UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

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

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

Commission File Number 0-16132

CELGENE CORPORATION

(Exact name of registrant as specified in its charter)

Delaware		22-2711928
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)
86 Morris Avenue, Summit, NJ		07901
(Address of principal executive offices)		(Zip Code)

(908) 673-9000

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 þ       No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes þ       No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o		Smaller reporting company o
				(Do not check if a smaller reporting company)

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

Yes o       No þ

At April 23, 2010, 460,862,551 shares of Common Stock, par value $.01 per share, were outstanding.

 

 

CELGENE CORPORATION

FORM 10-Q TABLE OF CONTENTS

		Page No.
PART I FINANCIAL INFORMATION
Item 1 Unaudited Consolidated Financial Statements
Consolidated Statements of Operations - Three-Month Periods Ended March 31, 2010 and 2009			1
Consolidated Balance Sheets - As of March 31, 2010 and December 31, 2009			2
Consolidated Statements of Cash Flows - Three-Month Periods Ended March 31, 2010 and 2009			3
Notes to Unaudited Consolidated Financial Statements			5
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations			27
Item 3 Quantitative and Qualitative Disclosures About Market Risk			37
Item 4 Controls and Procedures			39
PART II OTHER INFORMATION
Item 1 Legal Proceedings			40
Item 1A Risk Factors			40
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds			53
Item 3 Defaults Upon Senior Securities			53
Item 4 Submission of Matters to a Vote of Security Holders			53
Item 5 Other Information			53
Item 6 Exhibits			54
Signatures			55
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT

CELGENE CORPORATION AND SUBSIDIARIES

		Three-Month Periods Ended
		March 31,
		2010				2009
Revenue:
Net product sales		$	759,411			$	576,232
Collaborative agreements and other revenue			2,380				2,244
Royalty revenue			29,463				26,577
Total revenue			791,254				605,053
Expenses:
Cost of goods sold (excluding amortization of acquired intangible assets)			61,915				64,299
Research and development			204,657				181,248
Selling, general and administrative			207,978				173,440
Amortization of acquired intangible assets			41,593				23,625
Acquisition related charges			4,862				—
Total costs and expenses			521,005				442,612
Operating income			270,249				162,441
Other income and expense:
Interest and investment income, net			14,084				17,453
Equity in (gains) losses of affiliated companies			(741	)			771
Interest expense			481				464
Other income, net			3,766				32,610
Income before income taxes			288,359				211,269
Income tax provision			53,917				48,386
Net income		$	234,442			$	162,883
Net income per common share:
Basic		$	0.51			$	0.35
Diluted		$	0.50			$	0.35
Weighted average shares:
Basic			459,914				459,583
Diluted			467,655				468,105

See accompanying Notes to Unaudited Consolidated Financial Statements

CELGENE CORPORATION AND SUBSIDIARIES

		March 31,				December 31,
		2010				2009
Assets
Current assets:
Cash and cash equivalents		$	1,055,546			$	1,102,172
Marketable securities available for sale			1,898,404				1,894,580
Accounts receivable, net of allowances of $9,677 and $10,787 at March 31, 2010 and December 31, 2009, respectively			481,072				438,617
Inventory			102,479				100,683
Deferred income taxes			70,472				49,817
Other current assets			312,066				258,935
Total current assets			3,920,039				3,844,804
Property, plant and equipment, net			303,729				297,792
Investment in affiliated companies			22,767				21,476
Intangible assets, net			853,665				349,542
Goodwill			764,622				578,116
Other assets			120,801				297,581
Total assets		$	5,985,623			$	5,389,311
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable		$	66,697			$	36,629
Accrued expenses			269,776				315,608
Income taxes payable			33,603				46,874
Current portion of deferred revenue			2,179				1,827
Other current liabilities			87,192				93,767
Total current liabilities			459,447				494,705
Deferred revenue, net of current portion			7,695				6,527
Non-current income taxes payable			444,597				422,358
Other non-current liabilities			309,478				71,115
Total liabilities			1,221,217				994,705
Commitments and Contingencies
Stockholders’ Equity:
Preferred stock, $.01 par value per share, 5,000,000 shares authorized; none outstanding at March 31, 2010 and December 31, 2009, respectively			—				—
Common stock, $.01 par value per share, 575,000,000 shares authorized; issued 468,958,767 and 467,629,433 shares at March 31, 2010 and December 31, 2009, respectively			4,690				4,676
Common stock in treasury, at cost; 8,117,466 and 8,337,961 shares at March 31, 2010 and December 31, 2009, respectively			(352,981	)			(362,521	)
Additional paid-in capital			5,504,417				5,474,122
Accumulated deficit			(397,804	)			(632,246	)
Accumulated other comprehensive income (loss)			6,084				(89,425	)
Total stockholders’ equity			4,764,406				4,394,606
Total liabilities and stockholders’ equity		$	5,985,623			$	5,389,311

See accompanying Notes to Unaudited Consolidated Financial Statements

CELGENE CORPORATION AND SUBSIDIARIES

		Three-Month Periods Ended
		March 31,
		2010				2009
Cash flows from operating activities:
Net income		$	234,442			$	162,883
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of long-term assets			11,951				9,521
Amortization of intangible assets			41,875				23,762
Allocation of pre-paid royalties			12,606				7,844
Provision for accounts receivable allowances			(1,265	)			1,242
Deferred income taxes			(10,136	)			(11,681	)
Acquisition related charges			4,862				—
Share-based compensation expense			41,428				32,421
Equity in (gains) losses of affiliated companies			(741	)			771
Share-based employee benefit plan expense			4,344				1,773
Unrealized change in value of foreign currency forward contracts			6,571				(15,485	)
Realized gains on marketable securities available for sale			(4,962	)			(4,967	)
Other, net			954				1,436
Change in current assets and liabilities, excluding the effect of the acquisition:
Accounts receivable			(54,375	)			(30,931	)
Inventory			(233	)			(2,564	)
Other operating assets			14,716				(3,124	)
Accounts payable and other operating liabilities			(29,908	)			(18,550	)
Income tax payable			10,697				(27,724	)
Deferred revenue			1,824				490
Net cash provided by operating activities			284,650				127,117
Cash flows from investing activities:
Proceeds from sales of marketable securities available for sale			1,196,864				412,606
Purchases of marketable securities available for sale			(1,200,626	)			(704,613	)
Payments for acquisition of business, net of cash acquired			(337,608	)			—
Capital expenditures			(18,906	)			(20,974	)
Investment in affiliated companies			(550	)			(1,064	)
Purchases of investment securities			(2,725	)			(750	)
Other			—				3,333
Net cash used in investing activities			(363,551	)			(311,462	)
Cash flows from financing activities:
Net proceeds from exercise of common stock options and warrants			31,669				11,860
Excess tax benefit from share-based compensation arrangements			12,228				44,751
Net cash provided by financing activities			43,897				56,611
Effect of currency rate changes on cash and cash equivalents			(11,622	)			(10,947	)
Net decrease in cash and cash equivalents			(46,626	)			(138,681	)
Cash and cash equivalents at beginning of period			1,102,172				1,092,386
Cash and cash equivalents at end of period		$	1,055,546			$	953,705

See accompanying Notes to Unaudited Consolidated Financial Statements

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

		Three-Month Periods Ended
		March 31,
		2010				2009
Supplemental schedule of non-cash investing and financing activity:
Change in net unrealized (gain) on marketable securities available for sale		$	(5,603	)		$	(16	)
Matured shares tendered in connection with stock option exercises		$	(163	)		$	—
Supplemental disclosure of cash flow information:
Income taxes paid		$	40,525			$	42,491

See accompanying Notes to Unaudited Consolidated Financial Statements

CELGENE CORPORATION AND SUBSIDIARIES

1. Nature of Business and Basis of Presentation

Celgene Corporation and its subsidiaries (collectively “Celgene” or the “Company”) is a global biopharmaceutical company primarily engaged in the discovery, development and commercialization of innovative therapies designed to treat cancer and immune-inflammatory diseases.

The Company’s primary commercial stage products include REVLIMID^®, THALOMID^® (inclusive of Thalidomide Celgene^TM and Thalidomide Pharmion^TM) and VIDAZA^®. FOCALIN^® is sold exclusively to Novartis Pharma AG, or Novartis. ISTODAX^®, which was obtained in the acquisition of Gloucester Pharmaceuticals, Inc., or Gloucester, was approved in November 2009 by the U.S. Food and Drug Administration, or FDA, for the treatment of cutaneous T-cell lymphoma, or CTCL, in patients who have received at least one prior systemic therapy and was launched in the first quarter of the year ending December 31, 2010. The Company also derives revenues from a licensing agreement with Novartis, which entitles it to royalties on FOCALIN XR^® and the entire RITALIN^® family of drugs. ALKERAN^® was licensed from GlaxoSmithKline, or GSK, and sold under the Celgene label through March 31, 2009, the conclusion date of the ALKERAN^® license with GSK. For the ensuing two years, the Company will continue to earn residual payments based upon GSK’s ALKERAN^® revenues. The Company also derives revenues from the sale of services through its Cellular Therapeutics subsidiary and miscellaneous licensing agreements.

