You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and accompanying notes included elsewhere in this quarterly report. In addition to the historical information, the discussion in this quarterly report contains certain forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated by the forward-looking statements due to our critical accounting estimates discussed below and important factors set forth in this quarterly report, including under "Risk Factors" in Part II, Item 1A of this quarterly report

Overview

We are a global pharmaceutical company focused on advancing the treatment of critical care patients through the delivery of innovative, cost-effective medicines to the worldwide hospital marketplace. We have two marketed products, Angiomax® (bivalirudin) and Cleviprex™ (clevidipine butyrate) injectable emulsion, one product in late-stage development, cangrelor, and one compound, CU-2010, scheduled to enter clinical development in the first half of 2009. We market Angiomax to interventional cardiology customers for its approved uses in patients undergoing percutaneous coronary intervention, or PCI, including in patients with or at risk of heparin-induced thrombocytopenia and thrombosis syndrome, a complication of heparin administration known as HIT/HITTS that can result in limb amputation, multi-organ failure and death. In Europe, we also market Angiomax for use in adult patients with acute coronary syndrome, or ACS. We market Cleviprex to anesthesiology/surgery, critical care and emergency department practitioners in the United States for its approved use for the reduction of blood pressure when oral therapy is not feasible or not desirable. We are also developing Angiomax and Cleviprex for additional indications.

We market and sell Angiomax and Cleviprex in the United States with a joint sales force that, as of September 30, 2008, consisted of 190 representatives and managers experienced in selling to hospital customers. In Europe, we market and sell Angiox® (bivalirudin), the name under which we sell Angiomax in Europe, with a sales force that we are currently building and expects to total approximately 70 sales representatives and managers by the end of the first quarter of 2009. Cleviprex is not approved for sale outside the United States. Our revenues to date have been generated principally from sales of Angiomax in the United States. We are increasing our sales force worldwide in connection with the expansion of our sales and marketing efforts in Europe, approval of the label expansion for the use of Angiox for ACS in Europe, and the approval by the U.S. Food and Drug Administration, or FDA, of Cleviprex for the reduction of blood pressure when oral therapy is not feasible or not desirable.

Research and development expenses represent costs incurred for product acquisition, clinical trials, activities relating to regulatory filings and manufacturing development efforts. We outsource much of our clinical trials and all of our manufacturing development activities to third parties to maximize efficiency and minimize our internal overhead. We expense our research and development costs as they are incurred. Selling, general and administrative expenses consist primarily of salaries and related expenses, general corporate activities and costs associated with marketing and promotional activities. Research and development expense, selling, general and administrative expense and cost of revenue also include stock-based compensation expense, which we allocate based on the responsibilities of the recipients of the stock-based compensation.

Except for 2004 and 2006, we have incurred net losses on an annual basis since our inception. As of September 30, 2008, we had an accumulated deficit of approximately $263.8 million. We expect to make substantial expenditures to further develop and commercialize our products, including costs and expenses associated with clinical trials, regulatory approvals and commercialization. Although we achieved profitability in 2004 and in 2006, we do not expect to be profitable in 2008 primarily as a result of the costs incurred in connection with our acquisition of Curacyte Discovery GmbH, or Curacyte Discovery, in August 2008. We were also not profitable in 2007, primarily as a result of the costs incurred in connection with the Nycomed transaction, which is described below. We will likely need to generate significantly greater revenue in future periods to achieve and maintain profitability in light of our planned expenditures.

In March 2007, we entered into an agreement with a third party to distribute Angiomax in the United States through a sole source distribution model. Cleviprex, which was launched in the United States in September 2008, is distributed under the same sole source distribution model with the same third party. Under this model, we sell Angiomax and Cleviprex to our sole source distributor, which then sells Angiomax and Cleviprex to a limited number of national medical and pharmaceutical wholesalers with distribution centers located throughout the United States and, in certain cases, directly to hospitals. Prior to adopting this sole source distribution model, we sold Angiomax to these wholesalers directly and these wholesalers then sold Angiomax to hospitals. We began selling Angiomax under this revised distribution system during the quarter ended March 31, 2007. Outside the United States, we sell Angiomax either directly to hospitals or to wholesalers or international distributors, which then sell Angiomax to hospitals.

