10-Q

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)
x	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2007
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                       to                      .
Commission File No. 0-19312

MEDAREX, INC.

(Exact Name of Registrant as Specified in Its Charter)

New Jersey	22-2822175
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
707 State Road, Princeton, New Jersey	08540
(Address of Principal Executive Offices)	(Zip Code)
Registrant’s Telephone Number, Including Area Code: (609) 430-2880

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

Yes  x No  o

Indicate by check x whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (check one):

Large accelerated filer x Accelerated filer o Non-accelerated filer o

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

Yes  o  No x

Indicate the number of shares of each of the issuer’s classes of common stock, as of the latest practicable date:

Class	Outstanding at July 31, 2007
Common Stock, $.01 par value	126,897,993

TABLE OF CONTENTS

				Page
Part I  –	Financial Information
Item 1.			Consolidated Interim Financial Statements (Unaudited)
			Consolidated Balance Sheets as of June 30, 2007 (Unaudited) and December 31, 2006 (Unaudited)	3
			Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2007 and 2006 (Unaudited)	4
			Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2007 and 2006 (Unaudited)	5
			Notes to Consolidated Interim Financial Statements (Unaudited)	6
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.			Quantitative and Qualitative Disclosures About Market Risk	38
Item 4.			Controls and Procedures	38
Part II–		Other Information
Item 1.			Legal Proceedings	39
Item 1A.			Risk Factors	39
Item 4.			Submission of Matters to a Vote of Security Holders	64
Item 6.			Exhibits	65
			Signatures	67
			Exhibit Index

2

MEDAREX, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

	June 30,			December 31,
	2007			2006
ASSETS
Current assets:
Cash and cash equivalents	$	28,218		$	34,511
Marketable securities	399,131			304,983
Marketable securities - Genmab	—			150,000
Prepaid expenses and other current assets	19,038			22,271
Total current assets	446,387			511,765
Property, buildings and equipment:
Land	6,780			6,780
Buildings and leasehold improvements	86,133			85,123
Machinery and equipment	63,093			61,076
Furniture and fixtures	5,050			5,025
	161,056			158,004
Less accumulated depreciation and amortization	(81,070		)	(73,663		)
	79,986			84,341
Marketable securities - Genmab	306,885			344,382
Investments in, and advances to, other partners	6,041			8,141
Segregated cash	1,477			1,477
Other assets	3,826			4,587
Total assets	$	844,602		$	954,693
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable	$	2,624		$	7,154
Accrued liabilities	32,234			42,250
Deferred contract revenue - current	26,135			21,032
Total current liabilities	60,993			70,436
Deferred contract revenue - long-term	88,889			94,115
Other long-term liabilities	3,883			3,689
2.25% Convertible senior notes due May 15, 2011	142,543			141,581
Minority interest	1,759			4,699
Commitments and contingencies	—			—
Shareholders’ equity:
Preferred stock, $1.00 par value, 2,000,000 shares authorized; none issued and outstanding	—			—
Common stock, $.01 par value; 200,000,000 shares authorized; 126,694,391 shares issued and 126,660,551 outstanding at June 30, 2007 and 124,288,191 shares issued and 124,244,059 outstanding shares outstanding at December 31, 2006	1,267			1,243
Capital in excess of par value	1,129,036			1,107,487
Treasury stock, at cost 33,840 shares in 2007 and 44,132 shares in 2006	(85		)	(111		)
Accumulated other comprehensive income	310,660			495,208
Accumulated deficit	(894,343		)	(963,654		)
Total shareholders’ equity	546,535			640,173
Total liabilities and shareholders’ equity	$	844,602		$	954,693

See notes to these consolidated financial statements.

3

MEDAREX, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2007			2006			2007			2006
Contract and license revenues	$	6,382		$	5,785		$	12,296		$	14,015
Contract and license revenues from Genmab	418			391			1,502			783
Reimbursement of development costs	4,995			5,631			9,536			10,086
Total revenues	11,795			11,807			23,334			24,884
Costs and expenses:
Research and development	45,273			48,036			92,295			93,974
General and administrative	10,569			10,158			21,871			19,676
Total costs and expenses	55,842			58,194			114,166			113,650
Operating loss	(44,047		)	(46,387		)	(90,832		)	(88,766		)
Equity in net loss of affiliate	—			—			—			(1,037		)
Interest and dividend income	5,485			4,585			10,284			7,836
Gain on sale of Genmab stock	—			—			152,143			—
Impairment loss on investments in partners	(2,141		)	—			(2,141		)	—
Interest expense	(1,540		)	(1,056		)	(3,081		)	(2,111		)
Minority interest - Celldex	1,289			1,499			2,940			3,106
Non-cash gain on loss of significant influence in Genmab	—			—			—			3,202
Income (loss) before provision for income taxes	(40,954		)	(41,359		)	69,313			(77,770		)
Provision for income taxes	—			62			2			284
Net income (loss)	$	(40,954	)	$	(41,421	)	$	69,311		$	(78,054	)
Net income (loss) per share:
- basic	$	(0.32	)	$	(0.34	)	$	0.55		$	(0.67	)
- diluted	$	(0.32	)	$	(0.34	)	$	0.52		$	(0.67	)
Weighted average number of common shares outstanding
- basic	126,430			122,187			125,730			117,229
- diluted	126,430			122,187			139,684			117,229

See notes to these unaudited consolidated financial statements.

4

MEDAREX, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	Six Months Ended
	June 30,
	2007			2006
Operating activities:
Net income (loss)	$	69,311		$	(78,054	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	7,407			7,646
Amortization	1,810			931
Net bond (discount)/premium amortization	(1,247		)	(1,806		)
Stock options and awards to employees	8,769			9,012
Non cash revenue	—			(1,339		)
Non-cash gain on loss of significant influence in Genmab	—			(3,202		)
Equity in net loss of Genmab	—			1,037
Gain on sale of Genmab	(152,143		)	—
Gain on sale of Land	—			(1		)
Impairment losses on investments in partners and other assets	2,141			—
Minority interest in net loss	(2,940		)	(3,106		)
Changes in operating assets and liabilities
Other current assets	3,233			12,895
Trade accounts payable	(4,530		)	(1,868		)
Accrued liabilities	(9,092		)	4,207
Deferred contract revenue	(123		)	(6,538		)
Net cash used in operating activities	(77,404		)	(60,186		)
Investing activities:
Purchase of property and equipment	(3,052		)	(6,230		)
Investment in partner	—			(500		)
Proceeds from sale of Genmab	152,143			—
Proceeds from sale of Land	—			16
Increase in segregated cash	—			(19		)
Purchase of marketable securities	(152,143		)	(94,110		)
Sales and maturities of marketable securities	60,202			76,415
Net cash provided by (used in) investing activities	57,150			(24,428		)
Financing activities:
Cash received from sales of securities and exercise of stock options, net	12,029			132,937
Principal payments under capital lease obligations	(15		)	(13		)
Net cash provided by financing activities	12,014			132,924
Effect of exchange rate differences on cash and cash equivalents	1,947			1,108
Net (decrease) increase in cash and cash equivalents	(6,293		)	49,418
Cash and cash equivalents at beginning of period	34,511			90,602
Cash and cash equivalents at end of period	$	28,218		$	140,020
Non-cash investing and financing activities:
Unrealized gain (loss) on investment in Genmab	$	(35,353	)	$	232,650
Supplemental disclosures of cash flow information
Cash paid during period for:
Income taxes	$	—		$	284
Interest	$	1,688		$	1,694

See notes to these consolidated financial statements.

5

MEDAREX, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollars in thousands, unless otherwise indicated, except per share data)

1.Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements are unaudited and have been prepared from the books and records of Medarex, Inc. and its subsidiaries (collectively, the “Company”) in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.  The consolidated interim financial statements, in the opinion of management, reflect all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the results for the interim periods ended June 30, 2007 and 2006.

The Company’s financial statements consolidate all of its subsidiaries, including those that it controls and those in which it holds a majority voting interest.  Medarex currently owns approximately 60% of the outstanding common stock of Celldex Therapeutics, Inc. (“Celldex”) (see Note 4).

Effective February 1, 2006, the Company ceased accounting for its investment in Genmab A/S (“Genmab”) under the equity method of accounting due to a reduction in ownership and a corresponding loss of significant influence (see Note 2).  The Company currently accounts for its investment in Genmab in accordance with SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities.

The unaudited consolidated results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year.  The unaudited consolidated balance sheet at December 31, 2006 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required for complete financial statements. These consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and footnotes thereto, which are contained in the Company’s annual report on Form 10-K for the year ended December 31, 2006 filed with the Securities and Exchange Commission, or SEC.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the following: (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent liabilities at the dates of the financial statements and (iii) the reported amounts of revenues and expenses during the reporting periods.  Actual results could differ from those estimates.

Net Income (Loss) per Share

Basic and diluted net income (loss) per share are computed in accordance with the Financial Accounting Standards Board (“FASB”) SFAS No. 128, Earnings per Share. Basic net income (loss) per share is based upon the number of weighted average shares of common stock outstanding. Diluted net income (loss) per share is based upon the weighted average number of shares of common stock and dilutive potential shares of common stock outstanding. Potential shares of common stock result from the assumed exercise of outstanding stock options, with exercise prices less than the average market price of the Company’s common stock during the six

6

month period ended June 30, 2007, which are included under the treasury stock method, as well as the assumed conversion of convertible senior notes. Potentially dilutive securities have been excluded from the computation of diluted net loss per share for the three month period ended June 30, 2007 and the three and six month periods ended June 30, 2006, as their effect is antidilutive.  A summary of such potentially dilutive securities is as follows:

The following table sets forth the computation of basic and diluted income per share for the six months ended June 30, 2007:

Income (Numerator):
Net income for basic income per share	$	69,311
Adjustment for interest expense on convertible notes	2,982
Income for diluted income per share	$	72,293
Shares (Denominator):
Weighted average shares for basic income per share	125,730,389
Effect of dilutive securities (stock options)	3,016,527
Effect of convertible notes, after assumed conversion	10,936,935
Weighted average shares for diluted income per share	139,683,851
Basic income per share	$	0.55
Diluted income per share	$	0.52

The following table sets forth potential shares of common stock that would be issued if all of the convertible notes were converted to common stock and all of the outstanding stock options were exercised, without regard to whether the convertible notes or outstanding stock options were “in the money”.  These potential shares of common stock are not included in the computation of diluted net loss per share for the three months ended June 30, 2007 and three and six months ended June 30, 2006 because to do so would be antidilutive.

	Three Months Ended June 30, 2007	Three and Six Months Ended June 30, 2006
Convertible notes	10,936,935	10,936,935
Outstanding stock options	16,500,127	16,001,589
	27,437,062	26,938,524

Marketable Securities and Long-Term Non-Marketable Investments

Marketable securities consist of fixed income investments with a maturity of greater than three months and other highly liquid investments that can be readily purchased or sold using established markets. Under SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, these investments are classified as available-for-sale and are reported at fair value on the Company’s consolidated balance sheet. Unrealized

7

holding gains and losses are reported within accumulated other comprehensive income as a separate component of shareholders’ equity. Under the Company’s accounting policy, a decline in the fair value of marketable securities is deemed to be “other than temporary” and such marketable securities are generally considered to be impaired if their fair value is less than the Company’s cost basis for more than six months, or some other period in light of the particular facts and circumstances surrounding the investment. If a decline in the fair value of a marketable security below the Company’s cost basis is determined to be other than temporary, such marketable security is written down to its estimated fair value as a new cost basis and the amount of the write-down is included in earnings as an impairment charge.

In addition, the Company has investments in several of its partners whose securities are not publicly traded. These investments are accounted for under the cost basis.  Because these securities are not publicly traded, the Company values these investments by using information acquired from industry trends, management of these companies, such companies’ financial statements, and other external sources.  Specifically, the Company’s determination of any potential impairment of the value of the privately held securities includes an analysis of the following for each company on a periodic basis:  review of interim and year-end financial statements, cash position and overall rate of cash used to support operations, the progress and development of technology and product platform, the per share value of subsequent financings and potential strategic alternatives.  Based on the information acquired through these sources, the Company records an impairment charge when it believes an investment has experienced a decline in value that is considered to be other than temporary.

The Company recorded no impairment charges related to investments in partners whose securities are publicly traded for the three and six month periods ended June 30, 2007 and 2006.  The Company recorded impairment charges of $2.1 million in partners whose securities are privately held for the three and six month periods ended June 30, 2007.  The Company recorded no impairment charges related to investments in partners whose securities are privately held for the three and six month periods ended June 30, 2006.  If the Company deems any of its investments to be further impaired at the end of any future period, it may incur additional impairment charges on these investments.

Revenue Recognition

The Company receives payments from customers and partners, for licenses to its proprietary technology for product development, for services and from the achievement of product development milestones and from the sale of antibodies. These payments are generally non-refundable and are reported as deferred revenue until they are recognizable as revenue. The Company follows the following principles in recognizing revenue:

·Fees received from the licensing of the Company’s proprietary technologies for research and development performed by its partners are recognized generally over the term of the respective license period beginning after both the license period has begun and the technology has been delivered.

·Fees received for product development services are recognized ratably over the period during which the services are performed.

·Milestone payments are recognized as revenue upon the achievement of mutually agreed milestones, provided that (i) the milestone event is substantive and its achievement is not reasonably assured at the

8

inception of the agreement, and (ii) there are no continuing performance obligations associated with the milestone payment.

·Revenue arrangements that include multiple deliverables are divided into separate units of accounting if the deliverables meet certain criteria, including whether the fair value of the delivered items can be determined and whether there is evidence of fair value of the undelivered items. In addition, the consideration is allocated among the separate units of accounting based on their fair values, or the residual method if the fair value of the undelivered element is the only element with determinable fair value, and the applicable revenue recognition criteria are considered separately for each of the separate units of accounting.

·Revenues derived from reimbursements of costs associated with the development of product candidates are recorded in compliance with EITF Issue 99-19, “Reporting Revenue Gross as a Principal Versus Net as an Agent” (“EITF 99-19”).  According to the criteria established by EITF 99-19, in transactions where the Company acts as a principal, with discretion to choose suppliers, bears credit risk and performs part of the services required in the transaction, the Company believes it has met the criteria to record revenue for the gross amount of the reimbursements.

·Revenue from sales of antibodies to partners in the United States and overseas is recognized when the antibodies are shipped and the Company has no further obligations related to the development of the antibodies.

·Grant revenues are recognized as the Company provides the services stipulated in the underlying grant based on the time and materials incurred. Amounts received in advance of services provided are recorded as deferred revenue and amortized as revenue when the services are provided.

Income Taxes

The Company uses the asset and liability method to account for income taxes, including the recognition of deferred tax assets and deferred tax liabilities for the anticipated future tax consequences attributable to differences between financial statements amounts and their respective tax bases. The Company reviews its deferred tax assets for recovery. A valuation allowance is established when the Company believes that it is more likely than not that its deferred tax assets will not be realized. Changes in valuation allowances from period to period are included in the Company’s tax provision in the period of change.

In June 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement No. 109 (“FIN 48”) to create a single model to address accounting for uncertainty in tax positions.  FIN 48 clarifies the accounting for income taxes, by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements.  FIN 48 also provides guidance on derecognition, measurement and classification of amounts relating to uncertain tax positions, accounting for and disclosure of interest and penalties, accounting in interim periods, disclosures and transition relating to the adoption of the new accounting standard.  FIN 48 is effective for fiscal years beginning after December 15, 2006.  The Company has adopted FIN 48 as of January 1, 2007, as required and determined that the adoption of FIN 48 did not have a material impact on the Company’s financial position and results of operations.  The Company did not recognize interest or penalties related to income tax during the three and six

9

month periods ended June 30, 2007 or 2006 and did not accrue for interest or penalties as of June 30, 2007 or December 31, 2006.  The Company does not have an accrual for uncertain tax positions as of June 30, 2007 or December 31, 2006.  Tax returns for all years 2000 and thereafter are subject to future examination by tax authorities.

In June 2007, the Emerging Issues Task Force reached a consensus on Issue No. 07-3, Accounting for Nonrefundable Advance Payments for Goods or Services Received for Use in Future Research and Development Activities. Nonrefundable advance payments for goods or services that will be used or rendered for future research and development activities should be deferred and capitalized. Such amounts should be recognized as an expense as the related goods are delivered or the services are performed, or when the goods or services are no longer expected to be provided. This Issue is effective for financial statements issued for fiscal years beginning after December 15, 2007, and earlier application is not permitted. This consensus is to be applied prospectively for new contracts entered into on or after the effective date. The Company is evaluating the potential impact of this consensus and does not expect it to have a material effect on its consolidated financial statements.

2.Investments in Genmab

As a result of a series of transactions, including an initial public offering by Genmab of its ordinary shares in October 2000, the Company owned an approximate 22.2% interest in Genmab as of December 31, 2005.

During the three month period ended March 31, 2006, the Company’s investment in Genmab was adjusted to reflect its share (22.2%) of Genmab’s net loss ($1.0 million) prior to Genmab’s February 1, 2006 private placement.

On February 1, 2006, Genmab completed the private placement of 5.75 million shares of its stock.  As a result of this private placement, the Company’s ownership percentage of Genmab was reduced to approximately 18.9%. As a result of a decrease in the Company’s ownership below 20%, on February 1, 2006 the Company began accounting for its investment in Genmab as a marketable security in accordance with SFAS No. 115 Accounting for Certain Investments in Debt and Equity Securities.

In addition, the Company recorded a non-cash gain on loss of significant influence in Genmab for the six month period ended June 30, 2006 of $3.2 million in accordance with FASB Staff Position APB 18-1, Accounting by an Investor for Its Proportionate Share of Accumulated Other Comprehensive Income of an Investee Accounted for under the Equity Method in Accordance with APB Opinion No. 18 upon a Loss of Significant Influence (FSP APB 18-1).  The Company’s net foreign translation gains of approximately $5.4 million associated with its investment in Genmab and reflected in accumulated other comprehensive income as of December 31, 2005 was first offset against the remaining carrying value of its investment in Genmab ($2.2 million) reducing the Company’s investment in Genmab to zero with the remaining balance ($3.2 million) recorded as a non-cash gain in the consolidated statement of operations for the six month period ended June 30, 2006.

On February 17, 2007, the Company completed the sale of 2,578,500 shares of Genmab through a block trade.  The Company received net proceeds of approximately $152.1 million from this sale resulting in a realized gain of approximately $152.1 million as the Company’s cost basis for these shares was zero.  As a

10

result of this transaction, the Company’s ownership in Genmab was reduced to approximately 10.8%.

3.Equity-Based Compensation

The Company’s stock awards are governed by its 2005 Equity Incentive Plan, as amended (the “Plan”).  The exercise price of stock options under the Plan is determined by the Compensation and Organization Committee of the Board of Directors of the Company (the “Committee”).  The term is fixed by the Committee, but no incentive stock option is exercisable after 10 years from the grant date.  Stock options generally vest over a four year period. As of June 30, 2007, a total of 6,900,287 shares were available for future grants under the Plan.

On January 1, 2006, the Company adopted the fair value recognition provisions of Statement No. 123(R), using the modified prospective transition method.  Under the modified prospective transition method, compensation expense is recognized in the financial statements on a prospective basis for (i) all share based payments granted prior to, but not vested as of January 1, 2006, based upon the grant date fair value estimated in accordance with the original provisions of  Statement No. 123, and (ii) share based payments granted on or subsequent to January 1, 2006, based upon the grant date fair value estimated in accordance with the provisions of Statement No. 123(R).  The grant date fair value of awards expected to vest is expensed on a straight line basis over the vesting periods of the related awards.

The total stock based compensation cost relating to Statement 123(R) for the three month period ended June 30, 2007 has been included in the consolidated statement of operations within research and development expenses ($2.5 million) and general and administrative expenses ($2.6 million).  The total stock-based compensation cost relating to Statement 123(R) for the six month period ended June 30, 2007 has been included in the consolidated statement of operations within research and development expenses ($5.0 million) and general and administrative expenses ($4.0 million).

The total stock based compensation cost relating to Statement 123(R) for the three month period ended June 30, 2006 has been included in the consolidated statement of operations within research and development expenses ($2.4 million) and general and administrative expenses ($2.3 million).  The total stock based compensation cost relating to Statement 123(R) for the six month period ended June 30, 2006 has been included in the consolidated statement of operations within research and development expenses ($4.7 million) and general and administrative expenses ($4.3 million).

The following summarizes all stock option transactions for the Company under the Plan for the period from January 1, 2007 through June 30, 2007.

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	Common Stock Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)	Aggregate Intrinsic Value
Outstanding at beginning of period	17,736,930		$	8.87
Granted	1,788,409		14.67
Exercised	(2,101,200	)	5.87
Canceled	(171,517	)	32.82
Forfeited	(752,495	)	8.64
Outstanding at end of period	16,500,127		9.88		6.7	$	90,118
Exercisable at end of period	10,535,971		9.88		5.5	$	63,340
Vested and unvested expected to vest at June 30, 2007	15,967,031		9.88		7.0	$	87,746

The weighted-average grant-date fair value of options granted during the six month periods ended June 30, 2007 and 2006 were $9.94 and $9.61, respectively.  The aggregate intrinsic value of options exercised during these same periods was $15.5 million and $6.1 million, respectively.  The grant-date fair value of shares which vested during the six month periods ended June 30, 2007 and 2006 was $13.8 million and $9.4 million, respectively.  Cash proceeds from stock options exercised during the six month periods ended June 30, 2007 and 2006 totaled $11.8 million and $3.9 million, respectively.

The fair value of each option grant is estimated using the Black-Scholes option pricing method.  The fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is the vesting period (generally 4 years).  Use of a valuation model requires management to make certain assumptions with respect to selected model inputs.  Expected volatility was calculated based on the historical volatility of the Company’s common stock.  The average expected life was based on the contractual term of the option and expected employee exercise and post-vesting employment termination behavior.  The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a remaining term equal to the expected life assumed on the date of grant.  Forfeitures are estimated based on voluntary termination behavior, as well as an analysis of actual option forfeitures.  The Company is currently using an estimated forfeiture rate of 13.7%.  The weighted average assumptions used in the Black-Scholes option pricing model are as follows:

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	Three Months Ended June 30				Six Months Ended June 30
	2007		2006		2007		2006
Expected stock price volatility	81.9	%	81.9	%	82.1	%	83.4	%
Risk-free interest rate	4.88	%	5.11	%	4.71	%	4.98	%
Expected life of options (years)	5.0		6.25		5.0		6.25
Expected dividend yield	0	%	0	%	0	%	0	%

As of June 30, 2007, the total unrecognized compensation cost related to non-vested stock options was approximately $38.0 million.  This cost is expected to be recognized over a weighted average period of 2.4 years.

Deferred Compensation

The Company maintains deferred compensation programs, under which certain of the Company’s executive officers elected to have a portion of their bonuses, which were otherwise payable in cash, converted to restricted stock units representing shares of the Company’s common stock. Participants in the deferred compensation programs could elect to defer up to 50% of their respective bonuses. The number of restricted stock units awarded upon such conversion was determined by dividing (i) the amount of the bonus to be converted by (ii) the fair market value of the Company’s common stock on the grant date. Participants in the deferred compensation programs elected to defer receipt of the common stock portion of their bonuses until the earlier of three years from the grant date or the participant’s termination from the Company. The bonus portion deferred by each of the participants is matched on a 1:1 basis by the Company and 25% of the match vested as of the respective grant dates. So long as a participant remains employed by the Company, an additional 25% of the Company’s matching contribution vests on each anniversary of the respective grant dates for the next three years. All benefits under each of the deferred compensation programs are distributed in separate payments and will be paid exclusively in the form of shares of the Company’s common stock. The expense associated with the Company’s matching contribution was approximately $0.1 million and $0.1 million for the three month periods ended June 30, 2007 and 2006, respectively and $0.1 million and $0.2 million for the six month periods ended June 30, 2007 and 2006, respectively.

4.Celldex Therapeutics, Inc.

In March 2004, the Company assigned or licensed to Celldex certain intellectual property related to the Company’s vaccine technology, including the rights to MDX-1307, one of the Company’s product candidates for the treatment of cancer, as well as the Investigational New Drug Application (“IND”) associated with this product candidate which became effective in February 2004.

To complement its technology and its internal clinical pipeline, in October 2005, Celldex completed the acquisition of all of the issued and outstanding shares of capital stock of Lorantis Limited (“Lorantis”), a privately held biotechnology company based in Cambridge, U.K. and substantially all of the assets of Alteris Therapeutics, Inc. (“Alteris”), a privately held biotechnology company based in Philadelphia, Pennsylvania.

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The purchase price of Lorantis consisted of 6.8 million shares of Celldex Class A common stock (valued at $34.0 million).

The purchase price for substantially all of the Alteris assets consisted of 1.2 million shares of Celldex common stock (valued at $6.0 million) and approximately $1.6 million in cash.  Celldex may be required to pay Alteris up to $5.0 million upon obtaining the first approval for commercial sale of an EGFRvIII product.  As a result of the Lorantis stock acquisition and the Alteris asset acquisition, the Company’s ownership percentage of Celldex was reduced from 100% to approximately 60%.

5.Bristol-Myers Squibb Collaboration

In January 2005, the Company announced the closing of a collaboration and co-promotion agreement and a related securities purchase agreement with Bristol-Myers Squibb Company (“BMS”), pursuant to which the Company and BMS each granted the other certain intellectual property licenses and product rights on a worldwide basis to enable the parties to collaborate in research and development of certain antibody-based product candidates for the treatment of cancer and other diseases, and, in the event that further development work is successful, to commercialize any resulting products. In particular, the collaboration includes a grant by the Company to BMS of a license to commercialize ipilimumab, a fully human antibody product candidate developed using the Company’s UltiMAb Human Antibody Development System®, that is antagonistic to cytotoxic T-lymphocyte antigen 4 (CTLA-4). Ipilimumab is currently under investigation for the treatment of a broad range of cancers. The collaboration also includes the grant by the Company to BMS of a sub-license to MDX-1379, a gp100 peptide vaccine, for use with ipilimumab for the treatment of metastatic melanoma.

As part of the collaboration, the two companies committed to an initial multi-year budget of approximately $192.0 million to fund the development of ipilimumab as a potential treatment for a broad range of cancers. BMS is responsible for 65% of all development costs related to clinical trials intended to support regulatory approval in both the United States and Europe, with the remaining 35% to be paid by the Company. The parties will share equally the costs of any clinical trials of product candidates intended solely for regulatory approval in the United States, and BMS will be fully responsible for all development efforts that relate solely to regulatory approval in Europe and other parts of the world. Approximately $3.9 million and $4.5 million of the Company’s revenue for the three month periods ended June 30, 2007 and 2006, respectively, and approximately $7.9 million and $7.8 million of the Company’s revenue for the six month periods ended June 30, 2007 and 2006, respectively, represented the reimbursement of the Company’s costs associated with the development of ipilimumab recorded in compliance with EITF 99-19.  The Company’s share of the BMS development costs for the three month periods ended June 30, 2007 and 2006 was approximately $5.6 million and $8.1 million, respectively, and the Company’s share of the BMS development costs for the six-month periods ended June 30, 2007 and 2006 was approximately $10.8 million and $11.6 million, respectively, and is included as a component of research and development expense.

Under the terms of the collaboration, the Company could receive up to $205.0 million from BMS if all regulatory milestones are met, plus up to an additional $275.0 million in sales-related milestones. The Company will also have the option to co-promote any products in the United States, and, if the Company elects to exercise this option and has participated in the funding of the applicable Phase III clinical trial(s), the Company will receive up to 45% of any net profits (and share in 45% of net losses) from commercial sales in the U.S. less a

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small percentage of net sales, in certain circumstances. In the event the Company chooses not to exercise its co-promotion rights, BMS will have exclusive commercial rights in the United States and will pay the Company royalties on any commercial sales. Outside the United States, BMS will have exclusive commercial rights and will pay the Company royalties on any commercial sales.

