogs.

"QUARTERLY REPORT" shall have the meaning ascribed thereto in Section 3.6 hereof.

"RECOGNIZED AGENT" shall mean an entity other than an Affiliate of Pharmion through which Pharmion regularly distributes and sells products in a particular region.

"REGULATORY APPROVAL" shall mean, with respect to each country in the Territory, all required regulatory approvals (including, without limitation, as to pricing) in such country to market and sell the Product to unaffiliated customers.

"TARGET VOLUME" shall have the meaning ascribed thereto in Section 9.4 hereof.

"TERRITORY" shall mean the world, except for North America (consisting of the United States, Canada and Mexico), Japan, Korea, Taiwan and China.

"THIRD PARTY" shall mean any entity other than Celgene or Pharmion, their respective Affiliates.

"UK REGULATORY APPROVAL" shall mean Regulatory Approval in the United Kingdom.

ARTICLE II.
REPRESENTATIONS AND WARRANTIES; COVENANTS

2.1. REPRESENTATIONS AND WARRANTIES OF EACH PARTY. Each party represents and warrants to the other that it has the legal right and power to enter into this Agreement, to extend the rights and licenses granted to the other in this Agreement, and that the performance of such obligations will not conflict with its charter documents or any agreements, contracts or other arrangements to which it is a party.

2.2. REPRESENTATIONS OF PHARMION. Pharmion and Guarantor jointly and severally represent and warrant to, and covenant with, Celgene that:

(a) Pharmion is a corporation duly organized, validly existing and in good standing under the applicable laws of Switzerland and has taken all necessary action to authorize the execution, delivery and performance of this Agreement, and

(b) Guarantor is a corporation duly organized, validly existing and in good standing under the applicable laws of Delaware and has taken all necessary action to authorize the execution, delivery and performance of this Agreement, and

(c) upon the execution and delivery of this Agreement, this Agreement shall constitute a valid and binding obligation of Pharmion and Guarantor enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' and contracting parties' rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

2.3. REPRESENTATIONS OF CELGENE. Celgene represents and warrants to, and covenants with, Pharmion that:

(a) Celgene is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has taken all necessary action to authorize the execution, delivery and performance of this Agreement;

(b) upon the execution and delivery of this Agreement, this Agreement shall constitute a valid and binding obligation of Celgene enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors' and contracting parties' rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); and

(c) Exhibit A contains a complete and correct list of all patents and patent applications filed by or on behalf of Celgene or any of its Affiliates, necessary or useful for registration, distribution, marketing or sale of any of the Products.

2.4. DISCLAIMER OF WARRANTIES. NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS A REPRESENTATION MADE, OR WARRANTY GIVEN, BY CELGENE OR PHARMION
(A) THAT ANY PATENT WILL ISSUE BASED UPON ANY PENDING PATENT APPLICATION, (B) THAT ANY PATENT WHICH HAS ISSUED OR HEREAFTER ISSUES WILL BE VALID, OR (C) THAT THE USE OF ANY LICENSE GRANTED HEREUNDER OR THE USE OF ANY PATENT RIGHTS WILL NOT INFRINGE THE PATENT OR PROPRIETARY RIGHTS OF ANY OTHER PERSON.

ARTICLE III.
LICENSE GRANTS; RESERVED RIGHTS

3.1. GRANT OF LICENSE RIGHTS BY CELGENE TO PHARMION. Celgene hereby grants to Pharmion, and Pharmion hereby accepts, an exclusive (including as to Celgene and its Affiliates) royalty-bearing license to register, distribute, market, use and sell the Products in the Territory under the Celgene Patent Rights and the Celgene Technology. Pharmion may not sublicense any of the rights granted by Celgene to Pharmion pursuant to this Section 3.1 and Section 3.2 other than in accordance with Section 10.12 hereof.

3.2. TRADEMARK. In connection with the sale and marketing of the Product by Pharmion in the Territory, Celgene hereby grants to Pharmion an exclusive, royalty-free license to use any Celgene trademark used by Celgene in connection with the Product. In the event a Celgene trademark is not available in any jurisdiction within the Territory, Pharmion may select a trademark with Celgene's written consent (such consent not to be unreasonably withheld or delayed) for registration in Celgene's name, and Celgene hereby grants to Pharmion a license thereto on the same basis as provided in the preceding sentence.

3.3. CELGENE RESERVED RIGHTS. Except for the license expressly granted by Celgene to Pharmion pursuant to Sections 3.1 and 3.2, Celgene reserves all rights under the Celgene Patent Rights and the Celgene Technology. The foregoing reserved rights shall include, but not be limited to, the rights to develop, make, use, sell and import Products outside the Territory. Without limiting the generality of the foregoing, it is understood and agreed that Pharmion has no right pursuant to this Agreement to manufacture the Products. However, Celgene and Pharmion hereby confirm that Celgene has authorized Penn Pharmaceuticals Ltd. (together with its successors and assigns, "Penn") to manufacture the Products for sale within the Territory, and that in connection therewith Pharmion is party to a certain Amended and Restated Distribution and License Agreement between Pharmion and Penn with respect to the manufacture of the Products (the "Penn Agreement"). Celgene shall use commercially reasonable efforts to establish a second source of supply of Product. If for any reason at any time during the term of this Agreement the supply of available Product is insufficient, Celgene and Pharmion shall, during such period of short supply, apportion available supply between them on the following basis: (a) if the short supply occurs during the period between the date of this Agreement and December 31, 2003, 75% to Celgene and 25% to Pharmion (but, in the case of Pharmion, not more than that amount subject to firm purchase orders), and (b) if the short supply occurs from and after January 1, 2004, on a basis that is proportional to their respective sales of Product during the preceding 12-month period. If there shall occur a withdrawal or recall of the Product from the U.S. market due to any regulatory mandate or otherwise, from and after the second anniversary of such withdrawal or recall, Celgene shall have no obligation whatsoever to Pharmion with respect to the supply of the Products except to license the manufacture of the Products to Pharmion and/or its contract manufacturers reasonably acceptable to Celgene, on commercially reasonable terms.

3.4. PRESERVATION OF LICENSES IN BANKRUPTCY.

(a) If Celgene should file a petition under bankruptcy laws, or if any involuntary petition shall be filed against Celgene, Pharmion shall be protected in the continued enjoyment of Pharmion's rights as licensee hereunder to the maximum feasible extent including, without limitation, if it so elects, the protection conferred upon licensees under Section 365(n) of Title 11 of the U.S. Code, or any similar provision of any applicable law. Celgene shall give Pharmion reasonable prior notice of the filing of any voluntary petition, and prompt notice of the filing of any involuntary petition, under any bankruptcy laws.

(b) The Celgene Technology, the Celgene Patent Rights shall be deemed to be "intellectual property" as that term is defined in 11 U.S.C.
Section 101(56) or any successor provision.

3.5. ROYALTIES. In consideration of the license and rights granted by Celgene to Pharmion pursuant to this Article 3, Pharmion shall pay to Celgene a royalty equal to eight percent (8%) of Net Sales, payable as provided below.

3.6. ROYALTY REPORTS, EXCHANGE RATES. During the term of this Agreement, following the First Commercial Sale, Pharmion shall within thirty (30) days after each calendar quarter furnish to Celgene a written quarterly report (the "Quarterly Report") showing: (a) the gross sales of the Product sold by Pharmion and its Affiliates during the reporting period and the calculation of Net Sales from such gross sales on a country by country basis; (b) the specific deductions, by category, permitted by the definition of "Net Sales" taken in connection with the calculation of Net Sales; and (c) the exchange rates used in determining the amount of United States dollars reflected in the report. For purposes of calculating Net Sales, all Net Sales in each quarter that are in currencies other than United States dollars shall be converted into United States dollars as follows: the exchange rate will be the average of: (1) the rate applicable on the last business day of the month prior to the month of sale, and (2) the rate applicable on the last business day of the month in which the sale was made (each published in the New York edition of the Wall Street Journal). Pharmion shall keep complete and accurate records in sufficient detail to properly reflect all gross sales and Net Sales and to enable the royalties payable hereunder to be determined. All payments of royalties shall be made in U.S. dollars.

3.7. AUDITS. Upon the written request of Celgene, Pharmion shall permit an independent public accountant selected by Celgene and acceptable to Pharmion, which acceptance shall not be unreasonably withheld or delayed, to have access during normal business hours to such records of Pharmion as may be reasonably necessary to verify the accuracy of the royalty reports described herein, in respect of any fiscal year ending not more than thirty-six (36) months prior to the date of such request. All such verifications shall be conducted upon reasonable prior notice and not more than once in each calendar year. In the event such Celgene representative concludes that additional royalties were owed to Celgene during such period, the additional royalty (together with interest thereon from the date such royalty was originally due to the date actually paid, at the Prime Rate) shall be paid by Pharmion within thirty (30) days of the date Celgene delivers to Pharmion such representative's written report so concluding. The fees charged by such representative shall be paid by Celgene unless the audit discloses that the royalties payable by Pharmion for the audited period are incorrect by more than five (5%) percent, in which case Pharmion shall pay the reasonable fees and expenses charged by such representative. All information subject to review under this Section 3.7 is confidential and Celgene shall, and shall cause its representatives to, retain all such information in confidence in accordance with Article 7 hereof.

3.8. ROYALTY PAYMENT TERMS. Royalties shown to have accrued by a Quarterly Report provided for under this Agreement shall be payable, with respect to Net Sales within Italy and Spain, within seventy-five (75) days following the end of each calendar quarter, and with respect to Net Sales elsewhere, within forty-five (45) days following the end of each calendar quarter. Payment of royalties in whole or in part may be made in advance of such due date. Royalties not paid when due shall bear interest at the Prime Rate from the date due to the date actually paid.

3.9. CMCC LICENSE. To the extent the Celgene Patent Rights and the Celgene Technology Rights licensed to Pharmion under this Agreement are rights which Children's Medical Center Corporation ("CMCC") has licensed to Celgene Pursuant to the Agreement among Celgene, CMCC, Bioventure Investments KFT and Entremed, Inc. dated August __, 2001 (the "CMCC License"), the license granted to Pharmion pursuant to Section 3.1 hereof is subject to the terms, limitations, restrictions and obligations provided for in the CMCC License. Sections 2, 4.7, 4.8, 4.9, 9, 10, 11, 12, 15 and 16 of the CMCC License, and, to the extent applicable pursuant to the terms of this Agreement, Sections 7.2, 7.3, 7.4, 7.5, and 7.6 thereof, shall be binding upon Pharmion as if it were a party to the CMCC License. A true and correct copy of the foregoing provisions of the CMCC License are annexed hereto as Exhibit D and a true and correct copy of the CMCC License in the form filed by Celgene with the Securities and Exchange Commission shall be provided by Celgene to Pharmion contemporaneously with the filing thereof with the Securities and Exchange Commission.

3.10. TAIWAN. Notwithstanding anything to the contrary contained in this Agreement,

(a) If Celgene has not prior to the third anniversary of the date of this Agreement, granted to any Third Party a license to distribute, market, use or sell the Products in Taiwan (a "Third Party License"), the Territory shall, at Pharmion's election,

include Taiwan, such election to be made by written notice to Celgene at any time after the third anniversary of the date of this Agreement; and

(b) Pharmion may at any time, but shall not be required to, register the Products and/or otherwise seek Regulatory Approval in Taiwan, provided that it notifies Celgene of its actions not later than the initiation of its first filing with Taiwanese authorities. Notwithstanding the receipt of any such registration or Regulatory Approval, Pharmion will not distribute, market, use or sell the Products in Taiwan prior to the time, Celgene shall have granted it a license to do so. If Celgene shall grant a Third Party License prior to the third anniversary of the date hereof, Pharmion shall, to the extent legally permissible, take all action reasonably necessary to assign all of its right, title and interest in and transfer possession and control to Celgene of the regulatory filings prepared by Pharmion, and regulatory approvals received by Pharmion, to the extent that such filings relate to the Product and Taiwan.

ARTICLE IV.
MARKETING

4.1. SALES AND MARKETING DUTIES OF PHARMION. In connection with the sales and marketing of Products in the Territory, Pharmion shall, at its own expense,

(a) use commercially reasonable efforts to commence a market launch of the Products within the Territory within three months of the receipt of UK Regulatory Approval;

(b) pay or have paid all marketing and distribution costs associated with the sales and distribution of the Products within the Territory;

(c) maintain or have maintained the Products, pending their sale to customers, in a facility that is properly equipped (including temperature and humidity control) to store pharmaceutical and other sensitive products. Subject to the terms of any agreements with third parties with respect to the maintenance of the Products, Celgene will have the right to inspect, from time to time, such facility and all government inspection reports and certificates relating thereto. Pharmion shall use commercially reasonable efforts to incorporate in any such agreements a right of Celgene to conduct such inspections;

(d) collect from customers customs, handling, freight and like charges, and sales, value added tax, if any, and other taxes;

(e) use commercially reasonable efforts to actively promote the distribution and sale of the Products within the Territory so as to maximize sales of the Products therein. Without limiting the generality of the preceding sentence, Pharmion shall call upon customers in the Territory at regular intervals to solicit purchases, furnish current information and display and distribute information and materials regarding the Products. Each party shall provide the other with copies of materials it creates and uses for its own marketing purposes relating to the Products in its respective territory. Pharmion shall use such selling, marketing and packaging materials pertaining to the Products as Celgene shall consent to in writing, such consent not to be unreasonably withheld or delayed. Pharmion shall provide Celgene any translations necessary for Celgene to give such consent;

(f) comply in all material respects with all applicable laws, regulations and approvals governing the registration, importation, distribution, marketing and sale of the Products, and conduct itself in a professional manner in accordance with industry standards so as not to cause disrepute or ill favor to Celgene or the Products;

(g) maintain a technically competent and experienced sales force (including a product or market specialist) assigned to market the Products and devoted to maintaining accounts with present customers and developing new accounts for sales of the Products, and disseminate to the sales personnel any sales aids and literature developed by Pharmion relating to the Products;

(h) maintain the highest standards of quality to protect the integrity of the Products, including providing laboratory services for quality control and general housekeeping;

(i) study market trends in the Territory and communicate perceived market changes to Celgene;

(j) immediately report to Celgene all governmental action relating to any of the Products of which it has knowledge and consult with Celgene in the

handling of such governmental action (provided, that, final determination with respect to any such governmental action within the Territory shall be made by Pharmion after such consultation, provided such determination would not be reasonably likely to have a material adverse effect on Celgene); and, during the Term of this Agreement and for a period of five years thereafter, maintain records of all sales of Products and customers in order to assist Celgene in tracking the Products sold in the event of a recall or withdrawal of any of the Products from the marketplace due to a mandate of the United States Food and Drug Administration ("FDA") or otherwise (it being understood and agreed that Celgene will immediately report to Pharmion any governmental action relating to any of the Products of which it has knowledge and will maintain similar records during the Term of this Agreement and for a period of five years thereafter);

(k) establish and, except as modified as a condition to any Regulatory Approval, strictly adhere to a system consistent with Celgene's System for Thalidomide Education and Prescribing Safety ("S.T.E.P.S.") for the safe and effective dispensing of the Products, a complete description of which is attached hereto as Exhibit B; provided, however, that Pharmion may effect such modifications of S.T.E.P.S. as Celgene shall have approved in advance, on a country by country basis, the consideration of such approval by Celgene not to be unreasonably delayed by it; and

(l) provide Celgene, no later than October 1 of each year during the term of this Agreement, with an annual marketing plan for the Products in the Territory and consult with Celgene with respect to such plan and consider, in good faith, Celgene's views with regard thereto.

4.2. DUTY NOT TO COMPETE. Pharmion will not sell, market or distribute any pharmaceutical product containing thalidomide or any combination pharmaceutical product in a single dosage formulation that includes thalidomide (other than the Products).

4.3. MARKETING SUPPORT DUTIES OF CELGENE. In connection with the marketing of the Product, Celgene shall:

(a) make available in the United States by telephone and/or meetings, during reasonable business hours, persons of authority to assist Pharmion in performing the duties of Pharmion required hereunder and to answer appropriate inquiries of Pharmion;

(b) refer all inquiries to Pharmion which are received by Celgene from customers in the Territory; and

(c) provide initial training for a limited number of Pharmion's marketing/medical staff at Celgene at the expense of Pharmion (including per diem, transportation costs and other expenses).

ARTICLE V.
REGULATORY MATTERS

5.1. REPORTING OF ADVERSE EVENTS. Each party will give prompt notice to the other party of any information it receives regarding the safety of the Product, including any confirmed or unconfirmed information on adverse, serious, or unexpected events associated with the use of the Product (i) by telephone by the end of the next calendar day and (ii) in writing via facsimile within three calendar days after receipt of the information. Pharmion will file any reports concerning such incidents required by law or regulation in the Territory.

5.2. OTHER REGULATORY COMPLIANCE MATTERS. Pharmion shall comply with all applicable guidelines of the U.S. Food and Drug Administration and/or the International Committee for Harmonization (ICH) relating to expedited reports and periodic safety update reports. Upon written request of Celgene, Pharmion shall permit Celgene or its representative, at Celgene's expense, to have access during normal business hours to such records of Pharmion as may be reasonably necessary to review Pharmion's drug safety operations. All such reviews shall be conducted upon reasonable prior notice and not more than twice in each calendar year.

ARTICLE VI.
INTELLECTUAL PROPERTY RIGHTS

6.1. NO OTHER TECHNOLOGY RIGHTS. Except as otherwise expressly provided in this Agreement, under no circumstances shall a party hereto, as a result of this Agreement, obtain any ownership interest in or other right to any technology, trade secrets, know-how, patents, pending patent applications, products or biological materials of the other party, including items owned, controlled or developed by the other party, or transferred by the other party to said party, at any time pursuant to this Agreement.

6.2. ENFORCEMENT OF PATENT RIGHTS. Celgene and Pharmion shall each promptly notify the other in writing of any alleged or threatened infringement of patents or patent applications relating to the Products of which they become aware. Celgene shall have the first right to bring any action or legal proceeding to enforce any Celgene Patent Right and/or to protect any Celgene Technology. If, within ninety (90) days from the date of notice of any such alleged or threatened infringement, Celgene has not initiated action to abate such infringement, Pharmion shall have the right, but not the obligation, to seek to abate such infringement at its sole cost and expense. The parties will cooperate with and provide reasonable assistance to each other in any such action. Any monetary recoveries from any such action shall first be applied to reimburse the party who undertook such litigation for its costs and expenses, with the balance of any such recovery being divided in an equitable manner between the parties.

6.3. DEFENSE OF INDIVIDUAL INFRINGEMENT ACTIONS. If Celgene or Pharmion, any of their respective Affiliates or any Recognized Agent shall be individually named as a defendant in a legal proceeding by a Third Party for infringement

of a patent because of the manufacture, use or sale of the Product, the party which has been sued (or whose Affiliate or Recognized Agent has been sued) shall promptly notify the other party hereto in writing of the institution of such suit. Celgene may, at its option and at its sole expense, control and defend such suit. If, within a reasonable time after receiving notice of such suit, Celgene does not notify the party that has been sued of its intention to control and defend such suit or advises such party that it does not intend to control and defend such suit, the party that has been sued may control and defend such suit. The controlling party (a) may not settle such suit or otherwise consent to an adverse judgment in such suit that materially diminishes the rights or interests of the other party hereto without the express written consent of such other party (which consent shall not be unreasonably withheld or delayed), and
(b) shall keep the other party hereto at all times reasonably informed as to the status of the suit. Such other party shall have the right to be represented by advisory counsel of its own selection (and such counsel's opinion shall be reasonably considered by the controlling party), at its own expense, and shall provide reasonable cooperation in the defense of such suit and furnish to the party controlling such suit all evidence and reasonable assistance within its control.

6.4. DEFENSE OF JOINT INFRINGEMENT ACTIONS. If Celgene or any of its Affiliates, on the one hand, or Pharmion or any of its Affiliates or Recognized Agents, on the other hand, shall be jointly named as defendants for infringement of a patent for making, using, selling, offering to sell or importing any of the Products, Celgene shall be entitled to control the defense of such suit, and all expenses thereof including costs and attorney fees, shall be paid by Celgene. Pharmion, its Affiliate or Recognized Agent, as the case may be, shall have the right to be represented by counsel of its own selection, but at its sole expense. Celgene will consult in good faith with Pharmion regarding the litigation. Pharmion, its Affiliate or Recognized Agent, as the case may be, shall provide reasonable cooperation in the defense of such suit and furnish to Celgene all evidence and reasonable assistance within its control. With respect to any judgments, settlements or damages payable with respect to the defense of joint infringement actions, Celgene and Pharmion shall contribute to the amount owed in an equitable manner, reflecting the relative financial benefits enjoyed by each of them with respect to the Net Sales of the Products. In the event a license from a third party is required, the parties shall share the cost of such license equitably. Notwithstanding the foregoing, Pharmion shall not be obligated to contribute to any settlement costs described above unless it has given its express written consent (which consent shall not be unreasonably withheld or delayed) to such settlement.

ARTICLE VII.
CONFIDENTIALITY

7.1. NONDISCLOSURE OBLIGATIONS.

(a) Except as otherwise provided in this Agreement, during the term of this Agreement and for a period of ten (10) years thereafter, both Parties shall maintain in confidence (a) information and data received from the other party resulting from or related to the Product and (b) all information and data not described in clause (a)

but supplied by the other party under this Agreement marked "Confidential." For purposes of this Article 6, information and data described in clause (a) or (b) shall be referred to as "Information."

(b) To the extent it is reasonably necessary or appropriate to fulfill its obligations or exercise its rights under this Agreement, a party may disclose Information it is otherwise obligated under this Section not to disclose to its Affiliates, consultants, outside contractors and clinical investigators, on a need-to-know basis on condition that such entities or persons agree to keep the Information confidential for the same time periods and to the same extent as such party is required to keep the Information confidential; and a party may disclose such Information to government or other regulatory authorities to the extent that such disclosure is reasonably necessary to obtain patents or authorizations to conduct clinical trials of, and to commercially market, the Product. The obligation not to disclose Information shall not apply to any part of such Information that: (a) is or becomes part of the public domain other than by unauthorized acts of the party obligated not to disclose such Information or its Affiliates; (b) can be shown by written documents to have been disclosed to the receiving party or its Affiliates by a Third Party, provided such Information was not obtained by such Third Party directly or indirectly from the other party pursuant to a confidentiality agreement; (c) prior to disclosure under this Agreement, was already in the possession of the receiving party or its Affiliates, provided such Information was not obtained directly or indirectly from the other party pursuant to a confidentiality agreement; (d) can be shown by written documents to have been independently developed by the receiving party or its Affiliates without breach of any of the provisions of this Agreement; (e) is disclosed by the receiving party pursuant to interrogatories, requests for information or documents, subpoena, civil investigative demand issued by a court or governmental agency or as otherwise required by law; provided that the receiving party notifies the other party immediately upon receipt thereof (and provided that the disclosing party furnishes only that portion of the Information which it is advised by counsel is legally required); or (f) bioavailability and clinical data used for marketing purposes following receipt of UK Regulatory Approval.

7.2. TERMS OF THIS AGREEMENT. Celgene and Pharmion each agree not to disclose any terms or conditions of this Agreement to any Third Party without the prior consent of the other party, except as required by applicable law. Notwithstanding the foregoing, prior to execution of this Agreement, Celgene and Pharmion shall agree upon the substance of information that can be used as a routine reference in the usual course of business to describe the terms of this transaction, and Celgene and Pharmion may disclose such information, as modified by mutual agreement from time to time, without the other party's consent.

7.3. INJUNCTIVE RELIEF. The Parties hereto understand and agree that remedies at law may be inadequate to protect against any breach of any of the provisions of this Article 7 by either party or their employees, agents, officers or directors or any other person acting in concert with it or on its behalf. Accordingly, each party shall be

entitled to the granting of injunctive relief by a court of competent jurisdiction against any action that constitutes any such breach of this Article 7.

ARTICLE VIII.
INDEMNITY

8.1. PHARMION INDEMNITY OBLIGATIONS. Pharmion shall defend, indemnify and hold Celgene, its Affiliates and their respective employees, officers, directors, counsel and agents harmless from all claims, losses, damages or expenses (including, without limitation, reasonable attorneys' fees and expenses and costs of investigation) arising as a result of: (a) the breach by Pharmion of any covenant, representation or warranty contained in this Agreement; (b) actual or asserted violations of any applicable law or regulation by Pharmion, its Affiliates or Recognized Agents by virtue of which any Product distributed, marketed or sold shall be alleged or determined to be adulterated, misbranded, mislabeled or otherwise not in compliance with any applicable law or regulation;
(c) claims for bodily injury, death or property damage attributable to the distribution, marketing or sale of the Product by Pharmion, its Affiliates or Recognized Agents; (d) any negligent act or omission of Pharmion, its Affiliates or Recognized Agents in the distribution, marketing and sale of any Product or any other activity conducted by Pharmion, its Affiliates or Recognized Agents under this Agreement which is the proximate cause of injury, death or property damage to a third party; or (e) any failure of Pharmion to comply with any recall of a Product marketed, distributed or sold by Pharmion, its Affiliates or Recognized Agents that is ordered by a governmental agency or required by a confirmed failure of such Product.

8.2. CELGENE INDEMNITY OBLIGATIONS. Celgene shall defend, indemnify and hold Pharmion, its Affiliates and their respective employees, officers, directors, counsel and agents harmless from all claims, losses, damages or expenses (including, without limitation, reasonable attorneys' fees and expenses, and costs of investigation) arising as a result of: (a) the breach by Celgene of any covenant, representation or warranty contained in this Agreement;
(b) actual or asserted violations of any applicable law or regulation by Celgene or its Affiliates by virtue of which any Product manufactured, distributed, marketed or sold shall be alleged or determined to be adulterated, misbranded, mislabeled or otherwise not in compliance with any applicable law or regulation;
(c) claims for bodily injury, death or property damage attributable to the manufacture, distribution, marketing or sale of the Product by Celgene or its Affiliates; (d) any negligent act or omission of Celgene (or any Affiliate or sublicensee thereof) in the manufacture, distribution, marketing or sale of any Product or any other activity conducted by Celgene or its Affiliates under this Agreement which is the proximate cause of injury, death or property damage to a third party; or (e) any failure of Celgene to comply with any recall of a Product manufactured, distributed, marketed or sold by Celgene or its Affiliates that is ordered by a governmental agency or required by a confirmed failure of such Product.

8.3. PROCEDURE. A party or any of its Affiliates or their respective employees or agents (the "Indemnitee") that intends to claim indemnification under this

Article 8 shall promptly notify the other party (the "Indemnitor") of any loss, claim, damage, liability or action in respect of which the Indemnitee intends to claim such indemnification, and the Indemnitor shall assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an Indemnitee shall have the right to retain its own counsel, with the fees and expenses to be paid by the Indemnitor, if representation of such Indemnitee by the counsel retained by the Indemnitor would be inappropriate due to actual or potential differing interests between such Indemnitee and any other party represented by such counsel in such proceedings. The indemnity agreement in this Article 8 shall not apply to amounts paid in settlement of any loss, claim, damage, liability or action if such settlement is effected without the consent of the Indemnitor, which consent shall not be withheld or delayed unreasonably. The Indemnitor may not settle, or otherwise consent to an adverse judgment with respect to, any loss, claim, liability or action without the consent of the Indemnitee, which consent shall not be withheld or delayed unreasonably. The failure to deliver notice to the Indemnitor within a reasonable time after the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such Indemnitor of any liability to the Indemnitee under this Article 8 to the extent of such prejudice, but the omission so to deliver notice to the Indemnitor will not relieve it of any liability that it may have to any Indemnitee otherwise than under this Article
8. The Indemnitee, its employees and agents, shall cooperate fully with the Indemnitor and its legal representatives in the investigation of any action, claim or liability covered by this indemnification. In the event that each party claims indemnity from the other and one party is finally held liable to indemnify the other, the Indemnitor shall additionally be liable to pay the reasonable legal costs and attorneys' fees incurred by the Indemnitee in establishing its claim for indemnity.

8.4. INSURANCE.

(a) Pharmion shall purchase and maintain in effect at its own expense, throughout the term of this Agreement, general liabilities insurance with limits of not less than U.S.$10,000,000 per occurrence and U.S.$50,000,000 in the aggregate. Such policy shall cover Celgene as an additional insured with respect to liability arising out of Pharmion's activities with respect to the Products, and shall provide that the issuer of such policy shall be required to give Celgene and Pharmion not less than 30 days written notice prior to the cancellation of the policy or policies. Upon Celgene's request, a memorandum certificate of the aforementioned insurance policy or policies shall be deposited with Celgene; provided, however, that failure of Celgene to make such a request shall in no way be construed in such a way as to relieve Pharmion from its obligation to procure such insurance coverage. Prior to expiration and/or cancellation of the aforementioned policy or policies, Pharmion shall promptly secure replacement of such insurance coverage upon the same terms and conditions and furnish Celgene with a memorandum certificate as heretofore described.

(b) Celgene shall purchase and maintain in effect at its own expense, throughout the term of this Agreement, general liabilities insurance with limits of not less than U.S.$10,000,000 per occurrence and U.S.$50,000,000 in the aggregate.

Such policy shall cover Pharmion as an additional insured with respect to liability arising out of Celgene's activities with respect to the Products, and shall provide that the issuer of such policy shall be required to give Pharmion and Celgene not less than 30 days written notice prior to the cancellation of the policy or policies. Upon Pharmion's request, a memorandum certificate of the aforementioned insurance policy or policies shall be deposited with Pharmion; provided, however, that failure of Pharmion to make such a request shall in no way be construed in such a way as to relieve Celgene from its obligation to procure such insurance coverage. Prior to expiration and/or cancellation of the aforementioned policy or policies, Celgene shall promptly secure replacement of such insurance coverage upon the same terms and conditions and furnish Pharmion with a memorandum certificate as heretofore described.

ARTICLE IX.
TERM AND TERMINATION

9.1. TERM. Unless sooner terminated pursuant to this Article 9, this Agreement shall expire on the 10-year anniversary of the date of Regulatory Approval in the United Kingdom. The term shall be extended thereafter for additional successive two-year periods, unless and until either party notifies the other party, in writing, of its intention to cancel such extension as of the end of the then current term; PROVIDED, that, any such non-extension notice shall be given not less than 180 days prior to the end of the then current term.

9.2. EXISTING OBLIGATIONS. Termination pursuant to Section 9.1 of this Agreement for any reason shall not relieve the Parties of any obligation accruing prior to such expiration or termination and any obligation under this Agreement which, pursuant to the express terms hereof, survives such termination.

9.3. TERMINATION BY EITHER PARTY.

(a) Celgene or Pharmion may terminate this Agreement on 60 days prior written notice to the other party following (i) a material breach by the other party of any covenant, duty or undertaking herein, or in the letter agreement of even date entered into among Pharmion, Guarantor and Celgene (the "Letter Agreement"), which is not cured within 60 days of written notice thereof; or (ii) if the other party shall become insolvent or shall file or have filed by its creditors a petition in bankruptcy or similar proceeding, if a court of competent jurisdiction appoints a receiver over the business or assets of the other party, or the making by the party of a general assignment for the benefit of creditors.

(b) In addition, Celgene may terminate this Agreement on 30 days prior written notice to Pharmion following (i) Pharmion's failure to apply for UK Regulatory Approval, which application may be to the EMEA, within twelve (12) months after the date of this Agreement or Pharmion's failure to obtain Regulatory Approval in the United Kingdom within three (3) years after the date of this Agreement, (ii) Pharmion's failure to pay Celgene any amount hereunder when due, unless Pharmion is

disputing such payment in good faith or otherwise cures such default within 30 days of Celgene's delivery of the notice, (iii) Pharmion's discontinuance of the active conduct of its business for a period in excess of 30 days, (iv) Pharmion's failure to commence a market launch of the Products within the United Kingdom within three months after receipt of UK Regulatory Approval, or (v) any change in control of Pharmion that Celgene does not consent to, such consent not be unreasonably withheld or delayed. For purposes of the preceding clause (v), a "change in control" shall be deemed to occur upon (A) the acquisition by any Scheduled Entity (as hereinafter defined) of 50% or more of Pharmion's voting shares, (B) directors elected to the Board of Directors of Pharmion over any 24-month period nominated by any Scheduled Entity representing 30% or more of the total number of directors constituting the Board at the beginning of the period, (C) any merger, consolidation or other corporate combination upon the completion of which shares of any Scheduled Entity outstanding prior to such transaction represent more than 50% of the combined voting power of the resulting entity, or (D) the sale of all or substantially all of the assets of Pharmion to any Scheduled Entity. For purposes of this Agreement, the term "Scheduled Entity" means (i) any of the entities listed on Exhibit C to this Agreement, (ii) any entity which Celgene at any time, and from time to time, during the term of this Agreement, shall add to the entities listed on Exhibit C, if, at any time within five (5) years prior to the date Celgene adds such entity to the list on Exhibit C, (A) Celgene has been in litigation or arbitration proceedings with such entity, (B) such entity has, in writing, threatened Celgene, or been threatened by Celgene, with litigation or arbitration proceedings, or (C) such entity is or has been the subject of any material government action, investigation or proceedings arising from alleged non-compliance with applicable law; (iii) any entity that derives its revenues primarily from generic/multisourced pharmaceuticals, including new dosage forms/delivery systems of generic or multisourced products, or (iv) any Affiliate of any entity described in the preceding clauses (i), (ii) or (iii).

9.4. CO-EXCLUSIVITY WITH CELGENE AND REVERSION. Notwithstanding anything to the contrary contained in this Agreement:

(a) In the event Pharmion fails to obtain Regulatory Approval in the United Kingdom within three years after the date hereof (the "Approval Period") and Celgene has not exercised its right to terminate this Agreement pursuant to
Section 9.3(b)(i), the license and rights granted by Celgene to Pharmion pursuant to Article 3 of this Agreement shall thereafter be exclusive only as to Third Parties and shall not be exclusive as to Celgene or its Affiliates.

