(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended: December 31, 2012
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Or
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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Delaware
(State or other jurisdiction of
incorporation or organization)
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04-3324394
(I.R.S. Employer
Identification No.)
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8 Sylvan Way
Parsippany, New Jersey
(Address of principal executive offices)
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07054
(Zip Code)
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, $.001 Par Value Per Share
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NASDAQ Global Select Market
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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Page
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EX-10.10
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EX-10.26
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EX-10.68
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EX-21
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EX-23
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EX-31.1
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EX-31.2
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EX-32.1
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EX-32.2
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EX-101 INSTANCE DOCUMENT
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EX-101 SCHEMA DOCUMENT
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EX-101 CALCULATION LINKBASE DOCUMENT
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EX-101 LABELS LINKBASE DOCUMENT
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EX-101 PRESENTATION LINKBASE DOCUMENT
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EX-101 DEFINITION LINKBASE DOCUMENT
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Item 1.
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Business
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On January 22, 2012, we entered into a license and supply agreement with APP Pharmaceuticals, LLC, or APP, in connection with the settlement of our Angiomax patent litigations with APP. Under the license and supply agreement, APP granted to us a non-exclusive license under APP's marketing authorizations and intellectual property to sell the acute care generic products to hospitals and integrated delivery networks in the United States.
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On April 25, 2012, we entered into a global collaboration agreement with AstraZeneca pursuant to which we and AstraZeneca agreed to collaborate globally to develop and commercialize certain acute ischemic heart disease compounds. The first activity agreed to under the global collaboration is a four year co-promotion arrangement for BRILINTA
in the United States.
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In February 2013, pursuant to a master transaction agreement with Bristol-Myers Squibb Company, or BMS, we acquired the right to sell, distribute and market Recothrom on a global basis for a two-year period, which we refer to as the collaboration term, and certain limited assets exclusively related to Recothrom, primarily the biologics license application, or BLA, for Recothrom and certain related regulatory assets. BMS also granted to us, under the master transaction agreement, an option to purchase from BMS and its affiliates, following the expiration or earlier termination of the collaboration term, certain other assets, including certain patent and trademark rights, contracts, inventory, equipment and related books and records, held by BMS which are exclusively related to Recothrom.
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In January 2013, we acquired Incline Therapeutics, Inc., or Incline, a company focused on the development of IONSYS, a compact, disposable, needleless patient-controlled system for the short-term management of acute postoperative pain in the hospital setting.
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In February 2013, we entered into a license and collaboration agreement with Alnylam Pharmaceuticals, Inc., or Alnylam, for the development and commercialization of Alnylam's ALN-PCS RNAi therapeutic program for the treatment of hypercholesterolemia.
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Cangrelor.
In January 2013, we announced that data analysis of our Phase 3 CHAMPION PHOENIX clinical trial revealed that the protocol defined primary composite efficacy endpoint of death, myocardial infarction, ischemia driven revascularization and stent thrombosis at 48 hours had been met, as cangrelor demonstrated statistically significant improvement for this endpoint as compared to clopidogrel. Safety outcomes from the trial were similar to those observed in prior trials. We expect that the trial results will be presented at the American College of Cardiology Scientific Session in March 2013.
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Oritavancin
. In December 2012, we announced that in the SOLO I trial, oritavancin had met all protocol-specified primary and secondary efficacy endpoints and was shown to be non-inferior to vancomycin in the efficacy analyses for the early clinical evaluation (48-72 hour) endpoints required by the FDA and the later (7-14 days after end of treatment)
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Product or Product
in Development
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Development Stage
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Mechanism/Target
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Clinical Indication(s)/Therapeutic Areas
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Marketed Products
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Angiomax
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Marketed
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Direct thrombin inhibitor
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U.S. - for use as an anticoagulant in combination with aspirin in patients with unstable angina undergoing percutaneous transluminal coronary angioplasty, or PTCA, and for use in patients undergoing percutaneous coronary intervention, or PCI, including patients with or at risk of heparin induced thrombocytopenia and thrombosis syndrome, or HIT/HITTS
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Europe - for use as an anticoagulant in patients undergoing PCI, adult patients with acute coronary syndrome, or ACS, and for the treatment of patients with ST-segment elevation myocardial infarction, or STEMI, undergoing primary PCI
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Recothrom
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Marketed in the United States and Canada
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Recombinant human thrombin
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For use as an aid to hemostasis to help control oozing blood and mild bleeding during surgical procedures
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Cleviprex
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Marketed in the United States
Approved in Australia, Austria, Canada, France, Germany, the Netherlands, New Zealand, Sweden, Switzerland and the United Kingdom
Marketing Authorization Application, or MAA, submitted for other European Union countries
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Calcium channel blocker
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U.S. - Blood pressure reduction when oral therapy is not feasible or not desirable
Ex-U.S. - with indications for blood pressure control in perioperative settings
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Ready-to-Use Argatroban
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Marketed in the United States
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Direct thrombin inhibitor
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Approved for prophylaxis or treatment of thrombosis in adult patients with HIT and for use as an anticoagulant in adult patients with or at risk for HIT undergoing PCI
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Acute care generic products:
Adenosine, Amiodarone, Esmolol and Milrinone
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Approved in the United States
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Various
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Cardiovascular
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Acute care generic products: Azithromycin and Clindamycin
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Approved in the United States
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Various
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Serious infection
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Acute care generic products: Haloperidol, Ondansetron, Midazolam and Rocuronium
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Approved in the United States
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Various
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Neurocritical care
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Products in Development
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Cangrelor
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Phase 3
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Antiplatelet agent
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Prevention of platelet activation and aggregation when oral therapy is not feasible or not desirable
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Oritavancin
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Phase 3
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Antibiotic
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Treatment of serious gram-positive bacterial infections, including acute bacterial skin and skin structure infections, or ABSSSI, and including infections that are resistant to conventional treatment
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IONSYS
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Pre-registration stage
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Patient-controlled analgesia system
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Short-term management of acute postoperative pain
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MDCO-157 (IV clopidogrel)
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Pre-registration stage
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Platelet inhibitor
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Platelet inhibition in patients suffering from ACS or patients recently
experiencing myocardial infarction, or MI, stroke, or peripheral arterial disease when oral therapy is not feasible or not desirable
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MDCO-216
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Phase 1
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Naturally occurring variant of a protein found in high-density lipoprotein, or HDL
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Reversal cholesterol transport agent to reduce atherosclerotic plaque burden development and thereby reduce the risk of adverse thrombotic events
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ALN-PCS program: ALN-PCS02 and ALN-PCSsc
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Phase 1
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PCSK-9 gene antagonist addressing low-density lipoprotein, or LDL, cholesterol disease modification
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Treatment of hypercholesterolemia
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bacteria are increasingly becoming resistant to one or more of these existing antibiotics;
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some of these antibiotics, referred to as bacteriostatic drugs, solely inhibit the growth of pathogens and rely on the immune system to actually kill the bacteria. In contrast, bactericidal antibiotics that kill bacteria independent of the immune system, like oritavancin, offer a more effective treatment for patients with compromised immune systems that cannot rid their bodies of the pathogens;
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many of these antibiotics have a narrow therapeutic spectrum, which is the range of bacteria treated by a drug, and, as a result, are only effective against some serious pathogens but not others;
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many of the antibiotics used to treat serious infections are difficult or inconvenient to administer, as they must be administered once or twice daily for seven to 14 days, or longer, with the patients being hospitalized for much or all of this period; and
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many of these antibiotics may cause serious side effects in some patients, sometimes requiring discontinuation of therapy. Due to these side effects, health care providers are required to engage in costly and time-consuming monitoring of blood levels and other parameters.
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the Gelfoam Plus hemostasis kit marketed by Baxter Healthcare Corporation;
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mechanical hemostats, such as absorbable gelatin sponge, collagen, cellulose, or polysaccharide-based hemostats applied as sponges, fleeces, bandages, or microspheres, which do not contain thrombin or any other active biologic compounds;
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active hemostats, which are thrombin products that may be derived from bovine or human pooled plasma purification or human recombinant manufacturing processes;
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flowable hemostats, which consist of granular collagen or gelatin component that is mixed with saline or reconstituted thrombin to form a semi-solid, flowable putty; and
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fibrin sealants, which consist of thrombin and fibrinogen that can be sprayed or applied directly to the bleeding surface.
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a multiple of average net sales over each of the two 12-month periods preceding the closing of the purchase of the assets to be acquired in connection with exercising the option (unless such closing occurs less than 24 months after February 8, 2013, in which case the measurement period would be the 12-month period preceding such closing); or
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if BMS has delivered a valid notice terminating the collaboration term early as a result of a material breach by us under the master transaction agreement, the amount described above plus an amount intended to give BMS the economic benefit of having received royalty fees for a 24-month collaboration term.
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pre-clinical laboratory tests, animal studies and formulation studies;
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submission to the FDA of an IND for human clinical testing, which must become effective before human clinical trials may begin;
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adequate and well-controlled clinical trials to establish the safety and efficacy of the drug for each indication;
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submission to the FDA of an NDA or BLA;
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satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the drug is produced to assess compliance with current good manufacturing practices, or cGMP; and
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FDA review and approval of the NDA or BLA.
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evaluate dosage tolerance and appropriate dosage;
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identify possible adverse effects and safety risks; and
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evaluate preliminarily the efficacy of the drug for specific indications.
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the required patent information has not been filed;
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the listed patent has expired;
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the listed patent has not expired, but will expire on a particular date and approval is sought after patent expiration; or
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the listed patent is invalid, unenforceable, or will not be infringed by the new product.
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Decentralised procedure.
Using the decentralised procedure, an applicant may apply for simultaneous authorization in more than one European Union country of medicinal products that have not yet been authorized in any European Union country and that do not fall within the mandatory scope of the centralised procedure.
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Mutual recognition procedure.
In the mutual recognition procedure, a medicine is first authorized in one European Union member state, in accordance with the national procedures of that country. Following this, further marketing authorizations can be sought from other European Union countries in a procedure whereby the countries concerned agree to recognize the validity of the original, national marketing authorization
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Item 1A.
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Risk Factors
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our ability to maintain market exclusivity for Angiomax in the United States through the enforcement of the '727 patent and the '343 patent during the period following the expiration of the patent term of the '404 patent on December 15, 2014 and the six month pediatric exclusivity on June 15, 2015 through at least May 1, 2019, the date on which we agreed APP may sell a generic version of Angiomax;
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the continued acceptance by regulators, physicians, patients and other key decision-makers of Angiomax as a safe, therapeutic and cost-effective alternative to heparin and other products used in current practice or currently being developed;
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our ability to further develop Angiomax and obtain marketing approval of Angiomax for use in additional patient populations and the clinical data we generate to support expansion of the product label;
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the overall number of PCI procedures performed;
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the ability of our third-party supply and manufacturing partners to provide us with sufficient quantities of Angiomax;
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the impact of competition from existing competitive products and from competitive products that may be approved in the future;
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the continued safety and efficacy of Angiomax;
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to what extent and in what amount government and third-party payors cover or reimburse for the costs of Angiomax; and
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our success and the success of our international distributors in selling and marketing Angiomax in Europe and in other countries outside the United States.
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the extent to which Angiomax is commercially successful globally;
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our ability to maintain market exclusivity for Angiomax in the United States through the enforcement of the '727 patent and the '343 patent during the period following the expiration of the patent term of the '404 patent on December 15, 2014 and the six month pediatric exclusivity on June 15, 2015 through at least May 1, 2019, the date on which we agreed APP may sell a generic version of Angiomax;
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the extent to which Cleviprex, ready-to-use Argatroban, Recothrom and the acute care generic products that we acquired the non-exclusive right to sell and distribute from APP are commercially successful in the United States;
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the extent to which our global collaboration with AstraZeneca, including our four-year co-promotion arrangement for BRILINTA in the United States, is successful;
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the extent to which we are successful in our efforts to establish a commercial infrastructure outside the United States;
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the consideration paid by us in connection with acquisitions and licenses of development-stage compounds, clinical-stage product candidates, approved products, or businesses, and in connection with other strategic arrangements;
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the progress, level, timing and cost of our research and development activities related to our clinical trials and non-clinical studies with respect to Angiomax, Cleviprex, as well as cangrelor, oritavancin, MDCO-157, IONSYS and our other products in development;
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the cost and outcomes of regulatory submissions and reviews for approval of Angiomax in additional countries and for additional indications, of Cleviprex and Recothrom outside the United States and of our products in development globally;
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the continuation or termination of third-party manufacturing, distribution and sales and marketing arrangements;
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the size, cost and effectiveness of our sales and marketing programs globally;
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the amounts of our payment obligations to third parties as to our products and products in development; and
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our ability to defend and enforce our intellectual property rights.
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difficulty in integrating the operations, products or product candidates and personnel of an acquired company;
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entry into markets in which we have no or limited direct prior experience and where competitors in such markets have stronger market positions;
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failure to successfully further develop the acquired or licensed business, product, compounds, programs or technology or to achieve strategic objectives, including commercializing and marketing successfully the development stage compounds and clinical stage candidates that we acquire or license;
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disruption of our ongoing business and distraction of our management and employees from other opportunities and challenges;
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inability to retain personnel, key customers, distributors, vendors and other business partners of the acquired company, or acquired or licensed product or technology;
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potential failure of the due diligence processes to identify significant problems, liabilities or other shortcomings or challenges of an acquired company, or acquired or licensed product or technology, including but not limited to, problems, liabilities or other shortcomings or challenges with respect to intellectual property, product quality, revenue recognition or other accounting practices, employee, customer or partner disputes or issues and other legal and financial contingencies and known and unknown liabilities;
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liability for activities of the acquired company or licensor before the acquisition or license, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities, and other known and unknown liabilities;
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exposure to litigation or other claims in connection with, or inheritance of claims or litigation risk as a result of, an acquisition or license, including but not limited to, claims from terminated employees, customers, former stockholders or other third-parties; and
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difficulties in the integration of the acquired company's departments, systems, including accounting, human resource and other administrative systems, technologies, books and records, and procedures, as well as in maintaining uniform standards, controls, including internal control over financial reporting required by the Sarbanes−Oxley Act of 2002 and related procedures and policies.
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impacting our ability to satisfy our obligations;
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increasing our vulnerability to general adverse economic and industry conditions;
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limiting our ability to obtain additional financing in the future;
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increasing the portion of our cash flows that may have to be dedicated to interest and principal payments and may not be available for operations, research and development, working capital, capital expenditures, expansion, acquisitions or general corporate or other purposes;
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limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we compete, and
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placing us at a possible competitive disadvantage to less leveraged competitors and competitors that have better access to capital resources.
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·the Gelfoam Plus hemostasis kit marketed by Baxter Healthcare Corporation;
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mechanical hemostats, such as absorbable gelatin sponges;
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collagen, cellulose, or polysaccharide-based hemostats applied as sponges, fleeces, bandages, or microspheres which do not contain thrombin or any other active biologic compounds;
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active hemostats, which are thrombin products that may be derived from bovine or human pooled plasma purification or human recombinant manufacturing processes;
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flowable hemostats, which consists of granular collagen or gelatin component that is mixed with saline or reconstituted thrombin to form a semi-solid, flowable putty; and
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fibrin sealants, which consists of thrombin and fibrinogen that can be sprayed or applied directly to the bleeding surface.
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continue to improve operating, administrative, and information systems;
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accurately predict future personnel and resource needs to meet contract commitments;
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track the progress of ongoing projects; and
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attract and retain qualified management, sales, professional, scientific and technical operating personnel.
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political and economic determinations that adversely impact pricing or reimbursement policies;
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our customers' ability to obtain reimbursement for procedures using our products in foreign markets;
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compliance with complex and changing foreign legal, tax, accounting and regulatory requirements;
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language barriers and other difficulties in providing long-range customer support and service;
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longer accounts receivable collection times;
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significant foreign currency fluctuations, which could result in increased operating expenses and reduced revenues;
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trade restrictions and restrictions on direct investment by foreign entities;
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reduced protection of intellectual property rights in some foreign countries; and
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the interpretation of contractual provisions governed by foreign laws in the event of a contract dispute.
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delay or otherwise adversely impact the manufacturing, development or commercialization of our products, our products in development or any additional products or product candidates that we may acquire or develop;
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require us to seek a new collaborator or undertake unforeseen additional responsibilities or devote unforeseen additional resources to the manufacturing, development or commercialization of our products; or
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result in the termination of the development or commercialization of our products.
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reliance on the third party for regulatory compliance and quality assurance;
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the possible breach of the manufacturing or supply agreement by the third party; and
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the possible termination or nonrenewal of the agreement by the third party, based on its own business priorities, at a time that is costly or inconvenient for us.
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delay or prevent the successful commercialization of any of the products or product candidates in the jurisdiction for which approval is sought;
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diminish our competitive advantage; and
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defer or decrease our receipt of revenue.
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our clinical trials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials which even if undertaken cannot ensure we will gain approval;
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data obtained from pre-clinical testing and clinical trials may be subject to varying interpretations, which could result in the FDA or other regulatory authorities deciding not to approve a product in a timely fashion, or at all;
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the cost of clinical trials may be greater than we currently anticipate;
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regulators, ethics committees or institutional review boards may not authorize us to commence a clinical trial or conduct a clinical trial at a prospective trial site;
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we, or the FDA or other regulatory authorities, might suspend or terminate a clinical trial at any time on various grounds, including a finding that participating patients are being exposed to unacceptable health risks. For example, we have in
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the effects of our product candidates may not be the desired effects or may include undesirable side effects or the product candidates may have other unexpected characteristics.