In April 2007, in connection with BMS granting Pfizer a license under certain intellectual property owned by BMS, and an expansion of the scope of the Company’s cross-license agreement with Pfizer, the Company and BMS amended certain royalty and profit sharing provisions of the Company’s collaboration and co-promotion agreement with BMS.

Pursuant to these agreements, BMS made an initial cash payment to the Company of $25.0 million, which was initially recorded as deferred revenue. In addition, BMS purchased a total of 2,879,223 unregistered shares of the Company’s common stock at a purchase price equal to $8.6829 per share for an aggregate purchase price of $25.0 million. The purchase price represented a small premium to the market price on the date the Company entered into the collaboration.

The Company determined that all elements under the collaboration and co-promotion agreement should be accounted for as a single unit of accounting under EITF 00-21, Accounting for Revenue Arrangements with Multiple Deliverables.  In accordance with SAB No. 104 (Topic 13, Revenue Recognition), deferral of revenue is appropriate regarding nonrefundable, upfront fees received in single unit of accounting arrangements.  As the Company has continuing obligations under the collaboration and co-promotion agreement, and as significant development risk remains, the Company recorded the $25.0 million upfront fee as deferred revenue and the Company is recognizing this amount over the enforceable term of the technology sublicensed to BMS under the collaboration and co-promotion agreement of approximately 11 years, as well as the technology and know-how to be delivered in connection therewith.

The BMS collaboration became effective in January 2005, and unless terminated earlier, will continue for as long as development and/or commercialization of any collaboration product continues.  BMS, however, may terminate the collaboration on a country-by-country basis at any time and, under certain conditions, on a product-by-product basis, resulting in the return of all rights to the Company with respect to such country and/or product.  In addition, BMS may terminate the Company’s co-promotion rights in the U.S. in the event that the Company fails to satisfy certain performance criteria.  The Company may terminate the BMS collaboration in the event of certain specified material breaches by BMS (in which case product rights would revert to the Company), and the Company may terminate BMS’s co-promotion rights in the event that BMS fails to satisfy certain performance criteria.

6.Legal Proceedings

The SEC is conducting an informal inquiry into the Company’s historical stock option granting practices and related accounting and disclosures.  In addition, the United States Attorney’s Office for the District of New Jersey is conducting a grand jury investigation relating to the same matters.  At the conclusion of the SEC’s informal inquiry and the U.S. Attorney’s Office investigation, the Company could be subject to criminal or civil charges and fines or penalties or other contingent liabilities; however, no outcome is determinable at this time.

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In June 2006, two derivative actions relating to the Company’s historical stock option granting practices were filed in New Jersey state court by shareholders purporting to act on behalf of Medarex, naming Medarex as a nominal defendant and certain current and former directors as defendants.  Between November 2006 and January 2007, three additional derivative complaints were filed in the United States District Court for the District of New Jersey, containing nearly identical factual allegations concerning Medarex’s historical stock option granting practices.  The complaints allege, among other things, that certain of Medarex’s officers and directors breached their fiduciary duties to the Company and violated federal securities laws in connection with public statements made in SEC filings relating to the Company’s historical stock option granting practices and related accounting.  The complaints seek unspecified damages and equitable relief.  These actions are in their preliminary stages and the potential outcome of these actions, if any, are not determinable at this time.  We could be required to pay significant damages in connection with this litigation.

The Company is unable to reasonably estimate any possible range of loss or liability associated with the stock option inquiry and/or derivative suits due to their uncertain resolution.

In addition to the proceedings described above, in the ordinary course of its business, the Company is at times subject to various legal proceedings.  The Company does not believe that any of the currently pending ordinary course legal proceedings, individually or in the aggregate, will have a material adverse effect on its operations of financial condition.

7.Contingencies

Ability Biomedical Corporation

In August 2004, the Company completed the acquisition of all of the outstanding capital stock not already owned by the Company of Ability Biomedical Corporation (“Ability Biomedical”). Pursuant to this transaction, the Company acquired Ability Biomedical’s intellectual property related to IP-10, a protein believed to be associated with a variety of immune disorders, including multiple sclerosis, rheumatoid arthritis, inflammatory bowel disease, chronic obstructive pulmonary disease and type I diabetes.

Upon achievement of certain development milestones with respect to the Company’s anti-IP-10 antibody program, but no later than September 4, 2007, the Company may be required to pay the former shareholders of Ability Biomedical approximately $4.6 million subject to an interest component in cash and/or common stock, subject to fluctuations in currency exchange rates. In lieu of such additional payment, the Company also has the option to revert to the original joint collaboration agreement with the former shareholders of Ability Biomedical whereby each party would be responsible for 50% of the costs associated with the anti-IP-10 antibody and would receive 50% of any profits arising from the commercialization of the anti-IP-10 antibody.

Kirin Brewery Co., Ltd.

Effective September 4, 2002, the Company entered into a Collaboration and License Agreement with Kirin which provides for the exchange by Kirin Brewery Co., Ltd. (“Kirin”) and the Company of certain cross-licenses for each other’s technology for the development and commercialization of human antibody products. The Collaboration and License Agreement supersedes a previous binding letter of intent. Pursuant to the letter of intent, the Company and Kirin developed the KM-Mouse®, a unique crossbred mouse which combines the

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

Through June 30, 2007, the Company has not made any milestone payments to Kirin. However, approximately $2.8 million has been paid to Kirin as of June 30, 2007 representing a payment due Kirin as a result of the Company’s collaboration with Pfizer. Based on a total of four product candidates the Company is developing, which use or the Company believes may use Kirin technology and that (i) are currently in clinical trials, or (ii) the Company anticipates may enter clinical trials through the end of 2008, the Company may be required to make milestone payments to Kirin aggregating up to approximately $17.0 million with respect to such product candidates, or a maximum of approximately $4.25 million per product candidate. The Company’s future milestone payment obligations to Kirin may or may not be triggered, and may vary in size, depending on a number of variables, almost all of which are currently unknown, including the following:

·whether or not a decision is made to request a license from Kirin;

·the type of license requested (research or commercial);

·the success and timing of development efforts and clinical trials of product candidates covered by any such licenses;

·the type of product developed, (payment obligations differ depending on whether a product is an ex vivo therapeutic, in vivo therapeutic, research reagent or diagnostic); and

·other financial provisions of the Kirin agreement that provide for variations in fee levels and netting of certain payments over specified periods of time that may impact the total amount potentially payable to Kirin for any particular license fee or milestone payment.

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

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

Other Contingent Arrangements

The Company has entered into a number of other agreements that contain in-licenses of third-party technology (in addition to Kirin) which may be used together with the Company’s own platform technologies for the generation, development and/or manufacture of its antibody product candidates. In addition, the Company has entered into other third-party agreements that contain in-licenses associated with antibody product candidates that target specific antigens. Many of these agreements contain milestones payments that are due with respect to product candidates using/targeting the licensed technology/antigen only if and when certain specified pre-commercialization events occur. Not all of the Company’s product candidates currently under development trigger such milestone payments. Through June 30, 2007, the Company had made milestone

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payments under these agreements of approximately $0.3 million. In addition, under the agreements the Company currently has in place (other than with Kirin), based on a total of nine product candidates the Company is developing for which milestones are potentially due and that (i) are now in clinical trials, or (ii) which the Company anticipates may enter clinical trials before the end of 2008, the Company may be obligated to make future milestone payments aggregating up to approximately $59.6 million with respect to such product candidates. In general, potential milestone payments for antibody product candidates may or may not be triggered under these licenses, and may vary in size, depending on a number of variables, almost all of which are currently uncertain. Typically, the events that trigger these milestone payments per product include:

·submission of IND(s) or foreign equivalents;

·commencement of Phase I, Phase II and/or Phase III clinical trials or foreign equivalents;

·submission of BLA(s) or foreign equivalents; and

·receipt of marketing approval(s) to sell products in a particular country or region.

In addition, the licenses above may trigger royalty payments in connection with the commercialization of certain of the Company’s products. Whether the Company will be obligated to make milestone or royalty payments in the future is subject to the success of its product development efforts and, accordingly, is inherently uncertain.

Stock Option Grant Practices

In conjunction with the review of the Company’s stock option grant practices, the Company has also evaluated the related compensation tax issues to determine if the Company may be subject to additional tax liability as a result of the matters under review.  In addition, due to revision of measurement dates, certain stock options that were previously treated as incentive stock options may not actually qualify for such treatment and may be treated as non-statutory stock options.  Accordingly, the Company may be subject to fines and/or penalties relating to the tax treatment of such stock options.  While the Company believes that its accrual for additional compensation tax liabilities associated with the matters under review is appropriate under the circumstances, it is possible that additional liabilities exist and the amount of such additional liabilities could be material.

8.Comprehensive Income (Loss)

Comprehensive income (loss) is comprised of net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) includes changes in the fair value of the Company’s marketable securities and the foreign exchange translation primarily relates to the Company’s loss of significant influence in Genmab and the related impact on changes in unrealized gain in the statement of changes in shareholders’ equity. The following table sets forth the components of comprehensive income (loss):

	Three Months Ended June 30						Six Months Ended June 30
	2007			2006			2007			2006
Net income (loss)	$	(40,954	)	$	(41,421	)	$	69,311		$	(78,054	)
Unrealized gain (loss) on securities	14,973			(6,413		)	(34,449		)	234,648
Unrealized (loss) gain on foreign exchange	1,960			590			2,045			(4,344		)
Total comprehensive income (loss)	$	(24,021	)	$	(47,244	)	$	36,907		$	152,250

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9.Segment Information

The Company is a biopharmaceutical company focused on the discovery, development and potential commercialization of fully human antibody-based therapeutic products. The operations of the Company and its subsidiaries constitute one business segment.

Revenue from customers representing 10% or more of total revenues is as follows:

	Three Months Ended June 30				Six Months Ended June 30
Customer	2007		2006		2007		2006
Bristol-Myers Squibb	40	%	46	%	41	%	38	%
Diatos SA	—		—		—		10	%
Pfizer	26	%	21	%	24	%	20	%

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

Certain statements made in this Quarterly Report on Form 10-Q are “forward-looking statements” that are subject to risks and uncertainties that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Forward-looking statements include information concerning our future financial performance, business strategy, plans, goals and objectives. Statements preceded by, followed by or that otherwise include the words “believes”, “expects”, “anticipates”, “intends”, “estimates”, “plans”, “forecasts”, “is likely to”, “projected” and similar expressions or future conditional verbs such as “should”, “would”, “may”, and “could” are generally forward-looking in nature and not historical facts. You should not place undue reliance on any such forward-looking statements as such statements speak only as of the date on which they are made, and we might not update them to reflect changes that occur after the date they are made.

Overview

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

Currently, over 30 antibody product candidates generated from our UltiMAb Human Antibody Development System are in human clinical trials, or have had regulatory applications submitted for such trials(1). Phase III clinical trials are currently underway relating to eight of the most advanced product candidates in which Medarex has an economic interest through co-promotion/profit sharing rights, royalties and/or equity ownership.  Seven of the eight product candidates currently in Phase III trials were generated through the use of our UltiMAb® technology and include:

·ipilimumab (also known as MDX-010), which we are developing jointly with Bristol-Myers Squibb Company, or BMS, for the treatment of metastatic melanoma and other cancers;

·golimumab (also known as CNTO 148) under development by Centocor, Inc. (a subsidiary of Johnson & Johnson), or Centocor, for the treatment of rheumatoid arthritis, psoriatic arthritis and ankylosing spondylitis;

·CNTO 1275 for the treatment of psoriasis, also under development by Centocor;

·zanolimumab (also known as HuMax-CD4®), being developed by Genmab A/S, or Genmab, for the treatment of T-cell lymphomas;

·ofatumumab (also known as HuMax-CD20™), being developed by Genmab and GlaxoSmithKline for the treatment of follicular non-Hodgkin’s lymphoma and chronic lymphocyte leukemia;

·zalutumumab (also known as HuMax-EGFr™), being development by Genmab for the treatment of head and neck cancer; and

(1) Information regarding the clinical status of third-party antibody products is based on public information available as of the date hereof.

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·Acz885, being developed by Novartis Pharma AG, or Novartis, for the treatment of Muckle Wells Syndrome.

The eighth product candidate currently in Phase III trials in which we have an economic interest is CP-675,206, which is being developed by Pfizer, Inc., or Pfizer, for the treatment of metastatic melanoma.  We expect to receive double-digit royalties on sales of this product, should commercialization occur.

Medarex is committed to building value by developing a diverse pipeline of antibody products to address major unmet healthcare needs in the world.  In addition to the antibody product candidates currently in Phase III trials, multiple product candidates in Phase II, Phase I and preclinical testing are being developed by either Medarex alone or by Medarex jointly with our partners, or separately by our partners.  These partners include Amgen, Inc., BMS, Johnson & Johnson, Eli Lilly and Company, Genmab, ImClone Systems Incorporated, or ImClone Systems, MedImmune, Inc. (a subsidiary of AstraZeneca PLC), Novartis and Novo Nordisk A/S.  We believe that through the broad use of our UltiMAb® technology, we are leveraging our efforts and our partners’ efforts to create, develop and potentially commercialize innovative treatments for a wide range of diseases.

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

A portion of our revenue is derived from licensing our fully human antibody technology to pharmaceutical and biotechnology companies. The terms of these license agreements typically include potential license fees and a series of potential milestone payments commencing upon the initiation of clinical trials and continuing through commercialization. These payments may total $7 million to $10 million per product candidate if the product receives approval from the U.S. Food and Drug Administration, or FDA, and equivalent foreign agencies. In general, we are also entitled to receive royalties on product sales. Additional revenue may be earned from the sales of antibodies to, and, in some cases, the manufacturing of antibodies for, our partners, as well as from government grants.

Our most significant costs on an annual basis are research and development expenses and general and administrative expenses. Research and development expenses represent those costs that support the advancement of our product pipeline and primarily consist of personnel costs, facilities (including depreciation), research and laboratory supplies, funding of outside research, license and technology access fees, expenses related to antibody manufacturing and clinical trial expenses. We believe that continued investment in research and development is critical to attaining our strategic objectives. General and administrative expenses consist primarily of personnel expenses for executive, finance, legal and administrative personnel, professional fees and other general corporate expenses. We may be required to add personnel in the future and incur additional costs as we expand our business activities.

We have a history of operating losses and may not achieve profitability. As of June 30, 2007, we had an accumulated deficit of approximately $894.3 million. Over the next several years, we expect to incur substantial expenses as we continue to identify, develop and manufacture our potential products, invest in research, move forward with our product development and prepare to commercialize our product(s). Our commitment of resources to research and the continued development and potential commercialization of our product candidates

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will require substantial additional funds. Our operating expenses may also increase as we invest in research or acquire additional technologies, as additional product candidates are selected for clinical development and as some of our earlier stage product candidates move into later stage clinical development. In addition, we may incur significant milestone payment obligations as our product candidates progress towards commercialization. In the absence of substantial revenues from new corporate collaborations or other sources, we will incur substantial operating losses and may be required to raise additional funds through debt or equity financings or sales of stock of partners in which we have an equity ownership or delay, reduce or eliminate certain of our research and development programs.

Critical Accounting Policies

The methods, estimates and judgments we use in applying our most critical accounting policies have a significant impact on the results we report in our consolidated financial statements. We evaluate our estimates and judgments on an on-going basis. We base our estimates on historical experience and on assumptions that we believe to be reasonable under the circumstances. Our experience and assumptions form the basis for our judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may vary from what we anticipate and different assumptions or estimates about the future could materially change our reported results. We believe the following accounting policies are the most critical to us, in that they are important to the portrayal of our financial statements and they require our most difficult, subjective or complex judgments in the preparation of our consolidated financial statements:

Revenue Recognition

We receive payments from our customers and partners for licenses to our proprietary technology, for product development services, from the achievement of product development milestones and for the sale of antibodies. These payments are generally non-refundable and are reported as deferred revenue until they are recognizable as revenue. We follow the following principles in recognizing revenue:

·We receive research fees from the licensing of our proprietary technologies for research and development performed by our partners. Revenue from these research fees is recognized generally over the term of the respective license period beginning only after both the license period has begun and the technology has been delivered.

·We receive fees for product development services (including manufacturing) we perform for our partners. These fees are recognized ratably over the entire period during which the services are performed.

·Revenue from milestone payments is recognized when each milestone is achieved, when collectibility of such milestone payment is assured and we have no future performance obligations relating to that event. Milestone payments are triggered either by the results of our research efforts or by the efforts of our partners and include such events as submission of an Investigational New Drug Application, or IND, commencement of Phase I, II or III clinical trials, submission of a Biologic License Application, or BLA, and regulatory approval of a product. Milestone payments are substantially at risk at the inception of an agreement.

·Revenue arrangements that include multiple deliverables are divided into separate units of accounting if the deliverables meet certain criteria, including whether the fair value of the delivered items can be determined and whether there is evidence of fair value of the undelivered items. In addition, the consideration is allocated among the separate units of accounting based on their relative fair values, or

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the residual method if the fair value of the undelivered element is the only element with determinable fair value, and the applicable revenue recognition criteria are considered separately for each of the separate units of accounting.

·Revenues derived from reimbursements of costs associated with the development of product candidates are recorded in compliance with EITF Issue 99-19, “Reporting Revenue Gross as a Principal Versus Net as an Agent” (“EITF 99-19”).  According to the criteria established by EITF 99-19, in transactions where we act as a principal, with discretion to choose suppliers, bear the credit risk and perform part of the services required in the transaction, we believe we have met the criteria to record revenue for the gross amount of the reimbursements.

·We sell antibodies primarily to partners in the United States and overseas. Revenue from these sales is recognized when the antibodies are shipped and we have no further obligations related to the development of the antibodies.

·Grant revenues are recognized as we provide the services stipulated in the underlying grant based on the time and materials incurred. Amounts received in advance of services provided are recorded as deferred revenue and amortized as revenue when the services are provided.

Investments

Our investment policy calls for investments in fixed income high grade securities such as U.S. corporate debt securities, U.S. treasury obligations and money market funds for which we believe there is not a significant risk of loss. Our primary objectives for our investment portfolio are liquidity and safety of principal. Investments are made to achieve the highest rate of return consistent with these two objectives. However, in the course of our business, we have made and may continue to make investments in companies (both public and private) as part of our strategic collaborations. Investments in companies whose securities are publicly traded (other than Genmab) are classified as marketable securities in the current assets section of our consolidated balance sheets. The fair market value of investments in our partners whose securities are publicly traded (other than Genmab) was approximately 1.8% and 2.2% of total marketable securities as of June 30, 2007 and December 31, 2006, respectively.

Under SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, our marketable securities are classified as available-for-sale securities and are carried at fair value. Marketable securities will include those securities of debt and publicly traded equity securities. These securities, including shares of Genmab, trade on listed exchanges; therefore, fair value is readily available. These securities are also subject to an impairment charge when we believe an investment has experienced a decline in value that is other than temporary. Under our accounting policy, a decline in the value of our investments is deemed to be other than temporary and such investments are generally considered to be impaired if their value is less than our cost basis for more than six (6) months, or some other applicable period in light of the facts and circumstances surrounding the investments.

In addition, in connection with our collaborative partnering business, we sometimes make strategic investments in the securities of companies that are privately held. Investments in our partners whose equity is not publicly traded are classified in a separate line item in our consolidated balance sheet entitled “Investments in, and advances to, other partners” and were approximately $6.0 million as of June 30, 2007. These securities are carried at original investment cost and adjusted for other than temporary impairment charges, if any. Because these securities are not listed on a financial exchange, the value of these investments is inherently more difficult to estimate than investments in public companies. We value these investments by using information

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acquired from industry trends, management of these companies, such companies’ financial statements, and other external sources.  Specifically, our determination of any potential impairment of the value of the securities of privately held companies includes an analysis of the following for each such privately held company on a periodic basis:  review of interim and year-end financial statements, cash position and overall rate of cash used to support operations, the progress and development of technology and product platform, the per share value of subsequent financings and potential strategic alternatives.  Based on the information acquired through these sources, we record an investment impairment charge when we believe an investment has experienced a decline in value that is other than temporary.

Future adverse changes in market conditions or adverse changes in financial condition and/or operating results of the companies in which we invest that may not be reflected in an investment’s current carrying value may also require an impairment charge in the future.

Stock-Based Compensation Expense

Prior to January 1, 2006, we accounted for our 2005 Equity Incentive Plan, or the Plan, as amended, under the recognition and measurement provisions of APB Opinion No. 25, Accounting for Stock Issued to Employees, or APB No. 25 and related Interpretations, as permitted by FASB Statement No. 123, Accounting for Stock-Based Compensation, or Statement No. 123.  Compensation expense was recognized in the consolidated statement of operations for all stock option grants under the Plan that had an exercise price which was less than the fair market value of the underlying common stock on the grant date. However, no compensation expense was recorded in the financial statements for stock options grants with an exercise price equal to the fair market value of the underlying common stock on the measurement date.

Effective January 1, 2006, we adopted the fair value recognition provisions of FASB Statement No. 123(R), Share-Based Payment, or Statement No. 123(R), using the modified prospective transition method.  Under the modified prospective transition method, compensation expense is recognized in the financial statements on a prospective basis for (i) all share based payments granted prior to, but not vested as of January 1, 2006, based upon the grant date fair value estimated in accordance with the original provisions of Statement No. 123, and (ii) share based payments granted on or subsequent to January 1, 2006, based upon the grant date fair value estimated in accordance with the provisions of Statement No. 123(R).  The grant date fair value of awards expected to vest is expensed on a straight line basis over the vesting periods of the related awards.

The fair value of each option grant is estimated using the Black-Scholes option pricing method.  The fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period (generally 4 years).  Use of a valuation model requires management to make certain assumptions with respect to selected model inputs.  In order to estimate the grant date fair value, option pricing models require the use of estimates and assumptions as to (i) the expected term of the option, (ii) the expected volatility of the price of the underlying stock, (iii) the risk free interest rate for the expected term of the option and (iv) pre-vesting forfeiture rates.  The expected term of the option is based upon the contractual term, taking into account expected employee exercise and expected post-vesting termination behavior.  The expected volatility of the price of the underlying stock is based on the historical volatility of our common stock.  The risk free interest rate is based on U.S. Treasury zero-coupon issues with a remaining term equal to the expected life assumed on the date of grant.  Pre-vesting forfeiture rates are estimated based on past voluntary termination behavior, as well as an analysis of actual option forfeitures.  We are currently using an estimated forfeiture rate of 13.7%.  The following table sets forth the weighted average assumptions used to calculate the fair value of options granted for the three and six month periods ended June 30, 2007 and 2006:

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	Three Months Ended June 30				Six Months Ended June 30
	2007		2006		2007		2006
Expected dividend yield	0	%	0	%	0	%	0	%
Expected stock price volatility	81.9	%	81.9	%	82.1	%	83.4	%
Risk free interest rate	4.88	%	5.11	%	4.71	%	4.98	%
Expected life of options (years)	5.0		6.25		5.0		6.25

Our results of operations for the three month periods ended June 30, 2007 and 2006 include share based compensation expense of approximately $5.0 million and $4.7 million, respectively.  Our results of operations for the six month periods ended June 30, 2007 and 2006 include share based compensation expense of approximately $9.0 million and $9.0 million, respectively.  As of June 30, 2007, the total unrecognized compensation cost related to non-vested stock options was approximately $38.0 million.  This cost is expected to be recognized over a weighted average period of 2.4 years.

However, any significant awards granted during the remainder of the year, or required changes in the estimated forfeiture rates could have an impact on this estimate.

Valuation of Long-Lived and Intangible Assets

We assess the impairment of identifiable intangible assets and long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors we consider important that could trigger an impairment review include the following:

·         a significant underperformance relative to expected historical or projected future results;

·         a significant change in the manner of our use of the acquired asset or the strategy for our overall business; and/or

·         a significant negative industry or economic trend.

When we determine that the carrying value of intangible assets or long-lived assets are not recoverable based upon the existence of one or more of the above indicators of impairment, we may be required to record impairment charges for these assets that have not been previously recorded.

Loss Contingencies and Litigation Reserves

We assess potential losses in relation to legal proceedings and other pending or threatened legal or tax matters based upon the application of Statement of Financial Accounting Standards No. 5, Accounting for Contingencies.  If a loss is considered probable and the amount can be reasonably estimated, we recognize an expense for the estimated loss.  If a loss is considered possible and the amount can be reasonably estimated, we disclose such loss if material.  Litigation by its nature is uncertain and the determination of whether any particular case involves a probable loss or the amount thereof requires the exercise of considerable judgment, which is applied as of a certain date.  Required reserves and estimates may change in the future due to new matters, developments in existing matters or if we determine to change our strategy with respect to any particular matter.

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Results of Operations

Three months ended June 30, 2007 and 2006

Contract and License Revenues

Contract and license revenues totaled $6.4 million and $5.8 million for the three month periods ended June 30, 2007 and 2006, respectively, an increase of $0.6 million, or 10%. Because contract and license revenues depend to a large extent on the product development efforts of our partners and licensees, our period-to-period contract and license revenues can fluctuate significantly and are inherently difficult to predict.

Contract and License Revenues from Genmab

Contract and license revenues from Genmab were $0.4 million and $0.4 million for the three month periods ended June 30, 2007 and 2006, respectively.

Reimbursement of Development Costs

Revenues derived from the reimbursement of costs associated with the development of our product candidates are recorded in compliance with EITF Issue 99-19, Reporting Revenue Gross as a Principal Versus Net as an Agent (“EITF 99-19”).  Reimbursement of development costs totaled $5.0 million and $5.6 million for the three month periods ended June 30, 2007 and 2006, respectively, a decrease of $0.6 million, or 11%. This decrease related primarily to the development of ipilimumab with BMS.

Research and Development Expenses

Research and development expenses for our product candidates in development were $45.3 million and $48.0 million for the three month periods ended June 30, 2007 and 2006, respectively, a decrease of $2.7 million, or 6%. Historically, we have not accounted for our research and development expenses on a project-by-project basis and, therefore, we do not provide a breakdown of such historical information in that format. We have, historically, tracked our costs in the categories discussed below, namely, “research” and “product development” and by the types of costs as outlined below.

Our research costs consist of costs associated with the breeding, care and continued development of our HuMAb-Mouse and KM-Mouse, as well as costs associated with research and testing of our product candidates prior to reaching the preclinical stage. Such research costs primarily include personnel costs, facilities (including depreciation), research supplies, funding of outside research and license and technology access fees.

Our product development costs consist of costs of preclinical development (including manufacturing) and conducting and administering clinical trials. Such product development costs also include personnel costs, facilities (including depreciation), supply expense related to antibody manufacturing and clinical trial expenses.

The following table sets forth a breakdown of our research and development expenses by those associated with research and those associated with product development for the periods indicated.

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	Three Months Ended June 30,
	2007		2006
Research	$	14,121	$	15,798
Product Development	31,152		32,238
Total	$	45,273	$	48,036

Research Costs

Research costs for the three month period ended June 30, 2007 decreased by $1.7 million, or 11% as compared to the three month period ended June 30, 2006. The decrease in research costs primarily relates to the following:

·License and technology access fees for the three month period ended June 30, 2007 were $0.3 million, a decrease of $2.4 million, or 88%, as compared to the three month period ended June 30, 2006.  Increases and decreases in license and technology access fees are primarily the result of the timing of the payments due under such agreements. These costs represent fees paid to certain partners and research organizations in connection with certain of our collaboration and license agreements. Included in the 2006 costs are payments to certain companies and research and academic institutions and other entities for licenses to certain technologies for which no comparable payments were made in 2007.

·Personnel costs for the three month period ended June 30, 2007 were $5.6 million, an increase of $0.4 million, or 8%, as compared to the three month period ended June 30, 2006. The increase reflects additional staff needed to support higher levels of new product development opportunities, the continued development of our UltiMAb system, and the performance of contract services for our collaborative partners.  Personnel costs include salary, benefits, stock based compensation, payroll taxes and recruiting costs. We expect personnel costs to continue to increase as we continue to increase our research activities.