(b) In the event Pharmion fails to achieve Target Volume (as hereinafter defined) with respect to any calendar year, the license and rights granted by Celgene to Pharmion pursuant to Article 3 of this Agreement shall thereafter be exclusive only as to Third Parties and shall not be exclusive as to Celgene or its Affiliates, unless Pharmion, on the latest date payments are required to made to Celgene in respect of the last quarter occurring in such calendar year, pays to Celgene an amount equal to eight (8%) percent of the difference between the Target Volume and the Net Sales with respect to such year (the "Shortfall Payment"). The term "Target Volume" shall mean Net Sales

of at least U.S.$6 million with respect to the first year following the First Commercial Sale in the United Kingdom, U.S.$13.5 million with respect to the second year following the First Commercial Sale in the United Kingdom, U.S.$18.5 million with respect to the third year following the First Commercial Sale in the United Kingdom, U.S.$20 million with respect to the fourth year following the First Commercial Sale in the United Kingdom and U.S.$22 million with respect to the fifth year following the First Commercial Sale in the United Kingdom, or, if Celgene or any licensee of Celgene commenced commercial sales (following regulatory approval) of an analog of thalidomide (referred to by Celgene currently as an "IMiD") at any time prior to such fifth year, U.S.$18.5 million with respect to such fifth year.

(c) In the event Pharmion fails to achieve at least fifty (50%) of Target Volume in any year and fails to make a Shortfall Payment with respect to such year (such payment to be made as provided in clause (b) above), at Celgene's option, such option to be exercisable solely for a period of sixty
(60) days after such payment is otherwise due, the license and rights granted by Celgene to Pharmion pursuant to Article 3 of this Agreement shall terminate upon the date set forth in Celgene's written notice of termination to Pharmion.

(d) In the event the license and rights granted by Celgene to Pharmion pursuant to Article 3 of this Agreement become co-exclusive with Celgene, Pharmion shall provide Celgene with access to all regulatory filings prepared by Pharmion, and regulatory approvals received by Pharmion, to the extent that such filings and approvals relate to the Product.

9.5. CONSEQUENCES OF TERMINATION BY CELGENE.

(a) If this Agreement is terminated by Celgene, all licenses and rights granted to Pharmion hereunder shall terminate and Pharmion will immediately cease to distribute, market or sell the Product; and Celgene shall be entitled to claim from Pharmion all damages which would be due to Celgene under law and equity.

(b) Pharmion may dispose of its inventory of Product on hand as of the effective date of termination, and may fill any orders for Product accepted prior to the effective date of termination, for a period of twelve (12) months after the effective date of termination.

(c) Within thirty (30) days after disposition of such inventory and fulfillment of such orders Pharmion will forward to Celgene a final report and pay Celgene all amounts due for Net Sales in such period.

(d) Pharmion shall to the extent legally permissible, take all additional action reasonably necessary to assign all of its right, title and interest in and transfer possession and control to Celgene of the regulatory filings prepared by Pharmion, and regulatory approvals received by Pharmion, to the extent that such filings and approvals relate to the Product.

9.6. OBLIGATION TO PAY SURVIVES TERMINATION. The termination of this Agreement shall not affect Pharmion's obligation to pay Celgene any amounts due Celgene for Product sold prior to termination or pursuant to Section 9.5(c) hereof.

ARTICLE X.
MISCELLANEOUS

10.1. FORCE MAJEURE. Neither party shall be held liable or responsible to the other party nor be deemed to have defaulted under or breached this Agreement for failure or delay in fulfilling or performing any term of this Agreement when such failure or delay is caused by or results from causes beyond the reasonable control of the affected party, including but not limited to fire, floods, embargoes, war, acts of war (whether war is declared or not), insurrections, riots, civil commotions, strikes, lockouts or other labor disturbances, acts of God or acts, omissions or delays in acting by any governmental authority or the other party; provided, however, that the party so affected shall use reasonable commercial efforts to avoid or remove such causes of nonperformance, and shall continue performance hereunder with reasonable dispatch whenever such causes are removed. Either party shall provide the other party with prompt written notice of any delay or failure to perform that occurs by reason of force majeure. The parties shall mutually seek a resolution of the delay or the failure to perform as noted above.

10.2. ASSIGNMENT. Except as otherwise provided herein, neither the rights nor the obligations hereunder of any party hereto may be assigned without the prior written consent of the other party hereto. Celgene may assign its rights and obligations hereunder to any subsidiary or successor to its business. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assignees.

10.3. SEVERABILITY. Each party hereby agrees that it does not intend to violate any public policy, statutory or common laws, rules, regulations, treaty or decision of any government agency or executive body thereof of any country or community or association of countries. Should one or more provisions of this Agreement be or become invalid, the Parties hereto shall substitute, by mutual consent, valid provisions for such invalid provisions which valid provisions in their economic effect are sufficiently similar to the invalid provisions that it can be reasonably assumed that the Parties would have entered into this Agreement with such valid provisions. In case such valid provisions cannot be agreed upon, the invalidity of one or several provisions of this Agreement shall not affect the validity of this Agreement as a whole, unless the invalid provisions are of such essential importance to this Agreement that it is to be reasonably assumed that the Parties would not have entered into this Agreement without the invalid provisions.

10.4. NOTICES. All notices and other communications under this Agreement shall be in writing and may be given by any of the following methods: (a) personal delivery; (b) facsimile transmission; (c) registered or certified mail, postage prepaid, return receipt requested; or (d) overnight delivery service. Notices shall be sent to the appropriate party at its address or facsimile number given below (or at such other

address or facsimile number for such party as shall be specified by notice given under this Section 10.4):

IF TO CELGENE:

Celgene Corporation
7 Powder Horn Drive
Warren, New Jersey 07059

Attention: Chief Executive Officer Tel: (732) 271-1001
Fax: (732) 805-3931

WITH A COPY TO:

Proskauer Rose LLP
1585 Broadway
New York, New York 10036-8299

Attn: Robert A. Cantone, Esq.

Tel: (212) 969-3235

Fax: (212) 969-2900

IF TO PHARMION:

Pharmion GmbH

c/o Durr Vogele Partner Centralbahnstr. 7
4052 Basel
Switzerland

WITH A COPY TO:

Pharmion Corporation
4865 Riverhead Road
Boulder, CO 80301

Attention: Patrick J. Mahaffy, Chief Executive Officer Facsimile No.: (720) 564-9191

AND WITH A COPY TO PHARMION'S COUNSEL AT:

Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019

Attention: Peter H. Jakes, Esq.

Facsimile No.: (212) 728-8111

All such notices and communications shall be deemed received upon (a) actual receipt by the addressee, (b) actual delivery to the appropriate address or (c) in the case of a

facsimile transmission, upon transmission by the sender and issuance by the transmitting machine of a confirmation slip confirming that the number of pages constituting the notice have been transmitted without error. In the case of notices sent by facsimile transmission, the sender shall contemporaneously mail a copy of the notice to the addressee at the address provided for above. However, such mailing shall in no way alter the time at which the facsimile notice is deemed received.

10.5. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to the choice of laws provisions thereof.

10.6. DISPUTE RESOLUTION, CHOICE OF FORUM. Any disputes arising between the parties relating to, arising out of or in any way connected with this Agreement or any term or condition hereof, or the performance by either party of its obligations hereunder, whether before or after the expiration pursuant to
Section 9.1 or termination pursuant to Section 9.3 of this Agreement, shall be promptly presented to the President or Chief Executive Officer of Celgene and the President or Chief Executive Officer of Pharmion for resolution and if they or their designees cannot promptly resolve such disputes, then either party shall have the right to bring an action to resolve such dispute before a court of competent jurisdiction. The Parties hereby submit to the jurisdiction of the federal or state courts located within the State of New York for the conduct of any suit, action or proceeding arising out of or relating to this Agreement. Pharmion hereby agrees that Celgene may effect service of process upon Pharmion by delivery (other than facsimile) in the manner provided for the giving of notices under Section 10.4 hereof.

10.7. ENTIRE AGREEMENT. This Agreement, together with the Letter Agreement, constitutes the entire understanding of the parties with respect to the subject matter hereof. All express or implied agreements and understandings, either oral or written, heretofore made are expressly merged in and made a part of this Agreement. This Agreement may be amended, or any term hereof modified, only by a written instrument duly executed by both parties.

10.8. HEADINGS. The captions to the several Articles and Sections hereof are not a part of this Agreement, but are merely guides or labels to assist in locating and reading the several Articles and Sections hereof.

10.9. INDEPENDENT CONTRACTORS. Pharmion and Celgene shall each act as independent contractors. Celgene shall not exercise control over the activities and operations of Pharmion; accordingly, Pharmion shall be responsible for paying all applicable social security, withholding, other employment and income taxes for itself and its employees. Pharmion shall bear all expenses incurred in its sales endeavors, except those for which Celgene agrees in writing to pay. Pharmion and Celgene shall each conduct all of its business in its own name and as it deems fit, provided it is not in derogation of the other's interests. Neither party shall engage in any conduct inconsistent with its status as an independent contractor, have authority to bind the other with respect

to any agreement or other commitment with any third party, nor enter into any commitment on behalf of the other.

10.10. WAIVER. The waiver by either party hereto of any right hereunder or of the failure to perform or of a breach by the other party shall not be deemed a waiver of any other right hereunder or of any other breach or failure by said other party whether of a similar nature or otherwise.

10.11. COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

10.12. SUBLICENSE AND ASSIGNMENT. Pharmion may not sublicense and/or assign any rights under this Agreement without the prior written consent of Celgene; provided, however, that no such consent shall be required if (i) such sublicensee or assignee is an entity controlled by, in control of, or under common control with, Pharmion, (ii) the sublicense is required under applicable law to enable a Recognized Agent to market and distribute the Products, or (iii) in the case of an assignee, such assignee is a successor or assignee of all or substantially all of Pharmion's business and such assignee is not a Scheduled Entity. Any sublicensee or assignee of Pharmion shall agree in writing to be bound by the terms of this Agreement applicable to the sublicense or assignment and, except with respect to an assignee of the type described in clause (iii) above, Pharmion shall remain responsible to Celgene for the performance of such sublicensee or assignee's obligations under this Agreement.

10.13. GUARANTEE. Guarantor hereby unconditionally guarantees the prompt payment and full performance by Pharmion of its obligations under this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above.

CELGENE CORPORATION

By:
Name: Sol J. Barer, Ph.D.
Title: President and Chief Operating Officer

PHARMION GMBH

By:
Name: Patrick J. Mahaffy
Title: Chief Executive Officer

PHARMION CORPORATION

By:
Name: Patrick J. Mahaffy
Title: Chief Executive Officer

EXHIBIT A
TO LICENSE AGREEMENT

Australian Patent Application No. 62486/94

New Zealand Patent Application No. 262676

European Patent Application No. 94909773

European Patent Application PCT/US00/29303

EXHIBIT B
TO LICENSE AGREEMENT

[Description of S.T.E.P.S.]

EXHIBIT C
TO LICENSE AGREEMENT

Watson Pharmaceuticals, Inc.

ICN Pharmaceuticals, Inc.

EXHIBIT D
TO LICENSE AGREEMENT

SECTION 2 - GRANT

2.1 GRANT. CMCC hereby grants to CELGENE an exclusive, worldwide right and license under the THALIDOMIDE PATENT RIGHTS and the MIXED PATENT RIGHTS, subject to the provisions of Sections 2.2 and 2.6 herein, to make, have made, use, lease, offer for sale, sell and import PRODUCTS and practice LICENSED METHODS in the FIELD.

2.2 RESERVATION OF RESEARCH RIGHTS.

2.2.1 CMCC-Retained Rights. The license granted in Section 2.1 of this Agreement is subject to, and expressly limited by, CMCC's non-exclusive rights to make and use, and to grant to other research and educational institutions (each, a "THIRD PARTY RESEARCHER"), subject to their prior written agreement to be bound by the terms and conditions of this Section 2.2, a non-exclusive license to make and use, the technology and the subject matter described and claimed in the PATENT RIGHTS for research and educational purposes only, whether or not such activities are sponsored by or otherwise paid for by or performed in conjunction with or on behalf of any commercial entity (the "CMCC RETAINED RIGHTS")

2.2.2 OPTION(S) TO CELGENE ON THALIDOMIDE INVENTIONS. If, in the exercise of the CMCC RETAINED RIGHTS, CMCC or any THIRD PARTY RESEARCHER makes any potentially patentable inventions or discoveries relating to THALIDOMIDE or to PRODUCTS ("THALIDOMIDE INVENTION"), including without limitation any modifications to any PRODUCT or any improvement to any of the THALIDOMIDE PATENT RIGHTS or any MIXED PATENT THALIDOMIDE CLAIMS, CMCC shall, and CMCC shall contractually obligate any such THIRD PARTY RESEARCHER to, promptly notify CELGENE and BIOVENTURE in writing, PROVIDED that the notice to BIOVENTURE need not contain any confidential technical information. CMCC hereby grants, and shall contractually obligate each such THIRD PARTY RESEARCHER to grant, CELGENE an exclusive option ("Option") to enter into a license agreement granting CELGENE an exclusive, worldwide, royalty-bearing license, with the right to sublicense, under any patent applications and patents directed to such THALIDOMIDE INVENTION, to make, have made, use, lease, offer for sale, sell, and import PRODUCTS and practice methods in the FIELD.

2.2.3 EXERCISE OF OPTION(S). The term of each Option granted to CELGENE hereunder shall run and be exercisable independently on a THALIDOMIDE INVENTION-by-THALIDOMIDE INVENTION basis, beginning on the date on which CELGENE receives notice thereof pursuant to
Section 2.2.2 and continuing for a period of three (3) months ("Option Period"). In the event that this Agreement terminates during any Option Period(s) for any reason other than due to CELGENE's breach of this Agreement, each such Option Period, and the rights and obligations of the parties under Sections 2.2.3, 2.2.4 and 2.2.5 with respect to the relevant THALIDOMIDE INVENTION, shall continue in full force and effect for the duration of each such three (3) month period and, if applicable, the relevant Negotiation Period. The relevant THALIDOMIDE INVENTION shall be deemed to be CMCC's CONFIDENTIAL INFORMATION, pursuant to the terms of this Agreement. CELGENE may exercise its Option with respect to any THALIDOMIDE INVENTION at any time during the relevant Option Period by providing written notice to CMCC and/or such THIRD PARTY RESEARCHER, as applicable, with a copy to BIOVENTURE, stating its intention to exercise such Option. CELGENE agrees that it shall reimburse CMCC for all reasonable out-of-pocket expenses, including reasonable attorney's fees, incurred in connection with the preparation, filing and prosecution of patent applications directed towards the relevant THALIDOMIDE INVENTION in the FIELD ("Patent Costs") during the Option Period, provided that if CELGENE notifies CMCC in writing that it rejects its Option with respect to the relevant THALIDOMIDE INVENTION, CELGENE shall have no obligation to pay for any Patent Costs incurred after the receipt of such notice by CMCC. If CELGENE expressly rejects its Option or the Option Period lapses without any such written notice from CELGENE, then CMCC and such THIRD PARTY RESEARCHER shall have no further obligation to CELGENE with respect to the relevant THALIDOMIDE INVENTION.

2.2.4 NEGOTIATION OF LICENSE AGREEMENT. Upon the exercise by CELGENE of the Option set forth in Section 2.2.2, CELGENE and CMCC and/or such THIRD PARTY RESEARCHER, as applicable, shall negotiate in good faith for up to three (3) months for the financial and other material terms, including diligence and indemnification terms, of the license agreement ("Initial Negotiation Period"). If written agreement has been reached between CMCC and/or the THIRD PARTY RESEARCHER, as applicable, on the one hand, and CELGENE, on the other hand, regarding such terms during such three (3) month period, then the Initial Negotiation Period shall automatically, without any further action by either party, be extended for an additional three (3) months (or any longer period as agreed to by the parties) (together with the Initial Negotiation Period, the "Negotiation Period") to permit negotiation and execution of a mutually-agreeable license agreement. CELGENE agrees that it shall reimburse

CMCC for all Patent Costs incurred during the Negotiation Period, provided that (a) if the parties cease good faith negotiations with respect to the relevant THALIDOMIDE INVENTION, CELGENE may notify CMCC in writing, and CELGENE shall have no obligation to pay for any Patent Costs incurred after the receipt of such notice by CMCC and
(b) if CMCC and/or the THIRD PARTY RESEARCHER, as applicable, on the one hand, and CELGENE, on the other hand, execute a license agreement relating to the relevant THALIDOMIDE INVENTION, the terms and conditions of such agreement shall govern the payment of Patent Costs incurred thereafter. CELGENE agrees that it shall not be entitled to reduce the royalties owed under Section 4 of this Agreement, pursuant to the terms of Section 7.7 hereof or otherwise, to offset payments owed to a THIRD PARTY RESEARCHER pursuant to a license agreement executed as set forth in this Section 2.2. CELGENE and CMCC agree that the payments due pursuant to Section 4 of this Agreement shall not be affected by any payment terms of a license agreement between CELGENE and CMCC executed as set forth in this
Section 2.2, it being understood that CELGENE and CMCC are free to agree that payments due under such license agreement may be offset or otherwise reduced by payments due hereunder. BIOVENTURE agrees that it shall not be entitled to any portion of any amount that becomes payable by CELGENE to CMCC or any THIRD PARTY RESEARCHER pursuant to a license agreement executed as set forth in this
Section 2.2. CMCC agrees, and shall contractually obligate such THIRD PARTY RESEARCHER, as applicable, to agree, that it will not, during the Option Period and the Negotiation Period, enter into or negotiate with any third party any agreement or contract that would be inconsistent with the grant of the Option to CELGENE hereunder. If the parties are unable to negotiate and execute a mutually acceptable license agreement within the Negotiation Period, CMCC and such THIRD PARTY RESEARCHER shall have no further obligation to CELGENE with respect to the relevant THALIDOMIDE INVENTION. CMCC shall notify BIOVENTURE if the Negotiation Period expires without execution of a license agreement between CELGENE and CMCC.

2.2.5 ENTREMED RELEASE. ENTREMED agrees that all rights ENTREMED may have in any THALIDOMIDE INVENTION, and any obligations of CMCC to disclose to ENTREMED a THALIDOMIDE INVENTION or to grant to, or negotiate with, ENTREMED a license to a THALIDOMIDE INVENTION, shall be subject to the terms of Sections 2.2.2, 2.2.3 and 2.2.4.

2.3 CELGENE'S RIGHT TO SUBLICENSE. Subject to the provisions of Section 7.5, CMCC hereby grants to CELGENE the right to sublicense the rights, duties and/or obligations granted to it hereunder in the THALIDOMIDE PATENT RIGHTS and/or the MIXED PATENT RIGHTS, in whole or in part, in the

FIELD, provided that, in all cases, CELGENE shall first (a) provide CMCC with such commercially relevant, publicly available information about the potential SUBLICENSEE as CELGENE determines, in its sole good faith judgment, to be necessary to enable CMCC to make a reasonably informed decision regarding the relevant commercial capacity of such potential SUBLICENSEE, such information to be provided to CMCC sufficiently in advance of CELGENE's expected date of entering into a sublicense agreement with the potential SUBLICENSEE so as to allow CMCC to reasonably consider such information, and (b) obtain the written consent of CMCC to the potential SUBLICENSEE, which consent shall not be unreasonably withheld, delayed, or conditioned. Prior to granting or withholding its consent, CMCC shall provide to BIOVENTURE copies of any information received from CELGENE about the potential SUBLICENSEE and shall consult with BIOVENTURE thereon; PROVIDED that CMCC shall not be required to obtain the consent of BIOVENTURE in providing or withholding CMCC's consent to such potential SUBLICENSEE, and that neither such consultation nor any consultation with any CMCC ROYALTY PURCHASER(s) shall in any way delay or otherwise obstruct the delivery of CMCC's notice regarding its consent. In the event that CMCC reasonably withholds consent to any potential SUBLICENSEE, CELGENE shall nonetheless have the right to enter into a sublicense agreement with such SUBLICENSEE and, in such event, CELGENE shall guarantee and be responsible for the payment of all royalties and other amounts due and the making of reports under this Agreement by such SUBLICENSEE and SUBLICENSEE's compliance with all applicable terms of this Agreement. CMCC and CELGENE acknowledge and agree that CMCC shall have no right of consent with respect to the terms and conditions of the relevant sublicense agreement, and that CELGENE shall use reasonable efforts to negotiate sublicense agreements that are commercially reasonable according to contemporaneous prevailing standards within the pharmaceutical industry.

2.4 SUBLICENSE OBLIGATIONS.

(a) CELGENE agrees that any sublicense granted by it shall provide that the obligations to CMCC of Sections 2, 4.7, 4.8, 4.9, 9, 10, 11, 12, 15 and 16 of this Agreement, and, to the extent applicable pursuant to the terms of the relevant sublicense, Sections 7.2, 7.3, 7.4, 7.5, 7.6, shall be binding upon the SUBLICENSEE as if it were a party to this Agreement. CELGENE further agrees to attach copies of the above-identified Sections to any such sublicense agreements. Further, CELGENE hereby agrees that every sublicensing agreement to which it shall be a party and which shall relate to the rights, privileges and license granted hereunder shall contain a statement setting forth the event or date upon which CELGENE'S exclusive rights, privileges and license hereunder shall terminate.

(b) CELGENE agrees to forward to each of CMCC and BIOVENTURE a copy of any and all fully executed sublicense agreements and any

amendments thereto, and further agrees to forward to each of CMCC and BIOVENTURE annually a copy of such reports received by CELGENE from its SUBLICENSEES during the preceding twelve (12) month period under the sublicenses as shall be pertinent to a royalty accounting under said sublicense agreements.

(c) CELGENE shall not receive from SUBLICENSEES anything of value in lieu of cash payments based upon payment obligations of any sublicense under this Agreement, without the express prior written permission of CMCC which shall not be unreasonably withheld or delayed. Prior to granting or withholding its consent, CMCC shall consult with BIOVENTURE as to the advisibility of granting or withholding consent; PROVIDED that CMCC shall not be required to obtain the consent of BIOVENTURE, and that such consultation shall in no way delay or otherwise obstruct the delivery of CMCC's notice regarding its consent.

2.5 NO OTHER RIGHTS. The license granted hereunder shall not be construed to confer any rights upon CELGENE by implication, estoppel or otherwise as to any technology not specifically set forth in Appendices A, B and/or C hereof.

2.6 GOVERNMENT RIGHTS. The license granted in Section 2.1 of this Agreement is subject to, and expressly limited by, any rights the United States government may have pursuant to Public Laws 96-517 and 98-620.

2.7 ACKNOWLEDGEMENT OF TRANSFERS UNDER CELGENE SUBLICENSE. CELGENE and ENTREMED represent and warrant that the obligations described in Sections 2.5 and 2.6 of the CELGENE SUBLICENSE necessary for CELGENE to fulfill its obligations under this Agreement were fully satisfied.

4.7 RECORDKEEPING. CELGENE shall keep, and shall require each of its AFFILIATES and SUBLICENSEES to keep, full and accurate books of account containing all particulars relevant to its sales of PRODUCTS that may be necessary for the purpose of calculating all royalties payable to CMCC and BIOVENTURE pursuant to Sections 4.1, 4.2 and 4.3 of this Agreement. Such books of account, as well as all reasonably necessary supporting data, shall be kept at the principal place of business of CELGENE and each AFFILIATE and SUBLICENSEE, as applicable, for the five (5) years next following the end of the calendar year to which each shall pertain, and shall be open for inspection by an independent certified public accountant reasonably acceptable to CELGENE, upon reasonable notice during normal business hours at BIOVENTURE or CMCC'S expense, as the case may be, for the sole purpose of verifying royalty statements or compliance with this Agreement. In the event the inspection determines that royalties due BIOVENTURE or CMCC for any period have been underpaid by five percent (5%) or more, which underpayment has not since been remedied, then CELGENE and/or its AFFILIATE or SUBLICENSEE, as applicable, shall pay for all costs of the inspection. All royalty payments set forth in this Agreement shall, if overdue, bear interest until payment at a per annum rate of two percent (2%) above the prime rate in effect at Fleet Bank on the due date. The payment of such interest shall not

foreclose BIOVENTURE or CMCC, as the case may be, from exercising any other rights it may have as a consequence of the lateness of any payment. All information and data reviewed in the inspection shall be used only for the purpose of verifying royalties and shall be treated as CELGENE'S CONFIDENTIAL INFORMATION subject to the obligations of this Agreement. No audit shall be conducted hereunder more frequently than once during any twelve (12) month period, irrespective of whether such audit is on behalf of CMCC or on behalf of BIOVENTURE.

4.8 QUARTERLY PAYMENTS AND REPORTS. In each year the amount of royalty due shall be calculated quarterly as of the end of each CALENDAR QUARTER and shall be paid quarterly within the forty-five (45) days next following such date. Every such payment shall be supported by the accounting described in Section 4.9 of this Agreement. All royalties due BIOVENTURE and CMCC are payable in United States dollars. BIOVENTURE and CMCC shall each designate, in writing, one bank account to which CELGENE shall make all payments due hereunder to each, respectively. When PRODUCTS are sold for currency other than United States dollars, the earned royalties will first be determined in the foreign currency of the country in which such PRODUCTS were sold and then converted into equivalent United States funds. The exchange rate will be that rate quoted in THE WALL STREET JOURNAL, NY EDITION on the last business day of the CALENDAR QUARTER in which such sales were made.

4.9 ACCOUNTING REPORTS. With each quarterly payment, CELGENE shall deliver to each of BIOVENTURE and CMCC a full and accurate accounting to include at least the following information:

(a) Quantity of PRODUCT subject to royalty sold, by country, by CELGENE, its AFFILIATES or SUBLICENSEES;

(b) Total receipts for each PRODUCT subject to royalty, by country and, to the extent used in any royalty calculations during such quarter, the exchange rate set forth in Section 4.8 of this Agreement;

(d) Compensation on PRODUCTS received from SUBLICENSEES pursuant to a sublicense of CELGENE's rights under this Agreement;

(e) Total royalties and/or compensation payable to BIOVENTURE and CMCC, as the case may be; and

Names and addresses of all SUBLICENSEES of CELGENE.

7.2 INFRINGEMENT ACTIONS.

(a) NOTIFICATION. In the event that any party learns of the infringement of any THALIDOMIDE PATENT RIGHT and/or MIXED PATENT RIGHT by

a THIRD PARTY, or the filing of a Declaratory Judgment action by a third party alleging the invalidity, unenforceability, or noninfringement of any of same ("DJ ACTION"), that party must promptly notify the other parties to this Agreement of the infringement or DJ ACTION, as the case may be, in writing, and must provide reasonable evidence of the infringement. The notifying party shall also inform the other parties to this Agreement whether, in its reasonable judgment, the infringement is alleged to be (1) the making, using, offering for sale, selling or importing of a product that is or contains THALIDOMIDE in such a way as to infringe any of the THALIDOMIDE PATENT RIGHTS and/or any MIXED PATENT THALIDOMIDE CLAIMS ("THALIDOMIDE INFRINGEMENT"); and/or (2) the making, using, offering for sale, selling or importing of a product that is or contains an analog of THALIDOMIDE in such a way as to infringe any claim of any MIXED PATENT RIGHTS ("NON-THALIDOMIDE INFRINGEMENT"). If any party disagrees with the characterization of the infringement as THALIDOMIDE INFRINGEMENT or NON-THALIDOMIDE INFRINGEMENT, the parties hereto shall promptly negotiate in good faith a resolution to such dispute. If the parties are unable to resolve such dispute within three (3) months, the matter shall be resolved in accordance with the provisions of Section 12. If the parties determine that such infringement is both a THALIDOMIDE INFRINGEMENT and a NON-THALIDOMIDE INFRINGEMENT, the parties shall cooperate in good faith to effectuate the applicable provisions of this Section 7 to the fullest extent possible, taking into account the relative commercial interests of the parties. None of the parties will notify a THIRD PARTY (except their attorneys) of the infringement of any THALIDOMIDE PATENT RIGHT or MIXED PATENT RIGHT (including without limitation the foregoing characterization of the infringement), or of the filing of a DJ ACTION directed to any PATENT RIGHT, without first obtaining the consent of each party to this Agreement having rights in such PATENT RIGHT and/or in the relevant claims thereof, including without limitation any economic rights therein BIOVENTURE may have, either pursuant to this Agreement or pursuant to the NEW ANALOG AGREEMENT, which rights are actually or potentially impacted by such alleged infringement or DJ ACTION ("INTERESTED PARTY"), which consent shall not be unreasonably withheld or delayed.

(b) ENFORCEMENT BY CELGENE OF CERTAIN PATENT RIGHTS AGAINST THALIDOMIDE INFRINGEMENT. If, at any time during the term of this Agreement, any party hereto furnishes notice, pursuant to Section 7.2(a), of a THALIDOMIDE INFRINGEMENT, then CELGENE shall have the right, but not the obligation, to bring a suit or action to compel termination of such infringement, at CELGENE's sole expense. CELGENE may join CMCC, ENTREMED and/or BIOVENTURE as parties as required, at CELGENE's sole expense. CMCC, ENTREMED

and BIOVENTURE independently shall each have the right to join, at its own expense, any such suit or action brought by CELGENE, to the extent same are INTERESTED PARTIES therein.

(c) ENFORCEMENT BY ENTREMED OF CERTAIN PATENT RIGHTS AGAINST NON-THALIDOMIDE INFRINGEMENT. If, at any time during the term of this Agreement, any party hereto furnishes notice, pursuant to
Section 7.2(a), of a NON-THALIDOMIDE INFRINGEMENT, then ENTREMED shall have the right, but not the obligation, to bring a suit or action to compel termination of such infringement, at ENTREMED's sole expense. ENTREMED may join CMCC, CELGENE and/or BIOVENTURE as parties as required, at ENTREMED's sole expense. CMCC, CELGENE and BIOVENTURE independently shall each have the right to join, at its own expense, any such suit or action brought by ENTREMED, to the extent same are INTERESTED PARTIES therein.

(d) ENFORCEMENT OF PATENT RIGHTS BY CMCC. If within six (6) months after the date of any notice provided under Section 7.2(a) of this Agreement with respect to any THALIDOMIDE INFRINGEMENT, CELGENE fails to cause such infringement to terminate, to enter into negotiations to sublicense such alleged infringer, or to bring a suit or action to compel termination, or if CELGENE notifies CMCC that it does not intend to take any action in such regard (which CELGENE shall do promptly upon making such decision, and which notice CELGENE shall likewise promptly provide to ENTREMED and BIOVENTURE, to the extent same are INTERESTED PARTIES), CMCC shall thereafter have the sole right, but not the obligation, to cause such infringement to terminate, including without limitation by granting a sublicense hereunder in accordance with Section 7.5 hereof, and/or to bring such suit or action to compel termination at CMCC's sole expense. If within six (6) months after the date of any notice provided under Section 7.2(a) of this Agreement with respect to any NON-THALIDOMIDE INFRINGEMENT, ENTREMED fails to cause such infringement to terminate, to enter into negotiations to sublicense such alleged infringer, or to bring a suit or action to compel termination, or if ENTREMED notifies CMCC that it does not intend to take any action in such regard (which ENTREMED shall do promptly upon making such decision, and which notice ENTREMED shall likewise promptly provide to CELGENE and BIOVENTURE, to the extent same are INTERESTED PARTIES), CMCC shall thereafter have the sole right, but not the obligation, to cause such infringement to terminate, including without limitation by granting a sublicense hereunder in accordance with Section 7.5 hereof, and/or to bring such suit or action to compel termination at CMCC's sole expense. CMCC may join ENTREMED, CELGENE and/or BIOVENTURE as parties as required, at CMCC's sole expense. ENTREMED, CELGENE and BIOVENTURE independently shall each have the right to join, at its

own expense, any such suit or action brought by CMCC, to the extent same are INTERESTED PARTIES therein.

(e) ENFORCEMENT BY BIOVENTURE OF CERTAIN PATENT RIGHTS AGAINST THALIDOMIDE INFRINGEMENT. If, within three (3) months after the date on which CMCC's right to bring any suit or action under Section 7.2(d) with respect to THALIDOMIDE INFRINGEMENT commences, CMCC fails to cause such infringement to terminate, to enter into negotiations to sublicense such alleged infringer, or to bring a suit or action to compel termination of such infringement, or if CMCC notifies BIOVENTURE that it does not intend to take any action in such regard (which CMCC shall do promptly upon making such decision), BIOVENTURE shall thereafter have the sole right, but not the obligation, to bring such suit or action to compel termination at BIOVENTURE's sole expense. BIOVENTURE may join ENTREMED, CELGENE and/or CMCC as parties as required, at BIOVENTURE's sole expense. ENTREMED, CELGENE and CMCC independently shall each have the right to join, at its own expense, any such suit or action brought by BIOVENTURE, to the extent same are INTERESTED PARTIES therein.

7.3 DECLARATORY JUDGMENT ACTIONS.

(a) THALIDOMIDE DJ ACTIONS DEFENDED BY CELGENE. In the event that a DJ ACTION relating to the making, using, offering for sale, selling or importing of a product that is or contains THALIDOMIDE ("THALIDOMIDE DJ ACTION") is brought against CMCC, CELGENE, ENTREMED or BIOVENTURE concerning any of the PATENT RIGHTS, CELGENE, at its option, shall have the right, within thirty (30) days after commencement of such THALIDOMIDE DJ ACTION, to intervene, as applicable, and to assume control of the defense of such DJ ACTION, at its sole expense. CMCC, ENTREMED and BIOVENTURE shall each have the right, at its own expense, to join any THALIDOMIDE DJ ACTION defended by CELGENE hereunder, to the extent same are INTERESTED PARTIES therein. Except as otherwise stated in Section 7.5 of this Agreement, CELGENE shall have the sole right, but not the obligation, to grant a sublicense of its rights hereunder for future use of any THALIDOMIDE PATENT RIGHTS and/or MIXED PATENT THALIDOMIDE CLAIMS in connection with any THALIDOMIDE DJ ACTION.