On July 1, 2007, we entered into a series of agreements with Nycomed pursuant to which we terminated our prior distribution agreement with Nycomed and reacquired all development, commercial and distribution rights for Angiox in the European Union (excluding Spain, Portugal and Greece) and the former Soviet republics, or collectively, the Nycomed territory. Prior to entering into the Nycomed agreements, Nycomed served as the exclusive distributor of Angiox in the Nycomed territory pursuant to a sales, marketing and distribution agreement, dated March 25, 2002, as amended. Pursuant to the Nycomed agreements, we and Nycomed agreed to transition the Angiox rights held by Nycomed to us. Under these arrangements, we assumed control of the marketing of Angiox immediately and Nycomed agreed to provide, on a transitional basis, sales operations services, which ended December 31, 2007, and product distribution services through 2008. We assumed control of the distribution of Angiox in the majority of countries in the Nycomed territory during the third quarter of 2008 and anticipate assuming control of the distribution in the remaining countries by the end of 2008.

Under the terms of the transitional distribution agreement with Nycomed, upon the sale by Nycomed to third parties of vials of Angiox purchased by Nycomed from us prior to July 1, 2007, which we refer to as existing inventory, Nycomed agreed to pay us a specified percentage of Nycomed's net sales of Angiox, less the amount previously paid by Nycomed for the existing inventory. Under the transitional distribution agreement, Nycomed had the right to return to us any existing inventory as of June 30, 2008 for the price paid by Nycomed to us for such inventory. We recorded a reserve of $3.0 million in the fourth quarter of 2007 for the existing inventory at Nycomed which we did not believe would be sold by Nycomed prior to June 30, 2008 and would be subject to return in accordance with such agreement. During the third quarter of 2008, we reduced the reserve by $1.3 million as Nycomed sold a portion of its existing inventory during the third quarter of 2008.

Under the transitional services agreement we had entered into with Nycomed, Nycomed performed detailing and other selling, sales management, product/marketing management, medical advisor, international marketing and certain pharmacovigilance services in accordance with an agreed upon marketing plan which ended December 31, 2007. Nycomed remains responsible for safety reporting for as long as it sells Angiox in the Nycomed territory. Pursuant to the agreement, we agreed to pay Nycomed's personnel costs, plus an agreed upon markup, for the performance of the services, in accordance with a budget detailed by country and function. In addition, we agreed to pay Nycomed's costs, in accordance with a specified budget, for performing specified promotional activities during the term of the services agreement. This services agreement terminated on December 31, 2007.

We have incurred total costs of $45.7 million in connection with the reacquisition of the rights to develop, distribute and market Angiox in the Nycomed territory. This amount includes the milestone payments of $20.0 million paid to Nycomed on June 2, 2007, $15.0 million paid to Nycomed on January 15, 2008 and $5.0 million paid to Nycomed on July 8, 2008, as well as an additional $5.0 million paid to Nycomed on July 8, 2008 for our obtaining European Commission approval to market Angiox for ACS in January 2008.

During the third quarter of 2007, we allocated $30.8 million of these costs as expense attributable to the termination of the prior distribution agreement with Nycomed and $14.9 million to intangible assets. The $30.8 million expense was offset in part by the write-off of approximately $2.7 million of deferred revenue, which amount represented the unamortized portion of deferred revenue related to milestone payments received from Nycomed in 2004 and 2002. Such amounts were included in selling, general and administrative expense on the consolidated statements of operations for the year ended December 31, 2007. We allocated approximately $14.9 million of the costs associated with the reacquisition of the rights to develop, distribute and market Angiox in the European Union to intangible assets. These intangible assets are being amortized over the remaining patent life of Angiox, which expires in 2015. The period in which amortization expense will be recorded reflects the pattern in which the economic benefits of the intangible assets are expected to be consumed.