Product Development Costs

Product development costs for the three month period ended June 30, 2007 decreased by $1.1 million, or 3% as compared to the three month period ended June 30, 2006.  The decrease in product development costs primarily relates to the following:

·Our share of partners’ product development costs for the three month period ended June 30, 2007 was $6.2 million, a decrease of $2.7 million, or 30%, as compared to the three month period ended June 30, 2006. These costs primarily represent our share (35%) of the BMS costs for the development of ipilimumab.  We expect our 35% share of BMS’s costs related to the development of ipilimumab to increase in the future as BMS continues to increase its development activities related to ipilimumab.

·Personnel costs for the three month period ended June 30, 2007 were $9.5 million, an increase of $0.5 million, or 6%, as compared to the three month period ended June 30, 2006. This increase primarily reflects increased staff needed to support more extensive clinical trial activities for ipilimumab. Personnel costs include salary, benefits, stock based compensation, payroll taxes and recruiting costs. We expect personnel costs to continue to increase as we continue to expand our product development activities to further progress our product candidates through clinical trials.

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We expect product development costs to increase in the future as more of our product candidates enter clinical trials. In addition, we may be obligated to make milestone payments on certain of our product candidates as they progress through the clinical trial process.  Completion of clinical trials may take several years or more. The length of time varies according to the type, complexity and intended use of the product candidate. We estimate that clinical trials of the type we generally conduct are typically completed over the following periods:

Clinical Phase	Estimated Completion Period
Phase I	1-2 Years
Phase II	1-2 Years
Phase III	2-4 Years

The duration and cost of clinical trials may vary significantly over the life of a particular project as a result of, among other things, the following factors:

·the length of time required to recruit qualified patients for clinical trials;

·the duration of patient dosing and follow-up in light of trial results;

·the number of clinical sites required for trials; and

·the number of patients that ultimately participate in clinical trials.

We continue to explore new collaborative arrangements that may affect future spending for research and development. As part of our partnering strategy, a significant portion of the research and development expenses incurred in connection with product candidates using our technology is expected to be borne by our partners. We believe this allows us to participate in the research and development of substantially more potential product candidates than we could develop on our own if we bore the entire cost of development. Product candidates using our technology are currently in various stages of development from preclinical to Phase III. The successful development of these product candidates is dependent on many factors, including among other things, the efforts of our partners, unforeseen delays in, or expenditures relating to, preclinical development, clinical testing, manufacturing or regulatory approval, failure to receive market acceptance, the emergence of competitive products and the inability to produce or market our products due to third-party proprietary rights.

General and Administrative Expenses

General and administrative expenses include compensation, professional services, consulting, travel and facilities (including depreciation) and other expenses related to legal, business development, finance, information systems and investor relations. General and administrative expenses totaled $10.6 million and $10.2 million for the three month periods ended June 30, 2007 and 2006, respectively, an increase of $0.4 million, or 4%. General and administrative expenses are expected to increase in the future as our product candidates are developed and we expand our business activities.

Interest and Dividend Income

Interest and dividend income consists primarily of interest earned from our cash, cash equivalents and marketable securities. Interest and dividend income was $5.5 million and $4.6 million for the three month periods ended June 30, 2007 and 2006, respectively, an increase of $0.9 million, or 20%.  The increase

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primarily reflects higher interest rates earned on our investment portfolio.  In addition, we have higher interest and dividend income in 2007 as the result of higher average cash balances reflecting the proceeds received (approximately $128.0 million) from our April 2006 public offering of 11.5 million shares of common stock and (approximately $152.1 million) from our February 2007 sale of approximately 2.5 million shares of Genmab stock.

Impairment Loss on Investments in Partners

We have investments in several partners whose securities are not publicly traded.  Because these securities are not publicly traded, the value of these investments is inherently more difficult to estimate than investments in publicly traded companies.  We recorded impairment charges of $2.1 million and $0 for the three month periods ended June 30, 2007 and 2006, respectively, related to investments in certain of our partners whose securities are not publicly traded.  If we deem any of our investments to be further impaired at the end of any future period, we may incur additional impairment charges on these investments

Interest Expense

Interest expense for the three month periods ended June 30, 2007 and 2006 relates primarily to interest and amortization of issuance costs on our 2.25% Convertible Senior Notes (“the 2.25% Notes”) issued in May 2004. Interest expense was $1.5 million and $1.1 million for the three month periods ended June 30, 2007 and 2006, respectively, an increase of $0.4 million or 46%.  The increase reflects the amortization of additional debt discount of approximately $0.5 million for the three months ended June 30, 2007 associated with an increase in the fair value of the embedded conversion option of the 2.25% Notes which occurred in the fourth quarter of 2006.

Minority Interest—Celldex

Minority interest in loss of Celldex represents 40% of Celldex’s net loss for the three month periods ended June 30, 2007 and 2006. Minority interest in loss of Celldex was $1.3 million and $1.5 million the three month periods ended June 30, 2007 and 2006 respectively, a decrease of $0.2 million, or 14%.  Prior to October 12, 2005, we owned 100% of the outstanding capital stock of Celldex. As a result of certain acquisitions in October of 2005 by Celldex (see Note 4 to the consolidated financial statements), our ownership percentage was reduced from 100% to approximately 60%. Celldex’s results of operations for 2007 and 2006 have been consolidated for reporting purposes, and the $1.3 million and $1.5 million (the portions of Celldex’s net loss for the three month periods ended June 30, 2007 and 2006, respectively, not attributable to us) is recorded as a reduction of our expenses.

Six months ended June 30, 2007 and 2006

Contract and License Revenues

Contract and license revenues totaled $12.3 million and $14.0 million for the six month periods ended June 30, 2007 and 2006, respectively, a decrease of $1.7 million, or 12%. Contract and licenses revenues for the six month period ended June 30, 2006 includes revenue recognized from an existing collaboration for which there was no comparable revenue for the six month period ended June 30, 2007.  Because contract and license revenues depend to a large extent on the product development efforts of our partners and licensees, our period-to-period contract and license revenues can fluctuate significantly and are inherently difficult to predict.

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Contract and License Revenues from Genmab

Contract and license revenues from Genmab were $1.5 million and $0.8 million for the six month periods ended June 30, 2007 and 2006, respectively, an increase of $0.7 million, or 92%. This increase is primarily the result of an increase in antibody exclusive licenses granted to Genmab in the first half of 2007 as compared to the first half of 2006.

Reimbursement of Development Costs

Revenues derived from the reimbursement of costs associated with the development of our product candidates are recorded in compliance with EITF Issue 99-19, Reporting Revenue Gross as a Principal Versus Net as an Agent (“EITF 99-19”).  Reimbursement of development costs totaled $9.5 million and $10.1 million for the six month periods ended June 30, 2007 and 2006, respectively, a decrease of $0.6 million, or 6%. This decrease relates principally to the development of product candidates with Ono Pharmaceuticals Co. Ltd.

Research and Development Expenses

Research and development expenses for our product candidates in development were $92.3 million and $94.0 million for the six month periods ended June 30, 2007 and 2006, respectively, a decrease of $1.7 million, or 2%. Historically, we have not accounted for our research and development expenses on a project-by-project basis and, therefore, we do not provide a breakdown of such historical information in that format. We have, historically, tracked our costs in the categories discussed below, namely, “research” and “product development” and by the types of costs as outlined below.

Our research costs consist of costs associated with the breeding, care and continued development of our HuMAb-Mouse and KM-Mouse, as well as costs associated with research and testing of our product candidates prior to reaching the preclinical stage. Such research costs primarily include personnel costs, facilities (including depreciation), research supplies, funding of outside research and license and technology access fees.

 Our product development costs consist of costs of preclinical development (including manufacturing) and conducting and administering clinical trials. Such product development costs also include personnel costs, facilities (including depreciation), supply expense related to antibody manufacturing and clinical trial expenses.

The following table sets forth a breakdown of our research and development expenses by those associated with research and those associated with product development for the periods indicated.

	Six Months Ended June 30,
	2007		2006
Research	$	29,442	$	33,762
Product Development	62,853		60,212
Total	$	92,295	$	93,974

Research Costs

Research costs for the six month period ended June 30, 2007 decreased by $4.3 million, or 13% as compared to the six month period ended June 30, 2006. The decrease in research costs primarily relates to the following:

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·License and technology access fees for the six month period ended June 30, 2007 were $1.7 million, a decrease of $5.7 million, or 77%, as compared to the six month period ended June 30, 2006.  Increases and decreases in license and technology access fees are primarily the result of the timing of the payments due under such agreements. These costs represent fees paid to certain partners and research organizations in connection with certain of our collaboration and license agreements. Included in the 2006 costs are payments to certain companies and research and academic institutions and other entities for licenses to certain technologies for which no comparable payments were made in 2007.

·Personnel costs for the six month period ended June 30, 2007 were $11.7 million, an increase of $1.2 million, or 11%, as compared to the six month period ended June 30, 2006. The increase reflects additional staff needed to support higher levels of new product development opportunities, the continued development of our UltiMAb system, and the performance of contract services for our collaborative partners.  Personnel costs include salary, benefits, stock based compensation, payroll taxes and recruiting costs. We expect personnel costs to continue to increase as we continue to increase our research activities.

·Facility costs for the six month period ended June 30, 2007 were $6.4 million, an increase of $0.8 million, or 15%, as compared to the six month period ended June 30, 2006. The increase in facility costs primarily relates to maintenance costs.  Facility costs include depreciation, utilities, maintenance, property taxes and other related expenses. We expect to incur increased facility costs as a result of increased energy costs and continued capital expansion.

Product Development Costs

Product development costs for the six month period ended June 30, 2007 increased by $2.6 million, or 4% as compared to the six month period ended June 30, 2006.  The increase in product development costs primarily relates to the following:

·Clinical research fees for the six month period ended June 30, 2007 were $9.1 million, an increase of $2.3 million, or 34%, as compared to the six month period ended June 30, 2006. This increase resulted primarily from the continued enrollment of patients in the Phase III clinical trial for ipilimumab in combination with MDX-1379 and the initiation of additional sites for this trial.  Sites participating in this trial are currently located in North America, Europe and Latin America.  The continued enrollment of patients in the Phase III trial and the initiation of additional sites resulted in increased monitoring costs and increased investigator site fees. Clinical research fees include clinical investigator site fees, external trial monitoring costs and data accumulation costs. We expect expenses related to clinical trials to increase in the future as we continue to develop our therapeutic product pipeline.

We expect product development costs to increase in the future as more of our product candidates enter clinical trials. In addition, we may be obligated to make milestone payments on certain of our product candidates as they progress through the clinical trial process.

General and Administrative Expenses

General and administrative expenses include compensation, professional services, consulting, travel and facilities (including depreciation) and other expenses related to legal, business development, finance, information systems and investor relations. General and administrative expenses totaled $21.9 million and $19.7 million for the six month period ended June 30, 2007 and 2006, respectively, an increase of $2.2 million, or 11%. Approximately $0.7 million of the increase is related to professional fees associated with an investigation

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of our historical stock option grant practices. General and administrative expenses are expected to increase in the future as our product candidates are developed and we expand our business activities.

Equity in Net Loss of Affiliate

Equity in net loss of affiliate was $0 and $1.0 million for the six month periods ended June 30, 2007 and 2006, respectively, a decrease of $1.0 million. Equity in net loss of affiliate represents our share of Genmab’s net loss for the six month periods ended June 30, 2007 and 2006.  The decrease was related to the suspension of our share of Genmab’s net losses effective February 1, 2006.  On February 1, 2006, Genmab completed the private placement of 5.75 million shares of its stock.  As a result of this private placement, our ownership percentage of Genmab was reduced to approximately 18.9%.  See Note 2 to the consolidated financial statements for further explanation. Beginning February 1, 2006 we began accounting for our investment in Genmab as a marketable security in accordance with SFAS No. 115.

Interest and Dividend Income

Interest and dividend income consists primarily of interest earned from our cash, cash equivalents and marketable securities. Interest and dividend income was $10.3 million and $7.8 million for the six month period ended June 30, 2007 and 2006, respectively, an increase of $2.5 million, or 31%.  The increase primarily reflects higher interest rates earned on our investment portfolio.  In addition, we have higher interest and dividend income in 2007 as the result of higher average cash balances reflecting the proceeds received (approximately $128.0 million) from our April 2006 public offering of 11.5 million shares of common stock and (approximately $152.1 million) from our February 2007 sale of  approximately 2.5 million shares of Genmab stock.

Gain on Sale of Genmab Stock

In February 2007, we received approximately $152.1 million in net proceeds from the sale of approximately 2.5 million shares of Genmab stock resulting in a realized gain of approximately $152.1 million as our cost basis for these shares was zero.  See Note 2 to the consolidated financial statements for further explanation.  The sale of the approximately 2.5 million shares of Genmab shares reduced our equity ownership in Genmab to approximately 10.8%

Impairment Loss on Investments in Partners

We have investments in several partners whose securities are not publicly traded.  Because these securities are not publicly traded, the value of these investments is inherently more difficult to estimate than investments in publicly traded companies.  We recorded impairment charges of $2.1 million and $0 for the six month periods ended June 30, 2007 and 2006, respectively, related to investments in certain of our partners whose securities are not publicly traded.  If we deem any of our investments to be further impaired at the end of any future period, we may incur additional impairment charges on these investments

Interest Expense

Interest expense for the six month periods ended June 30, 2007 and 2006 relates to interest and amortization of issuance costs on the 2.25% Notes issued in May 2004. Interest expense was $3.1 million and $2.1 million for the six month periods ended June 30, 2007 and 2006, respectively, an increase of $1.0 million or 46%.  The increase reflects the amortization of additional debt discount of approximately $1.0 million for the

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six months ended June 30, 2007 associated with an increase in the fair value of the embedded conversion option of the 2.25% Notes which occurred in the fourth quarter of 2006.

Minority Interest—Celldex

Minority interest in loss of Celldex represents 40% of Celldex’s net loss for the six month periods ended June 30, 2007 and 2006. Minority interest in loss of Celldex was $2.9 million and $3.1 million the six month periods ended June 30, 2007 and 2006 respectively, a decrease of $0.2 million, or 5%.  Prior to October 12, 2005, we owned 100% of the outstanding capital stock of Celldex. As a result of certain acquisitions in October of 2005 by Celldex (see Note 4 to the consolidated financial statements), our ownership percentage was reduced from 100% to approximately 60%. Celldex’s results of operations for 2007 and 2006 have been consolidated for reporting purposes, and the $2.9 million and $3.1 million (the portions of Celldex’s net loss for the six month periods ended June 30, 2007 and 2006, respectively, not attributable to us) is recorded as a reduction of our expenses.

Non-Cash Gain on Investment in Genmab

Non-cash gain on investment in Genmab for the six month period ended June 30, 2006 of $3.2 million was recorded in accordance with FASB Staff Position APB 18-1, Accounting by an Investor for Its Proportionate Share of Accumulated Other Comprehensive Income of an Investee Accounted for under the Equity Method in Accordance with APB Opinion No. 18 upon a Loss of Significant Influence (FSP APB 18-1).  As a result of Genmab’s private placement of 5.75 million shares of its common stock in February 2006 and the corresponding reduction of our ownership percentage below 20%, our accumulated other comprehensive income associated with our investment in Genmab was first offset against the remaining carrying value of our investment in Genmab ($2.2 million) reducing our investment in Genmab to zero with the remaining balance ($3.2 million) recorded as a non-cash gain in the consolidated statement of operations for the six month period ended June 30, 2006.

Liquidity and Capital Resources

We require cash to fund our operations, to make capital expenditures and strategic investments, and to pay debt service on our convertible notes. Since inception, we have financed our operations through the sale of our securities in public and private placements, sales of our product candidates for research purposes, development and manufacturing services, technology transfer and license fees and milestone payments. We expect to continue to fund our cash requirements from these sources in the future.

At June 30, 2007, we had $427.3 million in cash, cash equivalents and marketable securities.  Approximately $11.1 million of cash and cash equivalents included in the June 30, 2007 balance relates to Celldex and is consolidated for accounting purposes.  We primarily invest our cash equivalents and marketable securities in highly liquid, interest-bearing, investment grade and government securities in order to preserve principal.  In addition, as of June 30, 2007, the value of our investment in Genmab was approximately $306.9 million.

Cash Used in Operating Activities

Cash used in operating activities was $77.4 million and $60.2 million for the six month periods ended June 30, 2007 and 2006, respectively. This reflects an increase of $17.2 million in 2007 as compared to the same period in 2006 and is primarily the result of increased research and development and general and administrative expenses as described in “Results of Operations.”

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We have incurred and will continue to incur significant costs in the area of research and development, including preclinical and clinical trials, as our product candidates are developed. We plan to spend significant amounts to progress our current product candidates through the clinical trial and commercialization process as well as to develop additional product candidates on our own or with our partners. As our product candidates progress through the clinical trial process, we may be obligated to make significant milestone payments. We also expect to incur future facility costs as a result of our continued capital expansion, renovations and replacements. We expect our general and administrative costs to increase as we expand our administrative and business development activities. Furthermore, we expect our investment income to decrease as we fund our future operations and capital expenditures from our cash reserves. We anticipate that our operating expenditures may be partially offset by revenues from partners for license fees, milestone payments, and development and manufacturing services.

Cash Provided by (Used in) Investing Activities

Net cash provided by investing activities was $57.2 million for the six month period ended June 30, 2007 and net cash used in investing activities was $24.4 million for the six month period ended June 30, 2006.  The increase in cash provided by investing activities was $81.6 million and was primarily the result of the following factors:

·In February 2007, we completed the sale of 2,578,500 shares of Genmab through a block trade resulting in net proceeds of approximately $152.1 million.

·Purchases of marketable securities totaled $152.1 and $94.1 million for the six month periods ended June 30, 2007 and 2006, respectively.  The 2007 purchases were made with a portion of the net proceeds received from the sale of our Genmab stock.

·Sales and maturities of marketable securities were $60.2 million and $76.4 million for the six month periods ended June 30, 2007 and 2006, respectively.  Proceeds from sales of marketable securities in 2007 and 2006 were primarily used to fund operations and capital expenditures.

Cash Provided by Financing Activities

Cash provided by financing activities was $12.0 million and $132.9 million for the six month periods ended June 30, 2007 and 2006, respectively.  Cash provided by financing activities for the six month period ended June 30, 2007 primarily represents cash received from the exercise of stock options.  Cash provided by financing activities for the six month period ended June 30, 2006 was primarily due to proceeds received from a public offering of 11.5 million shares of our common stock at a public offering price of $11.75 per share resulting in net proceeds of approximately $128.0 million.

Other Liquidity Matters

In August 2004, we completed the acquisition of all of the outstanding capital stock not already owned by us of Ability Biomedical. Pursuant to this transaction, we acquired Ability Biomedical’s intellectual property related to IP-10, a protein believed to be associated with a variety of immune disorders, including multiple sclerosis, rheumatoid arthritis, inflammatory bowel disease, chronic obstructive pulmonary disease and type I diabetes.

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Under the terms of the share purchase agreement with Ability Biomedical, we made cash payments totaling approximately $606 thousand and issued a total of 731,823 shares of our common stock valued at approximately $4.3 million in exchange for all of Ability Biomedical’s issued and outstanding stock not already owned by us.

Upon achievement of certain development milestones with respect to our anti-IP-10 antibody program, but no later than September 4, 2007, we may be required to pay the former shareholders of Ability Biomedical an additional amount of approximately $4.6 million subject to an interest component in cash and/or common stock subject to fluctuations in currency exchange rates. In lieu of such additional payment, we also have the option to revert to the original joint collaboration agreement with the former shareholders of Ability Biomedical whereby each party would be responsible for 50% of the costs associated with the anti-IP-10 antibody.

In January 2005, we announced the closing of a collaboration and co-promotion agreement and a related securities purchase agreement with BMS. Under the terms of the collaboration, we and BMS each granted the other certain intellectual property licenses and product rights on a worldwide basis in order to enable us to collaborate in research and development of certain therapeutic antibody-based product candidates for the treatment of cancer and other diseases, and, in the event that further development work is successful, to commercialize any resulting products. In particular, the collaboration includes a grant by us to BMS of a license to commercialize ipilimumab, a fully human antibody product candidate developed using our UltiMAb Human Antibody Development System®. Ipilimumab is currently under investigation for the treatment of a broad range of cancers. The collaboration also includes the grant by us to BMS of a sub-license to MDX-1379, a gp100 peptide vaccine licensed by us from the U.S. Public Health Service, for use with ipilimumab for the treatment of metastatic melanoma. We and BMS are currently conducting three separate registrational studies of ipilimumab for metastatic melanoma under three separate Special Protocol Assessment agreements with the FDA. One is a monotherapy study of ipilimumab in second-line (previously treated with melanoma therapy other than ipilimumab) metastatic melanoma that completed enrollment in 2006.  This monotherapy study is the subject of a potential BLA filing in late 2007 / early 2008. A Phase III clinical trial of ipilimumab used in combination with chemotherapy in first-line (previously untreated) patients with metastatic melanoma was initiated in June 2006 and is currently underway. The third study is an ongoing Phase III clinical trial with ipilimumab and MDX 1379 combination therapy in Stage III and Stage IV metastatic melanoma patients. Each of these trials is being conducted at multiple sites worldwide.

In April 2007, in connection with BMS granting Pfizer a license under certain intellectual property owned by BMS, and an expansion of the scope of our cross-license agreement with Pfizer, we and BMS amended certain royalty and profit sharing provisions of our collaboration and co-promotion agreement with BMS.

As part of the collaboration, we and BMS committed to an initial multi-year budget of approximately $192.0 million to fund the development of ipilimumab as a potential treatment for a broad range of cancers. BMS is responsible for 65% of all development costs related to clinical trials intended to support regulatory approval in both the United States and Europe, with the remaining 35% to be paid by us. We and BMS will share equally the costs of any clinical trials of products intended solely for regulatory approval in the United States, and BMS will be fully responsible for all development costs that relate solely to regulatory approval in Europe and other parts of the world.

Under the terms of the collaboration, we have the option to co-promote any product in the U.S.  If we exercise a co-promotion option with respect to a product for use in the first cancer indication for which an initial regulatory approval filing is accepted by the FDA, we will have the right and obligation to co-promote such product for use in all cancer indications, even if such indications are the subject of additional filings or approvals, and even if we opted-out of the development of any such indication.  Even if we elect to co-promote

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a product for cancer indications, however, we would need to exercise a separate option to co-promote that product with respect to any indication other than cancer.  If we do not exercise our co-promotion option with respect to a product for use in the first cancer indication for which an initial regulatory approval filing is accepted by the FDA, then we will not have the right or obligation to co-promote such product for any cancer indications, unless the filing for that first cancer indication is not approved by FDA.

Under the terms of the collaboration, we could receive up to $205.0 million from BMS if all regulatory milestones are met, plus up to an additional $275.0 million in sales-related milestones. If we exercise our co-promotion option with respect to ipilimumab for the metastatic melanoma indication, and regulatory approval is obtained, we would receive up to 45% of any net profits (and share in 45% of net losses) from commercial sales of such a collaboration product in the U.S. less a small percentage of net sales, in certain circumstances.  In the event we choose not to exercise our co-promotion rights with respect to a product, BMS will have exclusive commercial rights in the U.S. and will pay us royalties on commercial sales. Regardless of whether or not we exercise our co-promotion option in the U.S., BMS will have exclusive commercial rights for products and will pay us royalties on commercial sales outside the U.S.

Pursuant to these agreements, BMS made an initial cash payment to us on January 21, 2005 of $25.0 million. In addition, BMS purchased a total of 2,879,223 unregistered shares of our common stock at a purchase price equal to $8.6829 per share for an aggregate purchase price of $25.0 million. These shares were issued in a private placement pursuant to the exemption from registration provided by Section 4(2) of the Securities Act of 1933. The purchase price represented a small premium to the market price on the date we entered into the collaboration. BMS agreed to a two-year lock-up period with respect to any sales of such stock.  The lock-up period expired in January 2007, and BMS may now sell such shares pursuant to the provisions of Rule 144 under the Securities Act. We have no future obligation to register such stock.

In October 2005, Celldex completed the acquisition of all of the issued and outstanding shares of capital stock of Lorantis Limited, or Lorantis, a privately held biotechnology company based in Cambridge, U.K. and substantially all of the assets of Alteris Therapeutics, Inc., or Alteris, a privately held biotechnology company based in Philadelphia, Pennsylvania.

The purchase price of Lorantis consisted of 6.8 million shares of Celldex Class A common stock (valued at $34.0 million).

The purchase price for substantially all of the Alteris assets consisted of 1.2 million shares of Celldex common stock (valued at $6.0 million) and approximately $1.6 million in cash.  Celldex may be required to pay Alteris up to $5.0 million upon obtaining the first approval for commercial sale of an EGFRvIII product.

Financial Uncertainties Related to Potential Future Milestone Payments

Effective September 4, 2002, we entered into a collaboration and license agreement with Kirin Brewery Co., Ltd., or Kirin, which provides for us to exchange with Kirin certain cross-licenses for each other’s technology for the development and commercialization of human antibody products. Pursuant to a letter of intent that was superseded by the collaboration and license agreement, we and Kirin developed the KM-Mouse®, a unique crossbred mouse that combines the traits of our HuMAb-Mouse® with Kirin’s TC Mouse™. Under the collaboration and license agreement, we are exchanging cross-licenses with Kirin with respect to the KM-Mouse and other antibody-generating mice. In addition, certain of the cross-licenses granted under the Collaboration and License Agreement are subject to license, milestone and royalty payments by one party to the other.

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Through June 30, 2007, we have not made any milestone payments to Kirin although approximately $2.8 million has been paid to Kirin as of June 30, 2007 representing a payment due Kirin as a result of our collaboration with Pfizer, Inc., or Pfizer. In addition, based on a total of four product candidates we are developing which use or, we believe may use, Kirin technology that (i) are currently in clinical trials, or (ii) we anticipate may enter clinical trials through the end of 2008, we may be required to make milestone payments to Kirin aggregating up to approximately $17.0 million with respect to such product candidates, or a maximum of approximately $4.25 million per product candidate. Our future milestone payment obligations to Kirin may or may not be triggered, and may vary in size, depending on a number of variables, almost all of which are currently unknown, including the following:

·whether or not a decision is made to request a license from Kirin;

·the type of license requested (research or commercial);

·the success and timing of development efforts and clinical trials of product candidates covered by any such licenses;

·the type of product developed, (payment obligations differ depending on whether a product is an ex vivo therapeutic, in vivo therapeutic, research reagent or diagnostic); and

·other financial provisions of the Kirin agreement that provide for variations in fee levels and netting of certain payments over specified periods of time that may impact the total amount potentially payable to Kirin for any particular license fee or milestone payment.

We have also entered into a number of other agreements that contain licenses of third-party technology which may be used together with our own platform technologies for the generation, development and/or manufacture of our antibody product candidates. In addition, we have entered into other third-party agreements that contain licenses associated with antibody product candidates that target specific antigens. Many of these agreements contain milestone payments that are due with respect to product candidates using/targeting the licensed technology/antigen only if and when certain specified pre-commercialization events occur. Not all of our product candidates currently under development trigger such milestone payments. Through June 30, 2007, we had made milestone payments of approximately $0.3 million under these agreements. In addition, under the agreements we currently have in place (other than with Kirin), based on a total of nine product candidates we are developing for which milestones are potentially due and that (i) are now in clinical trials, or (ii) which we anticipate may enter clinical trials before the end of 2008, we may be obligated to make future milestone payments aggregating up to approximately $59.6 million with respect to such product candidates. In general, potential milestone payments for our antibody product candidates may or may not be triggered under these licenses, and may vary in size, depending on a number of variables, almost all of which are currently uncertain. Typically, the events that trigger these payments per product include:

·submission of IND(s) or foreign equivalents;

·commencement of Phase I, Phase II and/or Phase III clinical trials or foreign equivalents;

·submission of BLA(s) or foreign equivalents; and

·receipt of marketing approval(s) to sell products in a particular country or region.