(b) NON-THALIDOMIDE DJ ACTIONS DEFENDED BY ENTREMED. In the event that a DJ ACTION relating to the making, using, offering for sale, selling or importing of a product that is or contains an analog of THALIDOMIDE ("NON-THALIDOMIDE DJ ACTION") is brought against CMCC, CELGENE, ENTREMED or BIOVENTURE concerning any of the PATENT RIGHTS, ENTREMED, at its option, shall have the

right, within thirty (30) days after commencement of such DJ ACTION, to intervene, as applicable, and to assume control of the defense of such NON-THALIDOMIDE DJ ACTION, at its sole expense. CMCC, CELGENE and BIOVENTURE shall each have the right, at its own expense, to join any NON-THALIDOMIDE DJ ACTION defended by ENTREMED hereunder, and to the extent same are INTERESTED PARTIES therein. Except as otherwise stated in Section 7.5 of this Agreement, ENTREMED shall have the sole right, but not the obligation, to grant a sublicense of its rights hereunder for future use of any THALIDOMIDE PATENT RIGHTS and/or MIXED PATENT THALIDOMIDE CLAIMS in connection with any NON-THALIDOMIDE DJ ACTION.

(c) DEFENSE OF THALIDOMIDE DJ ACTIONS BY CMCC. In the event of any THALIDOMIDE DJ ACTION in which CELGENE does not assume control of the defense, as provided for in Section 7.3(a) hereof, or any NON-THALIDOMIDE DJ ACTION in which ENTREMED does not assume control of the defense, as provided for in Section 7.3(b) hereof, CMCC shall thereafter have the sole right, but not the obligation, to intervene and assume control of the defense of such THALIDOMIDE DJ ACTION, at its sole expense. CELGENE, BIOVENTURE, and/or ENTREMED shall each have the right, at its own expense, to join in any such THALIDOMIDE DJ ACTION or NON-THALIDOMIDE DJ ACTION defended by CMCC hereunder, to the extent same are INTERESTED PARTIES therein.

(d) DEFENSE OF THALIDOMIDE DJ ACTIONS BY BIOVENTURE. If CMCC fails to assume defense of any THALIDOMIDE DJ ACTION within thirty (30) days of CMCC's right to do so, pursuant to Section 7.3(c), BIOVENTURE shall thereafter have the sole right, but not the obligation, to intervene and assume control of the defense of such THALIDOMIDE DJ ACTION, at its sole expense. CMCC, CELGENE and/or ENTREMED shall each have the right, at its own expense, to join in any such THALIDOMIDE DJ ACTION defended by BIOVENTURE hereunder, to the extent same are INTERESTED PARTIES therein.

7.4 ALLOCATION OF ANY DAMAGES AWARD. Any damages recovered in connection with any suit or action brought pursuant to Section 7.2, or any DJ ACTION defended pursuant to section 7.3 shall be used (a) first to reimburse the party primarily responsible for conduct or defense of the litigation (I.E., CELGENE if the action is brought pursuant to Section 7.2(b) or defended pursuant to Section 7.3(a), ENTREMED if the action is brought pursuant to Section 7.2(c) or defended pursuant to Section 7.3(b), CMCC if the action is brought pursuant to Section 7.2(d) or defended pursuant to
Section 7.3(c), and BIOVENTURE if the action is brought pursuant to
Section 7.2(e) or defended pursuant to Section 7.3(d)) (each, as applicable, the "PRIMARY LITIGANT") for the cost of such suit or action (including attorney's fees) actually

paid by such PRIMARY LITIGANT, then (b) to reimburse any INTERESTED PARTY that has, pursuant to the terms of Section 7.2 or 7.3, voluntarily joined any action brought or defended hereunder, for the cost of such suit or action (including attorney's fees) actually paid by such voluntarily-joined INTERESTED PARTY, then (c) to reimburse CMCC and BIOVENTURE pro rata for any loss of royalties payable hereunder or under the NEW ANALOG AGREEMENT, as applicable. In the event that CELGENE and/or ENTREMED has, pursuant to the terms of Section 7.2 or 7.3, voluntarily joined any action brought or defended hereunder, then any damages remaining after the distributions set forth in subsections (a) through (c) of this Section 7.4 ("RESIDUAL DAMAGES") shall first be used to reimburse CELGENE and/or ENTREMED, as applicable, for their lost profits. Any remaining RESIDUAL DAMAGES shall next be distributed to or among the PRIMARY LITIGANT and any INTERESTED PARTIES that have, pursuant to the terms of Section 7.2 or 7.3, voluntarily joined any action brought or defended hereunder, on a basis to be determined in good faith by such INTERESTED PARTIES and the PRIMARY LITIGANT based on each such party's respective commercial interest in the subject matter of such suit or action.

7.5 SETTLEMENT OF ENFORCEMENT ACTIONS AND DJ ACTIONS. In the event that any INTERESTED PARTY has, pursuant to the terms of Section 7.2 or 7.3, voluntarily joined any action brought or defended hereunder, then no settlement, consent judgment or other voluntary final disposition of such suit or action may be entered into without the prior consent of all such joined INTERESTED PARTIES, which consent shall not be unreasonably withheld or delayed. Except as otherwise stated below in this Section 7.5,
(i) CELGENE shall have the sole right but not the obligation, in accordance with the terms and conditions of this Agreement, to sublicense any alleged infringer for future use of any THALIDOMIDE PATENT RIGHTS and/or any MIXED PATENT THALIDOMIDE CLAIMS with respect to any THALIDOMIDE INFRINGEMENT and (ii) ENTREMED shall have the sole right but not the obligation, in accordance with the terms and conditions of the NEW ANALOG AGREEMENT, to sublicense any alleged infringer for future use of any MIXED PATENT RIGHTS with respect to any NON-THALIDOMIDE INFRINGEMENT. CELGENE and ENTREMED shall each have the right to grant such sublicenses in accordance with the terms and conditions of this Agreement and the NEW ANALOG AGREEMENT, respectively, provided that neither shall grant any such sublicense to the detriment of the rights of CMCC or any such joined INTERESTED PARTY hereunder or under the NEW ANALOG AGREEMENT. In the event that CELGENE and/or ENTREMED elect not to exercise their right to initiate litigation against an alleged infringer, as set forth in Sections 7.2(b) and (c), respectively, or to defend a DJ ACTION, as set forth in Sections 7.3(a) and (b), respectively, then the PRIMARY LITIGANT shall have the right, but no obligation, to license or sublicense, as applicable, any alleged infringer for future use of any THALIDOMIDE PATENT RIGHTS and/or any MIXED PATENT RIGHTS, provided, however, that (1) the terms and conditions of such license or sublicense shall be commercially reasonable and commensurate in scope with the alleged infringement, (2) such license or sublicense shall not permit the further sublicensing,

assignment or transfer of any right or license under the PATENT RIGHTS granted therein, and (3) but for a change in the grant under the relevant PATENT RIGHTS, as set forth in Section 2.1, from exclusive to co-exclusive in the region where such infringement has occurred and in the field to which such infringement relates, neither CELGENE's rights and licenses hereunder, nor ENTREMED's rights and licenses under the NEW ANALOG AGREEMENT, shall be affected.

7.6 COOPERATION. In any suit or action any party may institute or control with respect to the enforcement or defense of any of the PATENT RIGHTS pursuant to this Agreement, the other parties hereto shall, at the request of the PRIMARY LITIGANT, cooperate in all respects and, to the extent possible, have its employees testify when requested and make available relevant records, papers, information, samples, specimens, and the like. All reasonable out-of-pocket costs incurred in connection with rendering cooperation requested hereunder shall be paid by the PRIMARY LITIGANT, except as otherwise set forth in this Section 7. In any such suit or action that involves any MIXED PATENT THALIDOMIDE CLAIMS, all INTERESTED PARTIES shall consult and cooperate in good faith to the extent any argument, claim, counterclaim or defense advanced by any party to such suit or action actually or potentially impacts the rights of any other INTERESTED PARTY including, without limitation, with respect to any claim construction and infringement issues.

SECTION 9 - INDEMNIFICATION AND INSURANCE

9.1 BY CELGENE. CELGENE will defend, indemnify and hold harmless each of CMCC, BIOVENTURE, their successors and AFFILIATES and their employees, agents, officers, trustees, shareholders and directors and each of them (the "Indemnified Parties") from and against any and all THIRD PARTY claims, causes of action and costs (including reasonable attorney's fees) of any nature made or lawsuits or other proceedings filed or otherwise instituted against the applicable Indemnified Parties in connection with any claims, suits or judgments arising out of any theory of product liability concerning the development, testing, manufacture, sale or use of any PRODUCT by CELGENE, its AFFILIATES or its SUBLICENSEES.

(a) CELGENE's indemnification under this Section 9.1 shall not apply to any liability, damage, loss or expense to the extent that it is directly attributable to the negligent activity, reckless misconduct or intentional misconduct of any Indemnified Party.

(b) Commencing not later than the date of FIRST COMMERCIAL SALE of a PRODUCT, CELGENE shall obtain and carry in full force and effect product liability insurance against any claims, judgments, liabilities and expenses for which it is obligated to indemnify CMCC and others to the extent required under Section 9.1 of this Agreement, in such amounts and

with such deductibles as are customary at the time for companies engaged in a similar business, and shall provide CMCC and BIOVENTURE with written evidence of such insurance upon request.

9.2 CONDITIONS TO INDEMNIFICATION. CELGENE's obligations under this Section 9 shall apply only if the Indemnified Parties promptly notify CELGENE of any loss, claim, damage, liability or action in respect of which the Indemnified Parties intend to claim such indemnification. CELGENE shall assume the defense thereof with counsel mutually satisfactory to the Indemnified Parties whether or not such claim is rightfully brought. Each Indemnified Party shall have the right to retain its own counsel, at its own expense, provided that CELGENE shall reimburse such Indemnified Party for such expense if representation of such Indemnified Party by the counsel retained by CELGENE would be inappropriate due to actual or potential differing interests between such Indemnified Party and any other person represented by such counsel in such proceedings. The failure to deliver notice to CELGENE within a reasonable time after the commencement of any such action, only if prejudicial to its ability to defend such action, shall relieve CELGENE of any liability to any Indemnified Party under this Section 9, but the omission so to deliver notice to CELGENE will not relieve it of any liability that it may have to any Indemnified Party otherwise than under this Section 9. Each Indemnified Party under this Section 9 shall cooperate fully with CELGENE and its legal representatives in the investigations of any action, claim or liability covered by this indemnification.

SECTION 10 - EXPORT CONTROLS

10.1  It is understood that CMCC is subject to United States laws and
      regulations controlling the export of technical data, computer software,
      laboratory prototypes and other commodities (including the Arms Export
      Control Act, as amended and the Export Administration Act of 1979) and
      that its obligations hereunder are contingent on compliance with
      applicable United States export laws and regulations. The transfer of
      certain technical data and commodities may require a license from the
      cognizant agency of the United States Government and/or written assurances
      by CELGENE that CELGENE shall not export data or commodities to certain
      foreign countries without prior written approval of such agency. CMCC
      neither represents that a license shall not be required nor that, if
      required, it shall be issued.

                          SECTION 11 - NON-USE OF NAMES

11.1  No party hereunder shall use the names of any other party hereunder, nor
      of any of its employees, nor any adaptation thereof, in any advertising,
      promotional or sales literature without prior written consent obtained
      from the party to be named, except that CELGENE and CMCC may state that
      CELGENE is licensed by CMCC under the PATENT RIGHTS in the FIELD.

                            SECTION 12 - ARBITRATION

12.1  Any and all claims, disputes or controversies arising under, out of, or in
      connection with the this Agreement, which have not been resolved by good
      faith negotiations between the parties, shall be resolved by final and
      binding arbitration in Boston, Massachusetts, under patent arbitration
      rules of the American Arbitration Association then obtaining. The
      arbitrators shall have no power to add to, subtract from or modify any of
      the terms or conditions of this Agreement. Any award rendered in such
      arbitration may be enforced by any party in either the courts of the
      Commonwealth of Massachusetts or in the United States District Court for
      the District of Massachusetts, to whose jurisdiction for such purposes
      each of CMCC, CELGENE, BIOVENTURE and ENTREMED hereby irrevocably consents
      and submits.

12.2  Notwithstanding the foregoing, nothing in this Section 12 shall be
      construed (a) to waive any rights or timely performance of any obligations
      existing under this Agreement or (b) to apply to the provisions of Section
      7.2 (Infringement Actions) (other than the fourth sentence of Section
      7.3(a)) or Section 7.4 (Declaratory Judgment Actions).

                            SECTION 15 - TERMINATION

15.1  TERM. Unless earlier terminated as hereinafter provided, this Agreement
      shall remain in full force and effect until CELGENE's obligations to pay
      royalties or other compensation under Section 4 of this Agreement, either
      directly or pursuant to a sublicense, terminate.

15.2  BY REASON OF FDA ACTION. If the FDA withdraws or recalls THALIDOMIDE from
      the market permanently, or in any other way permanently revokes or
      terminates CELGENE's regulatory approval to market and sell THALIDOMIDE
      and/or PRODUCTS, CELGENE shall promptly notify CMCC and BIOVENTURE in
      writing, and this Agreement and all of CELGENE's, CMCC's, BIOVENTURE's and
      ENTREMED's rights and obligations hereunder shall terminate with respect
      to THALIDOMIDE and/or such PRODUCTS, as applicable, upon receipt by CMCC
      and BIOVENTURE of such notice.

15.3  TERMINATION OF ROYALTY OBLIGATIONS. Upon termination of CELGENE's
      obligation to pay royalties and other compensation hereunder with respect
      to a specific country and specific PRODUCT as to which CELGENE's license
      is then in effect, the license granted to CELGENE with respect to such
      country and such PRODUCT pursuant to Section 2 of this Agreement shall be
      deemed to be fully paid and CELGENE shall thereafter have a royalty free,
      exclusive right to use the PATENT RIGHTS to make, have made, use, offer to
      sell, sell and import such PRODUCT in such country.

15.4  BREACH.

      (a)   BY EITHER CMCC OR CELGENE. This Agreement shall be terminable by
            CELGENE or CMCC, respectively, upon the material breach or default
            of either CMCC or CELGENE, as applicable. In the event of a material
            breach or default by CMCC or CELGENE ("Defaulting Party"), the other
            party ("Non-Defaulting Party") shall give the Defaulting Party
            written notice of the default. The Defaulting Party will then have
            sixty (60) days to cure the breach. If cure has not been effected
            within said sixty (60) days, the Non-Defaulting Party shall have the
            right to terminate this Agreement. Notwithstanding anything in this
            Agreement to the contrary, CMCC agrees not to terminate this
            Agreement, for any reason, including pursuant to Sections 3.1(b),
            3.2(b), 3.3(b), 3.4 and 15.4(b), without the prior written consent
            of BIOVENTURE, PROVIDED that (i) CMCC shall not be required to
            obtain the prior consent of BIOVENTURE prior to any termination
            based upon (1) a material breach of payment provisions of this
            Agreement or (2) a material breach of this Agreement the action or
            circumstances of which are, or may reasonably be expected to be,
            deleterious to CMCC's reputation and good standing within the
            healthcare community and (ii) CMCC shall terminate this Agreement if
            BIOVENTURE so requests in writing if the material breach entitling
            CMCC to terminate falls within Section 15.4(b)(i) of this Agreement.

(b) BY CELGENE.

(i) PAYMENTS. If and only if CELGENE materially breaches this Agreement by failure to pay royalties and/or sublicensing or milestone payments due under Section 4 of this Agreement, and fails to cure such material breach within sixty (60) days of receiving written notice thereof pursuant to Section 15.4(a) of this Agreement, then CELGENE's rights under this Agreement shall terminate, and CELGENE shall grant to CMCC, to the extent not prohibited by the United States Government or by prior contractual obligations to any THIRD PARTY:

(a) an exclusive, worldwide, royalty-free license, with the right to sublicense, under CELGENE DEVELOPED INTELLECTUAL PROPERTY; and

(b) a non-exclusive, worldwide, irrevocable, royalty-free license, with the right to sublicense, under (1) that certain Agreement by and between the Division of Cancer Treatment at the National Cancer Institute ("NCI") and ENTREMED, dated November 16, 1994, and executed on behalf of ENTREMED on November 23, 1994, and on behalf of NCI on November 18, 1994, as assigned by ENTREMED to CELGENE ("NCI AGREEMENT"), and (2) any Orphan Drug Status and

Investigational New Drug applications filed by ENTREMED as of December 9, 1998, as set forth in Appendix C of the CELGENE SUBLICENSE, to the extent same were assigned or licensed to CELGENE pursuant to Section 2.4 of the CELGENE SUBLICENSE ("REGULATORY APPLICATIONS");

in the case of both (a) and (b), to make, have made, use, lease, offer to sell, sell, and import PRODUCTS in the TERRITORY.

(ii) DILIGENCE. If and only if (i) CMCC exercises its right and option to terminate the license granted to CELGENE in the entire TERRITORY, pursuant to Section 3.1(b) of this Agreement, or (ii) CMCC exercises its right and option to terminate the license granted to CELGENE in Europe, Canada, or the PACIFIC RIM, pursuant to Section 3.2(b) of this Agreement, or (iii) CMCC exercises its right and option to terminate the license granted to CELGENE for use in animals, pursuant to
Section 3.3(b) of this Agreement or (iv) CMCC exercises its right and option to terminate the license granted to CELGENE for PRODUCTS for ophthalmologic use in the United States pursuant to Section 3.4 of this Agreement, then, only in the region in which such termination has occurred, and only to the extent of such termination as specified in Section 3.1(b), 3.2(b), 3.3(b) and/or 3.4, as applicable:

a) CELGENE's rights under this Agreement shall terminate; and

b) CELGENE shall grant to CMCC, to the extent not prohibited by the United States Government or by prior contractual obligations to any THIRD PARTY, solely to the extent necessary to permit CMCC to exercise its rights under such terminated PATENT RIGHTS in the relevant region or territory and solely to the extent CELGENE's rights thereunder have terminated, pursuant to
Section 3: (1) a non-exclusive, worldwide, royalty-free license, with the right to sublicense, under the NCI AGREEMENT and any REGULATORY APPLICATIONS, to make, have made, use, lease, offer to sell, sell, and import PRODUCTS in the TERRITORY; and (2) immunity from suit for any causes of action CELGENE may have arising out of or in connection with any CELGENE DEVELOPED INTELLECTUAL PROPERTY that would otherwise be infringed by the making, having

made, using, leasing, offering for sale, selling, or importing of any PRODUCTS in such region or TERRITORY. The term of the rights granted to CMCC under this
Section 15.4(b)(ii)(b) shall continue for so long as any PATENT RIGHT exists, within the relevant region or TERRITORY, that contains an ISSUED VALID CLAIM covering a PRODUCT (only for animal use in the case of termination pursuant to Section 3.3(b), and only for ophthalmologic use, in the case of termination pursuant to Section 3.4), provided that if any patent applications within the PATENT RIGHTS are pending, in the relevant region or TERRITORY, at the end of such term, and any ISSUED VALID CLAIM covering a PRODUCT (only for animal use in the case of termination pursuant to Section 3.3(b), and only for ophthalmologic use, in the case of termination pursuant to Section 3.4) subsequently issues from such PATENT RIGHTS, then CMCC's rights under this Section 15.4(b)(ii)(b) shall recommence, in the relevant region or TERRITORY, on the issuance date of such ISSUED VALID CLAIMS and continue until the date of expiration or termination of the last to expire of such ISSUED VALID CLAIMS in such region or TERRITORY. CMCC shall have the right to sublicense the rights granted to it under this Section 15.4(b)(ii)(b), with CELGENE's prior written consent, as set forth herein, only to its AFFILIATES and other THIRD PARTIES in connection with and commensurate in scope with a bona fide license of CMCC's rights under the PATENT RIGHTS. Prior to granting any such sublicense, CMCC shall notify CELGENE in writing of such AFFILIATE or THIRD PARTY and CELGENE shall have the right to consent to such AFFILIATE or THIRD PARTY (which consent shall not be unreasonably withheld or delayed) on the basis of such AFFILIATE or THIRD PARTY's safety record and capacity to satisfy all applicable health and safety laws, rules and regulations governing the manufacture, use, offer for sale, sale and/or importation of PRODUCTS.

(c) Termination under this Section 15.4 will be effective upon the date specified in the written notice. All termination rights shall be in addition to

and not in substitution for any other remedies that may be available to the Non-Defaulting Party. Termination pursuant to this Section 15.4 shall not relieve the Defaulting Party from liability and damages to the Non-Defaulting Party for default. Waiver by either party of a single default or a succession of defaults shall not deprive such party of any right to terminate or convert this Agreement arising by reason of any subsequent default.

(d) Upon any termination of this Agreement in its entirety, or with

            respect to any PATENT RIGHTS pursuant to Section 15.4(b)(ii), for
            any reason, whether by CELGENE or by CMCC, each of CMCC and CELGENE
            agrees not to enter into any other agreement, arrangement or
            understanding with each other granting a license to CELGENE under
            any PATENT RIGHTS in the FIELD without providing for the payment to
            BIOVENTURE of 75% of royalties and other consideration payable to
            CMCC under such other agreement, arrangement or understanding. In
            addition, upon any termination of this Agreement in its entirety or
            with respect to any PATENT RIGHTS pursuant to Section 15.4(b)(ii),
            for any reason, CMCC agrees not to enter into any other agreement,
            arrangement or understanding with a THIRD PARTY granting a license
            under PATENT RIGHTS in the FIELD without providing for the payment
            to BIOVENTURE of 75% of royalties and other consideration payable to
            CMCC under such other agreement, arrangement or understanding.

15.5  INSOLVENCY. CMCC may terminate this Agreement upon receipt of notice that
      CELGENE has become insolvent or has suspended business in all material
      respects hereof, or has consented to an involuntary petition purporting to
      be pursuant to any reorganization or insolvency law of any jurisdiction,
      or has made an assignment for the benefit of creditors or has applied for
      or consented to the appointment of a receiver or trustee for a substantial
      part of its property, by giving written notice to all other parties, and
      termination of this Agreement will be effective upon receipt of such
      notice.

15.6  WORK-IN-PROGRESS. Upon termination of this Agreement, CELGENE shall be
      entitled, but shall not be obligated, to finish any work-in-progress at
      the time of termination and sell the same as well as all completed
      inventory of PRODUCTS which remains on hand as of the date of the
      termination, so long as CELGENE pays to CMCC and BIOVENTURE the royalties
      applicable to said subsequent sales in accordance with the same terms and
      conditions as set forth in this Agreement.

15.7  SURVIVAL. The obligations of Sections 2.2.3, 2.2.4, 2.2.5, 2.4, 2.5, 4.7,
      5, 9, 11, 12 and 13.3, as well as Sections 15.4(b)(i), 15(b)(ii)(b),
      15.4(d), 15.5, 15.6, 15.7, 15.8, 16.2, 16.3, 16.4, 16.5, 16.6, 16.7 and
      16.9 shall survive any termination of this Agreement. Any payment
      obligations accrued and owing as of the date of termination or expiration
      of this Agreement shall survive such termination or expiration. The rights
      and obligations of CMCC and ENTREMED relating to

      MIXED PATENT RIGHTS, as set forth in Section 7 of this Agreement, shall
      survive termination or expiration hereof pursuant to the terms and
      conditions of the NEW ANALOG AGREEMENT.

15.8  REVERSION OF RIGHTS. Upon termination of this Agreement or of the rights
      and licenses granted to CELGENE in any country of the TERRITORY, CELGENE
      agrees not to use the PATENT RIGHTS in any country other than those
      countries in which CELGENE retains a license under this Agreement. In
      addition, all rights to the PATENT RIGHTS in any such country shall revert
      to CMCC and, subject to Section 15.4(d), may be used by CMCC without
      restriction in any country other than those countries in which CELGENE
      retains a license under this Agreement.

15.9  TERMINATION OR EXPIRATION OF NEW ANALOG AGREEMENT. In the event that the
      NEW ANALOG AGREEMENT terminates or expires during the Term of this
      Agreement, EntreMed's rights and obligations hereunder shall, as of the
      effective date of such termination or expiration, immediately cease,
      except for any rights and obligations which survive termination or
      expiration of this Agreement, pursuant to Section 15.7 hereof.

                         SECTION 16 - GENERAL PROVISIONS

16.1  RELATIONSHIP OF PARTIES. The relationship between CMCC, CELGENE,
      BIOVENTURE and ENTREMED is that of independent contractors. CMCC, CELGENE,
      BIOVENTURE and ENTREMED are not joint venturers, partners, principal and
      agent, master and servant, employer or employee, and have no relationship
      other than as independent contracting parties. None of the parties shall
      have any power to bind or obligate any of the other parties in any manner.

16.2  ENTIRE UNDERSTANDING. This Agreement, the NEW ANALOG AGREEMENT and the
      Consents sets forth the entire agreement and understanding among the
      parties as to the subject matter thereof and supersede all prior
      agreements in this respect, including without limitation the ENTREMED
      LICENSE and the CELGENE SUBLICENSE, both of which shall automatically and
      without any further action of the parties terminate on the EFFECTIVE DATE
      hereof. Notwithstanding anything to the contrary set forth herein,
      ENTREMED shall be and remain solely liable and responsible for the past
      breach of performance of any duties, obligations and covenants under the
      ENTREMED LICENSE, and the performance of any duties, obligations and
      covenants that survive termination of the ENTREMED LICENSE.

16.3  GOVERNING LAW. This Agreement shall be construed and enforced in
      accordance with the laws of the Commonwealth of Massachusetts, U.S.A.
      without reference to its choice of law principles. Each party agrees that
      the state and federal courts located in the Commonwealth of Massachusetts,
      including any courts of appeal therefrom, shall have exclusive
      jurisdiction over any dispute arising under this

      Agreement, and the parties hereby consent to personal jurisdiction of such
      courts in any such action.

16.4  HEADINGS. The headings in this Agreement have been inserted for the
      convenience of reference only and are not intended to limit or expand on
      the meaning of the language contained in the particular or section or
      paragraph.

16.5  AMENDMENTS. Any provisions of this Agreement may be amended, modified or
      waived, if and only if, such amendment, modification or waiver is in
      writing and signed by all parties to this Agreement, including, without
      limitation, BIOVENTURE, or, in the case of a waiver, by the party against
      whom the waiver is to be effective. The consent of ENTREMED shall not be
      required with respect to any amendment or modification of this Agreement,
      except any such amendment or modification to Section 7.

16.6  NO WAIVER. Any delay in enforcing a party's rights under this Agreement or
      any waiver as to a particular default or other matter shall not constitute
      a waiver of a party's right to the future enforcement of its rights under
      this Agreement, excepting only as to an expressed written and signed
      waiver as to a particular matter for a particular period of time.

16.7  SEVERABILITY. The provisions of this Agreement are severable, and in the
      event that any provisions of this Agreement shall be determined to be
      invalid or unenforceable under any controlling body of law, such
      invalidity or unenforceability shall not in any way affect the validity or
      enforceability of the remaining provisions hereof.

16.8  PATENT MARKING. CELGENE agrees to mark the labels of PRODUCTS with all
      applicable patent numbers in accordance with standard practice in the
      pharmaceutical industry.

16.9  NOTICES. Any notices given pursuant to this Agreement shall be in writing
      and shall be deemed delivered upon the earlier of (i) when received at the
      address set forth below, or (ii) three (3) business days after mailed by
      certified or registered mail postage prepaid and properly addressed, with
      return receipt requested, or (iii) when sent, if sent by facsimile, as
      confirmed by certified or registered mail. Notices shall be delivered to
      the respective parties as indicated below:

            If to CMCC:              Children's Medical Center Corporation
                                     c/o Children's Hospital Boston
                                     Intellectual Property Office
                                     300 Longwood Avenue
                                     Boston, MA  02115
                                     Attn: Chief Intellectual Property Officer
                                     Fax: (617) 232-7485

            If to CELGENE:           Celgene Corporation
                                     7 Powder Horn Drive
                                     Warren, NJ 07059
                                     Attn: President and COO
                                     Fax: (732) 805-3931

            If to BIOVENTURE:        Bioventure Investments kft
                                     c/o Royalty Pharma Management
                                     675 Third Avenue, Suite 3000
                                     New York, NY  10017
                                     Attn: Dave Madden
                                           Pablo Legorreta
                                     Fax: (917) 368-0021

            If to ENTREMED:          EntreMed, Inc.
                                     9640 Medical Center Drive, Suite 200
                                     Rockville, MD  20850

                                     Attn: Thomas P. Russo
                                     Fax: (302) 217-9594

16.10 ORIGINAL COUNTERPARTS. This Agreement may be executed in four separate counterparts, each of which shall be deemed to be an original, but which together shall constitute one and the same instrument.

EXHIBIT 10.37

Amendment No. 1 to
License Agreement

This Amendment No. 1, dated March 3, 2003, to the License Agreement, dated as of November 16, 2001 by and among Pharmion GmbH, a Swiss limited liability company ("Pharmion"), Pharmion Corporation, a Delaware corporation ("Guarantor") and Celgene Corporation, a Delaware corporation ("Celgene").

WHEREAS, Pharmion, Guarantor and Celgene are parties to License Agreement, dated November 16, 2001, (the "Agreement"); and

WHEREAS, promptly following the execution and delivery of this Agreement, Pharmion, or one of its Affiliates, will enter into an agreement (the "Acquisition Agreement") substantially in the form annexed hereto as Exhibit A with the owners of Gophar S.A.S. to acquire, or cause one of its Affiliates to acquire, 100% of the outstanding capital stock of Gophar S.A.S., the holder of 100% of the issued and outstanding share capital of Laphal Developpement S.A. ("Laphal"); and

WHEREAS, Laphal currently sells Thalidomide in France and Belgium under two French ATUs (AUTORISATION TEMPORAIRE D'UTILISATION) and, in addition, sells Thalidomide in various other countries on a specials or named patient basis, based upon such ATUs; and

WHEREAS, Laphal purchases its requirements of Thalidomide from Laphal Industrie ("Industrie"), a company under common ownership with Laphal that will not be acquired by Pharmion or one of its Affiliates; and

WHEREAS, on or prior to the closing of the Acquisition Agreement, Laphal will enter into an agreement substantially in the form annexed hereto as Exhibit B with Industrie providing for the supply of Thalidomide by Industrie to Laphal; and

WHEREAS, Pharmion and Celgene wish to amend the Agreement as provided below in order to accommodate the acquisition of Laphal by Pharmion and to reflect the existing circumstances surrounding the sale of Thalidomide in various markets within the Territory (as defined in the Agreement);

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, Celgene and Pharmion hereby agree that the Agreement be amended as follows:

1. DEFINITIONS. All terms not otherwise expressly defined in this Amendment shall have the meanings ascribed to such terms in the Agreement.

2. LAPHAL SAFETY AND DISTRIBUTION SYSTEM. Attached hereto as Exhibit C is Pharmion's summary description of the safety and distribution system that Laphal has established with respect to its sales of Thalidomide under the ATUs that it has in France, which system Pharmion understands has been approved as part of such ATUs by the appropriate French regulatory authorities. Exhibit C also contains Pharmion's comparison of the Laphal system with S.T.E.P.S.

3. ACQUISITION RELATED CHANGES. If Pharmion or one of its Affiliates acquires all of the outstanding capital stock of Laphal pursuant to the agreement referred to in the second recital above on or prior to June 30, 2003, then, effective upon the closing of such acquisition (the "Acquisition Date"), the following amendments to the Agreement shall take effect:

(a) Following the acquisition of Laphal by Pharmion, Pharmion will use commercially reasonable efforts to introduce S.T.E.P.S. to the French regulatory authorities and to seek to modify such ATUs as promptly as possible to allow a shift from Laphal's safety and distribution system to a full implementation of S.T.E.P.S. (the "S.T.E.P.S. Modification"). In addition, Pharmion will use commercially reasonable efforts to change the formulation of Thalidomide that Laphal has authority to distribute under such ATUs from Laphal's formulation to Product produced under the Celgene Patent Rights and Celgene Technology (the "Formulation Modification").

(b) Pending effectiveness of the Formulation Modification, notwithstanding the provisions of Section 4.1(e) and 4.2 of the Agreement, Pharmion shall have the right to permit Laphal to continue to sell its formulation of Thalidomide, and notwithstanding Section 3.3 of the Agreement, Laphal shall have the right to purchase its requirements of Thalidomide from Industrie.

(c) Pending effectiveness of the S.T.E.P.S. Modification, notwithstanding the provisions of Section 4.1(k) of the Agreement, Laphal and Pharmion, as its parent company, shall have the right to continue to utilize the Laphal safety and distribution system in connection with sales of Thalidomide in lieu of S.T.E.P.S.; and

(d) The waivers of the provisions of the Agreement contained in paragraph
(b) above shall be effective for a period commencing on the Acquisition Date and shall extend until the earlier of (x) the effectiveness of the Formulation Modification, or (y) the receipt by Pharmion of its first Regulatory Approval in the European Union for the sale of Thalidomide, including Regulatory Approval by the EMEA. The waivers of the provisions of the Agreement contained in paragraph
(c) above shall be effective for a period commencing on the Acquisition Date and shall extend until the earlier of (x) the effectiveness of the S.T.E.P.S. Modification, or (y) the receipt by Pharmion of its first Regulatory Approval in the European Union for the sale of Thalidomide, including Regulatory Approval by the EMEA.

(e) Pharmion will sublicense its rights under Section 3.1 of the Agreement to Laphal pursuant to Section 10.12 of the Agreement.

(f) All net sales of Laphal's formulation of Thalidomide under its ATUs shall constitute Net Sales of Product within the meaning of Section 3.5 of the Agreement, and

Pharmion shall comply with the provisions of Sections 3.6 through 3.8 with respect to such sales and royalties.

