(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, 2017
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Or
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¨
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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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Emerging growth company
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(Do not check if a smaller reporting company)
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Page
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EX-3.2
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EX-10.9
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EX-10.29
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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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•
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On February 1, 2016, we completed the sale of our hemostasis portfolio, consisting of PreveLeak, Raplixa and Recothrom, to wholly owned subsidiaries of Mallinckrodt plc, or Mallinckrodt. At the completion of the sale, we received approximately $174.1 million in cash and may receive up to an additional $235.0 million in the aggregate following the achievement of certain specified calendar year net sales milestones with respect to net sales of PreveLeak and Raplixa.
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On June 21, 2016, we completed the sale of Cleviprex, Kengreal and rights to Argatroban for Injection, which we refer to collectively as Non-Core ACC Assets, to Chiesi USA, Inc., or Chiesi USA, and its parent company Chiesi Farmaceutici S.p.A., or Chiesi. At the completion of the sale, we received approximately $263.8 million in cash, which included the value of product inventory, and may receive up to an additional $480.0 million in the aggregate following the achievement of certain specified calendar year net sales milestones with respect to net sales of each of Cleviprex and Kengreal.
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On January 5, 2018, we completed the sale of our infectious disease portfolio, consisting of the products Vabomere, Orbactiv and Minocin IV and line extensions thereof, and substantially all of the assets related thereto, other than certain pre-clinical assets, to Melinta Therapeutics, Inc., or Melinta. At the completion of the sale, we received approximately $166.4 million and 3,313,702 shares of Melinta common stock having a market value, based on Melinta's closing share price on January 5, 2018, of approximately $54.5 million. In addition, we are entitled to receive (i) a cash payment payable 12 months following the closing of the transaction equal to $25 million; (ii) a cash payment payable 18 months following the closing of the transaction equal to $25 million; and (iii) tiered royalty payments of 5% to 25% on worldwide net sales of (a) Vabomere and (b) Orbactiv and Minocin IV, collectively.
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Study
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Sites
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Main inclusion criteria
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Patients
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ORION-5
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US, EU, South Africa (SA)
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Homozygous familial hypercholesterolemia, or HoFH
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45
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ORION-9
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US, EU, SA
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Heterozygous familial hypercholesterolemia, or HeFH
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400
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ORION-10
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US
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ASCVD
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1,500
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ORION-11
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EU, SA
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ASCVD and risk equivalent patients
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1,500
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3,445
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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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Phase 1 usually involves the initial introduction of the investigational drug into people to evaluate its safety, dosage tolerance, pharmacokinetics, and, if possible, to gain an early indication of its effectiveness.
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Phase 2 usually involves trials in a limited patient population to: evaluate dosage tolerance and appropriate dosage; identify possible adverse effects and safety risks; and evaluate preliminarily the efficacy of the drug for specific indications.
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Phase 3 trials usually involve administration of the drug to an expanded patient population, generally at geographically dispersed clinical trial sites, in well-controlled clinical trials to generate enough data to evaluate safety, and statistically evaluate the efficacy of the product for approval, to establish the overall risk-benefit profile of the product, and to provide adequate information for the labeling of the product.
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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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National procedures.
A medicine is authorised in one European Union member state in accordance with the national procedures of that country. If a marketing authorisation holder wishes to apply subsequently for additional marketing authorisations in other member states for that product, the mutual recognition procedure must be used.
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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, as described above. 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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we may not be able to demonstrate that inclisiran or any other drug candidate is safe and effective as a treatment for our targeted indications to the satisfaction of the FDA;
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the results of our clinical trials may not meet the level of statistical or clinical significance required by the FDA for marketing approval;
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a clinical research organization, or CRO, that we retain to conduct clinical trials or any other third parties involved in the conduct of trials may take actions outside of our control that materially adversely impact our clinical trials;
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the FDA may not find the data from pre-clinical studies and clinical trials sufficient to demonstrate that the clinical and other benefits of inclisiran or any other drug candidate outweigh the safety risks;
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the FDA may disagree with our interpretation of data from our pre-clinical studies and clinical trials or may require that we conduct additional studies or trials;
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the FDA may not accept data generated at our clinical trial sites;
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if our NDA is reviewed by an advisory committee, the FDA may have difficulties scheduling an advisory committee meeting in a timely manner or the advisory committee may recommend against approval of our application or may recommend that the FDA require, as a condition of approval, additional pre-clinical studies or clinical trials, limitations on approved labeling or distribution and use restrictions;
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the advisory committee may recommend that the FDA require, as a condition of approval, additional pre-clinical studies or clinical trials, limitations on approved labeling or distribution and use restrictions;
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the FDA may require development of a Risk Evaluation and Mitigation Strategy as a condition to approval;
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the FDA may identify deficiencies in the manufacturing processes or facilities of our third-party manufacturers; or
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the FDA may change its approval policies or adopt new regulations.
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train, deploy and support a qualified sales force to market and sell our newly launched products;
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have third parties manufacture and release the products in sufficient quantities;
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implement and maintain agreements with wholesalers and distributors;
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receive adequate levels of coverage and reimbursement for these products from governments and third-party payors;
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develop and execute marketing and sales strategies and programs for the products; and
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enter into suitable partnerships with third parties, as needed, to provide a viable platform to commercialize inclisiran.
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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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$150.0 million
for the license and collaboration agreement with Alnylam;
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$69.3 million
relating to our research and development infectious disease portfolio acquired in our Rempex acquisition (and which was not divested in the Melinta transactions); and
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$2.2 million
for other transaction milestones.
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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 inclisiran;
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whether we develop and commercialize inclisiran on our own or through licenses and collaborations with third parties and the terms and timing of such arrangements, if any;
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the extent to which our submissions and planned submissions for regulatory approval of inclisiran are approved on a timely basis, if at all;
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the decline in Angiomax sales and the extent to which royalties on sales of the authorized generic of Angiomax are generated;
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if inclisiran receives regulatory approval, the extent to which it is commercially successful;
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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, including scaling our operations in anticipation of a potential launch of inclisiran;
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the amounts of our payment obligations to third parties with respect to inclisiran or other assets; 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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inadequate or unfavorable clinical trial results from acquired or contracted for products in development;
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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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requiring us to dedicate a substantial portion of cash flow from operations to the payment of interest on, and principal of, our debt, which will reduce the amounts available to fund working capital, capital expenditures, product development efforts and other general corporate purposes;
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increasing our vulnerability to general adverse economic, industry and market conditions;
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limiting our ability to obtain additional financing in the future or engage in certain strategic transactions without securing bondholder consent;
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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 less debt, better debt servicing options or better access to capital resources.
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delay or otherwise adversely impact the manufacturing, development or commercialization of Angiomax, inclisiran 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 non-renewal 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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collaborators have significant discretion in determining the efforts and resources that they will apply to these collaborations;
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collaborators may not pursue development and commercialization of inclisiran or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborators’ strategic focus or available funding, or external factors such as an acquisition that diverts resources or creates competing priorities;
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collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon inclisiran, repeat or conduct new clinical trials or require a new formulation of inclisiran for clinical testing;
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collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products in development if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours;
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a collaborator with marketing and distribution rights to one or more products may not commit sufficient resources to the marketing and distribution of such product or products;
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collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or otherwise expose us to potential litigation;
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collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability;
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disputes may arise with respect to the ownership of intellectual property developed pursuant to our collaborations;
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disputes may arise between the collaborators and us that result in the delay or termination of the research, development or commercialization of our products or products in development or that result in costly litigation or arbitration that diverts management attention and resources; and
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collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable products and products in development.
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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 the past voluntarily suspended enrollment in one of our clinical trials to review an interim analysis of safety data from the trial; and
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the effects of inclisiran may not be the desired effects or may include undesirable side effects or inclisiran 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 inclisiran;
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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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announcements of results of clinical trials or nonclinical studies by us or third parties relating to inclisiran or Angiomax or products of our competitors or of regulatory proceedings by us or our competitors;
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approval or rejection of submissions for marketing approval for inclisiran;
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regulatory actions by the FDA limiting or revoking the use of Angiomax;
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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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the timing, amount and receipt of revenue from and margins on sales of Angiomax;
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changes in governmental regulations;
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developments in patent rights or other proprietary rights;
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the extent to which our products are commercially successful globally;
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developments in our ongoing litigation and 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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currently and until such time after our 2018 annual meeting of stockholders that our board of directors ceases to be classified, 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, and at all times after our board ceases to be classified, our directors may be removed with or without cause (but subject to the same 75% voting requirement as currently in effect);
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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 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.
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Unresolved Staff Comments.
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Item 2.
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Properties.
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Item 4.
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Mine Safety Disclosures.
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Item 5.
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
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Common Stock
Price
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||||||
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High
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Low
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||||
Year Ended December 31, 2017
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First Quarter
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$
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55.28
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$
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32.61
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Second Quarter
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$
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55.95
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$
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36.91
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Third Quarter
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$
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43.79
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$
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32.39
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Fourth Quarter
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$
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39.44
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$
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25.40
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Year Ended December 31, 2016
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First Quarter
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$
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37.48
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$
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27.50
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Second Quarter
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$
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39.08
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$
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31.15
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Third Quarter
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$
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41.79
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$
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33.29
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Fourth Quarter
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$
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41.07
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$
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30.80
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12/12*
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12/13*
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12/14*
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12/15*
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12/16*
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12/17*
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The Medicines Company
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100.00
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161.12
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115.44
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155.78
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|
141.59
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|
114.06
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NASDAQ Composite
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100.00
|
|
141.63
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|
162.09
|
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173.33
|
|
187.19
|
|
242.29
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NASDAQ Biotechnology
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100.00
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174.05
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230.33
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244.29
|
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194.95
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228.29
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*
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Fiscal year ended December 31.
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Item 6.
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Selected Financial Data.
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Year Ended December 31,
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||||||||||||||||||
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2017
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2016
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2015
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2014
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2013
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||||||||||
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(In thousands, except per share data)
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||||||||||||||||||
Statements of Operations Data
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||||||||||
Net product revenues
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$
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18,980
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$
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71,956
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$
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240,688
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$
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657,533
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$
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624,519
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Royalty revenues
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25,809
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71,205
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53,859
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—
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—
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Total net revenues
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44,789
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143,161
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294,547
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657,533
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624,519
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Operating expenses:
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Cost of product revenues
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47,193
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60,653
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103,986
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228,514
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216,607
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|||||
Asset impairment charges
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392,097
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—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Research and development
|
138,370
|
|
|
92,107
|
|
|
90,388
|
|
|
96,257
|
|
|
104,354
|
|
|||||
Selling, general and administrative
|
132,225
|
|
|
212,482
|
|
|
285,300
|
|
|
281,818
|
|
|
252,233
|
|
|||||
Total operating expenses
|
709,885
|
|
|
365,242
|
|
|
479,674
|
|
|
606,589
|
|
|
573,194
|
|
|||||
(Loss) income from operations
|
(665,096
|
)
|
|
(222,081
|
)
|
|
(185,127
|
)
|
|
50,944
|
|
|
51,325
|
|
|||||
Co-promotion and license income
|
7,549
|
|
|
3,854
|
|
|
10,132
|
|
|
24,236
|
|
|
17,383
|
|
|||||
Gain on remeasurement of equity investment
|
—
|
|
|
—
|
|
|
22,597
|
|
|
—
|
|
|
—
|
|
|||||
Gain on sale of investment
|
—
|
|
|
—
|
|
|
19,773
|
|
|
—
|
|
|
—
|
|
|||||
Gain on sale of assets
|
—
|
|
|
288,301
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Loss on extinguishment of debt
|
—
|
|
|
(5,380
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Legal settlement
|
—
|
|
|
—
|
|
|
5,000
|
|
|
25,736
|
|
|
—
|
|
|||||
Loss in equity investment
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,711
|
)
|
|
—
|
|
|||||
Investment impairment
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,500
|
)
|
|
—
|
|
|||||
Interest expense
|
(48,564
|
)
|
|
(44,463
|
)
|
|
(37,092
|
)
|
|
(15,701
|
)
|
|
(15,531
|
)
|
|||||
Other income
|
1,840
|
|
|
346
|
|
|
188
|
|
|
918
|
|
|
1,420
|
|
|||||
(Loss) income from continuing operations before income taxes
|
(704,271
|
)
|
|
20,577
|
|
|
(164,529
|
)
|
|
76,922
|
|
|
54,597
|
|
|||||
Benefit from (provision for) income taxes
|
96,576
|
|
|
(67
|
)
|
|
29,733
|
|
|
(18,808
|
)
|
|
(17,394
|
)
|
|||||
(Loss) income from continuing operations
|
(607,695
|
)
|
|
20,510
|
|
|
(134,796
|
)
|
|
58,114
|
|
|
37,203
|
|
|||||
Loss from discontinued operations, net of tax
|
(100,678
|
)
|
|
(139,682
|
)
|
|
(217,950
|
)
|
|
(90,462
|
)
|
|
(21,943
|
)
|
|||||
Net (loss) income
|
(708,373
|
)
|
|
(119,172
|
)
|
|
(352,746
|
)
|
|
(32,348
|
)
|
|
15,260
|
|
|||||
Net loss (income) attributable to non-controlling interest
|
—
|
|
|
54
|
|
|
(10
|
)
|
|
138
|
|
|
252
|
|
|||||
Net (loss) income attributable to The Medicines Company
|
$
|
(708,373
|
)
|
|
$
|
(119,118
|
)
|
|
$
|
(352,756
|
)
|
|
$
|
(32,210
|
)
|
|
$
|
15,512
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic (loss) earnings per common share attributable to The Medicines Company:
|
|
|
|
|
|
|
|
|
|
||||||||||
(Loss) earnings from continuing operations
|
$
|
(8.40
|
)
|
|
$
|
0.29
|
|
|
$
|
(2.02
|
)
|
|
$
|
0.90
|
|
|
$
|
0.64
|
|
Loss from discontinued operations
|
(1.39
|
)
|
|
(2.00
|
)
|
|
(3.26
|
)
|
|
(1.40
|
)
|
|
(0.38
|
)
|
|||||
Basic (loss) income per share
|
$
|
(9.79
|
)
|
|
$
|
(1.71
|
)
|
|
$
|
(5.28
|
)
|
|
$
|
(0.50
|
)
|
|
$
|
0.26
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Diluted (loss) earnings per common share attributable to The Medicines Company:
|
|
|
|
|
|
|
|
|
|
||||||||||
(Loss) earnings from continuing operations
|
$
|
(8.40
|
)
|
|
$
|
0.28
|
|
|
$
|
(2.02
|
)
|
|
$
|
0.87
|
|
|
$
|
0.60
|
|
Loss from discontinued operations
|
$
|
(1.39
|
)
|
|
(1.91
|
)
|
|
(3.26
|
)
|
|
(1.36
|
)
|
|
(0.35
|
)
|
||||
Diluted (loss) income per share
|
$
|
(9.79
|
)
|
|
$
|
(1.63
|
)
|
|
$
|
(5.28
|
)
|
|
$
|
(0.49
|
)
|
|
$
|
0.25
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Shares used in computing basic (loss) earnings per common share
|
72,356
|
|
|
69,909
|
|
|
66,809
|
|
|
64,473
|
|
|
58,096
|
|
|||||
Shares used in computing diluted (loss) earnings per common share
|
72,356
|
|
|
73,022
|
|
|
66,809
|
|
|
66,668
|
|
|
62,652
|
|
|
As of December 31,
|
||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||
|
(In thousands)
|
||||||||||||||||
Balance Sheet Data
|
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents, available for sale securities and accrued interest receivable
|
$
|
151,359
|
|
|
541,835
|
|
|
373,173
|
|
|
$
|
370,741
|
|
|
$
|
376,727
|
|
Working capital
|
387,812
|
|
|
409,328
|
|
|
298,670
|
|
|
220,071
|
|
|
417,188
|
|
|||
Total assets*
|
872,983
|
|
|
1,705,211
|
|
|
1,795,516
|
|
|
1,881,769
|
|
|
1,736,014
|
|
|||
Long-term liabilities*
|
672,577
|
|
|
807,570
|
|
|
512,406
|
|
|
557,855
|
|
|
669,600
|
|
|||
Accumulated deficit
|
(1,257,356
|
)
|
|
(548,983
|
)
|
|
(429,865
|
)
|
|
(77,109
|
)
|
|
(44,899
|
)
|
|||
Total stockholders’ equity
|
24,914
|
|
|
651,983
|
|
|
731,774
|
|
|
920,091
|
|
|
892,161
|
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
•
|
On February 1, 2016, we completed the sale of our hemostasis portfolio, consisting of PreveLeak, Raplixa and Recothrom, to wholly owned subsidiaries of Mallinckrodt plc, or Mallinckrodt. At the completion of the sale, we received approximately $174.1 million in cash, and may receive up to an additional $235.0 million in the aggregate following the achievement of certain specified calendar year net sales milestones with respect to net sales of PreveLeak and Raplixa.