In addition, the licenses above may trigger royalty payments in connection with the commercialization of certain of our products. To date, we have not made any royalty payments on sales of our products and believe we are at least 1 - 2 years away from selling any products that would require us to make any such royalty payments. Whether we will be obligated to make milestone or royalty payments in the future is subject to the success of our product development efforts and, accordingly, is inherently uncertain.

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Future Liquidity Resources

Our current sources of liquidity are our cash, cash equivalents and marketable securities, interest and dividends earned on such cash, cash equivalents and marketable securities, contract and licensing revenue and sales of our product candidates for research. We believe that such sources of liquidity will be sufficient to meet our operating, debt service, and capital requirements for at least the next 24 months. To the extent our 2.25% Notes are converted into shares of our common stock on or before their maturity date, we will have use of that portion of the principal amount of the notes to fund our on-going operations. In any event, we may require additional financing within this time frame and may raise funds through public or private financings, line of credit arrangements, collaborative relationships and/or other methods. The use of cash on hand or other financial alternatives will depend on several factors including, but not limited to, the future success of our product candidates in clinical development, the prevailing interest rate environment, and access to the capital markets. We cannot assure you that we will be able to raise such additional funds. We may be unable to raise sufficient funds to complete development of any of our product candidates or to continue operations. As a result, we may face delay, reduction or elimination of research and development programs or preclinical or clinical trials, in which case our business, financial condition or results of operations may be materially harmed.

Item 3. Quantitative and Qualitative Disclosures about Market Risks.

We do not use derivative financial instruments in our operations or investment portfolio. We regularly invest excess operating cash in deposits with major financial institutions, money market funds, notes issued by the U.S. Government, as well as fixed income investments and U.S. bond funds both of which can be readily purchased or sold using established markets. We believe that the market risk arising from our holdings of these financial instruments is minimal. We do not believe we have material exposure to market risks associated with changes in interest rates, as we have no variable interest rate debt outstanding. While we do not believe we have any material exposure to market risks associated with interest rates, we may experience reinvestment risk as fixed income securities mature and are reinvested in securities bearing lower interest rates.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures:  Our principal executive officer and principal financial officer reviewed and evaluated our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q.  Based on that evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures are effective in ensuring that all material information required to be included in this Quarterly Report on Form 10-Q has been made known to them in a timely fashion.

Changes in Internal Controls Over   Financial Reporting: Such evaluation did not identify any significant changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the quarter ended June 30, 2007 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Limitations on the effectiveness of controls: A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within an organization have been detected.

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Part II — Other Information

Item 1. Legal Proceedings

The SEC is conducting an informal inquiry into our historical stock option granting practices and related accounting and disclosures.  In addition, we have received a subpoena from the U.S. Attorney’s Office, District of New Jersey, relating to the same matters.  At the conclusion of this inquiry and investigation, we could be subject to criminal or civil charges and significant fines or penalties.

In June 2006, two derivative actions were filed in New Jersey state court by shareholders purporting to act on behalf of Medarex, naming Medarex as a nominal defendant and certain current and former directors as defendants.  In November 2006 and January 2007, three additional derivative complaints were filed in the United States District Court for the District of New Jersey, containing nearly identical factual allegations concerning Medarex’s historical stock option granting practices.  The complaints allege, among other things, that certain of Medarex’s officers and directors breached their fiduciary duties to the Company and violated federal securities laws in connection with public statements made in SEC filings relating to the Company’s historical stock option granting practices and related accounting.  The complaints seek unspecified damages and equitable relief.  These actions are in their preliminary stages.

In addition to the proceedings described above, in the ordinary course of our business, we are at times subject to various legal proceedings. We do not believe that any of our current ordinary course legal proceedings, individually or in the aggregate, will have a material adverse effect on our operations or financial condition.

Item 1A. Risk Factors

We have marked with an asterisk (*) those risk factors that reflect substantive changes from the risk factors included in our Form 10-Q filed on May 7, 2007 with the SEC for the period ended March 31, 2007.

Additional factors that might affect future results include the following:

Risks Related to Our Business and Industry

Successful development of our product candidates is uncertain.

Based on public disclosures, as of August 1, 2007, regulatory applications, including INDs, have been submitted to the FDA or comparable foreign authorities for over 30 product candidates derived from our UltiMAb® platform. Neither we nor our partners have any product candidates employing our human antibody technology that have been approved for sale by the FDA or comparable foreign authorities and/or commercialized. Product candidates employing our human antibody technology have not advanced, and may not advance, beyond clinical development and may not demonstrate clinical safety and effectiveness.

Our development of current and future product candidates is subject to the risks of failure and delay inherent in the development of new pharmaceutical products and products based on new technologies. These risks include, but are not limited to:

· delays in product development, clinical testing or manufacturing;

· slower than expected patient enrollment;

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· unplanned expenditures in product development, clinical testing or manufacturing;

· failure in clinical trials;

· failure to receive regulatory approvals;

· emergence of superior or equivalent products;

· inability to manufacture on our own, or through others, product candidates on a commercial scale;

· inability to market products due to third-party proprietary rights;

· election by our partners not to pursue product development;

· failure by our partners to develop products successfully;

· failure to receive adequate coverage and reimbursement for our products from health care payors;

· changes in legal and regulatory requirements; and

· failure to achieve market acceptance.

In certain instances, we have experienced delays in our product development and clinical testing as a result of slower than anticipated patient recruitment. In a number of instances, we have terminated the development of certain product candidates in the early stages of human clinical testing due to a lack of effectiveness.

Because of these risks, our research and development efforts or those of our partners may not result in any commercially viable products. If a significant portion of these development efforts are not successfully completed, required regulatory approvals are not obtained or any approved products are not commercially successful, our business, financial condition and results of operations may be materially harmed.

Our revenue and profit potential are unproven.  No revenues have been generated from the commercial sale of our products and our products may not generate commercial revenues in the future.

Because we and our partners have not begun commercial sales of our products, our revenue and profit potential are unproven, which makes it difficult for an investor to evaluate our business and prospects. Our technology may not result in any meaningful benefits to our current or potential partners. No revenues have been generated from the commercial sale of our products, and our products may not generate revenues in the future. Our business and prospects should be considered in light of the heightened risks and unexpected expenses and problems we may face as a company in a rapidly evolving biopharmaceutical industry.

*We have incurred large operating losses, and we anticipate that these losses will continue.

We have incurred large operating losses, and we anticipate that these losses will continue for the foreseeable future. In particular, as of June 30, 2007, we had an accumulated deficit of approximately $894.3 million. Our net loss was $181.7 million for the year ended December 31, 2006.  Although we recorded net income of $69.3 million for the six month period ended June 30, 2007 (which was the result of the sale of a portion of our Genmab stock) our operating loss for the period was $90.8 million. Our losses have resulted principally from:

· research and development costs relating to the development of our technology and antibody product candidates;

· costs associated with the establishment of our laboratory and manufacturing facilities and manufacturing of products; and

· general and administrative costs relating to our operations.

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We intend to continue to make significant investments in:

· research and development;

· preclinical testing and clinical trials;

· manufacturing clinical supplies of our antibody product candidates;

· establishing new collaborations; and

· new technologies.

In addition, we may be obligated to make milestone payments with respect to certain of our product candidates as they progress through the clinical trial process.

We do not know when or if we or our partners will complete any pending or future product development efforts, receive regulatory approval or successfully commercialize any approved products.

We may continue to incur substantial operating losses even if our revenues increase. As a result, we cannot predict the extent of future losses or the time required for us to achieve profitability, if at all.

Our operating results may vary significantly from period-to-period, which may result in a decrease in the price of our securities.

Our future revenues and operating results are expected to vary significantly from period-to-period due to a number of factors. Many of these factors are outside of our control. These factors include:

· the timing of the commencement, completion or termination of partnership agreements;

· the introduction of new products and services by us, our partners or our competitors;

· delays in, or termination of, preclinical testing and clinical trials;

· changes in regulatory requirements for clinical trials;

· costs and expenses associated with preclinical testing and clinical trials;

· the timing of regulatory approvals, if any;

· sales and marketing expenses; and

· the amount and timing of operating costs and capital expenditures relating to the expansion of our business operations and facilities.

Period-to-period comparisons of our results of operations may not be relied upon as an indication of future performance.

It is possible that in some future periods, our operating results may be below expectations of analysts and investors. If this happens, the price of our securities may decrease.

We are subject to an informal inquiry by the SEC and a grand jury investigation by the United States Attorney’s Office for the District of New Jersey, relating to our stock option granting practices, and such governmental inquiry and investigation may result in charges filed against us and in fines or penalties.

The SEC is conducting an informal inquiry into our historical stock option granting practices and related accounting and disclosures.  In addition, the United States Attorney’s Office for the District of New Jersey is conducting a grand jury investigation relating to the same matters.   We understand that the governmental inquiry and investigation relate to the same subject matter underlying the investigation (the “Investigation”) conducted by

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a special investigation committee of our independent directors relating to our stock option grant practices from 1996 through June 30, 2006.  Based upon the information obtained in the Investigation, through July 2002, we had a practice, in many instances, of selecting dates for our stock option grants and restricted stock grants as of the date when the stock price was the lowest during the month of grant, without disclosing this practice in our public filings and without properly measuring the compensation expense on a date that the terms of the equity awards were finalized.  Subsequent to July 2002, while this practice of selecting dates ceased by us in response to new legal and regulatory reporting requirements, there were two annual equity grants for rank and file employees for which the measurement dates differed from the grant dates recorded in our books and records, which the Investigation revealed were primarily a result of administrative delays, with no apparent intent to achieve favorable exercise prices.  Based on the results of the Investigation, we restated our financial statements for the quarter ended March 31, 2006 and the years ended December 31, 2005, 2004 and 2003, respectively.

Criminal or civil charges could be filed against us and we could be required to pay significant fines or penalties in connection with either or both of the governmental inquiry and investigation or other governmental investigations.  We have incurred, and continue to incur, substantial costs related to the governmental inquiry and investigation and they continue to cause a diversion of our management’s time and attention which could have a material adverse effect on our financial condition and results of operations.  Any criminal or civil charges by the SEC or the U.S. Attorney’s Office or any fines or penalties imposed by either the SEC or the U.S. Attorney’s Office or other governmental agency could materially harm our business, results of operations, financial position and cash flows.

We have civil litigation pending that relates to our stock option granting practices, and we cannot predict the ultimate outcome of this litigation.

In June 2006, two derivative actions were filed in New Jersey state court by shareholders purporting to act on behalf of Medarex, naming Medarex as a nominal defendant and certain current and former directors as defendants.  In November 2006 and January 2007, three additional derivative complaints were filed in the United States District Court for the District of New Jersey, containing nearly identical factual allegations concerning Medarex’s historical stock option granting practices. The complaints allege, among other things, that certain of Medarex’s officers and directors breached their fiduciary duties to the Company and violated federal securities laws in connection with public statements made in SEC filings relating to the Company’s historical stock option granting practices and related accounting. The complaints seek unspecified damages and equitable relief. These actions are in their preliminary stages.  We could be required to pay significant legal fees and damages in connection with this litigation.

We are subject to the risks of additional lawsuits and regulatory actions in connection with our historical stock option granting practices, the resulting restatements, and the remedial measures we have taken.

In addition to the possibilities that there may be additional governmental actions and shareholder lawsuits against us, we may be sued or taken to arbitration by current or former officers or employees in connection with their stock options or other matters. These governmental actions, lawsuits and arbitrations may be time consuming and expensive, and cause further distraction from the operation of our business. The adverse resolution of any specific action could have a material adverse effect on our business, financial condition and results of operations.

We are at risk for additional tax liabilities.

In connection with the investigation of our historical stock option grant practices, we evaluated the related tax issues to determine if we may be subject to additional tax liabilities.  Due to revision of

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measurement dates for certain stock option grants, certain stock options that were previously treated as incentive stock options may not actually qualify for such treatment and may be treated as non-statutory stock options.  As a result, we may be subject to fines or penalties relating to the tax treatment of such stock options.  It is possible that additional tax liabilities exist arising out of our past stock option granting practices, and the amount of such additional tax liabilities could be material.

We are at risk of securities class action litigation.

In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. The risk is especially relevant for us because biotechnology companies have experienced greater than average price volatility in recent years and because we are currently subject to an SEC inquiry and a grand jury investigation relating to our historical stock option granting practices. If we faced such litigation, it could result in substantial costs and a diversion of management’s attention and resources, which could  materially harm our business.

We may need substantial additional funding. We may not be able to obtain sufficient funds to grow our business or continue our operations.

We will continue to expend substantial resources for research and development, including costs associated with developing our antibody technology and conducting preclinical testing and clinical trials. Our future capital requirements will depend on a number of factors, including, for example:

· the size and complexity of research and development programs;

· the scope and results of preclinical testing and clinical trials;

· the retention of existing and establishment of further partnerships, if any;

· continued scientific progress in our research and development programs;

· the time and expense involved in seeking regulatory approvals;

· competing technological and market developments;

· the time and expense of filing and prosecuting patent applications and enforcing patent claims; and

· the cost of establishing commercial scale manufacturing capabilities, conducting commercialization activities and arrangements and in-licensing products.

We believe our current sources of liquidity will be sufficient to meet our operating, debt service and capital requirements for at least the next 24 months. To the extent our 2.25% convertible senior notes due in 2011 are converted into shares of our common stock on or before their maturity date, we will have use of that portion of the principal amount of the notes to fund our on-going operations. In any event, we may require additional financing within this time frame and may raise funds through public or private financings, line of credit arrangements, collaborative relationships, sale of assets, and/or other methods. The use of cash on hand or other financial alternatives will depend on several factors including, but not limited to, the future success of our products in clinical development, the prevailing interest rate environment and access to the capital markets. We may be unable to raise sufficient funds to complete development of any of our product candidates, to continue operations or to repay our debt obligations at maturity. As a result, we may face delay, reduction or elimination of research and development programs or preclinical or clinical trials, in which case our business, financial condition or results of operations may be materially harmed.

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We have a significant amount of debt and may have insufficient cash to satisfy our debt service obligations. In addition, the amount of our debt could impede our operations and flexibility.

We have $150.0 million in aggregate principal amount of our 2.25% convertible senior notes outstanding, which, unless converted to shares of our common stock or redeemed, will mature in 2011. Generally, during the last five years, our operating cash flows were negative and insufficient to cover our fixed charges. Our ability to generate sufficient operating cash flow to service our indebtedness, including the notes, and fund our operating requirements will depend on our ability, alone or with others, to successfully develop, manufacture, and obtain required regulatory approvals and market our product candidates, as well as other factors, including general economic, financial, competitive, legislative and regulatory conditions, some of which are beyond our control. If we are unable to generate sufficient operating cash flow to service our indebtedness and fund our operating requirements, we may need to obtain additional debt or equity financing to do so, which may not be available to us on satisfactory terms or at all. In addition, if new indebtedness is incurred, the risks relating to our ability to service our indebtedness that we face could intensify.

Even if we are able to meet our debt service obligations, the amount of debt we have could adversely affect us in a number of ways, including by:

· limiting our ability to obtain any necessary financing in the future for working capital, capital expenditures, debt service requirements or other purposes;

· limiting our flexibility in planning for, or reacting to, changes in our business;

· placing us at a competitive disadvantage relative to our competitors who have lower levels of debt;

· making us more vulnerable to a downturn in our business or the economy generally; and

· requiring us to use a substantial portion of our cash to pay principal and interest on our debt, instead of applying those funds to other purposes such as working capital and capital expenditures.

Clinical trials required for our product candidates are expensive and time-consuming, and their outcome is uncertain.

To obtain FDA approval to market a new drug product, we or our partners must demonstrate proof of safety and efficacy in humans. To meet these requirements, we or our partners will have to conduct extensive preclinical testing and “adequate and well-controlled” clinical trials. Conducting clinical trials is a lengthy, time-consuming and expensive process. The length of time may vary substantially according to the type, complexity, novelty and intended use of the product candidate, and often can be several years or more per trial. Delays associated with product candidates for which we are directly conducting preclinical or clinical trials may cause us to incur additional operating expenses. Moreover, we will continue to be affected by delays associated with the preclinical testing and clinical trials of certain product candidates conducted by our partners over which we have no control. The commencement and rate of completion of clinical trials may be delayed by many factors, including, for example:

· the inability to manufacture sufficient quantities of qualified materials under cGMPs for use in clinical trials;

· the need or desire to modify our manufacturing processes;

· slower than expected rates of patient recruitment;

· modification of clinical trial protocols;

· the inability to adequately observe patients after treatment;

· changes in regulatory requirements for clinical trials;

· the lack of effectiveness during the clinical trials;

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· unforeseen safety issues;

· delays, suspension or termination of the clinical trials due to the institutional review board responsible for overseeing the study at a particular study site, or for some studies due to the data safety monitoring committee charged with overseeing the study as a whole; and

· government or regulatory delays or “clinical holds” requiring suspension or termination of the trials.

Even if we obtain positive results from preclinical or clinical trials, we may not achieve the same success in future trials. Clinical trials may not demonstrate statistically sufficient safety and effectiveness to obtain the requisite regulatory approvals for our product candidates. In a number of instances, we have terminated the development of certain product candidates in the early stages of human clinical testing due to a lack of effectiveness.

Generally, our clinical trials, including our melanoma trials for ipilimumab, are conducted in patients with serious or life-threatening diseases for whom conventional treatments have been unsuccessful or for whom no conventional treatment exists, and in some cases, our product candidate is used in combination with approved therapies that themselves have significant adverse event profiles. During the course of treatment, these patients could suffer adverse medical events or die for reasons that may or may not be related to our product candidates. The most common adverse events associated with our trials of ipilimumab have consisted of flu-like symptoms such as fever, chills and nausea. These events were expected and generally responded to standard medical therapy. In addition, some patients have experienced anticipated drug-related immune-mediated events, such as diarrhea, rash, reduced pituitary function, colitis and increased liver enzymes, ranging from mild in most cases to severe in a very small number of instances. Other than a very small number of fatalities not directly related to progression or complications of the disease being treated, representing approximately 1% of over 1,000 patients treated in all previous trials, which may or may not be attributable to our product candidate, most events resolved with treatment. We cannot assure you that additional safety issues will not arise with respect to our products in the future.

To date, we have experienced slower than expected rates of patient recruitment in certain of our clinical trials. As a result, in certain instances, we have experienced or may experience delays in our product development and clinical testing.

Data obtained from clinical trials of our product candidates to date have been insufficient to demonstrate safety and efficacy under applicable FDA criteria. As a result, such data will not support an application for regulatory approval without further clinical trials. Clinical trials that we conduct or that third parties conduct on our behalf may not demonstrate sufficient safety and efficacy to obtain the requisite regulatory approvals for any of our product candidates. We expect to commence new clinical trials from time to time in the course of our business as our product development work continues. The failure of clinical trials to demonstrate safety and effectiveness for our desired indications could harm the development of that product candidate as well as other product candidates. Any change in, or termination of, our clinical trials could materially harm our business, financial condition and results of operations.

Success in early clinical trials may not be indicative of results obtained in later trials.

Results of our early clinical trials and those of our partners using our human antibody technology are based on a limited number of patients and may, upon review, be revised or negated by authorities or by later stage clinical results. Historically, the results from preclinical testing and early clinical trials have often not been predictive of results obtained in later clinical trials. A number of potential new drugs and biologics have shown promising results in initial clinical trials, but subsequently failed to establish sufficient safety and efficacy data

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to obtain necessary regulatory approvals. Data obtained from preclinical and clinical activities are subject to varying interpretations, which may delay, limit or prevent regulatory approval.

In addition, regulatory delays or rejections may be encountered as a result of many factors, including changes in regulatory policy during the period of product development.

Products employing our antibody technology may fail to gain market acceptance.

Even if clinical trials demonstrate the safety and efficacy of product candidates developed by us or our partners using our technology and all regulatory approvals have been obtained, products employing our antibody technology may not gain market acceptance among physicians, patients, third-party payors and the medical community. For example, the current delivery systems for antibody-based therapeutic products are intravenous and subcutaneous injection, which are generally less well received by patients than tablet or capsule delivery. The degree of market acceptance of any products employing our technology will depend on a number of factors, including, for example:

· establishment and demonstration of clinical efficacy and safety, especially as compared to conventional treatments;

· cost-effectiveness;

· alternative treatment methods;

· reimbursement policies of government and third-party payors; and

· marketing and distribution support for our product candidates.

In addition, many of our activities involve genetic engineering in animals and animal testing, controversial subjects which have generally received adverse publicity from animal rights activists and various other interest groups. Such adverse publicity could decrease market acceptance of products employing our technology.

If products employing our technology do not achieve significant market acceptance, our business, financial condition and results of operations may be materially harmed.

The successful commercialization of our antibody products will depend on obtaining coverage and reimbursement for use of these products from third-party payors.

Sales of pharmaceutical products largely depend on the reimbursement of patients’ medical expenses by government health care programs and private health insurers. Without the financial support of the government or third-party payors, the market for products employing our human antibody technology will be limited. These third-party payors are increasingly challenging the price and examining the cost effectiveness of medical products and services. In addition, significant uncertainty exists as to the reimbursement status of newly approved healthcare products. We may need to conduct post-marketing studies in order to demonstrate the cost-effectiveness of our products. Such studies may require us to dedicate a significant amount of resources. Our project candidates may not be considered cost-effective. Third-party payors may not reimburse sales of products employing our human antibody technology, or enable us or our partners to sell them at profitable prices.

The continuing efforts of governmental and third-party payers to contain or reduce the costs of healthcare may impair our future revenues and profitability.

The pricing of our future products may be influenced in part by government controls. For example, in certain foreign markets, pricing or profitability of prescription pharmaceuticals is subject to government control. In the United States, there have been, and we expect that there will continue to be, a number of federal and state

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proposals to implement more rigorous provisions relating to government payment levels. While we cannot predict whether the government will adopt any such legislative or regulatory proposals, the announcement or adoption of these proposals could have a material adverse effect on our business, results of operations, financial condition and cash flow.

Our manufacturing facilities may not continue to meet regulatory requirements and may have limited capacity.

Before approving a new drug or biologic product, the FDA requires that the facilities at which the product will be manufactured are in compliance with cGMP requirements. To be successful, our therapeutic products must be manufactured for development and, following approval, in commercial quantities, in compliance with regulatory requirements and at acceptable costs. While we believe our current facilities are adequate for the limited production of product candidates for clinical trials, our facilities are not adequate to produce sufficient quantities of any products for commercial sale.

If we are unable to establish and maintain a manufacturing facility or secure third-party manufacturing capacity within our planned time and cost parameters, the development and commercialization of our products and our financial performance may be materially harmed.

We may also encounter problems with the following:

· production yields;

· quality control and assurance;

· shortages of qualified personnel;

· compliance with FDA regulations, including the demonstration of purity and potency;

· changes in FDA requirements;

· production costs; and/or

· development of advanced manufacturing techniques and process controls.

We are aware of only a limited number of companies on a worldwide basis that operate manufacturing facilities in which our product candidates can be manufactured under cGMP regulations, a requirement for all pharmaceutical products. We are currently pursuing late-stage clinical and commercial supply agreements with cGMP-compliant third-party manufacturers with available capacity to meet our internal production timetables. We have entered into clinical supply agreements with Lonza with respect to ipilimumab and MDX-060.  As part of our collaboration with BMS, we assigned to BMS the clinical supply agreement with respect to ipilimumab.  Our partner BMS is responsible for securing commercial supply agreements for ipilimumab and is currently in negotiations with respect to such arrangements. BMS may not be able to successfully consummate such arrangements. We do not currently have the capability to manufacture our product candidates under development in large commercial quantities and have no experience in commercial-scale manufacturing. It would take a substantial period of time for a contract facility that has not been producing antibodies to begin producing antibodies under cGMP regulations. We cannot make assurances that we will be able to contract with such companies for clinical and/or commercial supply on acceptable terms or in a timely manner, if at all. Moreover, even if we are able to enter into clinical and/or commercial supply manufacturing arrangements with cGMP-compliant third-party manufacturers, we cannot assure you that such manufacturers will be able to produce products that are substantially equivalent to the product candidates that we have produced in our own facilities and used in our clinical trials. If such companies are not able to produce products that are substantially equivalent to our product candidates, the progress of our clinical trials and/or commercialization of our products may be delayed and our business, financial condition and results of operations may be materially harmed.

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In addition, we and any third-party manufacturer will be required to register manufacturing facilities with the FDA and other regulatory authorities. The facilities will be subject to inspections confirming compliance with cGMP or other regulations. If we or any of our third-party manufacturers fail to maintain regulatory compliance, the FDA or other regulatory authorities can impose regulatory sanctions including, among other things, refusal to approve a pending application for a new drug product or biologic product, or revocation of a pre-existing approval.

The development and commercialization of our lead product candidate, ipilimumab, is, in large part, dependent on the actions of BMS, which are outside of our control.

We depend, in part, on our partners to support our business, including the development of product candidates generated through the use of our antibody technology. In particular, under the terms of our collaboration and co-promotion agreement with BMS, we have granted a license to commercialize our lead product candidate, ipilimumab, to BMS for the treatment of all diseases. We have also granted to BMS a sub-license to MDX-1379 for use in combination with ipilimumab for the treatment of metastatic melanoma. The successful development and commercialization of ipilimumab is dependent, in large part, on the actions of BMS, which are outside of our control. The failure of BMS to act in accordance with its obligations under the collaboration and co-promotion agreement or to prioritize or devote sufficient resources to ipilimumab development and commercialization, or a change of control of BMS, may cause us to incur substantial additional costs in order to develop and commercialize ipilimumab, which could materially harm our business.

We are, in part, dependent on our partners’ willingness and/or ability to devote resources to the development and commercialization of product candidates or otherwise support our business as contemplated in our partnership agreements.

We currently, or in the future may, rely on our partners to:

· access proprietary antigens for the development of product candidates;

· access skills and information that we do not possess;

· fund our research and development activities;

· manufacture products;

· fund and conduct preclinical testing and clinical trials;

· seek and obtain regulatory approvals for product candidates; and/or

· commercialize and market future products.

Our dependence on our partners subjects us to a number of risks, including:

· our partners have significant discretion whether to pursue planned activities;

· we cannot control the quantity and nature of the resources our partners may devote to product candidates;

· our partners may not develop product candidates generated using our antibody technology as expected; and

· business combinations or significant changes in a partner’s business strategy may adversely affect that partner’s willingness or ability to continue to pursue these product candidates.

If we do not realize the contemplated benefits from our partners, our business, financial condition and results of operations may be materially harmed.

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Our existing partnerships may be terminated, and we may not be able to establish additional partnerships.

Our licensing partners generally have the right to terminate our partnerships at any time. Our ability to continue our current partnerships and to enter into additional partnerships is dependent in large part on our ability to successfully demonstrate that our UltiMAb® technology is an attractive method of developing fully human antibody therapeutic products. Existing or potential partners may pursue alternative technologies, including those of our competitors, or enter into other transactions that could make a collaboration with us less attractive to them. For example, if an existing partner purchases or is purchased by a company that is one of our competitors, that company could be less willing to continue its collaboration with us and may, instead, become one of our competitors. In April 2006, Abgenix and Amgen completed a merger that resulted in Amgen’s ownership of Abgenix’s XenoMouse® technology.  As a result, Amgen may be less willing to continue its collaboration with us and may, through the use of the XenoMouse® technology, engage in direct competition with us in the area of generating fully human monoclonal antibodies for antibody-based therapeutics. In addition, a company that has a strategy of purchasing companies rather than entering into partnership arrangements might have less incentive to enter into a collaboration agreement with us. Moreover, disputes may arise with respect to the ownership of rights to any technology or products developed with any current or future partner. Lengthy negotiations with potential new partners or disagreements between us and our partners may lead to delays or termination in the research, development or commercialization of product candidates. If we are not able to establish additional partnerships on terms that are favorable to us or if a significant number of our existing partnerships are terminated and we cannot replace them, we may be required to increase our internal product development and commercialization efforts. This would likely:

·limit the number of product candidates that we will be able to develop and commercialize;

·significantly increase our need for capital; and/or

·place additional strain on management’s time.