4. GRUNENTHAL WITHDRAWAL FROM THE MARKET. Pharmion has been advised that the Grunenthal Group (i) has for several years been distributing Thalidomide in Europe through various ATUs and other temporary, specials or named-patient authorizations (collectively, "Special Authorizations"), utilizing its original stock of product, and (ii) will cease to distribute Thalidomide on or about April 30, 2003. It is anticipated that the withdrawal of Grunenthal product from the market will create a demand for an alternative source of the product. Pharmion intends to work with regulatory authorities in Europe to provide Thalidomide to this patient population on a compassionate use basis under some form of Special Authorizations, and to do so utilizing the S.T.E.P.S. system.

Any sales of Product under such Specials Authorizations shall constitute Net Sales of Product within the meaning of Section 3.5 of the Agreement, and Pharmion shall comply with the provisions of Sections 3.6 through 3.8 with respect to such sales and royalties.

5. OTHER COMPLIANCE. In connection with the sales of Laphal's formulation of Thalidomide and the provision of Thalidomide to patients as described in paragraph 4 above (any such Thalidomide product, a "Pharmion Product"), Pharmion and Guarantor shall, and cause their respective Affiliates to, comply with the provisions of Sections 4.1(c), (f), (h) and (j) of the Agreement, which for the purposes of this paragraph 5 shall be deemed to refer to the Pharmion Products rather than "the Products".

6. ACCESS TO DATA. Pharmion shall provide Celgene and its designees access to any clinical trials data of Pharmion or any of its Affiliates with respect to the Products or any other formulation of Thalidomide.

7. INDEMNIFICATION. Section 8.1 of the Agreement is hereby amended to read in its entirety as follows:

"8.1. PHARMION INDEMNITY OBLIGATIONS. Pharmion shall defend, indemnify and hold Celgene, its Affiliates and their respective employees, officers, directors, counsel and agents harmless from all claims, losses, damages or expenses (including, without limitation, reasonable attorneys' fees and expenses and costs of investigation) arising as a result of: (a) the breach by Pharmion of any covenant, representation or warranty contained in this Agreement; (b) actual or asserted violations of any applicable law or regulation by Pharmion, its Affiliates or Recognized Agents by virtue of which any Product or Pharmion Product distributed, marketed or sold shall be alleged or determined to be adulterated, misbranded, mislabeled or otherwise not in compliance with any applicable law or regulation; (c) claims for bodily injury, death or property damage attributable to the distribution, marketing or sale of the Product or any Pharmion Product by Pharmion, its Affiliates or Recognized Agents; (d) any negligent act or omission of Pharmion, its Affiliates or Recognized Agents in the distribution, marketing and sale of any Product or Pharmion Product or

any other activity conducted by Pharmion, it's Affiliates or Recognized Agents under this Agreement which is the proximate cause of injury, death or property damage to a third party, or (e) any failure of Pharmion to comply with any recall of a Product or Pharmion Product marketed, distributed or sold by Pharmion, its Affiliates or Recognized Agents that is ordered by a governmental agency or required by a confirmed failure of such Product."

8. TERMINATION. Section 9.3(b)(i) of the Agreement is hereby amended by replacing the words "within three (3) years after the date of this Agreement" with the words "within five (5) years after the date of this Agreement".

9. UNMODIFIED PROVISIONS. The provisions of this Amendment No. 1 shall be deemed to be incorporated in the Agreement and except as expressly modified by this Amendment, all terms and conditions of the Agreement shall remain in full force and effect.

10. GOVERNING LAW; CHOICE OF FORUM. The parties agree that this Agreement shall be governed by and construed in accordance with the laws of the State of New York.

11. CAPTIONS. All captions herein are for convenience only and shall not be interpreted as having any substantive meaning.

IN WITNESS WHEREOF, the parties have caused this Amendment No. 1 to be duly executed by their authorized representatives, in duplicate on the dates written herein below.

Pharmion GmbH                    Celgene Corporation

By: /s/ Patrick J. Mahaffy       By: /s/ Sol J. Barer
   --------------------------       --------------------------

Pharmion Corporation

By: /s/ Patrick J. Mahaffy
   --------------------------

EXHIBIT A

Form of Acquisition Agreement
for the acquisition of
Gophar S.A.S.
the parent corporation
of
Laphal Developpement S.A.

EXHIBIT 10.38

Pharmion Corporation
2525 28th Street
Boulder, Colorado 80301

March 3, 2003

Celgene Corporation
7 Powder Horn Drive
Warren, New Jersey 07059
Attention; Sol J. Barer, PhD

Gentlemen:

On the date hereof, Pharmion GmbH ("Pharmion"), Pharmion Corporation and Celgene Corporation ("Celgene") are entering into an Amendment No. 1 (the "Amendment") to the License Agreement among such parties dated November 16, 2001 (the "Agreement"). Except as otherwise indicated, capitalized terms used herein have the meaning ascribed to them in the Agreement or the Amendment. This will confirm our agreement as follows:

(1) Any royalties paid by Pharmion to Celgene in respect of sales of Thalidomide under ATUs (AUTORISATION TEMPORAIRE D' UTILISATION) and other temporary, specials or named-patient authorizations (collectively, "Special Authorizations"), whether manufactured by Laphal or Penn T Limited shall be fully creditable against Pharmion's quarterly fee obligation under Paragraph 4(b) of that certain Letter Agreement, dated November 16, 2001 among Pharmion, Guarantor and Celgene (the "Letter Agreement").

(2) Except as expressly modified by this letter, all teams and conditions of the Letter Agreement shall remain in full force and effect.

Please indicate your acceptance and agreement with the foregoing by signing the enclosed copy of this letter and returning it to us.

Very truly yours,

Pharmion Corporation                  ACCEPTED AND AGREED
Pharmion GmbH                         Celgene Corporation

By   /s/ Patrick J. Mahaffy           By   /s/ Sol J. Barer
  ------------------------------        ---------------------------------------
     Patrick J. Mahaffy                    Sol J. Barer
     President and CEO                     President and Chief Operating Officer

EXHIBIT 10.39

Amendment No. 2 to
License Agreement

This Amendment No. 2, dated April 8, 2003, to the License Agreement, dated as of November 16, 2001, as amended by Amendment No. 1 dated as of March 3, 2003, by and among Pharmion GmbH, a Swiss limited liability company ("Pharmion"), Pharmion Corporation, a Delaware corporation ("Guarantor") and Celgene Corporation, a Delaware corporation ("Celgene").

WHEREAS, Pharmion, Guarantor and Celgene are parties to the License Agreement, dated as of November 16, 2001, as amended by Amendment No. 1 dated as of March 3, 2003 (the "Agreement"); and

WHEREAS, Guarantor and Celgene have entered into a Securities Purchase Agreement (the "Securities Purchase Agreement") whereby Guarantor will sell and issue to Celgene a senior convertible promissory note in the principal amount of $12,000,000 and a warrant to purchase shares of Celgene's common stock for an aggregate purchase price of $12,000,000 (the "Securities Transaction"); and

WHEREAS, pursuant to Section 5.4 of the Securities Purchase Agreement, the obligation of Celgene to complete the Securities Transaction is subject to the execution and delivery of this Amendment No. 2 to the Agreement;

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, Pharmion, Guarantor and Celgene hereby agree that the Agreement be amended as follows:

1. DEFINITIONS. All terms not otherwise expressly defined in this Amendment shall have the meanings ascribed to such terms in the Agreement.

2. TERMINATION BY EITHER PARTY IN THE EVENT OF BANKRUPTCY. Section 9.3(a) of the Agreement is hereby amended to read in its entirety as follows:

"(a) Celgene may terminate this Agreement on 60 days prior written notice to Pharmion following (i) a material breach by Pharmion of any covenant, duty or undertaking herein, or in the letter agreement of even date entered into among Pharmion, Guarantor and Celgene (the "Letter Agreement"), which is not cured within 60 days of written notice thereof; or (ii) if any of Pharmion, Guarantor or Pharmion BV, a wholly owned subsidiary of Guarantor, shall become insolvent or shall file or have filed by its creditors a petition in bankruptcy or similar proceeding, if a court of competent jurisdiction appoints a receiver over the business or assets of the other party, or the making by the party of a general assignment for the benefit of creditors. Pharmion may terminate this Agreement on 60 days prior written notice to Celgene following (i) a material breach by Celgene of any covenant, duty or undertaking herein, or in the Letter Agreement, which is not cured within 60 days of written notice thereof; or (ii) if

Celgene shall become insolvent or shall file or have filed by its creditors a petition in bankruptcy or similar proceeding, if a court of competent jurisdiction appoints a receiver over the business or assets of the other party, or the making by the party of a general assignment for the benefit of creditors."

3. CONSEQUENCES OF TERMINATION BY CELGENE. Section 9.5(d) of the Agreement is hereby amended to read in its entirety as follows:

"(d) Pharmion shall, to the extent legally permissible, take all additional action reasonably necessary to assign all of its right, title and interest in and transfer possession and control to Celgene of the regulatory filings prepared by Pharmion, and regulatory approvals received by Pharmion, and all clinical and other research data related to such regulatory filings or approvals, to the extent that such filings and approvals relate to the Product."

4. UNMODIFIED PROVISIONS. The provisions of this Amendment No. 2 shall be deemed to be incorporated in the Agreement and, except as expressly modified by this Amendment, all terms and conditions of the Agreement shall remain in full force and effect.

5. GOVERNING LAW. The parties agree that this Amendment shall be governed by and construed in accordance with the laws of the State of New York.

6. CAPTIONS. All captions herein are for convenience only and shall not be interpreted as having any substantive meaning.

IN WITNESS WHEREOF, the parties have caused this Amendment No. 2 to be duly executed by their authorized representatives, in duplicate as of the date first written above.

Pharmion GmbH                        Celgene Corporation

By: /s/ Patrick J. Mahaffy           By: /s/ Sol J. Barer
   --------------------------           ----------------------------------------
      Patrick J. Mahaffy                   Sol J. Barer
      Chief Executive Officer              President and Chief Operating Officer

Pharmion Corporation

By: /s/ Patrick J. Mahaffy
   --------------------------
      Patrick J. Mahaffy
      Chief Executive Officer

EXHIBIT 10.40

Pharmion Corporation
2525 28th Street
Boulder, Colorado 80301

August 18, 2003

Celgene Corporation
7 Powder Horn Drive
Warren, New Jersey 07059

Attention: Sol J. Barer, PhD

Gentlemen:

On March 3, 2003, Pharmion GmbH ("Pharmion"), Pharmion Corporation and Celgene Corporation ("Celgene") entered into an Amendment No. 1 (the "Amendment") to the License Agreement among such parties dated November 16, 2001 (the "Agreement"). Except as otherwise indicated, capitalized terms used herein have the meaning ascribed to them in the Agreement or the Amendment.

In the course of an internal contract review, we believe that our mutual intentions relating to an extension of time contemplated by Section 8 of the Amendment, which changed from three years to five years a trigger date on a Celgene termination right under Section 9.3(b)(i) of the Agreement, should also apply to Section 9.4 (a) of the Agreement relating to co-exclusivity.

In addition, as we have explained to you, to date we have only been able to obtain liability insurance coverage of $15 million per occurrence and $15 million in the aggregate. Accordingly, we would like to amend the provisions of
Section 8.4 of the Agreement to reflect these insurance limits.

Accordingly, this will confirm our agreement as follows:

1. Section 9.4(a) of the Agreement is hereby amended by replacing the words "within three (3) years after the date hereof" with the words "within five (5) years after the date hereof".

2. Section 8.4(a) of the Agreement is hereby amended by replacing the words "U.S. $10,000,000 per occurrence and U.S. $50,000,000 in the aggregate" with "U.S. $15,000,000 per occurrence and U.S. $15,000,000 in the aggregate".

Except as expressly modified by this letter, all terms and conditions of the Agreement and the Amendment shall remain in full force and effect.

Please indicate your acceptance and agreement with the foregoing by signing the enclosed copy of this letter and returning it to us.

Very truly yours,

Pharmion Corporation                  ACCEPTED AND AGREED
Pharmion GmbH                         Celgene Corporation

By   /s/ Patrick J. Mahaffy           By
  ------------------------------        ---------------------------------------
     Patrick J. Mahaffy                    Sol J. Barer
     President and CEO                     President and Chief Operating Officer

-2-

Please indicate your acceptance and agreement with the foregoing by signing the enclosed copy of this letter and returning it to us.

Very truly yours,

Pharmion Corporation                  ACCEPTED AND AGREED
Pharmion GmbH                         Celgene Corporation

By                                    By   /s/ Sol J. Barer
  ------------------------------        ---------------------------------------
     Patrick J. Mahaffy                    Sol J. Barer
     President and CEO                     President and Chief Operating Officer

-2-

EXHIBIT 10.50

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO THE CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED AS ***. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

CELGENE CORPORATION

AND

EVOTEC OAI LIMITED

SUPPLY AGREEMENT

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

                                      INDEX

1        DEFINITIONS AND INTERPRETATION........................................1

2        PURCHASE AND SALE.....................................................3

3        PRICING...............................................................3

4        FORECASTS AND ORDERS..................................................4

5        SHIPMENT, INVOICES, DELIVERY..........................................5

6        PAYMENTS..............................................................7

7        TERM AND TERMINATION..................................................7

8        SUPPLY QUALITY AND SECURITY OF PRODUCT................................8

9        RECALLS..............................................................11

10       WARRANTIES...........................................................12

11       INDEMNITY............................................................12

12       FORCE MAJEURE........................................................13

13       PATENT INFRINGEMENT..................................................14

14       CONFIDENTIALITY AND INTELLECTUAL PROPERTY............................15

15       ASSIGNMENT...........................................................18

16       GOVERNING LAW........................................................18

17       WAIVER...............................................................19

18       SEVERANCE OF TERMS...................................................19

19       ENTIRE AGREEMENT/VARIATIONS..........................................19

20       NOTICES..............................................................20

21       COUNTERPARTS.........................................................20

22       REGISTRATION.........................................................21

23       INDEPENDENT CONTRACTORS..............................................21

24       COSTS................................................................21

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

THIS AGREEMENT (hereinafter "Agreement") is made as of the 1st day of August
2004 BETWEEN:

(1) CELGENE CORPORATION, a Delaware corporation and having its business address at 7 Powder Horn Drive, Warren, New Jersey 07059, United States of America (hereinafter CELGENE).

AND

(2) EVOTEC OAI LIMITED, a company incorporated in England and whose registered office is at 151, Milton Park, Abingdon, Oxfordshire OX14 4SD, UK (hereinafter EOAI).

WHEREAS:

CELGENE is the owner of the compound known as CC-5013 and wishes to engage EOAI to manufacture for CELGENE CC-5013 from time to time, as requested by CELGENE.

NOW THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

1        DEFINITIONS AND INTERPRETATION

1.1      In  this  Agreement  and in  the  Appendices  to  this  Agreement,  the
         following  words and phrases shall have the following  meanings  unless
         the context requires otherwise:

1.1.1    "Affiliate(s)" - shall mean any corporation, firm, partnership or other
         entity, whether de jure or de facto, which directly or indirectly owns,
         is  owned  by or is  under  common  ownership  with,  a  Party  to this
         Agreement to the extent of more then fifty  percent (50%) of the equity
         having the power to vote on or direct the affairs of the entity and any
         person,  firm,  partnership,   corporation  or  other  entity  actually
         controlled by. controlling or under common control with a Party to this
         Agreement.

1.1.2    "Batch" - shall  mean a  specific  quantity  of Bulk  Compound  that is
         intended  to have  uniform  character  and  quality,  within  specified
         limits,  and is  produced  according  to a single  manufacturing  order
         during the same cycle of manufacture.

1.1.3    "Bulk  Compound"  - shall mean a bulk  quantity  of the  Compound as an
         active  pharmaceutical  ingredient that has yet to be rendered into the
         commercial dosage form.

1.1.4    "Business  Day" - shall mean 09:00  hours to 17:00 hours on a day other
         than a Saturday,  Sunday,  English  bank or ether  English or US public
         holiday.

1.1.5    "cGMP" - means currant Good  Manufacturing  Practices as promulgated by
         the FDA as  detailed  in  Title  21,  United  States  Code  of  Federal
         Regulations,  or when appropriate,  any  corresponding  statutes and/or
         regulations  of  any  other  country's   prescription   pharmaceuticals
         regulating health authority or agency.

1.1.6    "Compound"    -    the    compound    known    as    CC-5013,     being
         3-(4-amino-1,3-dihydro-1-oxo-2H-isoindol-2-y)-2,6-piperidinedione.

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

1.1.7    "Compound  Specifications"  - means the written  physical  and chemical
         specifications for the Bulk Compound referenced in Appendix 1 hereto as
         amended from time to time pursuant to Clause 8.5.

1.1.8    "Confidential  Information" - means any information including,  but not
         limited to,  ideas,  proposals,  plans,  know-how,  reports,  drawings,
         designs,  data,  discoveries,  inventions,  improvements,  suggestions,
         specifications  (including  the  Compound  Specifications),   products,
         samples,  components and materials  relating to the Compound and to the
         Product, and all information relating to the manufacture, formulations,
         analysis,  stability,  pharmacology,  toxicology,  pathology,  clinical
         data,  results of  clinical  efficacy  studies,  clinical  effects  and
         indications for use of the Product which a Party discloses, directly or
         indirectly,  to the  other  Party,  so  long  as  such  information  is
         disclosed  in  writing  and  marked  "confidential"  or with a  similar
         legend;  or if verbal,  is reduced to writing and marked as such within
         thirty (30) days of disclosure.

1.1.9    "Contract  Price" - means the price par  kilogram of Bulk  Compound for
         each Batch set forth in Clause 3.1.

1.1.10 "Contract Year" - means, for the first Contract Year, the period commencing on the Effective Date and ending on 31st December 2004, and for subsequent Contract Years the successive calendar years thereafter.

1.1.11 "Effective Date" - means August 1, 2004,

1.1.12 "FDA" - means the United States Food and Drug Administration and any successor entity thereto.

1.1.13 "Force Majeure" - shall mean any significant, unexpected event which is beyond the reasonable control of either Party and for which such Party could not reasonably have been expected to have taken into account as of the Effective Date.

1.1.14 "Party" or "Parties" - means CELGENE or EOAI or both as the context may dictate.

1.1.15 "Producer Price Index" - shall mean the Producer Price Index for *** as published by the Office of National Statistics (ONS) United Kingdom.

1.1.16 "Product"- means compound in finished form suitable for use by the ultimate consumer, packaged and labeled for marketing.

1.1.17 "Purchase Order" - means a formal document issued by CELGENE containing a firm order for delivery of Bulk Compound.

1.2      In this Agreement -

1.2.1    "References" - unless the context otherwise requires, all references to
         a particular Clause, paragraph or Appendix shall be a reference to that
         Clause,  paragraph or Appendix, in or

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

         to this Agreement as the same may be amended from time to time pursuant
         to this Agreement.

1.2.2    "Headings"  - a  table  of  contents  and  headings  are  inserted  for
         convenience only and shall be ignored in construing this Agreement.

1.2.3    "Gender/Plurality"  - unless  the  contrary  intention  appears,  words
         importing  the  masculine  gender  shall  include the feminine and VICE
         VERSA and words in the singular include the plural and VICE VERSA.

1.2.4    "Person"  - unless  the  contrary  intention  appears,  words  denoting
         persons   shall   Include   any   individual,   partnership,   company,
         corporation,  joint venture, trust, association,  organization or other
         entity, in each case whether or not having separate legal personality.

1.2.5    "Include" - reference to the words  "include" or "including"  are to be
         construed without limitation to the generality of the preceding words.

2        PURCHASE AND SALE

         CELGENE  shall  purchase  from EOAI and EOAI shall sell to CELGENE  the
         quantities of Bulk Compound ordered in accordance with Clause 4 hereof.
         EON shall not at any time  during the Term (as  defined in Section  7.1
         herein) or during  the  two-year  period  thereafter,  manufacture  the
         Compound   for  any  person  or  entity   other  than  CELGENE  or  its
         designee(s),  without the prior written consent of CELGENE. which shall
         not be unreasonably withheld.

3        PRICING

3.1      Price

         The Contract Price to be paid by CELGENE to EOAI for each (***Kg) Batch
         of Bulk  Compound  hereunder  shall be as  indicated  below  net of any
         applicable Taxes (as defined in 3.2 below):

                      *** (in words: US Dollars ***) per Kg

         The foregoing  Contract Price shall be payable in United States Dollars
         and shall be  adjusted  at the end of each  Contract  Year for all Bulk
         Compound ordered during the ensuing Contract Year by a percentage equal
         to the percentage  change in the Producer Price Index during the twelve
         (12) months preceding the change in the Contract Year.

         Any other adjustment to the Contract Price due to external factors such
         as raw material  price changes can be  implemented  at any time through
         the agreement of both Parties.

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

3.2      Taxes

         In the event that any national,  federal,  state, county,  municipal or
         other governmental excise,  sales, import,  export, stamp or other tax,
         assessment,  or other  government-imposed  charge  (other  than any tax
         imposed  upon the Income of EOAI)  (collectively,  "Taxes")  is levied,
         assessed  or  charged  to  EOAI  on or  for  the  sale,  production  or
         transportation of the Bulk Compound sold to CELGENE, the Contract Price
         shall be increased by an amount  sufficient  to cover such Taxes.  Upon
         request by CELGENE,  EOAI shall promptly  provide CELGENE with evidence
         of payment of Taxes.

4        FORECASTS AND ORDERS

4.1      Initial Forecast

         Attached  hereto as Appendix 2 is the current  forecast of the quantity
         of Bulk  Compound  that  CELGENE will require for the first twelve (12)
         months of the Term (the  "Initial  Strategic  Forecast").  The  Initial
         Strategic  Forecast shall  constitute a firm  production  order against
         which  CELGENE  shall  Issue  Purchase  Orders.  CELGENE  may,  at  its
         discretion,  issue  Purchase  Orders for  quantities  of Bulk  Compound
         forecast for  delivery  after the first twelve (12) months of the Term.
         It is intended that the forecasts be used by EOAI to ensure appropriate
         and timely replenishment of stock.

4.2      Rolling Forecast

         On or about the first week of each  January  and July of each  Contract
         Year,  CELGENE  shall  confirm  to EOAI,  or update as  necessary,  the
         Initial  Strategic  Forecast  (it  being  understood  that the  Initial
         Strategic  Forecast  constitutes a firm  production  order according to
         Clause 4.1) and each  successive  forecast  subsequent  thereto (each a
         "Semi-Annual  Forecast")  for the  ensuing  twelve-month  period of the
         Term.  The  second six (6) months of each  Semi-Annual  Forecast  shall
         constitute a firm  production  order  against which CELGENE shall issue
         Purchase Orders.

4.3      Acceptance of Purchase Orders

         Subject to any adjustment that may be desirable to match  manufacturing
         batch  requirements  and which shall be  promptly  notified to CELGENE,
         EOAI shall accept firm Purchase  Orders  placed by CELGENE  pursuant to
         Clauses 4.1 and 4.2 above, within *** days of receipt, of such quantity
         up to *** percent  (***%) of the then  current firm  production  order.
         EOAI  shall  use  commercially  reasonable  efforts,  but  shall not be
         obligated, to supply any quantities ordered by CELGENE in excess of the
         *** percent (***%) cap.  Within *** days after EOAI receives  CELGENE's
         firm Purchase  Order for  quantities of Bulk Compound in excess of such
         *** percent  (***%) cap,  EOAI shall  notify  CELGENE  whether EOAI can
         supply the quantities and by what date.

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

4.4      Purchase Orders

         CELGENE  shall  provide  EOAI with  Purchase  Orders  covering the firm
         production orders detailed in Causes 4.1 and 42 above not less than ***
         days  after  provision  of the  Initial  Strategic  Forecast  and  each
         Semi-Annual  Forecast,  as  applicable.  Each  Purchase  Order  made by
         CELGENE  shall be in writing  and,  in  addition  to any other terms or
         requirements that the Parties may specifically establish in writing for
         such Purchase Order,  shall set forth the date by which the goods shall
         be available for  collection  (the  "Delivery  Date').  EOAI shall make
         available  for  collection  each shipment of Bulk Compound on or before
         the Delivery  Date;  provided that it is  understood  and agreed by the
         Parties  that  EOAI  shall  not be  obligated  to make  available  Bulk
         Compound by the Delivery  Date set forth in any Purchase  Order,  which
         Purchase  Order is  received  by EOAI less than *** days  prior to such
         Delivery Date. The Delivery Date in such case shall be deemed to be ***
         days after the date of receipt of the Purchase Order by EOAI.

4.5      Units to be Ordered and Minimum Order Quantity

         Purchase  Orders will be  expressed  in terms of Batch  multiples.  The
         standard Batch size is *** kilograms,  from which the actual Batch size
         may vary by plus or minus *** percent (***%).

4.6      Conflicting Terms and Conditions

         Except  as  otherwise  provided  in  this  Agreement,   the  terms  and
         conditions  of  this  Agreement  shall  govern,   notwithstanding   any
         additional or  inconsistent  terms or  conditions in CELGENE's  form of
         Purchase  Order  or  similar  document  or in  EOAI's  acknowledgement,
         invoice or similar document.

5        SHIPMENT, INVOICES, DELIVERY

5.1      Title and Risk of Loss

         Risk of loss for the Bulk Compound  shall pass to CELGENE upon delivery
         FCA  Abingdon  Incoterms  2000.  Title  shall  pass to  CELGENE on full
         payment of the Contract Price to EOAI for the Bulk Compound.

5.2      Shipment

         EOAI shall, as agent for CELGENE, arrange for shipment of Bulk Compound
         covered by firm Purchase Orders from CELGENE pursuant to this Agreement
         to the  destination  advised by CELGENE  accompanied by Certificates of
         Analysis  for each Batch of Bulk  Compound  included in such  shipment.
         CELGENE shall be  responsible  for  obtaining any necessary  import and
         export  permits  and the like for Bulk  Compound.  EOAI  shall  provide
         reasonable  assistance to CELGENE in this respect.  Where Bulk Compound
         available for shipment has not yet received  quality  control  release,
         CELGENE  reserves the right to require in writing that such shipment be
         made under quarantine.

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

CELGENE shall provide EOAI with appropriate instructions for each shipment of Bulk Compound designating the destination, including full address details. Shipment shall not be made without specific authorization of CELGENE. EOAI shall, as agent for CELGENE, be responsible for arranging appropriate carriage and insurance and shall invoice CELGENE for such reasonable out-of-pocket expenses. CELGENE shall have its choice of carrier on this basis.

5.3 Invoices

At the date the Bulk Compound is accepted by the carrier, as authorized by CELGENE pursuant to Clause 5.2 above, EOAI shall invoice CELGENE for the Contract Price for the total Bulk Compound shipped. In the event that Bulk Compound is stored at EOAI in accordance with the Agreement for Storage referenced in Clause 5.5 below, EOAI will invoice CELGENE upon placing the Bulk Compound into storage.

5.4 Addresses

Unless otherwise notified to the sending party in writing:

All Purchase Orders shall be sent to:        Evotec OAI Ltd
                                             151 Milton Park
                                             Abingdon, Oxon OX14 4SD
                                             United Kingdom
                                             Attn:  ***
                                             Tel:  ***
                                             Fax:  ***

All shipments of Bulk Compound shall be sent to: to be informed

         All invoices shall be sent to:               Celgene Corporation
                                                      7 Powder Horn Drive
                                                      Warren
                                                      New Jersey 07059
                                                      United States of America
                                                      Attn:  ***
                                                      Tel:  ***
                                                      Fax:  ***

5.5      Storage

Contemporaneously with the execution and delivery of this Agreement, the Parties hereto are executing and exchanging an Agreement for Storage in the form attached as Appendix 3 hereto.

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

6        PAYMENTS

         Payment  shall be due no later than *** days from the date of  invoice.
         Late payments  shall attract  interest at an annual rate of *** percent
         (***%) above the base lending rate of Barclays  Bank plc at of the date
         such payment becomes past due and as may be adjusted from time to time.

         Payment shall be made in *** by wire  transfer to an account  indicated
         by EOAI, the details of which shall be notified to CELGENE by EOAI from
         time to time.

7        TERM AND TERMINATION

7.1      Term

         Except as  provided  in  Clauses  7.2 and 7.3  below,  the term of this
         Agreement  commences on the Effective Date and continues  until the end
         of the *** Contract Year (the "Term").

7.2      Renewal Term

         The Term shall be  automatically  renewed  for a period of *** upon the
         end of the *** Contract  Year and upon the end of each  renewal  period
         unless either Party to this Agreement  notifies the other in writing at
         least *** prior to the  commencement  of such renewal that such renewal
         shall not occur.

7.3      Early Termination

7.3.1 In addition to the provisions of Clauses 7.1 and 7.2 above, this Agreement may be terminated prior to the expiration of the Term:

(a) by the non-breaching Party on *** written notice in the event of materiel breach, or breach of a material term, of this Agreement by the other Party which breach has not been remedied by such other Party within such *** period; or

(b) by the non-defaulting Party on *** written notice (if reasonable steps toward cure have not been made during such time) if the other Party suspends payment of its debts or otherwise ceases or threatens to cease to carry on its business, becomes bankrupt or insolvent, goes into liquidation (except for the purposes of reconstruction or amalgamation), or compounds or enters into an arrangement with its creditors, or a receiver or manager of the other Party's business is appointed, or a petition is presented for the winding-up of the other Party.

7.3.2 Notwithstanding Clause 7.2 above, CELGENE shall have the right to

         terminate  this  Agreement for any reason upon *** prior written notice
         to EOAI.

7.3.3    Upon the early termination of this Agreement by Celgene for any reason,
         EOAI agrees to cooperate  reasonably  with CELGENE in good faith as may
         be reasonably  necessary to

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

facilitate the timely qualification of an alternative manufacturer for the Bulk Compound at Celgene's expense.

7.4      Effect of Termination

7.4.1    Survival of Liability

         Termination  under  Clauses  7.1,  7.2 or 7.3 above  shall not  relieve
         either Party of its liability for breach of its obligations pursuant to
         the terms  and  conditions  of this  Agreement  incurred  prior to such
         termination.

7.4.2    Stock

         In the event of early  termination by CELGENE under Clause 7.3.2 above,
         CELGENE has the  obligation  to purchase from EOAI all usable stocks of
         Bulk Compound then on hand not exceeding the amount of the then current
         firm production order.

7.4.3    In case of early  termination  by EOAI under Clause 7.3.1 or by CELGENE
         pursuant to Clause 7.3.2 above,  CELGENE shall be  responsible  to EOAI
         for all  amounts  for  which  EOAI is  contractually  obligated  to its
         contractors  that are not  Affiliates  provided such  contracts  relate
         solely  to the  production  of Bulk  Compound,  and are not  reasonably
         avoidable,  and provided further that EOAI uses commercially reasonable
         efforts to mitigate same.

8        SUPPLY QUALITY AND SECURITY OF PRODUCT

8.1      Certificate of Analysis

         EOAI  shall  test or  cause  to be  tested  each  lot of Bulk  Compound
         according to the  Compound  Specifications  pursuant to this  Agreement
         before  delivery,  and a  Certificate  of Analysis  shall set forth the
         items tested,  specifications  and test results for each lot delivered.
         EOAI shall send or cause to be sent such certificates to CELGENE and to
         CELGENE's designated subcontractor prior to shipment, together with the
         delivery  of  Bulk  Compound.  CELGENE  is  entitled  to  rely  on such
         certificates  for all  purposes  of this  Agreement.  Unless  otherwise
         requested in writing by CELGENE,  EOAI shall  release the Bulk Compound
         to CELGENE  or to  CELGENE's  designated  subcontractor  after  testing
         against the Compound Specifications.

8.2      Good Manufacturing Practices Audits

         At CELGENE's  request and upon fourteen (14) days prior notice to EOAI,
         EOAI   shall   arrange   CELGENE   or   CELGENE's   agents   (bound  by
         confidentiality   obligations   similar  to  those   contained  in  its
         Agreement)  access during  reasonable  business hours to those areas of
         EOAI's facilities where Bulk Compound is manufactured, analyzed, stored
         and handled and to  manufacturing,  analytical  and quality  records of
         Bulk Compound manufactured for CELGENE. Such visits shall be limited to
         two (2) times per year,  other

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

than in extenuating circumstances. The right to access contained in this Clause is exclusive of the rights discussed in the following paragraph.

EOAI shall advise CELGENE immediately if an authorized agent of the FDA or any other governmental agency visits or announces plans to visit any of EOAI's manufacturing facilities concerning Bulk Compound. CELGENE shall be entitled, where practicable and relevant, to be present at any such inspection and, where notice of such inspection is available to satisfy itself prior to such inspection that reasonable best efforts are being made to ensure a satisfactory outcome of the inspection. EOAI shall furnish to CELGENE the report by such agency of such visit and the application of such report to Compound, if any, within forty-eight
(48) hours of EOAI's receipt of such report.

8.3 Discrepant Test Results

Notwithstanding Clause 8.1, on receipt of the Bulk Compound, CELGENE or its designated subcontractor or agent may conduct analytical testing within sixty (60) days of receipt of such Bulk Compound in accordance with Clause 8.4. In the event of a discrepancy between EOAI's test results and those of CELGENE or any of CELGENE's subcontractors or agents, such that one set of results fall within the Compound Specifications and the other results fall outside the Compound Specifications and in the event that such discrepant results cannot be resolved to both Parties' satisfaction, the Parties shall cause a recognized independent testing laboratory to perform comparative tests on samples of the allegedly defective Bulk Compound, provided that such independent laboratory is mutually agreeable to the Parties. The independent tester's results shall be final and binding. The costs of the testing shall be borne by EOAI where EOAI's test results were found by the independent tester to be erroneous and otherwise by CELGENE.