|
•
|
On June 21, 2016, we completed the sale of Cleviprex, Kengreal and rights to Argatroban for Injection, which we refer to collectively as Non-Core ACC Assets, to Chiesi USA, Inc., or Chiesi USA, and its parent company Chiesi Farmaceutici S.p.A., or Chiesi. At the completion of the sale, we received approximately $263.8 million in cash, which included the value of product inventory, and may receive up to an additional $480.0 million in the aggregate following the achievement of certain specified calendar year net sales milestones with respect to net sales of each of Cleviprex and Kengreal.
|
•
|
On January 5, 2018, we completed the sale of our infectious disease portfolio, consisting of the products Vabomere, Orbactiv and Minocin IV and line extensions thereof, and substantially all of the assets related thereto, other than certain pre-clinical assets, to Melinta Therapeutics, Inc., or Melinta. At the completion of the sale, we received approximately $166.4 million and 3,313,702 shares of Melinta common stock having a market value, based on Melinta's closing share price on January 5, 2018, of approximately $54.5 million. In addition, we are entitled to receive (i) a cash payment payable 12 months following the closing of the transaction equal to $25 million; (ii) a cash payment payable 18 months following the closing of the transaction equal to $25 million; and (iii) tiered royalty payments of 5% to 25% on worldwide net sales of (a) Vabomere and (b) Orbactiv and Minocin IV, collectively.
|
|
Year Ended December 31,
|
|||||||||||||
|
2017
|
|
2016
|
|
Change $
|
|
Change %
|
|||||||
|
(in thousands)
|
|
|
|||||||||||
Net product revenues
|
$
|
18,980
|
|
|
$
|
71,956
|
|
|
$
|
(52,976
|
)
|
|
(73.6
|
)%
|
Royalty revenues
|
25,809
|
|
|
71,205
|
|
|
(45,396
|
)
|
|
(63.8
|
)%
|
|||
Total net revenues
|
$
|
44,789
|
|
|
$
|
143,161
|
|
|
$
|
(98,372
|
)
|
|
(68.7
|
)%
|
|
Year Ended December 31,
|
|||||||||||||
|
2017
|
|
2016
|
|
Change $
|
|
Change %
|
|||||||
|
(in thousands)
|
|
|
|||||||||||
Angiomax
|
$
|
18,842
|
|
|
$
|
50,596
|
|
|
$
|
(31,754
|
)
|
|
(62.8
|
)%
|
Other products
|
138
|
|
|
21,360
|
|
|
(21,222
|
)
|
|
(99.4
|
)%
|
|||
Net product revenues
|
$
|
18,980
|
|
|
$
|
71,956
|
|
|
$
|
(52,976
|
)
|
|
(73.6
|
)%
|
•
|
expenses in connection with the manufacture of our products sold, including expenses related to excess inventory offset by the positive impact of sales of previously reserved units;
|
•
|
royalty expenses under our agreement with Biogen and HRI related to Angiomax, our agreement with AstraZeneca related to Cleviprex and our agreement with Eagle Pharmaceuticals, Inc., or Eagle, related to ready-to-use Argatroban;
|
•
|
amortization of the costs of selling rights agreements, product licenses, developed product rights and other identifiable intangible assets, which result from product and business acquisitions;
|
•
|
logistics costs related to Angiomax, Cleviprex, ready-to-use Argatroban, Kengreal and Ionsys, including distribution, storage, and handling costs; and
|
•
|
expenses associated with the discontinuance and market withdrawal of Ionsys in the United States market, including a write-off of inventory, severance and other exit costs.
|
|
Year Ended December 31,
|
||||||||||||
|
2017
|
|
% of Total
|
|
2016
|
|
% of Total
|
||||||
|
(in thousands)
|
|
|
|
(in thousands)
|
|
|
||||||
Manufacturing/Logistics
|
$
|
25,232
|
|
|
53.5
|
%
|
|
$
|
38,302
|
|
|
63.1
|
%
|
Royalties
|
810
|
|
|
1.7
|
%
|
|
3,960
|
|
|
6.5
|
%
|
||
Impairment of inventory and amortization of acquired product rights and intangible assets
|
21,151
|
|
|
44.8
|
%
|
|
18,391
|
|
|
30.4
|
%
|
||
Total cost of product revenues
|
$
|
47,193
|
|
|
100.0
|
%
|
|
$
|
60,653
|
|
|
100.0
|
%
|
|
Year Ended December 31,
|
||||||||||||
|
2017
|
|
% of Total
|
|
2016
|
|
% of Total
|
||||||
|
(in thousands)
|
|
|
|
(in thousands)
|
|
|
||||||
Marketed products
|
|
|
|
|
|
|
|
||||||
Ionsys
|
$
|
3,951
|
|
|
2.9
|
%
|
|
$
|
6,159
|
|
|
6.7
|
%
|
Angiomax
|
(11
|
)
|
|
—
|
%
|
|
1,646
|
|
|
1.8
|
%
|
||
Other
|
(250
|
)
|
|
(0.1
|
)%
|
|
3,377
|
|
|
3.7
|
%
|
||
Total marketed products
|
3,690
|
|
|
2.7
|
%
|
|
11,182
|
|
|
12.1
|
%
|
||
Research and development product candidates
|
|
|
|
|
|
|
|
||||||
Inclisiran
|
118,721
|
|
|
85.8
|
%
|
|
26,707
|
|
|
29.0
|
%
|
||
MDCO-216
|
479
|
|
|
0.3
|
%
|
|
33,856
|
|
|
36.8
|
%
|
||
Other
|
15,480
|
|
|
11.2
|
%
|
|
20,362
|
|
|
22.1
|
%
|
||
Total research and development product candidates
|
134,680
|
|
|
97.3
|
%
|
|
80,925
|
|
|
87.9
|
%
|
||
Total research and development expenses
|
$
|
138,370
|
|
|
100.0
|
%
|
|
$
|
92,107
|
|
|
100.0
|
%
|
|
Year Ended December 31,
|
|||||||||||||
|
2017
|
|
2016
|
|
Change $
|
|
Change %
|
|||||||
|
(in thousands)
|
|
|
|||||||||||
Selling, marketing and promotional
|
$
|
40,763
|
|
|
$
|
103,560
|
|
|
$
|
(62,797
|
)
|
|
(60.6
|
)%
|
General corporate and administrative
|
91,462
|
|
|
108,922
|
|
|
(17,460
|
)
|
|
(16.0
|
)%
|
|||
Total selling, general and administrative expenses
|
$
|
132,225
|
|
|
$
|
212,482
|
|
|
$
|
(80,257
|
)
|
|
(37.8
|
)%
|
|
Year Ended December 31,
|
|
Change
|
|
Change
|
|||||||||
|
2017
|
|
2016
|
|
$
|
|
%
|
|||||||
|
(In thousands)
|
|
|
|||||||||||
Co-promotion and license income
|
$
|
7,549
|
|
|
$
|
3,854
|
|
|
$
|
3,695
|
|
|
95.9
|
%
|
|
Year Ended December 31,
|
|||||||||||||
|
2017
|
|
2016
|
|
Change $
|
|
Change %
|
|||||||
|
(in thousands)
|
|
|
|||||||||||
Gain on sale of assets
|
$
|
—
|
|
|
$
|
288,301
|
|
|
$
|
(288,301
|
)
|
|
(100.0
|
)%
|
|
Year Ended December 31,
|
|
Change
|
|
Change
|
|||||||||
|
2017
|
|
2016
|
|
$
|
|
%
|
|||||||
|
(In thousands)
|
|
|
|||||||||||
Loss on extinguishment of debt
|
$
|
—
|
|
|
$
|
(5,380
|
)
|
|
$
|
5,380
|
|
|
(100.0
|
)%
|
|
Year Ended December 31,
|
|
Change
|
|
Change
|
|||||||||
|
2017
|
|
2016
|
|
$
|
|
%
|
|||||||
|
(In thousands)
|
|
|
|||||||||||
Interest expense
|
$
|
(48,564
|
)
|
|
$
|
(44,463
|
)
|
|
$
|
(4,101
|
)
|
|
(9.2
|
)%
|
|
Year Ended December 31,
|
|
Change
|
|
Change
|
|||||||||
|
2017
|
|
2016
|
|
$
|
|
%
|
|||||||
|
(In thousands)
|
|
|
|||||||||||
Other income
|
$
|
1,840
|
|
|
$
|
346
|
|
|
$
|
1,494
|
|
|
431.8
|
%
|
|
Year Ended December 31,
|
|
Change
|
|
Change
|
||||||||
|
2017
|
|
2016
|
|
$
|
|
%
|
||||||
|
(In thousands)
|
|
|
||||||||||
Benefit from (provision for) income taxes
|
$
|
96,576
|
|
|
$
|
(67
|
)
|
|
$
|
96,643
|
|
|
*
|
|
Year Ended December 31,
|
|
Change
|
|
Change
|
||||||||
|
2017
|
|
2016
|
|
$
|
|
%
|
||||||
|
(In thousands)
|
|
|
||||||||||
Loss from discontinued operations, net of tax
|
$
|
(100,678
|
)
|
|
$
|
(139,682
|
)
|
|
$
|
39,004
|
|
|
*
|
|
Year Ended December 31,
|
|||||||||||||
|
2016
|
|
2015
|
|
Change $
|
|
Change %
|
|||||||
|
(in thousands)
|
|
|
|||||||||||
Net product revenues
|
$
|
71,956
|
|
|
$
|
240,688
|
|
|
$
|
(168,732
|
)
|
|
(70.1
|
)%
|
Royalty revenues
|
71,205
|
|
|
53,859
|
|
|
17,346
|
|
|
32.2
|
%
|
|||
Total net revenues
|
$
|
143,161
|
|
|
$
|
294,547
|
|
|
$
|
(151,386
|
)
|
|
(51.4
|
)%
|
|
Year Ended December 31,
|
|||||||||||||
|
2016
|
|
2015
|
|
Change $
|
|
Change %
|
|||||||
|
(in thousands)
|
|
|
|||||||||||
Angiomax
|
$
|
50,596
|
|
|
$
|
211,970
|
|
|
$
|
(161,374
|
)
|
|
(76.1
|
)%
|
Other products
|
21,360
|
|
|
28,718
|
|
|
(7,358
|
)
|
|
(25.6
|
)%
|
|||
Net product revenues
|
$
|
71,956
|
|
|
$
|
240,688
|
|
|
$
|
(168,732
|
)
|
|
(70.1
|
)%
|
•
|
expenses in connection with the manufacture of our products sold, including expenses related to excess inventory offset by the positive impact of sales of previously reserved units;
|
•
|
royalty expenses under our agreement with Biogen and HRI related to Angiomax, our agreement with AstraZeneca related to Cleviprex and our agreement with Eagle related to ready-to-use Argatroban;
|
•
|
amortization of the costs of selling rights agreements, product licenses, developed product rights and other identifiable intangible assets, which result from product and business acquisitions; and
|
•
|
logistics costs related to Angiomax, Cleviprex, ready-to-use Argatroban, Kengreal and Ionsys, including distribution, storage, and handling costs.