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delay in approving or refusal to approve a product;
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product recall or seizure;
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suspension or withdrawal of an approved product from the market;
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delays in, suspension of or prohibition of commencing, clinical trials of products in development;
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interruption of production;
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operating restrictions;
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untitled or warning letters;
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injunctions;
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fines and other monetary penalties;
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the imposition of civil or criminal penalties;
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disruption of importing and exporting activities; and
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unanticipated expenditures.
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the Federal Anti-Kickback Law, which prohibits persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce either the referral of an individual or furnishing or arranging for a good or service for which payment may be made under federal health care programs such as Medicare and Medicaid;
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other Medicare laws and regulations that prescribe the requirements for coverage and payment for services performed by our customers, including the amount of such payment;
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the Federal False Claims Act, which imposes civil and criminal liability on individuals and entities who submit, or cause to be submitted, false or fraudulent claims for payment to the government;
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the Federal False Statements Act, which prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with delivery of or payment for health care benefits, items or services; and
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various state laws that impose similar requirements and liability with respect to state healthcare reimbursement and other programs.
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obtain and maintain U.S. and foreign patents, including defending those patents against adverse claims;
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secure patent term extension for the patents covering our approved products;
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protect trade secrets;
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operate without infringing the proprietary rights of others; and
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prevent others from infringing our proprietary rights.
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achievement or rejection of regulatory approvals of our product candidates and our products;
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regulatory actions by the FDA or a foreign jurisdiction limiting or revoking the use of our products;
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changes in securities analysts' estimates of our financial performance;
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changes in valuations of similar companies;
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variations in our operating results;
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acquisitions and strategic partnerships;
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announcements of technological innovations or new commercial products by us or our competitors or the filing of ANDAs, NDAs or BLAs for products competitive with ours;
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disclosure of results of clinical testing or regulatory proceedings by us or our competitors;
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the timing, amount and receipt of revenue from sales of our products and margins on sales of our products;
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changes in governmental regulations;
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developments in patent rights or other proprietary rights, particularly with respect to our U.S. Angiomax patents;
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the extent to which Angiomax is commercially successful globally;
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our ability to maintain market exclusivity for Angiomax in the United States through the enforcement of the '727 patent and the '343 patent during the period following the expiration of the patent term of the '404 patent on December 15, 2014 and the six month pediatric exclusivity on June 15, 2015 through at least May 1, 2019, the date on which we agreed APP may sell a generic version of Angiomax;
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significant new litigation;
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developments or issues with our contract manufacturers;
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changes in our management; and
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general market conditions.
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Section 203 of the Delaware General Corporation Law, which provides that we may not enter into a business combination with an interested stockholder for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in the manner prescribed in Section 203;
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our board of directors has the authority to issue, without a vote or action of stockholders, up to 5,000,000 shares of a new series of preferred stock and to fix the price, rights, preferences and privileges of those shares, each of which could be superior to the rights of holders of our common stock;
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our directors are elected to staggered terms, which prevents our entire board of directors from being replaced in any single year;
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our directors may be removed only for cause and then only by the affirmative vote of the holders of at least 75% of the votes which all stockholders would be entitled to cast in any annual election of directors;
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the size of our board of directors is determined by resolution of the board of directors;
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any vacancy on our board of directors, however occurring, including a vacancy resulting from an enlargement of our board, may only be filled by vote of a majority of our directors then in office, even if less than a quorum;
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only our board of directors, the chairman of the board or our president may call special meetings of stockholders;
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our by-laws may be amended, altered or repealed by (i) the affirmative vote of a majority of our directors, subject to any limitations set forth in the by-laws, or (ii) the affirmative vote of the holders of at least 75% of the votes which all the stockholders would be entitled to cast in any annual election of directors;
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stockholders must provide us with advance notice, and certain information specified in our by-laws, in connection with nominations or proposals by such stockholder for consideration at an annual meeting;
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stockholders may not take any action by written consent in lieu of a meeting; and
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our certificate of incorporation may only be amended or repealed by the affirmative vote of a majority of our directors and the affirmative vote of the holders of at least 75% of the votes which all the stockholders would be entitled to cast in any annual election of directors (and plus any separate class vote that might in the future be required pursuant to the terms of any series of preferred stock that might be outstanding at the time any of these amendments are submitted to stockholders).
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responding to proxy contests and other actions by activist shareholders may be costly and time-consuming and may disrupt our operations and divert the attention of management and our employees;
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perceived uncertainties as to our future direction may result in our inability to consummate potential acquisitions, collaborations or in-licensing opportunities and may make it more difficult to attract and retain qualified personnel and business partners; and
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if individuals are elected to our board of directors with a specific agenda different from ours, it may adversely affect our ability to effectively and timely implement our strategic plan and create additional value for our stockholders.
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Item 1B.
|
Unresolved Staff Comments
|
Item 2.
|
Properties
|
Item 3.
|
Legal Proceedings
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information and Holders
|
|
Common Stock
Price
|
||||||
|
High
|
|
Low
|
||||
Year Ended December 31, 2011
|
|
|
|
|
|
||
First Quarter
|
$
|
17.73
|
|
|
$
|
13.97
|
|
Second Quarter
|
19.40
|
|
|
15.19
|
|
||
Third Quarter
|
17.12
|
|
|
12.33
|
|
||
Fourth Quarter
|
20.00
|
|
|
16.27
|
|
||
Year Ended December 31, 2012
|
|
|
|
|
|
||
First Quarter
|
$
|
22.82
|
|
|
$
|
18.06
|
|
Second Quarter
|
23.45
|
|
|
19.37
|
|
||
Third Quarter
|
26.95
|
|
|
22.39
|
|
||
Fourth Quarter
|
26.75
|
|
|
20.04
|
|
*
|
|
Fiscal year ended December 31.
|
|
12/07
|
|
12/08
|
|
12/09
|
|
12/10
|
|
12/11
|
|
12/12
|
The Medicines Company
|
100.00
|
|
76.88
|
|
43.53
|
|
73.75
|
|
97.29
|
|
125.1
|
NASDAQ Composite
|
100.00
|
|
59.03
|
|
82.25
|
|
97.32
|
|
98.63
|
|
110.78
|
NASDAQ Biotechnology
|
100.00
|
|
93.4
|
|
103.19
|
|
113.89
|
|
129.12
|
|
163.33
|
Item 6.
|
Selected Financial Data
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
||||||||||
|
(In thousands, except per share data)
|
||||||||||||||||||
Statements of Operations Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net revenue
|
$
|
558,588
|
|
|
$
|
484,732
|
|
|
$
|
437,645
|
|
|
$
|
404,241
|
|
|
$
|
348,157
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cost of revenue
|
177,339
|
|
|
156,866
|
|
|
129,299
|
|
|
118,148
|
|
|
88,355
|
|
|||||
Research and development
|
126,423
|
|
|
110,180
|
|
|
85,241
|
|
|
117,610
|
|
|
105,720
|
|
|||||
Selling, general and administrative
|
171,753
|
|
|
159,617
|
|
|
158,690
|
|
|
193,832
|
|
|
164,903
|
|
|||||
Total operating expenses
|
475,515
|
|
|
426,663
|
|
|
373,230
|
|
|
429,590
|
|
|
358,978
|
|
|||||
Income (loss) from operations
|
83,073
|
|
|
58,069
|
|
|
64,415
|
|
|
(25,349
|
)
|
|
(10,821
|
)
|
|||||
Legal settlement
|
—
|
|
|
17,984
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Co-promotion income
|
10,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Interest expense
|
(8,005
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other income (expense)
|
1,140
|
|
|
1,790
|
|
|
(267
|
)
|
|
(2,818
|
)
|
|
5,235
|
|
|||||
Income (loss) before income taxes
|
86,208
|
|
|
77,843
|
|
|
64,148
|
|
|
(28,167
|
)
|
|
(5,586
|
)
|
|||||
(Provision for) benefit from income taxes
|
(35,038
|
)
|
|
50,034
|
|
|
40,487
|
|
|
(48,062
|
)
|
|
(2,918
|
)
|
|||||
Net income (loss)
|
51,170
|
|
|
127,877
|
|
|
104,635
|
|
|
(76,229
|
)
|
|
(8,504
|
)
|
|||||
Net loss attributable to non-controlling interest
|
84
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income (loss) attributable to The Medicines Company
|
$
|
51,254
|
|
|
$
|
127,877
|
|
|
$
|
104,635
|
|
|
$
|
(76,229
|
)
|
|
$
|
(8,504
|
)
|
Basic earnings per common share attributable to The Medicines Company
|
$
|
0.96
|
|
|
$
|
2.39
|
|
|
$
|
1.98
|
|
|
$
|
(1.46
|
)
|
|
$
|
(0.16
|
)
|
Diluted earnings per common share attributable to The Medicines Company
|
$
|
0.93
|
|
|
$
|
2.35
|
|
|
$
|
1.97
|
|
|
$
|
(1.46
|
)
|
|
$
|
(0.16
|
)
|
Shares used in computing basic earnings (loss) per common share
|
53,545
|
|
|
53,496
|
|
|
52,842
|
|
|
52,269
|
|
|
51,904
|
|
|||||
Shares used in computing diluted earnings (loss) per common share
|
55,346
|
|
|
54,407
|
|
|
53,184
|
|
|
52,269
|
|
|
51,904
|
|
|
As of December 31,
|
||||||||||||||||||
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Balance Sheet Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents, available for sale securities and accrued interest receivable
|
$
|
570,669
|
|
|
$
|
340,886
|
|
|
$
|
247,923
|
|
|
$
|
177,113
|
|
|
$
|
217,542
|
|
Working capital
|
621,169
|
|
|
327,088
|
|
|
239,251
|
|
|
156,103
|
|
|
212,222
|
|
|||||
Total assets
|
972,182
|
|
|
692,647
|
|
|
474,124
|
|
|
374,776
|
|
|
387,404
|
|
|||||
Long-term liabilities
|
250,754
|
|
|
26,370
|
|
|
31,156
|
|
|
47,768
|
|
|
5,771
|
|
|||||
Accumulated deficit
|
(60,411
|
)
|
|
(111,665
|
)
|
|
(239,542
|
)
|
|
(344,177
|
)
|
|
(267,948
|
)
|
|||||
Total stockholders’ equity
|
586,222
|
|
|
511,642
|
|
|
357,598
|
|
|
240,389
|
|
|
298,025
|
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
a multiple of average net sales over each of the two 12-month periods preceding the closing of the purchase of the assets to be acquired in connection with exercising the option (unless such closing occurs less than 24 months after February 8, 2013, in which case the measurement period would be the 12-month period preceding such closing); or
|
•
|
if BMS has delivered a valid notice terminating the collaboration term early as a result of a material breach by us under the master transaction agreement, the amount described above plus an amount intended to give BMS the economic benefit of having received royalty fees for a 24-month collaboration term.
|
•
|
Upon approval from the European Medicines Agency of a Marketing Authorization Application for oritavancin for the treatment of serious gram-positive bacterial infections, including acute bacterial skin and skin structure infections, or ABSSSI (which were formerly referred to as complicated skin and skin structure infections) on or before
December 31, 2013
, approximately
$10.5 million
.
|
•
|
Upon final approval from the FDA of an NDA for oritavancin for the treatment of ABSSSI on or before
December 31, 2013
, approximately
$10.5 million
.
|
•
|
Upon final approval from the FDA of an NDA for the use of oritavancin for the treatment of ABSSSI administered by a single dose intravenous infusion on or before
December 31, 2013
, approximately
$14.7 million
. This payment may become payable simultaneously with the payment described in the previous bullet above.
|
•
|
If aggregate net sales of oritavancin in four consecutive calendar quarters ending on or before
December 31, 2021
reach or exceed
$400 million
, approximately
$49.4 million
.
|
|
Year Ended December 31,
|
|
Change
|
|
Change
|
|||||||||
|
2012
|
|
2011
|
|
$
|
|
%
|
|||||||
|
(In thousands)
|
|||||||||||||
Angiomax
|
$
|
548,229
|
|
|
$
|
483,906
|
|
|
$
|
64,323
|
|
|
13.3
|
%
|
Cleviprex/Ready-to Use Argatroban
|
10,359
|
|
|
826
|
|
|
9,533
|
|
|
*
|
|
|||
Total net revenue
|
$
|
558,588
|
|
|
$
|
484,732
|
|
|
$
|
73,856
|
|
|
15.2
|
%
|
|
Year Ended December 31,
|
||||||||||||
|
2012
|
|
% of Total
Cost
|
|
2011
|
|
% of Total
Cost
|
||||||
|
(In thousands)
|
|
|
|
(In thousands)
|
|
|
||||||
Manufacturing/Logistics
|
$
|
50,506
|
|
|
28
|
%
|
|
$
|
47,787
|
|
|
31
|
%
|
Royalty
|
125,930
|
|
|
71
|
%
|
|
108,853
|
|
|
69
|
%
|
||
Amortization of product rights and intangible assets
|
903
|
|
|
1
|
%
|
|
226
|
|
|
—
|
%
|
||
Total cost of revenue
|
$
|
177,339
|
|
|
100
|
%
|
|
$
|
156,866
|
|
|
100
|
%
|
|
Year Ended December 31,
|
||||||||||||
|
2012
|
|
% of
Total R&D
|
|
2011
|
|
% of
Total R&D
|
||||||
|
(In thousands)
|
|
|
|
(In thousands)
|
|
|
||||||
Angiomax
|
|
|
|
|
|
|
|
|
|
|
|
||
Clinical trials
|
$
|
6,894
|
|
|
5
|
%
|
|
$
|
6,606
|
|
|
6
|
%
|
Manufacturing development
|
73
|
|
|
—
|
%
|
|
288
|
|
|
—
|
%
|
||
Administrative and headcount costs
|
3,170
|
|
|
3
|
%
|
|
2,574
|
|
|
3
|
%
|
||
Total Angiomax
|
10,137
|
|
|
8
|
%
|
|
9,468
|
|
|
9
|
%
|
||
Cleviprex
|
|
|
|
|
|
|
|
|
|
|
|
||
Clinical trials
|
228
|
|
|
—
|
%
|
|
1,492
|
|
|
1
|
%
|
||
Manufacturing development
|
1,029
|
|
|
1
|
%
|
|
295
|
|
|
—
|
%
|
||
Administrative and headcount costs
|
1,776
|
|
|
1
|
%
|
|
1,557
|
|
|
2
|
%
|
||
Total Cleviprex
|
3,033
|
|
|
2
|
%
|
|
3,344
|
|
|
3
|
%
|
||
Cangrelor
|
|
|
|
|
|
|
|
|
|
|
|
||
Clinical trials
|
36,132
|
|
|
29
|
%
|
|
26,823
|
|
|
24
|
%
|
||
Manufacturing development
|
2,465
|
|
|
2
|
%
|
|
955
|
|
|
1
|
%
|
||
Administrative and headcount costs
|
8,918
|
|
|
7
|
%
|
|
6,671
|
|
|
6
|
%
|
||
Total Cangrelor
|
47,515
|
|
|
38
|
%
|
|
34,449
|
|
|
31
|
%
|
||
Oritavancin
|
|
|
|
|
|
|
|
|
|
|
|
||
Clinical trials
|
26,942
|
|
|
21
|
%
|
|
21,944
|
|
|
20
|
%
|
||
Manufacturing development
|
5,085
|
|
|
4
|
%
|
|
3,454
|
|
|
3
|
%
|
||
Administrative and headcount costs
|
5,000
|
|
|
4
|
%
|
|
5,221
|
|
|
5
|
%
|
||
Total Oritavancin
|
37,027
|
|
|
29
|
%
|
|
30,619
|
|
|
28
|
%
|
||
MDCO-157
|
|
|
|
|
|
|
|
||||||
Clinical trials
|
1,518
|
|
|
1
|
%
|
|
—
|
|
|
—
|
%
|
||
Manufacturing development
|
744
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
||
Administrative and headcount costs
|
2,034
|
|
|
2
|
%
|
|
1,072
|
|
|
1
|
%
|
||
Acquisition license fee
|
—
|
|
|
—
|
%
|
|
1,750
|
|
|
2
|
%
|
||
Total MDCO-157
|
4,296
|
|
|
3
|
%
|
|
2,822
|
|
|
3
|
%
|
||
MDCO-2010
|
|
|
|
|
|
|
|
|
|
|
|
||
Clinical trials
|
910
|
|
|
1
|
%
|
|
713
|
|
|
1
|
%
|
||
Manufacturing development
|
852
|
|
|
1
|
%
|
|
416
|
|
|
—
|
%
|
||
Administrative and headcount costs
|
2,919
|
|
|
2
|
%
|
|
4,637
|
|
|
4
|
%
|
||
Clinical milestone
|
—
|
|
|
—
|
%
|
|
5,275
|
|
|
5
|
%
|
||
Government subsidy
|
—
|
|
|
—
|
%
|
|
(222
|
)
|
|
—
|
%
|
||
Total MDCO-2010
|
4,681
|
|
|
4
|
%
|
|
10,819
|
|
|
10
|
%
|
||
MDCO-216
|
|
|
|
|
|
|
|
|
|
|
|
||
Clinical trials
|
1,205
|
|
|
1
|
%
|
|
692
|
|
|
1
|
%
|
||
Manufacturing development
|
2,028
|
|
|
2
|
%
|
|
2,364
|
|
|
2
|
%
|
||
Administrative and headcount costs
|
1,327
|
|
|
1
|
%
|
|
1,373
|
|
|
1
|
%
|
||
Total MDCO-216
|
4,560
|
|
|
4
|
%
|
|
4,429
|
|
|
4
|
%
|
||
Ready-to-Use Argatroban
|
|
|
|
|
|
|
|
|
|
|
|
||
Manufacturing development
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
||
Administrative and headcount costs
|
—
|
|
|
—
|
%
|
|
491
|
|
|
—
|
%
|
||
Total Ready-to-Use Argatroban
|
—
|
|
|
—
|
%
|
|
491
|
|
|
—
|
%
|
||
Other
|
15,175
|
|
|
12
|
%
|
|
13,739
|
|
|
12
|
%
|
||
Total
|
$
|
126,424
|
|
|
100
|
%
|
|
$
|
110,180
|
|
|
100
|
%
|
•
|
the scope, rate of progress and cost of our clinical trials and other research and development activities;
|
•
|
future clinical trial results;
|
•
|
the terms and timing of any collaborative, licensing and other arrangements that we may establish;
|
•
|
the cost and timing of regulatory approvals;
|
•
|
the cost and timing of establishing and maintaining sales, marketing and distribution capabilities;
|
•
|
the cost of establishing and maintaining clinical and commercial supplies of our products and product candidates;
|
•
|
the effect of competing technological and market developments; and
|
•
|
the cost of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights.