The accompanying unaudited consolidated financial statements have been prepared from the books and records of the Company pursuant to U.S. generally accepted accounting principles for interim information and the rules and regulations of the Securities and Exchange Commission for interim reporting. Pursuant to such rules and regulations, certain information and footnote disclosures normally included in complete annual financial statements have been condensed or omitted. The consolidated financial statements include the accounts of Celgene Corporation and its subsidiaries. All intercompany transactions and balances have been eliminated. Investments in limited partnerships and interests in which the Company has an equity interest of 50% or less and does not otherwise have a controlling financial interest are accounted for by either the equity or cost method. The interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009, or the 2009 Annual Report on Form 10-K.

The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. The Company is subject to certain risks and uncertainties related to product development, regulatory approval, market acceptance, scope of patent and proprietary rights, competition, technological change and product liability.

Interim results may not be indicative of the results that may be expected for the full year. In the opinion of management, these financial statements include all normal and recurring adjustments considered necessary for a fair presentation of these interim consolidated financial statements. Effective January 1, 2010, the Company changed the functional currency of Celgene International Sarl from the Euro to the US Dollar. Significant changes in economic facts and circumstances supported this change in functional currency and the change was applied on a prospective basis.

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2. Summary of Significant Accounting Policies

The Company’s significant accounting policies are described in Note 1 of the Notes to the Consolidated Financial Statements included in the 2009 Annual Report on Form 10-K.

New Accounting Pronouncements: In December 2009, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2009-17, “Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities,” or ASU 2009-17, which changes how a company determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a company is required to consolidate an entity is based on, among other things, an entity’s purpose and design and a company’s ability to direct the activities of the entity that most significantly impact the entity’s economic performance. This amendment requires ongoing reassessments of whether an enterprise is the primary beneficiary of a variable interest entity and will require a company to provide additional disclosures about its involvement with variable interest entities, any significant changes in risk exposure due to that involvement and how its involvement with a variable interest entity affects the company’s financial statements. This amendment was effective for the Company beginning January 1, 2010 and had no impact on its financial statements. The Company will comply with its rules and expanded disclosure requirements for all applicable future collaboration agreements.

In October 2009, the FASB issued ASU No. 2009-13, “Multiple-Deliverable Revenue Arrangements,” or ASU 2009-13, which amends existing revenue recognition accounting pronouncements that are currently within the scope of ASC 605. This guidance eliminates the requirement to establish the fair value of undelivered products and services and instead provides for separate revenue recognition based upon management’s estimate of the selling price for an undelivered item when there is no other means to determine the fair value of that undelivered item. ASU 2009-13 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. The Company is currently evaluating the impact, if any, that the adoption of this amendment will have on its consolidated financial statements.

In January 2010, the FASB issued ASU No. 2010-06, “Improving Disclosures About Fair Value Measurements,” or ASU 2010-06, which amends ASC 820 to add new requirements for disclosures about transfers into and out of Levels 1 and 2 and separate disclosures about purchases, sales, issuances, and settlements relating to Level 3 measurements. The ASU also clarifies existing fair value disclosures about the level of disaggregation and about inputs and valuation techniques used to measure fair value. Further, the ASU amends guidance on employers’ disclosures about postretirement benefit plan assets under ASC 715 to require that disclosures be provided by classes of assets instead of by major categories of assets. The ASU is effective for the first reporting period (including interim periods) beginning after December 15, 2009, except for the requirement to provide the Level 3 activity of purchases, sales, issuances, and settlements on a gross basis, which will be effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. Early adoption is permitted. The section of the amendment pertaining to transfers into and out of Levels 1 and 2 was effective for the Company beginning January 1, 2010. The adoption of this section of the amendment did not have any impact on the Company’s consolidated financial statements. The section of the amendment pertaining to Level 3 measurements is effective for the Company beginning January 1, 2011. The Company is currently evaluating the impact, if any, that the adoption of this amendment will have on its consolidated financial statements.

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In February 2010, the FASB issued ASU No. 2010-10, “Amendments for Certain Investment Funds,” or ASU 2010-10, which amends certain provisions of Statement 167 (codified in ASC 810-10). The ASU defers the application of Statement 167 for a reporting enterprise’s interest in certain entities if all of the following conditions are met: (1) The entity either has all of the attributes specified in paragraphs 15-2(a)–(d) of ASC 946-10 or is an entity for which it is industry practice to apply guidance that is consistent with the measurement principles in ASC 946 (including recognizing changes in fair value currently in the statement of operations) for financial reporting purposes, (2) The reporting enterprise does not have an explicit or implicit obligation to fund losses of the entity that could potentially be significant to the entity and (3) The entity is not a securitization entity, an asset-backed financing entity, or an entity that was formerly considered a qualifying special-purpose entity. In addition, the application of Statement 167 is deferred for a reporting enterprise’s interest in an entity that is required to comply with or operate in accordance with requirements that are similar to those included in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds. The ASU is effective as of the beginning of the first annual period that begins after November 15, 2009, and for interim periods within that first annual period. The amendment was effective for the Company beginning January 1, 2010 and the adoption did not have any impact on the Company’s consolidated financial statements.

In April 2010, the FASB issued ASU No. 2010-17 “Milestone Method of Revenue Recognition,” or ASU 2010-17, to (1) limit the scope of this ASU to research or development arrangements and (2) require that guidance in this ASU be met for an entity to apply the milestone method (record the milestone payment in its entirety in the period received). However, the FASB clarified that, even if the requirements in this ASU are met, entities would not be precluded from making an accounting policy election to apply another appropriate accounting policy that results in the deferral of some portion of the arrangement consideration. The guidance in this ASU will apply to milestones in both single-deliverable and multiple-deliverable arrangements involving research or development transactions. The ASU will be effective for fiscal years (and interim periods within those fiscal years) beginning on or after June 15, 2010. Early application is permitted. Entities can apply this guidance prospectively to milestones achieved after adoption. However, retrospective application to all prior periods is also permitted. The Company is currently evaluating the impact, if any, that the adoption of this ASU will have on its consolidated financial statements.

3. Acquisition of Gloucester Pharmaceuticals, Inc.

On January 15, 2010, Celgene acquired all of the outstanding common stock and stock options of Gloucester in a transaction accounted for under the acquisition method of accounting for business combinations, ASC No. 805 “Business Combinations,” or ASC 805. Under the acquisition method of accounting, the assets acquired and liabilities assumed of Gloucester are recorded as of the acquisition date, at their respective fair values, and consolidated with those of the Company. The reported consolidated financial condition and results of operations of the Company after completion of the acquisition reflect these fair values. Gloucester’s results of operations are included in the Company’s consolidated financial statements from the date of acquisition. Gloucester’s results of operations prior to the acquisition were determined to be immaterial to the Company; therefore, proforma financial statements are not required to be presented.

The Company paid $338.9 million in cash and may make additional payments of $300.0 million in contingent regulatory milestone payments. Prior to the acquisition, Gloucester was a privately held biopharmaceutical company that acquired clinical-stage oncology drug candidates with the goal of advancing them through regulatory approval and commercialization. The Company acquired Gloucester to enhance its portfolio of therapies for patients with life-threatening illnesses worldwide.

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The preliminary purchase price allocation resulted in the following amounts being allocated to the assets acquired and liabilities assumed at the acquisition date based upon their respective fair values summarized below:

		January 15, 2010
Current assets		$	3,132
Developed product rights			197,000
IPR&D product rights			349,000
Other noncurrent assets			54
Assets acquired			549,186
Contingent consideration			(230,201	)
Net deferred taxes			(145,635	)
Other liabilities assumed			(21,347	)
Net assets acquired			152,003
Goodwill			186,907
Cash paid		$	338,910

Assets categories acquired in the Gloucester acquisition included working capital, inventory, fixed assets, developed product right assets and in-process research and development, or IPR&D product right assets. Fair values of working capital and fixed assets were determined to approximate book values while the fair value of inventory was determined to be greater than book value.