|
|
Year Ended December 31,
|
||||||||||||
|
2016
|
|
% of Total
|
|
2015
|
|
% of Total
|
||||||
|
(in thousands)
|
|
|
|
(in thousands)
|
|
|
||||||
Manufacturing/Logistics
|
$
|
38,302
|
|
|
63.1
|
%
|
|
$
|
43,002
|
|
|
41.4
|
%
|
Royalties
|
3,960
|
|
|
6.5
|
%
|
|
9,283
|
|
|
8.9
|
%
|
||
Impairment of inventory and amortization of acquired product rights and intangible assets
|
18,391
|
|
|
30.4
|
%
|
|
51,701
|
|
|
49.7
|
%
|
||
Total cost of product revenues
|
$
|
60,653
|
|
|
100.0
|
%
|
|
$
|
103,986
|
|
|
100.0
|
%
|
|
Year Ended December 31,
|
||||||||||||
|
2016
|
|
% of Total
|
|
2015
|
|
% of Total
|
||||||
|
(in thousands)
|
|
|
|
(in thousands)
|
|
|
||||||
Marketed products
|
|
|
|
|
|
|
|
||||||
Ionsys
|
$
|
6,159
|
|
|
6.7
|
%
|
|
$
|
5,355
|
|
|
5.9
|
%
|
Angiomax
|
1,646
|
|
|
1.8
|
%
|
|
11,314
|
|
|
12.5
|
%
|
||
Other
|
3,377
|
|
|
3.7
|
%
|
|
3,666
|
|
|
4.1
|
%
|
||
Total marketed products
|
11,182
|
|
|
12.1
|
%
|
|
20,335
|
|
|
22.5
|
%
|
||
Registration stage product candidates
|
|
|
|
|
|
|
|
||||||
Ionsys
|
—
|
|
|
—
|
%
|
|
3,225
|
|
|
3.6
|
%
|
||
Other
|
—
|
|
|
—
|
%
|
|
2,232
|
|
|
2.5
|
%
|
||
Total registration stage product candidates
|
—
|
|
|
—
|
%
|
|
5,457
|
|
|
6.0
|
%
|
||
Research and development product candidates
|
|
|
|
|
|
|
|
||||||
Inclisiran
|
26,707
|
|
|
29.0
|
%
|
|
8,379
|
|
|
9.3
|
%
|
||
MDCO-216
|
33,856
|
|
|
36.8
|
%
|
|
37,052
|
|
|
41.0
|
%
|
||
Other
|
20,362
|
|
|
22.1
|
%
|
|
19,165
|
|
|
21.2
|
%
|
||
Total research and development product candidates
|
80,925
|
|
|
87.9
|
%
|
|
64,596
|
|
|
71.5
|
%
|
||
Total research and development expenses
|
$
|
92,107
|
|
|
100.0
|
%
|
|
$
|
90,388
|
|
|
100.0
|
%
|
|
Year Ended December 31,
|
|||||||||||||
|
2016
|
|
2015
|
|
Change $
|
|
Change %
|
|||||||
|
(in thousands)
|
|
|
|||||||||||
Selling, marketing and promotional
|
$
|
103,560
|
|
|
$
|
129,936
|
|
|
$
|
(26,376
|
)
|
|
(20.3
|
)%
|
General corporate and administrative
|
108,922
|
|
|
155,364
|
|
|
(46,442
|
)
|
|
(29.9
|
)%
|
|||
Total selling, general and administrative expenses
|
$
|
212,482
|
|
|
$
|
285,300
|
|
|
$
|
(72,818
|
)
|
|
(25.5
|
)%
|
|
Year Ended December 31,
|
|
Change
|
|
Change
|
|||||||||
|
2016
|
|
2015
|
|
$
|
|
%
|
|||||||
|
(In thousands)
|
|
|
|||||||||||
Legal settlement
|
$
|
—
|
|
|
$
|
5,000
|
|
|
$
|
(5,000
|
)
|
|
(100.0
|
)%
|
|
Year Ended December 31,
|
|
Change
|
|
Change
|
|||||||||
|
2016
|
|
2015
|
|
$
|
|
%
|
|||||||
|
(In thousands)
|
|
|
|||||||||||
Co-promotion and license income
|
$
|
3,854
|
|
|
$
|
10,132
|
|
|
$
|
(6,278
|
)
|
|
(62.0
|
)%
|
|
Year Ended December 31,
|
|
Change
|
|
Change
|
|||||||||
|
2016
|
|
2015
|
|
$
|
|
%
|
|||||||
|
(In thousands)
|
|
|
|||||||||||
Gain on remeasurement of equity investment
|
$
|
—
|
|
|
$
|
22,597
|
|
|
$
|
(22,597
|
)
|
|
(100.0
|
)%
|
|
Year Ended December 31,
|
|
Change
|
|
Change
|
|||||||||
|
2016
|
|
2015
|
|
$
|
|
%
|
|||||||
|
(In thousands)
|
|
|
|||||||||||
Gain on sale of investment
|
$
|
—
|
|
|
$
|
19,773
|
|
|
$
|
(19,773
|
)
|
|
(100.0
|
)%
|
|
Year Ended December 31,
|
|||||||||||||
|
2016
|
|
2015
|
|
Change $
|
|
Change %
|
|||||||
|
(in thousands)
|
|
|
|||||||||||
Gain on sale of assets
|
$
|
288,301
|
|
|
$
|
—
|
|
|
$
|
288,301
|
|
|
100.0
|
%
|
|
Year Ended December 31,
|
|
Change
|
|
Change
|
|||||||||
|
2016
|
|
2015
|
|
$
|
|
%
|
|||||||
|
(In thousands)
|
|
|
|||||||||||
Loss on extinguishment of debt
|
$
|
(5,380
|
)
|
|
$
|
—
|
|
|
$
|
(5,380
|
)
|
|
(100.0
|
)%
|
|
Year Ended December 31,
|
|
Change
|
|
Change
|
|||||||||
|
2016
|
|
2015
|
|
$
|
|
%
|
|||||||
|
(In thousands)
|
|
|
|||||||||||
Interest expense
|
$
|
(44,463
|
)
|
|
$
|
(37,092
|
)
|
|
$
|
(7,371
|
)
|
|
(19.9
|
)%
|
|
Year Ended December 31,
|
|
Change
|
|
Change
|
|||||||||
|
2016
|
|
2015
|
|
$
|
|
%
|
|||||||
|
(In thousands)
|
|
|
|||||||||||
Other income
|
$
|
346
|
|
|
$
|
188
|
|
|
$
|
158
|
|
|
84.0
|
%
|
|
Year Ended December 31,
|
|
Change
|
|
Change
|
||||||||
|
2016
|
|
2015
|
|
$
|
|
%
|
||||||
|
(In thousands)
|
|
|
||||||||||
(Provision for) benefit from income taxes
|
$
|
(67
|
)
|
|
$
|
29,733
|
|
|
$
|
(29,800
|
)
|
|
*
|
|
Year Ended December 31,
|
|
Change
|
|
Change
|
|||||||||
|
2016
|
|
2015
|
|
$
|
|
%
|
|||||||
|
(In thousands)
|
|
|
|||||||||||
Loss from discontinued operations, net of tax
|
$
|
(139,682
|
)
|
|
$
|
(217,950
|
)
|
|
$
|
78,268
|
|
|
(35.9
|
)%
|
•
|
$150.0 million
for the license and collaboration agreement with Alnylam;
|
•
|
|
•
|
$69.3 million
relating to our research and development infectious disease portfolio acquired in our Rempex acquisition (and which was not divested in the Melinta transactions); and
|
•
|
$2.2 million
for other transaction milestones.
|
•
|
the progress, level, timing and cost of our research and development activities related to our clinical trials and non-clinical studies with respect to inclisiran;
|
•
|
whether we develop and commercialize inclisiran on our own or through licenses and collaborations with third parties and the terms and timing of such arrangements, if any;
|
•
|
the extent to which our submissions and planned submissions for regulatory approval of inclisiran are approved on a timely basis, if at all;
|
•
|
the decline in Angiomax sales and the extent to which royalties on sales of the authorized generic of Angiomax are generated;
|
•
|
if inclisiran receives regulatory approval, the extent to which it is commercially successful;
|
•
|
the extent to which we are able to realize additional funds through other sources of liquidity from the Melinta transaction;
|
•
|
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, including scaling our operations in anticipation of a potential launch of inclisiran;
|
•
|
the amounts of our payment obligations to third parties with respect to inclisiran or other assets; and
|
•
|
our ability to defend and enforce our intellectual property rights.
|
|
|
Less Than
|
|
|
|
|
|
More Than
|
|
|
||||||||||
Contractual Obligations (in thousands)
(1) (2)
|
|
1 Year
|
|
1 - 3 Years
|
|
4 - 5 Years
|
|
5 Years
|
|
Total
|
||||||||||
Inventory related commitments
|
|
$
|
52,111
|
|
|
$
|
16,167
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
68,278
|
|
Long-term debt obligations
|
|
21,069
|
|
|
42,138
|
|
|
437,135
|
|
|
413,569
|
|
|
913,911
|
|
|||||
Research and development
|
|
71,115
|
|
|
68,387
|
|
|
34,508
|
|
|
30,409
|
|
|
204,419
|
|
|||||
Operating leases
|
|
7,185
|
|
|
15,029
|
|
|
15,428
|
|
|
27,928
|
|
|
65,570
|
|
|||||
Selling, general and administrative
|
|
3,924
|
|
|
1,379
|
|
|
—
|
|
|
—
|
|
|
5,303
|
|
|||||
Total contractual obligations
|
|
155,404
|
|
|
$
|
143,100
|
|
|
$
|
487,071
|
|
|
$
|
471,906
|
|
|
$
|
1,257,481
|
|
(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.
|
(2)
|
This table includes commitments related to our infectious disease business which was sold on January 5, 2018 and the related commitments were assumed by Melinta. These commitments include
$68.3 million
of inventory related commitments,
$7.3 million
for research and development service agreements and
$1.8 million
for selling general and administrative obligations. See Note 23 “Discontinued Operations,” in the accompanying notes to consolidated financial statements included in this Annual Report on Form 10-K for further details.
|
•
|
Under the license agreement with Alnylam, we may have to make contingent cash payments of up to
$170.0 million
upon achievement of specified milestones for the PCSK9 products. We have also agreed to pay to Alnylam specified royalties on net sales of the PCSK9 products. In addition to these obligations to Alnylam, in connection with the license, we also agreed to make payments to third parties on sales of the PCSK9 products.
|
•
|
In connection with our acquisition of Incline, we may have to make contingent cash payments of up to
$60.0 million
, less certain expenses, upon achievement of specified milestones with respect to Ionsys. We also agreed to make payments to third parties of up to
$83.0 million
upon achievement of specified milestones and are obligated to pay specified royalties based on net sales of Ionsys. While we continue to seek a partnership or divestiture transaction for Ionsys, in June 2017 we commenced a voluntary discontinuation and withdrawal of Ionsys from the market and ceased related commercialization activities, with the regulatory authorizations for Ionsys remaining open.
|
•
|
In connection with our acquisition of Rempex, we may have to make contingent cash payments of up to
$224.3 million
, less certain expenses and employer taxes owing because of such payments, upon achievement of specified milestones. This includes up to approximately $155 million of contingent cash payments that were assumed by Melinta as a result of the sale of our infectious disease business on January 5, 2018. See Note 23 “Discontinued Operations,” in the accompanying notes to consolidated financial statements included in this Annual Report on Form 10-K for further details.
|
•
|
In connection with our acquisition of Targanta, we may have to make contingent cash payments up to
$49.4 million
to the former shareholders of Targanta and up to
$25.0 million
in additional payments to Eli Lilly and InterMune upon achievement of specified milestones. As a result of the Targanta acquisition, we are a party to a license agreement with Eli Lilly through our Targanta subsidiary. We are required to make payments to Eli Lilly upon reaching specified regulatory and sales milestones. In addition, we are obligated to pay royalties to Eli Lilly based on net sales of products containing Orbactiv or the other compounds in any jurisdiction in which we hold license rights to a valid patent. These commitments were assumed by Melinta as a result of the sale of our infectious disease business on January 5, 2018. See Note 23 “Discontinued Operations,” in the accompanying notes to consolidated financial statements included in this Annual Report on Form 10-Kfor further details.
|
•
|
In connection with our acquisition of Annovation and its lead product candidate, MDCO-700, we may have to make contingent cash payments of up to
$26.3 million
upon achievement of specified milestones and up to
$6.5 million
in additional payments to other third parties. In August 2017, we announced that we are discontinuing the clinical development program for MDCO-700.
|
•
|
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 Angiomax 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 Angiomax.
|
•
|
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
$0.9 million
and
$0.8 million
at
December 31, 2017
and
2016
, respectively. A 10% change in our fee-for-service accruals and allowances would have had an approximately
$0.0 million
effect on our net revenue for the year ended
December 31, 2017
.
|
|
Cash
Discounts
|
|
Returns
|
|
Chargebacks
|
|
Rebates
|
|
Fees-for-
Service
|
||||||||||
Balance at January 1, 2015
|
$
|
4,142
|
|
|
$
|
3,349
|
|
|
$
|
44,399
|
|
|
$
|
—
|
|
|
$
|
924
|
|
Allowances for sales during 2015
|
9,212
|
|
|
12,143
|
|
|
107,564
|
|
|
833
|
|
|
14,249
|
|
|||||
Actual credits issued for prior year’s sales
|
(3,927
|
)
|
|
(3,528
|
)
|
|
(40,419
|
)
|
|
—
|
|
|
(1,179
|
)
|
|||||
Actual credits issued for sales during 2015
|
(8,540
|
)
|
|
(3,221
|
)
|
|
(95,828
|
)
|
|
(733
|
)
|
|
(11,314
|
)
|
|||||
Balance at December 31, 2015
|
887
|
|
|
8,743
|
|
|
15,716
|
|
|
100
|
|
|
2,680
|
|
|||||
Allowances for sales during 2016
|
1,854
|
|
|
(1,424
|
)
|
|
36,197
|
|
|
(6
|
)
|
|
3,166
|
|
|||||
Actual credits issued for prior year’s sales
|
(887
|
)
|
|
(5,233
|
)
|
|
(15,610
|
)
|
|
(50
|
)
|
|
(2,655
|
)
|
|||||
Actual credits issued for sales during 2016
|
(1,573
|
)
|
|
(502
|
)
|
|
(34,408
|
)
|
|
(29
|
)
|
|
(2,365
|
)
|
|||||
Balance at December 31, 2016
|
281
|
|
|
1,584
|
|
|
1,895
|
|
|
15
|
|
|
826
|
|
|||||
Allowances for sales during 2017
|
1,746
|
|
|
4,439
|
|
|
17,395
|
|
|
271
|
|
|
3,085
|
|
|||||
Actual credits issued for prior year’s sales
|
(281
|
)
|
|
(1,464
|
)
|
|
(1,246
|
)
|
|
(15
|
)
|
|
(865
|
)
|
|||||
Actual credits issued for sales during 2017
|
(775
|
)
|
|
(220
|
)
|
|
(12,172
|
)
|
|
(126
|
)
|
|
(2,152
|
)
|
|||||
Balance at December 31, 2017
|
$
|
971
|
|
|
$
|
4,339
|
|
|
$
|
5,872
|
|
|
$
|
145
|
|
|
$
|
894
|
|
Item 7A.
|
Quantitative and Qualitative Disclosures 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.
|
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 14.
|
Principal Accounting Fees and Services.
|
Item 15.
|
Exhibits and Financial Statement Schedules.