|
|
Year Ended December 31,
|
|
Change
|
|
Change
|
|||||||||
|
2012
|
|
2011
|
|
$
|
|
%
|
|||||||
|
(In thousands)
|
|
|
|
|
|||||||||
Selling, general and administrative expenses
|
$
|
171,753
|
|
|
$
|
159,617
|
|
|
$
|
12,136
|
|
|
(7.6
|
)%
|
|
Year Ended
December 31,
|
|
Change
|
|
Change
|
|||||||||
|
2012
|
|
2011
|
|
$
|
|
%
|
|||||||
|
(In thousands)
|
|
|
|
|
|||||||||
Legal settlement
|
$
|
—
|
|
|
$
|
17,984
|
|
|
$
|
(17,984
|
)
|
|
(100.0
|
)%
|
|
Year Ended
December 31,
|
|
Change
|
|
Change
|
||||||||
|
2012
|
|
2011
|
|
$
|
|
%
|
||||||
|
(In thousands)
|
|
|
|
|
||||||||
Co-promotion income
|
$
|
10,000
|
|
|
$
|
—
|
|
|
$
|
10,000
|
|
|
*
|
|
Year Ended
December 31,
|
|
Change
|
|
Change
|
||||||||
|
2012
|
|
2011
|
|
$
|
|
%
|
||||||
|
(In thousands)
|
|
|
|
|
||||||||
Interest expense
|
$
|
(8,005
|
)
|
|
$
|
—
|
|
|
$
|
(8,005
|
)
|
|
*
|
|
Year Ended
December 31,
|
|
Change
|
|
Change
|
|||||||||
|
2012
|
|
2011
|
|
$
|
|
%
|
|||||||
|
(In thousands)
|
|
|
|
|
|||||||||
Other income
|
$
|
1,140
|
|
|
$
|
1,790
|
|
|
$
|
(650
|
)
|
|
36.3
|
%
|
|
Year Ended
December 31,
|
|
Change
|
|
Change
|
||||||||
|
2012
|
|
2011
|
|
$
|
|
%
|
||||||
|
(In thousands)
|
|
|
|
|
||||||||
(Provision) benefit for income tax
|
$
|
(35,038
|
)
|
|
$
|
50,034
|
|
|
$
|
(85,072
|
)
|
|
*
|
|
Year Ended December 31,
|
|
Change
|
|
Change
|
|||||||||
|
2011
|
|
2010
|
|
$
|
|
%
|
|||||||
|
(In thousands)
|
|||||||||||||
Angiomax
|
$
|
483,906
|
|
|
$
|
436,872
|
|
|
$
|
47,034
|
|
|
10.8
|
%
|
Cleviprex/Ready-to-Use Argatroban
|
826
|
|
|
773
|
|
|
53
|
|
|
6.9
|
%
|
|||
Total net revenue
|
$
|
484,732
|
|
|
$
|
437,645
|
|
|
$
|
47,087
|
|
|
10.8
|
%
|
|
Year Ended December 31,
|
||||||||||||
|
2011
|
|
% of Total
Cost
|
|
2010
|
|
% of Total
Cost
|
||||||
|
(In thousands)
|
|
|
|
(In thousands)
|
|
|
||||||
Manufacturing/Logistics
|
$
|
47,787
|
|
|
31
|
%
|
|
$
|
43,081
|
|
|
33
|
%
|
Royalty
|
108,853
|
|
|
69
|
%
|
|
86,218
|
|
|
67
|
%
|
||
Amortization of product rights and intangible assets
|
226
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
||
Total cost of revenue
|
$
|
156,866
|
|
|
100
|
%
|
|
$
|
129,299
|
|
|
100
|
%
|
|
Year Ended December 31,
|
||||||||||||
|
2011
|
|
% of
Total R&D
|
|
2010
|
|
% of
Total R&D
|
||||||
|
(In thousands)
|
|
|
|
(In thousands)
|
|
|
||||||
Angiomax
|
|
|
|
|
|
|
|
|
|
|
|
||
Clinical trials
|
$
|
6,606
|
|
|
6
|
%
|
|
$
|
6,439
|
|
|
7
|
%
|
Manufacturing development
|
288
|
|
|
—
|
%
|
|
4,466
|
|
|
5
|
%
|
||
Administrative and headcount costs
|
2,574
|
|
|
3
|
%
|
|
2,381
|
|
|
3
|
%
|
||
Total Angiomax
|
9,468
|
|
|
9
|
%
|
|
13,286
|
|
|
15
|
%
|
||
Cleviprex
|
|
|
|
|
|
|
|
|
|
|
|
||
Clinical trials
|
1,492
|
|
|
1
|
%
|
|
1,545
|
|
|
2
|
%
|
||
Manufacturing development
|
295
|
|
|
—
|
%
|
|
1,777
|
|
|
2
|
%
|
||
Administrative and headcount costs
|
1,557
|
|
|
2
|
%
|
|
1,835
|
|
|
2
|
%
|
||
Total Cleviprex
|
3,344
|
|
|
3
|
%
|
|
5,157
|
|
|
6
|
%
|
||
Cangrelor
|
|
|
|
|
|
|
|
|
|
|
|
||
Clinical trials
|
26,823
|
|
|
24
|
%
|
|
9,232
|
|
|
11
|
%
|
||
Manufacturing development
|
955
|
|
|
1
|
%
|
|
1,998
|
|
|
2
|
%
|
||
Administrative and headcount costs
|
6,671
|
|
|
6
|
%
|
|
7,328
|
|
|
9
|
%
|
||
Total Cangrelor
|
34,449
|
|
|
31
|
%
|
|
18,558
|
|
|
22
|
%
|
||
Oritavancin
|
|
|
|
|
|
|
|
|
|
|
|
||
Clinical trials
|
21,944
|
|
|
20
|
%
|
|
6,196
|
|
|
7
|
%
|
||
Manufacturing development
|
3,454
|
|
|
3
|
%
|
|
8,199
|
|
|
10
|
%
|
||
Administrative and headcount costs
|
5,221
|
|
|
5
|
%
|
|
7,609
|
|
|
9
|
%
|
||
Total Oritavancin
|
30,619
|
|
|
28
|
%
|
|
22,004
|
|
|
26
|
%
|
||
MDCO-157
|
|
|
|
|
|
|
|
||||||
Administrative and headcount costs
|
1,072
|
|
|
1
|
%
|
|
—
|
|
|
—
|
%
|
||
Acquisition license fee
|
1,750
|
|
|
2
|
%
|
|
—
|
|
|
—
|
%
|
||
Total MDCO-157
|
2,822
|
|
|
3
|
%
|
|
—
|
|
|
—
|
%
|
||
MDCO-2010
|
|
|
|
|
|
|
|
|
|
|
|
||
Clinical trials
|
713
|
|
|
1
|
%
|
|
2,056
|
|
|
2
|
%
|
||
Manufacturing development
|
416
|
|
|
—
|
%
|
|
1,475
|
|
|
2
|
%
|
||
Administrative and headcount costs
|
4,637
|
|
|
4
|
%
|
|
4,288
|
|
|
5
|
%
|
||
Clinical milestone
|
5,275
|
|
|
5
|
%
|
|
4,329
|
|
|
5
|
%
|
||
Government subsidy
|
(222
|
)
|
|
—
|
%
|
|
(1,403
|
)
|
|
(1
|
)%
|
||
Total MDCO-2010
|
10,819
|
|
|
10
|
%
|
|
10,745
|
|
|
13
|
%
|
||
MDCO-216
|
|
|
|
|
|
|
|
|
|
|
|
||
Clinical trials
|
692
|
|
|
1
|
%
|
|
689
|
|
|
1
|
%
|
||
Manufacturing development
|
2,364
|
|
|
2
|
%
|
|
2,716
|
|
|
3
|
%
|
||
Administrative and headcount costs
|
1,373
|
|
|
1
|
%
|
|
608
|
|
|
1
|
%
|
||
Total MDCO-216
|
4,429
|
|
|
4
|
%
|
|
4,013
|
|
|
5
|
%
|
||
Ready-to-Use Argatroban
|
|
|
|
|
|
|
|
|
|
|
|
||
Manufacturing development
|
—
|
|
|
—
|
%
|
|
316
|
|
|
—
|
%
|
||
Administrative and headcount costs
|
491
|
|
|
—
|
%
|
|
629
|
|
|
1
|
%
|
||
Total Ready-to-Use Argatroban
|
491
|
|
|
—
|
%
|
|
945
|
|
|
1
|
%
|
||
Other
|
13,739
|
|
|
12
|
%
|
|
10,533
|
|
|
12
|
%
|
||
Total
|
$
|
110,180
|
|
|
100
|
%
|
|
$
|
85,241
|
|
|
100
|
%
|
|
Year Ended December 31,
|
|
Change
|
|
Change
|
|||||||||
|
2011
|
|
2010
|
|
$
|
|
%
|
|||||||
|
(In thousands)
|
|
|
|
|
|||||||||
Selling, general and administrative expenses
|
$
|
159,617
|
|
|
$
|
158,690
|
|
|
$
|
927
|
|
|
(0.6
|
)%
|
|
Year Ended
December 31,
|
|
Change
|
|
Change
|
||||||||
|
2011
|
|
2010
|
|
$
|
|
%
|
||||||
|
(In thousands)
|
|
|
|
|
||||||||
Legal settlement
|
$
|
17,984
|
|
|
$
|
—
|
|
|
$
|
17,984
|
|
|
*
|
|
Year Ended
December 31,
|
|
Change
|
|
Change
|
||||||||
|
2011
|
|
2010
|
|
$
|
|
%
|
||||||
|
(In thousands)
|
|
|
|
|
||||||||
Other income (expense)
|
$
|
1,790
|
|
|
$
|
(267
|
)
|
|
$
|
2,057
|
|
|
*
|
|
Year Ended
December 31,
|
|
Change
|
|
Change
|
|||||||||
|
2011
|
|
2010
|
|
$
|
|
%
|
|||||||
|
(In thousands)
|
|
|
|
|
|||||||||
Benefit from income tax
|
$
|
50,034
|
|
|
$
|
40,487
|
|
|
$
|
9,547
|
|
|
(23.6
|
)%
|
•
|
the principal U.S. patent covering Angiomax, the '404 patent, was set to expire in March 2010, but was extended under the Hatch-Waxman Act on an interim basis to August 13, 2012, for an extension of the term of the '404 patent. However the PTO rejected our application because in its view the application was not timely filed. As a result we filed suit against the PTO, the FDA and the U.S. Department of Health and Human Services, or HHS, seeking to set aside the denial of our application to extend the term of the '404 patent. On August 3, 2010, the U.S. Federal District Court for the Eastern District of Virginia granted our motion for summary judgment and ordered the PTO to consider our patent term extension application timely filed. The period for the government to appeal the court's August 3, 2010 decision expired without government appeal. However, on August 19, 2010, APP filed a motion to intervene for the purpose of appeal in our case against the PTO, the FDA and HHS. On September 13, 2010, the federal district court denied APP's motion. APP appealed the denial of its motion, as well as the federal district court's August 3, 2010 order. On January 22, 2012, we entered into a legal settlement with APP in which APP agreed to dismiss its appeal. Upon dismissal of APP's appeal, all pending litigation regarding the '404 patent was resolved. Following the expiration of the government's appeal period in the litigation, the FDA determined the applicable regulatory review period for Angiomax. On January 31, 2012, the PTO issued a notice of final determination finding the '404 patent eligible for patent term extension under the Hatch-Waxman Act and concluding that the term of extension ends on December 15, 2014. On February 3, 2012, we accepted the extension of the term of the '404 patent. The PTO has not yet issued the certificate of extension, but we expect to receive it shortly. As a result of our study of Angiomax in the pediatric setting, we are entitled to a six-month period of pediatric exclusivity following expiration of the '404 patent. If the term of the '404 patent is extended to December 15, 2014, we believe that this pediatric exclusivity would extend until June 15, 2015;
|
•
|
on September 16, 2011, President Obama signed into law the Leahy-Smith America Invents Act, or the America Invents Act. Section 37 of the America Invents Act clarifies the filing timeline for patent term extension applications under the Hatch-Waxman Act. This clarification confirms the interpretation of the Hatch-Waxman Act adopted by the federal district court's August 3, 2010 decision in our suit against the PTO, the FDA and HHS, which ordered the PTO to consider our patent term extension application timely filed;
|
•
|
on September 30, 2011, we entered into a settlement agreement and a license agreement with Teva, with respect to our patent infringement suits against Teva, which includes our suit against Pliva Hrvatska d.o.o., et al. As part of the settlement agreement, Teva admitted that the '727 patent and '343 patent are valid and enforceable and that they would be infringed by the manufacture and sale of Teva's generic bivalirudin for injection products. Under the license agreement, we granted Teva a non-exclusive license under the '727 patent and '343 patent to sell a generic bivalirudin for injection product under a Teva ANDA in the United States beginning June 30, 2019 or earlier under certain conditions;
|
•
|
on January 22, 2012, we entered into a settlement agreement and a license agreement with APP with respect to APP's appeal (as described in the first bullet above) and the patent infringement suits. Under the settlement agreement, APP
|
•
|
we have reported three years of cumulative U.S. income before income taxes.
|
•
|
we were, and currently are, involved in patent infringement litigation with four generic manufacturers with respect to our '343 and '727 patents, the negative outcomes of which may have a material impact on our future operations and profitability.
|
•
|
the extent to which Angiomax is commercially successful globally;
|
•
|
our ability to maintain market exclusivity for Angiomax in the United States through the enforcement of the '727 patent and the '343 patent during the period following the expiration of the patent term of the '404 patent on December 15, 2014 and the six month pediatric exclusivity on June 15, 2015 through at least May 1, 2019, the date on which we agreed APP may sell a generic version of Angiomax;
|
•
|
the extent to which Cleviprex, ready-to-use Argatroban, Recothrom and the acute care generic products that we acquired the non-exclusive right to sell and distribute from APP are commercially successful in the United States;
|
•
|
the extent to which our global collaboration with AstraZeneca, including our four-year co-promotion arrangement for BRILINTA in the United States, is successful;
|
•
|
the extent to which we are successful in our efforts to establish a commercial infrastructure outside the United States;
|
•
|
the consideration paid by us in connection with acquisitions and licenses of development-stage compounds, clinical-stage product candidates, approved products, or businesses, and in connection with other strategic arrangements;
|
•
|
the progress, level, timing and cost of our research and development activities related to our clinical trials and non-clinical studies with respect to Angiomax, Cleviprex, as well as cangrelor, oritavancin, MDCO-157, IONSYS and our other products in development;
|
•
|
the cost and outcomes of regulatory submissions and reviews for approval of Angiomax in additional countries and for additional indications, of Cleviprex and Recothrom outside the United States and of our products in development globally;
|
•
|
the continuation or termination of third-party manufacturing, distribution and sales and marketing arrangements;
|
•
|
the size, cost and effectiveness of our sales and marketing programs globally;
|
•
|
the amounts of our payment obligations to third parties as to our products and products in development; and
|
•
|
our ability to defend and enforce our intellectual property rights.
|
|
|
|
|
Less Than
|
|
|
|
|
|
More Than
|
||||||||||
Contractual Obligations (in thousands)
(1)
|
|
Total
|
|
1 Year
|
|
1 - 3 Years
|
|
4 - 5 Years
|
|
5 Years
|
||||||||||
Inventory related commitments
|
|
$
|
78,141
|
|
|
$
|
40,753
|
|
|
$
|
36,678
|
|
|
$
|
710
|
|
|
—
|
|
|
Long-term debt obligations
|
|
292,015
|
|
|
3,781
|
|
|
7,562
|
|
|
280,672
|
|
|
—
|
|
|||||
Research and development
|
|
7,046
|
|
|
6,266
|
|
|
780
|
|
|
—
|
|
|
—
|
|
|||||
Operating leases
|
|
54,823
|
|
|
7,412
|
|
|
11,817
|
|
|
17,068
|
|
|
18,526
|
|
|||||
Selling, general and administrative
|
|
3,539
|
|
|
2,550
|
|
|
989
|
|
|
—
|
|
|
—
|
|
|||||
Unrecognized tax benefits
|
|
2,433
|
|
|
2,433
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total contractual obligations
|
|
$
|
437,997
|
|
|
$
|
63,195
|
|
|
$
|
57,826
|
|
|
$
|
298,450
|
|
|
$
|
18,526
|
|
(1)
|
This table does not include any milestone and royalty payments which may become payable to third parties for which the timing and likelihood of such payments are not known, as discussed below.
|
•
|
the nature of the estimate or assumption is material due to the level of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change; and
|
•
|
the impact of the estimates and assumptions on financial condition or operating performance is material.
|
•
|
Product returns.