The fair value of developed product right assets was based on expected cash flows from developed product right sales of ISTODAX^® (romidepsin), a novel histone deacetylase (HDAC) inhibitor, which was approved for marketing in the United States in November 2009 by the FDA for the treatment of CTCL in patients who have received at least one prior systemic therapy. Prior to the acquisition, Gloucester was also conducting a registration trial in peripheral T-cell lymphoma, or PTCL, in the United States with an anticipated supplemental New Drug Application filing in 2010 for this indication. Fair values were derived using probability-weighted cash flows. The U.S. CTCL developed product right asset will be amortized over its economic useful life of ten years. The compassionate use right asset will be amortized evenly over the asset’s economic useful life of 1.5 years.

The fair value of IPR&D product right assets was based on expected cash flows from sales of ISTODAX^® (romidepsin) for the treatment of PTCL, which had not yet achieved regulatory approval for marketing and have no future alternative use. The $349.0 million estimated fair value of IPR&D product rights was derived using probability-weighted cash flows. The fair value was based on expected cash flows from the treatment of PTCL in the United States and PTCL in the European Union, or E.U., based on key assumptions such as estimates of sales and operating profits related to the programs considering their stages of development; the time and resources needed to complete the regulatory approval process for the products and the life of the potential commercialized products and associated risks, including the inherent difficulties and uncertainties in obtaining regulatory approvals.

The U.S. PTCL IPR&D product right asset was assigned a value of $287.0 million based on related future net cash flows estimated using a risk-adjusted discount rate of 14.5% and an anticipated regulatory approval date in mid-2011 with market exclusivity rights expected to continue through 2017. The E.U. PTCL IPR&D product right asset was assigned a value of $62.0 million based on future net cash flows using a risk-adjusted discount rate of 14.5% and an anticipated regulatory approval date in mid-2015 with market exclusivity rights expected to continue through 2021.

The excess of purchase price over the fair value amounts preliminarily assigned to the assets acquired and liabilities assumed represents the goodwill amount resulting from the acquisition. The Company does not expect any portion of this goodwill to be deductible for tax purposes. The goodwill attributable to the Company’s acquisition of Gloucester has been recorded as a noncurrent asset in its Consolidated Balance Sheet and will not be amortized, but is subject to review for impairment in accordance with ASC 350 “Goodwill and Other Intangible Assets.”

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company accounts for contingent consideration in accordance with applicable guidance provided within the business combination rules of ASC 805. As part of the Company’s consideration for the Gloucester acquisition, it is contractually obligated to pay certain consideration resulting from the outcome of future events. The Company will update its assumptions each reporting period based on new developments and record such amounts at fair value until such consideration is satisfied.

The Gloucester acquisition included two contingent considerations which would obligate the Company to make a $180.0 million cash milestone payment to the former Gloucester shareholders upon the marketing approval for the U.S. PTCL IPR&D product right asset and a $120.0 million cash milestone payment upon the marketing approval for the E.U. PTCL IPR&D product right asset.

The initial fair value of contingent considerations was $230.2 million, consisting of $156.7 million based on the $180.0 million milestone payment upon U.S. PTCL approval and $73.5 million based on the $120.0 million milestone payment upon E.U. PTCL approval. The Company determined the fair value of these obligations to pay additional milestone payments upon approvals based on a probability-weighted income approach. This fair value measurement is based on significant input not observable in the market and thus represents a Level 3 measurement within the fair value hierarchy. The resulting probability-weighted cash flows were discounted using a Baa rated debt yield of 6.15 percent, which the Company believes is appropriate and representative of a market participant assumption. The range of estimated milestone payments is from no payment if both products fail to gain market approval to $300.0 million if both products gain market approval. The Company classified the contingent considerations as liabilities, which were measured at fair value as of the acquisition date. Fair value is based on the future milestone payments adjusted for the probability of each payment and the time until each payment is expected to be made.

Subsequent to the acquisition date, the Company will measure the contingent consideration arrangement at fair value each period with changes in fair value recognized in operating earnings unless changes pertain to facts and circumstances that existed as of the acquisition date, in which case changes are recognized as adjustments to goodwill. Changes in fair values will reflect new information about the IPR&D assets and the passage of time. In the absence of new information, changes in fair value will only reflect the passage of time as development work towards the achievement of the milestones progresses and will be accrued based on an accretion schedule.

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

4. Earnings Per Share

Basic earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding during the period increased to include all additional common shares that would have been outstanding assuming potentially dilutive common shares resulting from option exercises, restricted stock units, warrants and other incentives had been issued and any proceeds thereof used to repurchase common stock at the average market price during the period. The assumed proceeds used to repurchase common stock are the sum of the amount to be paid to the Company upon exercise of options, the amount of compensation cost attributed to future services and not yet recognized and, if applicable, the amount of excess income tax benefit that would be credited to paid-in capital upon exercise.

		Three-Month Periods Ended
		March 31,
		2010				2009
Net income		$	234,442			$	162,883
Weighted-average shares (in thousands):
Basic			459,914				459,583
Effect of dilutive securities:
Options, restricted stock units, warrants and other incentives			7,741				8,522
Diluted			467,655				468,105
Net income per share:
Basic		$	0.51			$	0.35
Diluted		$	0.50			$	0.35

The total number of potential common shares excluded from the diluted earnings per share computation because their inclusion would have been anti-dilutive was 18,775,142 and 17,662,587 shares for the three-month periods ended March 31, 2010 and 2009, respectively.

In April 2009, the Company’s Board of Directors approved a $500.0 million common stock share repurchase program. As of March 31, 2010, an aggregate 4,314,625 shares of common stock of the Company have been repurchased under the program at a total cost of $209.5 million.

5. Comprehensive Income

The components of comprehensive income consist of net income, changes in pension liability, changes in net unrealized gains (losses) on marketable securities classified as available-for-sale, net unrealized gains (losses) related to cash flow hedges and changes in foreign currency translation adjustments.

A summary of accumulated other comprehensive income, net of tax, is summarized as follows:

		Three-Month Periods Ended
		March 31,
		2010				2009
Net income		$	234,442			$	162,883
Other comprehensive income:
Marketable securities:
Net unrealized gains on marketable securities available for sale, net of tax			5,112				1,827
Reclassification adjustment for gains included in net income			(4,976	)			(4,967	)
Total other comprehensive gains (losses) related to marketable securities available for sale, net of tax			136				(3,140	)
Net unrealized gains related to cash flow hedges, net of tax			57,003				52,759
Currency translation adjustments			38,370				(46,765	)
Total other comprehensive income items			95,509				2,854
Comprehensive income		$	329,951			$	165,737

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

6. Financial Instruments and Fair Value Measurement

The table below presents information about assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2010 and the valuation techniques the Company utilized to determine such fair value. Fair values determined based on Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. The Company’s Level 1 assets consist of marketable equity securities. Fair values determined based on Level 2 inputs utilize observable quoted prices for similar assets and liabilities in active markets and observable quoted prices for identical or similar assets in markets that are not very active. The Company’s Level 2 assets consist primarily of U.S. Treasury securities, U.S. government-sponsored agency securities, U.S. government-sponsored agency mortgage-backed securities, non-U.S. government agency and Supranational securities, global corporate debt securities and forward currency contracts. Fair values determined based on Level 3 inputs utilize unobservable inputs and include valuations of assets or liabilities for which there is little, if any, market activity. The Company’s Level 3 assets consist of warrants for the purchase of equity securities in a non-publicly traded company in which the Company has invested and which is party to a collaboration and option agreement with the Company. The Company’s Level 3 liabilities consist of a contingent consideration related to undeveloped product rights resulting from the Gloucester acquisition.

						Quoted Price in				Significant				Significant
						Active Markets for				Other Observable				Unobservable
		Balance at				Identical Assets				Inputs				Inputs
		March 31, 2010				(Level 1)				(Level 2)				(Level 3)
Assets:
Available-for-sale securities		$	1,898,404			$	380			$	1,898,024			$	—
Warrants			1,598				—				—				1,598
Cash equivalents			34,320				—				34,320				—
Forward currency contracts			58,519				—				58,519				—
Total assets		$	1,992,841			$	380			$	1,990,863			$	1,598
Liabilities:
Acquisition-related contingent consideration		$	(235,063	)		$	—			$	—			$	(235,063	)
						Quoted Price in				Significant				Significant
						Active Markets for				Other Observable				Unobservable
		Balance at				Identical Assets				Inputs				Inputs
		December 31, 2009				(Level 1)				(Level 2)				(Level 3)
Assets:
Available-for-sale securities		$	1,894,580			$	512			$	1,894,068			$	—
Warrants			1,598				—				—				1,598
Cash equivalents			183,224				—				183,224				—
Forward currency contracts			7,008				—				7,008				—
Total assets		$	2,086,410			$	512			$	2,084,300			$	1,598

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

There were no security transfers between Levels I and II during the three-month period ended March 31, 2010. The following tables represent a roll-forward of the fair value of Level 3 securities (significant unobservable inputs):

		Three-Month Periods Ended March 31,
		2010				2009
Assets:
Balance at beginning of period		$	1,598			$	11,054
Amounts acquired or issued			—				—
Net gains (realized and unrealized)			—				—
Settlements			—				(2,736	)
Transfers in and/or out of Level 3			—				—
Balance at end of period		$	1,598			$	8,318

		Three-Month Periods Ended March 31,
		2010				2009
Liabilities:
Balance at beginning of period		$	—			$	—
Amounts acquired or issued			(230,201	)			—
Net “accretion”			(4,862	)			—
Settlements			—				—
Transfers in and/or out of Level 3			—				—
Balance at end of period		$	(235,063	)		$	—

7. Derivative Instruments and Hedging Activities

Foreign Currency Forward Contracts: The Company uses foreign currency forward contracts to hedge specific forecasted transactions denominated in foreign currencies and to reduce exposures to foreign currency fluctuations of certain assets and liabilities denominated in foreign currencies.

