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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For The Quarterly Period Ended March 31, 2004

Commission File Number 000-31191

The Medicines Company
(Exact Name of Registrant as Specified in Its Charter)

Registrant's telephone number, including area code: (973) 656-1616

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

Yes ý    No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes ý    No o

Indicate the number of shares outstanding of each of the issuer's classes of Common Stock, as of the latest practicable date: As of April 30, 2004, there were 47,696,253 shares of Common Stock, $0.001 par value per share, outstanding.

THE MEDICINES COMPANY
TABLE OF CONTENTS

THE MEDICINES COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS

See accompanying notes to condensed consolidated financial statements.

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THE MEDICINES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

See accompanying notes to condensed consolidated financial statements.

2

THE MEDICINES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

See accompanying notes to condensed consolidated financial statements.

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1.     Nature of Business

        The Medicines Company (the Company) was incorporated in Delaware on July 31, 1996. The Company is a pharmaceutical company that specializes in acute hospital care products and is engaged in the acquisition, development and commercialization of late-stage development drugs or drugs approved for marketing. In December 2000, the U.S. Food and Drug Administration approved Angiomax® (bivalirudin), a direct thrombin inhibitor, for use as an anticoagulant in combination with aspirin in patients with unstable angina undergoing coronary angioplasty. The Company has concentrated its commercial sales and marketing resources on the United States hospital market, and revenues to date have been generated almost entirely from sales of Angiomax in the United States. In addition to Angiomax, the Company is currently developing two pharmaceutical products as potential acute hospital care products. The first of these, Clevelox™ (clevidipine), is an intravenous drug intended for the short-term control of blood pressure in patients undergoing cardiac surgery. The second potential product, cangrelor, is an anticoagulant that prevents platelet clotting factors from activating, which may have potential uses in coronary angioplasty and cardiac surgery.

2.     Summary of Significant Accounting Policies

Basis of Presentation

        The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, the accompanying financial statements include all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation of the Company's financial position, results of operations, and cash flows for the periods presented.

        The results of operations for the three-month period ended March 31, 2004 are not necessarily indicative of the results that may be expected for the entire fiscal year ending December 31, 2004. These condensed consolidated financial statements should be read in conjunction with the audited financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2003, filed with the Securities and Exchange Commission.

Use of Estimates

        The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash, Cash Equivalents and Available for Sale Securities

        The Company considers all highly liquid investments purchased with an original maturity at the date of purchase of three months or less to be cash equivalents. Cash and cash equivalents at March 31, 2004 consisted of $21.0 million in demand deposits and money market funds. Cash and cash equivalents at December 31, 2003 consisted of $30.6 million in demand deposits and money market funds and $12.8 million of corporate bonds with original maturities of less than three months. These investments are carried at cost, which approximates fair value.

        The Company considers securities with original maturities of greater than three months to be available for sale securities. Securities under this classification are recorded at fair market value and unrealized gains and losses are recorded as a separate component of stockholders' equity. The estimated fair value of the available for sale securities is determined based on quoted market prices or

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rates for similar instruments. The cost of debt securities in this category is adjusted for amortization of premium and accretion of discount to maturity.

        At March 31, 2004, the Company held available for sale securities with fair value totaling $106.9 million. These available for sale securities included various certificates of deposit, corporate debt securities and United States government agency notes, $40.5 million of which had original maturities of more than three months and up to one year and $66.4 million of which had original maturities of more than one year and up to two years. At December 31, 2003, the Company held available for sale securities with fair value totaling $92.5 million. These available for sale securities included various certificates of deposit, corporate debt securities and United States government agency notes, $37.0 million of which had original maturities of more than three months and up to one year and $55.5 million of which had original maturities of more than one year and up to two years.

Revenue Recognition

        The Company sells its products primarily to wholesalers and distributors, who, in turn, sell to hospitals. The Company does not recognize revenue from product sales until there is persuasive evidence of an arrangement, delivery has occurred, the price is fixed and determinable, the buyer is obligated to pay the Company, the obligation to pay is not contingent on resale of the product, the buyer has economic substance apart from the Company, the Company has no obligation to bring about sale of the product, the amount of returns can be reasonably estimated and collectibility is reasonably assured.