Any of the above may materially harm our business, financial condition and results of operations.

Due to the size of our equity interest in Celldex Therapeutics, Inc., we must consolidate the results of its operations in our financial statements.

We currently own approximately 60% of the outstanding common stock of Celldex Therapeutics, Inc., a privately held biopharmaceutical company.  Due to the size of our equity interest in Celldex, we are currently required to consolidate the operations of Celldex in our financial statements, which results in the inclusion of their losses in our financial statements.  We are unable to predict what such losses will be. For the year ended December 31, 2006 and the six month period ended June 30, 2007, our share, net of minority interest, of Celldex’s net loss included in our financial statements was approximately $10.3 million and $4.4 million, respectively.

Our strategic equity investments in our partners expose us to equity price risk and, in addition, investments in our partners may be deemed impaired, which would affect our results of operations.

We have a number of strategic investments that expose us to equity price risk. These investments may become impaired, which would adversely affect our results of operations.

We are exposed to equity price risk on our strategic investments in our publicly-traded partners, and as part of our business strategy, we may choose to make additional similar investments in public companies in the future. Under SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, these

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investments are designated as available-for-sale and are reported at fair value on our consolidated balance sheet. Unrealized holding gains and losses on available-for-sale securities are generally excluded from earnings and reported within other comprehensive income which is a separate component of shareholders’ equity. Under our accounting policy, marketable equity securities are generally considered to be impaired if their fair value is less than our cost basis in such securities for more than six months, or some other period in light of the particular facts and circumstances surrounding the investment. If a decline in the fair value of available-for-sale securities is considered to be other than temporary, the cost basis of the security is written down to fair value as a new cost basis and the amount of the write-down is included in earnings as an impairment charge. For the years ended December 31, 2006 and 2004, we recorded impairment charges of $5.2 million and $0.2 million on investments in partners whose securities are publicly traded.  During the year ended December 31, 2005, no impairment charges were recorded related to the value of our investments in publicly traded companies. If we deem these investments to be further impaired at the end of any future reporting period, we may incur additional impairment charges on these investments.

In addition, we have investments in several of our partners whose securities are not publicly traded. The value of our investments in these companies are inherently more difficult to estimate than our investments in publicly traded companies. We estimate the value of these investments by using information acquired from industry trends, management of these companies, financial statements and other external sources. Specifically, our determination of any potential impairment of the value of privately held securities includes an analysis of the following for each company on a periodic basis: review of interim and year-end financial statements, cash position and overall rate of cash used to support operations, the progress and development of technology and product platform, the per share value of subsequent financing and potential strategic alternatives. Based on the information acquired through these sources, we record an investment impairment charge when we believe an investment has experienced a decline in value that is considered to be other than temporary. For the years ended December 31, 2006, 2005 and 2004, we recorded impairment charges of approximately $0, $33.3 million and $7.1 million, respectively, on our investments in privately-held companies. Approximately $7.0 million of the 2004 impairment charge related to IDM Pharma.  Approximately $29.3 million of the 2005 impairment charge related to IDM Pharma prior to the share exchange with Epimmune, Inc., at which time IDM Pharma became a publicly-traded company. Future adverse changes in market conditions or adverse changes in operating results of these companies may also require an impairment charge in the future.

Because competition for qualified personnel is intense, we may not be able to retain or recruit such qualified personnel, which could impact the research, development and commercialization of our products.

For us to pursue product development and commercialization plans, we will need to hire additional qualified scientific personnel to perform research and development. We will also need to hire personnel with expertise in clinical testing, government regulation, manufacturing, sales and marketing, relevant law and finance. We may not be able to attract and retain personnel on acceptable terms, given the competition for such personnel among biotechnology, pharmaceutical and healthcare companies, universities and non-profit research institutions. If we are not able to attract and retain qualified personnel, our business, financial condition and results of operations may be materially harmed.

We have had and may continue to face product liability claims related to the use or misuse of products developed by us or our partners.

The administration of drugs to humans, in clinical trials or after approval and during commercialization, may expose us to product liability claims. Consumers, healthcare producers or persons selling products based on our technology may be able to bring claims against us based on the use of our product candidates in clinical

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trials and the sale of products based on our technology. Product liability claims may be expensive to defend and may result in large judgments against us. We have obtained limited product liability coverage for our clinical trials, under which coverage limits are $20.0 million per occurrence and $20.0 million in the aggregate. Although we believe these coverage limits are adequate, we cannot be certain that the insurance policies will be sufficient to cover all claims that may be made against us. We intend to increase our coverage limits as we progress into additional late-stage clinical trials and to expand our insurance coverage to include the sale of commercial products if we obtain marketing approval for product candidates in development. Product liability insurance is expensive, difficult to obtain and may not be available in the future on acceptable terms.

In November 1998, we voluntarily suspended clinical trials for one of our product candidates after some patients experienced serious adverse events, or SAEs. This product candidate did not employ our core fully human antibody technology and we have determined not to pursue further development of this product candidate. As a result of these SAEs, we received a small number of claims, of which five resulted in lawsuits being filed. All of these lawsuits have been settled for insubstantial amounts. We cannot make assurances that additional claims will not be filed against us relating to these SAEs or arising out of any other clinical trial we have conducted or will conduct in the future.

Generally, our clinical trials, including our melanoma trials for ipilimumab, are conducted in patients with serious life-threatening diseases for whom conventional treatments have been unsuccessful or for whom no conventional treatment exists, and in some cases, our product candidate is used in combination with approved therapies that themselves have significant adverse event profiles. During the course of treatment, these patients could suffer adverse medical events or die for reasons that may or may not be related to our product candidates. The most common adverse events associated with our melanoma trials of ipilimumab have consisted of flu-like symptoms such as fever, chills and nausea. These events were expected and generally responded to standard medical therapy. In addition, some patients have experienced anticipated drug-related immune-mediated adverse events, such as diarrhea, rash, reduced pituitary function, colitis and increased liver enzymes, ranging from mild in most cases to severe in a very small number of instances. Almost all of these adverse events responded to medical therapy. In a very small number of instances (approximately 1% of over 1,000 patients treated), fatalities not directly related to disease progression or complications have occurred during the course of these trials—such fatalities may or may not be attributable to our product candidate. Any of these events or any other adverse events in any of our other clinical trials could result in a product liability claim. Any such claims against us, regardless of their merit, could result in significant awards against us, which could materially harm our business, financial condition and results of operations.

We face intense competition and rapid technological change.

The development of biotechnology and pharmaceutical products is a highly competitive business subject to significant and rapid technological change. We face competition in several different forms. First, our human antibody generation activities currently face competition from competitors with similar technology to ours as well as distinctly different technologies. Second, the actual product candidates being developed by us or by our partners also face actual and potential competition. Developments by our competitors may render our human antibody technology or our products obsolete or non-competitive.

We are aware of several pharmaceutical and biotechnology companies that are actively engaged in research and development in areas related to antibody therapeutics. Some of these companies have commenced clinical trials of antibody product candidates or have successfully commercialized antibody products. Many of these companies are addressing the same disease indications as are we and our partners. Also, we compete with companies that offer antibody generation services to other companies that have disease related target antigens. These competitors have specific expertise or technology related to monoclonal antibody development. In the

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past, we competed directly with Abgenix, which merged with Amgen in April 2006, with respect to the generation of fully human antibodies from transgenic mice. As a result of the merger, Amgen owns Abgenix’s XenoMouse® technology and may engage in direct competition with us in the area of generating fully human monoclonal antibodies for antibody-based therapeutics.  Regeneron has licensed its VelocImmune® monoclonal antibody generation technology to each of AstraZeneca and Astellas Pharma Inc., respectively, potentially enabling AstraZeneca and Astellas to compete with us in the generation of therapeutic antibodies.  Regeneron may also compete with us directly in the generation of therapeutic antibodies or may enter into additional licenses with other companies.  AstraZeneca also has access to antibody generation technologies through its ownership of Cambridge Antibody Technology.  In addition, we have entered into agreements with each of Kirin and Genmab, respectively, that grant these companies licenses to our proprietary transgenic mouse technology platform, enabling them to compete with us in offering antibody generation and development services in certain markets.

We have entered into license agreements with Pfizer, designed to give each party freedom to operate with respect to the development and commercialization of antibodies to CTLA-4. Among other things, these license agreements allow Pfizer to compete with us in such development and commercialization efforts, but Pfizer is obligated to make certain milestone and royalty payments to us based upon future sales of any Pfizer anti-CTLA-4 antibody product. Pfizer is developing CP-675,206, a fully human antibody generated by using transgenic mouse technology substantially similar to our HuMAb-Mouse® technology that targets the T-cell receptor CTLA-4. According to publicly available information, Pfizer is conducting a first line Phase III clinical trial comparing CP-675,206 alone to chemotherapy alone for metastatic melanoma, as well as in a second-line clinical trial of CP-675,206 as a monotherapy for metastatic melanoma.

Xenerex and XTL have developed technologies that, according to Xenerex and XTL, will allow them to generate fully human monoclonal antibodies in functionally modified mice. Numerous additional companies are developing therapeutic product candidates comprising human antibody components. Furthermore, several companies are developing, or have developed, technologies that do not involve immunization of animals for creating antibodies comprising human antibody sequences.  XOMA and PDL BioPharma both offer technologies to convert mouse antibodies into antibodies closely resembling human antibodies. In addition, phage display technology is being used by companies, such as CAT, Dyax and MorphoSys to generate potentially therapeutic products comprising human antibody sequences. Companies such as Johnson & Johnson, MedImmune (a subsidiary of AstraZeneca), Amgen, Biogen Idec, Novartis, Genentech, PDL BioPharma, Wyeth, Abbott Laboratories and GlaxoSmithKline have generated therapeutic products that are currently in development or on the market and that are derived from recombinant DNA that comprise human antibody components.

Other technologies can also be applied to the treatment of the diseases that we or our partners are pursuing. For example, immunoconjugates—monoclonal antibodies linked to toxins—are being developed by others, as well as by us, and other companies are developing antibodies linked to radioactive isotopes. In addition, the application of recombinant DNA technology to develop potential products consisting of proteins (such as growth factors, hormones, enzymes, cytokines receptor fragments and fusion proteins) that do not occur normally in the body, or occur only in small amounts, has been under way for some time. Included in this group are interleukins such as IL-2 and IL-11, interferons, colony stimulating factors such as G-CSF and GM-CSF, clotting factors, growth hormones, erythropoeitin, DNAse, tPA, glucocerebrosidase, PDGF and a number of other similar biological agents. Continuing development of new chemical entities and other drugs by pharmaceutical and other biotechnology companies carries with it the potential discovery of agents for treating disease indications also targeted by drugs that we or our partners are developing.

Some of our competitors have received regulatory approval or are developing or testing product candidates that compete directly with product candidates employing our antibody technology. Many of these companies and institutions, either alone or together with their partners, have substantially greater financial resources and

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larger research and development staffs than we or some of our partners do. In addition, many of these competitors have significantly greater experience than we do in:

·developing products;

·undertaking preclinical testing and clinical trials;

·obtaining FDA and other regulatory approvals of products; and

·manufacturing and commercializing products.

Accordingly, our competitors may obtain patent protection, receive FDA approval or commercialize products before we or our partners do. If we or our partners commence commercial product sales, we or our partners will be competing against companies with greater manufacturing, marketing and sales capabilities, areas in which we and certain of our partners have limited or no experience.

We also face intense competition from other pharmaceutical and biotechnology companies to establish partnerships, as well as relationships with academic and research institutions, and to in-license proprietary technology from these institutions. These competitors, either alone or with their partners, may succeed in developing or licensing technologies or products that are more effective than ours.

Seeking orphan drug designation for eligible products is an uncertain process, and we may not receive any effective or competitive results from this competitive strategy.

Our competitive strategy includes seeking orphan drug designation for eligible products (i.e., certain products for diseases with small patient populations).  In the United States, the first drug with an orphan drug designation for a given disease to receive regulatory approval for such disease generally receives marketing exclusivity for the use of the drug for such disease for a period of seven years from approval.  The orphan drug exclusivity bars others from obtaining approval for the same drug for the designated indication during the seven years, unless the subsequent applicant can demonstrate that its product is clinically superior to the drug with exclusivity or the prior applicant is unable to provide adequate supply to meet medical need.  Orphan drug exclusivity is also available in markets outside the United States on similar terms.

We have obtained orphan drug designation in the United States for each of ipilimumab and MDX-1379 for specified metastatic melanoma patient populations, and therefore each is eligible for orphan drug exclusivity if approved first. The FDA’s approach with respect to orphan drug status for antibody products is uncertain, particularly with respect to whether two antibody products against the same disease target would be considered to be the same for orphan drug purposes under current law and regulations.  Furthermore, we are not aware of established FDA policies or precedent for how orphan drug exclusivity applies in circumstances where two or more compounds with orphan drug designations are approved for combination therapy. The FDA may not grant us exclusivity for the ipilimumab and MDX-1379 combination therapy, or may permit others to receive approval for differing combinations of similar compounds despite any orphan drug exclusivity we receive for different uses or for treating metastatic melanoma, depending on FDA’s assessment of the chemical similarity of the other drugs to our products.  Orphan drug exclusivity also does not prevent FDA from permitting others to market the same compound for different uses than the orphan use. We therefore may not receive any meaningful protection for ipilimumab, MDX-1379 or our other products based on orphan drug exclusivity.

In addition, Pfizer has obtained orphan drug designation in the United States for CP-675,206 for specific patient populations, including metastatic melanoma.  In April 2007, Pfizer, Medarex and BMS each agreed that it would not assert any orphan drug exclusivity to, and would take commercially reasonable steps to assure that such exclusivity does not, block one another from obtaining approval for their respective anti-CTLA4 antibody products anywhere in the world.

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Prior to the agreement in April 2007, if Pfizer had been first to receive approval by the FDA for such patient populations, and CP-675,206 and ipilimumab were to be considered to be the “same” drug for orphan exclusivity purposes, Pfizer could have obtained exclusivity that would potentially have blocked us and our partner BMS from obtaining approval in the United States to sell ipilimumab, whether as a monotherapy or combination therapy, for such patient populations, including metastatic melanoma.

We are subject to extensive and costly government regulation.

Product candidates employing our human antibody technology are subject to extensive and rigorous domestic government regulation including regulation by the FDA, the Centers for Medicare and Medicaid Services, other divisions of the U.S. Department of Health and Human Services, the U.S. Department of Justice, state and local governments and their respective foreign equivalents. The FDA regulates the research, development, preclinical and clinical testing, manufacture, safety, effectiveness, record-keeping, reporting, labeling, storage, approval, advertising, promotion, sale, distribution, import, and export of biopharmaceutical products. The FDA regulates human antibodies as biologics, subject to a BLA, under the Public Health Service Act, as amended. If products employing our human antibody technology are marketed abroad, they will also be subject to extensive regulation by foreign governments, whether or not we have obtained FDA approval for a given product and its uses. Such foreign regulation may be equally or more demanding than corresponding U.S. regulation.

Government regulation substantially increases the cost and risk of researching, developing, manufacturing, and selling our products. The regulatory review and approval process, which includes preclinical testing and clinical trials of each product candidate, is lengthy, expensive and uncertain. We or our partners must obtain and maintain regulatory authorization to conduct clinical trials. We or our partners must obtain regulatory approval for each product candidate we intend to market, and the manufacturing facilities used for the products must be inspected and meet legal requirements. Securing regulatory approval requires the submission of extensive preclinical and clinical data and other supporting information for each proposed therapeutic indication in order to establish the product’s safety, efficacy, potency and purity for each intended use. The development and approval process takes many years, requires substantial resources, and may never lead to the approval of a product. Failure to obtain regulatory approvals, or delays in obtaining regulatory approvals may:

·adversely affect the successful commercialization of any drugs that we or our partners develop;

·impose additional costs on us or our partners;

·diminish any competitive advantages that we or our partners may attain; and

·adversely affect our receipt of revenues or royalties.

Even if we are able to obtain regulatory approval for a particular product, the approval may limit the indicated medical uses for the product, may otherwise limit our ability to promote, sell, and distribute the product, may require that we conduct costly post-marketing surveillance, and/or may require that we conduct ongoing post-marketing studies. Material changes to an approved product, such as, for example, manufacturing changes or revised labeling, may require further regulatory review and approval. Once obtained, any approvals may be withdrawn, including, for example, if there is a later discovery of previously unknown problems with the product, such as a previously unknown safety issue. If we, our partners or our contract manufacturers fail to comply with applicable regulatory requirements at any stage during the regulatory process, such noncompliance could result in, among other things:

·delays in the approval of applications or supplements to approved applications;

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·refusal of a regulatory authority, including the FDA, to review pending market approval applications or supplements to approved applications;

·warning letters;

·fines;

·import and/or export restrictions;

·product recalls or seizures;

·injunctions;

·total or partial suspension of production;

·civil penalties;

·withdrawals of previously approved marketing applications or licenses;

·recommendations by the FDA or other regulatory authorities against governmental contracts; and

·criminal prosecutions.

In certain cases, we expect to rely on our partners to file INDs with the FDA and to direct the regulatory approval process for product candidates employing our human antibody technology. Our partners may not be able to conduct clinical testing or obtain necessary approvals from the FDA or other regulatory authorities for their product candidates employing our human antibody technology. If they fail to obtain required governmental approvals, our partners will be delayed or precluded from marketing these products. As a result, commercial use of products employing our technology will not occur and our business, financial condition and results of operations may be materially harmed.

We do not have, and may never obtain, the regulatory approvals we need to market our product candidates.

Following completion of clinical trials, the results are evaluated and, depending on the outcome, submitted to the FDA in the form of a BLA or NDA, to obtain FDA approval of the product and authorization to commence commercial marketing. In responding to a BLA or NDA, the FDA may require additional testing or information, may require that the product labeling be modified, may impose post-approval study or reporting requirements or other restrictions on product distribution, or may deny the application.  The FDA has established performance goals for review of NDAs and BLAs – six months for priority applications and 10-12 months or longer for standard application.  However, the FDA is not required to complete its review within these time periods. The timing of final FDA review and action varies greatly, but can take years in some cases and often involves the input of an FDA advisory committee of outside experts. Product sales in the U.S. may commence only when a BLA or NDA is approved.

To date, we have not applied for or received the regulatory approvals required for the commercial sale of any of our product candidates in the U.S. or in any foreign jurisdiction. None of our product candidates has been determined to be safe and effective. We have only limited experience in filing and pursuing applications necessary to obtain regulatory approval. It is possible that none of our product candidates will be approved for marketing.

Product candidates that appear promising in the early phases of development, such as in preclinical development or in early human clinical trials, may fail to reach the market for a number of reasons, such as:

·the product candidate did not demonstrate acceptable clinical trial results even though it demonstrated positive preclinical trial results;

·the product candidate was not effective in treating the specified disease or condition;

·the product candidate had harmful side effects on humans or presented unacceptable safety risks;

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·the governing regulatory authorities (such as the FDA) denied approval to the product candidate altogether or denied a commercially important indicated use;

·the product candidate was not economical for us to manufacture; and/or

·the product candidate was not cost effective in light of alternative therapies.

We cannot guarantee that we will ever be able to produce commercially successful products.

If we or our manufacturing partners do not comply with current good manufacturing practices requirements, we will not be able to commercialize our product candidates.

We will depend on our own manufacturing facilities and/or on those of our partners and other third parties to manufacture products generated through the use of our human antibody technology if we are able to commercialize any of our product candidates. Before commercializing a new drug, manufacturers must demonstrate compliance with the applicable cGMP requirements which include quality control and quality assurance requirements as well as the maintenance of extensive records and documentation. Manufacturing facilities are subject to ongoing periodic inspection by the FDA and corresponding foreign and state authorities, including unannounced inspections, and must be licensed before they can be used in commercial manufacturing for products generated through the use of our technology. In addition, cGMP requirements are constantly evolving, and new or different requirements may apply in the future. We, our partners or third party contract manufacturers may not be able to comply with the applicable regulations. After regulatory approvals are obtained, the subsequent discovery of previously unknown problems, or the failure to maintain compliance with existing or new regulatory requirements may result in restrictions on the marketing of a product, withdrawal of the product from the market, seizures, costly required corrective and preventative actions, the shutdown of manufacturing facilities, injunctions, monetary fines and/or civil or criminal sanctions.

Even if approved, our products will be subject to extensive post-approval regulation.

Once a product is approved, numerous post-approval requirements apply. Among other things, the holder of an approved BLA or NDA is subject to periodic and other FDA monitoring and reporting obligations, including obligations to monitor and report adverse events and instances of the failure of a product to meet the specifications in the BLA or NDA.  Application holders must submit new or supplemental applications and obtain FDA approval for certain changes to the approved product, product labeling or manufacturing process. Application holders must also submit advertising and other promotional material to the FDA and report on ongoing clinical trials.

Advertising and promotional materials must comply with FDA rules in addition to other potentially applicable federal and state laws. The distribution of product samples to physicians must comply with the requirements of the Prescription Drug Marketing Act. Manufacturing facilities remain subject to FDA inspection and must continue to adhere to FDA’s cGMP requirements. Sales, marketing, and scientific/educational grant programs must comply with the anti-fraud and abuse provisions of the Social Security Act, the False Claims Act and similar state laws, each as amended. Pricing and rebate programs must comply with the Medicaid rebate requirements of the Omnibus Budget Reconciliation Act of 1990 and the Veteran’s Health Care Act of 1992, each as amended. If products are made available to authorized users of the Federal Supply Schedule of the General Services Administration, additional laws and requirements apply. All of these activities are also potentially subject to federal and state consumer protection and unfair competition laws.

Depending on the circumstances, failure to meet these post-approval requirements can result in criminal prosecution, fines or other penalties, injunctions, recall or seizure of products, total or partial suspension of production, denial or withdrawal of pre-marketing product approvals, or refusal to allow us to enter into supply

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contracts, including government contracts.  Any government investigation of alleged violations of law could require us to expend significant time and resources in response, and could generate negative publicity.  In addition, even if we comply with FDA and other requirements, new information regarding the safety or effectiveness of a product could lead the FDA to modify or withdraw a product approval.

New legal and regulatory requirements could make it more difficult for us to obtain approvals for our product candidates, and could limit or make more burdensome our ability to commercialize any approved products.

Numerous proposals have been made in recent months and years to impose new requirements on drug approvals, expand post-approval requirements, and restrict sales and promotional activities.  For example, federal legislation has been proposed that would require all new drug applicants to submit risk evaluation and minimization plans to monitor and address potential safety issues for products upon approval, grant FDA the authority to impose risk management measures for marketed products and to mandate labeling changes in certain circumstances, and establish new requirements for disclosing the results of clinical trials.  Additional measures have also been proposed to address perceived shortcomings in FDA’s handling of drug safety issues, including proposed changes to clinical trial disclosure, and to limit pharmaceutical company sales and promotional practices that may be viewed as excessive or improper.  If these or other legal or regulatory changes are enacted, it may become more difficult or burdensome for us to obtain approval of our product candidates, any approvals we receive may be more restrictive or be subject to onerous post-approval requirements, our or our partners’ ability to commercialize approved products successfully may be hindered, and our business may be harmed as a result.

If we are able to obtain approvals for our products, we could face competition from “generic” or “follow-on” versions of our products.

Under current U.S. law and FDA policy, generic versions of conventional chemical drug compounds, sometimes referred to as small molecule compounds, may be approved through an abbreviated approval process. In general terms, the generic applicant references an approved innovator product for which full clinical data demonstrating safety and effectiveness exist for the approved conditions of use. The generic applicant in turn need only demonstrate that its product has the same active ingredient(s), dosage form, strength, route of administration, and conditions of use (labeling) as the referenced innovator drug, and that the generic product is absorbed in the body at the same rate and to the same extent as the referenced innovator drug (this is known as bioequivalence). In addition, the generic application must contain information regarding the manufacturing processes and facilities that will be used to ensure product quality, and must contain certifications to patents listed with the FDA for the referenced innovator drug.

There is no such abbreviated approval process under current law for biological products approved under the Public Health Service Act through a BLA, such as monoclonal antibodies, cytokines, growth factors, enzymes, interferons and certain other proteins. However, various proposals have been made to establish an abbreviated approval process to permit approval of generic or follow-on versions of certain types of biological products. The proposals include proposals for legislation, and proposals for FDA to extend its existing authority to this area.

If the law is changed or if FDA somehow extends its existing authority in new ways, and third parties are permitted to obtain approvals of versions of our antibody products through an abbreviated approval mechanism, and without conducting full clinical studies of their own, it could materially harm our business. Such products would be significantly less costly than ours to bring to market, and could lead to the existence of multiple lower

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priced competitive products. This would substantially limit our ability to obtain a return on the investments we have made in those products.

We are subject to federal, state, local and foreign laws and regulations, and complying with these may cause us to incur significant costs.

We are subject to laws and regulations enforced by certain federal, state, local and foreign health and environmental authorities and other regulatory statutes including:

·the Occupational Safety and Health Act;

·the Environmental Protection Act;

·the Toxic Substances Control Act;

·the Food, Drug and Cosmetic Act;

·the Resource Conservation and Recovery Act; and

·other current and potential federal, state, local or foreign laws and regulations.

In particular, with respect to environmental laws, our product development activities involve the use of hazardous materials, and we may incur significant costs as a result of the need to comply with these laws. Our research, development and manufacturing activities involve the controlled use of hazardous materials, chemicals, viruses and radioactive compounds. We are subject to federal, foreign, state and local laws and regulations governing the use, manufacture, storage, handling and disposal of these materials and waste products. Although we believe that our safety procedures for handling and disposing of these materials comply with the standards prescribed by applicable laws and regulations, we cannot completely eliminate the risk of contamination or injury, by accident or as the result of intentional acts of terrorism, from these materials. In the event of an accident, we could be held liable for any damages that result, and any resulting liability could exceed our resources. We may also be required to incur significant costs to comply with environmental laws and regulations in the future.

Risks Related to Intellectual Property

We depend on patents and proprietary rights.

Our success depends in part on our ability to:

·apply for, obtain, protect and enforce patents;

·protect trade secrets;

·operate without infringing upon the proprietary rights of others; and

·in-license or acquire certain technologies.

We will be able to protect our proprietary rights from unauthorized use by third parties only to the extent that our proprietary rights are covered by valid and enforceable patents or are effectively maintained as trade secrets.  We protect our proprietary position by filing U.S. and foreign patent applications related to our proprietary technology, inventions and improvements that are important to the development of our business.  Our pending patent applications, those we may file in the future, or those we may license from third parties, may not result in patents being issued or, if issued, may not be held enforceable.  The patent position of biotechnology intellectual property involves complex legal and factual questions and, therefore, enforceability cannot be predicted with certainty. Patents, if issued, may be challenged, invalidated or circumvented.  Thus,

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any patents that we own or license from third parties may not provide sufficient protection against competitors.  Also, patent rights may not provide us with proprietary protection or competitive advantages against competitors with similar technology.  Furthermore, others may independently develop similar technologies or duplicate any technology that we have developed which is not covered by an issued patent.  The laws of foreign countries may not protect our intellectual property rights to the same extent as do the laws of the U.S.

In addition to patents, we rely on trade secrets and proprietary know-how.  We seek protection, in part, through confidentiality and proprietary information agreements.  These agreements may not provide protection or adequate remedies in the event of unauthorized use or disclosure of confidential and proprietary information, or breach of these agreements.  Furthermore, our trade secrets may otherwise become known to, or be independently developed by, our competitors.

We do not have exclusive access to certain patents and therefore we may face increased competition from those entities that share access to these patents.

Even though we own issued patents and pending applications and have received licenses pertaining to the HuMAb-Mouse® and the KM-Mouse® technologies, this does not mean that we and our licensees of the HuMAb-Mouse® and the KM-Mouse® technology will have exclusive rights to antibodies against all targets that are made using this technology, or that we or our licensees will have the right to make, develop, use or sell such antibodies.

Our patents and applications covering the HuMAb-Mouse® and the KM-Mouse® technology include patents and applications that cover particular human antibodies. These patents do not cover all human antibodies.  Our patents may not protect against the importation of products, such as antibodies, made using HuMAb-Mouse® or KM-Mouse® technology.