The Company enters into foreign currency forward contracts to protect against changes in anticipated foreign currency cash flows resulting from changes in foreign currency exchange rates, primarily associated with non-functional currency denominated revenues and expenses of foreign subsidiaries. The foreign currency forward hedging contracts outstanding at March 31, 2010 and December 31, 2009 had settlement dates within 24 months. These foreign currency forward contracts are designated as cash flow hedges and to the extent effective, any unrealized gains or losses on them are reported in other comprehensive income (loss), or OCI, and reclassified to operations in the same periods during which the underlying hedged transactions affect operations. Any ineffectiveness on these foreign currency forward contracts is reported in other income, net. Foreign currency forward contracts entered into to hedge forecasted revenue and expenses were as follows:

		Notional Amount
Foreign Currency		March 31, 2010				December 31, 2009
Euro		$	979,208			$	1,107,340
Canadian Dollar			90,679				—
Total		$	1,069,887			$	1,107,340

The Company considers the impact of its own and the counterparties’ credit risk on the fair value of the contracts as well as the ability of each party to execute its obligations under the contract on an ongoing basis. As of March 31, 2010 and December 31, 2009, credit risk did not materially change the fair value of the Company’s foreign currency forward contracts.

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company also enters into foreign currency forward contracts to reduce exposures to foreign currency fluctuations of certain recognized assets and liabilities denominated in foreign currencies in addition to non-functional currency denominated forecasted revenues and expenses of foreign subsidiaries where product approval has not yet occurred. These foreign currency forward contracts have not been designated as hedges and, accordingly, any changes in their fair value are recognized in other income, net in the current period. The aggregate notional amount of the foreign currency forward non-designated hedging contracts outstanding at March 31, 2010 and December 31, 2009 were $596.9 million and $483.2 million, respectively.

The following table summarizes the fair value and presentation in the consolidated balance sheets for derivative instruments as of March 31, 2010 and December 31, 2009:

		March 31, 2010
		Asset Derivatives						Liability Derivatives
		Balance Sheet						Balance Sheet
Instrument		Location		Fair Value				Location		Fair Value
Foreign currency forward contracts designated		Other current assets		$	42,432			Other current assets		$	7,471
as hedging instruments*		Other current liabilities			2,017			Other current liabilities			2,642
		Other non-current assets			23,475			Other non-current assets			410
Foreign currency forward contracts not designated		Other current assets			4,376			Other current assets			583
as hedging instruments		Other current liabilities			2,034			Other current liabilities			9,805
		Other non-current assets			5,096			Other non-current assets			—
Total				$	79,430					$	20,911

		December 31, 2009
		Asset Derivatives						Liability Derivatives
		Balance Sheet						Balance Sheet
Instrument		Location		Fair Value				Location		Fair Value
Foreign currency forward contracts designated		Other current assets		$	25,403			Other current assets		$	21,346
as hedging instruments*		Other current liabilities			—			Other current liabilities			14,591
		Other non-current assets			11,645			Other non-current assets			—
		Other non-current liabilities			28			Other non-current liabilities			89
Foreign currency forward contracts not designated		Other current assets			6,593			Other current assets			547
as hedging instruments		Other current liabilities			75			Other current liabilities			164
Total				$	43,744					$	36,737

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following tables summarize the effect of derivative instruments designated as hedging instruments on the Consolidated Statements of Operations for the three-month periods ended March 31, 2010 and 2009, respectively:

March 31, 2010

Location of

Amount of

Gain/(Loss)

Gain/(Loss)

Recognized in

Recognized in

Location of

Amount of

Income on

Income on

Amount of

Gain/(Loss)

Gain/(Loss)

Derivative

Derivative

Gain/(Loss)

Reclassified from

Reclassified from

(Ineffective Portion

(Ineffective Portion

Recognized in OCI

Accumulated OCI

Accumulated OCI

and Amount Excluded

and Amount Excluded

on Derivative

into Income

into Income

From Effectiveness

From Effectiveness

Instrument

(Effective Portion)

(Effective Portion)

(Effective Portion)

Testing)

Testing)

Foreign currency forward contracts

$

57,213

(1)

Net product sales

$

213

Other income, net

$

(1,422

)(2)

Research and development

$

(3

)

March 31, 2009

Location of

Amount of

Gain/(Loss)

Gain/(Loss)

Location of

Amount of

Recognized in

Recognized in

Amount of

Gain/(Loss)

Gain/(Loss)

Income on

Income on

Gain/(Loss)

Reclassified from

Reclassified from

Derivative

Derivative

Recognized in OCI

Accumulated OCI

Accumulated OCI

(Amount Excluded

(Amount Excluded

on Derivative

into Income

into Income

From Effectiveness

From Effectiveness

Instrument

(Effective Portion)

(Effective Portion)

(Effective Portion)

Testing)

Testing)

Foreign currency forward contracts

$

53,025

Net product sales

$

(750

)

Other income, net

$

(4,610

)(1)

Research and development

$

1,016

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the effect of derivative instruments not designated as hedging instruments on the Consolidated Statements of Operations for the three-month periods ended March 31, 2010 and 2009:

						Amount of Gain/(Loss) Recognized in
		Location of Gain/(Loss)				Income on Derivative
		Recognized in Income				March 31,
Instrument		on Derivative				2010				2009
Foreign currency forward contracts		Other income, net				$	18,512			$	15,948

8. Cash, Cash Equivalents and Marketable Securities Available-for-Sale

Money market funds of $712.1 million and $860.9 million at March 31, 2010 and December 31, 2009, respectively, were recorded at cost, which approximates fair value and are included in cash and cash equivalents.

The amortized cost, gross unrealized holding gains, gross unrealized holding losses and estimated fair value of available-for-sale securities by major security type and class of security at March 31, 2010 and December 31, 2009 were as follows:

						Gross				Gross				Estimated
		Amortized				Unrealized				Unrealized				Fair
March 31, 2010		Cost				Gain				Loss				Value
U.S. Treasury securities		$	433,134			$	232			$	(786	)		$	432,580
U.S. government-sponsored agency securities			707,909				1,387				(659	)			708,637
U.S. government-sponsored agency MBS			495,394				1,657				(1,228	)			495,823
Non-U.S. government agency and Supranational securities			128,165				381				(69	)			128,477
Corporate debt — global (43% AAA/Aaa rated)			132,494				219				(206	)			132,507
Marketable equity securities			407				—				(27	)			380
Total available-for-sale marketable securities		$	1,897,503			$	3,876			$	(2,975	)		$	1,898,404

						Gross				Gross				Estimated
		Amortized				Unrealized				Unrealized				Fair
December 31, 2009		Cost				Gain				Loss				Value
U.S. Treasury securities		$	502,112			$	244			$	(1,573	)		$	500,783
U.S. government-sponsored agency securities			523,241				1,743				(1,383	)			523,601
U.S. government-sponsored agency MBS			654,251				3,317				(2,034	)			655,534
Non-U.S. government agency and Supranational securities			176,846				484				(448	)			176,882
Corporate debt — global (100% AAA/Aaa rated)			37,437				15				(184	)			37,268
Marketable equity securities			407				105				—				512
Total available-for-sale marketable securities		$	1,894,294			$	5,908			$	(5,622	)		$	1,894,580

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

U.S. government-sponsored agency securities include general unsecured obligations either issued directly by or guaranteed by US Government Sponsored Enterprises. U.S. government-sponsored agency mortgage-backed securities, or MBS, includes mortgage-backed securities issued by the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation and the Government National Mortgage Association. Non-U.S. government agency and Supranational securities consist of direct obligations of highly rated governments of nations other than the United States and obligations of sponsored agencies and other entities that are guaranteed or supported by highly rated governments of nations other then the United States. Corporate debt – global includes obligations issued by investment-grade corporations including some issues that have been guaranteed by governments and government agencies. Net unrealized gains in the marketable debt securities primarily reflect the impact of decreased interest rates at March 31, 2010 and December 31, 2009.