        The Company records allowances for product returns, rebates and discounts at the time of sale, and reports revenue net of such allowances. The Company must make significant judgments and estimates in determining these allowances. For instance:

•

The Company's wholesaler 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 allowance for product returns, the Company must estimate the likelihood that product sold to wholesalers might remain in their inventory to within six months of expiration and determine if it will be returned. The Company bases its estimates on information from wholesalers, historic patterns of returns, industry data and the expiration dates of product currently being shipped.



•

Certain hospitals purchasing the Company's products from wholesalers have the right to receive a discounted price and a volume-based rebate if they have a direct contract with the Company or participate in a group purchasing organization that has a contract with the Company. As a result, the Company must estimate the likelihood that product sold to wholesalers might be ultimately sold to a participating hospital. The Company bases its estimates on information from wholesalers and hospitals, industry data, historic patterns of discounts and customer rebate thresholds.

        If actual results differ from the Company's estimates, the Company will be required to make adjustments to these allowances in the future.

        Revenue from collaborative agreements with partners may include milestone payments. These payments are recorded as deferred revenue until contractual performance obligations have been satisfied, and they are recognized ratably over the term of these agreements. When the period of deferral cannot be specifically identified from the contract, the Company must estimate the period based upon other critical factors contained within the contract. The Company reviews these estimates at least annually, which could result in a change in the deferral period.

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Inventories

        Inventory is recorded upon the transfer of title from the Company's vendors. Inventory is stated at the lower of cost or market value. Angiomax bulk product is classified as raw materials and its costs are determined using a weighted average of acquisition costs. Work-in-progress costs of filling, finishing and packaging are recorded against specific product batches. Prior to FDA approval of Angiomax and its original manufacturing process in December 2000, the Company expensed all of these costs as research and development. The Company recorded as inventory any Angiomax bulk drug product manufactured according to its original manufacturing process to which the Company took title after FDA approval.

        Together with its contract-manufacturing partner, UCB Bioproducts S.A., the Company has developed a second-generation chemical synthesis process, the Chemilog process, for the manufacture of Angiomax bulk drug substance. In May 2003, the Company received FDA approval of this process. All Angiomax bulk drug product manufactured using the Chemilog process to which title had transferred to the Company prior to approval was expensed as research and development, and all bulk drug product manufactured after FDA approval of the Chemilog process has been and will be recorded as inventory upon transfer of title from the Company's vendors.

        The major classes of inventory were as follows:

Research and Development

        Expenditures for research and development costs are expensed as incurred.

Stock-Based Compensation

        Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation" encourages, but does not require, companies to record compensation costs for stock-based employee compensation plans at fair value. SFAS No. 148, "Accounting for Stock-Based Compensation—Transition and Disclosure" requires the disclosure of the impacts of SFAS No. 123 in quarterly reports. The Company has elected to account for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees."

        The following table illustrates the effect on net income/(loss) and earnings/(loss) per share if the Company had applied the fair value recognition and share based compensation costs provisions of SFAS No. 123 and SFAS No. 148 to stock-based employee compensation:

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        For purposes of the table above, the Company estimated the fair value of each option grant on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

        During the period from January 1, 2000 to September 30, 2000, the Company granted options to purchase 2,273,624 shares of the Company's common stock (Common Stock) at exercise prices below the estimated fair value of the Common Stock as of the date of grant of such options based on the price of the Common Stock in connection with the Company's initial public offering. The total deferred stock compensation associated with these options is approximately $17.3 million. The Company amortizes deferred stock compensation over the respective vesting periods of the individual stock options. Total deferred compensation is reduced when the associated options are cancelled prior to exercise. During the three months ended March 31, 2004, cancellation of options that had not been exercised resulted in a reduction in the total deferred stock compensation of approximately $18,430. During the three months ended March 31, 2003, cancellation of options that had not been exercised resulted in a reduction in the total deferred stock compensation of approximately $0.1 million.

        Included in the results of operations is deferred stock compensation expense associated with these options of $0.4 million for the three months ended March 31, 2004, and $0.6 million the three months ended March 31, 2003. We expect to record amortization expense for the remaining deferred stock compensation associated with these options of approximately $0.3 million for the remainder of 2004 assuming the continued vesting of the associated options.

