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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2003

Commission File No. 0-19312

MEDAREX, INC.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (609) 430-2880

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

Securities registered pursuant to Section 12(g) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

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

Indicate by checkmark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes x No ¨

As of February 27, 2004, the registrant had outstanding 79,087,401 shares of Common Stock, $0.01 par value (“Common Stock”), which is registrant’s only class of Common Stock.

The aggregate market value of the voting stock held by non-affiliates of the Registrant was approximately $448.9 million as of June 30, 2003, based upon the closing sale price on the NASDAQ National Market reported for such date. The determination of affiliate status for the purposes of this calculation is not necessarily a conclusive determination for other purposes. The calculation excludes approximately 8,561,734 shares held by directors, officers and stockholders whose ownership exceeded 5% of the Registrant’s outstanding Common Stock as of June 30, 2003. Exclusion of these shares should not be construed to indicate that such person controls, is controlled by or is under common control with the Registrant.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive Proxy Statement for the Annual Meeting of Shareholders to be held on May 19, 2004 (the “Proxy Statement”) are incorporated by reference in Parts II and III of this Report. Other documents incorporated by reference in this report are listed in the Exhibit Index.

MEDAREX, INC.

TABLE OF CONTENTS

FORM 10-K

PART I

In this Annual Report, “Medarex” or the “company,” “we,” “us” and “our” refer to Medarex, Inc., and our wholly owned subsidiaries. This Annual Report contains forward-looking statements that involve risk and uncertainties. Our actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” as well as those discussed elsewhere in this document. Actual events or results may differ materially from those discussed in this Annual Report.

Medarex^®, HuMAb-Mouse^®, GenPharm^®, KM-Mouse^®, UltiMAb Human Antibody Development System^® and Trans-Phage Technology^® are registered U.S. trademarks of Medarex, Inc. UltiMAb^™ and Ultra-Potent Toxin^™ are trademarks of Medarex, Inc. All other company names, registered trademarks, trademarks and service marks included in this Annual Report are trademarks, registered trademarks, service marks or trade names of their respective owners.

Overview

We are a biopharmaceutical company focused on the discovery and development of fully human antibody-based therapeutic products. We believe that our UltiMAb Human Antibody Development System^® enables us to rapidly create and develop fully human antibodies for a wide range of diseases, including cancer, inflammation, autoimmune disease and other life-threatening and debilitating diseases.

We believe that antibodies are proven candidates for therapeutic products. To date, the United States Food and Drug Administration, or FDA, has approved 17 antibody-based therapeutic products for sale in the United States. In 2003, 15 of these products generated aggregate worldwide sales in excess of $5.0 billion. We intend to participate in this market and, to this end, are developing an expanding pipeline of therapeutic antibody products generated through the use of our proprietary UltiMAb^™ human antibody development technology.

Currently, 17 antibody products derived from our UltiMAb human antibody development technology are in human clinical trials, or have had regulatory applications submitted for such trials. These antibodies are designed to treat a wide range of diseases, such as cancer (including various lymphomas), rheumatoid arthritis and other inflammatory and autoimmune diseases. Five of these antibody products are fully owned by Medarex: MDX-010 (Phase II clinical trials), MDX-060 (Phase II clinical trials), MDX-070 (Phase I/II clinical trials), MDX-214 (Phase I/II clinical trials) and MDX-1307 (Phase I clinical trials), for the treatment of cancer, lymphoma and/or HIV. One antibody product for autoimmune disease, MDX-018 (Phase I/II clinical trials), is being jointly developed with our licensing partner, Genmab A/S, and four are being developed separately by Genmab: HuMax^™-CD4 (Phase II clinical trials) for cutaneous T-cell lymphoma, HuMax-IL15 (Phase II clinical trials) for rheumatoid arthritis, HuMax-EGFr (Phase I/II clinical trials) for head and neck cancer and HuMax-CD20 (Phase I/II clinical trials) for non-Hodgkin’s lymphoma. Additionally, our licensing partners, including Novartis Pharma AG and Centocor, Inc. (a subsidiary of Johnson & Johnson), among others, are developing a total of seven antibody products for inflammatory and/or autoimmune diseases and cancer that are currently in early clinical trials. We and our partners also have a number of product candidates in preclinical development. The preceding information regarding the clinical status of antibody products is based on our and our partners’ public disclosures and other publicly available information.

As of March 1, 2004, we have more than 45 partnerships with pharmaceutical and biotechnology companies to jointly develop and commercialize products or to enable other companies to use our proprietary technology in their development of new therapeutic products. These companies include industry leaders such as Amgen, Inc., Centocor, Pfizer, Inc., Eli Lilly & Company, Human Genome Sciences, Inc., Abbott Laboratories, Novartis, Novo Nordisk A/S and Schering AG. Some of our partnerships are licensing partnerships, with the potential to pay us licensing fees, milestone payments and royalty payments; others are collaborative partnerships and provide for the sharing of product development costs, as well as any revenues, expenses and profits associated with products arising under the collaboration.