Our customers have the right to return any unopened product during the 18-month period beginning six months prior to the labeled expiration date and ending 12 months after the labeled expiration date. As a result, in calculating the accrual for product returns, we must estimate the likelihood that product sold might not be used within six months of expiration and analyze the likelihood that such product will be returned within 12 months after expiration. We consider all of these factors and adjust the accrual periodically throughout each quarter to reflect actual experience. When customers return product, they are generally given credit against amounts owed. The amount credited is charged to our product returns accrual.
|
•
|
Chargebacks and rebates.
Although we primarily sell products to ICS in the United States, we typically enter into agreements with hospitals, either directly or through group purchasing organizations acting on behalf of their hospital members, in connection with the hospitals’ purchases of products.
|
•
|
Fees-for-service.
We offer discounts to certain wholesalers and ICS based on contractually determined rates for certain services. We estimate our fee-for-service accruals and allowances based on historical sales, wholesaler and distributor inventory levels and the applicable discount rate. Our discounts are accrued at the time of the sale and are typically settled with the wholesalers or ICS within 60 days after the end of each respective quarter. Our fee-for-service accruals and allowances were
$3.6 million
and
$3.3 million
at December 31, 2012 and December 31, 2011, respectively. A 10% change in our fee-for-service accruals and allowances would have had an approximately $0.4 million effect on our net revenue for the year ended December 31, 2012.
|
|
Cash
Discounts
|
|
Returns
|
|
Chargebacks
|
|
Rebates
|
|
Fees-for-
Service
|
||||||||||
Balance at January 1, 2010
|
$
|
664
|
|
|
$
|
3,764
|
|
|
$
|
4,664
|
|
|
$
|
11
|
|
|
$
|
3,125
|
|
Allowances for sales during 2010
|
9,817
|
|
|
3,420
|
|
|
53,756
|
|
|
—
|
|
|
10,976
|
|
|||||
Allowances for prior year sales
|
—
|
|
|
1,163
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Actual credits issued for prior year’s sales
|
(688
|
)
|
|
(3,811
|
)
|
|
(4,041
|
)
|
|
—
|
|
|
(3,051
|
)
|
|||||
Actual credits issued for sales during 2010
|
(8,674
|
)
|
|
(3,909
|
)
|
|
(40,516
|
)
|
|
—
|
|
|
(8,416
|
)
|
|||||
Balance at December 31, 2010
|
1,119
|
|
|
627
|
|
|
13,863
|
|
|
11
|
|
|
2,634
|
|
|||||
Allowances for sales during 2011
|
10,911
|
|
|
3,807
|
|
|
60,318
|
|
|
1,159
|
|
|
9,136
|
|
|||||
Allowances for prior year sales
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Actual credits issued for prior year’s sales
|
(1,119
|
)
|
|
(556
|
)
|
|
(8,481
|
)
|
|
—
|
|
|
(2,294
|
)
|
|||||
Actual credits issued for sales during 2011
|
(9,062
|
)
|
|
(7
|
)
|
|
(50,060
|
)
|
|
—
|
|
|
(6,207
|
)
|
|||||
Balance at December 31, 2011
|
1,849
|
|
|
3,871
|
|
|
15,640
|
|
|
1,170
|
|
|
3,269
|
|
|||||
Allowances for sales during 2012
|
12,240
|
|
|
854
|
|
|
68,179
|
|
|
—
|
|
|
9,914
|
|
|||||
Allowances for prior year sales
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Actual credits issued for prior year’s sales
|
(1,849
|
)
|
|
(3,612
|
)
|
|
(9,673
|
)
|
|
(1,170
|
)
|
|
(2,885
|
)
|
|||||
Actual credits issued for sales during 2012
|
(10,230
|
)
|
|
—
|
|
|
(59,303
|
)
|
|
—
|
|
|
(6,721
|
)
|
|||||
Balance at December 31, 2012
|
$
|
2,010
|
|
|
$
|
1,113
|
|
|
$
|
14,843
|
|
|
$
|
—
|
|
|
$
|
3,577
|
|
Assumption
|
|
Method of Estimating
|
• Estimated expected term of options
|
|
• Employees’ historical exercise experience and, at times, estimates of future exercises of unexercised options based on the midpoint between the vesting date and end of the contractual term
|
• Expected volatility
|
|
• Historical price of our common stock and the implied volatility of the stock of our peer group
|
• Risk-free interest rate
|
|
• Yields of U.S. Treasury securities corresponding with the expected life of option grants
|
• Forfeiture rates
|
|
• Historical forfeiture data
|
Item 7A.
|
Quantitative and Qualitative Disclosure About Market Risk
|
Item 8.
|
Financial Statements and Supplementary Data
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
Item 9A.
|
Controls and Procedures
|
Item 9B.
|
Other Information
|
Name and Title
|
|
2013 Annual
Base Salary
|
|
2012 Annual
Cash Bonus
Payments
|
|
|||||
Clive A. Meanwell
Chief Executive Officer
|
|
$
|
793,272
|
|
|
$
|
795,143
|
|
|
|
|
|
|
|
|
|
|
|
|||
Glenn P. Sblendorio
President and Chief Financial Officer
|
|
$
|
569,296
|
|
|
$
|
480,344
|
|
|
|
|
|
|
|
|
|
|
|
|||
Paul M. Antinori
Senior Vice President and General Counsel
|
|
$
|
427,849
|
|
|
$
|
203,019
|
|
|
|
|
|
|
|
|
|
|
|
|||
William B. O'Connor
Senior Vice President and Chief Accounting Officer
|
|
$
|
375,000
|
|
|
$
|
169,257
|
|
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
Item 11.
|
Executive Compensation
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
Item 14.
|
Principal Accounting Fees and Services
|
Item 15.
|
Exhibits and Financial Statement Schedules
|
|
Page
|
Consolidated Statements of
Income
|
|
By:
|
/s/ Clive A. Meanwell
|
|
Clive A. Meanwell
|
|
Chairman and Chief Executive Officer
|
Signature
|
|
Title(s)
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Clive A. Meanwell
|
|
Chief Executive Officer and Chairman of the
|
|
March 1, 2013
|
Clive A. Meanwell
|
|
Board of Directors (Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Glenn P. Sblendorio
|
|
President, Chief Financial Officer and
|
|
March 1, 2013
|
Glenn P. Sblendorio
|
|
Treasurer (Principal Financial and Accounting Officer); Director
|
|
|
|
|
|
|
|
/s/ William W. Crouse
|
|
Director
|
|
March 1, 2013
|
William W. Crouse
|
|
|
|
|
|
|
|
|
|
/s/ Robert J. Hugin
|
|
Director
|
|
March 1, 2013
|
Robert J. Hugin
|
|
|
|
|
|
|
|
|
|
/s/ John C. Kelly
|
|
Director
|
|
March 1, 2013
|
John C. Kelly
|
|
|
|
|
|
|
|
|
|
/s/ Armin M. Kessler
|
|
Director
|
|
March 1, 2013
|
Armin M. Kessler
|
|
|
|
|
|
|
|
|
|
/s/ Robert G. Savage
|
|
Director
|
|
March 1, 2013
|
Robert G. Savage
|
|
|
|
|
|
|
|
|
|
/s/ Hiroaki Shigeta
|
|
Director
|
|
March 1, 2013
|
Hiroaki Shigeta
|
|
|
|
|
|
|
|
|
|
/s/ Melvin K. Spigelman
|
|
Director
|
|
March 1, 2013
|
Melvin K. Spigelman
|
|
|
|
|
|
|
|
|
|
/s/ Elizabeth H.S. Wyatt
|
|
Director
|
|
March 1, 2013
|
Elizabeth H.S. Wyatt
|
|
|
|
|
|
Page
|
Consolidated Statements of
Income
|
|
•
|
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of The Medicines Company;
|
•
|
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of The Medicines Company are being made only in accordance with authorizations of management and directors of The Medicines Company; and
|
•
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of The Medicines Company’s assets that could have a material effect on the financial statements.
|
/s/ Clive A. Meanwell
|
|
/s/ Glenn P. Sblendorio
|
Chairman and
Chief Executive Officer
|
|
President and
Chief Financial Officer
|
|
December 31,
|
||||||
|
2012
|
|
2011
|
||||
|
(In thousands, except share and per share amounts)
|
||||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
519,446
|
|
|
$
|
315,382
|
|
Available for sale securities
|
50,875
|
|
|
25,130
|
|
||
Accrued interest receivable
|
348
|
|
|
374
|
|
||
Accounts receivable, net of allowances of approximately $17.7 million and $18.1 million at December 31, 2012 and 2011
|
85,893
|
|
|
74,559
|
|
||
Inventory
|
76,355
|
|
|
45,145
|
|
||
Deferred tax assets
|
13,881
|
|
|
9,395
|
|
||
Prepaid expenses and other current assets
|
9,577
|
|
|
11,738
|
|
||
Total current assets
|
756,375
|
|
|
481,723
|
|
||
Fixed assets, net
|
16,100
|
|
|
17,979
|
|
||
Intangible assets, net
|
119,576
|
|
|
87,329
|
|
||
Goodwill
|
14,671
|
|
|
14,671
|
|
||
Restricted cash
|
1,571
|
|
|
4,714
|
|
||
Deferred tax assets
|
46,625
|
|
|
78,441
|
|
||
Other assets
|
17,264
|
|
|
7,790
|
|
||
Total assets
|
$
|
972,182
|
|
|
$
|
692,647
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
25,378
|
|
|
$
|
6,587
|
|
Accrued expenses
|
107,453
|
|
|
147,382
|
|
||
Deferred revenue
|
2,375
|
|
|
666
|
|
||
Total current liabilities
|
135,206
|
|
|
154,635
|
|
||
Contingent purchase price
|
18,971
|
|
|
20,431
|
|
||
Convertible senior notes (due 2017)
|
226,109
|
|
|
—
|
|
||
Other liabilities
|
5,674
|
|
|
5,939
|
|
||
Total liabilities
|
385,960
|
|
|
181,005
|
|
||
Stockholders’ equity:
|
|
|
|
|
|
||
Preferred stock, $1.00 par value per share, 5,000,000 shares authorized; no shares issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, $.001 par value per share, 125,000,000 shares authorized; 56,153,140 issued and 53,960,158 outstanding at December 31, 2012 and 54,313,107 issued and outstanding at December 31, 2011
|
56
|
|
|
54
|
|
||
Additional paid-in capital
|
697,427
|
|
|
623,801
|
|
||
Treasury stock, at cost; 2,192,982 and 0 shares at December 31, 2012 and December 31, 2011, respectively
|
(50,000
|
)
|
|
—
|
|
||
Accumulated deficit
|
(60,411
|
)
|
|
(111,665
|
)
|
||
Accumulated other comprehensive (loss)
|
(766
|
)
|
|
(548
|
)
|
||
Total The Medicines Company stockholders’ equity
|
586,306
|
|
|
511,642
|
|
||
Non-controlling interest in joint venture
|
(84
|
)
|
|
—
|
|
||
Total stockholders’ equity
|
586,222
|
|
|
511,642
|
|
||
Total liabilities and stockholders’ equity
|
$
|
972,182
|
|
|
$
|
692,647
|
|
|
Year Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
|
(In thousands, except per share amounts)
|
||||||||||
Net revenue
|
$
|
558,588
|
|
|
$
|
484,732
|
|
|
$
|
437,645
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|||
Cost of revenue
|
177,339
|
|
|
156,866
|
|
|
129,299
|
|
|||
Research and development
|
126,423
|
|
|
110,180
|
|
|
85,241
|
|
|||
Selling, general and administrative
|
171,753
|
|
|
159,617
|
|
|
158,690
|
|
|||
Total operating expenses
|
475,515
|
|
|
426,663
|
|
|
373,230
|
|
|||
Income from operations
|
83,073
|
|
|
58,069
|
|
|
64,415
|
|
|||
Legal settlement
|
—
|
|
|
17,984
|
|
|
—
|
|
|||
Co-promotion income
|
10,000
|
|
|
—
|
|
|
—
|
|
|||
Interest expense
|
(8,005
|
)
|
|
—
|
|
|
—
|
|
|||
Other income (loss)
|
1,140
|
|
|
1,790
|
|
|
(267
|
)
|
|||
Income before income taxes
|
86,208
|
|
|
77,843
|
|
|
64,148
|
|
|||
(Provision) benefit for income taxes
|
(35,038
|
)
|
|
50,034
|
|
|
40,487
|
|
|||
Net income
|
51,170
|
|
|
127,877
|
|
|
104,635
|
|
|||
Net loss attributable to non-controlling interest
|
84
|
|
|
—
|
|
|
—
|
|
|||
Net income attributable to The Medicines Company
|
$
|
51,254
|
|
|
$
|
127,877
|
|
|
$
|
104,635
|
|
Basic earnings per common share attributable to The Medicines Company
|
$
|
0.96
|
|
|
$
|
2.39
|
|
|
$
|
1.98
|
|
Diluted earnings per common share attributable to The Medicines Company
|
$
|
0.93
|
|
|
$
|
2.35
|
|
|
$
|
1.97
|
|
Weighted average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|||
Basic
|
53,545
|
|
|
53,496
|
|
|
52,842
|
|
|||
Diluted
|
55,346
|
|
|
54,407
|
|
|
53,184
|
|
|
Year Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
Net income
|
$
|
51,170
|
|
|
$
|
127,877
|
|
|
$
|
104,635
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Unrealized gain (loss) on available for sale securities
|
6
|
|
|
—
|
|
|
(26
|
)
|
|||
Foreign currency translation adjustment
|
(224
|
)
|
|
(968
|
)
|
|
611
|
|
|||
Other comprehensive (loss) income
|
(218
|
)
|
|
(968
|
)
|
|
585
|
|
|||
Comprehensive income
|
$
|
50,952
|
|
|
$
|
126,909
|
|
|
105,220
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
Accumulated
Comprehensive
|
|
Non-controlling
|
|
Total
|
||||||||||||||||
|
Common Stock
|
|
Treasury Stock
|
|
Paid-in
|
|
Accumulated
|
|
(Loss)
|
|
Interest
|
|
Stockholders’
|
||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Capital
|
|
Deficit
|
|
Income
|
|
in JV
|
|
Equity
|
||||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||||||||||
Balance at January 1, 2010
|
52,830
|
|
|
$
|
53
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
584,678
|
|
|
$
|
(344,177
|
)
|
|
$
|
(165
|
)
|
|
$
|
—
|
|
|
$
|
240,389
|
|
Employee stock purchases
|
558
|
|
|
—
|
|
|
|
|
|
|
3,361
|
|
|
|
|
|
|
|
|
|
|
3,361
|
|
||||||||||
Issuance of restricted stock awards
|
76
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
||||||||||
Non-cash stock compensation
|
|
|
|
|
|
|
|
|
|
|
8,336
|
|
|
|
|
|
|
|
|
|
|
8,336
|
|
||||||||||
Excess tax benefit from share-based compensation arrangements
|
|
|
|
|
|
|
|
|
|
|
292
|
|
|
|
|
|
|
|
|
|
|
292
|
|
||||||||||
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
104,635
|
|
|
|
|
|
|
|
104,635
|
|
||||||||||
Currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
611
|
|
|
|
|
611
|
|
||||||||||
Unrealized loss on available for sale securities (net of tax)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(26
|
)
|
|
|
|
(26
|
)
|
||||||||||
Balance at December 31, 2010
|
53,464
|
|
|
$
|
53
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
596,667
|
|
|
$
|
(239,542
|
)
|
|
$
|
420
|
|
|
$
|
—
|
|
|
$
|
357,598
|
|
Employee stock purchases
|
609
|
|
|
1
|
|
|
|
|
|
|
6,724
|
|
|
|
|
|
|
|
|
|
|
6,725
|
|
||||||||||
Issuance of restricted stock awards
|
239
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
||||||||||
Non-cash stock compensation
|
|
|
|
|
|
|
|
|
|
|
11,017
|
|
|
|
|
|
|
|
|
|
|
11,017
|
|
||||||||||
Excess tax benefit from share-based compensation arrangements
|
|
|
|
|
|
|
|
|
|
|
9,393
|
|
|
|
|
|
|
|
|
|
|
9,393
|
|
||||||||||