        In May 2003, the Company granted options to a non-employee consultant to purchase 50,000 shares at an exercise price based on the fair market value of Common Stock on the date of the consulting agreement. These options were valued utilizing the Black-Scholes option-pricing model. Included in selling, general and administrative expenses in the results of operations for the three

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months ended March 31, 2004 was $0.1 million of non-cash stock compensation expense associated with these options. These options will be revalued and expensed over the two months remaining of their vesting term.

        During the three months ended March 31, 2004, there were 171,811 shares of Common Stock issued in connection with the exercise of stock options and purchases under the 2000 Employee Stock Purchase Plan.

3.    Net Income/(Loss) per Share

        The following table sets forth the computation of basic and diluted net income/(loss) per share for the three months ended March 31, 2004 and 2003.

        As of March 31, 2004, there were options to purchase 5,077,697 shares of Common Stock and warrants to purchase 795,432 shares of Common Stock outstanding. These options and warrants have been included in the computation of diluted net income per share for the three months ended March 31, 2004. The number of dilutive Common Stock equivalents was calculated using the treasury stock method. As of March 31, 2003, there were 4,967,107 options and 805,146 warrants to purchase shares of Common Stock outstanding. The Company has not included the dilutive effects of such options and warrants for the three months ended March 31, 2003, as the effects would have been antidilutive.

4.    Comprehensive Income/(Loss)

        Comprehensive income and losses are primarily comprised of net income/(loss) and unrealized gain/(loss) on marketable securities and currency translation adjustments. Comprehensive income/(loss) for the three month ended March 31, 2004 and March 31, 2003 are detailed below.

5.    Litigation and related costs

       In November 2003, the Company received a notice from the Equal Employment Opportunity Commission, or EEOC, that a current employee had filed a Charge of Discrimination with the EEOC alleging that the Company had engaged in sexual discrimination and sexual harassment in violation of Title VII of the Civil Rights Act of 1964 and the New Jersey Law Against Discrimination. In March 2004, the Company reached a settlement with the employee, in which we agreed to financial terms without admitting any of the facts of the complaint. The associated legal costs and settlement expenses are included in selling, general and administrative expense in the condensed consolidated statement of operations for the three months ended March 31, 2004.

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Item 2—Management's Discussion and Analysis of Financial Condition and Results of Operations

        You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and accompanying notes in this quarterly report. In addition to the historical information, the discussion in this quarterly report contains certain forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated by the forward-looking statements due to factors including, but not limited to, those set forth under "Factors That May Affect Future Results" below.

Overview

        We are a pharmaceutical company that specializes in acute hospital care with growing revenue from sales of our first product, Angiomax® (bivalirudin). Angiomax is a direct thrombin inhibitor that was approved by the FDA in December 2000 for use as an anticoagulant in combination with aspirin in patients with unstable angina undergoing coronary angioplasty. We began selling the product in the United States in January 2001. Our revenues to date have been generated almost entirely from sales of Angiomax in the United States.

        We focus on increased use of Angiomax by existing hospital customers, as well as penetration to new hospitals, to evaluate our operating performance. Since the announcement of the results of our REPLACE-2 clinical trial in November 2002, additional hospitals have granted Angiomax formulary approval and hospital demand for the product has increased, which are critical elements of our ability to increase revenues. In the first quarter of 2004, based on data from a third-party industry source, the number of hospitals purchasing Angiomax increased by approximately 7% as compared to the fourth quarter of 2003 and the number of hospitals purchasing four or more boxes of Angiomax increased by approximately 11% as compared to the fourth quarter of 2003.

        Since our inception we have generated significant losses, although we were profitable for the second consecutive quarter in the first quarter of 2004. Most of our expenditures to date have been for research and development activities and selling, general and administrative expenses. Research and development expenses represent costs incurred for product acquisition, clinical trials, activities relating to regulatory filings and manufacturing development efforts. We outsource our clinical trials and manufacturing development activities to independent organizations to maximize efficiency and minimize our internal overhead. We expense our research and development costs as they are incurred. Selling, general and administrative expenses consist primarily of salaries and related expenses, general corporate activities and costs associated with promotion and marketing activities.