Duration periods of available-for-sale debt securities were as follows at March 31, 2010:

		Amortized				Fair
		Cost				Value
Duration of one year or less		$	810,983			$	811,944
Duration of one through three years			1,031,791				1,031,938
Duration of three through five years			43,940				43,890
Duration of over five years			10,382				10,252
Total		$	1,897,096			$	1,898,024

9. Inventory

A summary of inventories by major category at March 31, 2010 and December 31, 2009 follows:

		March 31,				December 31,
		2010				2009
Raw materials		$	24,089			$	26,345
Work in process			62,983				41,282
Finished goods			15,407				33,056
Total		$	102,479			$	100,683

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

10. Investment in Affiliated Companies

A summary of the Company’s equity investment in affiliated companies follows:

		March 31,				December 31,
Investment in Affiliated Companies		2010				2009
Investment in affiliated companies (1)		$	20,487			$	18,810
Excess of investment over share of equity (2)			2,280				2,666
Investment in affiliated companies		$	22,767			$	21,476

		Three-Month Periods Ended
		March 31,
Equity in Losses of Affiliated Companies		2010				2009
Affiliated companies (gains) losses (1)		$	(741	)		$	771

Additional equity method investments totaling $0.5 million were made during the three-month period ended March 31, 2010.

11. Intangible Assets and Goodwill

Intangible Assets: The Company’s intangible assets consist of developed product rights from the Pharmion Corporation, or Pharmion, and Gloucester acquisitions, IPR&D product rights from the Gloucester acquisition, contract-based licenses, technology and other. Remaining amortization periods related to these intangibles range from two to ten years. The following summary of intangible assets by category includes intangibles currently being amortized and intangibles not yet subject to amortization:

		Gross								Intangible				Weighted
		Carrying				Accumulated				Assets,				Average
March 31, 2010		Value				Amortization				Net				Life (Years)
Amortizable intangible assets:
Acquired developed product rights		$	727,000			$	(227,327	)		$	499,673				5.6
License			4,250				(1,306	)			2,944				13.8
Technology and other			3,092				(1,044	)			2,048				4.4
			734,342				(229,677	)			504,665				5.6
Nonamortized intangible assets:
Acquired IPR&D product rights			349,000				—				349,000
Total intangible assets		$	1,083,342			$	(229,677	)		$	853,665

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

		Gross								Intangible				Weighted
		Carrying				Accumulated				Assets,				Average
December 31, 2009		Value				Amortization				Net				Life (Years)
Amortizable intangible assets:
Acquired developed product rights		$	530,000			$	(185,733	)		$	344,267				6.5
License			4,250				(1,229	)			3,021				13.8
Technology and other			3,098				(844	)			2,254				4.4
Total intangible assets		$	537,348			$	(187,806	)		$	349,542				6.5

The increase in gross carrying value of intangibles at March 31, 2010 compared to December 31, 2009 was primarily due to the acquisition of Gloucester, which resulted in a $546.0 million increase in developed and IPR&D product rights.

Amortization of intangible assets was $41.9 million and $23.8 million for the three-month periods ended March 31, 2010 and 2009, respectively. The increase in amortization expense in 2010 compared to 2009 was primarily due to an acceleration of amortization related to the VIDAZA^® intangible, which reflects an updated forecast related to VIDAZA^® and the initiation of amortization related to the Gloucester intangibles. Assuming no changes in the gross carrying amount of intangible assets, the amortization of intangible assets for the next five years is now estimated to be approximately $182.9 million for 2010, $197.3 million for the year ending December 31, 2011 and $51.9 million for each of the years ending December 31, 2012 through 2014.

Goodwill: At March 31, 2010, the Company’s goodwill related to the January 2010 acquisition of Gloucester, the March 2008 acquisition of Pharmion and the October 2004 acquisition of Penn T Limited. The goodwill related to the Gloucester acquisition reflects the preliminary purchase price allocation of the Gloucester purchase price.

The change in carrying value of goodwill is summarized as follows:

Balance at December 31, 2009		$	578,116
Acquisition of Gloucester			186,907
Tax benefit on the exercise of Pharmion converted stock options			(401	)
Balance at March 31, 2010		$	764,622

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

12. Share-Based Compensation

The following table summarizes the components of share-based compensation expense in the consolidated statements of operations for the three-month periods ended March 31, 2010 and 2009:

		Three-Month Periods Ended
		March 31,
		2010				2009
Cost of good sold		$	1,520			$	971
Research and development			19,129				14,699
Selling, general and administrative			19,931				16,854
Total share-based compensation expense		$	40,580			$	32,524

Share-based compensation cost included in inventory was $2.2 million at March 31, 2010 and $1.9 million at December 31, 2009.

Stock Options: The weighted-average grant date fair value of the stock options granted during the three-month periods ended March 31, 2010 and 2009 was $19.28 per share and $23.85 per share, respectively. The $4.57 decrease from March 31, 2009 to March 31, 2010 reflects the decrease in stock price volatility between the two periods. There have been no significant changes to the assumptions used to estimate the fair value of options granted during the three-month period ended March 31, 2010 compared to those disclosed for the year ended December 31, 2009 in Note 15 to the Consolidated Financial Statements included in the Company’s 2009 Annual Report on Form 10-K.

Stock option transactions for the three-month period ended March 31, 2010 under all plans are as follows:

						Weighted				Weighted
						Average				Average
						Exercise				Remaining				Aggregate
						Price				Contractual				Intrinsic
		Options				Per Option				Term (Years)				Value
Outstanding at December 31, 2009			37,450,036			$	44.63				7.0			$	516,856
Changes during the period:
Granted			2,329,235				57.32
Exercised			(1,326,371	)			24.07
Forfeited			(157,811	)			54.15
Expired			(39,787	)			37.16
Outstanding at March 31, 2010			38,255,302			$	46.09				6.8			$	651,186
Vested at March 31, 2010 or expected to vest in the future			37,621,586			$	45.95				6.8			$	645,674
Vested at March 31, 2010			19,220,556			$	36.67				5.0			$	500,702

The total fair value of shares vested during the three-month periods ended March 31, 2010 and 2009 were $5.5 million and $4.1 million, respectively. The total intrinsic value of stock options exercised during the three-month periods ended March 31, 2010 and 2009 was $25.8 million and $28.9 million, respectively. The Company primarily utilizes newly issued shares to satisfy the exercise of stock options.

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of March 31, 2010, there was $303.7 million of unrecognized compensation expense related to the Company’s stock option plan. These costs will be recognized over an expected remaining weighted-average period of 2.4 years.

Restricted Stock Units: Equity awards may, at the option of employee participants, be divided between stock options and restricted stock units, or RSUs, based on a two-thirds and one-third mix, respectively, using a three-to-one ratio of stock options to RSUs in calculating the number of RSUs to be granted. The fair value of RSUs is determined based on the closing price of the Company’s common stock on the grant dates. Information regarding the Company’s RSUs during the three-month period ended March 31, 2010 is as follows:

						Weighted
						Average
		Share				Grant Date
Nonvested RSUs		Equivalent				Fair Value
Nonvested at December 31, 2009			502,440			$	40.41
Changes during the period:
Granted			30,141				57.94
Vested			(2,055	)			44.94
Forfeited			(5,575	)			39.01
Nonvested at March 31, 2010			524,951			$	41.42

A total of 2,055 RSUs vested during the three-month period ended March 31, 2010. The Company expects to primarily utilize newly issued shares to satisfy the vesting of RSUs.

As of March 31, 2010, there was $14.6 million of total unrecognized compensation cost related to non-vested awards of RSUs. That cost is expected to be recognized over a weighted-average period of 2.1 years. The Company recognizes compensation cost on a straight-line basis over the requisite service period for the entire award, as adjusted for expected forfeitures.

13. Income Taxes

The Company periodically evaluates the likelihood of the realization of its deferred tax assets and reduces the carrying amount of those deferred tax assets by a valuation allowance to the extent it believes a portion will not be realized. The Company considers many factors when assessing the likelihood of future realization of its deferred tax assets, including recent cumulative earnings experience by taxing jurisdiction, expectations of future taxable income, the carryforward periods available to it for tax reporting purposes and other relevant factors. Significant judgment is required in making this assessment.