8.4 Defective Bulk Compound or Shortage of Supply

CELGENE shall notify EOAI in writing of any claim relating to damaged, defective or non-conforming (with respect to this Agreement, the Compound Specifications, applicable regulations or the like) Bulk Compound or any shortage in quantity of any shipment of Bulk Compound within *** days of receipt of such Bulk Compound (it being understood that a *** day period is required for initial testing and standard quality assurance testing of the Bulk Compound), or, in the case of Bulk Compound having latent defects. which upon reasonable examination within such *** day period could not have been discovered, within *** days after discovery of such defect by CELGENE. The Parties agree that in extenuating and unusual circumstances, such *** day limit shall be extended to a reasonable time period under the circumstances. In the event of such rejection or storage, EOAI shall, unless otherwise agreed by the Parties or the cause of the rejection has been determined to be not the fault of EOAI in accordance with Clause 8.3 above, (i) use its commercially reasonably best efforts to replace the rejected or shortage of Bulk Compound without undue delay but in no case greater than the time quoted for the original manufacture and delivery, subject to the provisions of Clause 12 of this Agreement (force majeure) and raw material availability, at no extra cost to

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

CELGENE, (ii) make arrangements with CELGENE for the return or destruction of any rejected Bulk Compound, all associated costs to be paid by EOAI, (iii) reimburse CELGENE for the shipping and related charges in respect of rejected Bulk Compound, and (iv) with respect to any shortage of Bulk Compound, bear the costs of shipping and insuring such Bulk Compound to the extent that such costs, together with the shipping and insurance costs of the original shipment, exceed the shipping and insurance costs that would have been incurred had there not been a shortage in the original shipment.

8.5 Compound Specifications; Cost of Changes

Compound Specifications may be modified from time to time as required by applicable law or a regulation or regulatory authority, or otherwise by written agreement of the Parties and such amended form shall be attached hereto as a replacement for Appendix 1. The Parties agree that in the event that material changes to the Compound Specifications and/or EOAI's facility or processes are required by applicable law or regulation, the expense of such changes shall be handled as follows:

(a) CELGENE shall be responsible for such out-of-pocket costs in the event that the required changes are specific and unique to EOAI's services related to CC-5013.

(b) EOAI shall be responsible for such costs in all other events, which includes, without limitation, changes in regulations which affect EOAI's work with clients other than CELGENE.

In addition, the change control provisions contained in 8.6 below shall apply.

8.6 Change Control

Any change in relation to methods of manufacture, specifications, batch size and packaging or in any of the plants in which Bulk Compound is manufactured, packaged or stored, which reasonably could be deemed to require regulatory amendment under US and/or EU regulations, shall be subject to CELGENE's prior written approval which shall not be unreasonably withheld. The Parties will co-operate in ensuring any necessary regulatory amendments are obtained. No changes that require regulatory amendment shall be implemented until all necessary regulatory approvals have been obtained.

8.7 Shelf Life

All Bulk Compound delivered shall have at least *** months remaining prior to its re-test date, as such date is determined by the Compound Specifications.

8.8 Equipment

EOAI agrees that it currently possesses or will purchase and maintain, at its sole cost and expense unless otherwise agreed by the Parties, all equipment required to perform the services required of it under this Agreement. Any changes to be made to equipment shall be in compliance with the applicable regulatory authority's guidelines and requirements.

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

No such changes shall be made by EOAI without the prior written consent of CELGENE, such consent not to be unreasonably withheld.

8.9 Facility.

All manufacturing pursuant to this Agreement shall be performed at EOAI's manufacturing facility located at Unit 117 Milton Park,

         Abingdon, Oxon OX14 4SD, United Kingdom. Any changes to be made by EOAI
         with respect to manufacturing building, facilities and batch size shall
         be in compliance with the applicable regulatory  authority's guidelines
         and  requirements.  No such  changes  shall be made by EOAI without the
         prior  written  consent of  CELGENE,  which  shall not be  unreasonably
         withheld.

8.10     Subcontracting.

         Except as otherwise  expressly  provided in this Agreement,  EOAI shall
         not subcontract any manufacturing of Bulk Compound or its intermediates
         without the prior written consent of CELGENE.

         EOAI shall be allowed to subcontract  analytical  services (such as ***
         and  ***)  without  prior   consent  of  CELGENE   provided  that  such
         subcontractors  have  been  approved  by  CELGENE  in  writing  for the
         specific  services to be rendered by same and such  subcontractors  are
         bound by confidentiality and intellectual  properly obligations no less
         strict than the use of this Agreement.

9        RECALLS

9.1      In the event that

         (a)      any government authority issues a request,  directive or order
                  that the Product and/or Bulk Compound be recalled; or

(b) a court of competent jurisdiction orders such a recall; or

(c) CELGENE reasonably determines after consultation with its subcontractors and/or EOAI that the Product and/or Bulk Compound should be recalled.

CELGENE shall take all appropriate corrective actions, and EOAI shall provide reasonable assistance at CELGENE's request.

9.2 To the extent that any such recall is caused by EOAI's breach of any term of this Agreement including but not limited to a warranty set forth in Clause 10 or EOAI's breach of statutory duty or out of the negligence or intentional misconduct of EOAI, EOAI shall be responsible for the cost of the recall provided that EOAI shall not be responsible for the cost of any recall to the extent it is not caused by any such breach, but by an inherent problem associated with the Compound, the registered process and/or the Compound Specifications.

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

9.3 For the purposes of this Agreement, the expenses of recall shall include, without limitation, the expenses of notification, refund and destruction or return of the recalled Product and/or Bulk Compound, where appropriate, and the Contract Price for the Bulk Compound recalled.

10 WARRANTIES

10.1     Title

         EOAI  warrants to CELGENE that EOAI shall convey good title to the Bulk
         Compound.

10.2     Compliance   with  Applicable   Regulations   and  Good   Manufacturing
         Practices; Conformity with Specifications

10.2.1 EOAI warrants and covenants that:

         (a)      its manufacturing  facilities  utilized for the manufacture of
                  Bulk Compound comply and will comply  throughout the Term with
                  applicable  regulations of the US and EU,  including,  without
                  limitation, applicable cGMP;

         (b)      the processes  utilized for the  manufacture  of Bulk Compound
                  are and will be throughout  the Term in accordance  with those
                  contained in the registered marketing authorization;

         (c)      all  the  Bulk   Compound   will   conform  to  the   Compound
                  Specifications when delivered; and

         (d)      the Bulk Compound shall have been  manufactured  in accordance
                  with the registered process and applicable cGMP.

10.3     Insurance

         EOAI will  maintain  for the  duration  of its  liabilities  under this
         Agreement,  product  liability  insurance  of no less  than ***  pounds
         ((pound)***)  cover,  per  calendar  year,  with a  reputable  insurer.
         Evidence  of such cover and its  renewal  shall be  provided to CELGENE
         annually in writing.  In the event that at such policy is  cancelled or
         not renewed for any reason,  CELGENE shall be  immediately  notified in
         writing  at  least  thirty  (30)  days  prior to such  cancellation  or
         non-renewal.

11       INDEMNITY

11.1     EOAI Indemnity

         CELGENE  shall  defend,  indemnify  and  hold  harmless  EOAI  and  its
         respective  officers,  directors and employees  (the "EOAI  Indemnified
         Parties") from and against any and all claims, suits, demands, actions,
         causes of action, liabilities,  damages, costs and expenses (including,
         without  limitation,  court costs and  reasonable  attorneys'  fees and
         expenses)

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

incurred by the EOAI Indemnified Parties in connection with any third party claim to the extent arising out of or in connection with any Bulk Compound supplied to CELGENE by EOAI pursuant to this Agreement and/or any products manufactured using such Bulk Compound except to the extent such third party claim arises out of EOAI's breach of any term of this Agreement including but not limited to any warranties set forth in Clause 10 or the breach of statutory duty by any EOAI Indemnified

         Party(ies) or out of the  negligence or  intentional  misconduct of any
         EOAI Indemnified Party(ies).

11.2     CELGENE's Indemnity

         EOAI  shall  defend,  indemnify  and  hold  harmless  CELGENE  and  its
         respective officers,  directors and employees (the "CELGENE Indemnified
         Parties") from and against any and all claims, suits, demands. actions,
         causes of action, liabilities,  damages, costs and expenses (including,
         without  limitation,  court costs and  reasonable  attorneys'  fees and
         expenses)  incurred by the CELGENE  Indemnified  Parties in  connection
         with any third  party claim to the extent  that such  liability  arises
         from  EOAI's  breach of any term of this  Agreement  including  but not
         limited  to any  warranties  set forth in  Clause  10 or the  breach of
         statutory  duty  by  any  EOAI  Indemnified  Party(ies)  or  out of the
         negligence  or   intentional   misconduct   of  any  EOAI   Indemnified
         Party(ies).

11.3     Notice of Claim

         The indemnified Party shall:

         (a)      advise the  indemnifying  Party in  accordance  with Clause 20
                  below  of any  claim  or  lawsuit,  in  writing,  as  soon  as
                  practicable,  but not later than  fourteen (14) days after the
                  indemnified  Party  has  received  notice  of  said  claim  or
                  lawsuit; and

         (b)      assist the indemnifying  Party and its  representatives in the
                  investigation  and  defense of any  lawsuit  and/or  claim for
                  which indemnification is provided,  but allow the indemnifying
                  Party to maintain control over the action.

         The  failure to timely  provide  the notice  under (a) above  shall not
         relieve the indemnifying  party of its obligations under this Clause 11
         except to the extent that such  failure  substantially  prejudices  the
         defense of such third  party  claim.  The  indemnity  provided  in this
         Clause 11 shall not be valid as to any settlement of a claim or lawsuit
         or offer of  settlement  or  compromise  made without the prior written
         approval of the indemnifying Party.

11.4     The  obligations  of the Parties under this Clause 11 shall survive the
         expiration or termination of this Agreement.

12       FORCE MAJEURE

12.1     Force Majeure Events

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

         If a Party (the "Non-Performing Party) shall be unable to carry out any
         of its  obligations  under this  Agreement due to Force  Majeure,  this
         Agreement  shall  remain  in  effect  but  the  Non-Performing  Party's
         relevant  obligations  and the relevant  obligations of the other Party
         (the  "Innocent  Party")  owed to the  Non-Performing  Party under this
         Agreement shall be suspended for a period equal to the  circumstance of
         Force Majeure or three (3) months,  whichever is the shorter,  provided
         that

         (a)      the  suspension of  performance is of no greater scope than is
                  required by the Force Majeure;

         (b)      the  Non-Performing  Party  gives the  Innocent  Party  prompt
                  notice   describing  the   circumstances   of  Force  Majeure,
                  including  the  nature  of the  occurrence  and  its  expected
                  duration,  and  continues  to  furnish  regular  reports  with
                  respect thereto during the period of Force Majeure;

         (c)      the Non-Performing Party uses all reasonable efforts to remedy
                  its  inability  to perform and to mitigate  the effects of the
                  circumstances of Force Majeure;

         (d)      as soon as practicable after the event which constitutes Force
                  Majeure the Parties shall  discuss how best to continue  their
                  operations  as  far  as  possible  in  accordance   with  this
                  Agreement and

         (e)      any  payment  obligations   relating  to  periods  of  excused
                  performance shall also be excused and any advance payments for
                  periods of excused performance shall be refunded.

12.2     Consequences of Force Majeure

         Upon the  occurrence of an event of Force Majeure,  the  Non-Performing
         Party shall  promptly  notify the  Innocent  Party in writing,  setting
         forth the details of the occurrence,  its expected duration and how the
         Non-Performing  Party's  performance  is affected.  The  Non-Performing
         Party  shall  resume  the  performance  of its  obligations  as soon as
         practicable  after the Force Majeure  event  ceases.  In the event that
         EOAI is unable to deliver all the Bulk Compound  ordered by CELGENE for
         a particular  period as a result of an event of Force Majeure,  CELGENE
         may  elect to forego  the  quantities  ordered  or it may elect to take
         delivery  within a  reasonable  period of time after the Force  Majeure
         event ceases.

13       PATENT INFRINGEMENT

13.1     CELGENE's Warranty and Indemnity

         CELGENE  warrants that, to the best of its knowledge,  the manufacture,
         use or sale of the Product  and/or Bulk  Compound  does not infringe or
         misappropriate  any  patent  or other  proprietary  rights of any third
         party.  CELGENE shall defend,  indemnify and hold EOAI harmless against
         any judgment, damage, liability, loss, cost or other expense, including
         reasonable  legal fees, to the extent resulting from any breach of this
         warranty.

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

13.2     Co-operation and Consultation

         Each Party shall give the other Party prompt  notice of any  threatened
         or pending claim or proceeding  against either or both Parties relating
         to a claim of infringement described In Clause 13.1 above. In the event
         of such notice and at the request of either Party, CELGENE shall assume
         control as stated in Clause 13.3 below, but agrees to consult with EOAI
         regarding how to proceed with respect to such claim or proceeding.

13.3     Defense by CELGENE

         CELGENE  shall  assume  full  control  of the  defense of such claim or
         proceeding described in Clause 11.1 above.

14       CONFIDENTIALITY AND INTELLECTUAL PROPERTY

14.1     During  the Term of this  Agreement  and for a period of ten (10) years
         thereafter,  neither  Party  shall  disclose  Confidential  Information
         received  from the  other  Party  (the  "Disclosing  Party")  hereunder
         without the Disclosing Party's prior written consent,  or use or permit
         to be used the  Disclosing  Party's  Confidential  Information  for any
         other purpose than the  performance of its  obligations or rights under
         this  Agreement.  Each Party shall procure that all employees and other
         persons having access to any  Confidential  Information are informed of
         its  secret  and  confidential  nature  and  to the  extent  reasonably
         practicable are subject to written  obligations similar to those of the
         Parties in this Clause 14.

14.2     No public  announcement or other disclosure to third parties concerning
         the  structure  and  financial  terms of this  Agreement  shall be made
         either directly or indirectly by any Party to this Agreement  except as
         may be legally  required  without  first  obtaining the approval of the
         other Party and agreement upon the nature and text of such announcement
         or disclosure  which approval and agreement  shall not be  unreasonably
         delayed  or  withheld,  provided  that in the  case  of any  disclosure
         required by either Party's investment bankers, lawyers, accountants and
         other  professional  advisors,  such  Party  shall not need to seek the
         other Party's  prior  approval,  provided that such  disclosure is made
         under terms of strict confidentiality and the detail of terms disclosed
         shall be kept to the  minimum  required by such  investment  bankers or
         other professional advisers.

         In all  circumstances,  including where disclosure is legally required,
         the  Party  desiring  to make any  such  public  announcement  or other
         disclosure shall inform the other Party of the proposed announcement or
         disclosure in, so far as practicable,  reasonably sufficient time prior
         to public release and shall provide the other Party with a written copy
         thereof  in order to allow  such  other  Party  to  comment  upon  such
         announcements or disclosure.

         Each Party shall  co-operate  fully with the other with  respect to all
         disclosures  regarding  this  Agreement to the US  Securities  Exchange
         Commission,  the Frankfurt Stock Exchange and any other governmental or
         regulatory  agencies including  requests for confidential  treatment of
         information of other Party included in any such disclosure.

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

14.3     Neither  during  the Term of this  Agreement,  nor for a period  of ***
         years thereafter, shall EOAI submit for written or oral publication any
         manuscript,   abstract  or  the  like  which  includes  data  or  other
         information  generated  in the course of this  Agreement  or  otherwise
         provided  by either  Party and  relating  to the  Compound  or  Product
         without first  obtaining the prior  written  consent of CELGENE,  which
         consent  shall  not  be  unreasonably  withheld  or  delayed.  Wherever
         reasonably  possible,  the contribution of each Party shall be noted in
         all publications and presentations by acknowledgement or co-authorship,
         whichever is appropriate.

14.4     The obligations of confidentiality  referred to in this Clause 14 shall
         not extend to any information which:

         (a)      is or shall be  generally  available  to the public  otherwise
                  than by reason of breach by the Party to whom such information
                  was disclosed  ("the  Recipient  Party") of the  provisions of
                  this Clause 14;

         (b)      is known to the  Recipient  Party and is at its free  disposal
                  prior to its receipt from the Disclosing Party as demonstrated
                  by the  written  records of the  Recipient  Party.  Should the
                  Disclosing Party  reasonably  believe that the Recipient Party
                  is  planning  to  disclose  Confidential  Information  of  the
                  Disclosing  Party,  then the Disclosing  Party may, by written
                  request,  ask the  Recipient  Party to  provide  copies of its
                  written records which  demonstrate the Recipient Party's prior
                  knowledge  of such  information.  The  Recipient  Party  shall
                  provide such written  demonstration within forty (40) Business
                  Days after the  Disclosing  Party's  written  request.  If the
                  Recipient  Party does not provide such written  evidence or if
                  the  Parties  disagree  as to whether  such  written  evidence
                  establishes  the  Recipient  Party's  prior  knowledge of such
                  information,  then the  Recipient  Party  shall  not make such
                  planned  disclosure  unless  and until  such time as a neutral
                  party  has  ruled  with  respect  to this  Issue in  Recipient
                  Party's favor.  The Parties shall  promptly  appoint a neutral
                  party to  determine  whether  or not such  information  is the
                  Confidential Information of the Disclosing Party;

         (c)      is  independently  developed  by or for  the  Recipient  Party
                  without reference to, and by employees having no knowledge of,
                  the  Confidential  Information  of the  Disclosing  Party,  as
                  referenced  by  written  records,   provided  that  conclusive
                  evidence of such knowledge is furnished by the Recipient Party
                  to the  Disclosing  Party  within  twenty-eight  (28)  days of
                  receipt of demand for such proof;

         (d)      is  subsequently  disclosed  to the  Recipient  Party  without
                  obligation  of  confidence  by a  third  party  owing  no such
                  obligations in respect thereof;

         (e)      is  required  by  law  to  be  disclosed,  provided  that  the
                  provisions of Clause 14.6 are followed; or

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

         (f)      is required to be disclosed to any  regulatory  authority when
                  applying for a license to conduct  clinical or other trials or
                  studies or for regulatory, marketing or pricing approval.

14.5     The  obligations  of the Parties under this Clause 14 shall survive the
         expiration or termination of this Agreement.

14.6     Each Party shall  immediately  notify the other Party of receipt of any
         process. subpoena, or demand by any governmental authority or any other
         person  requiring  production of Confidential  Information of the other
         Party and shall,  within five (5) Business Days after receipt,  provide
         the other Party with a copy of such process,  subpoena,  or demand and,
         as available,  all materials and facts relating and responsive thereto.
         The  Party  whose  Confidential  Information  is the  subject  of  such
         process,  subpoena,  or demand  shall  have the right to take any legal
         action to prevent disclosure of its Confidential Information. The Party
         in receipt of such demand for disclosure  shall  reasonably  assist the
         first Party in attempting to limit such disclosure.

14.7     EOAI  agrees that any and all right,  title and  interest in and to any
         patentable  and/or  copyrightable   material,   notes,  data,  results,
         records, inventions, improvements,  developments, discoveries and trade
         secrets  made,  conceived,  reduced to practice,  or  discovered in the
         performance  of this  Agreement  that  consists  of or  relates  to the
         Compound or the Product,  the use,  manufacture or formulation thereof,
         or any other material,  product or process  belonging to CELGENE or its
         licensors,  or to any improvement(s),  enhancement(s) or refinements of
         any  of  same,  shall  be  the  sole  property  of  CELGENE   ("CELGENE
         Inventions").  EOAI further  agrees to assign (or cause to be assigned)
         and does hereby assign fully to CELGENE all such CELGENE Inventions and
         any patents,  copyrights or other intellectual property rights relating
         thereto.  In  addition,  to the  extent  allowed  by law,  any  CELGENE
         Inventions  which  constitute  copyrightable  subject  matter  shall be
         considered  "works made for hire" as that term is defined in the United
         States  Copyright Act. All CELGENE  Inventions and any information with
         respect  thereto  shall be deemed  CELGENE's  Confidential  Information
         subject to the confidentiality  provisions set forth in this Agreement.
         EOAI shall  disclose all CELGENE  Inventions to CELGENE  promptly after
         EOAI becomes aware of the making, conception,  reduction to practice or
         discovery  of  same.  CELGENE  shall  grant  to  EOAI  an  irrevocable,
         perpetual, non-exclusive,  royalty-free license to practice the CELGENE
         Inventions only in connection with the development or  manufacturing of
         products other than (i) the Compound,  (ii) any specific  intermediates
         in the synthesis route of the Compound,  and (iii)  diastereoisomers of
         the Compound.  The  foregoing  license grant shall include the right to
         sublicense  solely to those of  EOAI's  customers  that have  purchased
         development  or  manufacturing  services from EOAI and have a bona fide
         need to practice the CELGENE  Inventions  in connection  therewith,  in
         each  case  subject  to  CELGENE's  prior  written  consent,  not to be
         unreasonably withheld.

14.8     Upon the expiration or termination of this Agreement, or upon CELGENE's
         earlier  request,  EOAI  shall  deliver  to  CELGENE  all of  CELGENE's
         property  relating  to,  and  all  tangible   embodiments  of,  CELGENE
         Inventions in EOAI's possession or control.

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

14.9     EOAI agrees to assist  CELGENE,  or  CELGENE's  designee,  at CELGENE's
         expense,  to obtain and from time to time enforce and defend  CELGENE's
         rights in the CELGENE  Inventions and any copyrights,  patents or other
         intellectual property rights relating thereto in any and all countries,
         and to execute all documents reasonably necessary for CELGENE to do so.

14.10    EOAI agrees  that if CELGENE is unable  using  commercially  reasonable
         efforts, because of EOAI's unavailability (only for the specific act to
         be performed),  dissolution,  or refusal, to secure EOAI's signature to
         apply for or to pursue any application for any United States of America
         or foreign  patents or  copyright  registrations  covering  the CELGENE
         Inventions  assigned  to CELGENE as provided  herein,  then EOAI hereby
         irrevocably   designates  and  appoints   CELGENE  and  CELGENE's  duly
         authorized officers and agents as EOAI's agent and attorney-in-fact, to
         act for and in EOAI's  behalf  and stead to  execute  and file any such
         applications and to do all other lawfully permitted acts to further the
         prosecution and issuance of patents and copyright registrations thereon
         with the same legal force and effect as if executed by EOAI.

14.11    EOAI  represents  and  warrants  that each  employee of EOAI,  and each
         independent  contractor of EOAI, if any, performing any work under this
         Agreement has executed an agreement with EOAI containing  provisions in
         CELGENE's  favor  substantially  similar to Clause 14.7  through  14.10
         above, including,  without limitation,  an obligation to assign any and
         all CELGENE Inventions to EOAI or CELGENE.

15       ASSIGNMENT

         Save as otherwise provided in this Agreement, neither Party may assign,
         transfer,  charge or in any other  manner  make over to any third party
         the benefit  and/or burden of this Agreement or encumber this Agreement
         in any way,  unless  that other Party has  consented  in writing to the
         change,  such  consent  not to be  unreasonably  withheld  or  delayed.
         Notwithstanding the foregoing.  CELGENE may assign this Agreement to an
         Affiliate,   or  in  connection  with  a  merger  or  sale  of  all  or
         substantially all its assets,  or a sale,  license or other disposition
         of  CELGENE's  business  related  to the  Compound,  without  the prior
         consent of EOAI,  provided  that the  assignee  agrees to abide by this
         Agreement.

16       GOVERNING LAW

         The validity,  construction  and performance of this Agreement shall be
         governed  by the laws of the State of New  York,  USA,  without  giving
         effect to the  principles of conflicts of law thereof.  In the event of
         any controversy or claim arising out of or relating to any provision of
         this  Agreement or the breach  thereof,  the parties hereto will try to
         settle their differences  amicably by themselves.  Any such controversy
         or claim which the parties hereto are unable to resolve shall initially
         be submitted for review and resolution by the chief executive  officers
         of the parties hereto. Any action,  suit or other proceeding  initiated
         by either party hereto under or in connection with this Agreement shall
         be brought  only in any Federal or state court in the State of New York
         having  jurisdiction  over the  subject  matter  thereof,  as the party
         hereto  bringing  such action,  suit or

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

proceeding shall elect. The parties hereto submit themselves to the jurisdiction of any such court and agree that service of process on them in any such action, suit or proceeding may be effected by the means by which notices are to be given to it pursuant to this Agreement.

17 WAIVER

Neither Party shall be deemed to have waived any of its rights or remedies whatsoever unless such waiver is made in writing and signed by a duly authorized representative of that Party. In particular, no delay or failure of either Party in exercising or enforcing any of its rights or remedies whatsoever shall operate as a waiver thereof or so as to preclude or impair the exercise or enforcement thereof nor shall any partial exercise or enforcement of any such right or remedy by either Party preclude or impair any other exercise or enforcement thereof by such Party.

18 SEVERANCE OF TERMS

18.1     If the  whole or any part of this  Agreement  is or shall  become to be
         declared illegal,  invalid or unenforceable in any jurisdiction for any
         reason  whatsoever  (including  both by reason of the  provision of any
         legislation  and  also  by  reason  of any  decision  of any  court  of
         competent  authority either having  jurisdiction over this Agreement or

having jurisdiction over either of the Parties to this Agreement):

18.1.1 In the case of the illegality, validity or unenforceability of the whole of this Agreement, it shall terminate in relation to the jurisdiction in question; or

18.1.2 In the case of the illegality, invalidity or unenforceability of part of this Agreement, such part shall be severed from the Agreement, or modified to the extent required to allow enforceability, in the jurisdiction in question, and such illegality, invalidity or unenforceability shall not in any way whatsoever prejudice or affect the remaining parts of this Agreement which shall continue in full force and effect provided always that if in the reasonable opinion of either Party any such severance materially affects the commercial basis of this Agreement, such Party shall notify the other Party, whereby the Parties shall meet and in good faith try to replace the part of the Agreement so held illegal, invalid or unenforceable.

19 ENTIRE AGREEMENT/VARIATIONS

19.1     This Agreement between the Parties constitutes the entire agreement and
         understanding  between the Parties in relation to the commercial supply
         of  Bulk   Compound   and   supersedes   all  prior   oral  or  written
         understandings,  arrangements,  representations  or agreements  between
         them relating to this subject matter.

19.2     No variation,  amendment,  modification or supplement to this Agreement
         shall be valid  unless  made in writing  in the  English  language  and
         signed by a duly authorized representative of each Party.

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

20 NOTICES

20.1     Save as otherwise  expressly  provided in this  Agreement any notice or
         other  communication  to be given by any  person  to any  other  person
         pursuant  to this  Agreement  shall be in  writing  and in the  English
         language and shall be delivered by hand or sent by first class  prepaid
         post or facsimile,  and shall be addressed to the recipient and sent to
         the address or facsimile number of the recipient set out below,  marked
         for the attention of the  representative set out below or to such other
         address and/or  facsimile  number or marked for such other attention as
         such  recipient  may  from  time to time  specify  by  notice  given in
         accordance  with this Clause 20 to the Party giving the relevant notice

or other communication to it and shall be deemed to have been received:

20.1.1 In the case of delivery by hand, when delivered; or

20.1.2 In the case of first class prepaid post, on the fifth (5th) day following the day of posting; or

20.1.3 In the case of facsimile, on acknowledgement by the recipient facsimile receiving equipment on a Business Day provided that such acknowledgement occurs before 17:00 hours local time of the recipient on the Business Day of acknowledgement and in any other case on the Business Day next following having the Business Day of acknowledgement.

CELGENE:              Celgene Corporation
                      7 Powder Horn Drive
                      Warren, New Jersey 07059
                      United States of America
                      Attention:  ***
                      Tel:   ***
                      Fax:   ***

EOAI:                 Evotec OAI Limited
                      151 Milton Park
                      Abingdon
                      Oxfordshire OX14 4SD
                      United Kingdom
                      Attention:  ***
                      Tel:   ***
                      Fax:   ***

21       COUNTERPARTS

This Agreement may be executed in two counterparts and by the different Parties hereof by separate counterparts, each of which when so executed shall be an original, and both of which shall constitute one and the same instrument. Complete sets of counterparts shall be lodged with each Party.

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

22 REGISTRATION

Either Party shall have the right at any time where commercially or legally necessary or desirable to record, register or otherwise notify this Agreement to appropriate governmental or regulatory offices having first given thirty (30) days' written notice to the other Party of its intention so to do. The Party seeking to record, register or otherwise notify this Agreement shall give due consideration to any comments or reasonable request made by the other Party in relation to such recording, registering or notifying. The other Party shall provide reasonable assistance in affecting such recording, registering or notifying.

23 INDEPENDENT CONTRACTORS

None of the provisions of this Agreement shall be deemed to constitute a partnership or joint venture between the Parties and none of them shall have any authority to bind the others in any way except as provided in this Agreement.

24 COSTS

Each Party shall bear its own legal costs, legal fees and other expenses incurred in the preparation and execution of this Agreement.

[Signature Page Follows]

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

IN WITNESS WHEREOF the Parties have executed this document as an Agreement the date and year first above written.

For and on behalf of                                         )  /s/ ***
                                                                ----------------
CELGENE CORPORATION                                          )
                                                             )
                                                                ----------------
Legal
Dept ***

For and or behalf of                                         )  /s/ ***
                                                                ----------------
EVOTEC OAI LIMITED                                           )  ***
                                                                ----------------
                                                                ***

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

AMENDMENT TO THE SUPPLY AGREEMENT

This Amendment, effective October 25, 2004, is an amendment to the Supply Agreement effective October __, 2004 (the "Agreement") between Celgene, Inc., having an address at 7 Powder Horn Drive, Warren NJ 07059, USA (hereinafter "Celgene") and Evotec OAI Ltd., having an address at 151 Milton Park, Abingdon, Oxfordshire OX14 4SD, UK (hereinafter "EOAI").

WHEREAS, Celgene and EOAI wish to revise the per kilogram price in clause 3.1 of the Agreement as a result of the introduction of an additional water slurry to guarantee the Polymorph ***.

The revised price per kilogram for a batch size of *** kilograms (***Kg) shall be ***.

In all other respects, the Agreement shall remain in full force and effect, unless further amended by written agreement.

IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment effective the day and year first above-written.

Celgene, Inc.

By.       ***
   ------------------------------------

Name:     ***
     ----------------------------------

Title:    ***
      ---------------------------------

Evotec OAI, Ltd.

By.       ***
   ------------------------------------

Name:     ***
     ----------------------------------

Title:    ***
      ---------------------------------

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

EXHIBIT 10.51

Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as ***. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.

COMMERCIAL

CONTRACT MANUFACTURING AGREEMENT

BETWEEN

OSG NORWICH PHARMACEUTICALS, INC.

AND

CELGENE CORPORATION

APRIL 26, 2004

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

THIS COMMERCIAL CONTRACT MANUFACTURING AGREEMENT (the "Agreement") is made this 26th day of April, 2004 (the "Agreement Date"), by and between Celgene Corporation ("Celgene"), a Delaware corporation with a principal place of business at 7 Powder Horn Drive, Warren, New Jersey 07059, and OSG NORWICH PHARMACEUTICALS, INC ("NPI"), a Delaware corporation with a principal place of business at 6826 State Highway 12, Norwich, NY 13815 USA.

RECITALS

A. Celgene is engaged in the business of, among other things, developing and gaining regulatory approval for certain pharmaceutical products.

B. NPI is in the business of contract manufacturing and packaging pharmaceutical products, and providing related services.

C. Celgene has agreed to purchase from NPI, and NPI has agreed to provide to Celgene, certain manufacturing and quality assurance services relating to certain of Celgene's products, on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, Celgene and NPI (the "Parties") agree as follows:

ARTICLE 1 - DEFINITIONS

The following terms used in this Agreement shall have the meanings set forth below. Other terms of less general applicability are defined where appropriate and are listed in the List of Defined Terms in the Appendix.

1.1 "Confidential Information" means any and all trademarks, trademark applications, trade names, copyrights, patents, patent applications, technical information, know-how, formulae, processes, clinical studies, trade secrets, confidential and/or proprietary information and other know-how, information, documents and/or materials, technology, formulations, specifications, testing data and analytical methods and other information which would be considered a trade secret under the Uniform Trade Secrets Act as in force and effect in the State of New York.

1.2 "Manufacture", or any variation thereof, means all operations necessary to produce the Products to the specified state of completion in accordance with the terms and conditions of this Agreement. Without limiting the foregoing, the term "Manufacture" shall include (i) all receipt and storage of Materials incident to such operations, and (ii) the performance of all quality control procedures pertaining to the Products which are required by applicable regulations on the Agreement Date, and/or which become required by such regulations after the Agreement Date.

1.3 "Product" or "Products" means those products of Celgene more fully described on Schedule 1.3 in the presentation forms listed in Schedule 1.3.

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

1.4 "Materials" means raw materials (chemicals) and packaging materials used to Manufacture and package Products.

1.5 "Specifications" mean the written methods, formulae, procedures, specifications, tests (and testing protocols) and standards pertaining to each presentation form of the Products set forth in Schedule 1.5, as modified from time to time.

1.6 "Laws, Rules and Regulations" means current Good Manufacturing Practices as promulgated by the U.S. FDA as detailed in Title 21, United States Code of Federal Regulations, or when appropriate, any corresponding statutes and/or regulations of any other country's prescription pharmaceuticals regulating health authority / agency.

1.7 "Latent Defect" means a deviation to Product Specifications that was discovered after the Product was shipped to the Celgene.

1.8 "Supply Term" means the period starting on the Agreement Date and continuing for the initial term of this Agreement and any subsequent extension period as set forth in Section 7.1 hereof, subject to any earlier termination of this Agreement pursuant to Section 7.2 hereof.

ARTICLE 2 - SUPPLY OF PRODUCT

2.1 OBLIGATIONS OF THE PARTIES.

(a) RELATIONSHIP OF THE PARTIES. No partnership, joint venture, or agency relationship is created between the Parties with respect to this Agreement.

(b) MANUFACTURE OF PRODUCTS. Subject to the terms and conditions hereof, NPI shall Manufacture Products in accordance with all applicable Laws, Rules and Regulations, and the Specifications provided to NPI by Celgene.