        We expect to continue to spend significant amounts on the development of our products in the future. For the remainder of 2004, we plan to continue to invest in clinical studies to expand the use of Angiomax and to develop Clevelox. In addition, we plan to invest in the manufacturing development of cangrelor. We also plan to continue our sales and marketing programs to educate and inform physicians, nurses, pharmacists and other medical decision-makers about the benefits of Angiomax. In light of these activities, as well as our plan to continue to evaluate possible acquisitions of development-stage or approved products that would fit within our growth strategy, we will likely need to generate greater revenues to maintain profitability.

        We have accrued for U.S. alternative minimum taxes, which could apply if we achieve profitability on an annual basis in 2004, state taxes based on net worth and some income taxes in international jurisdictions. At December 31, 2003, net operating losses available to offset future taxable income for federal income tax purposes were approximately $235.2 million. If not utilized, federal net operating loss carryforwards will expire at various dates beginning in 2011 and ending in 2023. We have not recognized the potential tax benefit of our net operating losses in our balance sheets or statements of operations. The future utilization of our net operating loss carryforwards may be limited based upon

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changes in ownership pursuant to regulations promulgated under the Internal Revenue Code of 1986, as amended.

Application of Critical Accounting Policies

        The discussion and analysis of our financial condition and results of operations is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect our reported assets and liabilities, revenues and expenses, and other financial information. Actual results may differ significantly from these estimates under different assumptions and conditions. In addition, our reported financial condition and results of operations could vary due to a change in the application of a particular accounting standard.

        We regard an accounting estimate or assumption underlying our financial statements as a "critical accounting estimate" where:

•

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.

        Our significant accounting policies are more fully described in the Notes to Unaudited Condensed Consolidated Financial Statements section of this quarterly report on Form 10-Q and Note 2 of the Notes to Consolidated Financial Statements in our annual report on Form 10-K for the year ended December 31, 2003. Not all of these significant accounting policies, however, fit the definition of "critical accounting estimates." We have discussed our accounting policies with the audit committee of our board of directors, and we believe that our estimates relating to revenue recognition and inventory described under the caption "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Application of Critical Accounting Policies" in our annual report on Form 10-K for the year ended December 31, 2003, fit the definition of "critical accounting estimates."

Results of Operations

Three Months Ended March 31, 2004 and 2003

        Net Revenue.    Net revenue for the three months ended March 31, 2004 increased 87% to $31.3 million as compared to $16.7 million for the three months ended March 31, 2003. Virtually all of the revenue in both periods was from U.S. sales of Angiomax. We believe that the growth in 2004 has been due primarily to increased use of Angiomax by existing hospital customers, adoption of Angiomax by new hospital customers and higher prices.

        Cost of Revenue.    Cost of revenue for the three months ended March 31, 2004 was $4.0 million, or 13% of net revenue, compared to $6.3 million, or 37% of net revenue, for the three months ended March 31, 2003. Cost of revenue for the three months ended March 31, 2004 consisted of expenses in connection with the manufacture of Angiomax that was sold during the period, which represented 21% of the 2004 cost of revenue, royalty expenses under our agreement with Biogen Idec, Inc. (Biogen), which represented 52% of the 2004 cost of revenue, and the logistics costs of selling Angiomax, such as distribution, storage, and handling, which represented 27% of the 2004 cost of revenue. Cost of revenue for the three months ended March 31, 2003 consisted of expenses in connection with the manufacture of the Angiomax sold, which represented 70% of the 2003 cost of revenue, royalty expenses under our agreement with Biogen, which represented 20% of the 2003 cost of revenue, and the logistics costs of selling Angiomax, which represented 10% of the 2003 cost of revenue.

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        Early in 2003, we took delivery of drug material manufactured using the Chemilog process. Because this material was manufactured prior to FDA approval of the Chemilog process, we expensed all costs of manufacturing as research and development. This process was approved by the FDA on May 23, 2003, and we are recording all costs of manufacturing Angiomax incurred after May 23, 2003 as inventory.