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In addition to our UltiMAb Human Antibody Development System, we have considerable experience in preclinical and clinical development as well as in manufacturing antibodies for clinical trials. Our existing manufacturing facility in Annandale, New Jersey currently has the capacity to undertake up to 15 new antibody projects per year for clinical development purposes, meeting our near-term production demands. We have assembled a team of experienced scientific, production, clinical and regulatory personnel to facilitate the discovery, development and commercialization of antibody-based products for us and for our partners. We intend to add sales and marketing and additional manufacturing capabilities as needed.

Our business strategy is to build one of the industry’s largest clinical pipelines of human antibody-based therapeutics for the treatment of cancer and other life-threatening and debilitating diseases. To this end, we intend to capitalize on the value of our own human antibody products by developing them, ourselves or with partners, through late stage clinical trials and/or regulatory approval. We believe that this will allow us to retain substantial commercial rights or profit sharing opportunities with regard to these products. In addition, we are expanding our number of partnerships, which we believe provides us with the opportunity to participate in the development and commercialization of substantially more product candidates than we could using only our own resources.

Scientific Background

Antibodies are natural proteins produced in the human body by B cells and serve as an important defense against disease. Human B cells produce millions of different types of antibodies, all with varying shapes that cause them to attach to and, as a result, neutralize different disease targets. For example, certain antibodies seek out and attach to viruses, bacteria and diseased cells, making them susceptible for destruction by the human immune system. Others attach to specific disease targets and block their interaction with other molecules. Each monoclonal antibody has a unique molecular structure that directs it to a specific target.

About thirty years ago, scientists recognized that if antibodies could be created in the laboratory, they could potentially function as a powerful tool for the treatment of many diseases. These efforts were partially successful when scientists discovered a way to make monoclonal antibodies using laboratory mice. Mouse-generated monoclonal antibodies, however, were often rejected by patients whose immune systems recognized them as foreign because they were not human proteins, and the patients produced a human anti-mouse antibody, or HAMA, response. This response reduces the effectiveness of the antibody by neutralizing the binding activity and by rapidly clearing the antibody from circulation in the body. The HAMA response can also cause significant toxicities with subsequent administrations of mouse antibodies.

Subsequent generations of antibodies have been re-engineered to address these immunogenic complications, resulting in monoclonal antibodies that are less mouse and more human. Scientists developed “chimeric antibodies,” which still contain mouse protein sequences (approximately 33%) but also contain human protein sequences (approximately 66%). Although chimeric antibodies are “more human” and theoretically, less likely to trigger an immune reaction, they nonetheless can trigger a human anti-chimeric antibody response by the human immune system. Scientists then developed CDR-grafted or “humanized” antibodies which contain approximately 5% to 10% mouse protein sequences.

Through our UltiMAb Human Antibody Development System, we can create all types of antibodies that are fully human (100% human protein sequences) by using transgenic mice in which mouse antibody gene expression is suppressed and effectively replaced with human antibody gene expression. Because our mice contain genes encoding human antibodies, we believe the monoclonal antibodies we generate are more likely to have favorable safety profiles and be eliminated less rapidly from the human body, potentially reducing the frequency and amount of dosing required to affect disease targets. Additionally, our fully human monoclonal antibodies do not require any humanization, a process that at times has proven to be challenging and time consuming, and can result in antibodies with lowered binding affinities for their respective targets.

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Products in Development

We and our partners have generated and are developing a number of potentially promising monoclonal antibodies using our proprietary fully human antibody technology, 17 of which are currently in various stages of human clinical trials. In addition, our preclinical development pipeline includes product candidates for a variety of indications, such as cancer, autoimmune/inflammatory diseases and infectious diseases.

The following table summarizes potential therapeutic indications and development stages for our active product candidates and those of our partners (based on our and our partners’ public disclosure and other publicly available information), and is followed by brief descriptions of each specific program.

Medarex Product Candidates in Clinical Development

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Medarex Licensing Partners’ Product Candidates in Clinical Development

Medarex Product Candidates in Clinical Development

MDX-010 (Anti-CTLA-4 Antibody)—Melanoma; Prostate Cancer; Breast Cancer; Renal Cancer; HIV; Combination/Exploratory Studies. MDX-010 is a fully human antibody that targets an immune receptor known as CTLA-4. This receptor, which is a protein found on the surface of T-cells, can down-regulate the immune response to tumors or infectious agents. By using a fully human antibody to block the activity of CTLA-4, we believe that patients’ immune systems may be able to mount a stronger immune response against foreign pathogens and cancers. We initially focused on the use of this antibody for the treatment of melanoma and prostate cancer and have expanded clinical studies into other indications such as breast cancer, renal cell cancer and HIV. We have also expanded the MDX-010 clinical program to include combination studies with chemotherapy, immunotherapy and vaccines.