|
By:
|
/s/ Clive A. Meanwell
|
|
Clive A. Meanwell
|
|
Chief Executive Officer
|
Signature
|
|
Title(s)
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
/s/ Clive A. Meanwell
|
|
Chief Executive Officer and Director
|
|
March 1, 2018
|
Clive A. Meanwell
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ William B. O’Connor
|
|
Chief Financial Officer
|
|
March 1, 2018
|
William B. O’Connor
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
/s/ William W. Crouse
|
|
Director
|
|
March 1, 2018
|
William W. Crouse
|
|
|
|
|
|
|
|
|
|
/s/ Alexander J. Denner
|
|
Director
|
|
March 1, 2018
|
Alexander J. Denner
|
|
|
|
|
|
|
|
|
|
/s/
Fredric N. Eshelman
|
|
Executive Chairman and Director
|
|
March 1, 2018
|
Fredric N. Eshelman
|
|
|
|
|
|
|
|
|
|
/s/ Geno J. Germano
|
|
Director
|
|
March 1, 2018
|
Geno J. Germano
|
|
|
|
|
|
|
|
|
|
/s/ John C. Kelly
|
|
Director
|
|
March 1, 2018
|
John C. Kelly
|
|
|
|
|
|
|
|
|
|
/s/ Armin M. Kessler
|
|
Director
|
|
March 1, 2018
|
Armin M. Kessler
|
|
|
|
|
|
|
|
|
|
/s/ Paris Panayiotopoulos
|
|
Director
|
|
March 1, 2018
|
Paris Panayiotopoulos
|
|
|
|
|
|
|
|
|
|
/s/ Sarah J. Schlesinger
|
|
Director
|
|
March 1, 2018
|
Sarah J. Schlesinger
|
|
|
|
|
|
|
|
|
|
/s/ Hiroaki Shigeta
|
|
Director
|
|
March 1, 2018
|
Hiroaki Shigeta
|
|
|
|
|
|
|
|
|
|
/s/ Melvin K. Spigelman
|
|
Director
|
|
March 1, 2018
|
Melvin K. Spigelman
|
|
|
|
|
|
|
|
|
|
/s/ Elizabeth H.S. Wyatt
|
|
Director
|
|
March 1, 2018
|
Elizabeth H.S. Wyatt
|
|
|
|
|
|
Page
|
•
|
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/ William B. O’Connor
|
Chief Executive Officer
|
|
Chief Financial Officer
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
151,359
|
|
|
$
|
541,835
|
|
Accounts receivable, net of allowances of approximately $7.1 million and $2.9 million at
December 31, 2017 and December 31, 2016, respectively |
3,496
|
|
|
18,171
|
|
||
Inventory, net
|
5,559
|
|
|
28,486
|
|
||
Prepaid expenses and other current assets
|
11,688
|
|
|
14,875
|
|
||
Current assets held for sale
|
391,202
|
|
|
50,586
|
|
||
Total current assets
|
563,304
|
|
|
653,953
|
|
||
Fixed assets, net
|
17,254
|
|
|
30,961
|
|
||
In-process research & development
|
—
|
|
|
65,000
|
|
||
Product licenses, net
|
—
|
|
|
26,987
|
|
||
Developed product rights, net
|
—
|
|
|
230,198
|
|
||
Goodwill
|
200,571
|
|
|
200,571
|
|
||
Restricted cash
|
5,541
|
|
|
5,032
|
|
||
Contingent purchase price from sale of businesses
|
80,700
|
|
|
143,700
|
|
||
Other assets
|
5,613
|
|
|
715
|
|
||
Noncurrent assets held for sale
|
—
|
|
|
348,094
|
|
||
Total assets
|
$
|
872,983
|
|
|
$
|
1,705,211
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
10,244
|
|
|
$
|
20,578
|
|
Accrued expenses
|
95,197
|
|
|
66,838
|
|
||
Current portion of contingent purchase price
|
4,995
|
|
|
—
|
|
||
Convertible senior notes
|
—
|
|
|
53,749
|
|
||
Deferred revenue
|
4,476
|
|
|
16,435
|
|
||
Current liabilities held for sale
|
60,580
|
|
|
87,025
|
|
||
Total current liabilities
|
175,492
|
|
|
244,625
|
|
||
Contingent purchase price
|
14,655
|
|
|
31,832
|
|
||
Convertible senior notes
|
649,198
|
|
|
623,584
|
|
||
Deferred tax liabilities
|
—
|
|
|
89,992
|
|
||
Other liabilities
|
8,724
|
|
|
11,705
|
|
||
Noncurrent liabilities held for sale
|
—
|
|
|
50,457
|
|
||
Total liabilities
|
848,069
|
|
|
1,052,195
|
|
||
Equity component of currently redeemable convertible senior notes (Note 9)
|
—
|
|
|
1,033
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $1.00 par value per share, 5,000,000 shares authorized; no shares issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, $0.001 par value per share, 187,500,000 authorized; 76,191,958 issued and 73,178,815 outstanding at December 31, 2017 and 73,212,545 issued and 71,019,563 outstanding at December 31, 2016
|
76
|
|
|
73
|
|
||
Additional paid-in capital
|
1,377,393
|
|
|
1,256,890
|
|
||
Treasury stock, at cost; 3,013,143 and 2,192,982 shares at December 31, 2017 and December 31, 2016, respectively
|
(90,016
|
)
|
|
(50,000
|
)
|
||
Accumulated deficit
|
(1,257,356
|
)
|
|
(548,983
|
)
|
||
Accumulated other comprehensive loss
|
(5,183
|
)
|
|
(5,479
|
)
|
||
Total The Medicines Company stockholders’ equity
|
24,914
|
|
|
652,501
|
|
||
Non-controlling interest in joint venture
|
—
|
|
|
(518
|
)
|
||
Total stockholders’ equity
|
24,914
|
|
|
651,983
|
|
||
Total liabilities and stockholders’ equity
|
$
|
872,983
|
|
|
$
|
1,705,211
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net product revenues
|
$
|
18,980
|
|
|
$
|
71,956
|
|
|
$
|
240,688
|
|
Royalty revenues
|
25,809
|
|
|
71,205
|
|
|
53,859
|
|
|||
Total net revenues
|
44,789
|
|
|
143,161
|
|
|
294,547
|
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|
|||
Cost of product revenues
|
47,193
|
|
|
60,653
|
|
|
103,986
|
|
|||
Asset impairment charges
|
392,097
|
|
|
—
|
|
|
—
|
|
|||
Research and development
|
138,370
|
|
|
92,107
|
|
|
90,388
|
|
|||
Selling, general and administrative
|
132,225
|
|
|
212,482
|
|
|
285,300
|
|
|||
Total operating expenses
|
709,885
|
|
|
365,242
|
|
|
479,674
|
|
|||
Loss from operations
|
(665,096
|
)
|
|
(222,081
|
)
|
|
(185,127
|
)
|
|||
Legal settlement
|
—
|
|
|
—
|
|
|
5,000
|
|
|||
Co-promotion and license income
|
7,549
|
|
|
3,854
|
|
|
10,132
|
|
|||
Gain on remeasurement of equity investment
|
—
|
|
|
—
|
|
|
22,597
|
|
|||
Gain on sale of investment
|
—
|
|
|
—
|
|
|
19,773
|
|
|||
Gain on sale of assets
|
—
|
|
|
288,301
|
|
|
—
|
|
|||
Loss on extinguishment of debt
|
—
|
|
|
(5,380
|
)
|
|
—
|
|
|||
Interest expense
|
(48,564
|
)
|
|
(44,463
|
)
|
|
(37,092
|
)
|
|||
Other income
|
1,840
|
|
|
346
|
|
|
188
|
|
|||
(Loss) income from continuing operations before income taxes
|
(704,271
|
)
|
|
20,577
|
|
|
(164,529
|
)
|
|||
Benefit from (provision for) income taxes
|
96,576
|
|
|
(67
|
)
|
|
29,733
|
|
|||
(Loss) income from continuing operations
|
(607,695
|
)
|
|
20,510
|
|
|
(134,796
|
)
|
|||
Loss from discontinued operations, net of tax
|
(100,678
|
)
|
|
(139,682
|
)
|
|
(217,950
|
)
|
|||
Net loss
|
(708,373
|
)
|
|
(119,172
|
)
|
|
(352,746
|
)
|
|||
Net loss (income) attributable to non-controlling interest
|
—
|
|
|
54
|
|
|
(10
|
)
|
|||
Net loss attributable to The Medicines Company
|
$
|
(708,373
|
)
|
|
$
|
(119,118
|
)
|
|
$
|
(352,756
|
)
|
|
|
|
|
|
|
||||||
Amounts attributable to The Medicines Company:
|
|
|
|
|
|
||||||
(Loss) income from continuing operations
|
$
|
(607,695
|
)
|
|
$
|
20,564
|
|
|
$
|
(134,806
|
)
|
Loss from discontinued operations, net of tax
|
(100,678
|
)
|
|
(139,682
|
)
|
|
(217,950
|
)
|
|||
Net loss attributable to The Medicines Company
|
$
|
(708,373
|
)
|
|
$
|
(119,118
|
)
|
|
$
|
(352,756
|
)
|
|
|
|
|
|
|
||||||
Basic (loss) earnings per common share attributable to The Medicines Company:
|
|
|
|
|
|
||||||
(Loss) earnings from continuing operations
|
$
|
(8.40
|
)
|
|
$
|
0.29
|
|
|
$
|
(2.02
|
)
|
Loss from discontinued operations
|
(1.39
|
)
|
|
(2.00
|
)
|
|
(3.26
|
)
|
|||
Basic loss per share
|
$
|
(9.79
|
)
|
|
$
|
(1.71
|
)
|
|
$
|
(5.28
|
)
|
|
|
|
|
|
|
||||||
Diluted (loss) earnings per common share attributable to The Medicines Company:
|
|
|
|
|
|
||||||
(Loss) earnings from continuing operations
|
$
|
(8.40
|
)
|
|
$
|
0.28
|
|
|
$
|
(2.02
|
)
|
Loss from discontinued operations
|
(1.39
|
)
|
|
(1.91
|
)
|
|
(3.26
|
)
|
|||
Diluted loss per share
|
$
|
(9.79
|
)
|
|
$
|
(1.63
|
)
|
|
$
|
(5.28
|
)
|
|
|
|
|
|
|
||||||
Weighted average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|||
Basic
|
72,356
|
|
|
69,909
|
|
|
66,809
|
|
|||
Diluted
|
72,356
|
|
|
73,022
|
|
|
66,809
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net loss
|
$
|
(708,373
|
)
|
|
$
|
(119,172
|
)
|
|
$
|
(352,746
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Foreign currency translation adjustment
|
296
|
|
|
213
|
|
|
1,445
|
|
|||
Amounts reclassified from accumulated other comprehensive income
|
—
|
|
|
(9,665
|
)
|
|
—
|
|
|||
Other comprehensive income (loss)
|
296
|
|
|
(9,452
|
)
|
|
1,445
|
|
|||
Comprehensive loss
|
(708,077
|
)
|
|
(128,624
|
)
|
|
(351,301
|
)
|
|||
Less: comprehensive loss (income) attributable to non-controlling interest
|
—
|
|
|
54
|
|
|
(10
|
)
|
|||
Comprehensive loss attributable to The Medicines Company
|
$
|
(708,077
|
)
|
|
$
|
(128,570
|
)
|
|
$
|
(351,311
|
)
|
|
Common Stock
|
|
Treasury Stock
|
|
Additional
Paid-in
|
|
Accumulated
|
|
Accumulated
Comprehensive
Income
|
|
Non-
controlling
Interest
|
|
Total
Stockholders’
|
||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Capital
|
|
Deficit
|
|
(Loss)
|
|
in JV
|
|
Equity
|
||||||||||||||||
Balance at January 1, 2015
|
67,667
|
|
|
$
|
68
|
|
|
(2,193
|
)
|
|
$
|
(50,000
|
)
|
|
$
|
1,045,078
|
|
|
$
|
(77,109
|
)
|
|
$
|
2,528
|
|
|
$
|
(474
|
)
|
|
$
|
920,091
|
|
Employee stock purchases
|
2,989
|
|
|
3
|
|
|
|
|
|
|
65,235
|
|
|
|
|
|
|
|
|
|
|
65,238
|
|
||||||||||
Issuance of restricted stock awards
|
166
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
—
|
|
||||||||||
Issuance of common stock
|
945
|
|
|
1
|
|
|
|
|
|
|
29,963
|
|
|
|
|
|
|
|
|
29,964
|
|
||||||||||||
Non-cash stock compensation
|
|
|
|
|
|
|
|
|
|
|
30,605
|
|
|
|
|
|
|
|
|
|
|
30,605
|
|
||||||||||
Equity component of the convertible notes issuance, net
|
|
|
|
|
|
|
|
|
37,177
|
|
|
|
|
|
|
|
|
37,177
|
|
||||||||||||||
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(352,756
|
)
|
|
|
|
|
10
|
|
|
(352,746
|
)
|
|||||||||
Currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,445
|
|
|
|
|
1,445
|
|
||||||||||
Balance at December 31, 2015
|
71,767
|
|
|
$
|
72
|
|
|
(2,193
|
)
|
|
$
|
(50,000
|
)
|
|
$
|
1,208,058
|
|
|
$
|
(429,865
|
)
|
|
$
|
3,973
|
|
|
$
|
(464
|
)
|
|
$
|
731,774
|
|
Employee stock purchases
|
1,313
|
|
|
1
|
|
|
|
|
|
|
33,775
|
|
|
|
|
|
|
|
|
|
|
33,776
|
|
||||||||||
Issuance of restricted stock awards
|
132
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
||||||||||
Non-cash stock compensation
|
|
|
|
|
|
|
|
|
|
|
30,987
|
|
|
|
|
|
|
|
|
|
|
30,987
|
|
||||||||||
Reclassification from mezzanine equity
|
|
|
|
|
|
|
|
|
16,056
|
|
|
|
|
|
|
|
|
16,056
|
|
||||||||||||||
Equity component of 2017 Notes repurchased
|
|
|
|
|
|
|
|
|
(108,725
|
)
|
|
|
|
|
|
|
|
(108,725
|
)
|
||||||||||||||
Purchase of capped call transactions
|
|
|
|
|
|
|
|
|
(33,931
|
)
|
|
|
|
|
|
|
|
(33,931
|
)
|
||||||||||||||
Equity component of 2023 Notes issuance, net
|
|
|
|
|
|
|
|
|
98,085
|
|
|
|
|
|
|
|
|
98,085
|
|
||||||||||||||
Settlement of hedges
|
|
|
|
|
|
|
|
|
(87,874
|
)
|
|
|
|
|
|
|
|
(87,874
|
)
|
||||||||||||||
Settlement of warrants
|
|
|
|
|
|
|
|
|
100,459
|
|
|
|
|
|
|
|
|
100,459
|
|
||||||||||||||
Net (loss) income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(119,118
|
)
|
|
|
|
|
(54
|
)
|
|
(119,172
|
)
|
|||||||||
Currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
213
|
|
|
|
|
213
|
|
||||||||||
Amounts reclassified from accumulated other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9,665
|
)
|
|
|
|
(9,665
|
)
|
||||||||||
Balance at December 31, 2016
|
73,212
|
|
|
$
|
73
|
|
|
(2,193
|
)
|
|
$
|
(50,000
|
)
|
|
$
|
1,256,890
|
|
|
$
|
(548,983
|
)
|
|
$
|
(5,479
|
)
|
|
$
|
(518
|
)
|
|
$
|
651,983
|
|
Employee stock purchases
|
1,949
|
|
|
2
|
|
|
|
|
|
|
48,619
|
|
|
|
|
|
|
|
|
|
|
48,621
|
|
||||||||||
Purchase of shares from non-controlling interest
|
|
|
|
|
|
|
|
|
(685
|
)
|
|
|
|
|
|
518
|
|
|
(167
|
)
|
|||||||||||||
Issuance of restricted stock awards
|
166
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
||||||||||
Non-cash stock compensation
|
|
|
|
|
|
|
|
|
|
31,520
|
|
|
|
|
|
|
|
|
|
|
31,520
|
|
|||||||||||
Equity component of 2022 Notes repurchased
|
|
|
|
|
|
|
|
|
1,031
|
|
|
|
|
|
|
|
|
1,031
|
|
||||||||||||||
Equity component of 2017 Notes repurchased
|
|
|
|
|
|
|
|
|
3
|
|
|
|
|
|
|
|
|
3
|
|
||||||||||||||
Settlement of 2017 Notes
|
820
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|||||||||||||
Settlement of hedges
|
|
|
|
|
|
|
(820
|
)
|
|
(40,016
|
)
|
|
40,015
|
|
|
|
|
|
|
|
|
(1
|
)
|
||||||||||
Settlement of warrants
|
44
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|||||||||||||
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(708,373
|
)
|
|
|
|
|
—
|
|
|
(708,373
|
)
|
|||||||||
Currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
296
|
|
|
|
|
296
|
|
||||||||||
Balance at December 31, 2017
|
76,191
|
|
|
$
|
76
|
|
|
(3,013
|
)
|
|
$
|
(90,016
|
)
|
|
$
|
1,377,393
|
|
|
$
|
(1,257,356
|
)
|
|
$
|
(5,183
|
)
|
|
$
|
—
|
|
|
$
|
24,914
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net loss
|
$
|
(708,373
|
)
|
|
$
|
(119,172
|
)
|
|
$
|
(352,746
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
21,974
|
|
|
31,042
|
|
|
34,837
|
|
|||
Asset impairment charges
|
392,097
|
|
|
—
|
|
|
29,413
|
|
|||
Impairment on divestiture
|
—
|
|
|
—
|
|
|
133,273
|
|
|||
Amortization of debt discount
|
26,868
|
|
|
26,182
|
|
|
23,676
|
|
|||
Unrealized foreign currency transaction losses (gains), net
|
2,180