        In the first quarter of 2004, we sold mostly Angiomax produced using the Chemilog process whose cost of manufacturing was previously expensed. As a result, our cost of manufacturing as a percentage of net revenue decreased substantially in the first quarter of 2004 versus the first quarter of 2003, when we sold Angiomax produced using the original manufacturing process, whose cost had not been previously expensed. Late in the first quarter of 2004, we sold a small amount of Angiomax produced using the Chemilog process to which we took title after FDA approval of the process. In the second quarter of 2004 and for the foreseeable future we expect to sell Angiomax produced using the Chemilog process that has not been previously expensed, which will result in an increase in our cost of manufacturing as a percentage of net revenue.

        Research and Development Expenses.    The funding for Angiomax has represented and will continue to represent a significant portion of our research and development spending. Approximately 79% of our research and development expenses for the three months ended March 31, 2004 and 72% of our research and development expenses for the three months ended March 31, 2003 related to Angiomax. For the three months ended March 31, 2004 and 2003, research and development expenses relating to Angiomax included the costs of clinical trials and infrastructure. In addition, for the three months ended March 31, 2003, Angiomax manufacturing development costs included $1.1 million for bulk Chemilog drug product.

        For the three months ended March 31, 2004, research and development expenses relating to Clevelox, which represented 20% of our total research and development expenses, consisted of expenses in connection with Phase 2 and Phase 3 clinical trials that commenced in the fourth quarter of 2003 in patients undergoing cardiac surgery. Research and development expenses for the three months ended March 31, 2003 relating to Clevelox represented 25% of total research and development expenses and included a $1.0 million license fee to AstraZeneca and manufacturing development expenses. We did not incur any direct expenses for the three months ended March 31, 2004 and 2003 relating to cangrelor.

        Research and development expenses increased 34% to $9.8 million for the three months ended March 31, 2004, from $7.3 million for the three months ended March 31, 2003. The increase in research and development expenses was primarily due to a net $2.8 million increase of Angiomax clinical trial costs in 2004, reflecting a $3.0 million increase in costs for ACUITY, our study of Angiomax in patients presenting to the emergency department with acute coronary syndromes, an increase of $0.7 million in infrastructure expenses, mostly related to an increase in headcount, offset in part by $1.0 million in lower manufacturing development costs.

        The following table identifies for each of our major research and development projects, our spending for the three months ended March 31, 2004 and 2003. Spending for past periods is not necessarily indicative of spending in future periods.

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Major Research and Development Projects

        We currently plan to spend approximately $49 million to $52 million on research and development in 2004, of which approximately 80% is planned for Angiomax.

        Angiomax.    We have a number of clinical trial programs currently underway, or about to commence, for expanding the applications of Angiomax for use as an intravenous anticoagulant in the treatment of arterial thrombosis. As of the date of this quarterly report, we are conducting:

•

a Phase 2/3 trial program studying the use of Angiomax as an anticoagulant in patients undergoing coronary artery bypass graft surgery, or CABG, with and without the use of a bypass pump, and in treatment of patients with an clinical condition known as heparin-induced thrombocytopenia and thrombosis syndrome, or HIT/HITTS, who were undergoing CABG, with and without the use of a bypass pump;



•

a randomized Phase 3 trial called ACUITY to study the use of Angiomax in patients presenting to the emergency department with coronary syndromes who may be medically managed or ultimately treated in the catheterization laboratory or operating room; and



•

a Phase 2 trial program to study the use of Angiomax in neonates and infants up to six months old with active thrombosis.

        We also completed three Phase 4 programs during the three months ended March 31, 2004, two of which investigated the use of Angiomax with drug-eluting stents and one that investigated Angiomax in patients undergoing percutaneous peripheral angioplasties.

        Clevelox.    We have commenced a Phase 2 clinical trial comparing Clevelox with nitroglycerin, a drug that is typically used to control high blood pressure in patients undergoing cardiac surgery. We have also commenced a Phase 3 clinical trial program in cardiac surgery.