We are currently conducting the following human clinical trials for this product:

Melanoma: Medarex is conducting a number of clinical studies investigating MDX-010 for the treatment of melanoma. A Phase II trial of MDX-010 in combination with a melanoma peptide vaccine based on gp100 has completed treatment of 41 patients with metastatic melanoma who have failed prior therapies. Patients were treated with one of two dose regimens. Of the 14 patients treated in the high-dose treatment cohort, two patients

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experienced complete responses ongoing for over 15 months and one patient experienced a partial response ongoing for over 20 months. Of the 27 patients treated in the low-dose treatment cohort, three patients experienced partial responses, two of which have ongoing responses of approximately one year or more. Out of the total of 41 patients, 11 reported drug-related autoimmune breakthrough events, or ABEs, such as dermatitis, pruritis and diarrhea, and responded to medical therapy. Of the patients who experienced ABEs, approximately 50% also experienced anti-tumor responses. Based on these observations, we believe that these ABEs may be associated with the induction of anti-cancer immune responses. We expect to initiate a pivotal program for MDX-010 in combination with the gp100 vaccine in the first half of 2004, subject to end of Phase II discussions with the FDA.

A separate Phase II trial designed to study MDX-010 both as a single agent and in combination with DTIC^® (dacarbazine) has completed treatment of 72 chemotherapy naïve patients with metastatic melanoma. In this ongoing study, certain patients have experienced partial responses or stable disease. Patients in this study are still being followed and evaluated for response duration.

Generally, our clinical trials, including our melanoma trials, are conducted in patients with serious life-threatening diseases for whom conventional treatments have been unsuccessful or for whom no conventional treatment exists, and in some cases, our product is used in combination with approved therapies that themselves have significant adverse event profiles. Some patients in our melanoma trials have experienced anticipated drug-related autoimmune adverse events, such as dermatitis and colitis, ranging from mild in most cases to severe in a very small number of instances. Almost all of these adverse events responded to medical therapy. In a very small number of instances, fatalities have occurred during the course of these trials — such fatalities may or may not be attributable to our product. We believe that these adverse events will not materially affect our ability to continue with clinical trials of this product as planned.

Prostate Cancer: A Phase II prostate cancer trial, initiated in October 2002, is designed to study MDX-010 as a single agent and in combination with Taxotere^® (docetaxel), is expected to accrue up to 40 chemotherapy naïve patients with hormone refractory prostate cancer, or HRPC.

Breast Cancer: A multi-center, open-label Phase II breast cancer trial was initiated in September 2003, and is expected to enroll up to 33 patients with metastatic breast cancer. The study is intended to evaluate tumor and immune responses.

Renal Cell Cancer: A Phase II renal cell cancer clinical trial is underway. The trial is designed to study MDX-010 as a single agent and is expected to enroll up to 24 patients with renal cell cancer.

Other Cancers: MDX-010 is under investigation for a variety of cancer indications. In addition to melanoma, prostate cancer, breast cancer and renal cell cancer, exploratory clinical studies are also underway for MDX-010 in colorectal cancer, non-Hodgkin’s lymphoma and ovarian cancer.

HIV Viremia: A multi-center, open-label Phase I clinical trial, initiated in June 2003, is underway to enroll up to 18 patients with HIV who have an extensive treatment history but whose virus is no longer suppressed by highly active antiretroviral therapy, or HAART. The trial is designed to establish safety and tolerability of MDX-010 in patients infected with HIV, and to preliminarily evaluate clinical efficacy.

Additional Combination Studies: As part of our MDX-010 clinical development program, separate clinical trials of MDX-010 in combination with various agents, including IL-2, chemotherapy and tumor vaccines, are currently underway. In addition to the Phase II trial of MDX-010 in combination with gp100 melanoma peptides, a Phase I/II trial of MDX-010 in combination with a different melanoma peptide vaccine based on multiple melanoma antigens has completed the full enrollment of 19 patients with advanced resected melanoma. There is also a Phase I study in 16 previously vaccinated metastatic melanoma and ovarian cancer patients underway to obtain a preliminary assessment of the biologic activity of MDX-010. Pursuant to a May 2003 research and development collaboration with Cell Genesys, Inc., we expect to initiate a Phase I clinical study in 2004 involving the use of Cell Genysys’ GVAX^® prostate cancer vaccine in combination with MDX-010. Under the terms of our collaboration, the cost of this clinical trial will be shared equally by both companies.