|
|
|
(941
|
)
|
|
(173
|
)
|
|||
Stock compensation expense
|
31,520
|
|
|
30,987
|
|
|
30,605
|
|
|||
Loss on disposal of fixed assets
|
105
|
|
|
521
|
|
|
543
|
|
|||
Deferred tax benefit
|
(89,895
|
)
|
|
(23
|
)
|
|
(53,292
|
)
|
|||
Extinguishment of debt
|
—
|
|
|
5,380
|
|
|
—
|
|
|||
Gain on sale of businesses
|
—
|
|
|
(289,305
|
)
|
|
—
|
|
|||
Gain on sale of investment
|
—
|
|
|
—
|
|
|
(19,773
|
)
|
|||
Gain on remeasurement of equity investment
|
—
|
|
|
—
|
|
|
(22,597
|
)
|
|||
Reserve for excess or obsolete inventory
|
17,453
|
|
|
8,533
|
|
|
42,599
|
|
|||
Changes in contingent purchase price
|
(18,787
|
)
|
|
23,981
|
|
|
20,278
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable
|
9,180
|
|
|
30,144
|
|
|
103,100
|
|
|||
Inventory, net
|
6,511
|
|
|
(15,653
|
)
|
|
(69,318
|
)
|
|||
Prepaid expenses and other assets
|
534
|
|
|
569
|
|
|
(5,286
|
)
|
|||
Accounts payable
|
(17,222
|
)
|
|
(7,398
|
)
|
|
16,362
|
|
|||
Accrued expenses
|
31,526
|
|
|
(37,233
|
)
|
|
(39,501
|
)
|
|||
Deferred revenue
|
(13,757
|
)
|
|
1,568
|
|
|
8,386
|
|
|||
Payments on contingent purchase price
|
(52,543
|
)
|
|
(1,045
|
)
|
|
(78,900
|
)
|
|||
Other liabilities
|
(7,659
|
)
|
|
(11,446
|
)
|
|
549
|
|
|||
Net cash used in operating activities
|
(368,288
|
)
|
|
(323,309
|
)
|
|
(197,965
|
)
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|||
Purchases of available for sale securities
|
(131,560
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from sale of fixed assets
|
—
|
|
|
—
|
|
|
250
|
|
|||
Proceeds from sale of investment
|
—
|
|
|
—
|
|
|
19,773
|
|
|||
Proceeds from maturities and sales of available for sale securities
|
131,535
|
|
|
—
|
|
|
—
|
|
|||
Purchases of fixed assets
|
(4,525
|
)
|
|
(2,176
|
)
|
|
(2,555
|
)
|
|||
Payments for intangible assets
|
—
|
|
|
(10,000
|
)
|
|
(112,617
|
)
|
|||
Acquisition of business, net of cash acquired
|
—
|
|
|
—
|
|
|
(28,397
|
)
|
|||
Proceeds from sale of businesses
|
—
|
|
|
437,875
|
|
|
—
|
|
|||
Change in restricted cash
|
(478
|
)
|
|
(3,656
|
)
|
|
35
|
|
|||
Net cash (used in) provided by investing activities
|
(5,028
|
)
|
|
422,043
|
|
|
(123,511
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|||
Proceeds from issuances of common stock, net
|
48,621
|
|
|
33,776
|
|
|
95,198
|
|
|||
Payments on contingent purchase price
|
(10,523
|
)
|
|
(9,404
|
)
|
|
(157,601
|
)
|
|||
Proceeds from the issuance of convertible senior notes
|
—
|
|
|
402,500
|
|
|
400,000
|
|
|||
Repayments of convertible senior notes
|
(55,000
|
)
|
|
(323,225
|
)
|
|
—
|
|
|||
Purchase of capped call transactions related to convertible senior notes
|
—
|
|
|
(33,931
|
)
|
|
—
|
|
|||
Proceeds from settlement of bond hedges related to convertible senior notes
|
—
|
|
|
100,459
|
|
|
—
|
|
|||
Settlement of warrants
|
(2
|
)
|
|
(87,874
|
)
|
|
—
|
|
|||
Debt and equity issuance costs
|
—
|
|
|
(11,725
|
)
|
|
(12,769
|
)
|
|||
Purchase of shares of non-controlling interest
|
(167
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash (used in) provided by financing activities
|
(17,071
|
)
|
|
70,576
|
|
|
324,828
|
|
|||
Effect of exchange rate changes on cash
|
(89
|
)
|
|
(648
|
)
|
|
(920
|
)
|
|||
(Decrease) increase in cash and cash equivalents
|
(390,476
|
)
|
|
168,662
|
|
|
2,432
|
|
|||
Cash and cash equivalents at beginning of period
|
541,835
|
|
|
373,173
|
|
|
370,741
|
|
|||
Cash and cash equivalents at end of period
|
$
|
151,359
|
|
|
$
|
541,835
|
|
|
$
|
373,173
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|||
Interest paid
|
$
|
22,561
|
|
|
$
|
12,269
|
|
|
$
|
8,837
|
|
Taxes paid
|
$
|
575
|
|
|
$
|
36
|
|
|
$
|
114
|
|
Non-cash investing and financing activities
|
|
|
|
|
|
||||||
Issuance of common stock upon conversion of convertible notes
|
$
|
32,018
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Receipt of common stock upon settlement of 2017 Note hedge
|
$
|
40,015
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Issuance of common stock upon the exercise of the 2017 Warrants
|
$
|
1,638
|
|
|
$
|
—
|
|
|
$
|
—
|
|
•
|
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 Angiomax 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 Angiomax.
|
•
|
Fees-for-service.
The Company offers discounts to certain wholesalers, Cardinal Health Inc. 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 within
60
days after the end of each respective quarter. The Company’s fee-for-service accruals and allowances were
$0.9 million
and
$0.8 million
at
December 31, 2017
and
2016
, respectively.
|
|
Cash
Discounts
|
|
Returns
|
|
Chargebacks
|
|
Rebates
|
|
Fees-for-
Service
|
||||||||||
Balance at January 1, 2015
|
$
|
4,142
|
|
|
$
|
3,349
|
|
|
$
|
44,399
|
|
|
$
|
—
|
|
|
$
|
924
|
|
Allowances for sales during 2015
|
9,212
|
|
|
12,143
|
|
|
107,564
|
|
|
833
|
|
|
14,249
|
|
|||||
Actual credits issued for prior year’s sales
|
(3,927
|
)
|
|
(3,528
|
)
|
|
(40,419
|
)
|
|
—
|
|
|
(1,179
|
)
|
|||||
Actual credits issued for sales during 2015
|
(8,540
|
)
|
|
(3,221
|
)
|
|
(95,828
|
)
|
|
(733
|
)
|
|
(11,314
|
)
|
|||||
Balance at December 31, 2015
|
887
|
|
|
8,743
|
|
|
15,716
|
|
|
100
|
|
|
2,680
|
|
|||||
Allowances for sales during 2016
|
1,854
|
|
|
(1,424
|
)
|
|
36,197
|
|
|
(6
|
)
|
|
3,166
|
|
|||||
Actual credits issued for prior year’s sales
|
(887
|
)
|
|
(5,233
|
)
|
|
(15,610
|
)
|
|
(50
|
)
|
|
(2,655
|
)
|
|||||
Actual credits issued for sales during 2016
|
(1,573
|
)
|
|
(502
|
)
|
|
(34,408
|
)
|
|
(29
|
)
|
|
(2,365
|
)
|
|||||
Balance at December 31, 2016
|
281
|
|
|
1,584
|
|
|
1,895
|
|
|
15
|
|
|
826
|
|
|||||
Allowances for sales during 2017
|
1,746
|
|
|
4,439
|
|
|
17,395
|
|
|
271
|
|
|
3,085
|
|
|||||
Actual credits issued for prior year’s sales
|
(281
|
)
|
|
(1,464
|
)
|
|
(1,246
|
)
|
|
(15
|
)
|
|
(865
|
)
|
|||||
Actual credits issued for sales during 2017
|
(775
|
)
|
|
(220
|
)
|
|
(12,172
|
)
|
|
(126
|
)
|
|
(2,152
|
)
|
|||||
Balance at December 31, 2017
|
$
|
971
|
|
|
$
|
4,339
|
|
|
$
|
5,872
|
|
|
$
|
145
|
|
|
$
|
894
|
|
|
|
2017
|
|
2016
|
||||
|
|
(In thousands)
|
||||||
Raw materials
|
|
$
|
1,389
|
|
|
$
|
18,714
|
|
Work-in-progress
|
|
3,608
|
|
|
8,397
|
|
||
Finished goods
|
|
562
|
|
|
1,375
|
|
||
Total
|
|
$
|
5,559
|
|
|
$
|
28,486
|
|
|
Estimated
|
|
December 31,
|
||||||
|
Life (Years)
|
|
2017
|
|
2016
|
||||
|
|
|
(In thousands)
|
||||||
Furniture, fixtures and equipment
|
2-15
|
|
$
|
20,603
|
|
|
$
|
25,132
|
|
Computer software
|
2-5
|
|
3,524
|
|
|
3,722
|
|
||
Computer hardware
|
2-5
|
|
3,054
|
|
|
3,795
|
|
||
Leasehold improvements
|
2-15
|
|
33,064
|
|
|
30,702
|
|
||
|
|
|
60,245
|
|
|
63,351
|
|
||
Less: Accumulated depreciation
|
|
|
(42,991
|
)
|
|
(32,390
|
)
|
||
|
|
|
$
|
17,254
|
|
|
$
|
30,961
|
|
5.
|
Cash, Cash Equivalents and Restricted Cash
|
Upfront cash consideration
|
|
$
|
28,397
|
|
Fair value of existing equity interest in Annovation
|
|
25,886
|
|
|
Total cash consideration and fair value of existing equity interest
|
|
54,283
|
|
|
Fair value of contingent cash payment
|
|
18,000
|
|
|
Total purchase price
|
|
$
|
72,283
|
|
Assets acquired:
|
|
|
||
Cash and cash equivalents
|
|
$
|
1,482
|
|
Other current assets
|
|
692
|
|
|
IPR&D
|
|
65,000
|
|
|
Goodwill
|
|
24,530
|
|
|
Total assets
|
|
$
|
91,704
|
|
Liabilities assumed:
|
|
|
||
Accrued expenses
|
|
$
|
398
|
|
Contingent purchase price
|
|
18,000
|
|
|
Deferred tax liability, net
|
|
19,023
|
|
|
Total liabilities
|
|
$
|
37,421
|
|
Total cash price paid upon acquisition and fair value of existing equity interest
|
|
$
|
54,283
|
|
7
.
|
Intangible Assets and Goodwill
|
|
|
As of December 31, 2017
|
|
As of December 31, 2016
|
||||||||||||||||||||
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
||||||||||||
|
(In thousands)
|
|||||||||||||||||||||||
Amortizable intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Product licenses
(1)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
30,000
|
|
|
$
|
(3,013
|
)
|
|
$
|
26,987
|
|
Developed product rights
(2)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
250,000
|
|
|
(19,802
|
)
|
|
230,198
|
|
||||||
Total
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
280,000
|
|
|
$
|
(22,815
|
)
|
|
$
|
257,185
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Intangible assets not subject to amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
In-process research & development
|
|
—
|
|
|
—
|
|
|
—
|
|
|
65,000
|
|
|
—
|
|
|
65,000
|
|
||||||
Total intangible assets not subject to amortization:
|
|
—
|
|
|
—
|
|
|
—
|
|
|
65,000
|
|
|
—
|
|
|
65,000
|
|
||||||
Total intangible assets
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
345,000
|
|
|
$
|
(22,815
|
)
|
|
$
|
322,185
|
|
(1)
|
The Company amortizes intangible assets related to the product licenses over their expected useful lives.
|
(2)
|
The Company amortizes intangible assets related to developed product rights over the remaining life of the patents.
|
|
December 31,
2017 |
|
December 31,
2016 |
||||
|
(In thousands)
|
||||||
Balance at beginning of period
|
$
|
200,571
|
|
|
$
|
234,383
|
|
Allocation of goodwill to the Non-Core ACC Products
|
—
|
|
|
(33,812
|
)
|
||
Balance at end of period
|
$
|
200,571
|
|
|
$
|
200,571
|
|
8.
|
Accrued Expenses
|
|
2017
|
|
2016
|
||||
|
(In thousands)
|
||||||
Royalties
|
$
|
1,039
|
|
|
$
|
739
|
|
Research and development services
|
43,496
|
|
|
11,477
|
|
||
Compensation related
|
25,621
|
|
|
28,802
|
|
||
Product returns, rebates and other fees
|
5,363
|
|
|
2,336
|
|
||
Legal, accounting and other
|
6,162
|
|
|
4,821
|
|
||
Manufacturing, logistics and related fees
|
1,984
|
|
|
6,200
|
|
||
Sales and marketing
|
1,875
|
|
|
1,575
|
|
||
Interest
|
9,657
|
|
|
10,888
|
|
||
Total
|
$
|
95,197
|
|
|
$
|
66,838
|
|
•
|
during any calendar quarter commencing on or after September 30, 2016 (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 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 2023 Notes 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;
|
•
|
during any period after the Company has issued notice of redemption until the close of business on the scheduled trading day immediately preceding the relevant redemption date; or
|
•
|
upon the occurrence of specified corporate events.
|
Liability component
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
|
|
(in thousands)
|
||||||
Principal
|
|
$
|
402,500
|
|
|
$
|
402,500
|
|
Less: Debt discount, net
(1)
|
|
(90,552
|
)
|
|
(103,162
|
)
|
||
Net carrying amount
|
|
$
|
311,948
|
|
|
$
|
299,338
|
|
(1)
|
Included in the accompanying consolidated balance sheets within convertible senior notes (due 2023) and amortized to interest expense over the remaining life of the 2023 Notes using the effective interest rate method.
|
|
Years Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(in thousands)
|
||||||||||
Contractual interest expense
|
$
|
11,060
|
|
|
$
|
6,158
|
|
|
$
|
—
|
|
Amortization of debt discount
|
12,610
|
|
|
6,648
|
|
|
—
|
|
|||
Total
|
$
|
23,670
|
|
|
$
|
12,806
|
|
|
$
|
—
|
|
Effective interest rate of the liability component
|
7.5
|
%
|
|
7.5
|
%
|
|
—
|
%
|
•
|
during any calendar quarter commencing on or after March 31, 2015 (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 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 2022 Notes Indenture) per
$1,000
principal amount of 2022 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;
|
•
|
during any period after the Company has issued notice of redemption until the close of business on the scheduled trading day immediately preceding the relevant redemption date; or
|
•
|
upon the occurrence of specified corporate events.
|
Liability component
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
|
|
(In thousands)
|
||||||
Principal
|
|
$
|
399,997
|
|
|
$
|
400,000
|
|
Less: Debt discount, net
(1)
|
|
(62,747
|
)
|
|
(75,754
|
)
|
||
Net carrying amount
|
|
$
|
337,250
|
|
|
$
|
324,246
|
|
(1)
|
Included on the accompanying consolidated balance sheets within convertible senior notes (due 2022) and amortized to interest expense over the remaining life of the 2022 Notes using the effective interest rate method.
|
|
Years Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(In thousands)
|
||||||||||
Contractual interest expense
|
$
|
10,000
|
|
|
$
|
10,000
|
|
|
$
|
9,639
|
|
Amortization of debt discount
|
13,007
|
|
|
12,139
|
|
|
10,942
|
|
|||
Total
|
$
|
23,007
|
|
|
$
|
22,139
|
|
|
$
|
20,581
|
|
Effective interest rate of the liability component
|
6.50
|
%
|
|
6.50
|
%
|
|
—
|
%
|
Liability component
|
|
December 31,
2017 |
|
December 31,
2016 |
||||
|
|
(In thousands)
|
||||||
Principal
|
|
$
|
—
|
|
|
$
|
55,000
|
|
Less: Debt discount, net
(1)
|
|
—
|
|
|
(1,251
|
)
|
||
Net carrying amount
|
|
$
|
—
|
|
|
$
|
53,749
|
|
(1)
|
Included on the accompanying consolidated balance sheets within convertible senior notes (due 2017) and amortized to interest expense over the remaining life of the 2017 Notes using the effective interest rate method.