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
127,877
|
|
|
|
|
|
|
|
127,877
|
|
||||||||||
Currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(968
|
)
|
|
|
|
(968
|
)
|
||||||||||
Unrealized loss on available for sale securities (net of tax)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
—
|
|
||||||||||
Balance at December 31, 2011
|
54,312
|
|
|
$
|
54
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
623,801
|
|
|
$
|
(111,665
|
)
|
|
$
|
(548
|
)
|
|
$
|
—
|
|
|
$
|
511,642
|
|
Employee stock purchases
|
1,488
|
|
|
2
|
|
|
|
|
|
|
22,930
|
|
|
|
|
|
|
|
|
|
|
22,932
|
|
||||||||||
Issuance of restricted stock awards
|
352
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
||||||||||
Non-cash stock compensation
|
|
|
|
|
|
|
|
|
|
|
14,981
|
|
|
|
|
|
|
|
|
|
|
14,981
|
|
||||||||||
Excess tax benefit from share-based compensation arrangements
|
|
|
|
|
|
|
|
|
|
|
1,558
|
|
|
|
|
|
|
|
|
|
|
1,558
|
|
||||||||||
Equity component of the convertible notes, issuance, net
|
|
|
|
|
|
|
|
|
55,685
|
|
|
|
|
|
|
|
|
55,685
|
|
||||||||||||||
Purchase of convertible note hedges
|
|
|
|
|
|
|
|
|
(58,223
|
)
|
|
|
|
|
|
|
|
(58,223
|
)
|
||||||||||||||
Sale of warrants
|
|
|
|
|
|
|
|
|
38,425
|
|
|
|
|
|
|
|
|
38,425
|
|
||||||||||||||
Purchase of treasury stock
|
|
|
|
|
(2,193
|
)
|
|
(50,000
|
)
|
|
|
|
|
|
|
|
|
|
(50,000
|
)
|
|||||||||||||
Debt issuance costs
|
|
|
|
|
|
|
|
|
(1,730
|
)
|
|
|
|
|
|
|
|
(1,730
|
)
|
||||||||||||||
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51,254
|
|
|
|
|
|
(84
|
)
|
|
51,170
|
|
|||||||||
Currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(224
|
)
|
|
|
|
(224
|
)
|
||||||||||
Unrealized gain on available for sale securities (net of tax)
|
|
|
|
|
|
|
|
|
|
|
|
|
6
|
|
|
|
|
6
|
|
||||||||||||||
Balance at December 31, 2012
|
56,152
|
|
|
$
|
56
|
|
|
(2,193
|
)
|
|
$
|
(50,000
|
)
|
|
$
|
697,427
|
|
|
$
|
(60,411
|
)
|
|
$
|
(766
|
)
|
|
$
|
(84
|
)
|
|
$
|
586,222
|
|
|
Year Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
|
(In thousands)
|
||||||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|||
Net income
|
$
|
51,170
|
|
|
$
|
127,877
|
|
|
$
|
104,635
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization
|
7,270
|
|
|
6,231
|
|
|
6,124
|
|
|||
Amortization of net premiums and discounts on available for sale securities
|
734
|
|
|
2,021
|
|
|
3,260
|
|
|||
Amortization of long term debt financing costs
|
598
|
|
|
—
|
|
|
—
|
|
|||
Amortization of debt discount
|
5,306
|
|
|
—
|
|
|
—
|
|
|||
Unrealized foreign currency transaction (gains) losses, net
|
(573
|
)
|
|
562
|
|
|
(1,217
|
)
|
|||
Non-cash stock compensation expense
|
14,981
|
|
|
11,017
|
|
|
8,336
|
|
|||
Loss on disposal of fixed assets
|
69
|
|
|
299
|
|
|
293
|
|
|||
Deferred tax provision (benefit)
|
30,376
|
|
|
(53,246
|
)
|
|
(43,592
|
)
|
|||
Excess tax benefit from share-based compensation arrangements
|
(1,558
|
)
|
|
(9,393
|
)
|
|
292
|
|
|||
Change in contingent consideration obligation
|
(1,460
|
)
|
|
(4,956
|
)
|
|
1,720
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|||
Accrued interest receivable
|
26
|
|
|
905
|
|
|
(364
|
)
|
|||
Accounts receivable
|
(11,120
|
)
|
|
(28,086
|
)
|
|
(16,627
|
)
|
|||
Inventory
|
(31,152
|
)
|
|
(19,794
|
)
|
|
701
|
|
|||
Prepaid expenses and other current assets
|
1,516
|
|
|
(6,763
|
)
|
|
5,031
|
|
|||
Accounts payable
|
18,903
|
|
|
(2,203
|
)
|
|
165
|
|
|||
Accrued expenses
|
(40,160
|
)
|
|
71,608
|
|
|
(736
|
)
|
|||
Deferred revenue
|
1,685
|
|
|
125
|
|
|
(616
|
)
|
|||
Other liabilities
|
(265
|
)
|
|
171
|
|
|
62
|
|
|||
Net cash provided by operating activities
|
46,346
|
|
|
96,375
|
|
|
67,467
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|||
Purchases of available for sale securities
|
(65,354
|
)
|
|
(33,583
|
)
|
|
(128,240
|
)
|
|||
Proceeds from maturities and sales of available for sale securities
|
38,881
|
|
|
126,713
|
|
|
108,640
|
|
|||
Purchases of fixed assets
|
(1,005
|
)
|
|
(1,269
|
)
|
|
(340
|
)
|
|||
Acquisition of intangible assets
|
(36,678
|
)
|
|
(7,000
|
)
|
|
—
|
|
|||
Other investments
|
(2,500
|
)
|
|
(7,500
|
)
|
|
—
|
|
|||
Adjustment to goodwill
|
—
|
|
|
—
|
|
|
263
|
|
|||
Decrease in restricted cash
|
3,148
|
|
|
1,049
|
|
|
1,278
|
|
|||
Net cash (used in) provided by investing activities
|
(63,508
|
)
|
|
78,410
|
|
|
(18,399
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|||
Proceeds from issuances of common stock, net
|
22,935
|
|
|
6,725
|
|
|
3,361
|
|
|||
Purchase of treasury stock
|
(50,000
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from the issuance of convertible senior notes
|
275,000
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from issuance of warrants
|
38,425
|
|
|
—
|
|
|
—
|
|
|||
Purchase of convertible note hedge
|
(58,223
|
)
|
|
—
|
|
|
—
|
|
|||
Debt issuance costs
|
(8,774
|
)
|
|
—
|
|
|
—
|
|
|||
Excess tax benefit from share-based compensation arrangements
|
1,558
|
|
|
9,393
|
|
|
—
|
|
|||
Net cash provided by financing activities
|
220,921
|
|
|
16,118
|
|
|
3,361
|
|
|||
Effect of exchange rate changes on cash
|
305
|
|
|
(1,885
|
)
|
|
1,710
|
|
|||
Increase in cash and cash equivalents
|
204,064
|
|
|
189,018
|
|
|
54,139
|
|
|||
Cash and cash equivalents at beginning of period
|
315,382
|
|
|
126,364
|
|
|
72,225
|
|
|||
Cash and cash equivalents at end of period
|
$
|
519,446
|
|
|
$
|
315,382
|
|
|
$
|
126,364
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|||
Taxes paid
|
$
|
1,709
|
|
|
$
|
6,850
|
|
|
$
|
1,699
|
|
Interest paid
|
$
|
1,786
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
1.
|
Nature of Business
|
2.
|
Significant Accounting Policies
|
|
As of December 31, 2012
|
|
As of December 31, 2011
|
||||||||||||||||||||||||||||
|
Cost
|
|
Fair Value
|
|
Carrying
Value
|
|
Unrealized
Gain
|
|
Cost
|
|
Fair Value
|
|
Carrying
Value
|
|
Unrealized
Gain
|
||||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||||||||
U.S. government agency notes
|
$
|
7,093
|
|
|
$
|
7,097
|
|
|
$
|
7,097
|
|
|
$
|
4
|
|
|
$
|
901
|
|
|
$
|
901
|
|
|
$
|
901
|
|
|
$
|
—
|
|
U.S. treasury notes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,021
|
|
|
3,022
|
|
|
3,022
|
|
|
1
|
|
||||||||
Corporate debt securities
|
43,772
|
|
|
43,778
|
|
|
43,778
|
|
|
6
|
|
|
21,204
|
|
|
21,207
|
|
|
21,207
|
|
|
3
|
|
||||||||
Total
|
$
|
50,865
|
|
|
$
|
50,875
|
|
|
$
|
50,875
|
|
|
$
|
10
|
|
|
$
|
25,126
|
|
|
$
|
25,130
|
|
|
$
|
25,130
|
|
|
$
|
4
|
|
•
|
Product returns.
The Company’s customers have the right to return any unopened product during the 18-month period beginning six months prior to the labeled expiration date and ending
12
months after the labeled expiration date. As a result, in calculating the accrual for product returns, the Company must estimate the likelihood that product sold might not be used within six months of expiration and analyze the likelihood that such product will be returned within
12
months after expiration. The Company considers all of these factors and adjusts the accrual periodically throughout each quarter to reflect actual experience. When customers return product, they are generally given credit against amounts owed. The amount credited is charged to the Company’s product returns accrual.
|
•
|
Chargebacks and rebates.
Although the Company primarily sells products to ICS in the United States, the Company typically enters into agreements with hospitals, either directly or through group purchasing organizations acting on behalf of their hospital members, in connection with the hospitals’ purchases of products.
|
•
|
Fees-for-service.
The Company offers discounts to certain wholesalers and ICS based on contractually determined rates for certain services. The Company estimates its fee-for-service accruals and allowances based on historical sales, wholesaler and distributor inventory levels and the applicable discount rate. The Company’s discounts are accrued at the time of the sale and are typically settled with the wholesalers or ICS within
60
days after the end of each respective quarter. The Company’s fee-for-service accruals and allowances were
$3.6 million
and
$3.3 million
at
December 31, 2012
and
December 31, 2011
, respectively.
|
|
Cash
Discounts
|
|
Returns
|
|
Chargebacks
|
|
Rebates
|
|
Fees-for-
Service
|
||||||||||
Balance at January 1, 2010
|
$
|
664
|
|
|
$
|
3,764
|
|
|
$
|
4,664
|
|
|
$
|
11
|
|
|
$
|
3,125
|
|
Allowances for sales during 2010
|
9,817
|
|
|
3,420
|
|
|
53,756
|
|
|
—
|
|
|
10,976
|
|
|||||
Allowances for prior year sales
|
—
|
|
|
1,163
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Actual credits issued for prior year’s sales
|
(688
|
)
|
|
(3,811
|
)
|
|
(4,041
|
)
|
|
—
|
|
|
(3,051
|
)
|
|||||
Actual credits issued for sales during 2010
|
(8,674
|
)
|
|
(3,909
|
)
|
|
(40,516
|
)
|
|
—
|
|
|
(8,416
|
)
|
|||||
Balance at December 31, 2010
|
1,119
|
|
|
627
|
|
|
13,863
|
|
|
11
|
|
|
2,634
|
|
|||||
Allowances for sales during 2011
|
10,911
|
|
|
3,807
|
|
|
60,318
|
|
|
1,159
|
|
|
9,136
|
|
|||||
Allowances for prior year sales
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Actual credits issued for prior year’s sales
|
(1,119
|
)
|
|
(556
|
)
|
|
(8,481
|
)
|
|
—
|
|
|
(2,294
|
)
|
|||||
Actual credits issued for sales during 2011
|
(9,062
|
)
|
|
(7
|
)
|
|
(50,060
|
)
|
|
—
|
|
|
(6,207
|
)
|
|||||
Balance at December 31, 2011
|
1,849
|
|
|
3,871
|
|
|
15,640
|
|
|
1,170
|
|
|
3,269
|
|
|||||
Allowances for sales during 2012
|
12,240
|
|
|
854
|
|
|
68,179
|
|
|
—
|
|
|
9,914
|
|
|||||
Allowances for prior year sales
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Actual credits issued for prior year’s sales
|
(1,849
|
)
|
|
(3,612
|
)
|
|
(9,673
|
)
|
|
(1,170
|
)
|
|
(2,885
|
)
|
|||||
Actual credits issued for sales during 2012
|
(10,230
|
)
|
|
—
|
|
|
(59,303
|
)
|
|
—
|
|
|
(6,721
|
)
|
|||||
Balance at December 31, 2012
|
$
|
2,010
|
|
|
$
|
1,113
|
|
|
$
|
14,843
|
|
|
$
|
—
|
|
|
$
|
3,577
|
|
3.
|
Inventory
|
Inventory
|
|
2012
|
|
2011
|
||||
|
|
(In thousands)
|
||||||
Raw materials
|
|
$
|
40,244
|
|
|
$
|
23,234
|
|
Work-in-progress
|
|
26,594
|
|
|
19,203
|
|
||
Finished goods
|
|
9,517
|
|
|
2,708
|
|
||
Total
|
|
$
|
76,355
|
|
|
$
|
45,145
|
|
4.
|
Fixed Assets
|
|
Estimated
|
|
December 31,
|
||||||
|
Life (Years)
|
|
2012
|
|
2011
|
||||
|
|
|
(In thousands)
|
||||||
Furniture, fixtures and equipment
|
3-7
|
|
$
|
10,437
|
|
|
$
|
11,647
|
|
Computer software
|
3
|
|
2,685
|
|
|
2,333
|
|
||
Computer hardware
|
3
|
|
2,130
|
|
|
2,282
|
|
||
Leasehold improvements
|
5-15
|
|
19,160
|
|
|
19,157
|
|
||
|
|
|
34,412
|
|
|
35,419
|
|
||
Less: Accumulated depreciation
|
|
|
(18,312
|
)
|
|
(17,440
|
)
|
||
|
|
|
$
|
16,100
|
|
|
$
|
17,979
|
|
5.
|
Investment
|
6.
|
Acquisitions
|
•
|
Upon approval from the European Medicines Agency (EMA) of a Marketing Authorization Application (MAA) for oritavancin for the treatment of serious gram-positive bacterial infections, including acute bacterial skin and skin structure infections (ABSSSI) (which were formerly referred to as complicated skin and skin structure infections (cSSSI)) on or before
December 31, 2013
, approximately
10.5 million
.
|
•
|
Upon final approval from the FDA of a new drug application (NDA) for oritavancin for the treatment of ABSSSI on or before
December 31, 2013
, approximately
$10.5 million
.
|
•
|
Upon final approval from the FDA of an NDA for the use of oritavancin for the treatment of ABSSSI administered by a single dose intravenous infusion on or before
December 31, 2013
, approximately
$14.7 million
. This payment may become payable simultaneously with the payment described in the previous bullet above.
|
•
|
If aggregate net sales of oritavancin in four consecutive calendar quarters ending on or before
December 31, 2021
reach or exceed
$400 million
, approximately
$49.4 million
.
|
Project
|
|
||
|
(In thousands)
|
||
ABSSSI
|
$
|
54,000
|
|
Bacteremia
|
5,900
|
|
|
Anthrax
|
6,400
|
|
|
Clostridium difficile
infections
|
3,200
|
|
|
Total
|
$
|
69,500
|
|
7.
|
Intangible Assets and Goodwill
|
|
|
|
As of December 31, 2012
|
|
As of December 31, 2011
|
||||||||||||||||||||
|
Weighted
Average
Useful Life
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||
Amortizable intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Customer relationships
(1)
|
8 years
|
|
$
|
7,457
|
|
|
$
|
(4,106
|
)
|
|
$
|
3,351
|
|
|
$
|
7,457
|
|
|
$
|
(2,863
|
)
|
|
$
|
4,594
|
|
Distribution agreements
(1)
|
5.7 years
|
|
9,125
|
|
|
(3,469
|
)
|
|
5,656
|
|
|
4,448
|
|
|
(1,708
|
)
|
|
2,740
|
|
||||||
Trademarks
(1)
|
8 years
|
|
3,024
|
|
|
(1,665
|
)
|
|
1,359
|
|
|
3,024
|
|
|
(1,161
|
)
|
|
1,863
|
|
||||||
Product licenses
(2)
|
8.8 years
|
|
39,000
|
|
|
(1,129
|
)
|
|
37,871
|
|
|
7,000
|
|
|
(226
|
)
|
|
6,774
|
|
||||||
Cleviprex milestones
(3)
|
13 years
|
|
2,000
|
|
|
(161
|
)
|
|
1,839
|
|
|
2,000
|
|
|
(142
|
)
|
|
1,858
|
|
||||||
Total
|
8.3 years
|
|
$
|
60,606
|
|
|
$
|
(10,530
|
)
|
|
$
|
50,076
|
|
|
$
|
23,929
|
|
|
$
|
(6,100
|
)
|
|
$
|
17,829
|
|
(1)
|
The Company amortizes intangible assets related to Angiox based on the ratio of annual forecasted revenue compared to total forecasted revenue from the sale of Angiox through the end of its patent life.
|
(2)
|
The Company amortizes intangible assets related to the product license over its expected useful life.
|
(3)
|
The Company amortizes intangible assets related to the Cleviprex approval over the remaining life of the patent.