The Company’s U.S. federal income tax returns have been audited by the Internal Revenue Service, or the IRS, through the year ended December 31, 2005. Tax returns for the years ended December 31, 2006, 2007, and 2008 are currently under examination by the IRS. The Company is also subject to audits by various state and foreign taxing authorities, including, but not limited to, most U.S. states and major European and Asian countries where the Company has operations.

The Company regularly reevaluates its tax positions and the associated interest and potential penalties, if applicable, resulting from audits of federal, state and foreign income tax filings, as well as changes in tax law (including regulations, administrative pronouncements, judicial precedents, etc.) that would reduce the technical merits of the position to below more likely than not. The Company believes that its accruals for tax liabilities are adequate for all open years. Many factors are considered in making these evaluations, including past history, recent interpretations of tax law and the specifics of each matter. Because tax regulations are subject to interpretation and tax litigation is inherently uncertain, these evaluations can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions. The Company applies a variety of methodologies in making these estimates and assumptions which include studies performed by independent economists, advice from industry and subject matter experts, evaluation of public actions taken by the IRS and other taxing authorities, as well as the Company’s industry experience. These evaluations are based on estimates and assumptions that have been deemed reasonable by management. However, if management’s estimates are not representative of actual outcomes, the Company’s results of operations could be materially impacted.

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Unrecognized tax benefits, generally represented by liabilities on the consolidated balance sheet and all subject to tax examinations, arise when the estimated benefit recorded in the financial statements differs from the amounts taken or expected to be taken in a tax return because of the uncertainties described above. These unrecognized tax benefits relate primarily to issues common among multinational corporations. Virtually all of these unrecognized tax benefits, if recognized, would impact the effective income tax rate. The Company accounts for interest and potential penalties related to uncertain tax positions as part of its provision for income taxes. The Company believes that it is reasonably possible that unrecognized tax benefits, as of March 31, 2010, could decrease by approximately $27.8 million over the next 12 months related to the settlement of routine examinations or through the expiration of the statute of limitations. Increases to the amount of unrecognized tax benefits from January 1, 2010 of approximately $22.2 million relate primarily to current year operations. The liability for unrecognized tax benefits is expected to increase in the next 12 months relating to operations occurring in that period.

During the first quarter of 2009, the Company effectively settled examinations with the IRS and with a foreign taxing jurisdiction. The foreign examination related to a subsidiary acquired in the Pharmion acquisition. These settlements resulted in a net tax benefit of $5.3 million, a decrease in the liability for unrecognized tax benefits related to tax positions taken in prior years of $35.1 million and an increase in tax assets of $7.3 million.

14. Collaboration Agreements

Novartis Pharma AG: The Company entered into an agreement with Novartis in which the Company granted to Novartis an exclusive worldwide license (excluding Canada) to develop and market FOCALIN^® (d-methylphenidate, or d — MPH) and FOCALIN XR^®, the long-acting drug formulation for attention deficit disorder, or ADD, and attention deficit hyperactivity disorder, or ADHD. The Company has retained the exclusive commercial rights to FOCALIN^® and FOCALIN XR^® for oncology-related disorders, such as chronic fatigue associated with chemotherapy. The Company also granted Novartis rights to all of its related intellectual property and patents, including formulations of the currently marketed RITALIN LA^®. Under the agreement, the Company is entitled to receive up to $100.0 million in upfront and regulatory achievement milestone payments. To date, the Company has received upfront and regulatory achievement milestone payments totaling $55.0 million. The Company also sells FOCALIN^® to Novartis and currently receives royalties of between 35% and 30% on sales of all of Novartis’ FOCALIN XR^® and RITALIN^® family of ADHD-related products.

The agreement will continue until the later of (i) the tenth anniversary of the first commercial launch on a country by country basis or (ii) when the last applicable patent expires with respect to that country. At the expiration date, the Company shall grant Novartis a perpetual, non-exclusive, royalty-free license to make, have made, use, import and sell the d-MPH and Ritalin^® under its technology.

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Prior to its expiration as described above, the agreement may be terminated by:

(i)

Novartis at their sole discretion, effective 12 months after written notice to the Company, or

(ii)

by:

a.

either party if the other party materially breaches any of its material obligations under the agreement,

b.

the Company if Novartis fails to pay amounts due under the agreement two or more times in a 12-month period,

c.

either party, on a product-by-product and country-by-country basis, in the event of withdrawal of the d-MPH Product or Ritalin® Product from the market because of regulatory mandate,

d.

either party if the other party files for bankruptcy.

If the agreement is terminated by the Company then all licenses granted to Novartis under the agreement will terminate and Novartis will also grant the Company a non-exclusive license to certain of their intellectual property related to the compounds and products.

If the agreement is terminated by Novartis then all licenses granted to Novartis under the agreement will terminate.

If the agreement is terminated by Novartis because of a material breach by the Company, then Novartis can make a claim for damages against the Company and the Company shall grant Novartis a perpetual, non-exclusive, royalty-free license to make, have made, use, import and sell d-MPH and Ritalin^® under the Company’s technology.

When generic versions of long-acting methylphenidate hydrochloride and dexmethylphenidate hydrochloride enter the market, the Company expects Novartis’ sales of Ritalin LA^® and Focalin XR^® products to decrease and therefore its royalties under this agreement to also decrease.

Array BioPharma Inc.: The Company has a research collaboration agreement with Array BioPharma Inc., or Array, focused on the discovery, development and commercialization of novel therapeutics in cancer and inflammation. As part of this agreement, the Company made an upfront payment in September 2007 to Array of $40.0 million, which was recorded as research and development expense, in return for an option to receive exclusive worldwide rights for compounds developed against two of the four research targets defined in the agreement, except for Array’s limited U.S. co-promotional rights. In June 2009, the Company made an additional upfront payment of $4.5 million to expand the research targets defined in the agreement, which was recorded as research and development expense. Array will be responsible for all discovery and clinical development through Phase I or Phase IIa and be entitled to receive, for each compound, potential milestone payments of approximately $200.0 million, if certain discovery, development and regulatory milestones are achieved and $300.0 million if certain commercial milestones are achieved, as well as royalties on net sales.

The Company’s option will terminate upon the earlier of either a termination of the agreement, the date the Company has exercised its options for compounds developed against two of the four research targets defined in the agreement, or September 21, 2012, unless the term is extended. The Company may unilaterally extend the option term for two additional one-year terms until September 21, 2014 and the parties may mutually extend the term for two additional one-year terms until September 21, 2016. Upon exercise of a Company option, the agreement will continue until the Company has satisfied all royalty payment obligations to Array. Upon the expiration of the agreement, Array will grant the Company a fully paid-up, royalty-free license to use certain intellectual properties of Array to market and sell the compounds and products developed under the agreement. The agreement may expire on a product-by-product and country-by-country basis as the Company satisfies its royalty payment obligation with respect to each product in each country.

Prior to its expiration as described above, the agreement may be terminated by:

(i)

the Company at its sole discretion, or

(ii)

either party if the other party:

a.

materially breaches any of its material obligations under the agreement, or

b.

files for bankruptcy.

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

If the agreement is terminated by the Company at its sole discretion or by Array for a material breach by the Company, then the Company’s rights to the compounds and products developed under the agreement will revert to Array. If the agreement is terminated by Array for a material breach by the Company, then the Company will also grant to Array a non-exclusive, royalty-free license to certain intellectual property controlled by the Company necessary to continue the development of such compounds and products. If the agreement is terminated by the Company for a material breach by Array, then, among other things, the Company’s payment obligations under the agreement could be either reduced by 50% or terminated entirely.

PTC Therapeutics, Inc.: In September 2007, the Company invested $20.0 million, of which $1.1 million represented research and development expense, in Series F-2 Convertible Preferred Stock of PTC Therapeutics, Inc., or PTC, and in December 2009, the Company invested an additional $1.5 million in Series G Convertible Preferred Stock of PTC. In September 2007, the Company also entered into a separate research and option agreement whereby PTC would perform discovery research activities. Under the agreement, both parties could subsequently agree to advance research on certain discovery targets and enter into a separate pre-negotiated collaboration and license agreement which would replace the original research and option agreement.

On July 16, 2009, the Company and PTC agreed to advance research on one discovery target and entered into a pre-negotiated collaboration and license agreement under which PTC is eligible to receive quarterly research fees, as defined in the agreement, and is entitled to receive potential milestone payments of approximately $129.0 million if certain development, regulatory and sales-based milestones are achieved. PTC will also receive tiered royalties on worldwide net sales. Under the agreement, the Company may transfer certain research and development activities from PTC to the Company and upon such transfer the Company will no longer fund such quarterly research fees to PTC.