We do not have exclusive access to the patents underlying the HuMAb-Mouse®. In March 1997, prior to our acquisition of GenPharm, GenPharm entered into a cross-license and settlement agreement with Abgenix, Cell Genesys, Inc., Xenotech, L.P. and Japan Tobacco, Inc., pursuant to which Abgenix and these entities paid GenPharm a total of approximately $38.6 million in exchange for a non-exclusive license to certain patents, patent applications, third-party licenses and inventions pertaining to the development and use of certain transgenic rodents, including mice, that produce fully human antibodies that are integral to our product candidates and business. These patents, patent applications, third party licenses and inventions form the basis of our HuMAb-Mouse® technology.  Abgenix completed its merger with Amgen in April 2006.  As a result, Amgen has access to such patents, patent applications, third party licenses and inventions. Our business may suffer from the competition of these entities and their licensees and sublicensees.

We are not the exclusive owner of the technology underlying the KM-Mouse®. Effective September 2002, we entered into a collaboration and license agreement with Kirin, which provides for us to exchange certain cross-licenses for each other’s technology for the development and commercialization of human antibody products made using the HuMAb-Mouse®, the KM-Mouse® and certain other antibody-generating mice. Kirin has certain rights to distribute and use such mice throughout the world. Our business may be materially harmed as a consequence of competition from Kirin and its licensees and sublicensees or if the collaboration and license agreement were breached or terminated for any reason.

Moreover, other parties could have blocking patent rights to products made using UltiMAb® technology, such as antibodies, and their production and uses, for instance because of a proprietary position covering the antibody or the antibody’s target or the method of manufacturing such antibody. For example, we are aware of certain U.S. and foreign patents held by third parties relating to particular targets for their human monoclonal antibodies, to human monoclonal

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antibodies against various targets, and to the method of manufacture and use of such products.    We are also aware of certain U.S. and foreign patents and patent applications held by third parties relating to antibody product candidates under development by us alone or with our collaborators.

Third parties may allege our products or technologies infringe their patents or may challenge the validity of our patents and other intellectual property rights, resulting in litigation or other time-consuming and expensive proceedings which could deprive us of valuable products and/or rights.

Our commercial success depends significantly on our ability to operate without infringing the patents and other proprietary rights of third parties.  In the event that our products or technologies may infringe on the patents or violate other proprietary rights of third parties, we and our partners may be prevented from pursuing product development, manufacturing or commercialization or may be required to pay significant monetary damages or royalty rates to third parties.  Such a result may materially harm our business, financial condition and results of operations.

If we become involved in any intellectual property litigation, interference or other judicial or administrative proceedings, we will incur substantial expense and the efforts of our technical and management personnel will be diverted.  An adverse determination may subject us to significant liabilities or require us to seek licenses that may not be available from third parties on commercially favorable terms, if at all.  Therefore, we and our partners may be restricted or prevented from manufacturing and selling products that are covered by such intellectual property, which would materially harm our business.

With respect to third party patent rights, we are aware of a U.S. patent owned by Genentech, relating to the production of recombinant antibodies in host cells.  The U.S. Patent and Trademark Office, or USPTO, has reexamined the patentability of this patent and, in a final office action, rejected the patentability of such claims.   Genentech has announced its intent to respond to such action and, if necessary, to appeal.  Upon completion of any appeal that might take place, the rejection of the patentability of such claims could be reversed.  The appeal processes could take several years to complete.

We currently produce our product candidates and our partners’ product candidates using recombinant antibodies from host cells and may choose to produce additional product candidates in this manner.  If any of our antibody product candidates are produced in the manner ultimately claimed in the Genentech patent, which claims survive the re-examination and any appeal processes, then we may need to obtain a license, should one be available.  We have a license to this patent from Genentech for our anti-CTLA-4 product candidate (ipilimumab) but currently do not have licenses for any of our other antibody product candidates.  If we desire a license for any of our other antibody product candidates and are unable to obtain a license on commercially reasonable terms or at all, we may be restricted in our ability to use Genentech’s techniques to make recombinant antibodies in or to import them into the United States.

In addition to this challenge to the validity of this Genentech patent through reexamination process at the USPTO, MedImmune, a licensee of the patent, has filed a complaint in Federal District Court alleging that the patent is invalid.  MedImmune’s standing to prosecute this complaint as a non-breaching licensee was challenged by Genentech, but a recent Supreme Court ruling on the matter has resulted in MedImmune’s standing being upheld, and the case has been remanded for further consideration of the merits.  As a result of this ruling, it may now be possible for licensees of our patents to challenge the validity of the patents that we  have licensed to the licensee.

In addition to Genentech’s patent, we are also aware of certain U.S. patents held by third parties relating to antibody expression in particular types of host cells, including CHO cells, including certain media preparations

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and their use for culturing CHO cells, and particular antibody formulations, any of which may be relevant to our current or future manufacturing techniques.  If we determine that we need a license to these or other patents relating to methods of making antibodies and are unable to obtain licenses on commercially reasonable terms or at all, we may be restricted in our ability to use these methods to make antibodies or to import the antibodies into the United States.

If our antibody product candidates (or those antibody product candidates of our partners using our human antibody technology) or their commercial use or production are covered by any of the claims of the aforementioned patents or any other patents, or patents that may issue from the aforementioned patent applications or any other patent applications, then we or our partners may need a license to one or more of these patents.  Further, we are aware of a number of other third party patent applications that, if granted, with claims as currently drafted, may cover our and our partners’ current or planned activities.  We cannot assure you that our product candidates and/or actions in developing or selling human antibody product candidates will not infringe such patents.  We intend to seek licenses to such patents when, in our judgment, such licenses are needed.  If any licenses are required, there can be no assurance that we will be able to obtain any such license on commercially favorable terms, if at all, and if these licenses are not obtained, we might be prevented from using certain of our technologies for the generation of our recombinant human antibody product candidates.  Our failure to obtain a license to any technology that we may require may materially harm our business, financial condition and results of operations.

Risks Related to Our Common Stock

Our stock price may be volatile.

Historically, there has been significant volatility in the market prices of biotechnology companies’ securities. During the two-year period ended June 30, 2007, the sale prices of our common stock ranged between $7.45 and $16.59.  Various factors and events may have a significant impact on the market price of our common stock. These factors include, by way of example:

·fluctuations in our operating results;

·announcements of technological innovations or new commercial therapeutic products by us or our competitors;

·published reports by securities analysts;

·progress with clinical trials;

·governmental regulation;

·developments in patent or other proprietary rights;

·developments in our relationship with collaborative partners;

·public concern as to the safety and effectiveness of our product candidates or products;

·changes in our management;

·matters relating to the investigation of our past stock option grant practices; and

·general market conditions.

The trading price of our common stock has been, and could continue to be, subject to wide fluctuations in response to these or other factors, including the sale or attempted sale of a large amount of our common stock into the market. Broad market fluctuations may also adversely affect the market price of our common stock.

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We have obligations to issue shares of our common stock in the future, which may have a dilutive effect on the shares of our common stock currently outstanding.

As of July 31, 2007, we had 16,248,877 shares of common stock reserved for issuance pursuant to options and other stock based awards which had been granted under our equity incentive plans having a weighted average exercise price of $9.88 per share and we had reserved 6,922,499 shares of common stock for issuance pursuant to future grants of options under our equity incentive plans. We have filed registration statements on Form S-8 under the Securities Act covering all of these shares with the exception of the 5,500,000 shares discussed in the following paragraph. Shares issued pursuant to these plans, other than shares issued to affiliates, will be freely tradable in the open market. Shares held by affiliates may be sold pursuant to the requirements of Rule 144.

At our annual meeting of shareholders held on May 18, 2006, our shareholders approved an amendment to our 2005 Equity Incentive Plan to increase the aggregate number of shares of common stock authorized for issuance under the plan by 5,500,000 shares.  We intend to file a registration statement on Form S-8 under the Securities Act covering these additional shares, and such registration statement will become effective upon filing.  Shares issued upon the exercise of options related to such additional shares, other than shares issued to affiliates, will be freely tradeable in the open market.  Shares held by affiliates may be sold pursuant to the requirements of Rule 144.

As of July 31, 2007, we had reserved 619,372 shares of common stock for issuance pursuant to our 2002 Employee Stock Purchase Plan. We have filed a registration statement on Form S-8 under the Securities Act covering all of those shares. All shares issued under this plan, other than shares issued to affiliates, will be freely tradable on the open market. Shares held by affiliates may be sold pursuant to the requirements of Rule 144.

The exercise of all or a portion of the outstanding options may result in a significant increase in the number of shares of our common stock that will be subject to trading on the NASDAQ Global Market and the issuance and sale of the shares of our common stock upon the exercise thereof may have an adverse effect on the price of our common stock.

As of July 31, 2007, we had 10,936,935 shares of common stock reserved for issuance pursuant to the conversion of the $150.0 million aggregate principal amount of our outstanding 2.25% Convertible Senior Notes due May 15, 2011. Holders of these notes may convert their notes into shares of common stock at any time prior to maturity or redemption by us at a conversion rate of 72.9129 shares per each $1,000 principal amount of the notes ($13.72 per share), subject to adjustment.

Future sales of our common stock or other securities could cause the market price of our common stock to decline.

As of July 31, 2007, we had 126,897,993 shares of common stock outstanding, of which approximately 8,500,000 are restricted securities as that term is defined in Rule 144 under the Securities Act. Under certain circumstances, these restricted securities may be sold without registration pursuant to such rule. We are unable to predict the effect that sales made under Rule 144 or pursuant to any registration may have on the market price of our common stock. The sale of a significant number of additional securities, or even the possibility thereof, may lower the market price of our common stock.

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Upon the occurrence of certain change of control events of our company, we are required to offer to repurchase all of our debt, which may adversely affect our business and the price of our common stock.

Upon the occurrence of certain change of control events of our company, we are required to offer to repurchase all of our outstanding 2.25% Convertible Senior Notes due May 15, 2011. As of July 31, 2007, $150.0 million aggregate principal amount of these notes was outstanding. In each instance, we may pay the repurchase price in cash or, at our option, in common stock. These change of control events include, without limitation, (i) the acquisition by any third party of at least 50% of our common stock; or (ii) our merger or consolidation with or into any other person, any merger or consolidation of another person into us or our sale or other disposal of all or substantially all of our assets, except in certain limited circumstances provided in the indentures relating to the notes. Such repurchase rights may be triggered at a time at which we do not have sufficient funds available to pay the repurchase price in cash or determine that payment in cash is otherwise inadvisable. In such event, the issuance of a significant number of additional shares of common stock in payment of the repurchase price may lower the market price of our common stock.

Our restated certificate of incorporation, amended and restated by-laws, shareholder rights plan and New Jersey law contain provisions that could delay or prevent an acquisition of our company even if the acquisition would be beneficial to our shareholders, and as a result, our management may become entrenched and hard to replace.

In May 2001, our board of directors adopted a shareholder rights plan. The shareholder rights plan provides for a dividend of one preferred share purchase right on each outstanding share of our common stock. Each right entitles shareholders to buy 1/1000th of a share of our Series A junior participating preferred stock at an exercise price of $150.00. Each right will become exercisable following the tenth day after a person or group announces an acquisition of 20% or more of our common stock. We will be entitled to redeem the rights at $0.001 per right at any time on or before the close of business on the tenth day following acquisition by a person or group of 20% or more of our common stock.

The shareholder rights plan and certain provisions of our restated certificate of incorporation and amended and restated by-laws and New Jersey law may have the effect of making it more difficult for a third party to acquire, or of discouraging a third party from attempting to acquire, control of us. This could limit the price that certain investors might be willing to pay in the future for our common stock. The provisions of our restated certificate of incorporation and amended and restated by-laws include:

·a classified board of directors;

·a requirement that special meetings of shareholders be called only by our board of directors, chairman of the board, chief executive officer or president;

·advance notice requirements for shareholder proposals and nominations;

·limitations on the ability of shareholders to amend, alter or repeal our by-laws; and

·the authority of the board of directors to issue, without shareholder approval, preferred stock with such terms as the board of directors may determine.

We are also afforded the protections of the New Jersey Shareholders Protection Act. This New Jersey statute contains provisions that impose restrictions on shareholder action to acquire control of our company. The effect of the provisions of our shareholder rights plan, restated certificate of incorporation and amended and restated by-laws and New Jersey law may discourage third parties from acquiring control of our company. In addition, these measures may result in the entrenchment of our management and may prevent or frustrate any attempt by shareholders to replace or remove our current management.

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We do not intend to pay cash dividends on our common stock in the foreseeable future.

We intend to retain any future earnings to finance the growth and development of our business, and we do not plan to pay cash dividends on our common stock in the foreseeable future.

Item 4.  Submission of Matters to a Vote of Security Holders

At the Annual Meeting of Shareholders held on May 17, 2007, our shareholders elected:  (i) three Class III Directors each to serve for a term to expire in 2010; and (ii) one Class II Director to serve for a term to expire in 2008.  Our shareholders also voted to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2007. Out of the 125,710,446 eligible votes, the following votes were cast at the meeting either by proxies solicited in accordance with Section 14 of the Securities Exchange Act of 1934, as amended, and the regulations set forth thereunder, or by securities holders voting in person. With respect to the election of directors, abstentions are treated as votes withheld and are included in the table:

Proposal 1

Director Nominees—Class III	Votes For	Votes Withheld
Abhijeet J. Lele	101,224,243	2,127,640
Irwin Lerner	95,732,846	7,619,037
Julius A. Vida, Ph.D.	99,101,174	4,250,709

Proposal 2

Director Nominee—Class IIb	Votes For	Votes Withheld
Robert C. Dinerstein	101,112,868	2,239,015

The following persons are incumbent directors whose terms of office continue after the Annual Meeting of Shareholders:

Class II Terms Expiring in 2008	Class I Terms Expiring in 2009
Patricia M. Danzon, Ph.D.	Ronald J. Saldarini, Ph.D.
	Charles R. Schaller

Proposal 3

Ratification of the selection of Ernst & Young LLP as our Independent Registered Public Accounting Firm for the year ending December 31, 2007:

FOR	AGAINST	ABSTAIN
98,683,798	4,498,019	170,066

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Item 6. Exhibits

(a)Exhibits:

Exhibit 3.1	Restated Certificate of Incorporation of the Registrant, incorporated by reference to Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q filed August 12, 2003.
Exhibit 3.2	Amended and Restated By-laws of the Registrant, incorporated by reference to Exhibit 99.2 to the Registrant’s Current Report on Form 8-K filed July 29, 2005.
Exhibit 4.1	Reference is made to Exhibits 3.1 and 3.2.
Exhibit 4.2	Form of Specimen Common Stock Certificate, incorporated by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form S-1 (File No. 33-39956) filed April 12, 1991.
Exhibit 4.3	Form of Rights Agreement (including Form of Rights Certificate), incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed May 25, 2001.
Exhibit 4.4	Indenture dated May 3, 2004 between the Registrant and Wilmington Trust Company, as trustee, incorporated by reference to Exhibit 4.3 to Registrant’s Current Report on Form 8-K filed May 4, 2004.
Exhibit 4.5	Registration Rights Agreement, dated May 3, 2004, by and among the Registrant, Goldman Sachs & Co. and J.P. Morgan Securities, Inc., incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed May 4, 2004.
Exhibit 4.6	First Supplemental Indenture dated October 4, 2006 among Registrant and Wilmington Trust Company, as trustee, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed October 5, 2006.
Exhibit 10. 1†	Amendment to Cross-License Agreement dated April 25, 2007, between the Registrant and Pfizer Inc.
Exhibit 10.2†	Amendment No. 1 to Collaboration and Co-Promotion Agreement dated April 25, 2007, between the Registrant and Bristol-Myers Squibb Company.
Exhibit 10.3	Orphan Drug Exclusivity Waiver Agreement dated April 25, 2007, between the Registrant, Bristol Myers-Squibb Company and Pfizer Inc.
Exhibit 10.4	Letter Agreement between Howard H. Pien and Registrant dated May 16, 2007, incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed May 16, 2007.
Exhibit 10.5	Medarex, Inc. Incentive Stock Option Agreement for 2005 Equity Incentive Plan, as amended, incorporated by reference to Exhibit 10.2 to Registrant’s Current Report on Form 8-K filed May 22, 2007.
Exhibit 10.6	Medarex, Inc. Nonqualified Stock Option Agreement for 2005 Equity Incentive Plan, as amended, incorporated by reference to Exhibit 10.3 to Registrant’s

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	Current Report on Form 8-K filed May 22, 2007.
Exhibit 10.7	Medarex, Inc. Non-Employee Director Nonqualified Stock Option Agreement for 2005 Equity Incentive Plan, as amended, incorporated by reference to Exhibit 10.4 to Registrant’s Current Report on Form 8-K filed May 22, 2007.
Exhibit 10.8	Medarex, Inc. 2005 Equity Incentive Plan, as amended, incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed May 22, 2007.
Exhibit 10.9	Restricted Stock Agreement dated as of June 29, 2007 between the Registrant and Howard H. Pien.
Exhibit 10.10	Stock Option Agreement dated as of June 29, 2007 between the Registrant and Howard H. Pien.
Exhibit 31.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 31.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

†  Confidential treatment has been requested for certain portions of this exhibit.  The redacted exhibits have been filed separately with the SEC as required by Rule 406 of Regulation C.

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		MEDAREX, INC.
		(Registrant)
Date: August 3, 2007	By:			/s/   HOWARD H. PIEN
			Howard H. Pien President and Chief Executive Officer (Principal Executive Officer)
Date: August 3, 2007	By:		/s/   CHRISTIAN S. SCHADE
			Christian S. Schade Senior Vice President Finance & Administration, Chief Financial Officer (Principal Financial and Accounting Officer)

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EX-10.1

EXHIBIT 10.1

EXECUTION COPY

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

AMENDMENT TO
CROSS-LICENSE AGREEMENT

THIS AMENDMENT TO CROSS-LICENSE AGREEMENT (the “Amendment”) is made as of April 25th, 2007 (the “Amendment Effective Date”) between Pfizer Inc, a Delaware corporation having an office at 235 East 42nd Street, New York, New York 10017, and its Affiliates (“Pfizer”), and Medarex, Inc., a New Jersey corporation with a business address at 707 State Road, Princeton, New Jersey 08540 (“Medarex”).  Pfizer and Medarex each may be referred to herein individually as a “Party” or collectively as the “Parties.”

RECITALS

A.   Pfizer and Medarex entered into a Cross-License Agreement dated September 15, 2004 (the “Cross-License Agreement”).

B.   The Parties now wish to amend the Cross-License Agreement to include certain additional patent claims and Patents.

NOW, THEREFORE, in consideration of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Parties, intending to be legally bound, do hereby agree as follows:

1.The definition of Covered Patent is deleted and replaced with the following new definition:

“Covered Patent” means any Patent to the extent that it claims (a) an Antibody, or a group of Antibodies, or the Exploitation of such Antibody or group of Antibodies, (b) a composition, whether alone or in combination with an article of manufacture, comprising one or more Antibodies or the Exploitation of such a composition, (c) a nucleic acid sequence or host cell that specifically codes for, incorporates, expresses or secretes an Antibody, (d) the use of such a nucleic acid sequence or host cell to make (including to manufacture, formulate, purify, express, recover and secrete) an Antibody, (e) a method of making (including manufacturing, formulating, purifying, expressing, recovering, and secreting) (i) an Antibody, (ii) a composition comprising one or more Antibodies or (iii) CTLA-4; (f) a method of using an Antibody or a composition comprising one or more Antibodies; or (g) CTLA-4.

For the avoidance of doubt, the following language has been deleted from the definition: “Covered Patents shall not include any Patents to the extent that they claim any method of manufacturing Licensed Products.”

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

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2.Schedule A, Medarex Patents and Patent Applications, is deleted and replaced with the attached Schedule A.

3.Schedule B, Pfizer Patents and Patent Applications, is deleted and replaced with the attached Schedule B.

4.The definitions of Medarex Patents and Pfizer Patents are amended to read as follows:

“Medarex Patents” means (a) all Covered Patents Controlled by Medarex (other than through a license from Bristol-Myers Squibb Company (“BMS”)) or its Affiliates as of the Amendment Effective Date that would be infringed (and with respect to Patent applications, would be infringed after issuance) by the Exploitation of a Pfizer Product in the absence of the license grant set forth in Section 2.1.2, including the Patents set forth in Schedule A hereto, and (b) all Covered Patents Controlled by Medarex or its Affiliates (other than through a license from BMS) that are filed either from such Covered Patents in clause (a) above or from an application claiming priority therefrom to the extent of claims not directed to new matter, but in each case ((a) and (b)) excluding any Medarex Excluded Patents.

“Pfizer Patents” means (a) all Covered Patents Controlled by Pfizer or its Affiliates as of the Amendment Effective Date that would be infringed (and with respect to Patent applications, would be infringed after issuance) by the Exploitation of a Medarex Product in the absence of the license grant set forth in Section 2.1.1, including the Patents set forth in Schedule B hereto, and (b) all Covered Patents Controlled by Pfizer or its Affiliates that are filed either from such Covered Patents in clause (a) above or from an application claiming priority therefrom to the extent of claims not directed to new matter, but in each case ((a) and (b)) excluding any Pfizer Excluded Patents.

5.The definition of Medarex Excluded Patents and Pfizer Excluded Patents are amended to read as follows:

“Medarex Excluded Patents” means (a) Mice-Related Patents, (b) Allison Patents, and (c) claims of any Patents that Medarex or any of its Affiliates own, have under license or otherwise Control to the extent that they (i) claim (A) one or more particular Antibodies where such particular Antibody(ies) is specifically defined by the amino acid sequence of CDR 1, 2 and 3 of either the heavy or the light chain variable region of such Antibody(ies) (each such specifically defined Antibody being a “Particular Antibody”) or the Exploitation of such Particular Antibody(ies), (B) a composition comprising one or more such Particular Antibodies or the Exploitation of such a composition, (C) a nucleic acid sequence or host cell that specifically codes for, incorporates, expresses or secretes one or more Particular Antibodies, (D) the use of a nucleic acid sequence, host cell or other composition of matter to make (including to manufacture, formulate, purify, express, recover and secrete) one or more Particular Antibodies, (E) a method of making (including manufacturing, formulating, purifying, expressing, recovering, and secreting) one or more Particular Antibodies or a composition comprising such Particular Antibody(ies), or (F) a method of using one or more Particular Antibodies or a composition comprising such Particular Antibody(ies), or (ii) validly claim priority to a

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Patent filed on or before September 15, 2004 and claim one or more Particular Antibodies, whether specifically or generally, together with, or otherwise in combination with, a specific therapeutic or prophylactic composition of matter, whether in a fixed dosage form or as a combination therapy, wherein the composition of matter is recited in the claim by a specific name, specific compositional description, specific protein structure or specific chemical structure, or the Exploitation of the foregoing, or (iii) validly claim priority to a Patent filed after September 15, 2004 and claim one or more Antibodies, whether specifically or generally, together with, or otherwise in combination with, one or more antibodies (other than an Antibody) or fragment(s) thereof, whether in a fixed dosage form or as a combination therapy, or the Exploitation of the foregoing.  Without limiting the foregoing, Medarex Excluded Patents shall include any Patents to the extent that they claim or cover [ * ].

“Pfizer Excluded Patents” means claims of any Patents that Pfizer or any of its Affiliates own, have under license or otherwise Control to the extent that they (a) claim (i) one or more Particular Antibodies, or the Exploitation of such Particular Antibody(ies), (ii) a composition comprising one or more Particular Antibodies or the Exploitation of such a composition, (iii) a nucleic acid sequence or host cell that specifically codes for, incorporates, expresses or secretes one or more Particular Antibodies, (iv) the use of a nucleic acid sequence or host cell or other composition of matter to make (including to manufacture, formulate, purify, express, recover and secrete) one or more Particular Antibodies, (v) a method of making (including manufacturing, formulating, purifying, expressing, recovering, and secreting) one or more Particular Antibodies or a composition comprising such Particular Antibody(ies), or (vi) a method of using one or more Particular Antibodies or a composition comprising such Particular Antibody(ies), or (b) validly claim priority to a Patent filed on or before September 15, 2004 and claim one or more Particular Antibodies, whether specifically or generally, together with, or otherwise in combination with, a specific therapeutic or prophylactic composition of matter, whether in a fixed dosage form or as a combination therapy, wherein the composition of matter is recited in the claim by a specific name, specific compositional description, specific protein structure or specific chemical structure, or the Exploitation of the foregoing, or (c) validly claim priority to a Patent filed after September 15, 2004 and claim one or more Antibodies, whether specifically or generally, together with, or otherwise in combination with, one or more antibodies (other than an Antibody) or fragment(s) thereof, whether in a fixed dosage form or as a combination therapy, or the Exploitation of the foregoing.  Without limiting the foregoing, Pfizer Excluded Patents shall include any Patents to the extent that they claim or cover [ * ] including claims that validly claim priority to [ * ].

6.Section 2.1.1 is amended to add the following sentence at the end of the Section: “Nor does anything in this Agreement provide rights to Medarex or any of its Affiliates or Sublicensees/Licensees to use any tangible quantities of biological materials developed by, or on behalf of, Pfizer.”

7.Section 2.1.2 is amended to add the following sentence at the end of the Section: “Nor does anything in this Agreement provide rights to Pfizer or any of its Affiliates or

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Sublicensees/Licensees to use any tangible quantities of biological materials developed by, or on behalf of, Medarex.”

8.Section 3.1(h) is amended to read as follows:

“; and (h) as of the Effective Date, to the best of Pfizer’s knowledge, Schedule B hereto lists Covered Patents owned or controlled by Pfizer or its Affiliates and neither Pfizer nor its Affiliates has any agreement or arrangement with a Third Party with respect to any Covered Patents that affects its Control of the Pfizer Patents or would otherwise adversely affect Medarex’s rights with respect to such Covered Patents under this Agreement.”

9.Section 3.2(h) is amended to read as follows:

“; and (h) as of the Effective Date, to the best of Medarex’s knowledge, Schedule A hereto lists Covered Patents owned or controlled by Medarex or its Affiliates and neither Medarex nor its Affiliates has any agreement or arrangement with a Third Party with respect to any Covered Patents that affects its Control of the Medarex Patents or would otherwise adversely affect Pfizer’s rights with respect to such Covered Patents under this Agreement.”

10.For purposes of this Amendment, the representations, warranties and covenants of the Parties in Sections 3.1 and 3.2 are made again as of the Amendment Effective Date.  Further, Medarex represents and warrants to Pfizer as of the Amendment Effective Date that, to Medarex’s knowledge, neither Medarex nor any of its Affiliates owns or Controls any Patents (other than the Medarex Patents and other than Patents obtained by a license from BMS) that would be infringed (or, with respect to Patent applications, would be infringed after issuance) by the Exploitation of a Pfizer Product and Pfizer represents and warrants to Medarex as of the Amendment Effective Date that, to Pfizer’s knowledge, neither Pfizer nor any of its Affiliates owns or Controls any Patents (other than the Pfizer Patents) that would be infringed (or, with respect to Patent applications, would be infringed after issuance) by the Exploitation of a Medarex Product.

11.This Amendment to Cross-License Agreement shall not take effect unless and until BMS and Pfizer shall have concurrently executed that certain License Agreement covering certain BMS CTLA4 intellectual property.  Pfizer shall promptly notify Medarex in writing when the License Agreement is executed.

12.This Amendment amends the terms of the Cross-License Agreement and is deemed incorporated into, and governed by all other terms of, the Cross-License Agreement.  Except as expressly amended hereby, the Cross-License Agreement is not amended, modified or affected by this Amendment, and the Cross-License Agreement and the rights and obligations of the Parties thereunder remain in full force and effect in all respects.

13.All capitalized terms used but not defined in this Amendment shall have the meanings ascribed to them in the Cross-License Agreement.