To support the marketing, sales and distribution efforts of Angiox, we are taking the necessary steps to develop our business infrastructure outside the United States. We have conducted market research to examine the number of PCI procedures performed globally and to identify key opinion leaders on a global basis. We are enhancing our worldwide development, sales and marketing capabilities, with European operations being our initial focus. We believe that by establishing operations in Europe for Angiox, we will be positioned to commercialize our pipeline of acute care product candidates upon their approval, including Cleviprex, cangrelor and CU-2010, in Europe.

In August 2008, we acquired Curacyte Discovery, a wholly owned subsidiary of Curacyte AG. Curacyte Discovery, a German limited liability company, is primarily engaged in the discovery and development of small molecule serine protease inhibitors. Its lead compound, CU-2010, is being developed for the prevention of blood loss during surgery. We expect to initiate Phase I clinical trials of CU-2010 during the first half of 2009. In connection with the acquisition, we paid Curacyte AG an upfront payment of €14.5 million (approximately $22.9 million) and agreed to pay a contingent milestone payment of €10.5 million if the Company elects to continue to proceed with clinical development of CU-2010 and possible future sales royalty

payments and a commercial milestone payment.

The total cost of the acquisition was approximately $23.7 million which included a purchase price of approximately $22.9 million and direct acquisition costs of $0.8 million. Since the acquisition date, results of Curacyte Discovery's operations have been included in our consolidated financial statements. The purchase price was allocated to the estimated fair value of assets acquired and liabilities assumed based on a preliminary valuation and management estimates. Approximately $21.4 million of the purchase price was allocated to in-process research and development and was expensed upon completion of the acquisition. This amount was recorded as research and development in the consolidated statements of operations. The remaining portion of the purchase price was allocated to net tangible assets. We expect to complete the purchase price allocation within one year from the date of the acquisition.

We have accrued for U.S. and state income taxes, for state taxes based on net worth and for a certain amount of income tax in international jurisdictions in our financial statements to the extent these taxes apply. At December 31, 2007, net operating losses available to offset future taxable income for federal income tax purposes were approximately $197.0 million. If not utilized, federal net operating loss carryforwards will expire at various dates beginning in 2019 and ending in 2026. During 2006, we reduced a portion of our valuation allowance associated with the deferred tax assets because at that time we considered the realization of these assets to be more likely than not. The future utilization of net operating losses and credits may be subject to limitation based upon changes in ownership under the rules of the Internal Revenue Code, or IRC. We experienced changes in ownership as defined by Section 382 of the IRC during the years ended December 31, 1998 and 2002. Based on the market value of our common stock at the time of those changes, we believe there will be no impact on our ability to utilize our net operating losses and credits. Of the $197.0 million of our federal net operating losses, $61.3 million is subject to limitations through 2010.

Application of Critical Accounting Estimates

The discussion and analysis of our financial condition and results of operations is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP, for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. The preparation of these financial statements requires us to make estimates and judgments that affect our reported assets and liabilities, revenues and expenses, and other financial information. Actual results may differ significantly from these estimates under different assumptions and conditions. In addition, our reported financial condition and results of operations could vary due to a change in the application of a particular accounting standard.

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

† the nature of the estimate or assumption is material due to the level of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change; and

† the impact of the estimates and assumptions on financial condition or operating performance is material.

Our significant accounting policies are more fully described in note 2 of the Unaudited Condensed Consolidated Financial Statements section of this quarterly report on Form 10-Q and note 2 of the Consolidated Financial Statements in our annual report on Form 10-K for the year ended December 31, 2007. Not all of these significant accounting policies, however, require that we make estimates and assumptions that we believe are "critical accounting estimates." We have discussed our accounting policies with the audit committee of our board of directors, and we believe that our estimates relating to revenue recognition, inventory, stock-based compensation and income taxes described under the caption "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations-Application of Critical Accounting Estimates" in our annual report on Form 10-K for the year ended December 31, 2007 are "critical accounting estimates." There have been no significant changes to our critical accounting estimates since December 31, 2007, except with respect to the revenue recognition policy for Cleviprex and our investment in a specialty pharmaceutical company.