|
|
Years Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(In thousands)
|
||||||||||
Contractual interest expense
|
$
|
315
|
|
|
$
|
2,101
|
|
|
$
|
3,781
|
|
Amortization of debt discount
|
1,251
|
|
|
7,395
|
|
|
12,734
|
|
|||
Total
|
$
|
1,566
|
|
|
$
|
9,496
|
|
|
$
|
16,515
|
|
Effective interest rate of the liability component
|
6.02
|
%
|
|
6.02
|
%
|
|
6.02
|
%
|
10.
|
Stockholders’ Equity
|
11.
|
Share-Based Compensation
|
•
|
the 2013 Stock Incentive Plan (the 2013 Plan);
|
•
|
the 2009 Equity Inducement Plan;
|
•
|
the 2007 Equity Inducement Plan; and
|
•
|
the 2004 Stock Incentive Plan.
|
|
Number of Shares
|
|
Weighted-Average
Exercise Price
Per Share
|
|
Weighted-
Average
Remaining
Contractual
Term (Years)
|
|
Aggregate
Intrinsic Value
|
|||||
Balance at January 1, 2017
|
8,023,696
|
|
|
$
|
28.27
|
|
|
|
|
|
||
Granted
|
1,693,309
|
|
|
$
|
49.89
|
|
|
|
|
|
||
Exercised
|
(1,854,644
|
)
|
|
$
|
24.57
|
|
|
|
|
|
||
Forfeited and expired
|
(818,871
|
)
|
|
$
|
37.24
|
|
|
|
|
|
||
Outstanding, December 31, 2017
|
7,043,490
|
|
|
$
|
33.40
|
|
|
5.85
|
|
$
|
11,705,399
|
|
Vested and expected to vest, December 31, 2017
|
6,842,097
|
|
|
$
|
33.13
|
|
|
5.81
|
|
$
|
11,699,950
|
|
Exercisable, December 31, 2017
|
4,190,582
|
|
|
$
|
28.97
|
|
|
5.05
|
|
$
|
11,487,732
|
|
Available for future grant at December 31, 2017
|
3,202,401
|
|
|
|
|
|
|
|
|
|
|
Years Ended
December 31,
|
|||||||
|
2017
|
|
2016
|
|
2015
|
|||
Expected dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Expected stock price volatility
|
39.14
|
%
|
|
37.90
|
%
|
|
41.49
|
%
|
Risk-free interest rate
|
1.867
|
%
|
|
1.249
|
%
|
|
1.436
|
%
|
Expected option term (years)
|
5.00
|
|
|
4.93
|
|
|
5.01
|
|
|
Number of
Shares
|
|
Weighted Average
Grant-Date
Fair Value
|
|||
Balance at January 1, 2017
|
375,301
|
|
|
$
|
31.88
|
|
Awarded
|
196,462
|
|
|
50.51
|
|
|
Vested
|
(172,076
|
)
|
|
32.80
|
|
|
Forfeited
|
(30,359
|
)
|
|
44.03
|
|
|
Outstanding, December 31, 2017
|
369,328
|
|
|
$
|
40.37
|
|
12.
|
Earnings per Share
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(In thousands, except per share amounts)
|
||||||||||
Amounts attributable to The Medicines Company:
|
|
|
|
|
|
|
|
|
|||
(Loss) income from continuing operations
|
$
|
(607,695
|
)
|
|
$
|
20,564
|
|
|
$
|
(134,806
|
)
|
Loss from discontinued operations, net of tax
|
(100,678
|
)
|
|
(139,682
|
)
|
|
(217,950
|
)
|
|||
Net loss attributable to The Medicines Company
|
$
|
(708,373
|
)
|
|
$
|
(119,118
|
)
|
|
$
|
(352,756
|
)
|
|
|
|
|
|
.
|
|
|||||
Weighted average common shares outstanding, basic
|
72,356
|
|
|
69,909
|
|
|
66,809
|
|
|||
Plus: net effect of dilutive stock options, warrants, restricted common shares and shares issuable upon conversion of Notes
|
—
|
|
|
3,113
|
|
|
—
|
|
|||
Weighted average common shares outstanding, diluted
|
72,356
|
|
|
73,022
|
|
|
66,809
|
|
|||
|
|
|
|
|
|
||||||
Basic (loss) earnings per common share attributable to The Medicines Company:
|
|
|
|
|
|
||||||
(Loss) earnings from continuing operations
|
$
|
(8.40
|
)
|
|
$
|
0.29
|
|
|
$
|
(2.02
|
)
|
Loss from discontinued operations
|
(1.39
|
)
|
|
(2.00
|
)
|
|
(3.26
|
)
|
|||
Basic loss per share
|
$
|
(9.79
|
)
|
|
$
|
(1.71
|
)
|
|
$
|
(5.28
|
)
|
|
|
|
|
|
|
||||||
Diluted (loss) earnings per common share attributable to The Medicines Company:
|
|
|
|
|
|
||||||
(Loss) earnings from continuing operations
|
$
|
(8.40
|
)
|
|
$
|
0.28
|
|
|
$
|
(2.02
|
)
|
Loss from discontinued operations
|
(1.39
|
)
|
|
(1.91
|
)
|
|
(3.26
|
)
|
|||
Diluted loss per share
|
$
|
(9.79
|
)
|
|
$
|
(1.63
|
)
|
|
$
|
(5.28
|
)
|
13.
|
Income Taxes
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
(In thousands)
|
||||||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
4,859
|
|
|
$
|
—
|
|
|
$
|
(5
|
)
|
State
|
(31
|
)
|
|
(33
|
)
|
|
(182
|
)
|
|||
Foreign
|
1,757
|
|
|
(34
|
)
|
|
(229
|
)
|
|||
|
6,585
|
|
|
(67
|
)
|
|
(416
|
)
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
$
|
88,556
|
|
|
$
|
—
|
|
|
$
|
28,011
|
|
State
|
1,435
|
|
|
—
|
|
|
2,138
|
|
|||
Foreign
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
89,991
|
|
|
—
|
|
|
30,149
|
|
|||
Total benefit from (provision for) taxes
|
$
|
96,576
|
|
|
$
|
(67
|
)
|
|
$
|
29,733
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
(In thousands)
|
||||||||||
Domestic
|
$
|
(704,814
|
)
|
|
$
|
22,289
|
|
|
$
|
(163,772
|
)
|
International
|
543
|
|
|
(1,712
|
)
|
|
(757
|
)
|
|||
Total
|
$
|
(704,271
|
)
|
|
$
|
20,577
|
|
|
$
|
(164,529
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(In thousands)
|
||||||||||
Statutory rate applied to pre-tax (loss) income from continuing operations
|
$
|
(246,495
|
)
|
|
$
|
7,202
|
|
|
$
|
(57,589
|
)
|
(Deduct) add:
|
|
|
|
|
|
|
|
|
|||
State income taxes, net of federal benefit
|
(913
|
)
|
|
21
|
|
|
(1,273
|
)
|
|||
Foreign
|
53
|
|
|
442
|
|
|
287
|
|
|||
Revaluation of contingent purchase price
|
(5,366
|
)
|
|
(10,244
|
)
|
|
10,272
|
|
|||
Tax credits
|
(3,539
|
)
|
|
(967
|
)
|
|
(305
|
)
|
|||
Lobbying costs
|
—
|
|
|
—
|
|
|
35
|
|
|||
Meals and entertainment
|
372
|
|
|
605
|
|
|
810
|
|
|||
Uncertain tax positions
|
(1,635
|
)
|
|
(2,064
|
)
|
|
61
|
|
|||
Bargain purchase
|
—
|
|
|
—
|
|
|
(7,310
|
)
|
|||
Loss on extinguishment of debt
|
—
|
|
|
1,403
|
|
|
—
|
|
|||
Loss on ACC goodwill
|
—
|
|
|
11,834
|
|
|
—
|
|
|||
Excess stock option benefit
|
(4,589
|
)
|
|
—
|
|
|
—
|
|
|||
Change in federal tax rate due to the Tax Cuts and Jobs Act
|
126,502
|
|
|
—
|
|
|
—
|
|
|||
Other
|
785
|
|
|
(485
|
)
|
|
1,239
|
|
|||
Tax benefit of operating loss carryforwards
|
11,509
|
|
|
(105,045
|
)
|
|
—
|
|
|||
Valuation allowances
|
26,740
|
|
|
97,365
|
|
|
24,040
|
|
|||
Income tax benefit
|
$
|
(96,576
|
)
|
|
$
|
67
|
|
|
$
|
(29,733
|
)
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
|
(In thousands)
|
||||||
Deferred tax assets:
|
|
|
|
||||
Net operating loss carryforwards
|
$
|
235,852
|
|
|
$
|
230,775
|
|
Tax credits
|
20,096
|
|
|
20,973
|
|
||
Stock based compensation
|
19,611
|
|
|
28,268
|
|
||
Other
|
26,113
|
|
|
26,889
|
|
||
Total deferred tax assets
|
301,672
|
|
|
306,905
|
|
||
Valuation allowance
|
(239,536
|
)
|
|
(162,892
|
)
|
||
Total deferred tax assets net of valuation allowance
|
62,136
|
|
|
144,013
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Fixed assets
|
$
|
(568
|
)
|
|
$
|
(4,997
|
)
|
Intangible assets
|
(30,664
|
)
|
|
(81,877
|
)
|
||
Convertible debt
|
(30,904
|
)
|
|
(57,430
|
)
|
||
Indefinite lived intangible assets
|
—
|
|
|
(89,701
|
)
|
||
Total deferred tax liabilities
|
(62,136
|
)
|
|
(234,005
|
)
|
||
Net deferred tax liabilities
|
$
|
—
|
|
|
$
|
(89,992
|
)
|
Year of Expiration
|
|
Federal Net
Operating Loss Carryforwards |
|
Federal Research
and Development Tax Credit Carryforwards |
||||
|
|
(In thousands)
|
||||||
2027
|
|
$
|
6,256
|
|
|
$
|
840
|
|
2028
|
|
38,954
|
|
|
2,108
|
|
||
2029
|
|
4,755
|
|
|
1,149
|
|
||
2030
|
|
1,030
|
|
|
1,162
|
|
||
2031
|
|
605
|
|
|
3,097
|
|
||
2032
|
|
1,533
|
|
|
3,666
|
|
||
2033
|
|
37,209
|
|
|
3,178
|
|
||
2034
|
|
4,353
|
|
|
1,861
|
|
||
2035
|
|
195,416
|
|
|
752
|
|
||
2036
|
|
293,661
|
|
|
1,739
|
|
||
2037
|
|
423,531
|
|
|
3,515
|
|
||
|
|
$
|
1,007,303
|
|
|
$
|
23,067
|
|
|
Gross
Unrecognized
Tax Benefits
|
||
|
(In thousands)
|
||
Balance at January 1, 2015
|
$
|
8,022
|
|
Additions related to current year tax positions
|
61
|
|
|
Balance at December 31, 2015
|
8,083
|
|
|
Additions related to current year tax positions
|
193
|
|
|
Balance at December 31, 2016
|
6,018
|
|
|
Additions related to current year tax positions
|
708
|
|
|
Reductions for prior year tax positions
|
(2,843
|
)
|
|
Balance at December 31, 2017
|
$
|
3,883
|
|
14.
|
Fair Value Measurements
|
Level 1
|
Quoted prices in active markets for identical assets or liabilities. The Company’s Level 1 asset consists of money market investments.
|
Level 2
|
Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. 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 prices associated with the Company’s dispositions and business combinations, respectively. The fair value of certain development or regulatory milestone based contingent purchase prices was determined in a discounted cash flow framework by probability weighting the future contractual payment with management's assessment of the likelihood of achieving these milestones and present valuing them using a risk-adjusted discount rate. Certain sales milestone based payments were determined in a discounted cash flow framework where risk-adjusted revenue scenarios were estimated using Monte Carlo simulation models to compute contractual payments which were present valued using a risk-adjusted discount rate.
|
|
|
As of December 31, 2017
|
|
As of December 31, 2016
|
||||||||||||||||||||||||||||
|
|
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)
|
|
2017
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
|
2016
|
||||||||||||||||
|
|
(In thousands)
|
||||||||||||||||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash and cash equivalents
|
|
$
|
12,100
|
|
|
|
|
|
$
|
—
|
|
|
$
|
12,100
|
|
|
$
|
56,097
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
56,097
|
|
|
Total assets at fair value
|
|
$
|
12,100
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12,100
|
|
|
$
|
56,097
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
56,097
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Contingent purchase price
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19,650
|
|
|
$
|
19,650
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
31,832
|
|
|
$
|
31,832
|
|
Total liabilities at fair value
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19,650
|
|
|
$
|
19,650
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
31,832
|
|
|
$
|
31,832
|
|
|
|
Fair Value as of December 31, 2017
|
|
Valuation Technique
|
|
Unobservable Input
|
|
Range
(Weighted Average)
|
||
|
|
(In thousands)
|
|
|
|
|
|
|
||
Rempex:
|
|
|
|
|
|
|
|
|
||
Contingent purchase price: Event-based milestones
|
|
$
|
19,650
|
|
|
Probability-adjusted discounted cash flow
|
|
Probabilities of successes
|
|
18% - 90% (71%)
|
|
|
|
|
|
|
Period in which milestones are expected to be achieved
|
|
2018 - 2024
|
||
|
|
|
|
|
|
Discount rate
|
|
4.8% - 7.5%
|
|
|
Fair Value as of December 31, 2016
|
|
Valuation Technique
|
|
Unobservable Input
|
|
Range
(Weighted Average)
|
||
|
|
(In thousands)
|
|
|
|
|
|
|
||
Incline:
|
|
|
|
|
|
|
|
|
||
Contingent purchase price
|
|
$
|
1,269
|
|
|
Probability-adjusted discounted cash flow
|
|
Probabilities of successes
|
|
5%
|
|
|
|
|
|
|
Period in which milestones are expected to be achieved
|
|
2019
|
||
|
|
|
|
|
|
Discount rate
|
|
18%
|
||
Rempex:
|
|
|
|
|
|
|
|
|
||
Contingent purchase price: Event-based milestones
|
|
$
|
16,500
|
|
|
Probability-adjusted discounted cash flow
|
|
Probabilities of successes
|
|
18% - 95% (78%)
|
|
|
|
|
|
|
Discount rate
|
|
6.6% - 8.2%
|
||
Annovation:
|
|
|
|
|
|
|
|
|
||
Contingent purchase price
|
|
$
|
14,063
|
|
|
Probability-adjusted discounted cash flow
|
|
Probabilities of successes
|
|
9% - 50% (34%)
|
|
|
|
|
|
|
Period in which milestones are expected to be achieved
|
|
2018 - 2031
|
||
|
|
|
|
|
|
Discount rate
|
|
6.0% - 10.0%
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
|
(In thousands)
|
||||||
Balance at beginning of period
|
$
|
31,832
|
|
|
$
|
18,300
|
|
Payments
|
—
|
|
|
(10,449
|
)
|
||
Fair value adjustments to contingent purchase prices included in net loss
|
(12,182
|
)
|
|
23,981
|
|
||
Balance at end of period
|
$
|
19,650
|
|
|
$
|
31,832
|
|
15.