|
|
As of December 31, 2012
|
|
As of December 31, 2011
|
||||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Adjustments
|
|
Net
Carrying
Amount
|
|
Gross
Carrying
Amount
|
|
Adjustments
|
|
Net
Carrying
Amount
|
||||||||||||
|
(In thousands)
|
||||||||||||||||||||||
Intangible assets not subject to amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
In-process research and development
|
$
|
69,500
|
|
|
$
|
—
|
|
|
$
|
69,500
|
|
|
$
|
69,500
|
|
|
$
|
—
|
|
|
$
|
69,500
|
|
Total
|
$
|
69,500
|
|
|
$
|
—
|
|
|
$
|
69,500
|
|
|
$
|
69,500
|
|
|
$
|
—
|
|
|
$
|
69,500
|
|
|
December 31,
2012 |
|
December 31,
2011 |
||||
|
(In thousands)
|
||||||
Balance at beginning of period
|
$
|
14,671
|
|
|
$
|
14,671
|
|
Adjustment to goodwill
|
—
|
|
|
—
|
|
||
Balance at end of period
|
$
|
14,671
|
|
|
$
|
14,671
|
|
8.
|
Accrued Expenses
|
|
2012
|
|
2011
|
||||
|
(In thousands)
|
||||||
Royalties
|
$
|
39,169
|
|
|
$
|
32,183
|
|
Research and development services
|
16,728
|
|
|
25,133
|
|
||
Compensation related
|
23,773
|
|
|
23,424
|
|
||
Product returns, rebates and other fees
|
4,367
|
|
|
13,351
|
|
||
Legal, accounting and other
|
8,501
|
|
|
13,819
|
|
||
Manufacturing, logistics and related fees
|
12,529
|
|
|
38,336
|
|
||
Sales and marketing
|
2,071
|
|
|
1,136
|
|
||
Interest
|
315
|
|
|
—
|
|
||
|
$
|
107,453
|
|
|
$
|
147,382
|
|
•
|
during any calendar quarter commencing on or after
September 1, 2012
(and only during such calendar quarter), if the last reported sale price of the Company's common stock for at least
20
trading days (whether or not consecutive) during a period of
30
consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to
130%
of the conversion price (described below) on each applicable trading day;
|
•
|
during the five business day period after any
five
consecutive trading day period (the Measurement Period) in which the trading price (as defined in the Indenture) per
$1,000
principal amount of Notes for each trading day of the Measurement Period was less than
98%
of the product of the last reported sale price of the Company's common stock and the conversion rate on each such trading day; or
|
•
|
upon the occurrence of specified corporate events, including a merger or a sale of all or substantially all of the Company's assets.
|
Liability component
|
|
December 31,
2012 |
|
December 31,
2011 |
||||
|
|
(in thousands)
|
||||||
Principal
|
|
$
|
275,000
|
|
|
$
|
—
|
|
Less: Debt discount, net
(1)
|
|
(48,891
|
)
|
|
—
|
|
||
Net carrying amount
|
|
$
|
226,109
|
|
|
$
|
—
|
|
|
Years Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
|
(in thousands)
|
||||||||||
Contractual interest expense
|
2,101
|
|
|
—
|
|
|
—
|
|
|||
Amortization of debt issuance costs
|
598
|
|
|
—
|
|
|
—
|
|
|||
Amortization of debt discount
|
5,306
|
|
|
—
|
|
|
—
|
|
|||
|
$
|
8,005
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
||||||
Effective interest rate of the liability component
|
6.02
|
%
|
|
—
|
%
|
|
—
|
%
|
10.
|
Stockholders’ Equity
|
11.
|
Stock-Based Compensation
|
•
|
the 2009 Equity Inducement Plan (the 2009 Plan),
|
•
|
the 2007 Equity Inducement Plan (the 2007 Plan),
|
•
|
the 2004 Stock Incentive Plan (the 2004 Plan),
|
•
|
the 2001 Non-Officer, Non-Director Stock Incentive Plan (the 2001 Plan),
|
•
|
the 2000 Outside Director Stock Option Plan (the 2000 Director Plan), and
|
•
|
the 1998 Stock Incentive Plan (the 1998 Plan).
|
•
|
$320 thousand
value of options on the date of his or her initial election to the Board of Directors (the Initial Options); and
|
•
|
$215 thousand
equity value split equally between stock options and restricted shares on the date of each annual meeting of the Company’s stockholders (the Annual Options), except if such non-employee director was initially elected to the Board of Directors at such annual meeting. The lead director will be granted an additional option to purchase
5,000
shares of the common stock on the date of each annual meeting of the Company’s stockholders.
|
|
Number of Shares
|
|
Weighted-Average
Exercise Price
Per Share
|
|
Weighted-
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic Value
|
|||||
Outstanding, January 1, 2010
|
10,994,407
|
|
|
19.63
|
|
|
|
|
|
|
||
Granted
|
1,079,700
|
|
|
9.01
|
|
|
|
|
|
|
||
Exercised
|
(357,225
|
)
|
|
5.77
|
|
|
|
|
|
|
||
Forfeited and expired
|
(3,691,471
|
)
|
|
20.31
|
|
|
|
|
|
|
||
Outstanding, December 31, 2010
|
8,025,411
|
|
|
18.51
|
|
|
|
|
|
|
||
Granted
|
2,108,510
|
|
|
17.04
|
|
|
|
|
|
|
||
Exercised
|
(451,600
|
)
|
|
11.04
|
|
|
|
|
|
|
||
Forfeited and expired
|
(545,644
|
)
|
|
17.3
|
|
|
|
|
|
|
||
Outstanding, December 31, 2011
|
9,136,677
|
|
|
$
|
18.61
|
|
|
|
|
|
|
|
Granted
|
1,619,702
|
|
|
22.28
|
|
|
|
|
|
|
||
Exercised
|
(1,342,739
|
)
|
|
15.50
|
|
|
|
|
|
|
||
Forfeited and expired
|
(301,608
|
)
|
|
17.62
|
|
|
|
|
|
|
||
Outstanding, December 31, 2012
|
9,112,032
|
|
|
$
|
19.75
|
|
|
5.84
|
|
$
|
45,083,235
|
|
Vested and expected to vest, December 31, 2012
|
8,904,487
|
|
|
$
|
19.75
|
|
|
5.77
|
|
$
|
44,212,885
|
|
Exercisable, December 31, 2012
|
6,372,168
|
|
|
$
|
20.14
|
|
|
4.76
|
|
$
|
30,713,356
|
|
Available for future grant at December 31, 2012
|
2,014,721
|
|
|
|
|
|
|
|
|
|
|
Years Ended
December 31,
|
|||||||
|
2012
|
|
2011
|
|
2010
|
|||
Expected dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Expected stock price volatility
|
46.5
|
%
|
|
49
|
%
|
|
52
|
%
|
Risk-free interest rate
|
0.825
|
%
|
|
1.73
|
%
|
|
2.13
|
%
|
Expected option term (years)
|
4.95
|
|
|
4.75
|
|
|
5.17
|
|
|
Years Ended
December 31,
|
|||||||
|
2012
|
|
2011
|
|
2010
|
|||
Expected dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Expected stock price volatility
|
32.65
|
%
|
|
38
|
%
|
|
65
|
%
|
Risk-free interest rate
|
0.14
|
%
|
|
0.1
|
%
|
|
0.19
|
%
|
Expected option term (years)
|
0.5
|
|
|
0.5
|
|
|
0.5
|
|
|
Number of
Shares
|
|
Weighted Average
Grant-Date
Fair Value
|
|||
Outstanding, January 1, 2010
|
430,280
|
|
|
$
|
14.45
|
|
Awarded
|
172,874
|
|
|
8.82
|
|
|
Vested
|
(128,196
|
)
|
|
14.76
|
|
|
Forfeited
|
(96,830
|
)
|
|
12.85
|
|
|
Outstanding, December 31, 2010
|
378,128
|
|
|
12.18
|
|
|
Awarded
|
250,224
|
|
|
17.59
|
|
|
Vested
|
(168,443
|
)
|
|
13.43
|
|
|
Forfeited
|
(10,648
|
)
|
|
13.42
|
|
|
Outstanding, December 31, 2011
|
449,261
|
|
|
14.70
|
|
|
Awarded
|
369,158
|
|
|
21.89
|
|
|
Vested
|
(188,541
|
)
|
|
15.03
|
|
|
Forfeited
|
(16,767
|
)
|
|
14.49
|
|
|
Outstanding, December 31, 2012
|
613,111
|
|
|
$
|
18.93
|
|
12.
|
Earnings per Share
|
|
Years Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
|
(In thousands, except per share amounts)
|
||||||||||
Basic and diluted
|
|
|
|
|
|
|
|
|
|||
Net income attributable to The Medicines Company
|
$
|
51,254
|
|
|
$
|
127,877
|
|
|
$
|
104,635
|
|
|
|
|
|
|
|
||||||
Net weighted average common shares outstanding, basic
|
53,545
|
|
|
53,496
|
|
|
52,842
|
|
|||
Plus: net effect of dilutive stock options and restricted common shares
|
1,801
|
|
|
911
|
|
|
342
|
|
|||
Weighted average common shares outstanding, diluted
|
55,346
|
|
|
54,407
|
|
|
53,184
|
|
|||
Income per common share attributable to The Medicines Company, basic
|
$
|
0.96
|
|
|
$
|
2.39
|
|
|
$
|
1.98
|
|
Income per common share attributable to The Medicines Company, diluted
|
$
|
0.93
|
|
|
$
|
2.35
|
|
|
$
|
1.97
|
|
13.
|
Income Taxes
|
|
2012
|
|
2011
|
|
2010
|
||||||
|
(In thousands)
|
||||||||||
Current:
|
|
|
|
|
|
|
|
|
|||
Federal
|
$
|
(2,492
|
)
|
|
$
|
(1,299
|
)
|
|
$
|
(1,380
|
)
|
State
|
(1,309
|
)
|
|
(1,677
|
)
|
|
(1,433
|
)
|
|||
Foreign
|
(863
|
)
|
|
(226
|
)
|
|
—
|
|
|||
|
(4,664
|
)
|
|
(3,202
|
)
|
|
(2,813
|
)
|
|||
Deferred:
|
|
|
|
|
|
|
|
|
|||
Federal
|
(26,388
|
)
|
|
48,384
|
|
|
43,582
|
|
|||
State
|
(3,920
|
)
|
|
5,077
|
|
|
(282
|
)
|
|||
Foreign
|
(66
|
)
|
|
(225
|
)
|
|
—
|
|
|||
|
(30,374
|
)
|
|
53,236
|
|
|
43,300
|
|
|||
Total benefit from (provision for) income taxes
|
$
|
(35,038
|
)
|
|
$
|
50,034
|
|
|
$
|
40,487
|
|
|
2012
|
|
2011
|
|
2010
|
||||||
|
(In thousands)
|
||||||||||
Domestic
|
$
|
92,998
|
|
|
$
|
84,390
|
|
|
$
|
80,765
|
|
International
|
(6,790
|
)
|
|
(6,547
|
)
|
|
(16,617
|
)
|
|||
Total
|
$
|
86,208
|
|
|
$
|
77,843
|
|
|
$
|
64,148
|
|
|
Year Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
|
(In thousands)
|
||||||||||
Statutory rate applied to pre-tax income
|
$
|
30,202
|
|
|
$
|
27,245
|
|
|
$
|
22,452
|
|
Add (deduct):
|
|
|
|
|
|
|
|
|
|||
State income taxes, net of federal benefit
|
3,399
|
|
|
(2,210
|
)
|
|
1,115
|
|
|||
Foreign
|
2,136
|
|
|
(1,263
|
)
|
|
1,551
|
|
|||
Tax exempt portion of WilmerHale settlement
|
—
|
|
|
(4,344
|
)
|
|
—
|
|
|||
Revaluation of Targanta contingent purchase price
|
(511
|
)
|
|
(1,735
|
)
|
|
602
|
|
|||
Tax credits
|
(1,712
|
)
|
|
(1,000
|
)
|
|
—
|
|
|||
Lobbying costs
|
171
|
|
|
—
|
|
|
1,324
|
|
|||
Meals and entertainment
|
386
|
|
|
349
|
|
|
390
|
|
|||
Uncertain tax positions
|
542
|
|
|
—
|
|
|
510
|
|
|||
Other
|
425
|
|
|
(567
|
)
|
|
181
|
|
|||
Net operating loss utilization
|
—
|
|
|
—
|
|
|
(23,438
|
)
|
|||
(Decrease) to valuation allowances
|
—
|
|
|
(66,509
|
)
|
|
(45,174
|
)
|
|||
Income tax provision (benefit)
|
$
|
35,038
|
|
|
$
|
(50,034
|
)
|
|
$
|
(40,487
|
)
|
|
December 31,
|
||||||
|
2012
|
|
2011
|
||||
|
(In thousands)
|
||||||
Deferred tax assets:
|
|
|
|
|
|
||
Net operating loss carryforwards
|
$
|
23,501
|
|
|
$
|
32,437
|
|
Tax credits
|
13,581
|
|
|
24,072
|
|
||
Intangible assets
|
17,760
|
|
|
23,352
|
|
||
Stock based compensation
|
16,994
|
|
|
15,692
|
|
||
Other
|
10,386
|
|
|
14,841
|
|
||
Total deferred tax assets
|
82,222
|
|
|
110,394
|
|
||
Valuation allowance
|
(2,425
|
)
|
|
(4,190
|
)
|
||
Total deferred tax assets net of valuation allowance
|
79,797
|
|
|
106,204
|
|
||
Deferred tax liabilities:
|
|
|
|
|
|
||
Fixed assets
|
$
|
(1,192
|
)
|
|
$
|
(979
|
)
|
Indefinite lived intangible assets
|
(18,099
|
)
|
|
(17,389
|
)
|
||
Total deferred tax liabilities
|
(19,291
|
)
|
|
(18,368
|
)
|
||
Net deferred tax assets
|
$
|
60,506
|
|
|
$
|
87,836
|
|
|
|
Federal Net
Operating Loss
|
|
Federal Research
and Development
Tax Credit
|
||||
Year of Expiration
|
|
Carryforwards
|
|
Carryforwards
|
||||
|
|
(In thousands)
|
||||||
2018-2024
|
|
$
|
—
|
|
|
$
|
—
|
|
2025
|
|
—
|
|
|
224
|
|
||
2026
|
|
—
|
|
|
1,971
|
|
||
2027
|
|
16,507
|
|
|
1,028
|
|
||
2028
|
|
38,955
|
|
|
1,186
|
|
||
2029
|
|
4,755
|
|
|
899
|
|
||
2030
|
|
—
|
|
|
1,051
|
|
||
2031
|
|
—
|
|
|
2,170
|
|
||
|
|
$
|
60,217
|
|
|
$
|
8,529
|
|
|
Gross
|
||
|
Unrecognized
|
||
|
Tax Benefits
|
||
|
(In thousands)
|
||
Balance at January 1, 2011
|
$
|
1,891
|
|
Additions related to current year tax positions
|
—
|
|
|
Additions for prior year tax positions
|
—
|
|
|
Reductions for prior year tax positions
|
—
|
|
|
Settlements
|
—
|
|
|
Balance at December 31, 2011
|
1,891
|
|
|
Additions related to current year tax positions
|
—
|
|
|
Additions for prior year tax positions
|
542
|
|
|
Reductions for prior year tax positions
|
—
|
|
|
Settlements
|
—
|
|
|
Balance at December 31, 2012
|
$
|
2,433
|
|
14.
|
Fair Value Measurements
|
Level 1
|
|
Quoted prices in active markets for identical assets or liabilities. The Company’s Level 1 assets and liabilities consist of money market investments and U.S. treasury notes.
|
Level 2
|
|
Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. The Company’s Level 2 assets and liabilities consist of U.S. government agency notes and corporate debt securities. Fair values are determined by utilizing quoted prices for similar assets and liabilities in active markets or other market observable inputs such as interest rates and yield curves.
|
Level 3
|
|
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company’s Level 3 assets and liabilities consist of the contingent purchase price associated with the Targanta acquisition (note 6). The fair value of the contingent purchase price was determined utilizing a probability weighted discounted financial model based on management's assessment of the likelihood of achievement of certain development, regulatory and sales milestones.