In March 2007, we entered into an agreement with a third party to distribute Angiomax in the United States through a sole source distribution model. Cleviprex, which was launched in the United States in September 2008, is distributed under the same sole source distribution model with the same third party. Under this model, we sell Angiomax and Cleviprex to our sole source distributor, which then sells Angiomax and Cleviprex to a limited number of national medical and pharmaceutical wholesalers with distribution centers located throughout the United States and in certain cases, directly to hospitals. Prior to adopting this sole source distribution model, we sold Angiomax to these wholesalers directly and these wholesalers then sold

Angiomax to hospitals. Outside of the United States, we sell Angiomax either directly to hospitals or to wholesalers or international distributors which then sell Angiomax to hospitals.

We do not recognize revenue from product sales until there is persuasive evidence of an arrangement, delivery has occurred, the price is fixed and determinable, the buyer is obligated to pay us, the obligation to pay is not contingent on resale of the product, the buyer has economic substance apart from us, we have no obligation to bring about sale of the product, the amount of returns can be reasonably estimated and collectibility is reasonably assured.

Initial gross wholesaler orders of Cleviprex in the United States in the third quarter of 2008 totaled $10.0 million and were recorded as deferred revenue as we could not estimate certain adjustments to gross revenue, including returns. Under this deferred revenue model, we do not recognize revenue upon product shipment. Instead, upon product shipment, we invoice our sole source distributor, record deferred revenue at gross invoice sales price, classify the cost basis of the product held by the sole source distributor as finished goods inventory held by others and include such amount within prepaid expenses and other current assets on our consolidated balance sheets. We expect to recognize the deferred revenue as revenue in the fourth quarter of 2008 when hospitals purchase product from the sole source distributor or wholesaler to which the sole source distributor sells Cleviprex at which time returns are unlikely. We expect to recognize Cleviprex revenue upon shipment to our sole source distributor in the same manner as we recognize Angiomax revenue when we have sufficient information to develop reasonable estimates of expected returns and other adjustments to gross revenue.

On July 2, 2008, we made a short term convertible loan of $5.0 million to a specialty pharmaceutical company with expertise in drug development. This loan converted into 2.7 million shares of convertible preferred stock in the third quarter of 2008. The $5.0 million has been classified as investments and is included in other assets on our consolidated balance sheets. We hold less than 20% of the issued and outstanding shares of the specialty pharmaceutical company and do not have significant influence over the company. Accordingly, we have accounted for the investment under the cost method and included it in other assets on our consolidated balance sheets. Under the cost method, an investment is carried at cost until it is sold or there is evidence that changes in the business environment or other facts and circumstances suggest it may be other than temporarily impaired based on criteria outlined in FAS Staff Position Nos. FAS 115-1 and FAS 124-1 and on Emerging Issues Task Force Issue No. 03-1, "The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments."

Results of Operations

Three Months Ended September 30, 2008 and 2007

Net Revenue. Net revenue increased 42% to $88.1 million for the three months ended September 30, 2008 as compared to $62.2 million for the three months ended September 30, 2007. The following table reflects the components of net revenue for the three months ended September 30, 2008 and 2007:

                                  Net Revenue



                                             Three Months Ended September 30,
                                                     % of Total              % of Total
Net Revenue                             2008          Revenue       2007      Revenue
                                   (in thousands)              (in thousands)
Angiomax
United States sales                $        84,979           96 % $ 60,730           98 %
International net revenue                    2,556            3 %      305            0 %
Revenue from collaborations, net               591            1 %    1,156            2 %
Total net revenue                  $        88,126          100 % $ 62,191          100 %

Net revenue for the three months ended September 30, 2008 increased compared to the three months ended September 30, 2007, primarily due to the increase in U.S. sales of Angiomax. Sales of Angiomax in the United States increased $24.2 million, or 40%, due to increased demand by existing hospital customers, the addition of new hospital customers and the price increases we implemented in August 2007 and January 2008. Of the 40% increase in United States sales in the third quarter of 2008 compared to the same quarter in 2007, approximately 24% was related to hospital demand by existing and new customers and approximately 16% was attributable to the price increases.