|
Restructuring
|
|
Balance as of January 1, 2017
|
|
Expenses,
Net
|
|
Cash
|
|
Noncash
|
|
Balance as of December 31, 2017
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Employee severance and other personnel benefits:
|
|
|
|
|
|
|
|
|
|
||||||||||
2017 Workforce reduction
|
$
|
—
|
|
|
$
|
5,897
|
|
|
$
|
(5,768
|
)
|
|
$
|
(129
|
)
|
|
$
|
—
|
|
2016 Workforce reduction
|
1,854
|
|
|
—
|
|
|
(1,038
|
)
|
|
(816
|
)
|
|
—
|
|
|||||
Total
|
$
|
1,854
|
|
|
$
|
5,897
|
|
|
$
|
(6,806
|
)
|
|
$
|
(945
|
)
|
|
$
|
—
|
|
|
Balance as of January 1, 2016
|
|
Expenses,
Net |
|
Cash
|
|
Noncash
|
|
Balance as of December 31, 2016
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Employee severance and other personnel benefits:
|
|
|
|
|
|
|
|
|
|
||||||||||
2016 Workforce reduction
|
$
|
—
|
|
|
$
|
17,162
|
|
|
$
|
(14,697
|
)
|
|
$
|
(611
|
)
|
|
$
|
1,854
|
|
Total
|
$
|
—
|
|
|
$
|
17,162
|
|
|
$
|
(14,697
|
)
|
|
$
|
(611
|
)
|
|
$
|
1,854
|
|
16.
|
Commitments and Contingencies
|
Contractual Obligations
(1) (2)
|
|
Less Than 1 Year
|
|
1-3 Years
|
|
3-5 Years
|
|
More Than 5 Years
|
|
Total
|
||||||||||
|
|
(In thousands)
|
||||||||||||||||||
Inventory related commitments
|
|
$
|
52,111
|
|
|
$
|
16,167
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
68,278
|
|
Research and development
|
|
71,115
|
|
|
68,387
|
|
|
34,508
|
|
|
30,409
|
|
|
204,419
|
|
|||||
Operating leases
|
|
7,185
|
|
|
15,029
|
|
|
15,428
|
|
|
27,928
|
|
|
65,570
|
|
|||||
Selling, general and administrative
|
|
3,924
|
|
|
1,379
|
|
|
—
|
|
|
—
|
|
|
5,303
|
|
|||||
Total contractual obligations
|
|
$
|
134,335
|
|
|
$
|
100,962
|
|
|
$
|
49,936
|
|
|
$
|
58,337
|
|
|
$
|
343,570
|
|
(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. It also does not include the long-term debt obligations. See Note
9
“Convertible Senior Notes” for further details.
|
(2)
|
This table includes commitments related to the Company’s infectious disease business which was sold on January 5, 2018 and the related commitments were assumed by Melinta. These commitments include
$68.3 million
of inventory related commitments,
$7.3 million
for research and development service agreements and
$1.8 million
for selling, general and administrative obligations. See Note 23 “Discontinued Operations” for further details.
|
•
|
$49.4 million
due to the former equityholders of Targanta and up to
$25.0 million
in additional payments to other third parties related to the Targanta transaction;
|
•
|
up to
$224.3 million
for the Rempex transaction;
|
•
|
up to
$170.0 million
for the Alnylam license and collaboration agreement with Alnylam; and
|
•
|
$2.2 million
for other transaction milestones.
|
17.
|
Employee Benefit Plan
|
18.
|
Segment and Geographic Information
|
|
Years Ended December 31,
|
|
|
|||||||||||||||||
|
2017
|
|
|
|
2016
|
|
|
|
2015
|
|
|
|||||||||
|
(In thousands)
|
|
|
|||||||||||||||||
Net revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
United States
|
$
|
37,131
|
|
|
82.9
|
%
|
|
$
|
131,572
|
|
|
91.9
|
%
|
|
$
|
275,118
|
|
|
93.4
|
%
|
Europe
|
7,239
|
|
|
16.2
|
%
|
|
9,331
|
|
|
6.5
|
%
|
|
16,745
|
|
|
5.7
|
%
|
|||
Other
|
419
|
|
|
0.9
|
%
|
|
2,258
|
|
|
1.6
|
%
|
|
2,684
|
|
|
0.9
|
%
|
|||
Total net revenue
|
$
|
44,789
|
|
|
|
|
|
$
|
143,161
|
|
|
|
|
|
$
|
294,547
|
|
|
|
|
|
Years Ended December 31,
|
||||||||||||
|
2017
|
|
|
|
2016
|
|
|
||||||
|
(In thousands)
|
||||||||||||
Long-lived assets:
|
|
|
|
|
|
|
|
||||||
United States
|
$
|
308,843
|
|
|
99.7
|
%
|
|
$
|
699,004
|
|
|
99.4
|
%
|
Europe
|
836
|
|
|
0.3
|
%
|
|
4,160
|
|
|
0.6
|
%
|
||
Total long-lived assets
|
$
|
309,679
|
|
|
|
|
|
$
|
703,164
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
Unrealized (gain) loss on available for sale securities
|
|
Total
|
||||||
|
|
(In thousands)
|
||||||||||
Balance at January 1, 2015
|
|
$
|
2,479
|
|
|
$
|
49
|
|
|
$
|
2,528
|
|
Other comprehensive income before reclassifications
|
|
1,445
|
|
|
—
|
|
|
1,445
|
|
|||
Total other comprehensive income
|
|
1,445
|
|
|
—
|
|
|
1,445
|
|
|||
Balance at December 31, 2015
|
|
$
|
3,924
|
|
|
$
|
49
|
|
|
$
|
3,973
|
|
Other comprehensive income before reclassifications
|
|
213
|
|
|
—
|
|
|
213
|
|
|||
Amounts reclassified from accumulated other comprehensive income
(1) (2)
|
|
(9,616
|
)
|
|
(49
|
)
|
|
(9,665
|
)
|
|||
Total other comprehensive loss
|
|
(9,403
|
)
|
|
(49
|
)
|
|
(9,452
|
)
|
|||
Balance at December 31, 2016
|
|
$
|
(5,479
|
)
|
|
$
|
—
|
|
|
$
|
(5,479
|
)
|
Other comprehensive income before reclassifications
|
|
296
|
|
|
|
|
|
296
|
|
|||
Total other comprehensive income
|
|
296
|
|
|
—
|
|
|
296
|
|
|||
Balance at December 31, 2017
|
|
$
|
(5,183
|
)
|
|
$
|
—
|
|
|
$
|
(5,183
|
)
|
(1)
|
Amounts were reclassified to other income in the accompanying consolidated statements of operations. There is generally no tax impact related to foreign currency translation adjustments, as earnings are considered permanently reinvested. In addition, there were no material tax impacts related to unrealized gains or losses on available for sale securities in the periods presented.
|
(2)
|
See Note 23, “Discontinued Operations,” for a discussion of this reclassification of foreign currency translation adjustment.
|
|
Three Months Ended
|
||||||||||||||||||||||||||||||
|
March 31, 2017
|
|
June 30, 2017
|
|
Sept. 30, 2017
|
|
Dec. 31, 2017
|
|
March 31, 2016
|
|
June 30, 2016
|
|
Sept. 30, 2016
|
|
Dec. 31, 2016
|
||||||||||||||||
|
|
|
(1)
|
|
|
|
(2)
|
|
|
|
(3)
|
|
|
|
|
||||||||||||||||
|
(In thousands, except per share data)
|
||||||||||||||||||||||||||||||
Total net revenues
|
$
|
17,465
|
|
|
$
|
10,861
|
|
|
$
|
7,868
|
|
|
$
|
8,595
|
|
|
$
|
46,075
|
|
|
$
|
48,573
|
|
|
$
|
31,084
|
|
|
$
|
17,429
|
|
Cost of product revenues
|
9,978
|
|
|
12,490
|
|
|
4,287
|
|
|
20,438
|
|
|
16,042
|
|
|
12,061
|
|
|
18,213
|
|
|
14,337
|
|
||||||||
Total operating expenses
|
76,879
|
|
|
393,195
|
|
|
71,129
|
|
|
168,682
|
|
|
104,248
|
|
|
120,817
|
|
|
51,881
|
|
|
88,296
|
|
||||||||
Loss from operations
|
(59,414
|
)
|
|
(382,334
|
)
|
|
(63,261
|
)
|
|
(160,087
|
)
|
|
(58,173
|
)
|
|
(72,244
|
)
|
|
(20,797
|
)
|
|
(70,867
|
)
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
(Loss) income from continuing operations attributable to The Medicines Company
|
$
|
(70,996
|
)
|
|
$
|
(370,065
|
)
|
|
$
|
(7,218
|
)
|
|
$
|
(159,416
|
)
|
|
$
|
(67,125
|
)
|
|
$
|
201,912
|
|
|
$
|
(31,444
|
)
|
|
$
|
(82,779
|
)
|
(Loss) income from discontinued operations, net of tax attributable to The Medicines Company
|
(31,674
|
)
|
|
(27,203
|
)
|
|
(22,957
|
)
|
|
(18,844
|
)
|
|
(25,324
|
)
|
|
(19,470
|
)
|
|
(54,815
|
)
|
|
(40,073
|
)
|
||||||||
Net (loss) income attributable to The Medicines Company
|
$
|
(102,670
|
)
|
|
$
|
(397,268
|
)
|
|
$
|
(30,175
|
)
|
|
$
|
(178,260
|
)
|
|
$
|
(92,449
|
)
|
|
$
|
182,442
|
|
|
$
|
(86,259
|
)
|
|
$
|
(122,852
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Diluted (loss) earnings per common share attributable to The Medicines Company:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
(Loss) earnings from continuing operations
|
$
|
(1.00
|
)
|
|
$
|
(5.15
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
(2.19
|
)
|
|
$
|
(0.97
|
)
|
|
$
|
2.78
|
|
|
$
|
(0.45
|
)
|
|
$
|
(1.17
|
)
|
(Loss) income from discontinued operations
|
(0.45
|
)
|
|
(0.38
|
)
|
|
(0.31
|
)
|
|
(0.26
|
)
|
|
(0.37
|
)
|
|
(0.27
|
)
|
|
(0.78
|
)
|
|
(0.57
|
)
|
||||||||
Diluted loss per share
|
$
|
(1.45
|
)
|
|
$
|
(5.53
|
)
|
|
$
|
(0.41
|
)
|
|
$
|
(2.45
|
)
|
|
$
|
(1.34
|
)
|
|
$
|
2.51
|
|
|
$
|
(1.23
|
)
|
|
$
|
(1.74
|
)
|
(1)
|
In June 2017, we commenced a voluntary discontinuation and withdrawal of Ionsys from the market and ceased related commercialization activities, with the regulatory authorizations for Ionsys remaining open. Concurrent with this market withdrawal, the Company commenced a workforce reduction, which resulted in the reduction of
57
employees, representing approximately
15%
of the Company’s workforce at that time. The Company recorded a pre-tax charge of approximately
$276.9 million
associated with the discontinuation and market withdrawal of Ionsys in the United States market.
|
(2)
|
In the fourth quarter of 2017, the Company decreased the carrying value of the contingent purchase price from the sale of the Hemostasis Business by
$63.0 million
as a result of the discontinuation of Raplixa by Mallinckrodt.
|
(3)
|
On June 21, 2016, the Company completed the sale of its Non-Core ACC Products pursuant to the purchase and sale agreement dated May 9, 2016 by and among the Company, Chiesi USA and Chiesi. As a result of this sale, the Company realized a gain on sale of business of
$288.3 million
.