The agreement will continue until the Company has satisfied all royalty payment obligations to PTC. Upon the Company’s full satisfaction of its royalty payment obligations to PTC under the agreement, the license granted to the Company by PTC under the agreement will become a non-exclusive, fully paid-up, sub-licensable, royalty-free license to use certain intellectual property of PTC to market and sell the products developed under the agreement. The agreement may expire on a product-by-product and country-by-country basis as the Company satisfies its royalty payment obligation with respect to each product in each country.

Prior to its expiration as described above, the agreement may be terminated by:

(i)

the Company at its sole discretion following the first anniversary of the agreement, or

(ii)

either party if the other party:

a.

materially breaches any of its material obligations under the agreement, or

b.

files for bankruptcy.

If the agreement is terminated by the Company at its sole discretion or by PTC for a material breach by the Company, then all licenses granted to the Company under the agreement will terminate. If PTC materially breaches any of its obligations under the agreement, the Company can either terminate the agreement, in which case all licenses and rights granted under the agreement are terminated, or elect to continue the agreement, in which case all milestone obligations cease and future royalties payable by the Company under the agreement will be reduced by between 50% and 70%.

Acceleron Pharma: The Company has a worldwide strategic collaboration with Acceleron Pharma, or Acceleron, for the joint development and commercialization of ACE-011, currently being studied for treatment of chemotherapy-induced anemia, metastatic bone disease and renal anemia. The collaboration combines both companies’ resources and commitment to developing products for the treatment of cancer and cancer-related bone loss. The agreement also includes an option for certain discovery stage programs. Under the terms of the agreement, the Company and Acceleron will jointly develop, manufacture and commercialize Acceleron’s products for bone loss. The Company made an upfront payment to Acceleron in February 2008 of $50.0 million, which included a $5.0 million equity investment in Acceleron, with the remainder recorded as research and development expense. In addition, in the event of an initial public offering of Acceleron, the Company will purchase a minimum of $7.0 million of Acceleron common stock.

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Acceleron will retain responsibility for initial activities, including research and development, through the end of Phase IIa clinical trials, as well as manufacturing the clinical supplies for these studies. In turn, the Company will conduct the Phase IIb and Phase III clinical studies and will oversee the manufacture of Phase III and commercial supplies. Acceleron will pay a share of the development expenses and is eligible to receive development, regulatory approval and sales-based milestones of up to $510.0 million for the ACE-011 program and up to an additional $437.0 million for each of the three discovery stage programs. The companies will co-promote the products in North America. Acceleron will receive tiered royalties on worldwide net sales.

The agreement will continue until the Company has satisfied all royalty payment obligations to Acceleron and the Company has either exercised or forfeited all of its options under the agreement. Upon the Company’s full satisfaction of its royalty payment obligations to Acceleron under the agreement, all licenses granted to the Company by Acceleron under the agreement will become fully paid-up, perpetual, non-exclusive, irrevocable and royalty-free licenses. The agreement may expire on a product-by-product and country-by-country basis as the Company satisfies its royalty payment obligation with respect to each product in each country.

Prior to its expiration as described above, the agreement may be terminated by:

(i)

the Company at its sole discretion, or

(ii)

either party if the other party:

a.

materially breaches any of its material obligations under the agreement, or

b.

files for bankruptcy.

If the agreement is terminated by the Company at its sole discretion or by Acceleron for a material breach by the Company, then all licenses granted to the Company under the agreement will terminate and the Company will also grant to Acceleron a non-exclusive license to certain intellectual property of the Company related to the compounds and products. If the agreement is terminated by the Company for a material breach by Acceleron, then, among other things, (A) the licenses granted to Acceleron under the agreement will terminate, (B) the licenses granted to the Company will continue in perpetuity, (C) all future royalties payable by the Company under the agreement will be reduced by 50% and (D) the Company’s obligation to make any future milestone payments will terminate.

Cabrellis Pharmaceuticals Corp.: The Company, as a result of its acquisition of Pharmion, obtained an exclusive license to develop and commercialize amrubicin in North America and Europe pursuant to a license agreement with Dainippon Sumitomo Pharma Co. Ltd, or DSP. Pursuant to Pharmion’s acquisition of Cabrellis Pharmaceutics Corp., or Cabrellis, prior to the Company’s acquisition of Pharmion, the Company will pay $12.5 million for each approval of amrubicin in an initial indication by regulatory authorities in the United States and the E.U. to the former shareholders of Cabrellis. Upon approval of amrubicin for a second indication in the United States or the E.U., the Company will pay an additional $10.0 million for each market to the former shareholders of Cabrellis. Under the terms of the license agreement for amrubicin, the Company is required to make milestone payments of $7.0 million and $1.0 million to DSP upon regulatory approval of amrubicin in the United States and upon receipt of the first approval in the E.U., respectively, and up to $17.5 million upon achieving certain annual sales levels in the United States. Pursuant to the supply agreement for amrubicin, the Company is to pay DSP a semiannual supply price calculated as a percentage of net sales for a period of ten years. In September 2008, amrubicin was granted fast-track product designation by the FDA for the treatment of small cell lung cancer after first-line chemotherapy.

The amrubicin license expires on a country-by-country basis and on a product-by-product basis upon the later of (i) the tenth anniversary of the first commercial sale of the applicable product in a given country after the issuance of marketing authorization in such country and (ii) the first day of the first quarter for which the total number of generic product units sold in a given country exceeds 20% of the total number of generic product units sold plus licensed product units sold in the relevant country during the same calendar quarter.

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Prior to its expiration as described above, the amrubicin license may be terminated by:

(i)

the Company at its sole discretion,

(ii)

either party if the other party:

a.

materially breaches any of its material obligations under the agreement, or

b.

files for bankruptcy,

(iii)

DSP if the Company takes any action to challenge the title or validity of the patents owned by DSP, or

(iv)

DSP in the event of a change in control of the Company.

If the agreement is terminated by the Company at its sole discretion or by DSP under circumstances described in clauses (ii)(x) and (iii) above, then the Company will transfer its rights to the compounds and products developed under the agreement to DSP and will also grant to DSP a non-exclusive, perpetual, royalty-free license to certain intellectual property controlled by the Company necessary to continue the development of such compounds and products. If the agreement is terminated by the Company for a material breach by DSP, then, among other things, DSP will grant to the Company an exclusive, perpetual, paid-up license to all of the intellectual property of DSP necessary to continue the development, marketing and selling of the compounds and products subject to the agreement.

GlobeImmune, Inc.: In September 2007, the Company made a $3.0 million equity investment in GlobeImmune, Inc., or GlobeImmune. In April 2009 and May 2009, the Company made additional $0.1 million and $10.0 million equity investments, respectively, in GlobeImmune. In addition, the Company has a collaboration and option agreement with GlobeImmune focused on the discovery, development and commercialization of novel therapeutics in cancer. As part of this agreement, the Company made an upfront payment in May 2009 of $30.0 million, which was recorded as research and development expense, to GlobeImmune in return for the option to license compounds and products based on the GI-4000, GI-6200, GI-3000 and GI-10000 oncology drug candidate programs as well as oncology compounds and products resulting from future programs controlled by GlobeImmune. GlobeImmune will be responsible for all discovery and clinical development until the Company exercises its option with respect to a drug candidate program and GlobeImmune will be entitled to receive potential milestone payments of approximately $230.0 million for the GI-4000 program, $145.0 million for each of the GI-6200, GI-3000 and GI-10000 programs as well as $161.0 million for each additional future program if certain development, regulatory and sales-based milestones are achieved. GlobeImmune will also receive tiered royalties on worldwide net sales.

The Company’s options with respect to the GI-4000, GI-6200, GI-3000 and GI-10000 oncology drug candidate programs will terminate if the Company does not exercise its respective options after delivery of certain reports from GlobeImmune on the completed clinical trials with respect to each drug candidate program, as set forth in the initial development plan specified in the agreement. If the Company does not exercise its options with respect to any drug candidate program or future program, the Company’s option with respect to the oncology products resulting from future programs controlled by GlobeImmune will terminate three years after the last of the options with respect to the GI-4000, GI-6200, GI-3000 and GI-10000 oncology drug candidate programs terminates. Upon exercise of a Company option, the agreement will continue until the Company has satisfied all royalty payment obligations to GlobeImmune. Upon the expiration of the agreement, on a product by product, country by country basis, GlobeImmune will grant the Company an exclusive, fully paid-up, royalty-free, perpetual license to use certain intellectual properties of GlobeImmune to market and sell the compounds and products developed under the agreement. The agreement may expire on a product-by-product and country-by-country basis as the Company satisfies its royalty payment obligation with respect to each product in each country.