(c) PRODUCT RECALLS. Celgene shall be responsible for conducting product recalls and shall promptly notify NPI of any recall notice for supplied Products. NPI shall use commercially reasonable efforts to cooperate with and assist Celgene in the performance of such duties and obligations. NPI shall promptly notify Celgene if it receives any notice, including a recall notice, which is related to any Product. NPI shall pay for all out-of-pocket cost and expenses excluding consequential damages arising from any recall resulting from NPI's breach of this Agreement.

(d) ADVERSE DRUG EXPERIENCE REPORTS. Celgene shall be responsible for filing, with the responsible regulatory body in any country where Celgene markets products, any and all adverse drug reaction reports that it receives.

(e) PRODUCT COMPLAINTS. Celgene shall have the responsibility for fielding, investigating, and responding to all Product complaints. NPI shall provide reasonable cooperation in promptly investigating and reporting to Celgene the results of investigations for all Product complaints that may involve the Products not meeting the Specifications.

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

2.2 TECHNOLOGY RIGHTS. Subject to the terms and conditions hereof, NPI shall have the right to use Celgene's Confidential Information, which relates in any way to the Products, solely to Manufacture the Products for Celgene or Celgene's successors or assigns. The Parties acknowledge and agree that Celgene is the owner of its Confidential Information and that NPI has no ownership rights thereto, and no right to use Celgene's Confidential Information except as provided in this Agreement.

2.3 PURCHASE, RECEIPT AND STORAGE OF MATERIALS. Celgene shall supply the active pharmaceutical ingredient ("API") for the Products to NPI, at no cost to NPI. NPI shall, at its own cost, be responsible to receive and store such API, and purchase, receive and store all other Materials to support the Manufacture of Products.

2.4 SHIPMENT OF FINISHED GOODS. All finished, labeled Products delivered hereunder to Celgene shall have proper dating on the labels. All Products delivered to Celgene hereunder shall be shipped Free Carrier (FCA per INCOTERMS 2000) NPI plant by a common carrier ("Carrier") approved and paid for by Celgene. NPI shall ship such quantities to the destinations(s) and at the time(s) specified in the Purchase Order (as defined in Section 3.1 hereof) by Celgene or its designee. Celgene will designate an approved Carrier or will provide a schedule of approved Carriers of which NPI will choose one from the list.

2.5 LABELING AND PACKAGING OF SUPPLIED PRODUCTS. Celgene shall, at its own cost and expense, supply NPI with the mechanical design of artwork for all Products labeling ("Printed Matter") to be used by NPI in connection with packaging the Products. Each set of such artwork, and each partial set and/or alteration or amendment thereto, for each piece of Printed Matter, shall be identified by a unique item control number or code (the "Code") supplied by the Celgene, or Celgene's designated vendor, which is consistent with NPI's existing control practices. All physical specifications of all Printed Matter shall comply with NPI's control numbering system, quality control requirements, and reasonable manufacturing process constraints as provided by NPI. Celgene shall specify the Code for each item of Printed Matter to be supplied with each order for Products hereunder. All Products delivered to Celgene hereunder shall include the Printed Matter as specified in the Purchase Order for such shipment.

2.6 INSPECTIONS. Upon reasonable prior written notice, during NPI's regular business hours, and subject to NPI's normal confidentiality and safety regulations governing visitors, Celgene's representatives shall have the right to enter and inspect the facility at which the Products are Manufactured and to receive upon request samples of the Products being Manufactured.

ARTICLE 3 - PURCHASE OF PRODUCT

3.1 PURCHASE OBLIGATION. Celgene shall purchase and receive from NPI, and NPI shall sell and deliver to Celgene or its designated agent Products to be ordered pursuant to the terms hereof in the quantities and timing set forth in each purchase order issued by Celgene (each a "Purchase Order"). The cost of shipping all such Products shall be borne by Celgene. Title and risk to Products shipped by NPI in accordance with the terms and conditions of this Agreement shall pass to Celgene upon acceptance by the Carrier.

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

3.2 PRODUCTION SCHEDULING. At least thirty (30) days prior to the start of each calendar quarter during the Supply Term, Celgene or its designated agent shall, by written notice hereunder, deliver to NPI: (i) a Purchase Order setting forth the Products to be purchased during the next succeeding calendar quarter (the "Next Quarter") and the quantity in amounts at or above the minimum order quantities set forth in Schedule 3.2 hereto and the desired delivery date(s) (which date(s) shall be no more than once per month during the Next Quarter) for each quantity so ordered; and (ii) a written forecast (the "Forecast") of Celgene's expected requirements of Products and the presentation forms thereof for the next three (3) calendar quarters after the Next Quarter, together with the expected quantity and delivery date(s) for each quantity so forecast to be ordered during such quarters. NPI shall provide capacity to accommodate Product volume increases in the Next Quarter and subsequent quarterly forecasts of at least 25%. Celgene may not reject as non-conforming orders filled within 10% of the requested order quantity, provided that the Products are otherwise satisfactory.

(a) RELEASE FOR SHIPMENT. NPI shall release for shipment quantities of Product consistent with each Purchase Order. If there is any discrepancy between the terms of a Purchase Order and the terms of this Agreement, the terms of this Agreement shall control.

(b) LIMITATIONS. In no event shall NPI be obligated to deliver to Celgene in the Next Quarter more than *** percent (***%) of the total quantity set forth in the last forecast issued by Celgene for the Next Quarter. If the Purchase Order in the Next Quarter is more than *** percent (***%) of the total quantity set forth in such Next Quarter forecast, NPI shall use reasonable efforts to determine feasibility of meeting the Purchase Order request. If feasible, NPI shall produce and invoice Celgene for any premium costs required to deliver the product that exceeds *** percent (***%) of such Next Quarter forecast. If the Purchase Order in the Next Quarter is less than *** percent (***%) of the immediately preceding Next Quarter forecast, NPI shall invoice Celgene a carrying fee for raw materials held in inventory that are reasonably allocable to such shortfall, in an amount equal to *** percent (***%) of NPI's cost of such excess raw materials.

3.3 TESTING AND CERTIFICATE OF ANALYSIS. NPI shall provide a certificate of analysis ("Certificate of Analysis") to Celgene or its designated agent with each shipment of supplied Product made hereunder. Such Certificate of Analysis shall certify with respect to each shipment and lot (identified by batch/lot or control number): (i) the quantity of the shipment and (ii) that the Product delivered was manufactured in accordance with the Specifications and the Master Batch Records and documented according to requirements of Laws, Rules and Regulations and applicable production standard operating procedures.

3.4 TESTING UPON DELIVERY. Promptly following receipt of the Products in any shipment, Celgene may check the compliance of such batch with the Specifications. Such compliance check shall be performed by Celgene's quality assurance and control departments and shall be certified by the head of such department (or his/her designee). If Celgene deems that any Products delivered to Celgene hereunder fail to conform to the Specifications, then Celgene shall notify NPI thereof in writing (such notice to include test results) within *** days from delivery of such Products to Celgene, or in the case of Products having Latent Defects, which upon diligent examination in accordance with the quality control testing procedures and

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

set out in the Specifications upon receipt could not have been discovered, within *** days after Celgene's discovery of such Latent Defect. Celgene shall retain the non-conforming Products and NPI shall have the right to inspect such Products.

(a) UNDISPUTED CLAIMS. NPI shall, if it agrees with Celgene's non-conformance assessment, replace any such Products with an equal quantity of Products complying with the Specifications at no cost to Celgene and without undue delay subject to the provisions of Section 8.3 of this Agreement (force majeure). Celgene shall dispose of any Products which are not in compliance with the Specifications at NPI's cost, and in compliance with all applicable laws, except that, upon request, Celgene shall follow any reasonable instructions from NPI to return such Products to NP1 at NPI's cost.

(b) DISPUTED CLAIMS. If NPI does not agree with Celgene's non-conformance assessment, then NPI shall notify Celgene of such disagreement within *** days of receipt of notice of deficiency. If the Parties cannot themselves resolve such disagreement within *** business days of Celgene's receipt of NPI's notice of disagreement, then the matter shall be submitted (without undue delay) to an independent qualified laboratory agreed by the Parties to determine whether the Products in question conform to Specifications. The assessment of such laboratory shall be binding upon the Parties and any related expense shall be borne by the Party whose analysis was in error. In the event that NPI is the Party in error, NPI shall replace the applicable Products in accordance with Section 3.4(a) above as if it had not disputed Celgene's non-conformance assessment.

3.5 VIOLATIONS. Each Party shall notify the other of any violation of any Laws, Rules and Regulations applicable to the Products alleged by a third party promptly following receipt of notice of such allegation.

ARTICLE 4 - PRICING AND PAYMENT TERMS

4.1 PRICING. The price (the "Price") for Products Manufactured hereunder is shown in Schedule 4.1.

(a) MATERIAL PRICES. Starting the January after the first full calendar year of commercial production of Product, NPI may notify Celgene of any changes in Material pricing. Changes to Material pricing may include supplier price increases or decreases, and may include adjustments to yield and scrap losses associated with the overall capability of the manufacturing process. NPI shall provide Celgene with at least *** days' prior written notice of any changes in Material pricing, and NPI shall reasonably substantiate any increase in Material pricing in such written notice. NPI shall have the right adjust Material pricing no more than once in any twelve (12) month period.

(b) NON-MATERIAL COSTS. Components of NPI's cost of the Products and the Manufacture thereof, other than the cost of Materials, shall be hereinafter referred to as "Non-Material Costs." Non-Material Costs included in the Price set forth in Schedule 4.1 attached hereto shall be considered firm during the first *** months of commercial production of Product. After such *** month period and for each subsequent *** month period during the

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

Supply Term, NPI shall have the right to adjust Non-Material Costs by a percentage equal to the percentage increase in the Producer Price Index published by the Bureau of Labor Statistics, U.S. Department of Labor for the preceding *** month period. Any adjustment to Non-Material Costs shall be effective for all orders received by NPI after written notice of such increase by NPI to Celgene, such notice showing the calculation of such increase.

4.2 PAYMENT TERMS. The Price for all Product Manufactured hereunder shall be due and owing to NPI net *** days from shipment and notification to Celgene thereof, unless such Product is held for more than *** days, then payment shall be due net *** days from Celgene's receipt of an invoice upon release of such Product. NPI may withhold subsequent deliveries of Product or take other action it deems appropriate should Celgene fail to pay within the stated terms.

4.3 CAPITAL. Capital investment to be paid by Celgene is shown in Schedule 4.3. NPI shall invoice Celgene at time of purchase and payment terms shall be net *** days from the date of Celgene's receipt of an invoice therefor.

4.4 PRE-PRODUCTION. Validation and other start-up costs to be paid by Celgene are shown in Schedule 4.4. NPI shall invoice Celgene for such services rendered monthly and payment terms shall be net *** days from the date of Celgene's receipt of an invoice therefor.

4.5 PRODUCT SCRAP. In the event that NPI incurs Product scrap costs which are (i) caused by process capability issues inherent in the production formulation and/or design and (ii) not within the control of NPI or its personnel and (iii) not caused by the failure of NPI and/or its personnel to comply with all Laws, Rules and Regulations with respect to the Manufacture of such Product, Celgene shall replace the API for the Product scrapped at Celgene's expense, and NPI may invoice Celgene for environmental disposal fees actually incurred and documented by NPI for the scrapped Product. NPI shall be responsible for all other costs and expenses associated with such scrapped Product. In the event that NPI incurs Product scrap costs which are (a) not caused by process capability issues inherent in the production formulation and/or design or (b) within the control of NPI or its personnel or (c) caused by the failure of NPI and/or its personnel to comply with all Laws, Rules and Regulations, NPI shall be responsible for all costs and expenses associated with such scrapped Product, including, without limitation, reimbursing Celgene for the out-of-pocket API costs therefore.

ARTICLE 5 - CHANGE MANAGEMENT

5.1 REQUIRED MANUFACTURING CHANGES. With respect to changes to the Specifications or manufacturing process which are required by applicable Laws, Rules and Regulations or by action (or inaction) of any legally-competent government or other regulatory body or authority, or by medical or scientific concerns as to the toxicity, safety, and/or efficacy of the Products (collectively, "Required Manufacturing Changes"), the Parties shall cooperate in making such changes promptly. The cost of effecting Required Manufacturing Changes shall be borne by NPI; provided, however, that if such costs are material and ongoing, Celgene and NPI shall negotiate in good faith a price adjustment to compensate NPI for such material and ongoing costs. In cooperating in making such changes, Celgene shall be responsible for communicating

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

with regulatory agencies with respect to the health registrations and marketing authorizations for the Products. Required Manufacturing Changes: (i) do not include changes to the labeling only (which are dealt with in Section 5.3 hereof), and (ii) do include changes resulting from or arising out of changes to or withdrawal of third party Materials. Celgene shall be responsible for the costs associated with any required change in sourcing of the API, including any regulatory submission charges and process validation costs.

5.2 DISCRETIONARY MANUFACTURING CHANGES. With respect to changes to the Specifications or the manufacturing process for Products which are not Required Manufacturing Changes (collectively, "Discretionary Manufacturing Changes"), the Parties shall, to the extent commercially reasonable under the circumstances, cooperate in making such changes and the Party initiating such change(s) shall bear all the costs associated with and resulting from any such changes. If the proposed change requires a prospective process validation or regulatory submission, then the costs to execute and resource such validation or submission shall be the responsibility of the initiating Party. All regulatory submissions will be filed by Celgene.

5.3 LABELING CHANGES. With respect to changes to the Printed Matter, the Parties shall cooperate in making such changes promptly and Celgene shall, unless otherwise agreed, reimburse NPI for all remaining obsolete stock of Products, all inventory of Printed Matter (at NPI's actual out-of-pocket cost plus *** percent (***%)) and all remaining obsolete work in process of Products resulting from any such change or amendment to the Printed Matter. Celgene may, at any time during the Supply Term, change or amend any item of the Printed Matter by notice hereunder, such change or amendment to be effective after appropriate advance written notice thereof.

5.4 CHANGES TO SPECIFICATIONS. Celgene may make changes to the Specifications from time-to-time, provided that all such changes, including Required Manufacturing Changes, are to be communicated to NPI in writing.

5.5 AUTHORIZATIONS. During the Supply Term, NPI shall obtain and maintain in force all licenses and authorizations necessary for NPI to Manufacture Products. Celgene shall bear all costs associated with maintenance of the health registrations for the Products. Except as may be required by Sections 5.1 or 5.2 hereof, NPI shall bear the full cost and expense of so obtaining and maintaining such licenses and authorizations. Celgene shall give NPI all help reasonably necessary to assist NPI in so obtaining and maintaining such licenses and authorizations and shall bear the full cost and expense of so assisting NPI. In the event Celgene Products require licenses in a new country or territory, Celgene shall pay the costs of new license requirements.

ARTICLE 6 - LIABILITIES AND INDEMNIFICATION

6.1 REPRESENTATIONS AND WARRANTIES.

(a) NPI. NPI hereby represents and warrants to Celgene that (i) it has the power and authority to enter into this Agreement and to perform its obligations hereunder; (ii) all work to be performed under this Agreement, including the Manufacture of all Products,

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

shall be performed in a professional manner, in accordance with all applicable Laws, Rules and Regulations, including all health and safety ordinances; and
(iii) NPI has all licenses, permits and other authorizations necessary to fulfill its obligations under this Agreement.

(b) CELGENE. Celgene hereby represents and warrants to NPI that (i) it has the power and authority to enter into this Agreement and to perform its obligations hereunder; (ii) it is the owner of all proprietary information, or the holder of licenses thereto, necessary to allow NPI to Manufacture the Products, and, to its knowledge, no Products, when Manufactured in accordance with the Specifications, will infringe upon the rights of any third party; and (iii) it has all licenses, permits, and other authorizations necessary to fulfill its obligations under this Agreement.

6.2 PRODUCT WARRANTIES. NPI represents and warrants to Celgene that the Products shall, on the date of delivery to the Carrier: (i) meet the requirements therefore set forth in the Specifications; (ii) not be adulterated within the meaning of Section 501 of the United States Food, Drug and Cosmetics Act and the regulations promulgated thereunder as each may be amended from time to time (collectively, the "Act"); and (iii) comply in all material respects with all federal, state and local laws (including without limitation all Laws, Rules and Regulations) applicable to the Manufacture of the Products in accordance with the Specifications. NPI makes no warranties with respect to the Products other than those specifically set forth in this section. No other warranty is expressed or implied by NPI including any warranty of merchantability or fitness for a particular purpose and none shall be implied. Further, all warranties with respect to the Products shall not apply to any Product that is subsequently altered by the Celgene or the Carrier. NPI shall not be liable for Celgene's consequential, incidental, special or indirect damages resulting from the use, handling, transportation, or storage of the Product, even if NPI has been made aware of the possibility of such damages. Except as otherwise set forth herein, the extent of NPI liability shall not exceed contract value.

6.3 CELGENE INSURANCE. Celgene shall provide NPI with evidence that it has in place the following policies with a reputable and responsible insurance carrier, which shall remain in full force and effect throughout the Supply Term: (i) all risk property insurance policy covering the full replacement cost of Celgene's property in NPI's possession or under its control;
(ii) general liability including product and completed operations coverage in a minimum amount of $*** insuring NPI against liability for injury to persons occurring in, upon, or adjacent to NPI's facilities. Celgene shall provide evidence that NPI has been named as an additional insured under the policies described herein during the Supply Term.

6.4 NPI INSURANCE. NPI shall provide Celgene with evidence that it has in place with a reputable and responsible insurance carrier, which shall remain in full force and effect throughout the Supply Term, a minimum amount of $*** insuring NPI against liability for Product defects.

6.5 CELGENE INDEMNITY. Notwithstanding anything to the contrary in this Agreement, Celgene shall indemnify, defend and hold harmless NPI, NPI's affiliates, and each of their respective officers, directors (past, present and future) employees, representatives and

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

agents from and against any and all third party claims, loss, damage, liability, payment, and obligation, and all expenses, including without limitation reasonable legal fees (collectively, "Losses") whether such Losses are based in contract, strict liability, negligence, warranty, statutes or regulations, or any other legal theory, including without limitation injury to or death of persons and/or property or contamination of or adverse effect on humans, animals, aquatic life or the environment, based upon, arising out of or otherwise in respect of: (1) the Manufacture, use, sale or distribution of the Products, provided such Products were in compliance with the warranties set forth in the first sentence of Section 6.2, (ii) any claim threatened or brought against NPI alleging that the Specifications for any Product, including the labeling for such Product, violate any applicable United States federal, state, or local rule, regulation, law or ordinance, to the extent that such Specifications were provided to NPI by Celgene, provided such Products were in compliance with the warranties set forth in the first sentence of Section 6.2,
(iii) any inaccuracy in or breach of any representation, warranty, or covenant made by Celgene in this Agreement; (iv) the willful misconduct or any negligent or reckless acts or omissions of any of Celgene's officers, directors, agents, affiliates, employees and/or representatives, or any allegations of the same made by any third party; (v) any claim threatened or brought against NPI alleging that the Manufacture, in accordance with the design or Specifications of any Product, as provided to NPI by Celgene, infringes upon any intellectual property interest of a third party, (vi) any product warranty claim or product liability claim threatened or brought against NPI with respect to the Products, provided such Products were in compliance with the warranties set forth in the first sentence of Section 6.2, and (vii) any claim, including damage to any property, or injury to any person (including Celgene's employees, representatives, agents, associates, or other persons invited by Celgene to inspect NPI's facilities on behalf of Celgene), arising out of, or related to the inspection of NPI's facilities contemplated by Section 2.6 of this Agreement, provided that such damage or injury is not caused by the negligence or willful misconduct of any NPI employee, contractor or agent or any defect in such facilities.

6.6 NPI INDEMNITY. Notwithstanding anything to the contrary in this Agreement, NPI shall indemnify, defend and hold harmless Celgene and Celgene's affiliates, and each of their respective officers, directors (past, present and future) employees, representatives and agents from and against any and all Losses, based upon, arising out of or otherwise in respect of: (i) the failure of the Products transferred to Celgene hereunder to meet the requirements of Section 6.2 hereof, (ii) bodily injury or property damage in connection with the Manufacture of the Products; (iii) any breach by NPI of any representation, warranty or covenant of this Agreement; or (iv) the willful misconduct or any negligent or reckless acts or omissions of any of NPI's officers, directors, agents, affiliates, employees and/or representatives, or any allegations of the same made by any third party.

6.7 JOINT NEGLIGENCE. If any Loss incurred by or rendered against either Party is determined by an independent tribunal to be due to the negligence or willful misconduct of both NPI and Celgene, then the Parties shall share the costs attributable to such Loss (including but not limited to the cost of defense thereof) in accordance with the proportion of each Party's relative fault, as determined by the independent tribunal. Each Party shall give the other notice of any Loss to which it believes the preceding sentence applies and the Parties shall cooperate in the defense thereof in accordance with the terms of this Section 6.7.

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

6.8 NOTICE AND OPPORTUNITY TO DEFEND. Promptly after becoming aware of a Loss as to which a Party is entitled to indemnification under this Agreement, such Party (the "Claiming Party") shall notify the other (the "Indemnifying Party") of such Loss. The failure or delay in providing such notice shall not relieve the Indemnifying Party of its obligations other than to the extent it was materially prejudiced by such failure or delay. Upon receipt of such notice, the Indemnifying Party will handle and control the defense of such Loss. If both Parties claim indemnification hereunder for the same Loss or if the Indemnifying Party in good faith rejects the claim of indemnity, then the Claiming Party will handle and control the defense of the Loss against it, pending final resolution of the Parties' respective claims for or with respect to indemnity hereunder. At the time of such resolution, defense costs incurred pursuant to the preceding sentence shall be apportioned between the Parties in the same manner as the Parties share ultimate liability for the underlying Loss pursuant to Sections 6.5, 6.6 or 6.7 hereof. In all cases, the Party not handling and controlling such defense shall cooperate in such defense and may, at its own expense, participate in such defense through counsel of its choice. An Indemnifying Party shall not dispose of or agree to dispose of a Loss without the prior written approval of the Claiming Party which approval shall not be unreasonably withheld, conditioned or delayed.

ARTICLE 7 - TERM AND TERMINATION

7.1 TERM. Subject to the provisions of Section 7.2 hereof, the initial term of this Agreement shall commence on the Agreement Date and shall continue in full force and effect, unless otherwise terminated earlier, for a period of *** months from the commencement date of commercial production. The term of this Agreement shall be extended automatically for *** terms unless Celgene gives NPI written notice at least *** before the expiration of the then-current term that the term shall not be extended.

7.2 TERMINATION. This Agreement may not be terminated at any time except in accordance with the terms and conditions of Section 7.2.

(a) DEFAULT. This Agreement may be terminated by written notice by either Party if the other Party breaches any material provision of this Agreement and does not remedy such breach within *** days of written notice of breach unless such breach cannot be remedied within such *** day period, in which case such breach must be remedied as soon as commercially reasonable diligence will permit.

(b) TERMINATION WITHOUT CAUSE. Celgene may, at any time, terminate its obligation to purchase or supply Product, by giving written notice to NPI at least *** days prior to the effective date of such termination.

(c) TERMINATION WITH CAUSE. Either Party may terminate this Agreement at any time effective upon delivery of written notice of such termination, upon the occurrence of any of the following: (i) improper assignment of this Agreement by the non-terminating Party; (ii) an assignment for the benefit of creditors by the non-terminating Party; or (iii) commencement of voluntary or involuntary liquidation proceedings by the non-terminating Party.

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

7.3 EFFECTS OF TERMINATION. Except in the event of a termination of this Agreement by Celgene pursuant to Sections 7.2(a) or (c), if NPI has quantities of raw materials or packaging materials in excess of Celgene requirements therefore after expiration or termination of this Agreement, or if NPI is required to order quantities of such raw materials or packaging materials in excess of Celgene requirements therefore after termination of this Agreement, Celgene shall, upon such termination, purchase all finished product at the agreed prices and such Materials at NPI out-of-pocket cost plus *** percent (***%) F.O.B. producing plant.

ARTICLE 8 - GENERAL PROVISIONS

8.1 CONFIDENTIALITY. During the Supply Term, and for a period of five (5) years thereafter, the Parties, and all of their respective employees, agents, representatives, and advisors, shall maintain in confidence all of the other Party's Confidential Information, and shall not disclose Confidential Information to any third party, or use Confidential Information in any way or for the benefit of any person other than as expressly permitted in this Agreement. For the purposes of this covenant, the Parties shall have no obligation with respect to any information which: (i) has been either published or is otherwise in the public domain or subsequently enters the public domain without breach of the confidentiality obligations hereunder; (ii) is lawfully acquired from a third party under no obligation of confidentiality, directly or indirectly, to the owner of the Confidential Information; or (iii) is legally required to be disclosed pursuant to applicable law, regulation, court order or in connection with a legal proceeding. If either Party is required by law to disclose the other's Confidential Information, the disclosing Party will promptly notify the owner of the Confidential Information of the requirement and will cooperate in all reasonable respects with the owner of the Confidential Information to limit the amount of information to be disclosed.

8.2 INTELLECTUAL PROPERTY.

(a) NPI agrees that any and all right, title and interest in and to any patentable and/or copyrightable material, notes, data, results, records, inventions, improvements, developments, discoveries and trade secrets made, conceived, reduced to practice, or discovered in the Manufacture of Products that consists of or relates to the Products, the use, formulation or manufacture thereof, or any other material, product or process belonging to Celgene or its licensors, or to any improvement(s), enhancement(s) or refinement(s) of any of same, shall be the sole property of Celgene ("Celgene Inventions"). NPI further agrees to assign (or cause to be assigned) and does hereby assign fully to Celgene all such Celgene Inventions and any patents, copyrights or other intellectual property rights relating thereto. In addition, to the extent allowed by law, any Celgene Inventions which constitute copyrightable subject matter shall be considered "works made for hire" as that term is defined in the United States Copyright Act. All Celgene Inventions and any information with respect thereto shall be deemed Confidential Information hereunder and be subject to the confidentiality provisions of Section 8.1 above.

(b) Upon the termination of this Agreement, or upon Celgene's earlier request, NPI will deliver to Celgene all of Celgene's property relating to, and all tangible embodiments of, Celgene Inventions in NPI's possession or control.

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

(c) NPI agrees to assist Celgene, or Celgene's designee, at Celgene's expense, to obtain and from time to time enforce and defend Celgene's rights in the Celgene Inventions and any copyrights, patents or other intellectual property rights relating thereto in any and all countries, and to execute all documents reasonably necessary for Celgene to do so.

(d) NPI agrees that if Celgene is unable because of NPI's unavailability, dissolution, or for any other reason, to secure NPI's signature to apply for or to pursue any application for any United States of America or foreign patents or copyright registrations covering the Celgene Inventions, then NPI hereby irrevocably designates and appoints Celgene and Celgene's duly authorized officers and agents as NPI's agent and attorney-in-fact, to act for and in NPI's behalf and stead to execute and file any such applications and to do all other lawfully permitted acts to further the prosecution and issuance of patents and copyright registrations thereon with the same legal force and effect as if executed by NPI.

(e) NPI represents and warrants that each employee and independent contractor of NPI has executed a written agreement with NPI sufficient for NPI to fulfill its obligations to Celgene under this Section 8.2, including, without limitation, an obligation on the part of each such employee and independent contractor to assign any and all Celgene Inventions to NPI.

8.3 FORCE MAJEURE.

(a) NPI shall not be subject to any liability for delay in performance or nonperformance hereunder as a result and to the extent of contingencies and circumstances beyond its reasonable control (including, but not limited to, fire, flood, or other natural catastrophe, strike, labor trouble, accident, riot, war, act of governmental authority, or act of God) interfering with the Production, supply, transportation or receipt of Product or with the supply of any Materials used in the Manufacture thereof.

(b) Except where the nature of the event shall prevent it from doing so, if NPI suffers such force majeure it shall promptly notify Celgene in writing after the occurrence of such force majeure and shall in every instance, to the extent reasonable and lawful under the circumstances, use its best efforts to remove or remedy such cause with all reasonable dispatch.

(c) When the force majeure conditions in question cease to exist, NPI shall promptly notify Celgene in writing about the force majeure termination.

(d) Should a circumstance of force majeure prevent performance of this Agreement by NPI for a continuous three (3) month period, Celgene may terminate this Agreement upon thirty (30) days written notice, provided that such notice is given during the continuance of such force majeure.

8.4 SEVERABILITY. If any provision of this Agreement is found or declared to be invalid or unenforceable by any court or other competent authority having jurisdiction, such finding or declaration will not invalidate any other provision hereof and this Agreement shall thereafter continue in full force and effect, except that such invalid or unenforceable provision, and (if necessary) other provisions thereof, shall be reformed by a court of competent jurisdiction

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

so as to effect, insofar as is practicable, the intention of the Parties as set forth in this Agreement, provided that if such court is unable or unwilling to effect such reformation, the invalid or unenforceable provisions shall be deemed deleted to the same extent as if they had never existed.

8.5 GOVERNING LAW; VENUE. The provisions of this Agreement shall be governed in the internal laws of the State of New Jersey, USA without regard to the conflict of laws and rules thereof. Any action, suit or other proceeding initiated by either Party hereto under or in connection with this Agreement may be brought in any Federal or state court in the State of New York having jurisdiction over the subject matter thereof as the Party bringing such action, suit or proceeding shall elect. The Parties hereby submit themselves to the jurisdiction of any such court and agree that service of process on them in any such action, suit or proceeding may be effected by the means by which notices are to be given to it under this Agreement.

8.6 REMEDIES. No right or remedy herein conferred upon the Parties is intended to be exclusive of any other right or remedy, and each and every right or remedy shall be cumulative and in addition to any other right or remedy given hereunder or now or hereafter existing at law or in equity or by statute.

8.7 ATTACHMENTS. The attachments to this Agreement are hereby incorporated in and made a part of this Agreement. The Parties may, by mutual consent, amend any attachment hereto at any time during the term hereof by executing a version of such attachments dated after the then current version thereof.

8.8 WAIVER: AMENDMENT. Any waiver by either Party hereto of a breach or a default of any provision of this Agreement by any other Party hereto shall not be construed as a waiver of any succeeding breach of the same or any other provision, nor shall any delay or omission on the part of any Party hereto to exercise or avail itself of any right, power or privilege that it has or may have hereunder operate as a waiver of any such right, power or privilege by such Party. Any amendment or supplementation of this Agreement shall be effective only if in writing signed by both of the Parties hereto.

8.9 COUNTERPARTS. This Agreement may be executed in two counterparts, each of which shall be deemed an original but both of which together shall constitute one and same instrument. The Parties have agreed that for this purpose, facsimile signatures will be accepted as originals.

8.10 SURVIVAL. The provisions of Sections 2.1(c), 2.1(e), 2.2, 3.4, 3.5, 6.1, 6.2, 6.5, 6.6, 6.7, 6.8 and 7.3 and Article 8 shall survive the expiration or termination of this Agreement for as long as necessary to permit their full discharge.

8.11 ENTIRE AGREEMENT. This Agreement and all exhibits and attachments hereto constitute the full understanding of the Parties, a complete allocation of risk between them, and a complete and exclusive statement of the terms and conditions of their agreement relating to the Manufacture of Product hereunder and supersedes and replaces any and all prior or contemporaneous agreements, arrangements, understandings, and negotiations, whether written or oral, that may exist between the Parties with respect to the subject matter hereof.

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

Except as provided otherwise in this Agreement, no conditions, usage of trade, course of dealing or performance, understanding or agreement purporting to modify, vary, explain or supplement the terms or conditions of this Agreement shall be binding on the Parties unless described as a modification or amendment of this Agreement made in writing and signed by the Parties to be bound. No modification hereof shall be effected by the acknowledgement or acceptance of any purchase order or shipping instruction forms containing terms and conditions at variance with those set forth in this Agreement.

8.12 ASSIGNMENT. Neither this Agreement nor any claim arising directly or indirectly out of or in connection with the performance of either Party hereunder shall be assignable by either Party hereto without the prior written consent of the other Party, which shall not be unreasonably withheld. The foregoing shall not include merger or acquisition of either Party, or an assignment by Celgene to an affiliate of Celgene or to any successor in interest (by license or otherwise) to Celgene's business with respect to the Product, but in any event, notification must be provided in writing within *** days of any such merger, acquisition, or assignment. No such assignment or transfer shall relieve or release the assignor or transferor from any of its liabilities or obligations under this Agreement.

8.13 NOTICE. All communications under this Agreement shall be in writing and shall be either faxed, sent by courier (Federal Express or equivalent), or mailed by first-class mail, postage pre-paid, to the fax number and/or address specified below. If faxed, such communication shall be deemed to be given when sent; provided, however, that such fax shall be confirmed by sending a hard copy by courier or first-class mail (by methods specified herein) within one (1) working day of the sending of such fax. If sent by courier or mailed by first-class mail as specified below, such communication shall be deemed to be given either two (2) business days after sending (for communication sent by courier) or five (5) business days after mailing (for communication sent by mail). Either Party may change its address for notice purposes by complying with the provisions of this Section 8.13. All communications hereunder shall be sent:

(a) if to NPI, at its address shown below or such other address as it may give to Celgene by notice hereunder:

President OSG Norwich Pharmaceuticals, Inc. 6826 State Highway 12 Norwich, NY 13815 Fax: (607) 335-3100

(b) if to Celgene, at its address shown below or such other address as it may give to NPI by notice hereunder:

President Celgene Corporation 7 Powder Horn Drive Warren, NJ 07059 Fax: 732-805-3931

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

with a copy to: *** Celgene Corporation 7 Powder Horn Drive Warren, NJ 07059 Fax: 732-805-3931

[End of text; signature page follows]

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives as of the date first above written.

CELGENE                                     OSG NORWICH PHARMACEUTICALS,
                                            INC.

(Celegne)                                   (NPI)

By:                                         By:


***                                         ***
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TITLE:                                      TITLE:

***                                         ***
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*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

EXHIBIT 10.52

FINISHED GOODS SUPPLY AGREEMENT
(REVLIMID(TM))

This Finished Goods Supply Agreement (the "Agreement") dated this 8th day of September 2004 between Penn Pharmaceutical Services Limited, ("Penn") and Celgene Corporation, a Delaware corporation ("Celgene").