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14.This Amendment may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

[Signature Page Follows]

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IN WITNESS WHEREOF, duly-authorized representatives of the Parties have signed this Amendment to Cross-License Agreement as a document under seal as of the Amendment Effective Date.

MEDAREX, INC.		PFIZER INC
By:	/s/ Ronald Pepin, Ph.D.	By:	/s/ John DeYoung
Name: Ronald Pepin, Ph.D.		Name: John DeYoung
Title: Senior Vice President,		Title: Attorney-in-Fact
Business Development

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Schedule A

Medarex Patents and Patent Applications

[ * ]

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Schedule B

Pfizer Patents and Patent Applications

Note: The Patents marked with an asterisk on this Schedule B are owned jointly by Pfizer,  Inc. and Abgenix, Inc.

[ * ]

*U.S. Patent No. 6,682,736

Issued: January 27, 2004

Titled: “Human Monoclonal Antibodies to CTLA-4”

Inventors: Douglas Charles HANSON, Mark Joseph NEVEU, Eileen Elliott MUELLER,
Jeffrey Herbert HANKE, Steven Christopher GILMAN, C. Geoffrey DAVIS, and Jose
Ramon CORVALAN

Assignee: Abgenix, Inc. (Fremont, CA) and Pfizer, Inc. (New York, NY)

U.S.S.N. 09/472,087 filed on December 23, 1999

Claiming priority from U.S.S.N. 60/113,647

[ * ]

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EX-10.2

EXHIBIT 10.2

Execution Version

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AMENDMENT NO. 1

TO

COLLABORATION AND CO-PROMOTION AGREEMENT

THIS AGREEMENT (“Amendment”) is made and entered into effective as of April 25, 2007 (the “Amendment Effective Date”) by and between Medarex, Inc., a New Jersey corporation having its principal place of business at 707 State Road, Princeton, New Jersey 08540-1437 (“Medarex”) and Bristol-Myers Squibb Company, a Delaware corporation headquartered at 345 Park Avenue, New York, New York 10154 (“BMS”), and amends the COLLABORATION AND CO-PROMOTION AGREEMENT (the “Agreement”) made as of November 7, 2004 between Medarex and BMS.  Medarex and BMS are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

WHEREAS, Medarex entered into that certain Cross-License Agreement with Pfizer Inc. (“Pfizer”) dated as of September 15, 2004 (the “Cross License”);

WHEREAS, Medarex desires that BMS assist it in facilitating, and BMS is willing to help facilitate, an amendment of certain terms and conditions under the Cross License; and

WHEREAS, Medarex and BMS both desire to enter into an agreement with Pfizer to address certain issues related to the orphan drug status of their respective products as contemplated by Section 10.5.1(c) of the Agreement;

WHEREAS, concurrently with the execution of this Amendment, BMS is entering into certain agreements with Pfizer such that Pfizer is willing (a) to amend the Cross License in a manner that is acceptable to Medarex and (b) to enter into an agreement with Medarex and BMS to address those certain orphan drug issues in a manner acceptable to Medarex and BMS.

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows:

1.The first sentence of Section 6.4.1 is deleted in its entirety and replaced with the following:

“Subject to Sections 3.8.3, 5.3, 5.5.6, 6.4.2, 6.4.3, 6.4.4 and 6.5, with respect to each Product for which Medarex exercises the Co-Promotion Option, (a)

Medarex shall receive forty-five percent (45%) of all Profits, and bear forty-five percent (45%) of all Losses, as applicable, with respect to a Co-Promotion Product in the United States, and (b) BMS shall receive fifty-five percent (55%) of all Profits, and bear fifty-five percent (55%) of all Losses, as applicable, with respect to such Co-Promotion Product in the United States.”

2.A new Section 6.4.4 is added to the Agreement, as follows:

“6.4.4 BMS Co-Promotion Royalty.  With respect to each Product for which Medarex exercises a Co-Promotion Option, BMS shall be entitled to retain or receive a royalty equal to [ * ] of the Net Sales of such Product in the United States in each Year during the Co-Promotion Term for such Product (the “BMS Co-Promotion Royalty”).  Any due and payable BMS Co-Promotion Royalty shall be calculated and paid in accordance with Section 6.5.  For clarity, termination of the Co-Promotion Term for a Product shall not relieve Medarex of its obligation to pay any BMS Co-Promotion Royalties that have accrued prior to, but are unpaid as of, the end of the Co-Promotion Term for such Product.”

3.Section 6.5 is deleted in its entirety and replaced with the following:

“6.5Calculation and Payment of Profit or Loss Share.

6.5.1Reports and Payments in General.  In the event that Medarex exercises its Co-Promotion Option with respect to a Co-Promotion Product, each Party shall report to the other Party, within twenty (20) days after the end of each Quarter following such Exercise Notice, with regard to Net Sales and Allowable Expenses incurred by such Party for such Co-Promotion Product during such Quarter in the United States in a manner sufficient to enable the other Party to comply with its reporting requirements; provided that in the case of the first Quarter for which such report is due, each Party shall additionally report all Allowable Expenses incurred by such Party prior to such Quarter with respect to such Co-Promotion Product.  Such report shall specify in reasonable detail Net Sales, all deductions allowed in the calculation of such Net Sales and all expenses included in Allowable Expenses, and, if requested by a Party, any invoices or other supporting documentation for any payments to a Third Party that individually exceed fifty thousand Dollars ($50,000) (or such other amount approved by the JFC) shall be promptly provided.  Within forty-five (45) days after the end of each Quarter (or for the last Quarter in a Year, sixty (60) days after the end of such Quarter), the Parties shall reconcile all Net Sales and Allowable Expenses to ascertain whether there is a Profit or Loss (which calculation shall be made without taking into account any BMS Co-Promotion Royalty) and payments shall be made as set forth in subsections (a) and (b) below, as applicable.

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a.If there is a Profit for such Quarter, then BMS shall (i) reimburse Medarex for Allowable Expenses incurred by Medarex in such Quarter and (ii) pay to Medarex, subject to Section 6.4.2, an amount equal to forty-five percent (45%) of the Profit for such Quarter, less the applicable aggregate BMS Co-Promotion Royalty for such Quarter, provided that if Medarex’s share of the Profit for such Quarter is less than the BMS Co-Promotion Royalty payable to BMS, Medarex shall make a reconciling payment to BMS (either by direct payment to BMS or by offset of other amounts payable by BMS to Medarex for such Quarter) equal to the applicable shortfall within (A) such applicable forty-five (45)-day period or sixty (60)-day period as set forth above or (B) ten (10) Business Days after BMS has notified Medarex in writing of the amount of the shortfall, whichever is the later date.

b.If there is a Loss for such Quarter, then (i) the Party that has borne less than its share of the Allowable Expenses in such Quarter shall make a reconciling payment to the other Party to assure that each Party bears its share of such Allowable Expenses during such Quarter and (ii) Medarex shall make a reconciling payment to BMS (either by direct payment to BMS or by offset of other amounts payable by BMS to Medarex for such Quarter) equal to the aggregate BMS Co-Promotion Royalty payable to BMS for such Quarter.

6.5.2Last Calendar Quarter.  No separate payment shall be made for the last Quarter in any Year.  Instead, at the end of each such Year, a final reconciliation shall be conducted by comparing the share of Profit or Loss to which a Party is otherwise entitled for such Year pursuant to Sections 6.4 and 6.5 against the sum of all amounts (if any) previously paid or retained by such Party for prior Quarters during such Year, and the Parties shall make reconciling payments to one another no later than ninety (90) days after the end of such Quarter, if and as necessary to ensure that (i) each Party receives for such year its share of Profits and bears its share of Losses in accordance with Sections 6.4.1 and 6.4.3, as applicable, and (ii) BMS receives its full BMS Co-Promotion Royalty due and payable for such Year.”

4.Section 6.6 of the Agreement is deleted in its entirety and replaced with the following:

“6.6 Royalties to Medarex.  In partial consideration of the license rights granted by Medarex to BMS hereunder, subject to Sections 3.8 and 6.7, BMS shall pay to Medarex royalties on (i) each Non-Co-Promoted Product sold in

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the United States and (ii) each Product and MDX-1379 sold in the Royalty Territory, on the terms and conditions set forth in this Section 6.6.

6.6.1United States.  Subject to Section 6.7.3:

a.BMS shall pay Medarex a royalty on Net Sales aggregated across all Non-Co-Promoted Products sold in the United States in a given Year equal to:

i.For that portion of aggregate Net Sales of Non-Co-Promoted Products in a Year that is less than or equal to [ * ] of such aggregate Net Sales, provided that to the extent that some or all of the Net Sales of such Non-Co-Promoted Products in such territory were for use in Indications (A) with respect to which Medarex Opted-Out pursuant to Section 3.8.2) and (B) for which Initial Approval has been obtained in such territory (collectively, the “Opt-Out NP Indications”), then, in such event BMS’ royalty obligation under this Section 6.6.1(a)(i) shall be reduced to [ * ] on such Net Sales thereafter from such Non-Co-Promoted Products that are attributable to such Opt-Out NP Indications;

ii.For that portion of aggregate Net Sales of Non-Co-Promoted Products in a Year that is more than [ * ] of such aggregate Net Sales, provided that to the extent that some or all of the Net Sales of such Non-Co-Promoted Products in such territory were for Opt-Out NP Indications, then, in such event BMS’ royalty obligation under this Section 6.6.1(a)(ii) shall be reduced to [ * ] on such Net Sales thereafter from such Non-Co-Promoted Products that are attributable to such Opt-Out NP Indications; and

iii.For that portion of aggregate Net Sales of Non-Co-Promoted Products in a Year that is more than [ * ] of such aggregate Net Sales, provided that to the extent that some or all of the Net Sales of such Non-Co-Promoted Products in such territory were for Opt-Out NP Indications, then, in such event BMS’ royalty obligation under this Section 6.6.1(a)(iii) shall be reduced to [ * ] on such Net Sales thereafter from such Non-Co-Promoted Products that are attributable to such Opt-Out NP Indications.

b.In the event that there are Opt-Out NP Indications and 6.6.1(a)(ii) or (iii) applies for a given Year, then the total royalty paid to Medarex under Section 6.6.1 shall be based on a weighted average of Net Sales attributable to the Opt-Out NP Indications and those attributable to other Indications.  By way of example, if the total Net Sales for Non-Co-Promoted Products in a Year is [ * ] and if [ * ] of such amount represents Net Sales for use in Opt-Out NP Indications, then the total royalty payable to Medarex for such Year shall be [ * ].  Net Sales attributable to the Opt-Out NP Indications shall be determined as the Parties, through the JCC or JEC, may agree or, in the event the JCC and the JEC are not able to agree, as an Expert shall

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determine as set forth in Section 16.2 following compliance with Sections 2.7.3(c) and 16.1.1.

6.6.2Japan.  BMS shall pay Medarex a royalty on annual Net Sales aggregated across all Products and MDX-1379 sold in Japan in a given Year equal to:

a.[ * ];

b.[ * ]; and

c.[ * ].

6.6.3Rest of the World.  BMS shall pay Medarex a royalty on annual Net Sales aggregated across all Products and MDX-1379 sold in the Royalty Territory (other than Japan) in a given Year equal to:

a.[ * ];

b.[ * ]; and

c.[ * ].

6.6.4Proration.  The royalty thresholds set forth in this Section 6.6 shall not be pro-rated for any partial calendar Years, except for the last year of the Royalty Term with respect to a given Product or MDX-1379, as applicable.”

5.The last two sentences of Section 6.7.1(a) are deleted in their entireties and replaced with the following:

“If, for example, sales for a Generic Product in a given year in France are greater than [ * ], but less than or equal to [ * ], of the sum of the entire market in France, the royalty reduction for France will be subject to clause (B) above and calculated as follows:  If total net sales in France equal [ * ] and total net sales in the Royalty Territory (other than Japan) equal [ * ] in a given year, the weighted average royalty for the Royalty Territory (other than Japan), will be calculated as follows:  [ * ].  Thus, the total royalty reduction in the Royalty Territory (other than Japan) is calculated as follows:  [ * ].”

6.Notwithstanding anything to the contrary, Sections 1, 2, 3, 4 and 5 of this Amendment shall be effective, on a Product-by-Product and country-by-country basis, only for so long as the manufacture (including formulating, purifying, expressing, recovering, and secreting), use, or sale of a Product would infringe, but for the license granted from Pfizer to Medarex under the Cross License, any Valid Claim of a Pfizer Manufacturing Patent (defined below), including a Product manufactured in a country where such

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manufacture would infringe, but for the license from Pfizer to Medarex under the Cross License, such Valid Claim, even though such Product may be sold in a country where such Product is not covered by such Valid Claim.  For purposes of this Amendment, “Pfizer Manufacturing Patent” means any patent Controlled by Pfizer or its Affiliates licensed to Medarex under the Cross License, as amended, that claims any methods of making (including manufacturing, formulating, purifying, expressing, recovering, and secreting), or that claims any nucleic acid sequence, host cell, or other composition of matter used for making (including manufacturing, formulating, purifying, expressing, recovering, and secreting), including [ * ], and any foreign equivalents thereof.

7.BMS hereby consents, in accordance with Section 6.7.3(a) of the Agreement, to Medarex’s amendment of the Cross License, effective as of the Amendment Effective Date, in the form attached hereto as Exhibit A to this Amendment.

8.Each Party hereby represents and warrants to the other Party, as of the Amendment Effective Date, that:

(i)it has full corporate power and authority under the laws of the state or country of its incorporation to enter into this Amendment and to carry out the provisions hereunder, and the individual signing below on its behalf is fully authorized to do so by all requisite corporate action;

(ii)it has secured or obtained all necessary consents and approvals of all governmental authorities, Regulatory Authorities and other Persons required to be obtained by it to enter into and to perform this Amendment;

(iii)this Amendment is a legal and valid obligation binding upon it and is enforceable in accordance with its terms; and

(iv)the execution, delivery and performance of this Amendment by it does not conflict with any agreement, oral or written, to which it is a party or by which it may be bound, nor violate any law, decree or regulation of any court by which it may be bound.

9.This Amendment amends the terms of the Agreement and is deemed incorporated into, and governed by all other terms of, the Agreement.  Except as expressly amended hereby, the Agreement is not amended, modified or affected by this Amendment, and the Agreement and the rights and obligations of the Parties thereunder remain in full force and effect in all respects.

10.All capitalized terms used but not defined in this Amendment shall have the meanings ascribed to them in the Agreement.

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11.The provisions set forth in Article 17 of the Agreement are hereby incorporated by reference herein as if such provisions were fully set forth in this Amendment.

{The next page is the signature page.}

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IN WITNESS WHEREOF, the Parties have executed this Amendment in duplicate originals by their proper officers.

Bristol-Myers Squibb Company		Medarex, Inc.
By:	/s/ Elliott Sigal, M.D., Ph.D.	By:	/s/ Ronald Pepin, Ph.D.
Title: Executive Vice President and Chief Scientific Officer, Research and Development		Title: Senior Vice President, Business Development

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EXHIBIT A

Form of Amendment to Medarex-Pfizer Cross-License

{This Exhibit A has been filed separately as an exhibit to the Registrant’s Quarterly
Report on Form 10-Q for the period ended June 30, 2007, in executed form.}

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EX-10.3

Exhibit 10.3

ORPHAN DRUG EXCLUSIVITY WAIVER AGREEMENT

THIS ORPHAN DRUG EXCLUSIVITY WAIVER AGREEMENT (the “Agreement”) is entered into as of April 25, 2007 (the “Effective Date”) by and between Pfizer Inc, a Delaware corporation having an office at 235 East 42nd Street, New York, New York 10017 (“Pfizer”), Bristol-Myers Squibb Company, a Delaware corporation headquartered at 345 Park Avenue, New York, New York 10154 (“BMS”) and Medarex, Inc., a New Jersey corporation with a business address at 707 State Road, Princeton, NJ 08540 (“Medarex”).  Pfizer, BMS and Medarex each may be referred to herein individually as a “Party” or collectively as the “Parties.”

RECITALS

WHEREAS, BMS and Pfizer are entering into the BMS-Pfizer License Agreement (as defined below) concurrently with this Agreement; and

WHEREAS, Medarex and Pfizer are entering into an amendment to the Medarex-Pfizer Cross License Agreement (as defined below) concurrently with this Agreement.

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Parties intending to be legally bound, do hereby agree as follows.

1.Definitions.

The terms in this Agreement with initial letters capitalized, whether used in the singular or the plural, shall have the meaning set forth below or, if not listed below, the meaning designated in places throughout this Agreement.

“Act” means, collectively, the Public Health Service Act and the United States Food, Drug, and Cosmetic Act, as amended.

“Affiliate” of a Person means any other Person that (directly or indirectly) is controlled by, controls or is under common control with such Person.  For the purposes of this definition, the term “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”) as used with respect to a Person, means the possession, directly or indirectly, of the power to direct, or cause the direction of, the management or policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

“Antibody” means any antibody, or fragment thereof, that targets and binds directly to CTLA4, and that has antagonistic activity against (or otherwise blocks the immunosuppressive signaling of) CTLA4.

“BMS/Medarex Antibody” means an Antibody derived from a BMS/Medarex Program.  BMS/Medarex Antibody includes the antibody known as ipilimumab (also known as MDX-010).  Notwithstanding the foregoing, BMS/Medarex Antibody shall not include any Antibody being developed or commercialized by Pfizer or its Affiliates pursuant to a Pfizer Program, including the Antibody known as CP-675,206.

“BMS/Medarex Product” means any product made, imported, used, sold or offered for sale by BMS and/or Medarex, their respective Affiliates or their respective sublicensees that includes a BMS/Medarex

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Antibody as an active ingredient, whether alone or in combination with one or more additional compositions of matter.  Notwithstanding the foregoing, BMS/Medarex Product shall not include any Antibody being developed or commercialized by Pfizer or its Affiliates pursuant to a Pfizer Program, including the Antibody known as CP-675,206.

“BMS/Medarex Program” means a program conducted by BMS and/or Medarex focused on the research and/or development of one or more Antibodies.

“BMS-Pfizer License Agreement” means that certain License Agreement relating to certain CTLA4 patent rights entered into between BMS and Pfizer concurrently with this Agreement.

“Change of Control” means, with respect to a Party, any sale of voting securities or sale of assets (whether by sale, merger, consolidation, share exchange or otherwise) which results in (i) the acquisition by a Third Party of over fifty percent (50%) of the assets of a Party, or (ii) a Third Party becoming the beneficial owner, directly or indirectly, of over fifty percent (50%) of those outstanding securities of a Party entitled to vote for the election of directors of such Party.

“CTLA4” means human cytotoxic T-lymphocyte antigen 4.

“Drug Approval Application” means (i) a Biologics License Application or a New Drug Application, as defined in the Act, and the regulations promulgated thereunder, or (ii) any corresponding foreign application in or with respect to the European Union, including a Marketing Authorization Application filed with the EMEA pursuant to the centralized approval procedure or with the applicable regulatory authority of a country in the European Union with respect to the mutual recognition or any other national approval procedure, or (iii) any corresponding foreign application in or with respect to Japan, including a Japanese New Drug Application filed with the Japan Ministry of Health, or (iv) any corresponding application in or with respect to any other country that is required by the country’s Regulatory Authority or other applicable health authority to obtain marketing approval for a pharmaceutical product.

“Medarex-BMS Collaboration Agreement” means that certain Collaboration and Co-Promotion Agreement made as of November 7, 2004 between Medarex and BMS, as amended.

“Medarex-Pfizer Cross License Agreement” means that certain cross-license agreement entered into by Pfizer and Medarex as of September 15, 2004, as amended.

“Orphan Drug Exclusivity” means any non-patent exclusivity or designation granted by a Regulatory Authority or other applicable health authority in conjunction with the approval of a Drug Approval Application for a product, which exclusivity or designation is based on the product being approved for a rare disease or condition that has been designated or otherwise recognized by the Regulatory Authority or other applicable health authority as an orphan disease or rare condition, and/or where such Regulatory Authority or other applicable health authority will not accept or will not finally approve a second Drug Approval Application for the same or similar drug for the same indication(s) which is covered by such exclusivity or designation.  “Orphan Drug Exclusivity” includes orphan drug designation and exclusivity granted by the FDA pursuant to the Orphan Drug Act (as amended) and the corresponding designations and exclusivity based on the treatment of a rare disease or condition available in other countries, regions or markets in the world.

“Person” means any individual, partnership, joint venture, corporation, limited liability company, trust, unincorporated organization, government or department or agency of a government or other entity.

“Pfizer Antibody” means an Antibody derived from a Pfizer Program.  Pfizer Antibody includes the antibody known as CP-675,206.  Notwithstanding the foregoing, Pfizer Antibody shall not include any

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Antibody being developed or commercialized by BMS or its Affiliates or by Medarex or its Affiliates pursuant to a BMS/Medarex Program, including the Antibody known as ipilimumab (also known as MDX-010).

“Pfizer Product” means any product made, imported, used, sold or offered for sale by Pfizer or its Affiliates or their respective sublicensees that includes a Pfizer Antibody as an active ingredient, whether alone or in combination with one or more additional compositions of matter.  Notwithstanding the foregoing, Pfizer Product shall not include any Antibody being developed or commercialized by BMS or its Affiliates or by Medarex or its Affiliates pursuant to a BMS/Medarex Program, including the Antibody known as ipilimumab (also known as MDX-010).

“Pfizer Program” means a program conducted by Pfizer focused on the research and/or development of one or more Antibodies.

“Regulatory Authority” means any governmental authority, including the United States Food and Drug Administration (the “FDA”), the European Regulatory Authority known as the European Medicines Agency (the “EMEA”) and the Japanese Ministry of Health and Welfare, or any successor agency of any of the foregoing, that has responsibility for granting any licenses or approvals or granting pricing and/or reimbursement approvals necessary for the marketing and sale of a product in any country.

“Third Party” means any Person other than (i) BMS, (ii) Pfizer, (iii) Medarex or (iv) any Affiliate of any of BMS, Pfizer or Medarex.

2.Orphan Drug Exclusivity Waivers.

2.1Should Pfizer obtain Orphan Drug Exclusivity for a Pfizer Product in the U.S., Europe, Japan or any other country, region or market in the world (each, a “Market”), and BMS and/or Medarex reasonably believes that such Orphan Drug Exclusivity could block a BMS and/or Medarex submission or approval of a Drug Approval Application for a BMS/Medarex Product, or otherwise block commercialization of a BMS/Medarex Product, then BMS and/or Medarex shall have the right to provide Pfizer with written notice thereof, which notice shall include a detailed explanation of its rationale for such belief.  Upon receipt of such notice, Pfizer shall promptly waive such Orphan Drug Exclusivity so as to assure that such Orphan Drug Exclusivity will not block such submission, approval or commercialization of such BMS/Medarex Product and, if such waiver is not available, or if such waiver is not sufficient to assure that such Orphan Drug Exclusivity will not block such submission, approval or commercialization of such BMS/Medarex Product, in a particular Market, then Pfizer shall use commercially reasonable efforts to take all necessary steps (including all necessary steps reasonably requested by BMS and/or Medarex) to assure that such Orphan Drug Exclusivity will not block such submission, approval or commercialization of such BMS/Medarex Product in such Market.  Pfizer shall provide all waivers or other documents as may be required by the relevant Regulatory Authority(s) (or other applicable health authority) or otherwise reasonably requested by BMS or Medarex to meet the obligations of Pfizer under this Section. Pfizer shall designate an employee to receive all notices and communications and to manage its responsibilities under this Section.

2.2Should BMS and/or Medarex obtain Orphan Drug Exclusivity for a BMS/Medarex Product in the U.S., Europe, Japan or any other Market, and Pfizer reasonably believes that such Orphan Drug Exclusivity could block a Pfizer submission or approval of a Drug Approval Application for a Pfizer Product, or otherwise block commercialization of a Pfizer Product, then Pfizer shall have the right to provide BMS (or Medarex, as applicable) with written notice thereof, which notice shall include a detailed explanation of its rationale for such belief.  Upon receipt of such notice, BMS (or Medarex, as applicable) shall promptly waive such Orphan Drug Exclusivity so as to assure that such Orphan Drug Exclusivity will not block such submission, approval or commercialization of such Pfizer Product and, if such waiver is not available, or if such waiver is not sufficient to assure that such Orphan Drug Exclusivity will not block such submission,

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approval or commercialization of such Pfizer Product, in a particular Market, then BMS (or Medarex, as applicable) shall use commercially reasonable efforts to take all necessary steps (including all necessary steps reasonably requested by Pfizer) to assure that such Orphan Drug Exclusivity will not block such submission, approval or commercialization of such Pfizer Product in such Market.  BMS (or Medarex, as applicable) shall provide all waivers or other documents as may be required by the relevant Regulatory Authority(s) (or other applicable health authority) or otherwise reasonably requested by Pfizer to meet the obligations of BMS and Medarex under this Section.  BMS (or Medarex, as applicable) shall designate an employee to receive all notices and communications and to manage its responsibilities under this Section.

2.3Pfizer shall not assert or otherwise represent to any Regulatory Authority in a Market that any Pfizer Product or the approval thereof should block a BMS and/or Medarex submission or approval of a Drug Approval Application for, or otherwise block commercialization of, a BMS/Medarex Product in such Market under the applicable Orphan Drug Exclusivity laws and/or regulations.  Neither Medarex nor BMS shall assert or otherwise represent to any Regulatory Authority in a Market that any BMS/Medarex Product or the approval thereof should block a Pfizer submission or approval of a Drug Approval Application for, or otherwise block commercialization of, a Pfizer Product in such Market under the applicable Orphan Drug Exclusivity laws and/or regulations.

2.4Right to Grant Sublicenses.

2.4.1The rights and obligations of Pfizer under this Article 2 shall be sublicensable only as part of an exclusive license to a Third Party of development and/or commercialization rights to a specific Pfizer Antibody or Pfizer Product, provided that: (i) the sublicensee has agreed first in writing to be bound by the terms and conditions of this Agreement in the same manner as Pfizer, (ii) BMS and Medarex are made express third party beneficiaries of the sublicensee’s obligations under such sublicense agreement that relate to compliance with the terms and conditions of this Agreement, (iii) any sublicense shall not be further sublicensable or sublicensed by the sublicensee, and (iv) Pfizer shall remain primarily responsible to BMS and Medarex for all acts performed (or not performed, as the case may be) by the sublicensee pursuant to any such sublicense as such acts relate to this Agreement.  A copy of the sublicense agreement shall be provided to BMS and Medarex promptly after execution (with terms not relating to this Agreement redacted).  Pfizer shall remain jointly and severally liable with any such sublicensee for any failure by such sublicensee to perform or observe the terms and conditions of this Agreement.  Any such exclusive license to a Third Party of development and/or commercialization rights to a specific Pfizer Antibody or Pfizer Product shall be required to include, and shall only be granted with, a sublicense to such Third Party of Pfizer’s rights, and such Third Party’s assumption of Pfizer’s obligations, under this Article 2, in accordance with the foregoing.

2.4.2The rights and obligations of BMS and/orMedarex under this Article 2 shall be sublicensable only as part of an exclusive license to a Third Party of development and/or commercialization rights to a specific BMS/Medarex Antibody or BMS/Medarex Product, provided that: (i) the sublicensee has agreed first in writing to be bound by the terms and conditions of this Agreement in the same manner as BMS and/or Medarex, (ii) Pfizer is made an express third party beneficiary of the sublicensee’s obligations under such sublicense agreement that relate to compliance with the terms and conditions of this Agreement, (iii) any sublicense shall not be further sublicensable or sublicensed by the sublicensee, and (iv) BMS and/or Medarex shall remain primarily responsible to Pfizer for all acts performed (or not performed, as the case may be) by the sublicensee pursuant to any such sublicense as such acts relate to this Agreement.  A copy of the sublicense agreement shall be provided to Pfizer promptly after execution (with terms not relating to this Agreement redacted).  BMS and/or Medarex shall remain jointly and severally liable with any such sublicensee for any failure by such sublicensee to perform or observe the terms and conditions of this Agreement.  Any such exclusive license to a Third Party of development and/or commercialization rights to a specific BMS/Medarex Antibody or BMS/Medarex Product shall be required to include, and shall only be granted with, a sublicense to such Third Party of BMS’s and/or Medarex’s rights, and such Third Party’s assumption of BMS’s and/or Medarex’s obligations, under this Article 2, in accordance with the foregoing.