International net revenue increased $2.3 million during the three months ended September 30, 2008 compared to the three months ended September 30, 2007. During the fourth quarter of 2007, we recorded a $3.0 million reserve for existing inventory at Nycomed, which we did not believe would be sold by Nycomed prior to June 30, 2008 and would be subject to return in accordance with our transitional distribution agreement with Nycomed. During the third quarter of 2008, Nycomed sold approximately $1.3 million of its existing inventory, which resulted in an increase of $1.3 million to international net revenue and a decrease of the reserve for existing inventory. The existing inventory at September 30, 2008 was $1.7 million, which represents the amount of inventory subject to return by Nycomed. Approximately $0.4 million of the increase in international net revenue reflects the direct sales we made after assuming control of the distribution of Angiox in the majority of countries in the Nycomed territory during the third quarter of 2008. We anticipate assuming control of the distribution of Angiox in the remaining countries in the Nycomed territory by the end of 2008. The remaining increase in international net revenue is primarily related to increased orders from our Canadian distributor.

During the three months ended September 30, 2008, we recognized as revenue from collaborations approximately $0.6 million of net revenue from sales made by Nycomed of approximately $1.4 million of Angiox under our transitional distribution agreement with Nycomed. For the three months ended September 30, 2007, we recognized as revenue from collaborations approximately $1.2 million of net revenue from sales made by Nycomed of approximately $2.7 million under the transitional distribution agreement. Under the terms of this transitional distribution agreement, upon the sale by Nycomed to third parties of vials of Angiox, Nycomed pays us a specified percentage of Nycomed's net sales of Angiox, less the amount previously paid by Nycomed to us for the existing inventory. The decrease in revenue from collaborations is primarily a result of us assuming control of the distribution of Angiox in the majority of countries in the Nycomed territory during the third quarter and such amounts being included in international net revenue.

Cost of Revenue. Cost of revenue during the three months ended September 30, 2008 was $22.1 million, or 25% of net revenue, compared to $16.2 million, or 26% of net revenue, for the three months ended September 30, 2007. The decrease in cost of revenues as a percentage of net revenue is primarily attributable to an increase in revenue due to the above mentioned price increases we implemented in August 2007 and January 2008. Cost of revenue consisted of expenses in connection with the manufacture of Angiomax sold, royalty expenses under our agreements with Biogen Idec and Health Research Inc. and the logistics costs of selling Angiomax, such as distribution, storage and handling. Cost of revenue increased $5.9 million during the three months ended September 30, 2008 compared to the three months ended September 30, 2007. Approximately $4.2 million of the total cost of revenue increase related to an increase in royalty expense due to higher Angiomax sales and approximately $1.7 million of the increase related to an increase in logistics costs primarily related to higher Angiomax sales and our costs associated with establishing our European distribution network.

                                Cost of Revenue



                                     Three Months Ended September 30,
                                          % of Total                     % of Total
Cost of Revenue              2008            Cost           2007            Cost
                        (in thousands)                 (in thousands)
Manufacturing           $         5,269           24 % $         5,230           33 %
Royalty                          13,747           62 %           9,583           59 %
Logistics                         3,073           14 %           1,344            8 %
Total Cost of Revenue   $        22,089          100 % $        16,157          100 %

Research and Development Expenses. Research and development expenses increased $25.4 million to $44.1 million for the three months ended September 30, 2008, from $18.7 million for the three months ended September 30, 2007. The increase primarily reflects the acquisition of Curacyte Discovery in August 2008, which resulted in the inclusion in research and development expense of $21.4 million of acquisition related in-process research and development. The remaining increase in research and development expenses resulted primarily from an increase in expenditures in connection with expenses associated with the development of Angiomax for additional indications and product lifecycle management activities, increased expenses associated with our cangrelor clinical trials and increased business development expenses. The increase in research and development expenses was partially offset by decreased research and development expenditures in connection with Cleviprex.

The following table identifies, for each of our major research and development projects, our spending for the three months ended September 30, 2008 and 2007. Spending for past periods is not necessarily indicative of spending in future periods.

                       Research and Development Spending



                                                  Three Months Ended September 30,
. . .