RECITALS

Whereas, Penn and Celgene desire to establish a relationship, pursuant to which Penn (or its appropriate Affiliates, as defined herein) will supply, and Celgene (or its appropriate Affiliates) will purchase, the Commercial Products, as defined herein.

In consideration of the foregoing premise, and the mutual covenants and obligations set forth herein, Celgene and Penn hereby agree as follows:

ARTICLE 1

DEFINITIONS

1.1. "AFFILIATE" shall mean, with respect to any party, any person or entity which, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such party. A person or entity shall be deemed to control a corporation (or other entity) if such person or entity possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such corporation (or other entity) whether through the ownership of voting securities, by contract or otherwise.

1.2. "API" shall mean the active pharmaceutical ingredient lenalidomide, [3-(4'aminoisoindoline-l'-one)-1-piperidine-2,6-dione], Celgene's compound CC-5013.

1.3. "BATCH" shall mean one (1) production lot of the Commercial Products as defined in Exhibit A.

1.4. "BATCH RECORD" shall mean the document created as and after each Batch is manufactured that, if complete and accurate, reflects and incorporates all aspects of the Master Batch Formula, the Certificate of Analysis, and any MD Reports issued, with respect to such Batch.

1.5. "CERTIFICATE OF ANALYSIS" shall mean a certificate issued by Penn stating that a Batch has been manufactured in accordance with the Master Batch Formula and stating the Test results.

1.6. "COMMERCIAL PRODUCTS" shall mean the formulations of Revlimid(TM) (lenalidomide) in capsule form for oral administration as identified in the NDA.

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

1.7. "CONFIDENTIAL INFORMATION" shall mean, with respect to a party, all information of any kind whatsoever (including without limitation, data, compilations, formulae, models, patent disclosures, procedures, processes, projections, protocols, results of experimentation and testing, specifications, strategies and techniques), and all tangible and intangible embodiments thereof of any kind whatsoever (including without limitation, apparatus, compositions, documents, drawings, machinery, patent applications, records and reports), which is disclosed by such party to the other party and is marked, identified as or otherwise acknowledged to be confidential at the time of disclosure to the other party. Notwithstanding the foregoing, Confidential Information of a party shall not include information which the other party can establish by written documentation (a) to have been publicly known prior to disclosure of such information by the disclosing party to the other party, (b) to have become publicly known, without fault on the part of the other party, subsequent to disclosure of such information by the disclosing party to the other party, (c) to have been received by the other party at any time from a source, other than the disclosing party, rightfully having possession of and the right to disclose such information, (d) to have been otherwise known by the other party prior to disclosure of such information by the disclosing party to the other party, or
(e) to have been independently developed by employees or agents of the other party without the use of such information disclosed by the disclosing party to the other party.

1.8. "DMF" shall mean the Drug Master File that relates to the API and that Celgene shall maintain.

1.9. "FDA" shall mean the United States Food and Drug Administration, and any successor agency thereto.

1.10. "FFDCA" shall mean the United States Federal Food Drug and Cosmetic Act as amended from time to time.

1.11. "cGMPS" shall mean current Good Manufacturing Practices promulgated by the FDA.

1.12. "HAZARDOUS WASTE" shall mean all waste that is defined as hazardous by applicable federal, state, and local laws and regulations, to the extent that such waste arises out of Penn's Processing and Packaging of Commercial Products in accordance with this Agreement.

1.13. "IN-PROCESS MATERIALS" shall mean the API and the Raw Materials with respect to a Batch during the time period beginning at the time Penn begins Processing Commercial Products in accordance with the Master Batch Formula and ending at the Penn Approval Date (as defined in clause 2.7.1. herein).

1.14. "INTELLECTUAL PROPERTY" shall mean Celgene's and its Affiliates' rights existing as of the date hereof and as may be developed hereafter in and to all Confidential Information, proprietary information, trade secrets, patent rights, technology, know-how, developments, improvements, techniques, data, methods, processes, instructions, formulae, recipes, drawings and specifications necessary to manufacture and supply the Commercial Products hereunder.

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

1.15. "LABEL" OR "LABELING" shall mean (1) written, printed or graphic materials, as set forth in the Master Packaging Record or (2) the act of supplying written, printed or graphic materials, as set forth in the Master Packaging Record, including (i) upon the Commercial Product, (ii) upon any container or wrapper utilized with the Commercial Product, or (iii) accompanying the Commercial Product, including, without limitation, package outserts.

1.16. "MD REPORT" or "MANUFACTURING DEVIATION REPORT" shall mean a report indicating any deviation from the Processing and Packaging procedures set forth in the Master Batch Record.

1.17. "MASTER BATCH FORMULA" shall mean the document containing the formulas for API and Raw Materials and the description of the Process, as set forth in EXHIBIT A.

1.18. "MASTER BATCH RECORD" shall mean the Master Batch Formula, Master Packaging Record and Specifications, as such may be amended by the parties pursuant to clause 2.3.1.

1.19. "MASTER PACKAGING RECORD" shall mean the document containing the procedures and specifications for Packaging and Labeling, as set forth in EXHIBIT B.

1.20. "MSDS" shall mean the Material Safety Data Sheet for the API.

1.21. "NDA" shall mean the New Drug Application for the Commercial Product to be filed with the FDA by Celgene, and any supplements thereto.

1.22. "NON-CONFORMING BATCH" shall mean any Batch that does not comply with the Specifications or any batch processed in violation of cGMPs.

1.23. "NON-HAZARDOUS WASTE" shall mean all rejected Commercial Product or In-Process Materials or waste arising out of Processing and/or Packaging, including without limitation, rejected or unusable Raw Materials or API, disposable manufacturing equipment (including filters used in Processing and Packaging), wash rinse, and previously used or discarded protective clothing, except to the extent that any of the foregoing is Hazardous Waste.

1.24. "PACKAGE" or "PACKAGING" shall mean the procedures used in packing the Commercial Products into containers, bottles, cartons, shipping cases or any other like matter, or the materials thereof, as set forth in the Master Packaging Record.

1.25. "PENN APPROVAL DATE" shall mean the date on which Penn's quality assurance department approves each Batch for shipment in compliance with the Master Batch Record.

1.26. "PERSON" shall mean an individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock company, joint venture, pool, syndicate, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed herein.

1.27. "PPI" shall mean the Producer Price Index for *** as published by the Office of National Statistics in the UK.

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

1.28. "PROCESS" or "PROCESSING" shall mean the pharmaceutical manufacturing procedures, or any part thereof, involved in manufacturing the Commercial Product from the API and Raw Materials as set forth in the Master Batch Formula.

1.29. "RAW MATERIALS" shall mean the excipients necessary for Processing (exclusive of the API) as listed in the Master Batch Formula.

1.30. "RAW MATERIAL COST" shall mean the cost of Raw Materials used to manufacture the Commercial Products, determined in accordance with generally accepted accounting principles and consistent with Penn's accounting practices for other manufactured products.

1.31. "SPECIFICATIONS" shall mean the appropriate standards of identity, strength, quality and purity for the Raw Materials, API, In-Process Materials and Commercial Product, and the Tests thereof, as set forth in EXHIBIT C.

1.32. "STORE" or "STORAGE" shall mean the warehousing of Commercial Products according to cGMP and other applicable U.S. laws and regulations subject to clause 2.7.1.

1.33. "TEST" or "TESTING" shall mean the analytical procedures, as applicable, for Raw Materials, API, In-Process Materials and Commercial Product as set forth in the Specifications.

ARTICLE 2
MANUFACTURE, SUPPLY AND PURCHASE

2.1. LICENSE GRANT. Celgene hereby grants to Penn a non-exclusive license to use and practice the Intellectual Property solely to manufacture the Commercial Products for Celgene in accordance with the provisions of this Agreement. The Intellectual Property licensed hereunder is sufficient to allow Penn to perform its obligations hereunder. Except as provided in this clause 2.1, Penn acknowledges that it has no intellectual property rights in the Commercial Products or in the API.

2.2. SUPPLY AND PURCHASE OBLIGATIONS. During the term of this Agreement, Penn shall manufacture and supply Commercial Products exclusively for Celgene. Celgene shall purchase a minimum *** percent (***) of its annual requirements of Commercial Products from Penn pursuant to clause 2.6.4 below and subject to clause 2.6.2 below unless Penn fails to supply conforming Commercial Products (subject to clause 2.6.3 below) for any two (2) out of four (4) consecutive calendar quarters. Upon the written request, and at the sole expense, of Penn, Celgene shall permit an independent certified public accounting firm, selected by Penn and reasonably acceptable to Celgene, to have access during normal business hours to such of the records of Celgene as may be reasonably necessary to verify that the Commercial Products supplied to Celgene pursuant to this Agreement represents at least *** percent (***) of Celgene's requirements during the preceding year.

2.3. MANUFACTURING PRACTICES.

2.3.1. MASTER BATCH RECORD. Penn shall Process, Test (unless Penn is requested by Celgene to conduct a full analysis), Package and Label the Commercial Products in conformity with the Master Batch Record. Unless otherwise required by law, Penn shall not

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

make any changes to the Master Batch Record without prior written consent from Celgene, which consent shall not be unreasonably withheld. Celgene shall notify Penn in writing of any proposed changes to the Master Batch Record. Penn shall use reasonable commercial efforts to promptly implement changes directed by Celgene to the Master Batch Record at Celgene's sole expense, including, but not limited to, any required capital equipment expenditures. The Price (as defined in clause 3.1), shall be increased to incorporate the costs associated with any such changes to the Master Batch Record as applicable. Penn shall notify Celgene and obtain prior written approval (such approval shall not be unreasonably withheld) for any proposed changes related to the Commercial Product outside the Master Batch Record prior to their implementation by Penn.

2.3.2. REGULATORY COMPLIANCE. Penn shall manufacture the Commercial Products in accordance with cGMPs and all applicable U.S. federal laws and regulations.

2.3.3. TECHNICAL REQUIREMENTS. Penn shall comply with the technical requirements set forth on EXHIBIT D.

2.4. RAW MATERIALS, LABELING AND PACKAGING.

2.4.1. RAW MATERIALS. Penn shall purchase the Raw Materials necessary for manufacturing Commercial Products as specified in the Master Batch Formula from vendors mutually agreed to in writing by the parties, the cost of which shall be included in the Price.

2.4.2. LABELING AND PACKAGING. Penn shall acquire all Labeling and Packaging for the Commercial Products to the bulk stage and such Labeling and Packaging shall be in accordance with the Master Packaging Record, the cost of which shall be included in the Price. Penn shall afford Celgene the opportunity to approve, on a sample basis, and Celgene shall review and approve the Labels for the Commercial Products so as to assure that the labels conform to all applicable laws, rules, regulations and requirements of all appropriate regulatory authorities. Should Celgene desire or be required to make any change to any such Labels, Celgene shall revise and update all artwork and text associated with such change and provide such changes to Penn or its Affiliates. Penn shall make all commercially reasonable and necessary arrangements to print such changed Labels and shall provide printer's proofs to Celgene for review and approval. Celgene shall promptly provide Penn with any necessary corrections thereto or notify Penn of its approval of such proofs. Celgene shall reimburse Penn for the cost of preparing the printer's proofs, as well as all other costs associated with such new Labels including, but not limited to, reimbursement of costs relating to unusable or superseded Labels; provided, however, that Celgene shall not be responsible for any such costs that result from Penn's failure to act within commercially reasonable care and diligence.

2.5. API.

2.5.1. API DELIVERY. At least ninety (90) days prior to Celgene's first firm purchase order submitted under clause 2.6.4, Celgene shall identify the source of the API to Penn and shall furnish the API to Penn, free of charge, in such quantities as are necessary to enable Penn to manufacture the Commercial Products ordered. Celgene or its designee will ship to Penn the API released with a certificate of analysis for the API.

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

2.5.2. API SEGREGATION. Penn shall keep all API segregated from other materials within its reasonable control so as to maintain the integrity of the substance and shall not allow any samples of the substance to be used or Tested by any party not under its direct supervisory control for any purposes. Penn shall perform only such Tests and analysis as it deems necessary for this Agreement and shall maintain the confidentiality of such Test results in compliance with clause 8 below. The API shall remain the property of Celgene until used by Penn in the Processing.

2.5.3. API VERIFICATION. Penn shall verify the quantity and quality of all API received by Penn according to the methods and procedures set forth in the Specifications within sixty (60) days of receipt by Penn of the API. Within such sixty (60) day period, Penn shall inform Celgene in writing of any discrepancies in the quantity and/or quality of the API received and the documents accompanying each shipment of the API.

2.5.4. TIMELY API DISCREPANCY. If Penn notifies Celgene of a discrepancy in the quantity or quality of the API within such sixty (60) day period, Celgene shall endeavor in good faith to ship additional API within the time period necessary for Penn to manufacture Commercial Product in accordance with the completion date for delivery of Commercial Product pursuant to the applicable purchase order. Penn shall not be liable to Celgene for any losses, liabilities or claims resulting directly or indirectly from the late delivery of API by Celgene.

2.5.5. LEGAL NOTICE OF DISCREPANCY; OR API DAMAGE. If Penn fails to inform Celgene of any discrepancy in the quantity or quality of the API within such sixty (60) day period or if there is damage to the API within the foregoing sixty (60) day period and Penn cannot demonstrate that such damage occurred prior to delivery to Penn or if any such damage is the result of Penn's failure to handle the API in accordance with the terms of this Agreement, then Penn shall (a) at Penn's option return the API to Celgene or dispose of same according to Celgene's instructions and (b) at Celgene's option, either (i) purchase from Celgene replacement API for a value equal to Celgene's then current API cost for the API that is lost, damaged or destroyed, or (ii) credit Celgene on it's next invoice for an amount equal to Celgene's then-current cost for such API.

2.5.6. OTHER API DAMAGE OR LOSS. Subject to Celgene notifying Penn of the replacement value of the API at or about the time Penn receives such item, Penn shall assume responsibility and liability for, and shall defend, indemnify and hold Celgene harmless from and against, any loss of or damage to the API while Penn has custody and control over the API, In-Process Materials and/or the finished Commercial Product. Such responsibility and liability shall commence upon Penn's receipt of the API at Penn's manufacturing facility and end upon the delivery of the Commercial Product to a common carrier at the manufacturing facility for shipment to Celgene. Without limiting the generality of the foregoing, lost or damaged API shall be disposed of and replaced or credited as provided in clause 2.5.5.

2.6. FORECASTS AND ORDERS.

2.6.1. FORECASTS. Beginning with the first full calendar quarter, not less than forty-five (45) days prior to the first day of each calendar quarter, Celgene shall prepare and provide Penn with a written forecast of the estimated Commercial Product requirements of

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

Celgene and its Affiliates for each of the following four (4) calendar quarters. Without the prior written consent of Penn, Celgene shall not increase or decrease the quantity estimated for the first calendar quarter of each forecast by more than twenty-five percent (25%) from the quantity estimated for the second calendar quarter of the previous forecast.

2.6.2. PURCHASE REQUIREMENTS. Celgene shall be required to purchase not less than one hundred percent (100%) of the quantity of Commercial Product forecasted for such first calendar quarter in the most recent forecast under clause 2.6.1 above.

2.6.3. SUPPLY REQUIREMENTS. Each calendar quarter, Penn shall manufacture, supply and deliver to Celgene such quantities of Commercial Products as Celgene orders pursuant to clause 2.6.4 below, up to one hundred percent (100%) of the quantity forecasted for such calendar quarter in the most recent forecast under clause' 2.6.1 above. Penn shall use its commercially reasonable efforts to manufacture and supply to Celgene any quantities of Commercial Products as Celgene orders pursuant to clause 2.6.4 below, in excess of one hundred percent (100%) of the quantity forecasted for such calendar quarter in the most recent forecast under clause 2.6.1 above, provided that Celgene has furnished Penn with the necessary amount of API pursuant to clause 2.5.1 above to enable Penn to manufacture the additional quantity. If Penn becomes aware of any circumstances that may cause Penn to default in its obligation above to deliver such quantities of conforming Commercial Products as Celgene forecasted for any calendar quarter, Penn shall give Celgene prompt written notice describing such circumstances, together with a proposed course of action to remedy such failure; provided, however, that the provision of such notice shall not relieve Penn of its delivery obligations hereunder.

2.6.4. ORDERS. Celgene shall purchase Commercial Product hereunder by submitting firm purchase orders to Penn. Each purchase order shall be in writing in a form reasonably acceptable to Penn, and shall specify the Commercial Products ordered, the quantity ordered and the required delivery date therefor, which shall not be less than ninety (90) days after the date of such purchase order. The minimum size of any order for Commercial Products shall be a single Batch with larger orders being in whole number multiples of a Batch. In the event of a conflict between the terms and conditions of any purchase order and this Agreement, the terms and conditions of this Agreement shall prevail.

2.7. STORAGE, DELIVERY AND ACCEPTANCE.

2.7.1. STORAGE. Penn shall have no obligation to Store the Commercial Product and may ship the Commercial Product to Celgene immediately following the Penn Approval Date.

2.7.2. DELIVERY. All Commercial Products supplied under this Agreement shall be shipped F.O.B. Penn's place of manufacture. Celgene shall pay all freight, insurance charges, taxes (excluding Value Added Tax ("VAT")), import and export duties, inspection fees and other charges applicable to the sale and transport of Commercial Products purchased by Celgene hereunder. Title and risk of loss and damages to Commercial Products purchased by Celgene hereunder shall pass to Celgene upon delivery to Celgene's designated carrier. Penn shall provide a copy of a complete and accurate Batch Record to Celgene within five (5) business days following the Penn Approval Date for the applicable Batch of Commercial Products.

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

2.7.3. REJECTION AND CURE.

(i) REJECTION. The Batch Records shall be accepted as complete and accurate unless Celgene notifies Penn in writing within thirty (30) days of delivery of Commercial Products that Celgene has determined that either the Commercial Products do not conform to the Specifications or that the Batch Records are not complete; provided, however, in the case of Commercial Product having latent defects, which upon diligent examination in accordance with all quality control testing procedures set out in the Specifications upon receipt could not have been discovered, Celgene must give notice to Penn within twenty (20) days after discovery of such defect, setting forth the specific basis for such rejection. Upon written notification by Celgene of a deficient Batch Record or Non-Conforming Batch, Penn shall review the specific basis for such rejection and upon acceptance of such rejection, Penn shall correct the deficiency to the Batch Record or replace the Non-Conforming Batch or non-conforming portion thereof within forty-five (45) business days with no additional cost to Celgene (subject to clause 2.7.3 (ii) below).

(ii) DISPUTES. If prior to either Celgene's acceptance of the Batch Record, or Celgene's notification to Penn of latent defects, the parties disagree concerning whether the Commercial Product meets Specifications or whether the Batch Records are complete, either party may request, in writing, at any time, that an independent laboratory be used to determine whether the Commercial Product meets Specifications. Thereafter, the parties shall, within fourteen (14) days, promptly name a reputable and mutually acceptable independent laboratory (the "Laboratory") that has been or will be qualified for the appropriate testing method(s) set forth in the NDA and in the absence of agreement by the parties, the dispute shall be referred to the laboratory used by the Home Office Forensic Science Service from time to time. The Laboratory shall Test the Commercial Product for compliance with the Specifications, and such Test results obtained by the Laboratory shall be final and controlling.

(iii) CURE. If the Laboratory determines that the Commercial Product meets Specifications, Celgene shall (1) pay to Penn the amount invoiced for such Commercial Product pursuant to clause 3.2 below, and all other expenses reasonably attributable or resulting from the Laboratory referral and (2) pay to the Laboratory the amount of the fees charged by the Laboratory for such Testing. If the Laboratory findings indicate that such sample fails to conform to the applicable Specifications, then Penn shall (a) replace each non-conforming shipment of Commercial Products, or the non-conforming portion thereof, with conforming Commercial Products as soon as reasonably practicable and in any event within forty-five (45) business days after receipt of the Laboratory findings with no additional cost to Celgene; (b) pay to the Laboratory the amount of the fees charged by the Laboratory for such Testing and all other expenses reasonably attributable or resulting from the Laboratory referral; and (c) reimburse Celgene for the required additional API necessary to manufacture conforming Commercial Product.

2.7.4. COVER. If Penn fails to timely deliver to Celgene the quantity of conforming Commercial Products that Celgene orders under any purchase order pursuant to clause 2.6.4 above (subject to clauses 2.6.3 and 2.7.3 above), after providing written notice to Penn, Celgene shall have the right to purchase substitute Commercial Products from a third party in substitution for the quantity of conforming Commercial Products which Penn failed to deliver

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

hereunder. Penn shall reimburse Celgene within fourteen (14) days for the difference between the cost of obtaining such substitute Commercial Products (plus any commercially reasonable charges, expenses or commissions incurred by Celgene in connection with effecting cover, and any other reasonable expenses incident to such failure), less the price which would have been due to Penn for the like quantity of Commercial Products if supplied by Penn hereunder, provided always that Celgene shall be obliged to use its reasonable commercial efforts to purchase the substitute Commercial Products at the best price available in the open market and on the best commercial terms available. Any purchase by Celgene under this clause 2.7.4 shall be deemed a purchase from Penn for the purposes of calculating Celgene's annual purchase requirements hereunder.

ARTICLE 3
PRICE AND PAYMENT TERMS

3.1. PRICE. Celgene shall purchase from Penn all Commercial Products which are accepted pursuant to clause 2.6 above at a price equal to that quoted in Penn proposal number ***, per Batch, subject to clause 2.3.1 above, clause 3.2 below and the Technical Requirements in Exhibit D (the "Price"). On each anniversary of the date of first manufacture of Commercial Product, Penn may increase the Price based on the greater price increase of either PPI or Raw Material Cost during the preceding year. Such new Price shall be effective for all orders received by Penn after written notice of such increase by Penn to Celgene, such notice, showing in reasonably specific detail the calculation of such increase.

3.2. INVOICING. Upon shipment of Commercial Products to Celgene, Penn shall submit invoices therefore to Celgene. Celgene shall pay each invoice in full within *** days after the date of Celgene's receipt of such invoice (subject to clause 2.7.3 above). Invoices will be issued in US Dollars whereby the conversion to US Dollars will be based upon the currency exchange rate that is prevailing on the day the invoice is issued as published in the Financial Times.

3.3. SALES AND USE TAXES. Celgene shall be solely responsible for the payment of all federal, state, or local sales, use, excise or similar charge, or other tax assessment (other than that assessed against income, and VAT), assessed or charged on the sale of Commercial Products sold pursuant to this Agreement.

3.4. AUDIT RIGHT. Upon the written request of Celgene and not more than once in each calendar year, Penn shall permit an independent certified public accounting firm, selected by Celgene and reasonably acceptable to Penn, to have access during normal business hours to such of the records of Penn as may be reasonably necessary to verify the accuracy of Penn's calculation of any price increase hereunder for any period ending not more than thirty-six (36) months prior to the date of such request. The accounting firm shall disclose to Celgene only whether the calculations are correct or not and the specific details concerning any discrepancies. If such accounting firm concludes that the price increase was overstated during the audited period, Penn shall reimburse Celgene for the amount overpaid by Celgene hereunder for such period within thirty (30) days of the date Celgene delivers to Penn such accounting firm's written report. The fees and expenses charged by such accounting firm shall be paid by Celgene; PROVIDED, HOWEVER, if the audit discloses that the price increase was overstated during the audited

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

period by more than five percent (5%), then Penn shall pay the accounting firm's reasonable fees and expenses.

ARTICLE 4
FURTHER OBLIGATIONS OF THE PARTIES

4.1. REGULATORY CORRESPONDENCE. Penn and Celgene shall make available (or cause to be made available) to each other as soon as practicable (but in any event within five (5) days) of receipt of regulatory correspondence regarding regulatory letters, recalls, adverse experiences and all other regulatory correspondence bearing on the safety and efficacy of the Commercial Products which may concern chemistry, manufacturing and control (CMC) issues.

4.2. PRODUCT INQUIRIES AND COMPLAINTS. Celgene will promptly submit to Penn all Commercial Product safety and efficacy inquiries, Commercial Product quality complaints and adverse drug event reports received by it which may concern CMC issues, together with all available evidence and other information relating thereto. Except as otherwise required by law or governmental regulation, Celgene will be responsible for investigating and responding to all such inquiries, complaints and adverse events regarding Commercial Product. It shall be the responsibility of Celgene to comply with all federal, state and local governmental reporting requirements regarding adverse drug events and Commercial Product quality matters, except where such events or matters are caused by acts or omissions of Penn, in which case Celgene may, consistent with applicable law and regulation, request Penn's assistance in such compliance. Celgene will forward a copy of FDA submissions concerning CMC issues within ten
(10) business days of submission.

4.3. RECALL. In the event either party believes it may be necessary to conduct a recall, field correction, market withdrawal, stock recovery, or other similar action with respect to any Commercial Products which were sold by Penn or its Affiliates to Celgene or its Affiliates under this Agreement (a "Recall"), Penn and Celgene shall consult with each other as to how best to proceed, it being understood and agreed that the final decision as to any Recall of any Commercial Product shall be made by Celgene; provided, however, that Penn shall not be prohibited hereunder from taking any action that it is required to take by applicable law. Celgene shall bear all costs in connection with any such Recall; provided, however, that Penn shall reimburse Celgene for all reasonable out-of-pocket expenses incurred by Celgene in connection with any such Recall attributable to any negligence on the part of Penn or as a result a latent defect as set out in clause 2.7.3.

4.4. RESPONSE TO COMPLAINTS AND/OR ADVERSE DRUG EVENTS. Pursuant to any reported complaint and/or adverse drug event, if the nature of the reported complaint and/or adverse drug event requires Testing, Penn will, at Celgene's reasonable request and expense, perform analytical Testing according to the Specifications of corresponding retention samples and provide the results thereto to Celgene as soon as reasonably practicable; PROVIDED, HOWEVER, Penn shall be responsible for the reasonable costs of such Testing and reporting to the FDA or any other governmental regulatory agency if it is determined that such reported complaint and/or adverse drug event is attributable to any negligence on the part of Penn or as a result of a latent defect as set out in clause 2.7.3.

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

4.5. ADDITIONAL WORK. If Celgene requires additional work from Penn related to the Commercial Products not specified herein, including, but not limited to, stability testing, such work, if accepted by Penn in its sole discretion, shall be accomplished on a purchase order basis and is beyond the scope of this Agreement.

ARTICLE 5
REPRESENTATIONS AND WARRANTIES

5.1. GENERAL WARRANTIES. Each party hereby represents and warrants to the other party as follows:

5.1.1. CORPORATE EXISTENCE. Such party is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated.

5.1.2. AUTHORIZATION AND ENFORCEMENT OF OBLIGATIONS. Such party (a) has the corporate power and authority and the legal right to enter into this Agreement and to perform its obligations hereunder, and (b) has taken all necessary corporate action on its part to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder. This Agreement has been duly executed and delivered on behalf of such party, and constitutes a legal, valid, binding obligation, enforceable against such party in accordance with its terms.

5.1.3. CONSENTS. All necessary consents, approvals and authorizations of all governmental authorities and other Persons required to be obtained by such party in connection with its performance of this Agreement have been obtained.

5.1.4. NO CONFLICT. The execution and delivery of this Agreement and the performance of such party's obligations hereunder (a) do not conflict with or violate any requirement of applicable laws or regulations, and
(b) do not conflict with, or constitute a default under, any material contractual obligation of such party.

5.1.5. INSURANCE. Each party shall maintain comprehensive general liability insurance, including product liability insurance against claims regarding the manufacture of Commercial Products under this Agreement, in such amounts as it customarily maintains for similar products and activities. Each party shall maintain such insurance during the term of this Agreement and thereafter for so long as it customarily maintains insurance for itself for similar products and activities. Each party shall provide the other proof of such insurance upon the request of the other party from time to time, and give the other party at least thirty (30) days notice of any cancellation, termination or change in such insurance. Either party may substitute a self-insurance program on notice to the other party with information demonstrating to the reasonable satisfaction of the other party the adequacy of such program.

5.2. PENN'S WARRANTIES. During the term of this Agreement, Penn hereby represents and warrants as follows:

5.2.1. MANUFACTURING METHODS. Penn shall Process, Test, Package and Label the Commercial Products in accordance with the Master Batch Record, and with any regulations

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

applicable to the manufacture of the Commercial Product of the FDA and any other applicable U.S. regulatory agencies. The Commercial Product shall, at the time it is shipped to Celgene,

(i) not be adulterated or misbranded within the meaning of the FFDCA or within the meaning of any applicable state or municipal law in which the definitions of adulteration and misbranding are substantially the same as those contained in the FFDCA;

(ii) not be articles that may not, under Section 505 of the FFDCA or any other provision of the FFDCA or any other applicable law, statute or regulation, be introduced into interstate commerce;

(iii) have been manufactured, processed, and packed in compliance with all requirements under the FFDCA (including drug establishment registration and applicable good manufacturing practice) or under any other applicable laws, rules, or regulations of the United States; and

(iv) conform to the Specifications for the Commercial Products as documented on the Master Batch Record

5.2.2. REGULATORY COMPLIANCE. Penn shall comply in all material respects with any law, regulation, ordinance, order, injunction, decree or governmental requirement applicable to the manufacture of the Commercial Product, the handling of the Hazardous Waste prior to pick-up by the waste contractor, and the handling and disposal of the Non-Hazardous Waste.

5.2.3. LICENSING REQUIREMENTS. Penn shall maintain in effect all required governmental permits, licenses, orders, applications and approvals necessary for the Processing, Testing, Packaging, and Labeling and Penn shall Process, Test, Package and Label in accordance with all such permits, licenses, orders, applications and approvals.

5.2.4. PROMPT RESPONSE. Penn shall promptly respond to all reasonable inquiries from Celgene pertaining to the Commercial Product.

5.2.5. PROMPT DELIVERY. Without limiting the other provisions of this Agreement, Penn shall use its commercially reasonable efforts at all times to minimize Commercial Product delivery time.

5.2.6. DISCLAIMER. PENN MAKES NO OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE COMMERCIAL PRODUCTS INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.

5.3. CELGENE'S WARRANTIES. During the term of this Agreement, Celgene hereby represents and warrants as follows:

5.3.1. API Integrity. The API shall, at the time it is shipped to Penn,

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

(ii) not be articles that may not, under Section 505 of the FFDCA or any other provision of the FFDCA or any other applicable law, statute or regulation, be introduced into interstate commerce;

(iv) conform to the Specifications for the API as documented on the certificate of analysis included with each delivery of API.

5.3.2. PROMPT RESPONSE. Celgene shall promptly respond to all reasonable inquiries from Penn pertaining to the Commercial Products.

5.3.3. REGULATORY DOSSIERS. Celgene shall assume all responsibility for maintaining the DMF, NDA, and any supplements thereto, including making additional filings with the FDA.

5.3.4. NECESSARY LICENSES. Celgene shall, at its own cost, obtain and maintain any and all Federal and state licenses with respect to the marketing, sale and distribution of the Commercial Products.

ARTICLE 6
INDEMNIFICATION AND LIABILITY

6.1. PENN'S INDEMNITY OBLIGATIONS. Subject to clauses 6.2 and 6.5 below, Penn shall indemnify and hold harmless Celgene, its Affiliates and their respective successors and permitted assigns (and the respective officers, directors, stockholders, partners and employees of each) (together the "Celgene Indemnitees") from and against any and all costs, losses, liabilities, claims, actions, proceedings, damages and expenses (including without limitation reasonable attorneys' fees and expenses) (herein "Damages") to the extent that such Damages relate to or arise (a) from the manufacture of the Commercial Products by Penn not in conformance with the Master Batch Record, (b) any breach by Penn or its Affiliates of this Agreement; or (c) any breach by Penn of any representation, warranty or obligation herein, provided however, Penn shall have no obligation to indemnify Celgene to the extent such Damages relate to Penn's use or any use by Penn's Affiliates of the Intellectual Property

6.2. EXCLUSION OF LIABILITY. Subject to clause 6.4, neither party shall under any circumstances be liable for any indirect, special or consequential loss, or loss of anticipated profit or loss of profit howsoever arising whether in contract, tort (including negligence) or breach of statutory duty or otherwise except with respect to the indemnity obligations provided for under clauses 6.1 and 6.3 as they may relate to damages awarded and/or settlement monies paid to third

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

parties in relation to death or personal injury claims asserted by such third parties ("Third Party Damages") arising out of negligence or willful misconduct and consequently, for the avoidance of doubt:

nothing in this Agreement shall limit the type of Damages against which the Celgene Indemnitees are entitled to be indemnified and held harmless pursuant to clause 6.1 to the extent that such Damages comprise Third Party Damages caused by Penn's negligence or willful misconduct; and

nothing in this Agreement shall limit the type of Damages against which the Penn Indemnitees are entitled to be indemnified and held harmless pursuant to clause 6.3 to the extent that such Damages comprise Third Party Damages caused by Celgene's negligence or willful misconduct.

6.3. CELGENE'S INDEMNITY OBLIGATIONS. Celgene shall indemnify and hold harmless Penn, its Affiliates, and their respective successors and permitted assigns (and the respective officers, directors, stockholders, partners and employees of each) (together the "Penn Indemnitees") and keep the Penn Indemnitees indemnified against all Damages (including but not limited to any Damages arising out of claims, actions or litigation brought by third parties relating to the use of Intellectual Property by any Penn Indemnitee) in connection with or arising out of any use of any API or Commercial Products by any Penn Indemnitee, Celgene or any third party (which third party shall include but not be limited to permitted sub-contractors assigns and agents in addition to consumers and end-users) provided that this indemnity shall not operate to the extent that such Damages have arisen out of (a) the manufacture of the Commercial Products not in conformance with the Master Batch Record, or (b) any breach by any Penn Indemnitee of this Agreement, including any representation, warranty or obligation herein. Said "any use of any API or Commercial Products" with respect to any Penn Indemnitee shall mean any use that occurs in the course of performing under this Agreement.