Prior to its expiration as described above, the agreement may be terminated by:

(i)

the Company at its sole discretion, or

(ii)

either party if the other party:

a.

materially breaches any of its material obligations under the agreement, or

b.

files for bankruptcy.

CELGENE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

If the agreement is terminated by the Company at its sole discretion or by GlobeImmune for a material breach by the Company, then the Company’s rights to the compounds and products developed under the agreement will revert to GlobeImmune. If the agreement is terminated by the Company for a material breach by GlobeImmune, then, among other things, the Company’s royalty payment obligations under the agreement will be reduced by 50%, the Company’s development milestone payment obligations under the agreement will be reduced by 50% or terminated entirely and the Company’s sales milestone payment obligations under the agreement will be terminated entirely.

15. Commitments and contingencies

Collaboration Arrangements: The Company has entered into certain research and development collaboration agreements, as identified in Note 14, with third parties that include the funding of certain development, manufacturing and commercialization efforts with the potential for future milestone and royalty payments upon the achievement of pre-established developmental, regulatory and/or commercial targets. The Company’s obligation to fund these efforts is contingent upon continued involvement in the programs and/or the lack of any adverse events which could cause the discontinuance of the programs. Due to the nature of these arrangements, the future potential payments are inherently uncertain, and accordingly no amounts have been recorded in the Company’s consolidated balance sheets at March 31, 2010 or December 31, 2009.

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

16. Subsequent Events

The Company’s management has evaluated its subsequent events for disclosure in these interim consolidated financial statements and has identified the following events:

On April 14, 2010, the Company and Agios Pharmaceuticals Inc., or Agios, entered into a pre-negotiated collaboration and licensing agreement focused on targeting cancer metabolism. Under terms of the agreement, the Company will pay Agios an aggregate $130.0 million, consisting of a $121.2 million non-refundable upfront payment which will be expensed by the Company to research and development in the second quarter of 2010 and an estimated $8.8 million equity investment in Agios Series B Convertible Preferred Stock. The Company receives an initial period of exclusivity during which it has the option to develop any drugs resulting from the Agios cancer metabolism research platform and may extend this exclusivity period through additional funding. The Company has an exclusive option to license any resulting clinical candidates and will lead and fund global development and commercialization of licensed programs. On each program, Agios may receive up to $120 million in milestones as well as royalties on sales, and may also participate in the development and commercialization of certain products in the United States.

On April 29, 2010, the Company announced its senior management succession plan. As of the Company’s annual meeting, scheduled on June 16, 2010, Dr. Sol J. Barer currently Chairman of the Board of Directors and Chief Executive Officer, will be appointed Executive Chairman of the Board of Directors through December 31, 2010 and Robert J. Hugin, currently President and Chief Operating Officer, will be appointed Chief Executive Officer of the Company. Effective January 1, 2011, Dr. Barer will be named Non-Executive Chairman and will continue with the Company in a consulting capacity until December 31, 2012.

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Information

Certain statements contained or incorporated by reference in this Quarterly Report on Form 10-Q are forward-looking statements concerning our business, results of operations, economic performance and financial condition based on our current expectations. These forward-looking statements are not guarantees of future performance and involve risks and uncertainties that could cause actual results to differ materially from those implied by such forward-looking statements. Given these risks and uncertainties, you are cautioned not to place undue reliance on any forward-looking statements.

Executive Summary

Celgene Corporation and its subsidiaries (collectively “we” or “our”) is a global integrated biopharmaceutical company primarily engaged in the discovery, development and commercialization of innovative therapies designed to treat cancer and immune-inflammatory related diseases.

Our primary commercial stage products include REVLIMID^®, THALOMID^® (inclusive of Thalidomide Celgene^TM and Thalidomide Pharmion^TM)and VIDAZA^®.

REVLIMID^® is an oral immunomodulatory drug marketed in the United States, Europe and Asia / Pacific for patients with multiple myeloma who have received at least one prior therapy and in the United States, Canada and certain countries in Latin America for the treatment of transfusion-dependent anemia due to low- or intermediate-1-risk myelodysplastic syndromes, or MDS, associated with a deletion 5q cytogenetic abnormality with or without additional cytogenetic abnormalities. THALOMID^® is marketed for patients with newly diagnosed multiple myeloma and for the acute treatment of the cutaneous manifestations of moderate to severe erythema nodosum leprosum, or ENL, an inflammatory complication of leprosy. VIDAZA^® is a pyrimidine nucleoside analog that has been shown to reverse the effects of DNA hypermethylation and promote subsequent gene re-expression. VIDAZA^® is licensed from Pfizer, and is marketed in the United States for the treatment of all subtypes of MDS and was granted orphan drug designation for the treatment of MDS through May 2011. VIDAZA^® is a Category 1 recommended treatment for patients with intermediate-2 and high-risk MDS according to the National Comprehensive Cancer Network, or NCCN. In Europe, VIDAZA^® is marketed for the treatment of certain qualified adult patients and was granted orphan drug designation for the treatment of MDS and acute myeloid leukemia, or AML, in the European Union, or E.U., expiring December 2018. FOCALIN^® is approved for the treatment of attention deficit hyperactivity disorder, or ADHD and is sold exclusively to Novartis Pharma AG, or Novartis. ISTODAX^® (romidepsin) was obtained in the acquisition of Gloucester Pharmaceuticals, Inc., or Gloucester, and was approved in November 2009 by the U.S. Food and Drug Administration, or FDA, for the treatment of cutaneous T-cell lymphoma, or CTCL, in patients who have received at least one prior systemic therapy. Additionally, ISTODAX^® has received both orphan drug designation for the treatment of non-Hodgkin’s T-cell lymphomas, which includes CTCL and peripheral T-cell lymphoma, or PTCL, and fast-track status in PTCL from the FDA. The European Agency for the Evaluation of Medicinal Products, or EMEA, has granted orphan status designation for ISTODAX^® for the treatment of both CTCL and PTCL. ISTODAX^® was launched in the United States in the first quarter of 2010.

Additional sources of revenue include a licensing agreement with Novartis, which entitles us to royalties on FOCALIN XR^® and the entire RITALIN^® family of drugs, residual payments from GlaxoSmithKline, or GSK, based upon GSK’s ALKERAN^® revenues through the end of March 2011, sale of services through our Cellular Therapeutics subsidiary and miscellaneous licensing agreements.

We continue to invest substantially in research and development, and the drug candidates in our pipeline are at various stages of preclinical and clinical development. These candidates include our IMiDs^® compounds, which are a class of compounds proprietary to us and having certain immunomodulatory and other biologically important properties, in addition to our leading oral anti-inflammatory agents and cell products. We believe that continued acceptance of our primary commercial stage products, depth of our product pipeline, regulatory approvals of both new products and expanded use of existing products provide the catalysts for future growth. See also Risk Factors contained in Part I, Item 1A of this Quarterly Report on Form 10-Q.

The following table summarizes total revenue and earnings for the three-month periods ended March 31, 2010 and 2009:

		Three-Month Periods Ended
		March 31,												Percent
(Amounts in thousands, except earnings per share)		2010				2009				Increase				Change
Total revenue		$	791,254			$	605,053			$	186,201				30.8	%
Net income		$	234,442			$	162,883			$	71,559				43.9	%
Diluted earnings per share		$	0.50			$	0.35			$	0.15				42.9	%

The increase in revenue for the three-month period ended March 31, 2010 compared to the three-month period ended March 31, 2009 was primarily due to continued growth of REVLIMID^® and VIDAZA^® in both U.S. and international markets. Net income and diluted earnings per share for the three-month period ended March 31, 2010 reflect the continued growth in sales, partly offset by increased spending for new product launches, research and development activities and expansion of our international operations.

Results of Operations:

Three-Month Periods Ended March 31, 2010 and 2009

Total Revenue: Total revenue and related percentages for the three-month periods ended March 31, 2010 and 2009 were as follows:

		Three-Month Periods Ended
		March 31,								Increase				Percent
(Amounts in thousands)		2010				2009				(Decrease)				Change
Net product sales:
REVLIMID®		$	530,466			$	362,516			$	167,950				46.3	%
THALOMID®			104,017				113,964				(9,947	)			-8.7	%
VIDAZA®			120,345				75,382				44,963				59.6	%
Other			4,583				24,370				(19,787	)			-81.2	%
Total net product sales		$	759,411			$	576,232			$	183,179				31.8	%
Collaborative agreements and other revenue			2,380				2,244				136				6.1	%
Royalty revenue			29,463				26,577				2,886				10.9	%
Total revenue		$	791,254			$	605,053			$	186,201				30.8	%