        We cannot reasonably estimate or know the nature, timing and estimated costs of the efforts necessary to complete the development of, or the period in which material net cash inflows are expected to commence from, any of our product candidates due to the numerous risks and uncertainties associated with developing drugs, including the uncertainty of:

•

the scope, rate of progress and cost of our clinical trials and other research and development activities;



•

the financial contributions of our third-party distributors to the costs of our clinical trials;



•

future clinical trial results;



•

the terms and timing of any collaborative, licensing and other arrangements that we may establish;

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•

the cost and timing of regulatory approvals;



•

the cost and timing of establishing sales, marketing and distribution capabilities;



•

the cost of establishing clinical and commercial supplies of our product candidates;



•

the effect of competing technological and market developments; and



•

the cost of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights.

        Selling, General and Administrative Expenses.    Selling, general and administrative expenses for the three months ended March 31, 2004 increased 39% to $13.6 million from $9.8 million for the three months ended March 31, 2003. The increase in selling, general and administrative expenses of $3.8 million in the 2004 period was primarily due to increased headcount, Angiomax promotion expenses and legal costs, including costs of settlement, relating to an Equal Employment Opportunity Commission complaint.

        Non-cash Stock Compensation.    We amortize the deferred stock compensation that was recorded in 2000 over the respective vesting periods of the individual stock options. We recorded amortization expense for such deferred compensation of approximately $0.4 million and $0.6 million for the three months ended March 31, 2004 and 2003, respectively. We expect to record additional amortization expense for the deferred compensation associated with these options of approximately $0.3 million in 2004. The amortization expense is included in our operating expenses in the consolidated statements of operations.

        In May 2003, we granted options to a non-employee consultant to purchase 50,000 shares at an exercise price based on the market value of our common stock on the date of the consulting agreement. We recorded $0.1 million in non-cash stock compensation expense during the three months ended March 31, 2004 associated with these options. The remaining unvested options will be revalued, utilizing the Black-Scholes option pricing model, and expensed over the remaining two months of their one-year vesting term.

        Other Income.    Other income for the three months ended March 31, 2004, which is almost completely comprised of interest income, increased 175% to $0.5 million from $0.2 million for the three months ended March 31, 2003. The increase of $0.3 million was primarily due to higher cash and available for sale securities balances attributable to our public offering in 2003.

Liquidity and Capital Resources

        Sources of Liquidity.    Since our inception, we have financed our operations through the sale of common and preferred stock, sales of convertible promissory notes and warrants, interest income and revenues from sales of Angiomax. We experienced our second consecutive quarterly profit during the three months ended March 31, 2004. We had $127.9 million in cash, cash equivalents and available for sale securities at March 31, 2004.

        In March 2003, we received approximately $91.5 million in net proceeds from the sale of 5.6 million shares of our Common Stock in a public offering, at a price of $17.50 per share.

        Cash Flows.    As of March 31, 2004, we had $21.0 million in cash and cash equivalents, as compared to $43.4 million as of December 31, 2003. Our major uses of cash the three months ended March 31, 2004 include net cash used for operating activities of $9.4 million and net cash used in investing activities of $15.0 million, which was offset by $2.0 million received from employee stock option exercises.

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        We used net cash of $9.4 million in operating activities during the three months ended March 31, 2004. Cash provided by operations consisted of net income of $4.2 million, approximately $1.0 million of non-cash items including non-cash stock compensation expense, depreciation on fixed assets and amortization of premium on available for sale securities and an increase of $0.5 million in accrued expenses. These cash sources, were more than offset by cash used to fund increases in accounts receivable of $9.5 million, attributable to the timing of cash receipts from our wholesaler customers and the growth in our inventory of $2.1 million, relating to purchases of Angiomax bulk drug product from our contract manufacturer. We also used cash to fund the decreases in accounts payable of $3.2 million and prepaid expenses of $0.5 million.

        During the three months ended March 31, 2004, we used $15.0 million in cash in net investing activities, which consisted principally of the purchase and reinvestment of available for sale securities.

        Funding Requirements.    We expect to devote substantial resources to our research and development efforts and to our sales, marketing and manufacturing programs associated with the commercialization of our products. Our funding requirements will depend on numerous factors including:

•

the extent to which Angiomax is commercially successful;



•

the progress, level and timing of our research and development activities related to our clinical trials with respect to Angiomax, Clevelox and cangrelor;



•

the cost and outcomes of regulatory reviews;