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MDX-060 (Anti-CD30 Antibody)—Lymphoma. MDX-060 is a fully human antibody that targets CD30, which is a marker for activated lymphocytes and is present on the malignant cells of Hodgkin’s disease, or HD, and anaplastic large cell lymphoma, or ALCL, as well as other CD30-positive cancers. Through its ability to target CD30 expressing tumor cells, MDX-060 may facilitate the elimination of such cells by the human immune system. In a preclinical study, MDX-060 showed activity in human tumor engrafted mice.

Findings from an ongoing Phase II clinical trial of MDX-060 in 31 patients with relapsed or refractory HD, ALCL or other CD30-positive lymphomas indicated that MDX-060 demonstrated clinical activity, including one complete response and two partial responses. In addition, stable disease was observed in nine patients. One episode of a possible serious drug-related adverse event (elevated liver transaminase levels, grade III) was reported in a patient with a history of Graft versus Host Disease, which resolved with steroid treatment. No maximum tolerated dose has been identified. All patients had failed multiple prior treatments and most had failed bone marrow transplantation. Enrollment of approximately 30 patients is ongoing in the Phase II portion of the trial to further explore the safety and activity profile of MDX-060.

MDX-070 (Anti-PSMA Antibody)—Prostate Cancer. MDX-070 is a fully human antibody that targets Prostate Specific Membrane Antigen, or PSMA. PSMA is a cell surface marker that is preferentially expressed on malignant prostate tissues and also on blood vessels in other tumors. Preclinical data suggests that the antibody will target live prostate tumor cells. An ongoing, single-dose, dose-escalation Phase I/II study is expected to accrue up to 40 patients with metastatic prostate cancer. The study is intended to evaluate safety and tumor response based on objective tumor response and decreases in PSA serum levels. In 2004, we expect to initiate a separate multi-dose, dose-escalation Phase II clinical study of MDX-070 in patients with hormone refractory prostate cancer.

MDX-214 (Anti-EGFr/CD89 Antibody)—Cancer. MDX-214 is a bifunctional protein consisting of human epidermal growth factor, or EGF, genetically linked to a fully human antibody fragment that targets CD89, a trigger molecule expressed on immune effector cells. Through the use of EGF, the natural ligand to the epidermal growth factor receptor, or EGFr, MDX-214 is believed to have the ability to direct CD89 positive effector cells to EGFr-overexpressing tumor cells, potentially facilitating the interaction of the immune system with the cancer. A Phase I/II clinical trial is underway for the treatment of cancers that overexpress EGFr. The study is expected to enroll up to 48 patients with refractory or relapsed EGFr-expressing cancers, including cancers of the head and neck, breast, colon, prostate, lung and ovary.

MDX-018 (Anti-inflammatory Antibody)—Autoimmune Disease. MDX-018, also known as HuMax-Inflam, is a fully human antibody that we are co-developing with Genmab. The Phase I/II European clinical trial is expected to enroll up to 44 patients. The disease and target mechanism for MDX-018 have not yet been made public.

MDX-1307 (Anti-Mannose Receptor/hCG-ß Antibody)—Colorectal, Pancreatic and/or Bladder Cancers. MDX-1307 is a fusion protein composed of a mannose receptor-specific human antibody conjugated to the beta chain of human chorionic gonadotropin, or hCG. The vaccine is designed to induce antibody and cytotoxic T cell responses directed at cancer cells in patients with ßhCG-expressing tumors. In February 2004, the FDA accepted our IND application to initiate a dose-escalation, multi-dose Phase I study which is expected to enroll up to 18 patients with metastatic or locally advanced colorectal, pancreatic or bladder cancers.

Selected Medarex Product Candidates in Preclinical Development

We have an active preclinical development program that we anticipate may lead to the identification of new antibody product candidates and novel combinations with antibodies currently in development. We expect these development efforts to lead to additional clinical candidates in both the near and long term. Our programs include, among others, the following:

MDX-1100 (Anti-IP-10 Antibody)—Inflammatory Diseases. We are working with our partner, Ability Biomedical Corporation, to develop MDX-1100, a fully human antibody product candidate that targets IP-10 (also known as CXCL10), a chemokine expressed in association with multiple inflammatory disease indications such as rheumatoid arthritis and multiple sclerosis.

MDX-1185 and MDX-1103 (Anti-Type 1 IFN Antibodies)—Systemic Lupus Erythematosus. MDX-1185 and MDX-1103 are fully human antibodies that target two different Type 1 IFN pathways that are believed to be

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involved with systemic lupus erythematosus, or SLE, disease activity. MDX-1185 is an antibody that we believe blocks the receptor of Type 1 IFN, and MDX-1103 is an antibody that we believe blocks multiple Type 1 IFN subtypes.