|
|
(in thousands)
|
||
Sale price:
|
|
||
Cash
|
$
|
263,807
|
|
Contingent purchase price from sale of business
|
65,700
|
|
|
Total sale price
|
329,507
|
|
|
|
|
||
Assets:
|
|
||
Inventory
|
2,184
|
|
|
Intangibles
|
5,210
|
|
|
Goodwill
|
33,812
|
|
|
Total assets sold
|
41,206
|
|
|
|
|
||
Gain on sale of business
|
$
|
288,301
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(In thousands)
|
||||||||||
Net product revenues
|
$
|
34,622
|
|
|
$
|
24,673
|
|
|
$
|
14,460
|
|
Operating expenses:
|
|
|
|
|
|
||||||
Cost of product revenue
|
20,060
|
|
|
10,693
|
|
|
15,945
|
|
|||
Research and development
|
39,984
|
|
|
47,155
|
|
|
33,218
|
|
|||
Selling, general and administrative
|
74,346
|
|
|
106,670
|
|
|
52,643
|
|
|||
Total operating expenses
|
134,390
|
|
|
164,518
|
|
|
101,806
|
|
|||
Loss from operations
|
(99,768
|
)
|
|
(139,845
|
)
|
|
(87,346
|
)
|
|||
Other expense, net
|
(906
|
)
|
|
(19
|
)
|
|
212
|
|
|||
Loss from discontinued operations before income taxes
|
(100,674
|
)
|
|
(139,864
|
)
|
|
(87,134
|
)
|
|||
Provision (benefit) for income taxes
|
4
|
|
|
2
|
|
|
(10
|
)
|
|||
Loss from discontinued operations, net of tax
|
$
|
(100,678
|
)
|
|
$
|
(139,866
|
)
|
|
$
|
(87,124
|
)
|
|
December 31,
|
December 31,
|
||||
|
2017
|
2016
|
||||
|
(In thousands)
|
|||||
Assets:
|
|
|
||||
Accounts receivable, net
|
$
|
9,595
|
|
$
|
3,916
|
|
Inventory
|
41,412
|
|
42,411
|
|
||
Other receivables
|
2,740
|
|
4,259
|
|
||
Intangibles, net
|
282,398
|
|
—
|
|
||
Goodwill
|
55,057
|
|
—
|
|
||
Current assets held for sale
|
391,202
|
|
50,586
|
|
||
Intangibles, net
|
—
|
|
293,036
|
|
||
Goodwill
|
—
|
|
55,057
|
|
||
Total assets held for sale
|
$
|
391,202
|
|
$
|
398,679
|
|
|
|
|
||||
Liabilities:
|
|
|
||||
Accounts payable
|
$
|
1,127
|
|
$
|
7,872
|
|
Accrued expenses
|
22,945
|
|
21,686
|
|
||
Contingent purchase price – current
|
24,650
|
|
55,000
|
|
||
Deferred Revenue
|
723
|
|
2,467
|
|
||
Contingent purchase price – noncurrent
|
11,135
|
|
—
|
|
||
Current liabilities held for sale
|
60,580
|
|
87,025
|
|
||
Contingent purchase price – noncurrent
|
—
|
|
50,457
|
|
||
Total liabilities held for sale
|
$
|
60,580
|
|
$
|
137,482
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(In thousands)
|
||||||||||
Amortization from discontinued operations
|
$
|
10,638
|
|
|
$
|
17,858
|
|
|
$
|
6,798
|
|
Changes in contingent purchase price
|
(3,456
|
)
|
|
53,249
|
|
|
1
|
|
|||
Reserve for excess or obsolete inventory
|
(435
|
)
|
|
(2,066
|
)
|
|
4,228
|
|
|||
Payments on contingent purchase price
|
(63,066
|
)
|
|
(10,449
|
)
|
|
(18
|
)
|
|
Year Ended December 31,
|
||||||
|
2016
|
|
2015
|
||||
|
(In thousands)
|
||||||
Net product revenues
|
$
|
1,275
|
|
|
$
|
65,754
|
|
Operating expenses:
|
|
|
|
||||
Cost of product revenue
|
1,424
|
|
|
75,889
|
|
||
Research and development
|
90
|
|
|
7,568
|
|
||
Selling, general and administrative
|
542
|
|
|
560
|
|
||
Impairment
|
—
|
|
|
133,266
|
|
||
Total operating expenses
|
2,056
|
|
|
217,283
|
|
||
Income (loss) from operations
|
(781
|
)
|
|
(151,529
|
)
|
||
Gain from sale of business
|
1,004
|
|
|
—
|
|
||
Other expense, net
|
(39
|
)
|
|
(745
|
)
|
||
Income (loss) from discontinued operations before income taxes
|
184
|
|
|
(152,274
|
)
|
||
Benefit for income taxes
|
—
|
|
|
(21,448
|
)
|
||
Loss from discontinued operations, net of tax
|
$
|
184
|
|
|
$
|
(130,826
|
)
|
|
Year Ended December 31,
|
||||||
|
2016
|
|
2015
|
||||
|
(In thousands)
|
||||||
Depreciation from discontinued operations
|
$
|
—
|
|
|
$
|
371
|
|
Amortization from discontinued operations
|
—
|
|
|
42,278
|
|
||
Gain on sale of business
|
(1,004
|
)
|
|
—
|
|
||
Asset impairment charges
|
—
|
|
|
25,800
|
|
||
Reserve for excess or obsolete inventory
|
—
|
|
|
876
|
|
||
Change in contingent consideration obligation
|
—
|
|
|
8,743
|
|
||
Proceeds from sale of businesses
|
174,068
|
|
|
—
|
|
||
Capital expenditures
|
—
|
|
|
738
|
|
Number
|
|
Description
|
|
|
|
|
|
|
2.1#
|
|
|
|
2.2#†
|
|
|
|
2.3†
|
|
|
|
2.4#†
|
|
|
|
2.5#†
|
|
|
|
3.1
|
|
|
|
3.2
|
|
|
|
4.2
|
|
|
|
4.3
|
|
|
|
10.1†
|
|
|
|
10.2†
|
|
|
|
10.3†
|
|
|
|
10.4†
|
|
|
|
10.5†
|
|
|
|
10.6†
|
|
|
|
10.7†
|
|
|
|
10.8†
|
|
|
|
10.9†
|
|
|
|
10.10†
|
|
|
|
10.11†
|
|
|
|
10.12†
|
|
|
|
10.13†
|
|
|
|
10.14†
|
|
|
|
10.15†
|
|
|
|
10.16†
|
|
|
|
10.17†
|
|
|
|
10.18†
|
|
|
|
10.19†
|
|
|
|
10.20
|
|
|
|
10.21†
|
|
|
|
10.22†
|
|
|
|
10.23†
|
|
|
|
10.24
|
|
|
10.25
|
|
|
|
10.26†
|
|
|
|
10.27†
|
|
|
|
10.28*
|
|
|
|
10.29*
|
|
|
|
10.30*
|
|
|
|
10.31*
|
|
|
|
10.32*
|
|
|
|
10.33*
|
|
|
|
10.34*
|
|
|
|
10.35*
|
|
|
|
10.36*
|
|
|
|
10.37*
|
|
|
|
10.38*
|
|
|
|
10.39*
|
|
|
|
10.40*
|
|
|
|
10.41*
|
|
|
|
10.42*
|
|
|
10.43*
|
|
|
|
10.44*
|
|
|
|
10.45*
|
|
|
|
10.46*
|
|
|
|
10.47*
|
|
|
|
10.48*
|
|
|
|
10.49*
|
|
|
|
10.50*
|
|
|
|
10.51*
|
|
|
|
10.52*
|
|
|
|
10.53*
|
|
|
|
10.54*
|
|
|
|
10.55*
|
|
|
|
10.56
|
|
|
|
10.57
|
|
|
|
10.58
|
|
|
|
10.59
|
|
|
|
10.60
|
|
|
|
10.61
|
|
|
|
10.62
|
|
|
|
10.63
|
|
|
|
10.64
|
|
|
|
21
|
|
|
|
23.1
|
|
|
|
31.1
|
|
|
|
31.2
|
|
|
|
32.1
|
|
|
|
32.2
|
|
|
|
101
|
|
The following materials from The Medicines Company Annual Report on Form 10-K for the year ended December 31, 2017, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive (Loss) Income, (iv) the Consolidated Statements of Stockholders’ Equity, (v) the Consolidated Statements of Cash Flows, and (vi) 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.
|
|
|
|
|
|||
|
|
|
|
Section 1.01
|
Place of Meetings; Remote Communication
|
1
|
|
Section 1.02
|
Annual Meeting
|
1
|
|
Section 1.03
|
Notice of Business to be Brought Before an Annual Meeting
|
1
|
|
Section 1.04
|
Special Meetings
|
4
|
|
Section 1.05
|
Notice of Director Nominations
|
4
|
|
Section 1.06
|
Submission of Questionnaire, Representation and Agreement
|
7
|
|
Section 1.07
|
Additional Meeting Related Matters
|
7
|
|
Section 1.08
|
Notice of Meetings
|
8
|
|
Section 1.09
|
Voting List
|
8
|
|
Section 1.10
|
Quorum
|
8
|
|
Section 1.11
|
Adjournments
|
8
|
|
Section 1.12
|
Voting and Proxies
|
9
|
|
Section 1.13
|
Action at Meeting
|
9
|
|
Section 1.14
|
Conduct of Meetings
|
10
|
|
Section 1.15
|
No Action by Written Consent in Lieu of a Meeting
|
11
|
|
|
|||
|
|
|
|
Section 2.01
|
General Powers
|
11
|
|
Section 2.02
|
Number, Election and Qualification
|
11
|
|
Section 2.03
|
Classes of Directors
|
11
|
|
Section 2.04
|
Terms of Office
|
11
|
|
Section 2.05
|
Allocation of Directors Among Classes in the Event of Increases or Decreases in the Authorized Number of Directors
|
11
|
|
Section 2.06
|
Quorum
|
12
|
|
Section 2.07
|
Action at Meeting
|
12
|
|
Section 2.08
|
Removal
|
12
|
|
Section 2.09
|
Vacancies
|
12
|
|
Section 2.10
|
Resignation
|
12
|
|
Section 2.11
|
Chairman of the Board
|
12
|
|
Section 2.12
|
Regular Meetings
|
12
|
|
Section 2.13
|
Special Meetings
|
13
|
|
Section 2.14
|
Notice of Special Meetings
|
13
|
|
Section 2.15
|
Meetings by Telephone Conference Calls
|
13
|
|
Section 2.16
|
Action by Written Consent
|
13
|
|
Section 2.17
|
Committees
|
13
|
|
Section 2.18
|
Compensation of Directors
|
14
|
|
|
|||
|
|
|
|
Section 3.01
|
Titles
|
14
|
|
Section 3.02
|
Election
|
14
|
|
Section 3.03
|
Qualification
|
14
|
|
Section 3.04
|
Tenure
|
14
|
|
Section 3.05
|
Resignation and Removal
|
14
|
|
Section 3.06
|
Vacancies
|
15
|
|
Section 3.07
|
Chief Executive Officer
|
15
|
|
Section 3.08
|
Vice Presidents
|
15
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Section 3.09
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Secretary and Assistant Secretaries
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15
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Section 3.10
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Treasurer and Assistant Treasurers
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15
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Section 3.11
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Salaries
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16
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Section 4.01
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Issuance of Stock
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16
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Section 4.02
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Certificates of Stock
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16
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Section 4.03
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Transfers
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16
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Section 4.04
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Lost, Stolen or Destroyed Certificates
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17
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Section 4.05
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Record Date
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17
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Section 5.01
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Fiscal Year
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18
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Section 5.02
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Corporate Seal
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18
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Section 5.03
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Execution of Instruments
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18
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Section 5.04
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Waiver of Notice
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18
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Section 5.05
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Voting of Securities
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18
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Section 5.06
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Evidence of Authority
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18
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Section 5.07
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Certificate of Incorporation
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18
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Section 5.08
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Transactions with Interested Parties
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18
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Section 5.09
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Forum for Adjudication of Disputes
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19
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Section 5.10
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Severability
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20
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Section 5.11
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Pronouns
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20
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Section 6.01
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Amendments
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20
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A.
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MDCO and Distributor are parties to a Second Amended and Restated Distribution Agreement effective as of October 1, 2010, as amended by the First Amendment dated July 1, 2011, the Second Amendment dated September 1, 2011, the Third Amendment dated April 23, 2012, the Fourth Amendment dated April 29, 2013, the Fifth Amendment dated September 12, 2013, the Sixth Amendment dated March 1, 2014, and the Seventh Amendment dated March 5, 2015, and the Eighth Amendment dated April, 2016 (as amended, the “Agreement”);
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B.
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Under the Agreement, among other things, MDCO engaged Distributor to perform distribution services for certain of MDCO’s pharmaceutical products; and
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C.
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The Parties now wish to amend the Agreement in certain respects.
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1.
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Defined Terms
. Capitalized terms in this Amendment that are not defined in this Amendment have the meanings given to them in the Agreement. If there is any conflict between the Agreement and any provision of this Amendment, this Amendment will control.
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2.
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Exhibit B
. The Parties agree that Exhibit B to the Agreement is hereby deleted in its entirety and replaced with the attached Revised Exhibit B.
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5.
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No Other Changes
. Except as otherwise provided in this Amendment, the terms and conditions of the Agreement will continue in full force, nothing in the Amendment modifies any term or provision in the Agreement or the Continuing Guaranty.
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INTEGRATED COMMERCIALIZATION
SOLUTIONS, INC.
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THE MEDICINES COMPANY
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||
By:
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/s/ Peter Belden
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By:
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/s/ Daniel Tokich
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Name:
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Peter Belden
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Name:
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_
Daniel Tokich
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Title:
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President
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Title:
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VP Supply Chain and 3
rd
Party Operations
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NDC#:
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65293-001-01
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Drug Type:
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RX
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Sellable Package Size:
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Carton (10 single use vials)
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Dosage Form:
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250mg vial
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Current WAC Price*:
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$[***] per Carton, (*which may change from time to time at MDCO’s sole discretion)
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Case Pack Size
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Thirty (30) Cartons
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Shipping and Storage Requirements:
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20 to 25°C
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Product Name:
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ANGIOMAX® (bivalirudin) Nova Plus for Injection
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NDC#:
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65293-004-22
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Drug Type:
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RX
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Sellable Package Size:
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Carton (10 single use vials)
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Dosage Form:
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250mg vial
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Current WAC Price*:
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$[***] per Carton, (*which may change from time to time at MDCO’s sole discretion)
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Case Pack Size
|
Thirty (30) Cartons
|
Shipping and Storage Requirements:
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20 to 25°C
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Sellable Package Size:
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Carton (6 single use vials)
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Current WAC Price*
|
$[***] Carton, (*which may change from time to time at MDCO’s sole discretion)
|
Current WAC Price*
|
$[***] Carton, (*which may change from time to time at MDCO’s sole discretion)
|
Current WAC Price*
|
$[***] Carton, (*which may change from time to time at MDCO’s sole discretion)
|
|
8 Sylvan Way
Parsippany, NJ 07054 |
EX - 10.29
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Name of Subsidiary
|
Jurisdiction of Incorporation
or Organization
|
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Annovation BioPharma, Inc.
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Delaware
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Circomed, LLC
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Delaware
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Incline Therapeutics Europe Ltd.
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England and Wales
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Incline Therapeutics, Inc.
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Delaware
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MDCO Holdings C.V.
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The Netherlands
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MEDCO Brasil Participações Ltda.
|
Brazil
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Medicines Company (India) Private Limited
|
India
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The Medicines Company do Brasil Comercio de Medicamentos e Produtos Medicos Ltda.
|
Brazil
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The Medicines Company Holdings, Inc.
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Delaware
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The Medicines Company (Australia) Pty Limited
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Australia
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The Medicines Company (Canada) Inc.
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Canada
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The Medicines Company (Deutschland) GmbH
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Germany
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The Medicines Company (Hong Kong) Limited
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Hong Kong
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The Medicines Company (Italy) S.r.l.
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Italy
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The Medicines Company (Leipzig) GmbH
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Germany
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The Medicines Company (Netherlands) BV
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The Netherlands
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The Medicines Company (New Zealand) Limited
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New Zealand
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The Medicines Company (NL) B.V.
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The Netherlands
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The Medicines Company (San Diego), LLC.
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Delaware
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The Medicines Company (Schweiz) GmbH
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Switzerland
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The Medicines Company Services GmbH
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Switzerland
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The Medicines Company (Sweden) AB
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Sweden
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The Medicines Company UK Limited
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England and Wales
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The Medicines Company Ventures, Inc.
|
Delaware
|
(1)
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Registration Statement (Form S-3 ASR No. 333-190568),
|
(2)
|
Registration Statement (Form S-8 No. 333-116295) pertaining to the 2004 Stock Incentive Plan,
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(3)
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Registration Statement (Form S-8 No. 333-135460) pertaining to the 2004 Stock Incentive Plan,
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(4)
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Registration Statement (Form S-8 No. 333-148602) pertaining to the 2007 Equity Inducement Plan,
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(5)
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Registration Statement (Form S-8 No. 333-152105) pertaining to the Amended and Restated 2004 Stock Incentive Plan,
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(6)
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Registration Statement (Form S-8 No. 333-157499) pertaining to the 2009 Equity Inducement Plan,
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(7)
|
Registration Statement (Form S-8 No. 333-167895) pertaining to the Amended and Restated 2004 Stock Incentive Plan,
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(8)
|
Registration Statement (Form S-8 No. 333-167896) pertaining to the 2010 Employee Stock Purchase Plan,
|
(9)
|
Registration Statement (Form S-8 No. 333-189710) pertaining to the 2013 Stock Incentive Plan,
|
(10)
|
Registration Statement (Form S-8 No. 333-197986) pertaining to the 2013 Stock Incentive Plan,
|
(11)
|
Registration Statement (Form S-8 No. 333-206250) pertaining to the 2013 Stock Incentive Plan,
|
(12)
|
Registration Statement (Form S-3 ASR No. 333-209956), and
|
(13)
|
Registration Statement (Form S-8 No. 333-212920) pertaining to the 2010 Employee Stock Purchase Plan and the 2013 Stock Incentive Plan;
|
|
|
/s/
Clive A. Meanwell
|
|
|
Clive A. Meanwell
|
|
|
Chief Executive Officer
|
|
|
|
Dated:
|
March 1, 2018
|
|
|
|
/s/
William B. O'Connor
|
|
|
William B. O'Connor
|
|
|
Chief Financial Officer
|
|
|
|
Dated:
|
March 1, 2018
|
|
|
|
By:
|
/s/
Clive A. Meanwell
|
|
|
|
Clive A. Meanwell
|
|
|
|
Chief Executive Officer
|
|
|
|
|
Dated:
|
March 1, 2018
|
|
|
|
|
By:
|
/s/
William B. O'Connor
|
|
|
|
William B. O'Connor
|
|
|
|
Chief Financial Officer
|
|
|
|
|
Dated:
|
March 1, 2018
|
|
|