|
|
|
As of December 31, 2012
|
|
As of December 31, 2011
|
||||||||||||||||||||||||||||
|
|
Quoted Prices in
Active Markets for
Identical Assets
|
|
Significant
Other
Observable
Inputs
|
|
Significant
Unobservable
Inputs
|
|
Balance at
December 31,
|
|
Quoted Prices in
Active Markets for
Identical Assets
|
|
Significant
Other
Observable
Inputs
|
|
Significant
Unobservable
Inputs
|
|
Balance at
December 31,
|
||||||||||||||||
Assets and Liabilities
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
|
2012
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
|
2011
|
||||||||||||||||
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Money market
|
|
$
|
14,751
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14,751
|
|
|
$
|
25,240
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
25,240
|
|
U.S. treasury notes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,022
|
|
|
—
|
|
|
—
|
|
|
3,022
|
|
||||||||
U.S. government agency
|
|
—
|
|
|
7,097
|
|
|
—
|
|
|
7,097
|
|
|
—
|
|
|
901
|
|
|
—
|
|
|
901
|
|
||||||||
Corporate debt securities
|
|
—
|
|
|
43,778
|
|
|
—
|
|
|
43,778
|
|
|
—
|
|
|
21,207
|
|
|
—
|
|
|
21,207
|
|
||||||||
Total assets at fair value
|
|
$
|
14,751
|
|
|
$
|
50,875
|
|
|
$
|
—
|
|
|
$
|
65,626
|
|
|
$
|
28,262
|
|
|
$
|
22,108
|
|
|
$
|
—
|
|
|
$
|
50,370
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Contingent purchase price
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
18,971
|
|
|
$
|
18,971
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20,431
|
|
|
$
|
20,431
|
|
Total liabilities at fair value
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
18,971
|
|
|
$
|
18,971
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20,431
|
|
|
$
|
20,431
|
|
|
|
Fair Value as of
|
|
|
|
|
|
|
||
|
|
December 31, 2012
|
|
Valuation Technique
|
|
Unobservable Input
|
|
Range
(Weighted Average)
|
||
|
|
(in thousands)
|
|
|
|
|
|
|
||
Targanta:
|
|
|
|
|
|
|
|
|
||
Contingent purchase price
|
|
$
|
18,971
|
|
|
Probability-adjusted discounted cash flow
|
|
Probabilities of success
|
|
20% - 60% (49%)
|
|
|
|
|
|
|
Periods in which milestones are expected to be achieved
|
|
2013 - 2019
|
||
|
|
|
|
|
|
Discount rate
|
|
11%
|
|
|
Fair Value as of
|
|
|
|
|
|
|
||
|
|
December 31, 2011
|
|
Valuation Technique
|
|
Unobservable Input
|
|
Range
(Weighted Average)
|
||
|
|
(in thousands)
|
|
|
|
|
|
|
||
Targanta:
|
|
|
|
|
|
|
|
|
||
Contingent purchase price
|
|
$
|
20,431
|
|
|
Probability-adjusted discounted cash flow
|
|
Probabilities of success
|
|
20% - 76% (58%)
|
|
|
|
|
|
|
Periods in which milestones are expected to be achieved
|
|
2013 - 2018
|
||
|
|
|
|
|
|
Discount rate
|
|
12%
|
|
December 31,
|
|||||
|
2012
|
2011
|
||||
|
(in thousands)
|
|||||
Balance at beginning of period
|
$
|
20,431
|
|
$
|
25,387
|
|
Fair value adjustment to contingent purchase price included in net income
|
(1,460
|
)
|
(4,956
|
)
|
||
Balance at end of period
|
$
|
18,971
|
|
$
|
20,431
|
|
15.
|
Restructuring Costs and Other, Net
|
|
Balance as
of January 1,
2012
|
|
Expenses,
Net
|
|
Cash
|
|
Noncash
|
|
Balance as of
December 31,
2012
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Employee severance and other personnel benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
2011 Leipzig closure
|
$
|
697
|
|
|
$
|
—
|
|
|
$
|
(697
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Other associated costs
|
918
|
|
|
229
|
|
|
(138
|
)
|
|
|
|
|
1,009
|
|
|||||
Total
|
$
|
1,615
|
|
|
$
|
229
|
|
|
$
|
(835
|
)
|
|
$
|
—
|
|
|
$
|
1,009
|
|
|
Balance as
of January 1,
2011
|
|
Expenses,
Net
|
|
Cash
|
|
Noncash
|
|
Balance as of
December 31,
2011
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Employee severance and other personnel benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
2011 Leipzig closure
|
$
|
—
|
|
|
$
|
950
|
|
|
$
|
(253
|
)
|
|
$
|
—
|
|
|
$
|
697
|
|
2010 workforce reductions
|
134
|
|
|
(119
|
)
|
|
(15
|
)
|
|
—
|
|
|
—
|
|
|||||
Leases and equipment write-offs
|
10
|
|
|
304
|
|
|
(10
|
)
|
|
(304
|
)
|
|
—
|
|
|||||
Other associated costs
|
—
|
|
|
918
|
|
|
—
|
|
|
—
|
|
|
918
|
|
|||||
Total
|
$
|
144
|
|
|
$
|
2,053
|
|
|
$
|
(278
|
)
|
|
$
|
(304
|
)
|
|
$
|
1,615
|
|
16.
|
Commitments and Contingencies
|
Contractual Obligations
(1)
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
Later Years
|
|
Total
|
||||||||||||||
|
|
(In thousands)
|
||||||||||||||||||||||||||
Inventory related commitments
|
|
$
|
40,753
|
|
|
$
|
28,468
|
|
|
$
|
8,210
|
|
|
$
|
710
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
78,141
|
|
Long-term debt obligations
|
|
3,781
|
|
|
3,781
|
|
|
3,781
|
|
|
3,781
|
|
|
276,891
|
|
|
—
|
|
|
292,015
|
|
|||||||
Research and development
|
|
6,266
|
|
|
780
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,046
|
|
|||||||
Operating leases
|
|
7,412
|
|
|
6,172
|
|
|
5,645
|
|
|
5,378
|
|
|
11,690
|
|
|
18,526
|
|
|
54,823
|
|
|||||||
Selling, general and administrative
|
|
2,550
|
|
|
850
|
|
|
139
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,539
|
|
|||||||
Total contractual obligations
|
|
$
|
60,762
|
|
|
$
|
40,051
|
|
|
$
|
17,775
|
|
|
$
|
9,869
|
|
|
$
|
288,581
|
|
|
$
|
18,526
|
|
|
$
|
435,564
|
|
(1)
|
This table does not include any milestone and royalty payments which may become payable to third-parties for which the timing and likelihood of such payments are not known, as discussed below.
|
17.
|
Employee Benefit Plan
|
18.
|
Segment and Geographic Information
|
|
|
|
Years Ended December 31,
|
|
|
|||||||||||||||
|
2012
|
|
|
|
2011
|
|
|
|
2010
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
|||||||||
Net revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
United States
|
$
|
512,044
|
|
|
91.7
|
%
|
|
$
|
453,163
|
|
|
93.5
|
%
|
|
$
|
413,044
|
|
|
94.4
|
%
|
Europe
|
38,517
|
|
|
6.9
|
%
|
|
25,532
|
|
|
5.3
|
%
|
|
20,126
|
|
|
4.6
|
%
|
|||
Other
|
8,027
|
|
|
1.4
|
%
|
|
6,037
|
|
|
1.2
|
%
|
|
4,475
|
|
|
1.0
|
%
|
|||
Total net revenue
|
$
|
558,588
|
|
|
|
|
|
$
|
484,732
|
|
|
|
|
|
$
|
437,645
|
|
|
|
|
|
Years Ended December 31,
|
||||||||||||
|
2012
|
|
|
|
2011
|
|
|
||||||
|
(In thousands)
|
|
|
||||||||||
Long-lived assets:
|
|
|
|
|
|
|
|
|
|
|
|
||
United States
|
$
|
166,129
|
|
|
99.1
|
%
|
|
$
|
126,513
|
|
|
99.0
|
%
|
Europe
|
1,243
|
|
|
0.7
|
%
|
|
1,069
|
|
|
0.8
|
%
|
||
Other
|
240
|
|
|
0.1
|
%
|
|
187
|
|
|
0.1
|
%
|
||
Total long-lived assets
|
$
|
167,612
|
|
|
|
|
|
$
|
127,769
|
|
|
|
|
19.
|
Selected Quarterly Financial Data (Unaudited)
|
|
Three Months Ended
|
||||||||||||||||||||||||||||||
|
Mar. 31,
2012 |
|
June 30,
2012 |
|
Sept. 30,
2012 |
|
Dec. 31,
2012 |
|
Mar. 31,
2011 |
|
June 30,
2011 |
|
Sept. 30,
2011 |
|
Dec. 31,
2011 |
||||||||||||||||
|
|
|
|
|
|
|
|
|
(1)
|
|
|
|
(2)
|
|
|
||||||||||||||||
|
(In thousands, except per share data)
|
||||||||||||||||||||||||||||||
Net revenue
|
$
|
126,610
|
|
|
$
|
135,702
|
|
|
$
|
136,786
|
|
|
$
|
159,490
|
|
|
$
|
112,137
|
|
|
$
|
119,591
|
|
|
$
|
120,773
|
|
|
$
|
132,231
|
|
Cost of revenue
|
38,663
|
|
|
42,681
|
|
|
43,767
|
|
|
52,228
|
|
|
35,570
|
|
|
37,830
|
|
|
39,459
|
|
|
44,007
|
|
||||||||
Total operating expenses
|
75,964
|
|
|
73,429
|
|
|
77,932
|
|
|
70,851
|
|
|
61,720
|
|
|
67,956
|
|
|
71,903
|
|
|
68,218
|
|
||||||||
Net income attributable to The Medicines Company
|
7,571
|
|
|
13,755
|
|
|
9,265
|
|
|
20,663
|
|
|
24,241
|
|
|
11,440
|
|
|
72,614
|
|
|
19,582
|
|
||||||||
Basic net income per common share attributable to The Medicines Company
|
$
|
0.14
|
|
|
$
|
0.25
|
|
|
$
|
0.18
|
|
|
$
|
0.39
|
|
|
$
|
0.46
|
|
|
$
|
0.21
|
|
|
$
|
1.36
|
|
|
$
|
0.36
|
|
Diluted net income per common share attributable to The Medicines Company
|
$
|
0.14
|
|
|
$
|
0.25
|
|
|
$
|
0.17
|
|
|
$
|
0.38
|
|
|
$
|
0.45
|
|
|
$
|
0.21
|
|
|
$
|
1.34
|
|
|
$
|
0.35
|
|
(1)
|
Net income for the first quarter of 2011 includes income of
$18.0 million
related to the settlement agreement entered into with Wilmer Cutler Pickering Hale and Dorr LLP (WilmerHale) in February 2011.
|
(2)
|
Net income for the third quarter of 2011 includes a tax benefit of
$66.5 million
from reducing the Company's valuation allowance against its deferred tax assets.
|
20.
|
Subsequent Events
|
•
|
a multiple of average net sales over each of the
two
12
-month periods preceding the closing of the purchase (unless the purchase closing occurs less than 24 months after February 8, 2013, in which case the measurement period would be the 12-month period preceding the purchase closing); or
|
•
|
if BMS has delivered a valid notice terminating the collaboration term early as a result of a material breach by the Company under the master transaction agreement, the amount described above plus an amount intended to give BMS the economic benefit of having received royalty fees for a
24
-month collaboration term.
|
Number
|
|
Description
|
|
|
|
|
|
|
2.1†
|
|
Sale and Purchase Agreement, dated August 4, 2008, between The Medicines Company (Leipzig) GmbH and Curacyte AG (filed as Exhibit 2.1 of the registrant’s current report on Form 8-K/A, filed on November 10, 2008)
|
|
2.2
|
|
Agreement and Plan of Merger among the registrant, Boxford Subsidiary Corporation, and Targanta Therapeutics Corporation, dated as of January 12, 2009 (filed as Exhibit 2.1 of the registrant’s current report on Form 8-K, filed on January 14, 2009)
|
|
2.3†
|
|
Amendment to Sale and Purchase Agreement dated December 14, 2009 between The Medicines Company (Leipzig) GmbH and Curacyte AG (filed as Exhibit 2.3 to the registrant’s annual report on Form 10-K for the year ended December 31, 2009)
|
|
2.4#†
|
|
Agreement and Plan of Merger, dated December 11, 2012, by and among the registrant, Incline Therapeutics, Inc., Silver Surfer Acquisition Corp. and Fortis Advisors LLC (filed as Exhibit 2.1 to the registrant's current report on Form 8-K, filed January 10, 2013)
|
|
2.5#†
|
|
Master Transaction Agreement, dated December 11, 2012, by and between the registrant and Bristol-Myers Squibb Company (filed as Exhibit 2.1 to the registrant's current report on Form 8-K, filed February 8, 2013)
|
|
3.1
|
|
Third Amended and Restated Certificate of Incorporation of the registrant, as amended (filed as Exhibit 4.1 to the Amendment No. 1 to the registrant’s registration statement on Form 8-A/A, filed July 14, 2005)
|
|
3.2
|
|
Amended and Restated By-laws of the registrant, as amended (filed as Exhibit 3.1 to the registrant’s quarterly report on Form 10-Q for the quarter ended June 30, 2012)
|
|
4.1
|
|
Indenture (including Form of Notes), dated as of June 11, 2012, by and between The Medicines Company and Wells Fargo Bank, National Association, a national banking association, as trustee (filed as Exhibit 4.1 to the registrant's current report on Form 8-K, filed June 14, 2012)
|
|
10.1†
|
|
Supply Agreement, dated December 11, 2012, by and between the registrant and Bristol-Myers Squibb Company (filed as Exhibit 10.1 to the registrant's current report on Form 8-K, filed February 8, 2013)
|
|
10.2
|
|
Lease for 8 Campus Drive dated September 30, 2002 by and between Sylvan/Campus Realty L.L.C. and the registrant, as amended by the First Amendment and Second Amendment, (filed as Exhibit 10.15 to the registrant’s annual report on Form 10-K for the year ended December 31, 2003)
|
|
10.3
|
|
Third Amendment to Lease for 8 Campus Drive dated December 30, 2004 by and between Sylvan/Campus Realty L.L.C. and the registrant (filed as Exhibit 10.18 to the registrant’s annual report on Form 10-K for the year ended December 31, 2004)
|
|
10.4
|
|
Lease for 8 Sylvan Way, Parsippany, NJ dated October 11, 2007 by and between 8 Sylvan Way, LLC and the registrant (filed as Exhibit 10.32 to the registrant’s annual report on Form 10-K for the year ended December 31, 2007)
|
|
10.5
|
|
Amendment to Lease for 8 Sylvan Way, Parsippany, NJ dated October 11, 2007 by and between 8 Sylvan Way, LLC and the registrant (filed as Exhibit 10.40 to the registrant’s annual report on Form 10-K for the year ended December 31, 2008)
|
|
10.6*
|
|
Employment agreement dated September 5, 1996 by and between the registrant and Clive Meanwell (filed as Exhibit 10.12 to the registration statement on Form S-1 filed on May 19, 2000 (registration no. 333-37404))
|
|
10.7*
|
|
Letter Agreement dated March 2, 2006 by and between the registrant and Glenn P. Sblendorio, (filed as Exhibit 10.23 to the registrant’s annual report on Form 10-K for the year ended December 31, 2005)
|
|
10.8*
|
|
Form of Amended and Restated Management Severance Agreement by and between the registrant and each of Clive Meanwell and Glenn Sblendorio (filed as Exhibit 10.24 to the registrant’s annual report on Form 10-K for the year ended December 31, 2008)
|
|
10.9*
|
|
Form of Amended and Restated Management Severance Agreement by and between the registrant and each of Paul Antinori, William O’Connor and Leslie Rohrbacker (filed as Exhibit 10.25 to the registrant’s annual report on Form 10-K for the year ended December 31, 2008)
|
Number
|
|
Description
|
|
|
|
|
|
|
10.10*
|
|
Director Compensation Summary
|
|
10.11*
|
|
1998 Stock Incentive Plan, as amended (filed as Exhibit 10.1 to the registration statement on Form S-1 filed on May 19, 2000 (registration no. 333-37404))
|
|
10.12*
|
|
Form of stock option agreement under 1998 Stock Incentive Plan (filed as Exhibit 10.3 to the registrant’s quarterly report on Form 10-Q for the quarter ended June 30, 2004)
|
|
10.13*
|
|
2000 Employee Stock Purchase Plan, as amended (filed as Exhibit 10.1 of the registrant’s registration statement on Form S-8, filed on September 1, 2009)
|
|
10.14*
|
|
2000 Outside Director Stock Option Plan, as amended (filed as Exhibit 10.1 to the registrant’s quarterly report on Form 10-Q for the quarter ended March 31, 2003)
|
|
10.15*
|
|
2001 Non-Officer, Non-Director Employee Stock Incentive Plan (filed as Exhibit 99.1 to the registration statement on Form S-8 filed December 5, 2001 (registration no. 333-74612))
|
|
10.16*
|
|
Amended and Restated 2004 Stock Incentive Plan (filed as Exhibit 99.1 to the registrant’s registration statement on Form S-8, dated June 30, 2010)
|
|
10.17*
|
|
Form of stock option agreement under 2004 Stock Incentive Plan (filed as Exhibit 10.22 to the registrant’s annual report on Form 10-K for the year ended December 31, 2004)
|
|
10.18*
|
|
Form of restricted stock agreement under 2004 Stock Incentive Plan (filed as Exhibit 10.1 to the registrant’s quarterly report on Form 10-Q for the quarter ended March 31, 2006)
|
|
10.19*
|
|
2007 Equity Inducement Plan (filed as Exhibit 10.1 to the registration statement on Form S-8 filed January 11, 2008 (registration no. 333-148602))
|
|
10.20*
|
|
Form of stock option agreement under 2007 Equity Inducement Plan (filed as Exhibit 10.34 to the registrant’s annual report on Form 10-K for the year ended December 31, 2007)
|
|
10.21*
|
|
Form of restricted stock agreement under 2007 Equity Inducement Plan (filed as Exhibit 10.35 to the registrant’s annual report on Form 10-K for the year ended December 31, 2007)
|
|
10.22*
|
|
2009 Equity Inducement Plan (filed as Exhibit 10.1 to the registration statement on Form S-8 filed February 24, 2009 (registration number 333-157499))
|
|
10.23*
|
|
Form of stock option agreement under 2009 Equity Inducement Plan (filed as Exhibit 10.2 to the registrant’s quarterly report on Form 10-Q for the quarter ended March 31, 2009)
|
|
10.24*
|
|
Form of stock option agreement for employees in Italy under 2009 Equity Inducement Plan (filed as Exhibit 10.3 to the registrant’s quarterly report on Form 10-Q for the quarter ended March 31, 2009)
|
|
10.25*
|
|
Form of restricted stock agreement under 2009 Equity Inducement Plan (filed as Exhibit 10.4 to the registrant’s quarterly report on Form 10-Q for the quarter ended March 31, 2009)
|
|
10.26*
|
|
Summary of Annual Cash Bonus Plan
|
|
10.27*
|
|