Medarex Licensing Partners’ Product Candidates in Development

Our licensing partners are currently conducting the following human clinical trials of product candidates developed using our UltiMAb Human Antibody Development System:

HuMax-CD4 (Anti-CD4 Antibody)‡ —Cutaneous T-cell Lymphoma. Genmab is developing HuMax-CD4, a fully human antibody that targets the CD4 receptor on cells known as T-cells, which are believed to be involved in promoting autoimmune disease. Genmab has reported that preclinical and clinical studies to date suggest that an antibody that targets CD4 may be useful for the treatment of cutaneous T-cell lymphomas, or CTCL.

In December 2003, Genmab announced interim results from two Phase II clinical studies for HuMax-CD4 for the treatment of CTCL. Based on the interim data, Genmab announced that it is enrolling additional patients in both studies and has increased the weekly dose in each trial. Treatment of these additional patients is expected to continue for up to 16 weeks. In February 2004, Genmab announced that HuMax-CD4 achieved positive interim results in the extended Phase II studies for CTCL.

In December 2003, Genmab announced that it had no further plans to develop HuMax-CD4 for the treatment of psoriasis because statistically significant results were not achieved in a Phase IIb clinical study.

HuMax-IL15 (Anti-IL-15 Antibody)‡ —Rheumatoid Arthritis. HuMax-IL15 is a fully human antibody against Interleukin-15 (IL-15), an immune system signaling molecule that appears early in the cascade of events that ultimately lead to inflammatory disease. Immunex Corporation, a wholly owned subsidiary of Amgen, Inc., acquired the rights associated with HuMax-IL15 from Genmab, which continues to support some related activities as part of the binding agreement. According to Amgen, findings from a Phase I trial in patients with rheumatoid arthritis indicated that HuMax-IL15 was generally well tolerated with early evidence of biologic activity.

CNTO 1275 (Anti-IL-12 Antibody)¨—Anti-inflammatory Diseases. In September 2002, Centocor reported that it was developing CNTO 1275, a high affinity, fully human antibody for the treatment of anti-inflammatory diseases such as moderate to severe psoriasis and multiple sclerosis. According to publicly available information, clinical trials are underway, including a randomized, double-blind, placebo-controlled, parallel Phase II clinical trial of single and multiple dose regimens in patients with moderate to severe psoriasis.

HuMax-EGFr (Anti-EGFr Antibody)‡ —Head and Neck Cancer. According to Genmab, HuMax-EGFr, a fully human antibody targeting EGFr, a receptor molecule that has been found in excess on many tumor cells, is under development for the treatment of carcinoma of the head and neck, breast, colon, prostate, lung and ovary. In September 2003, Genmab announced the commencement of a Phase I/II clinical trial for the treatment of head and neck cancer with HuMax-EGFr. According to Genmab, preclinical studies have indicated that blocking the interaction between EGFr and its ligands has the potential to inhibit tumor growth leading to cell death.

HuMax-CD20 (Anti-CD20 Antibody)‡ —Lymphoma. Genmab is developing HuMax-CD20, a fully human antibody targeting CD20, a molecule found on B cells. In December 2003, Genmab announced the filing of an Investigational New Drug application, or IND, in the US and a Clinical Trial Application in England to start an open label Phase I/II clinical trial using HuMax-CD20 in patients with relapsed or refractory follicular lymphoma. According to Genmab, preclinical studies have indicated that HuMax-CD20 may kill tumor cells that are resistant to rituximab.

CNTO 148 (Anti-TNFa Antibody)¨—Anti-inflammatory Diseases. In September 2002, Centocor reported that it was developing CTNO 148, a high affinity, fully human antibody for anti-inflammatory diseases, including Crohn’s disease, rheumatoid arthritis and uveitis. According to publicly available information, Phase I trials of

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CTNO 148 are currently underway, and a Phase I/IIa clinical trial is underway in patients with intermediate uveitis, posterior uveitis or panuveitis.

CNTO 95 (Anti-integrin receptors Antibody)¨—Cancers. In December 2003, we announced that Centocor had commenced a multi-dose Phase I trial of CTNO 95, a high affinity, fully human antibody targeting the integrin receptors (avß3 and avß5) that are implicated in tumor-induced angiogenesis. Angiogenesis is the formation of new blood vessels and plays an important role in tumor growth and metastasis.

Novartis Antibodies¨—Autoimmune Disease. In December 2002, and May 2003, respectively, we reported that Novartis had begun Phase I clinical trials with two separate antibody product candidates for the treatment of an autoimmune disease.

Fibrogen Antibody¨—Idiopathic Pulmonary Fibrosis. In December 2003, we announced that Fibrogen had commenced a Phase I clinical trial of a fully human antibody therapeutic in patients with idiopathic pulmonary fibrosis (IPF). The product candidate is Fibrogen’s lead anti-CTGF (connective tissue growth factor) therapeutic antibody, also known as FG-3019. The multi-center, open-label, dose-escalating study is expected to enroll up to 27 patients with IPF and is designed to evaluate the safety, tolerability, pharmacokinetics and immunogenicity of the antibody.