6.4. NO EXCLUSION. Notwithstanding any other provision of this Agreement neither party seeks to exclude liability for loss arising from death or personal injury caused by negligence or willful misconduct.

6.5. LIMITATION OF LIABILITY. Subject to clause 6.4 the aggregate liability of Penn (whether in contract, tort (including negligence) or breach of statutory duty or otherwise) to Celgene for any Damages (whether asserted by Celgene or third parties) of whatever nature and however caused, other than any Third Party Damages, shall be limited to and in no circumstances shall exceed the greater of:

two times the Price paid to Penn for the Commercial Products from which such damage flowed; or

in relation to a bona fide claim brought against Penn for which Penn has insurance, monies recovered by Penn from its insurers; or

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

in relation to a bona fide claim brought against Penn for which Penn has insurance, monies which would have been recovered by Penn from its insurers had Penn taken all appropriate steps in a timely manner to make a claim under any relevant insurance policy.

6.6. PROCEDURES. A party (the "indemnitee") that intends to claim indemnification under this clause 6 shall notify the other party (the "indemnitor") promptly in writing of any action, claim or liability in respect of which the indemnitee believes it is entitled to claim indemnification, provided that the failure to give timely notice to the indemnitor shall not release the indemnitor from any liability to the indemnitee except to the extent the indemnitor is prejudiced thereby. The indemnitor shall have the right, by notice to the indemnitee, to assume the defense of any such action or claim within the fifteen (15) day period after the indemnitor's receipt of notice of any action or claim with counsel of the indemnitor's choice and at the sole cost of the indemnitor. If the indemnitor so assumes such defense, the indemnitee may participate therein through counsel of its choice, but at the sole cost of the indemnitee; PROVIDED, HOWEVER, that the indemnitor shall be obligated to pay fees and expenses of such indemnitee's counsel if representation of the indemnitee by the counsel retained by the indemnitor would be inappropriate due to actual or potential differing interests between the indemnitee and any other party represented by such counsel in the investigation and defense of any such action, claim or liability. The party not assuming the defense of any such claim shall render all reasonable assistance to the party assuming such defense, and all reasonable out-of-pocket costs of such assistance shall be for the account of the indemnitor. No such claim shall be settled other than by the party defending the same, and then only with the consent of the other party which shall not be unreasonably withheld; provided that the indemnitee shall have no obligation to consent to any settlement of any such action or claim which imposes on the indemnitee any liability or obligation which cannot be assumed and performed in full by the indemnitor, and the indemnitee shall have no right to withhold its consent to any settlement of any such action or claim if the settlement involves only the payment of money by the indemnitor or its insurer.

6.7. LIMITATIONS ON INDEMNIFICATION. Notwithstanding any contrary provision herein, including, but not limited to, clause 6.3 above, neither party shall be entitled to indemnification with respect to any claim or suit to the extent such claim or suit results from (1) its own or any of its Indemnitee's gross negligence or (2) willful misconduct on its or any of its Indemnitee's part

ARTICLE 7
RELATIONSHIP BETWEEN THE PARTIES

7.1. INDEPENDENT CONTRACTOR. The relationship between Penn and Celgene is solely that of seller and buyer, it being understood that each party is acting as an independent contractor for its own account and this Agreement does not establish a joint venture, agency, partnership or employer/employee relationship between the parties. Neither party shall have authority to conclude contracts or otherwise to act for or bind the other party in any manner, whatsoever, as agent or otherwise. Any and all contracts and agreements entered into by either party shall be for that party's sole account and risk and shall not bind the other party in any respect.

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

ARTICLE 8
CONFIDENTIALITY AND PUBLIC DISCLOSURE

8.1. CONFIDENTIALITY. Except for literature and information intended for disclosure to customers, and except as may be required to obtain government approval to manufacture, sell or use the Commercial Products, each party will treat as confidential the Confidential Information, and will take all necessary precautions to assure the confidentiality of such information. Each party agrees to return to the other party upon the expiration or termination of this Agreement all Confidential Information acquired from such other party, except as to such information it may be required to retain under applicable law or regulation, and except for one (1) copy of such information to be retained by such party's legal department solely to monitor compliance hereunder. Neither party shall, during the period of this Agreement or for five (5) years thereafter, without the other party's express prior written consent use or disclose any such Confidential Information for any purpose other than to carry out its obligations hereunder. Each party, prior to disclosure of such Confidential Information to any employee, consultant or advisor shall ensure that such person is bound in writing to observe the confidentiality provisions of this Agreement. The obligations of confidentiality shall not apply to information that the receiving party is required by law or regulation to disclose, provided however that the receiving party shall so notify the disclosing party of its intent and cooperate with the disclosing party on reasonable measures to protect the confidentiality of the information.

8.2. PUBLIC DISCLOSURE. Except for such disclosure as is deemed necessary, in the reasonable judgment of a party, to comply with applicable laws, no announcement, news release, public statement, publication, or presentation relating to the existence of this Agreement, the subject matter hereof, or either party's performance hereunder will be made without the other party's prior written approval, which approval shall not be unreasonably withheld or delayed.

ARTICLE 9
TERM AND TERMINATION

9.1. TERM. Unless terminated earlier pursuant to clause 9.2 below, the initial term of this Agreement shall expire on the date *** years after the date hereof; PROVIDED, HOWEVER, that the term of this Agreement shall be automatically extended for up to *** successive additional terms of *** thereafter unless either party gives to the other not less than *** written notice of termination prior to the expiration of the initial term, or any additional term, of this Agreement.

9.2. TERMINATION.

9.2.1. BY EITHER PARTY. A party shall have the right to terminate this Agreement, upon or after the breach of any material provision of this Agreement by the other party if the other party has not cured such breach within thirty (30) days (or ten (10) days in event of a payment default) after receipt of written notice thereof from the non-breaching party describing such breach in reasonable detail.

9.2.2. BY CELGENE. Celgene shall have the right to terminate this Agreement, on sixty (60) days written notice to Penn, if Penn fails to deliver to Celgene such quantities of

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

conforming Commercial Products as Celgene orders pursuant to clause 2.6.4 above (subject to clause 2.6.3 above) for any two (2) out of four (4) consecutive calendar quarters.

9.2.3. EFFECT OF EXPIRATION AND TERMINATION. Expiration or termination of this Agreement shall not relieve the parties of any obligation accruing prior to such expiration or termination. The provisions of clauses 2.5.5, 2.5.6, 2.7.3, 2.7.4, 3.4, 4.3, 4.4, 5.1.5, 5.2.4, 5.3.2 and 9.2.3 and Articles 6, 8 and 10 shall survive any expiration or termination of this Agreement. Upon termination or expiration, each party shall immediately deliver to the other (and cause each of its employees, agents and representatives to so deliver), at such party's expense, all Confidential Information of the other party, including without limitation any and all copies, duplications, summaries and/or notes thereof or derived therefrom, regardless of the format, except as to such information it may be required to retain under applicable law or regulation, and except for one (1) copy of such information to be retained by such party's legal department solely to monitor compliance hereunder. The following purchase obligations shall survive Termination under this clause 9.2:

(i) In the event that Penn terminates this Agreement pursuant to clause 9.2.1 (Celgene's breach), Celgene shall purchase Penn's inventory of Raw Materials, Packaging, Labeling, In-Process Materials and Commercial Products that conform to the Master Batch Record at the prices paid by Penn for such items, as reasonably documented by Penn.

ARTICLE 10
MISCELLANEOUS

10.1. FORCE MAJEURE. Neither party shall incur any liability to the other to the extent that it is delayed in the performance of its obligations hereunder solely by force majeure. For the purpose of this Agreement "force majeure" shall mean any cause of delay beyond the reasonable control of the party liable to perform unless conclusive evidence to the contrary is provided and shall include but not be limited to strikes, lockouts, industrial disturbance, riots, sabotage, act of war or piracy, destruction of essential equipment by fire, explosion, storm, flood, earthquake, or delay caused by failure of power supplies or transport facilities, inability to obtain materials (that is beyond Penn's control) or government action including but not limited to priorities and quotas.

10.2. NOTICES. All notices or other communications given pursuant hereto by one party hereto to the other party shall be in writing and deemed given (a) when delivered by messenger, (b) when sent by telecopier, (with receipt confirmed), (c) when received by the addressee, if sent by Express Mail, Federal Express or other express delivery service (receipt requested), or (d) five days after being mailed in the U.S., first-class postage prepaid, registered or certified, in each case to the appropriate addresses and telecopier numbers set forth below (or to such other addresses and telecopier numbers as a party may designate as to itself by notice to the other party):

If to Penn, to it at:

Penn Pharmaceutical Services Ltd

Unit 23 & 24
Tafarnaubach Industrial Estate

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

Tredegar,
Gwent
NP22 3AA
Attention: ***
Telecopier: +44 1495 713616

with a copy to:

Addleshaw Goddard
100 Barbirolli Square
Manchester,
M2 3AB
Attention: ***
Telecopier No.: +44 161 934 6060

If to Celgene, to it at:

Celgene Corporation
7 Powder Horn Drive
Warren, NJ 07059
Attention: Chief Operating Officer Telecopier No.: (732) 271-4184

with a copy to:

Proskauer Rose, LLP
1585 Broadway
New York, NY 10036
Attention: ***
Telecopier No.: (212) 969-2900

10.3. ASSIGNMENT. Neither party shall assign or transfer this Agreement to any Person, in whole or in part, provided that, each party may assign or transfer this Agreement to any Affiliate or to any successor by merger of such party or its pharmaceutical business to which this Agreement relates, or upon a sale of all or substantially all of such parties assets, or the assets of its pharmaceutical business to which this Agreement relates, without the prior written consent of the other party hereto (not to be unreasonably withheld or delayed). All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors and permitted assigns.

10.4. SEVERABILITY. If any portion of this Agreement is held invalid by a court of competent jurisdiction, such portion shall be deemed to be of no force and effect and the Agreement shall be construed as if such portion had not been included herein, provided however, if the deletion of such provision materially impairs the commercial value of this Agreement to either party, the parties shall attempt to renegotiate such provision in good faith.

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

10.5. ENTIRE AGREEMENT. This Agreement and all Exhibits attached hereto contain the sole and entire agreement and understanding of the parties hereto and their respective Affiliates and representatives related to the subject matter hereof and supersede all oral or written agreements concerning the subject matter made prior to the date of this Agreement.

10.6. AMENDMENT: WAIVER. This Agreement cannot be amended, changed, modified or supplemented orally, and no amendment, change, modification or supplement of this Agreement shall be recognized nor have any effect, unless the writing in which it is set forth is signed by Penn and Celgene, nor shall any waiver of any of the provisions of this Agreement be effective unless in writing and signed by the party to be charged therewith. The failure of either party to enforce, at any time, or for any period of time, any provision hereof or the failure of either party to exercise any option herein shall not be construed as a waiver of such provision or option and shall in no way affect that party's right to enforce such provision or exercise such option. No waiver of any provision hereof shall be deemed to be, or shall constitute, a waiver of any other provision, or with respect to any succeeding breach of the same provision.

10.7. GOVERNING LAW, DISPUTE RESOLUTION, ARBITRATION. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New Jersey and the United States, as though made and to be fully performed therein without regard to conflicts of laws principles thereof.

The parties shall initially attempt in good faith to resolve any significant controversy, claim, allegation of breach or dispute arising out of or relating to this Agreement (hereinafter collectively referred to as a "Dispute") through negotiations between senior executives of Celgene and Penn. If the Dispute is not resolved within thirty (30) days (or such other period of time mutually agreed upon by the parties) of notice of the Dispute (the "Executive Resolution Period"), then the parties agree to submit the Dispute to arbitration as provided herein. Unless otherwise mutually agreed by the parties, only if the Dispute is not resolved through negotiations as set forth herein, may a party resort to arbitration.

All Disputes relating in any way to this Agreement shall be resolved exclusively through arbitration conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association as then in effect. In the event either party demands arbitration, it shall do so within thirty (30) days after the expiration of the Executive Resolution Period (or any mutually agreed extension) and shall include a request that such arbitration be held within thirty (30) days of such demand. The arbitration hearing shall be held as soon as practicable. The arbitration hearing shall be held in Chicago, Illinois and shall be before a single arbitrator selected by the parties in accordance with the Commercial Arbitration Rules of the American Arbitration Association pursuant to its rules on selection of arbitrators. The arbitrator shall render a formal, binding, non-appealable resolution and award on each issue as expeditiously as possible but not more than ten (10) business days after the hearing. In any arbitration, the prevailing party shall be entitled to reimbursement of its reasonable attorneys' fees and the parties shall use all reasonable efforts to keep arbitration costs to a minimum.

10.8. SINGULAR AND PLURAL FORMS. The use herein of the singular form shall also denote the plural form, and the use herein of the plural form shall denote the singular form, as in each case the context may require.

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

10.9. HEADINGS. The headings contained in this Agreement are for convenience of reference only and shall not constitute a part hereof or define, limit or otherwise affect the meaning of any of the terms or provisions hereof.

10.10. NO THIRD PARTY BENEFICIARIES. Except as expressly set forth herein, this Agreement shall not create, or be construed to create, any rights enforceable by any Person not a party to this Agreement.

10.11. COUNTERPARTS. This Agreement maybe executed in two (2) counterparts, each of which shall be deemed an original, but both of which, when taken together, shall constitute one and the same instrument.

[SIGNATURE PAGE FOLLOWS]

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective duly authorized officers as of the date first above written.

PENN PHARMACEUTICAL SERVICES LTD

By: ***

Name: ***

Title: ***

CELGENE CORPORATION

By: ***

Name: ***

Title: ***

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.\

EXHIBIT 10.53

DISTRIBUTION SERVICES AND STORAGE AGREEMENT

BETWEEN

CELGENE CORPORATION

AND

SHARP CORPORATION

JANUARY 1, 2005

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

DISTRIBUTION SERVICES AND STORAGE AGREEMENT

This Amended and Restated Distribution Services Agreement entered into this 1st day of January, 2005, by and between Celgene Corporation, a Delaware corporation ("CELGENE"), and Sharp Corporation ("SHARP").

WHEREAS, CELGENE and SHARP entered into a Distribution Services Agreement dated June 12, 2000 (the "Agreement"); and

WHEREAS, CELGENE and SHARP desire to amend and restate the Agreement in its entirety.

NOW, THEREFORE, in consideration of the promises, covenants, agreements and other valuable consideration hereinafter set forth, the parties hereto hereby amend and restate the Agreement in its entirety as follows:

Article 1. DEFINITIONS

As used in this agreement, the following words and phrases shall have the following meanings:

(a) "FDA" shall mean the United States Food and Drug Administration, or any successor entity thereto.

(b) "Act" shall mean the United States Food, Drug and Cosmetics Act, as amended, and rules and regulations promulgated thereunder.

(d) "SHARP facility" shall mean SHARP's facility either owned or leased by Sharp, at which SHARP provides distribution services for pharmaceutical products.

(e) "API" shall mean the active pharmaceutical ingredient required to manufacture a formulation of drug product.

(f) "One Time Costs" as defined in schedule 1.(f)

Article 2. TERM

This Agreement shall be in effect for an initial term of *** years commencing January 1st, 2005 (the "Initial Term"), for the distribution of Celgene products, if not earlier terminated according to Article 5 of this Agreement. The term of this Agreement shall automatically renew for successive ***-year periods unless either party hereto gives the

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

         other  notice of  non-renewal  hereof at least *** months  prior to the
         expiration of the Initial Term or any *** year renewal  period,  as the
         case may be.  Distribution terms of in-licensed  product are subject to
         the term of the individual licensing agreements.

Article 3.      ENGAGEMENT; SERVICES

3.01     CELGENE hereby engages SHARP and SHARP hereby accepts the engagement by
         CELGENE,  to provide the services  hereinafter  described on the terms,
         and subject to the conditions set forth in this Agreement.

3.02     SHARP  will,  as  agent  for  CELGENE,  process  sales  orders  for the
         Products,  ship the  Products  and  process  returns  of the  Products.
         Without limiting the generality of the preceding sentence, SHARP will

                  (a)      dedicate  at  least  ***  square  feet  at the  SHARP
                           facility for the  warehousing  of the  Products,  the
                           processing  of sales  orders for the Products and the
                           processing of returns of the Products;

                  (b)      dedicate at least ***  full-time  SHARP  employees to
                           provide the services described herein;

                  (c)      provide  storage space at the SHARP facility to store
                           API as needed;

                  (d)      provide  perpetual   tracking  of  inventory  of  the
                           Products by lot number.

                  (e)      provide  supervision  of the  destruction of returned
                           and  expired  Products;  and  provide  reporting  and
                           documentation  of  product   destruction  within  ten
                           business days of destruction of product.

                  (f)      provide for the  refrigerated,          2-8(degrees)C
                           (36-46(degrees)F), storage as required.

                  (g)      provide   office  space  for  at  least  ***  Celgene
                           employee.

3.03     CELGENE will provide SHARP remote access to CELGENE's  validated  sales
         order processing  system, and the computer equipment to be described on
         Schedule 3.03 hereto for the purpose of such access and to enable SHARP
         to report on a daily work-day basis to CELGENE. SHARP acknowledges that
         any and all information equipment, inventory or other items provided to
         SHARP  pursuant  to this  Agreement  shall be and remain the  exclusive
         property of CELGENE,  shall be used by SHARP  solely for the purpose of
         rendering  the services  provided for  hereunder  and shall be returned
         promptly  by SHARP  to  CELGENE  upon  termination  of this  Agreement,
         without SHARP having retained any copy thereof.

Article 4. FEES, EXPENSES

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

4.01     For all services to be rendered by SHARP to CELGENE hereunder,  CELGENE
         shall pay SHARP the fees set forth on Schedule 4.01 hereto at the times
         also described in such Schedule.

4.02     Freight charges will be billed directly to CELGENE by carriers.

4.03     Additional  charges due to volume demand,  changes required by Celgene,
         and/or annual  inflation/wage  increases,  to be mutually  agreed upon.
         Reductions in charges due to volume  decline or other similar  factors,
         are to be  negotiated  in good faith and mutually  agreed upon.  If the
         parties cannot agree on the price  adjustments,  the parties will abide
         by the opinion of a mutually agreed upon arbitrator.

5.       TERMINATION

5.01     Upon the occurrence of the following events, either party may terminate
         this Agreement by giving the other party *** days prior written notice:

                  (a) If the other  party is unable  to pay its  debts,  becomes
                  bankrupt  or  insolvent  or enters  into  liquidation  whether
                  compulsory  or  voluntary,  or  compounds  with or  convenes a
                  meeting of its creditors,  or has a receiver appointed overall
                  or part of its assets,  or takes or suffers any similar action
                  in consequence of a debt, or ceases for any reason to carry on
                  business; or

                  (b)  Upon  the  breach  of  any  material  provision  of  this
                  Agreement by the other party if the breach is not cured within
                  *** days after written  notice thereof to the party in default
                  and the  material  breach  continues  to  exist at the time of
                  notice of termination.

5.02     CELGENE may  terminate  this  Agreement  at any time by giving *** days
         written notice to SHARP, if CELGENE, in its sole discretion, determines
         that it will no longer  market  the  Products  or if the FDA  withdraws
         approval of the  manufacture or marketing of the Products.  CELGENE may
         terminate this agreement if the FDA or any other regulatory agency that
         regulates  the  Products  takes any  action  the  result of which is to
         prohibit  the  manufacture,  sale or use or any  similar  action of the
         Products or any raw material contained therein or to impose significant
         restriction.

5.03     The Agreement may be terminated  Pursuant to Article 2, which  provides
         for  termination,  by notice from either party,  upon expiration of the
         Initial Term or any *** period.

5.04     Termination,  expiration, or cancellation of this Agreement through any
         means  and  for  any  reason  shall  not  relieve  the  parties  of any
         obligation  accruing  prior  thereto,  including but not limited to the
         confidentiality  provisions herein and the obligation to pay money, and
         shall be without  prejudice  to the rights and remedies of either party
         with respect to the antecedent  breach of any of the provisions of this
         Agreement.  During the term of this  Agreement  and for a period of ***
         years  thereafter,  both parties  hereto,  subject to applicable  laws,
         shall  maintain in confidence all  information  received from the other
         party  resulting  from or related to the matters  contemplated  by this
         Agreement.

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

5.05     If for any  reason  Celgene  terminates  contract  prior to full  term,
         Celgene  will repay  Sharp's  facility  "one time costs"  according  to
         schedule 5.05.

Article 6.      REPRESENTATION, WARRANTY AND COVENANT

         SHARP  represents and warrants to, and covenants with,  CELGENE that it
         shall render its services  hereunder in compliance  with all applicable
         laws and regulations, including, but not limited to, those dealing with
         occupational  safety and health,  those  dealing with public safety and
         health,  those  dealing  with  protecting  the  environment,  and those
         dealing with disposal of wastes.

Article 7.      INDEMNIFICATION

7.01     CELGENE  shall  indemnify  and hold  SHARP,  its  officers,  directors,
         agents,  servants,  and employees harmless against all claims,  losses,
         damages and liabilities,  including reasonable legal expenses,  arising
         out  of  CELGENE'S  duties  under  this  Agreement  or  the  use of the
         products, and which are not attributable to:

                  (a)      the negligence of SHARP or its agents or employees,

                  (b)      the   failure   of  SHARP  to  follow   the   written
                           instructions and specifications of CELGENE; or

                  (c)      SHARP's breach of this Agreement.

         SHARP  shall not  settle  any such  claim  without  the  prior  written
         approval of CELGENE and CELGENE shall have the right,  if it so wishes,
         to conduct  negotiations  to settle,  settle or conduct any  litigation
         arising out of, any such claim.  SHARP shall  provide  prompt notice of
         any claim to CELGENE and shall cooperate in the defense of the claim.

7.02     SHARP  shall  indemnify  and hold  CELGENE,  its  officers,  directors,
         agents,  servants,  and employees harmless against all claims,  losses,
         damages, and liabilities  including reasonable legal expenses,  arising
         out  of  SHARP's   duties  under  this  Agreement  and  which  are  not
         attributable to:

                  (a)      any act or  negligence  of  CELGENE  or its agents or
                           employees,

                  (b)      the  failure of CELGENE  or its  employees  to comply
                           with applicable law or regulations, or

                  (c)      Celgene's breach of this Agreement.

         CELGENE  shall not  settle  any such claim  without  the prior  written
         approval  of SHARP,  and that  SHARP  shall  have the  right,  if it so
         wishes,  to  conduct  negotiations  to settle,  settle or  conduct  any
         litigation arising out of, any such claim. CELGENE shall provide

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

         prompt  and  written  notice  of any  such  claim to  SHARP  and  shall
         cooperate in the defense of the claim.

7.03     The  indemnification  obligations  set  forth in this  Article  7 shall
         survive the termination of this Agreement.

Article 8.      QUALITY AGREEMENT

         A  Quality  Agreement  shall be in place  by March  15,  2005 or a date
         shortly after that is mutually agreed upon by both parties.

Article 9       RIGHTS TO INSPECT

9.01     In  performing  distribution  of the  Products  hereunder,  SHARP shall
         permit  CELGENE  and/or  its  designated  representative,   but  not  a
         competitor of Sharp,  to inspect on a regular  basis or as needed,  but
         not less than once per year that portion of SHARP  Facility to evaluate
         SHARP's  work  practices,  supporting  systems,  documents  and records
         associated  with the Products and make such copies of the  documents as
         reasonably  necessary for the purpose of assessing  SHARP's  compliance
         with  applicable  regulations.  Additionally,  SHARP shall from time to
         time permit CELGENE and/or its designated  representative access to the
         SHARP Facility for the purpose of confirming  inventory of the Products
         on hand, as and when such  confirmation is determined to be appropriate
         by CELGENE's  external  auditors.  All such reviews  shall be conducted
         upon reasonable prior notice by CELGENE.

9.02     SHARP shall keep CELGENE fully  informed of the steps taken by SHARP to
         resolve  any  outstanding  issues  with  the FDA  and  the  anticipated
         timetable of  resolution  of such issues as it applies to either of the
         Products.

Article 10 ASSIGNMENT

This Agreement may not be assigned or transferred by SHARP without the prior written consent of CELGENE. In the event there is a change of control of SHARP or its business, this Agreement will remain in effect and bind the acquirer.

Article 11 COURT PROCEEDINGS; GOVERNING LAW

Any court proceeding initiated by one party against the other with respect to any dispute under this Agreement shall be commenced in the United States District Court for the Eastern District of New Jersey. This Agreement will be governed by, and construed in accordance with, the laws of the State of New Jersey.

Article 12 FORCE MAJEURE

Any delay in the performance of any of the duties or obligations of either party (except the payment of money due hereunder) shall not be considered a breach of this Agreement and the time required for performance shall be extended for a period equal to the period

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

         of such  delay;  provided  that such delay has been caused by or is the
         result of any acts of God,  acts of the  public  enemy,  insurrections,
         riots,  embargoes,  labor disputes,  including strikes,  lockouts,  job
         actions, or boycotts,  equipment failure,  fires,  explosions,  floods,
         shortages of material or energy or other  unforeseeable  causes  beyond
         the reasonable control of the party so affected.  The party so affected
         shall give prompt  notice to the other  party of such cause,  and shall
         take whatever  reasonable  steps are necessary to relieve the effect of
         such cause as rapidly as  reasonably  possible.  Not  withstanding  the
         forgoing, if SHARP is unable to perform for any of the above enumerated
         reasons,  CELGENE shall be relieved of its obligations hereunder during
         the  pendency  thereof,  and if such  inability  of  SHARP  to  perform
         continues for a period longer than *** days, CELGENE shall have a right
         to terminate this Agreement.

Article 13.     SEVERABILITY

3.04     In the  event  that  any  provision  of this  Agreement  is  judicially
         determined  to be  void  or  unenforceable,  such  provision  shall  be
         construed to be separable  from the other  provisions of this Agreement
         which shall retain full force and effect.

Article 14      HEADINGS

         All titles and captions in this Agreement are for convenience  purposes
         only and shall not be of any force or substance.

Article 15      USE OF NAMES

         Except as expressly  required  pursuant to the Act,  neither party will
         without the prior written consent of the other: (a) use in advertising,
         publicity,   promotional   premiums  or  otherwise,   any  trade  name,
         trademark,  trade device,  service mark,  symbol,  or any abbreviation,
         contraction  or  simulation  thereof  owned  by  either  party,  or (b)
         represent,  either directly or indirectly,  that any product or service
         of one party is a product or service of the other.

Article 16      INDEPENDENT CONTRACTOR

3.05     Each party is acting under this Agreement as an independent  contractor
         and not as the agent or employee of the other.  Each party  understands
         and agrees that it has no authority to assume any  obligation on behalf
         of the other party and that it shall not hold out to third parties that
         it has any  authority  to act on the  other  party's  behalf  except as
         expressly  permitted herein.  Unless otherwise expressly stated herein,
         each party shall be  responsible  for its own expenses  relating to its
         performance  under this  Agreement and shall not incur expenses for the
         other  party's  account  unless  expressly   authorized  herein  or  by
         subsequent written agreements.

Article 17 WAIVER

No waiver or modification of any of the terms of this Agreement shall be valid unless in writing and signed by an authorized representative of both parties hereto. Failure by

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

either party to enforce any rights under this Agreement shall not be construed as a waiver of such rights nor shall a waiver by either party in one or more instances be construed as constituting a continuing waiver or as a waiver in other instances.

Article 18 PUBLIC DISCLOSURE

Neither party shall disclose to any third party or originate any publicity, news release or public announcement, written or oral, whether to the public or the press, or otherwise, refer into the terms of this Agreement, including its existence, the subject matter to which it relates, the performance under it or any of its specific terms and conditions, except by such announcements as are (i) mutually agreed upon by the parties in writing, or (ii) in the opinion of counsel for the party making such announcement are required by law. If a party believes a public announcement to be required by law with respect to this Agreement, it will give the other party such notice as is reasonably practicable and an opportunity to comment upon the announcement.

ARTICLE 19 NOTICES

Unless otherwise specified herein, all notices required or permitted to be given under this Agreement shall be in writing and shall be delivered either personally and promptly confirmed by such registered or certified mail or overnight courier service or sent by registered or certified mail, return receipt requested, or by overnight courier service, postage prepaid in each case, or by facsimile and promptly confirmed by such registered certified mail or overnight courier service to the receiving party at such party's address set forth below, or at such other address as may from time to time be furnished by similar notice by either party. Any notice sent by registered or certified mail as aforesaid shall be deemed to have been given when mailed, and shall be effective upon receipt.

If to SHARP:

Sharp Corporation
7451 Keebler Way
Allentown, Pennsylvania 18106
Attention:_Chief Financial Officer

If to CELGENE:

Celgene Corporation
86 Morris Avenue
Summit, New Jersey 07901 U.S.A.
Attention: Vice President, Legal and Chief Counsel

or to such other address as the addressee shall have last furnished in writing to the addresser.

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

ARTICLE 20. ENTIRE AGREEMENT

20.01    This Agreement  constitutes  the entire  agreement  between the parties
         with respect to the subject matter  hereof,  and supersedes all written
         or oral agreements or understandings with respect thereto.

20.02    Neither party shall claim any amendment,  modification, or release from
         any provision, hereof, unless such an amendment is in writing signed by
         an authorized representative of each party.

SHARP CORPORATION                           CELGENE CORPORATION

By:***                                      By:***


Name:***                                    Name:***
Title:***                                   Title:***
Date: 4/11/05                               Date: April 13, 2005

*** - indicates material omitted pursuant to a Confidential Treatment Request and filed separately with the Securities and Exchange Commission.

EXHIBIT 21.1

LIST OF SUBSIDIARIES

----------------------------------------------- ---------------------------------------------
Name                                            State or Other Jurisdiction of Incorporation
----------------------------------------------- ---------------------------------------------
Signal Pharmaceuticals, Inc.                    California

Anthrogenesis Corp.                             New Jersey

Celgene International, Inc.                     Delaware

Celgene International SARL                      Switzerland

Celgene Luxembourg Finance Company SARL         Luxembourg

Celgene UK Holdings, Limited                    United Kingdom

Celgene UK Manufacturing, Limited               United Kingdom

Celgene UK Manufacturing II, Limited            United Kingdom

Celgene Edinburgh Finance                       United Kingdom

Celgene Europe Ltd.                             United Kingdom

Celgene International Holdings Corporation      Delaware

Celgene UK Distribution Limited                 United Kingdom

Celgene UK Marketing Limited                    United Kingdom

Celgene Italy Distribution Srl                  Italy

Celgene Puerto Rico Distribution LLC            Puerto Rico

Celgene Spain Division, S.L.                    Spain

Celgene Germany Distribution GmbH               Germany

Celgene France Distribution Sarl                France

Celgene Limited                                 Ireland

Celgene Investment Company, LLC                 Delaware

----------------------------------------------- ---------------------------------------------
Name                                            State or Other Jurisdiction of Incorporation
----------------------------------------------- ---------------------------------------------
Celgene Financing Company, LLC                  Delaware

Celgene Canada Finance Company LP               Canada

4319257 Canada, Inc.                            Canada

4319265 Canada, Inc.                            Canada

Celgene Canada Distribution (Partnership)       Canada

Celgene KK                                      Japan

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors
Celgene Corporation:

We consent to the incorporation by reference in the registration statements on Form S-8 (Nos. 333-126296, Nos. 333-70083, 333-91977, 333-39716 and 333-65908), in the registration statements on Form S-3 (Nos. 333-02517, 333-32115, 333-38861, 333-52963, 333-87197, 333-93759, 333-94915, 333-75636, 333-107977 and 333-107978) and in the registration statements on Form S-4 (No. 333-101196 and 333-42302) of Celgene Corporation of our reports dated March 15, 2006, with respect to the consolidated balance sheets of Celgene Corporation and subsidiaries as of December 31, 2005 and 2004, and the related consolidated statements of operations, cash flows and stockholders' equity for each of the years in the three-year period ended December 31, 2005, and the related consolidated financial statement schedule, management's assessment of the effectiveness of internal control over financial reporting as of December 31, 2005 and the effectiveness of internal control over financial reporting as of December 31, 2005, which reports appear in the December 31, 2005 annual report on Form 10-K of Celgene Corporation.

/s/ KPMG LLP

Short Hills, New Jersey
March 15, 2006

Exhibit 31.1

CERTIFICATION PURSUANT TO
18 U.S.C. Sec. 1350,
AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John W. Jackson, certify that:

1. I have reviewed this annual report on Form 10-K of Celgene Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 15, 2006


                                                     /s/ John W. Jackson
                                                     ---------------------------
                                                     John W. Jackson
                                                     Chairman of the Board
                                                     Chief Executive Officer

Exhibit 31.2

CERTIFICATION PURSUANT TO
18 U.S.C. Sec. 1350,
AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Robert J. Hugin, certify that:

1. I have reviewed this annual report on Form 10-K of Celgene Corporation;

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 15, 2006

                                                  /s/ Robert J. Hugin
                                                  ------------------------------
                                                  Robert J. Hugin
                                                  Chief Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. ss.1350,
AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the accompanying Annual Report on Form 10-K of Celgene Corporation ("the Company") for the period ended December 31, 2005 ("the Periodic Report"), I, John W. Jackson, Chief Executive Officer of the Company, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge that the Periodic Report fully complies with the requirements of Section 13 (a) or 15
(d) of the Securities Exchange Act of 1934 and that the information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:  March 15, 2006                                 /s/ John W. Jackson
                                                      --------------------------
                                                      John W. Jackson
                                                      Chief Executive Officer

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. ss.1350,
AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the accompanying Annual Report on Form 10-K of Celgene Corporation ("the Company") for the period ended December 31, 2005 ("the Periodic Report"), I, Robert J. Hugin, Chief Financial Officer of the Company, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge that the Periodic Report fully complies with the requirements of Section 13 (a) or 15
(d) of the Securities Exchange Act of 1934 and that the information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:  March 15, 2006                           /s/ Robert J. Hugin
                                                --------------------------------
                                                Robert J. Hugin
                                                Chief Financial Officer