Summary of Performance Measures under the registrant’s Annual Cash Bonus Plan (filed in Item 5.02 of the registrant's current report on Form 8-K, filed on February 27, 2012)
|
|
10.28†
|
|
License Agreement, dated as of June 6, 1990, by and between Biogen, Inc. and Health Research, Inc., as assigned to the registrant (filed as Exhibit 10.6 to the registration statement on Form S-1 filed on May 19, 2000 (registration no. 333-37404))
|
|
10.29†
|
|
License Agreement dated March 21, 1997, by and between the registrant and Biogen, Inc. (filed as Exhibit 10.7 to the registration statement on Form S-1 filed on May 19, 2000 (registration no. 333-37404))
|
|
10.30†
|
|
License Agreement effective as of March 28, 2003 by and between AstraZeneca AB and the registrant (filed as Exhibit 10.17 to the registrant's annual report on Form 10-K for the year ended December 31, 2003
|
|
10.31†
|
|
Amendment No. 1 to License Agreement dated April 25, 2006 by and between AstraZeneca AB (filed as Exhibit 10.1 to the registrant's quarterly report on Form 10-Q for the quarter ended June 30, 2006)
|
|
10.32
|
|
Amendment No. 2 to License Agreement, dated October 22, 2008 by and between the registrant and AstraZeneca AB (filed as Exhibit 10.38 to the registrant’s annual report on Form 10-K for the year ended December 31, 2008)
|
Number
|
|
Description
|
|
|
|
|
|
|
10.33†
|
|
License Agreement dated as of December 18, 2003 by and between AstraZeneca AB and the registrant (filed as Exhibit 10.18 to the registrant’s annual report on Form 10-K for the year ended December 31, 2003)
|
|
10.34†
|
|
Amendment to License Agreement dated July 6, 2007 between AstraZeneca AB and the registrant (filed as Exhibit 10.4 to the registrant’s quarterly report on Form 10-Q for the quarter ended September 30, 2007)
|
|
10.35
|
|
License Agreement, dated December 23, 2005 by and between Targanta Therapeutics Corporation (as successor to InterMune, Inc.) and Eli Lilly and Company (filed as Exhibit 10.11 to Targanta’s registration statement on Form S-1 (registration no. 333-142842), as amended, originally filed with the SEC on May 11, 2007)
|
|
10.36
|
|
Contingent Payment Rights Agreement dated February 25, 2009 between the registrant and American Stock Transfer & Trust Company (filed as Exhibit 99.1 of the registrant’s current report on Form 8-K, filed on March 2, 2009)
|
|
10.37†
|
|
License Agreement dated as of December 18, 2009 between the registrant and Pfizer Inc. (filed as Exhibit 10.41 to the registrant’s annual report on Form 10-K for the year ended December 31, 2009)
|
|
10.38†
|
|
Consent and Release Agreement dated as of December 18, 2009 between the registrant and Washington Cardiovascular Associates, LLC, HDLT LLC, H. Bryan Brewer, Silvia Santamarina-Fojo and Michael Matin (filed as Exhibit 10.42 to the registrant’s annual report on Form 10-K for the year ended December 31, 2009)
|
|
10.39†
|
|
Chemilog Development and Supply Agreement, dated as of December 20, 1999, by and between the registrant and UCB Bioproducts S.A. (filed as Exhibit 10.5 to the registration statement on Form S-1 filed on May 19, 2000 (registration no. 333-37404))
|
|
10.40
|
|
Second Amendment to License Agreement dated as of June 1, 2010 between AstraZeneca AB and the registrant (filed as Exhibit 10.1 to the registrant’s quarterly report on Form 10-Q for the quarter ended June 30, 2010)
|
|
10.41*
|
|
The Medicines Company’s 2010 Employee Stock Purchase Plan (incorporated by reference to Appendix I to the registrant’s definitive proxy statement, dated and filed with the Securities and Exchange Commission on April 30, 2010, for the registrant’s 2010 Annual Meeting of Stockholders)
|
|
10.42*
|
|
The Medicines Company’s 2004 Amended and Restated Stock Incentive Plan, as amended (incorporated by reference to Appendix II to the registrant’s definitive proxy statement, dated and filed with the Securities and Exchange Commission on April 30, 2010, for the registrant’s 2010 Annual Meeting of Stockholders)
|
|
10.43
|
|
First Amendment to lease for 400 Fifth Avenue, Waltham, MA, dated as of June 30, 2010 by and between ATC Realty Sixteen Inc. and the registrant (filed as Exhibit 10.1 to the registrant’s quarterly report on Form 10-Q for the quarter ended September 30, 2010)
|
|
10.44*
|
|
Form of restricted stock agreement under the registrant’s Amended and Restated 2004 Stock Incentive Plan (filed as Exhibit 10.2 to the registrant’s quarterly report on Form 10-Q for the quarter ended September 30, 2010)
|
|
10.45*
|
|
Restricted stock agreement of Clive Meanwell under the registrant’s Amended and Restated 2004 Stock Incentive Plan (filed as Exhibit 10.53 to the registrant’s annual report on Form 10-K for the year ended December 31, 2010)
|
Number
|
|
Description
|
|
|
|
|
|
|
10.46†
|
|
Second Amended and Restated Distribution Agreement effective as of October 1, 2010 between the registrant and Integrated Commercialization Solutions, Inc. (filed as Exhibit 10.54 to the registrant’s annual report on Form 10-K for the year ended December 31, 2010)
|
|
10.47†
|
|
Settlement Agreement and Release, dated February 14, 2011, between registrant and Wilmer Cutler Pickering Hale and Dorr LLP (filed as Exhibit 10.1 to the registrant’s quarterly report on Form 10-Q for the quarter ended March 31, 2011)
|
|
10.48
|
|
Fourth Amendment to Lease, dated June 30, 2011, between registrant and Sylvan/Campus Realty L.L.C. (filed as Exhibit 10.1 to the registrant’s quarterly report on Form 10-Q for the quarter ended June 30, 2011)
|
|
10.49†
|
|
Manufacturing Services Agreement, dated March 30, 2011, between registrant and Patheon International A.G. (filed as Exhibit 10.1 to the registrant’s quarterly report on Form 10-Q for the quarter ended September 30, 2011)
|
|
10.50†
|
|
Settlement Agreement, dated September 30, 2011, between registrant and Teva Pharmaceuticals USA, Inc. (filed as Exhibit 10.2 to the registrant’s quarterly report on Form 10-Q for the quarter ended September 30, 2011)
|
|
10.51†
|
|
License Agreement, dated September 30, 2011, between registrant and Teva Pharmaceuticals USA, Inc. (filed as Exhibit 10.3 to the registrant’s quarterly report on Form 10-Q for the quarter ended September 30, 2011)
|
|
10.52†
|
|
Supply Agreement, dated September 30, 2011, between registrant and Plantex USA Inc. (filed as Exhibit 10.4 to the registrant’s quarterly report on Form 10-Q for the quarter ended September 30, 2011)
|
|
10.53†
|
|
First Amendment to the Second Amended and Restated Distribution Agreement, dated July 1, 2011, between registrant and Integrated Commercial Solutions, Inc. (filed as Exhibit 10.5 to the registrant’s quarterly report on Form 10-Q for the quarter ended September 30, 2011)
|
|
10.54†
|
|
Second Amendment to the Second Amended and Restated Distribution Agreement, dated July 1, 2011, between registrant and Integrated Commercial Solutions, Inc. (filed as Exhibit 10.6 to the registrant’s quarterly report on Form 10-Q for the quarter ended September 30, 2011)
|
|
10.55†
|
|
Settlement Agreement, dated January 22, 2012, between registrant and APP Pharmaceuticals, LLC (filed as Exhibit 10.1 to the registrant’s quarterly report on Form 10-Q for the quarter ended March 31, 2012)
|
|
10.56†
|
|
License Agreement, dated January 22, 2012, between registrant and APP Pharmaceuticals, LLC (filed as Exhibit 10.2 to the registrant’s quarterly report on Form 10-Q for the quarter ended March 31, 2012)
|
|
10.57†
|
|
Contract Manufacturing Agreement, dated January 22, 2012, between registrant and APP Pharmaceuticals, LLC
(filed as Exhibit 10.3 to the registrant’s quarterly report on Form 10-Q for the quarter ended March 31, 2012)
|
|
10.58†
|
|
License and Supply Agreement, dated January 22, 2012, between registrant and APP Pharmaceuticals, LLC (filed as Exhibit 10.4 to the registrant’s quarterly report on Form 10-Q for the quarter ended March 31, 2012)
|
|
10.59†
|
|
AG Supply Agreement, dated January 22, 2012, between registrant and APP Pharmaceuticals, LLC (filed as Exhibit 10.5 to the registrant’s quarterly report on Form 10-Q for the quarter ended March 31, 2012)
|
|
10.60†
|
|
Amendment 1 to the Supply Agreement, dated February 13, 2012, between registrant and Teva API, Inc. (formerly known as Plantex USA Inc.) (filed as Exhibit 10.6 to the registrant’s quarterly report on Form 10-Q for the quarter ended March 31, 2012)
|
|
10.61†*
|
|
Severance Agreement and Full and Final Mutual General Release of Claims, dated April 16, 2012, between the registrant and Leslie C. Rohrbacker (filed as Exhibit 10.1 to the registrant’s quarterly report on Form 10-Q for the quarter ended June 30, 2012)
|
|
10.62†
|
|
Global Collaboration Agreement, dated April 25, 2012, between the registrant and AstraZeneca LP (filed as Exhibit 10.1 to the registrant’s quarterly report on Form 10-Q for the quarter ended June 30, 2012)
|
|
10.63†
|
|
Third Amendment to Second Amended and Restated Distribution Agreement, dated April 23, 2012, between registrant and Integrated Commercialization Solutions, Inc. (filed as Exhibit 10.1 to the registrant’s quarterly report on Form 10-Q for the quarter ended June 30, 2012)
|
|
10.64†
|
|
Letter Agreement, dated August 7, 2012, by and between the registrant and Biogen Idec MA Inc. (filed as Exhibit 10.1 to the registrant’s quarterly report on Form 10-Q for the quarter ended September 30, 2012)
|
|
10.65*
|
|
Consulting Agreement, dated July 6, 2012, by and between the registrant and Strategic Imagery, LLC (filed as Exhibit 10.2 to the registrant’s quarterly report on Form 10-Q for the quarter ended September 30, 2012)
|
|
10.66*
|
|
Amendment to Consulting Agreement, effective as of July 6, 2012, by and between the registrant and Strategic Imagery, LLC
|
|
21
|
|
Subsidiaries of the registrant
|
|
23
|
|
Consent of Ernst & Young LLP, Independent Registered Accounting Firm
|
|
31.1
|
|
Chief Executive Officer — Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
31.2
|
|
Chief Financial Officer — Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
32.1
|
|
Chief Executive Officer — Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
32.2
|
|
Chief Financial Officer — Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
101.INS
|
|
The following materials from The Medicines Company Annual Report on Form 10-K for the year
ended December 31, 2012, formatted in XBRL (Extensible Business Reporting Language): (i) the
Consolidated Balance Sheets, (ii) the Consolidated Statement of Income, (iii) the Consolidated Statement
of Cash Flows, and (iv) Notes to Consolidated Financial Statements
.
|
#
|
|
Schedules (and similar attachments) have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally copies of any of the omitted schedules (or similar attachments) to the Securities and Exchange Commission upon request.
|
|
|
|
*
|
|
Management contract or compensatory plan or arrangement filed as an exhibit to this form pursuant to Items 15(a) and 15(c) of Form 10-K
|
|
|
|
†
|
|
Confidential treatment requested as to certain portions, which portions have been omitted and filed separately with the Securities and Exchange Commission Unless otherwise indicated, the exhibits incorporated herein by reference were filed under Commission file number 000-31191.
|
|
|
|
Type of Fee
|
|
Amount of Compensation
|
|
Annual retainer for board members
|
|
$55,000
|
|
Additional annual retainer for lead director
|
|
$10,000
|
|
Attendance for each board meeting attended in person
|
|
$3,000 for each meeting attended in a year in excess of ten meetings
|
|
Attendance for each board meeting attended by telephone
|
|
$3,000 for each meeting attended in a year in excess of ten meetings
|
|
Additional annual retainer for committee members:
|
|
|
|
Audit committee chair
|
|
$25,000
|
|
Other audit committee members
|
|
$12,500
|
|
Compensation committee chair
|
|
$20,000
|
|
Other compensation committee member
|
|
$10,000
|
|
Nominating and corporate governance committee chair
|
|
$15,000
|
|
Other nominating and corporate governance committee member
|
|
$7,500
|
|
Attendance for each committee meeting attended in person
|
|
$1,500 for each meeting attended in a year in excess of ten meetings, per committee
|
|
Attendance for each committee meeting attended by telephone
|
|
$1,500 for each meeting attended in a year in excess of ten meetings, per committee
|
|
Type of Grant
|
|
|
Awards under Program
|
|
Grant Date
|
|
Vesting Schedule
|
Initial equity grant
|
|
|
$320,000 value of options
|
|
The date the director is initially elected to the board
|
|
36 equal monthly installments beginning on the date one month after the grant date
|
|
|
|
|
|
|
|
|
Annual equity grant
|
|
|
$215,000 equity value split equally between stock options and restricted shares(1)
|
|
The date of the annual meeting of stockholders
|
|
Stock options and restricted stock vest in one installment 12 months after the grant date
|
|
|
|
|
|
|
|
|
Additional annual equity grant to our lead director
|
|
|
Option to purchase 5,000 shares of common stock
|
|
The date of the annual meeting of stockholders
|
|
Stock options vest in one installment 12 months after the grant date
|
4.1
|
During the Term of this Agreement, the Company will pay the Consultant hourly consulting fees in the amount of $500. Consultant is authorized to spend a maximum of 240 hours in connection with the Services. The total amount payable for the Services under this Agreement shall not exceed $120,000 without prior written authorization from Company. The Company's payment of the fees specified in this Agreement constitutes full payment to Consultant for the Services and Consultant shall not receive any other compensation or benefits for the Services. If, however, the Company requests a modification of the Services, the Parties shall agree in writing to adjust the fee accordingly.
|
Name of Subsidiary
|
Jurisdiction of Incorporation or Organization
|
Circomed, LLC
|
Delaware
|
Incline Therapeutics, Inc.
|
Delaware
|
MDCO Holdings C.V.
|
Netherlands
|
MEDCO Brasil Participações Ltda.
|
Brazil
|
Medicines Company (India) Private Limited
|
India
|
Targanta Therapeutics Corporation
|
Delaware
|
Targanta Therapeutics Inc.
|
Canada
|
The Medicines Company do Brasil Comercio de Medicamentos
e Produtos Medicos Ltda.
|
Brazil
|
The Medicines Company France SAS
|
France
|
The Medicines Company Holdings, Inc.
|
Delaware
|
The Medicines Company (Australia) Pty Limited
|
Australia
|
The Medicines Company (Austria) GmbH
|
Austria
|
The Medicines Company (Belgium) SPRL/BVBA
|
Belgium
|
The Medicines Company (Denmark) ApS
|
Denmark
|
The Medicines Company (Deutschland) GmbH
|
Germany
|
The Medicines Company (Finland) Oy
|
Finland
|
The Medicines Company (Hong Kong) Limited
|
Hong Kong
|
The Medicines Company (Italy) S.r.l.
|
Italy
|
The Medicines Company (Leipzig) GmbH
|
Germany
|
The Medicines Company (Netherlands) BV
|
Netherlands
|
The Medicines Company (New Zealand) Limited
|
New Zealand
|
The Medicines Company (NL) B.V.
|
Netherlands
|
The Medicines Company (Norway) AS
|
Norway
|
The Medicines Company (Poland) Sp.z.o.o.
|
Poland
|
The Medicines Company (Schweiz) GmbH
|
Switzerland
|
The Medicines Company (Spain) S.L.
|
Spain
|
The Medicines Company (Sweden) AB
|
Sweden
|
The Medicines Company UK Limited
|
England and Wales
|
The Medicines Company Ventures, Inc.
|
Delaware
|
Vita Solutions, Inc.
|
Delaware
|
|
|
/s/ Clive A. Meanwell
|
|
|
Clive A. Meanwell
|
|
|
Chairman and Chief Executive Officer
|
|
|
|
Dated:
|
March 1, 2013
|
|
|
|
/s/ Glenn P. Sblendorio
|
|
|
Glenn P. Sblendorio
|
|
|
President and Chief Financial Officer
|
|
|
|
Dated:
|
March 1, 2013
|
|
|
|
By:
|
/s/ Clive A. Meanwell
|
|
|
|
Clive A. Meanwell
|
|
|
|
Chairman and Chief Executive Officer
|
|
|
|
|
Dated:
|
March 1, 2013
|
|
|
|
|
By:
|
/s/ Glenn P. Sblendorio
|
|
|
|
Glenn P. Sblendorio
|
|
|
|
President and Chief Financial Officer
|
|
|
|
|
Dated:
|
March 1, 2013
|
|
|