Strategic Investments

Genmab

In February 1999, we and a group of unrelated third party investors formed Genmab, a Danish biotechnology company, to develop and commercialize a portfolio of fully human antibodies derived from our HuMAb-Mouse^® technology. Initially, the investor group invested approximately DKK 35.4 million or $5.3 million (based on the then current exchange rate of $1.00 = DKK 6.73), and received approximately 44% of Genmab’s share capital. At the same time, we contributed a license to our human antibody technology for producing antibodies to particular targets in exchange for comparable consideration of approximately 44% of Genmab’s share capital. During Genmab’s initial 12 months of operation, the investor group invested on additional DKK 49.0 million or $7.0 million (based on the then current exchange rate of $1.00 = DKK 6.99) for additional equity in Genmab. In connection therewith, we expanded our license to provide Genmab with broader rights to our human antibody technology in exchange for further equity, thereby maintaining our level of ownership in Genmab’s share capital. Specifically, in exchange for equity, we granted Genmab 16 fully paid-up commercial licenses for antibody products. In addition, in May 2000, Genmab completed a private placement in which it received approximately DKK 321.0 million or $38.4 million (based on the then current exchange rate of $1.00 = DKK 8.35) from the original investor group and additional new investors. In connection therewith, we made an additional cash investment of $18.0 million in order to maintain our approximate 44% ownership interest in Genmab. In August 2000, we received additional equity in connection with the Genomics Agreement (as described below) valued at $2.0 million (based upon the recently completed private placement), representing payment for the first year which increased our equity interest in Genmab to approximately 45%.

In August 2000, we entered into a binding memorandum of understanding, or the Genomics Agreement, with Genmab, pursuant to which we granted Genmab rights to market our transgenic mouse technologies for multi-target (five or more targets) genomics partnerships to certain pharmaceutical and biotechnology companies whose headquarters are located in Europe. Under the terms of the Genomics Agreement, Genmab may market our human antibody technology (a) for large multi-target (five or more targets) partnerships to any European based company except for: (i) certain Medarex partners, including Novartis, Merck KGaA, Schering, Aventis Behring, Immuno-Design Molecules S/A, or IDM, and Scil Biomedicals GmbH; and (ii) any European based pharmaceutical company with worldwide revenues in excess of $1 billion in 1999, provided, however, that Genmab may market our human antibody technology to Sanofi/Synthélabo and Boehringer Ingelheim, and (b) for non-large multi-target (less than five targets) partnerships, to any company worldwide. We also have the right to participate in Genmab’s large multi-target (five or more targets) partnerships, thereby sharing in certain costs and commercial benefits. We retain all

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rights to market our technology to companies headquartered outside of Europe and to all companies for non-large multi-target (less than five targets) partnerships in Europe. Certain license fees, milestones and royalties due to us under our previously existing agreement with Genmab were reduced. The Genomics Agreement also provides that, under certain circumstances, we must negotiate in good faith to manufacture antibodies for Genmab’s partnerships.

In addition, under the terms of the Genomics Agreement, we granted Genmab an option to receive certain rights in Europe with respect to the development and commercialization of up to four antibody products we may obtain through our agreement with Eos Biotechnology, Inc., which was acquired by Protein Design Labs., Inc. in 2003. Finally, the Genomics Agreement grants Genmab certain rights to access technologies acquired by us from Biosite Incorporated and Kirin Brewery Co., Ltd.

The Genomics Agreement has an initial term of five years with a right exercisable by Genmab to extend the term for an additional two years. For each year of the agreement and during the term of any extension, we will receive $2.0 million per year from Genmab. At Genmab’s option, these amounts may be paid in either cash or capital stock. During each of the years ended December 31, 2001, 2002 and 2003, the Company recognized $2.0 million of revenue from this agreement.

In September 2000, we entered into an amended agreement, or the Amended Genomics Agreement, with Genmab, pursuant to which we agreed to assign to Genmab 100% of our economic interest in each product we jointly develop with Oxford GlycoSciences plc, or a Medarex/OGS product, and sell in Europe, and 50% of our economic interest in each Medarex/OGS product sold outside of North America and Europe. We retained 100% of our economic interest in Medarex/OGS products to be sold in North America. Oxford GlycoSciences plc, or OGS, was subsequently acquired by Celltech Group plc, or Celltech. Under the terms of the Amended Genomics Agreement, if a Medarex/OGS product is intended to be sold only in Europe, Genmab will reimburse us for 100% of our research, development, manufacturing and commercialization expenses associated with such product. If the Medarex/OGS product is to be sold only in North America, Genmab will not be obligated to reimburse us for any such expenses. In all other cases, Genmab will reimburse us for 50% of such expenses. In addition, we sold one-half of our equity interest in OGS to Genmab for $2.5 million, which was our original cost of such equity interest. In 2002, the value of our remaining interest in OGS was written down to approximately $0.2 million due to a decline in its fair value, which was considered to be “other than temporary.” In June 2003, we exchanged our remaining equity interest in OGS for approximately $0.3 million in cash in connection with the acquisition of OGS by Celltech.

In October 2000, Genmab became a publicly listed company on the Copenhagen Stock Exchange. As a result of raising the equivalent of $187.0 million (based on the then current exchange rate) and subsequent investments in Genmab by other parties, our ownership interest in Genmab has been reduced to approximately 32%. We currently account for our investment in Genmab under the equity method of accounting.

IDM

During the second half of the 1990s, the focus of our business shifted from humanized and murine monoclonal antibody-based products to fully human antibody development. As a result, in July 2000, we entered into an agreement with IDM whereby we licensed to IDM certain of our humanized and murine antibodies in exchange for equity units in IDM. Under the agreement, IDM acquired worldwide rights to the use of our MDX-210 anti-HER-2 product in connection with cell therapy. IDM also acquired the right to receive royalty payments from third party sales of MDX-210 in Europe, outside the field of cell therapy. Additionally, IDM acquired certain rights in all fields to additional products which we are not actively developing at this time.

As a result of this transaction, we recorded a gain from the transfer of this technology of approximately $40.5 million (based upon an independent valuation) as non-cash contract revenue over a two year period ending in September 2002 for financial reporting purposes (see Note 12 to the Consolidated Financial Statements). In October 2000, we participated in a private placement of equity interests in IDM and purchased additional equity of approximately $5.2 million. Our current equity position in IDM is approximately 9%. In the event that we exercise certain warrants held by us to purchase convertible or redeemable bonds of IDM and such bonds are converted or redeemed, our equity position in IDM would be approximately 26%, based on the shares of IDM currently outstanding. These warrants are exercisable between September 2002 and September 2010, and such bonds may be converted or redeemed within six months of such exercise.

Celldex

We are in the process of a possible public offering of a portion of the common stock of our wholly-owned subsidiary Celldex Therapeutics, Inc. As part of this transaction, we intend to assign or license to Celldex certain intellectual property related to our vaccine technology, including the rights to MDX-1307, one of our product candidates for the treatment of cancer, as well as the IND associated with this product which became effective in February 2004. If the offering proceeds, we anticipate that we will continue to hold approximately 75% of the outstanding shares of common stock of Celldex. We cannot assure you that this transaction will be consummated.

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Our Human Antibody Partnering Business

As of March 1, 2004, we have more than 45 partnerships with pharmaceutical and biotechnology companies to jointly develop and commercialize products or to enable other companies to use our proprietary technology in their development and commercialization of new therapeutic and, in some cases, diagnostic products. We expect that substantially all of our operating revenues over the next few years will come from licensing fees and milestone payments from our existing and future partners. These partnerships typically provide our partners with access to our human antibody technology for the purpose of generating fully human antibodies to specific disease targets identified by such partners. In some cases, we provide our mice to our partners who then immunize the mice to generate fully human antibodies. In other cases, we may immunize the mice with a partner’s antigen.

In general, our partnerships fall into two major categories: (1) collaborative partnerships in which we collaborate with partners to jointly generate, develop and commercialize human antibody products; and (2) licensing partnerships in which we license our human antibody generation technology to our partners in exchange for license fees, milestone payments and royalties.

Our Collaborative Partnerships to Jointly Develop Fully Human Antibodies with Our Partners

We are increasing our access to novel therapeutic targets by establishing collaborations with companies and institutions that have identified potential therapeutic targets or have created platforms for the identification of such targets. We actively seek opportunities to in-license and/or acquire such targets and intend to develop novel therapeutic products by producing fully human antibodies that interact with such targets. As of March 1, 2004, we had agreements with more than 25 collaborators with whom we plan to jointly develop and commercialize human antibody products, including, among others, Ability Biomedical, Avalon Pharmaceuticals, Inc., Corixa Corporation, Immusol, Inc., Tularik, Inc. and Xerion Pharmaceuticals AG. Typically, a collaborator will provide a target antigen, and we will generate and develop antibodies against that antigen using our UltiMAb Human Antibody Development System. We and our collaborators typically agree to share equally costs of clinical development and manufacturing as well as revenues, expenses and profits associated with the products arising under the collaboration. We believe this allows us to participate in the research and development of substantially more potential candidates than we could develop on our own if we bore the entire cost of development.

Our Licensing Partnerships for the Development of Fully Human Antibodies by Our Partners

Our licensing partners typically obtain licenses to one or more of our antibody generating technologies which allow these partners to develop and commercialize antibody-based products using our technology. We could receive license fees, milestone payments and royalties in connection with each of these products. Under these licenses, there is usually an initial period during which our licensing partner may elect to enter into a research license for antibodies to a particular designated target. Subsequently, our partner may elect to obtain a commercial license for one or more specific monoclonal antibodies. In some cases, once a partner has obtained a commercial license for monoclonal antibodies to a given target, we can no longer license our human antibody technology to a different company for that particular target. As of March 1, 2004, we had more than 20 licensing partnerships with partners including industry leaders such as Amgen, Centocor, Pfizer, Eli Lilly, Human Genome Sciences, Abbott Laboratories, Novartis, Novo Nordisk and Schering AG.

The financial terms of our licensing partnerships typically include license fees and a series of milestone payments commencing upon initiation of clinical trials and continuing through to commercialization. These fees and milestones may total up to $7 to $10 million per antibody if the antibody receives approval from the FDA and equivalent foreign agencies. A licensing partnership may involve multiple antibodies. Under these partnerships, we will also receive royalties on any product sales. In some cases, our partners reimburse us for research and development activities we conduct on their behalf. Generally, under the terms of these agreements, our partners are responsible for all costs of product development, manufacturing and marketing of any products.

Our Agreement with Kirin

Effective September 4, 2002, we entered into a Collaboration and License Agreement with Kirin, which provides for us to exchange with Kirin certain cross-licenses for each other’s technology for the development and commercialization of human antibody products. Pursuant to a letter of intent that was superceded by the Collaboration and License Agreement, we and Kirin developed the KM-Mouse^®, a unique crossbred mouse which

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combines the traits of our HuMAb-Mouse^® with Kirin’s TC Mouse^™. Under the Collaboration and License Agreement, we are exchanging cross-licenses with Kirin with respect to the KM-Mouse and other antibody-generating mice. In addition, certain of the cross-licenses granted under the Collaboration and License Agreement are subject to license, milestone and royalty payments by one party to the other.

Through December 31, 2003, we have not made any milestone payments to Kirin and have made licensing and other payments of approximately $0.2 million. Based on a total of three products we are developing which use or we believe may use Kirin technology and that (i) are currently in clinical trials, or (ii) we anticipate may enter clinical trials through the end of 2005, we may be required to make milestone payments to Kirin aggregating up to approximately $12.8 million with respect to such products, or a maximum of approximately $4.3 million per product. Our future milestone payment obligations to Kirin may or may not be triggered, and may vary in size, depending on a number of variables, almost all of which are currently unknown, including the following:

Whether we may be obligated to make milestone payments to Kirin in the future is subject to the success of our efforts with respect to products we are developing that utilize the Kirin technology and, accordingly, is inherently uncertain.

Unless terminated earlier, the Collaboration and License Agreement expires on December 31, 2014. The Collaboration and License Agreement can be terminated by either party in the event of a material breach by the other party if the breach is not cured during a specified cure period. In addition, either party may terminate any commercial license with respect to a specific biologic target granted to it by the other party under the agreement at any time.

Other in-licensed technology

We have also entered into a number of other agreements that contain licenses of third-party technology which may be used together with our own platform technologies for the generation, development and/or manufacture of our antibody products. In addition, we have entered into other third-party agreements that contain licenses associated with antibody products that target specific antigens. Many of these agreements contain milestones payments that become due with respect to products using/targeting the licensed technology/antigen only if and when certain specified pre-commercialization events occur. Not all of our products currently under development trigger such milestone payments. Through December 31, 2003, we have made no milestone payments under these agreements. In addition, under the agreements we currently have in place (other than with Kirin), based on a total of five products we are developing for which milestones are potentially due and that (i) are now in clinical trials, or (ii) which we anticipate may enter clinical trials before the end of 2005, we may be obligated to make future milestone payments aggregating up to approximately $30.6 million with respect to such products. In general, potential milestone payments for our antibody products may or may not be triggered under these licenses, and may vary in size, depending on a number of variables, almost all of which are currently uncertain. Typically, the events that trigger these payments per product include:

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In addition, the licenses above may trigger royalty payments in connection with the commercialization of certain of our products. To date, we have not made any royalty payments on sales of our products and believe we are at least a few years away from selling any products that would require us to make any such royalty payments. Whether we will be obligated to make milestone or royalty payments in the future is subject to the success of our product development efforts and, accordingly, is inherently uncertain.

Our Human Antibody Technology

The UltiMAb Technology Platform

Our solution to making antibodies with fully human protein sequences is to use transgenic strains of mice in which mouse antibody gene expression is suppressed and effectively replaced with human antibody gene expression. Our human antibody technology includes (i) our HuMAb-Mouse technology, (ii) Kirin’s TC Mouse technology, and (iii) the KM-Mouse technology, a crossbred mouse that combines the characteristics of our HuMAb-Mouse with the TC Mouse. In total these technologies constitute our UltiMAb Human Antibody Development System.