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2.5No Implied Licenses.  Except as specifically and expressly set forth herein, no rights or licenses, express or implied, are granted by a Party to any other Party under this Agreement.

3.Confidentiality.

3.1Treatment of Confidential Information.  The Parties shall limit their cooperation and sharing of confidential information under this Agreement solely to information required in order to carry out the terms and objectives of this Agreement, and shall not otherwise be obligated to cooperate or share confidential information relating to their respective Antibody programs with each other.  Unless required by law, each Party shall maintain all information of the other Parties and their respective Affiliates in confidence, including the existence and terms and conditions of this Agreement, and shall not disclose, divulge or otherwise communicate such information to others, or use it for any purpose, except pursuant to, and in order to carry out, the terms and objectives of this Agreement, and hereby agrees to exercise every reasonable precaution to prevent and restrain the unauthorized disclosure or use of such information by any of its Affiliates, directors, officers, employees, consultants, subcontractors, licensees or agents.

3.1Separate Programs.  This Agreement does not imply or require that the Parties share any technical information relating to their respective Antibody programs with each other, and the Parties intend to restrict their communications and cooperation under this Agreement to matters directly relating to the Parties’ rights hereunder.

4.Term and Termination; Remedies for Breach.

4.1Term.  This Agreement shall continue in effect following the Effective Date for a period of 15 years unless and until terminated in accordance with this Article 4.

4.2Termination for Breach.  Pfizer shall have the right to terminate this Agreement if BMS or Medarex breaches or defaults with respect to a material obligation under this Agreement, and fails to cure such default or breach within sixty (60) days after written notice from Pfizer to BMS and Medarex specifying the nature of such default or breach; provided however, that all rights of Pfizer under Article 2 shall survive such termination, including any waivers granted by BMS or Medarex to Pfizer pursuant to Article 2 prior to such termination.  BMS and Medarex (collectively, but not individually) shall have the right to terminate this Agreement if Pfizer breaches or defaults with respect to a material obligation under this Agreement, and fails to cure such default or breach within sixty (60) days after written notice from BMS and Medarex (collectively, but not individually) to Pfizer specifying the nature of such default or breach; provided however, that all rights of BMS and Medarex under Article 2 shall survive such termination, including any waivers granted by Pfizer to BMS or Medarex pursuant to Article 2 prior to such termination.  Notwithstanding the foregoing, (a) if BMS no longer has any rights under the BMS-Pfizer License Agreement (as a result of termination thereof or otherwise), then Medarex shall have the individual right to terminate this Agreement pursuant to this Section 4.2 and (b) if Medarex no longer has any rights under the Medarex-Pfizer Cross-License Agreement (as a result of termination thereof or otherwise), then BMS shall have the individual right to terminate this Agreement pursuant to this Section 4.2.

4.3Termination by BMS.  BMS shall have right to terminate this Agreement (subject to the prior written consent of Medarex) upon written notice to Pfizer in the event that the BMS-Pfizer License Agreement is terminated for any reason by BMS or Pfizer.

4.4Specific Performance Remedy for Material Breach of this Agreement.  The Parties hereby agree that if any Party materially breaches its obligations under Article 2 of this Agreement, and a court of competent jurisdiction determines that such material breach results in the blocking of submission or approval of a Drug Approval Application for, or commercialization of, the applicable BMS/Medarex Product or Pfizer

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Product, then such a breach shall cause each of the non-breaching Parties irreparable harm, for which monetary damages shall be an inadequate remedy.  In the event of such a breach (and such determination by a court of competent jurisdiction), any such non-breaching Party shall be entitled to obtain injunctive relief and specific performance of such obligations of the breaching Party as a remedy (in addition to and without limiting other remedies as may be available under this Agreement or at law or in equity) for such breach, without the posting of a bond or other security.  The Parties hereby stipulate that such specific performance remedy is necessary and appropriate and that other remedies (such as damages) would be an inadequate remedy for such a breach.

5.Miscellaneous Provisions.

5.1Medarex-BMS Collaboration Agreement; Medarex-Pfizer Cross-License Agreement.  This Agreement shall not amend in any way the rights and obligations of (a) Medarex and BMS under the Medarex-BMS Collaboration Agreement or (b) Medarex and Pfizer under the Medarex-Pfizer Cross-License Agreement.

5.2Representations, Warranties and Covenants.  Each Party hereby represents, warrants and covenants to the other Parties that: (a)  it has the power and authority and the legal right to enter into this Agreement and perform its obligations hereunder, and that it has taken all necessary action on its part required to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder; and (b)  this Agreement has been duly executed and delivered on behalf of such Party and constitutes a legal, valid and binding obligation of such Party and is enforceable against it in accordance with its terms.

5.3Construction.  Except where the context requires otherwise, whenever used the singular includes the plural, the plural includes the singular, the use of any gender is applicable to all genders and the word “or” has the inclusive meaning represented by the phrase “and/or”.  Whenever this Agreement refers to a number of days, unless otherwise specified, such number refers to calendar days.  The headings of this Agreement are for convenience of reference only and do not define, describe, extend or limit the scope or intent of this Agreement or the scope or intent of any provision contained in this Agreement.  The term “including” or “includes” as used in this Agreement means including, without limiting the generality of any description preceding such term.  The wording of this Agreement shall be deemed to be the wording mutually chosen by the Parties.  Each of the Parties acknowledges and agrees that this Agreement has been diligently reviewed by and negotiated by and between them, that in such negotiations each of them has been represented by competent counsel and that the final agreement contained herein, including the language whereby it has been expressed, represents the joint efforts of the Parties hereto and their counsel.  Accordingly, in interpreting this Agreement or any provision hereof, no presumption shall apply against any Party hereto as being responsible for the wording or drafting of this Agreement or any such provision, and ambiguities, if any, in this Agreement shall not be construed against any Party, irrespective of which Party may be deemed to have authored the ambiguous provision.

5.4Publicity.  Except as otherwise required by law, rule or regulation, no Party shall issue a press release regarding this Agreement or originate any publicity, news release or other public announcement, written or oral, relating to this Agreement without the prior written approval of the other Parties; provided however, that the Parties agree that disclosures of information for which consent has been previously obtained shall not require additional approval.  If a public disclosure is required by law, rule or regulation, the disclosing Party shall provide copies of the disclosure reasonably in advance of such filing or other disclosure for each of the nondisclosing Parties’ prior review and comment; provided however, that no such review and comment shall be required for any filing with the Securities and Exchange Commission, including on Form 10K or Form 10Q or Form 8K or other similar filing under the Securities Exchange Act of 1934, as amended, or a Registration Statement under the Securities Act of 1933, as amended; and provided further, that the disclosing Party agrees to seek confidential treatment for all proprietary and other commercially-sensitive

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provisions of this Agreement with respect to its SEC filing obligations to the extent permitted by applicable law.

5.5No Agency.  Nothing herein shall be deemed to constitute any Party as the agent or representative of another Party, or the Parties as joint venturers or partners for any purpose.

5.6Notice.  Any notice, request, demand, waiver, consent, approval or other communication permitted or required under this Agreement shall be in writing, shall refer specifically to this Agreement and shall be deemed given only if delivered by hand or by nationally recognized overnight delivery service that maintains records of delivery, addressed to the Parties at their respective addresses set forth below or to such other address as the Party to whom notice is to be given may have provided to the other Parties in accordance with this Section 5.6.  Such notice shall be deemed to have been given as of the date delivered by hand or on the third business day (at the place of delivery) after deposit with a nationally recognized overnight delivery service.

If to Pfizer:	Pfizer Global Research & Development
	Vice President, Strategic Alliances
	50 Pequot Avenue
	New London, CT 06320
With copies to:	Pfizer Inc
	235 East 42nd Street
	New York, New York 10017
	Attn: General Counsel
	and
	Pfizer Global Research and Development
	General Counsel
	50 Pequot Avenue
	New London, CT 06320
If to BMS:	Bristol-Myers Squibb Company
	Route 206 and Province Line Road
	Princeton, NJ 08540-4000
	Attn: Vice President, Business Development
With copies to:	Bristol-Myers Squibb Company
	Route 206 and Province Line Road
	Princeton, NJ 08540-4000
	Attn: Vice President and Associate General Counsel - Patents
	and
	Bristol-Myers Squibb Company
	Route 206 and Province Line Road
	Princeton, NJ 08540-4000
	Attn: Vice President and Senior Counsel - Licensing

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If to Medarex:	Medarex, Inc.
	707 State Road
	Princeton, New Jersey 08540-1437
	Attention: President
With copies to:	Medarex, Inc.
	707 State Road
	Princeton, New Jersey 08540-1437
	Attention: General Counsel

5.7Assignment.  This Agreement, and the rights and obligations hereunder, may not be assigned or transferred, in whole or in part, by any Party without the prior written consent of the other Parties, except (a) to Affiliates of such Party, provided that such assigning Party remains liable and responsible for the performance of any Affiliate to which it assigns the Agreement or any of its rights or obligations hereunder; (b) in connection with a Change of Control; (c) if Pfizer assigns all of its assets relating to the Pfizer Products to a Third Party, provided that such Third Party agrees to be bound by the terms and conditions of this Agreement and, provided further that Pfizer continues to remain primarily liable for the performance by such Third Party to which it assigns the Agreement or any of its rights or obligations thereunder; (d) if BMS assigns all of its assets relating to the BMS/Medarex Products to a Third Party, provided that such Third Party agrees to be bound by the terms and conditions of this Agreement and, provided further that BMS continues to remain primarily liable for the performance by such Third Party to which it assigns the Agreement or any of its rights or obligations thereunder; or (e) if Medarex assigns all of its assets relating to the BMS/Medarex Products to a Third Party, provided that such Third Party agrees to be bound by the terms and conditions of this Agreement and, provided further that Medarex continues to remain primarily liable for the performance by such Third Party to which it assigns the Agreement or any of its rights or obligations thereunder.  Any such permitted assignee or successor agrees to be bound by the terms and conditions of this Agreement.  Without limiting the preceding sentence, all validly assigned rights of a Party shall inure to the benefit of and be enforceable by, and all validly delegated obligations of such Party shall be binding on and be enforceable against, the permitted successors and assigns of such Party.  Any attempted assignment or delegation in violation of this Section 5.7 shall be void.

5.8No Modification.  This Agreement may be changed only by a writing signed by authorized representatives of each of the Parties.

5.9Waiver.  The waiver by any Party of a breach or a default of any provision of this Agreement by another Party shall not be construed as a waiver of any succeeding breach of the same of any other provision, nor shall any delay or omission on the part of any Party to exercise or avail itself of any right, power or privilege that it has or may have hereunder operate as a waiver of any right, power or privilege by such Party.

5.10Severability.  To the fullest extent permitted by applicable law, the Parties waive any provision of law that would render any provision in this Agreement invalid, illegal or unenforceable in any respect.  If any provision of this Agreement is held to be invalid, illegal or unenforceable, in any respect, then such provision shall be given no effect by the Parties and shall not form part of this Agreement.  To the fullest extent permitted by applicable law and if the rights or obligations of any Party shall not be materially and adversely affected, all other provisions of this Agreement shall remain in full force and effect and the Parties shall use their best efforts to negotiate a provision in replacement of the provision held invalid, illegal or unenforceable that is consistent with applicable law and achieves, as nearly as possible, the original intention of the Parties.

5.11Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

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5.12Governing Law, Jurisdiction and Venue.  This Agreement shall in all events and for all purposes be governed by, and construed in accordance with, the laws of the State of New York without regard to any choice of law principle that would dictate the application of the law of another jurisdiction.  The Parties hereby irrevocably and unconditionally consent to the exclusive jurisdiction of the courts of the State of New York and the United States District Court for the Southern District of New York for any action, suit or proceeding (other than appeals therefrom) arising out of or relating to this Agreement, and agree not to commence any action, suit or proceeding (other than appeals therefrom) related thereto except in such courts.  The Parties further hereby irrevocably and unconditionally waive any objection to the laying of venue of any action, suit or proceeding (other than appeals therefrom) arising out of or relating to this Agreement in the courts of the State of New York or the United States District Court for the Southern District of New York, and hereby further irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such action, suit or proceeding has been brought in an inconvenient forum.  Each Party hereto further agrees that service of any process, summons, notice or document by U.S. registered mail to its address set forth in Section 5.6 shall be effective service of process for any action, suit or proceeding brought against it under this Agreement in any such court.

5.13No Consents.  No Party requires any consents, permissions, waivers or licenses from Third Parties in order to provide each other with the rights provided for herein or to otherwise satisfy the terms of this Agreement.

5.14Further Acts and Instruments.  Upon request by a Party, the other Parties agree to execute, acknowledge and deliver such further instruments, and to do all such other acts, as may be reasonably necessary or appropriate in order to carry out the purposes and intent of this Agreement.

5.15Entire Agreement.  This Agreement and the BMS-Pfizer License Agreement, the Medarex-Pfizer Cross-License Agreement and the Medarex-BMS Collaboration Agreement, as each is amended as of the Effective Date, where and to the extent herein referenced, constitute the entire agreement and understanding between the Parties as to the subject matter hereof and merges all prior discussions and negotiations among them, and none of the Parties shall be bound by any conditions, definitions, warranties, understandings or representations with respect to such subject matter other than as expressly provided herein or therein or as duly set forth on or subsequent to the date hereof in writing and signed by a proper and duly authorized officer or representative of the Parties to be bound thereby.

*   *   *   [signature page follows]   *   *   *

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives.

BRISTOL-MYERS SQUIBB COMPANY			PFIZER INC
By:	/s/  Elliott Sigal, M.D., Ph.D.		By:	/s/ John DeYoung
Name:  Elliott Sigal, M.D., Ph.D.			Name:		John DeYoung
Title: Executive Vice President and			Title:		Attorney-in-Fact
Chief Scientific Officer, Research and Development
MEDAREX, INC.
By:		/s/ Ronald Pepin, Ph.D.
Name:		Ronald Pepin, Ph.D.
Title:		Senior Vice President, Business Development

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EX-10.9

Exhibit 10.9

RESTRICTED STOCK AGREEMENT

This Agreement (the “Agreement”) is made as of the 29th day of June, 2007 (“Date of Award”), between Medarex, Inc., a New Jersey corporation (the “Company”), and Howard H. Pien (the “Grantee”).  In consideration of the agreements set forth below, the Company and the Grantee agree as follows:

1.     Grant.  The following restricted stock awards (collectively, the “Award”) of shares of the Company’s common stock, $.01 par value per share (“Common Stock”), are hereby granted by the Company to the Grantee subject to (i) the terms and conditions hereof, (ii) the provisions of the Medarex, Inc. 2005 Equity Incentive Plan (the “Plan”), a copy of which is attached hereto as Exhibit A and the terms of which are incorporated by reference herein, (iii) the terms and conditions of the Grantee’s employment agreement with the Company dated May 16, 2007 (the “Employment Agreement”), and (iv) the receipt by the Company of a stock power endorsed in blank by the Grantee, in the form attached hereto as Exhibit B:

(a)50,000 shares (the “Inducement Shares”);

(b)175,000 shares (the “Initial Award Shares”); and

(c)75,000 shares (the “Performance Shares”).

The Inducement Shares, the Initial Award Shares and the Performance Shares shall be referred to collectively herein as the “Award Shares.”  The term “Change in Control” as used herein shall have the meaning set forth in the Employment Agreement and not in the Plan.  All capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Plan.  In the event of any conflict between the provisions of this Agreement, the Employment Agreement and those of the Plan, the provisions of the Plan shall control.

2.     Transfer Restrictions.  None of the Award Shares shall be sold, assigned, pledged or otherwise transferred, voluntarily or involuntarily, by the Grantee, except in accordance with the terms of this Agreement and the Plan.

3.     Release of Restrictions.

(a)             The restrictions set forth in Section 2 above shall lapse as follows, provided that the Grantee remains employed by the Company from June 14, 2007 (the “Start Date”) through the applicable date:

(i)With respect to the Inducement Shares, on June 14, 2008 with respect to 25,000 Inducement Shares and on June 14, 2009 with respect to the remaining 25,000 Inducement Shares;

(ii)With respect to the Initial Award Shares, on June 14, 2009 with respect to 87,500 Initial Award Shares and on June 14, 2010 with respect to the remaining 87,500 Initial Award Shares; and

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(iii)With respect to the Performance Shares, on the five-year anniversary of the Start Date; provided, however, that if the price of the Common Stock equals or exceeds $26 per share for the 20 consecutive trading days immediately preceding the three-year anniversary of the Start Date, then the restrictions with respect to 25,000 Performance Shares shall lapse on such three-year anniversary of the Start Date and; provided further, however, that if the price of the Common Stock equals or exceeds $26 per share for the 20 consecutive trading days immediately preceding the four-year anniversary of the Start Date, then with respect to any Performance Shares for which restrictions have not yet lapsed, the restrictions shall lapse on such four-year anniversary of the Start Date.

(b)           In the event the Grantee’s employment is terminated by the Company “Without Cause” or by the Grantee for “Good Reason” (each of such terms as defined in the Employment Agreement), any restrictions on the Initial Award Shares that would have lapsed during the eighteen (18) months following the date the Grantee’s employment is terminated shall immediately lapse.

(c)            In the event of a Change in Control, any restrictions on the Award Shares shall immediately lapse upon the effective date of the Change in Control.

(d)           In the event the Grantee’s employment with the Company is terminated prior to the date the restrictions lapse, as provided in Section 3(a), due to the Grantee’s retirement, permanent disability, or death, or in cases of special circumstances, the Committee may, in its sole discretion, when it finds that a waiver would be in the best interests of the Company, waive in whole or in part any or all remaining restrictions with respect to the Grantee’s Award Shares.

4.     Forfeiture.  Except as set forth in Section 3 above, in the event the Grantee’s employment with the Company is terminated for any reason prior to the date the restrictions lapse as provided in Section 3 above, the Award Shares for which restrictions have not lapsed shall be forfeited to the Company.

5.     Tender Offer/Merger; Adjustment of Shares.  Notwithstanding anything contained herein to the contrary:

(a)            Award Shares (i) may be tendered in response to a tender offer for or a request or invitation to tenders of greater than 50% of the outstanding Common Stock of the Company or (ii) may be surrendered in a merger, consolidation or share exchange involving the Company; provided, however, that in each case, in the event such tender offer, request for tender, merger, consolidation or share exchange does not result in a Change in Control, the securities or other consideration received in exchange therefore shall thereafter be subject to the restrictions and conditions set forth herein.

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(b)           In the event of any change in the outstanding Common Stock resulting from a subdivision or consolidation of shares, whether through reorganization, recapitalization, share split, reverse share split, share distribution or combination of shares or the payment of a share dividend, the Award Shares shall be treated in the same manner in any such transaction as other Common Stock.  Any Common Stock or other securities received by the Grantee with respect to the Award Shares in any such transaction shall be subject to the restrictions and conditions set forth herein.

6.     Rights as Stockholder.  The Grantee shall be entitled to all of the rights of a stockholder with respect to the Award Shares held in escrow including the right to vote such shares and to receive dividends and other distributions payable with respect to such shares since the Date of Award, even if some or all of such Award Shares have not yet vested and been released from the restrictions set forth in Section 2 above.

7.     Escrow of Share Certificates.  Certificates for the Award Shares shall be issued in the Grantee’s name and shall be held in escrow by the Company until all restrictions lapse or such shares are forfeited as provided herein; provided, however, that the terms of such escrow shall make allowance for the transactions contemplated by Section 5 above.  A certificate or certificates representing the Award Shares as to which restrictions have lapsed shall be delivered to the Grantee upon such lapse, provided that any withholding obligations of the Company are satisfied pursuant to Section 9 below.

8.     Government Regulations.  Notwithstanding anything contained herein to the contrary, the Company’s obligation to issue or deliver certificates evidencing the Award Shares shall be subject to all applicable laws, rules and regulations and to such approvals by any governmental agencies or national securities exchanges as may be required.

9.     Withholding Taxes.  The Company shall have the right to require the Grantee to remit to the Company, or to withhold from other amounts payable to the Grantee, as compensation or otherwise, an amount sufficient to satisfy all federal, state and local withholding tax requirements which may arise in connection with this Award.

10.   Tax Consequences.   The acquisition and vesting of the Award Shares may have adverse tax consequences to the Grantee that may be avoided or mitigated by filing an election under Section 83(b) of the Code.  Such election must be filed within thirty (30) days after the date this Award is granted.  The Grantee hereby acknowledges that it is his responsibility, and not the Company’s, to file a timely election under Section 83(b) of the Code, even if the Grantee requests the Company to make such filing on his behalf.

11.   Award not a Service Contract.  This Award is not an employment or service contract, and nothing in this Award shall be deemed to create in any way whatsoever any obligation on the Grantee’s part to continue in the employ of or service to the Company, or on the part of the Company to continue the Grantee’s employment or service.

12.   Governing Law.  This Agreement shall be construed under the laws of the State of New Jersey, without regard to its conflicts of laws principles.

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IN WITNESS WHEREOF, the Company has caused this Award to be granted on the date first above written.

	Medarex, Inc.
	By:	/s/ Christian S. Schade
		Christian S. Schade,
		Senior Vice President and
		Chief Financial Officer
Accepted:
/s/ Howard H. Pien
Howard H. Pien – Grantee

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EXHIBIT A

MEDAREX, INC.
2005 EQUITY INCENTIVE PLAN

Section 1.               Purpose of the Plan. The purpose of the Plan is to aid Medarex, Inc. and any Participating Company in securing and retaining Directors, Officers, Consultants, and other Employees and to motivate such persons to exert their best efforts on behalf of the Participating Company Group.

Section 2.               Definitions and Construction. Whenever used herein, the following terms shall have their respective meanings set forth below:

(a)           “Affiliate” means (i) an entity, other than a Parent Company, that directly, or indirectly through one or more intermediary entities, controls the Company or (ii) an entity, other than a Subsidiary Company, that is controlled by the Company directly or indirectly through one or more intermediary entities. For this purpose, the term “control” (including the term “controlled by”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of the relevant entity, whether through the ownership of voting securities, by contract or otherwise; or shall have such other meaning assigned such term for the purposes of registration on Form S-8 under the Securities Act.

(b)           “Award” means any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Performance Share, Performance Unit, Deferred Stock Award, Other Stock-based Award or Deferred Compensation Award granted under the Plan.

(c)           “Award Agreement” means a written agreement between the Company and a Participant setting forth the terms, conditions and restrictions of the Award granted to the Participant. An Award Agreement may be an “Option Agreement,” a “Stock Appreciation Right Agreement,” a “Restricted Stock Agreement,” a “Restricted Stock Unit Agreement,” a “Performance Share Agreement,” a “Performance Unit Agreement,” a “Deferred Stock Award Agreement,” a “Deferred Compensation Award Agreement” and such other cash agreement or “Stock-based Award Agreement” containing such terms and conditions as shall be determined by the Committee from time to time.

(d)           “Board” means the Board of Directors of the Company.

(e)           “Cashless Exercise” shall have the meaning set forth in Section 6(d).

(f)            “Cause” shall have the meaning set forth in Section 6(h).

(g)           “Change in Control” means, unless otherwise defined by the Participant’s Award Agreement or contract of employment or service, the occurrence of any of the following:

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(i)            An acquisition (other than directly from the Company) of any voting securities of the Company (the “Voting Securities”) by any “Person” (as the term “person” is used for purposes of Section 13(d) or 14(d) of the Exchange Act) immediately after which such Person has “Beneficial Ownership” (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of the combined voting power of the Company’s then outstanding Voting Securities; provided, however, that in determining whether a Change in Control has occurred, voting securities which are acquired in a “Non-Control Acquisition” (as hereinafter defined) shall not constitute an acquisition which would cause a Change in Control.

A “Non-Control Acquisition” shall mean an acquisition of Voting Securities by (1) an employee benefit plan (or a trust forming a part thereof) maintained by (x) the Company or (y) any company or other Person of which a majority of its voting power or its equity securities or equity interest is owned directly or indirectly by the Company (a “Subsidiary”), (2) the Company or any Subsidiary, or (3) any Person in connection with a Non-Control Transaction (as defined below);

(ii)           The individuals who, as of the Effective Date, are members of the Board (the “Incumbent Board”), cease for any reason to constitute at least 66 2/3% of the Board; provided, however, that if the election, or nomination for election by the Company’s shareholders, of any new director was approved by a vote of at least 66 2/3% of the Incumbent Board, such new director shall be considered as a member of the Incumbent Board; provided, further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened “Election Contest” (as described in Rule 14a-11 promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a “Proxy Contest”) including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or

(iii)          Approval of the Company’s shareholders of: (1) a merger, consolidation or reorganization involving the Company, unless (i) the shareholders of the Company, immediately before such merger, consolidation or reorganization, own, directly or indirectly immediately following such merger, consolidation or reorganization, at least 66 2/3% of the combined voting power of the outstanding Voting Securities of the company resulting from such merger, consolidation or reorganization (the “Surviving Company”) in substantially the same proportion as their ownership of the Voting Securities immediately before such merger, consolidation or reorganization, (ii) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation or reorganization constitute at least 66 2/3% of the members of the board of directors of the Surviving Company, and (iii) no Person, other than the Company, any Subsidiary, any employee benefit plan (or any trust forming a

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part thereof) maintained by the Company, the Surviving Company or any subsidiary thereof, or any Person who, immediately prior to such merger, consolidation or reorganization had Beneficial Ownership of 20% or more of the then outstanding Voting Securities of the Company, has Beneficial Ownership of 20% or more of the combined voting power of the Surviving Company’s then outstanding voting securities (a transaction described in clause (i) through (iii) shall herein be referred to as a “Non-Control Transaction”); (2) a complete liquidation or dissolution of the Company; or (3) an agreement for the sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to a Subsidiary).

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any Person (the “Subject Person”) acquired Beneficial Ownership of more than the permitted amount of the outstanding Voting Securities as a result of the acquisition of Voting Securities by the Company which, by reducing the number of Voting Securities outstanding, increases the proportional number of shares Beneficially Owned by the Subject Person, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of Voting Securities by the Company, and after such share acquisition, the Subject Person becomes the Beneficial Owner of any additional Voting Securities which increases the percentage of the then outstanding Voting Securities Beneficially Owned by the Subject Person, then a Change in Control shall occur.

(h)       “Code” means the Internal Revenue Code of 1986, as amended, and any applicable regulations promulgated thereunder.

(i)        “Committee” means the Company’s Compensation and Organization Committee and such other committee or subcommittee of the Board, if any, duly appointed to administer the Plan and having such powers in each instance as shall be specified by the Board. The Committee shall have at least two members, each of whom shall be a “non-employee director” as defined in Rule 16b-3 under the Exchange Act and an “outside director” as defined in Section 162(m) of the Code and the regulations thereunder, and, if applicable, meet the independence requirements of the applicable stock exchange, quotation system or other self-regulatory organization on which the Stock is traded. If, at any time, there is no committee of the Board then authorized or properly constituted to administer the Plan, the Board shall exercise all of the powers of the Committee granted herein.

(j)        “Company” means Medarex, Inc., a New Jersey corporation, or any successor company thereto.

(k)       “Consultant” means a person engaged to provide consulting or advisory services (other than as an Employee or a member of the Board) to a Participating Company, provided that the identity of such person, the nature of such services or the entity to which such services are provided would not preclude the Company from offering or selling securities to such person pursuant to the Plan in reliance on registration on a Form S-8 Registration Statement under the Securities Act.

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(l)        “Covered Employee” shall have the meaning given to such term in Section 162(m) of the Code.

(m)      “Deferral Period” shall have the meaning set forth in Section 11(a).

(n)       “Deferred Compensation Award” means an award granted to a Participant pursuant to Section 13 of the Plan.

(o)       “Deferred Stock Award” means an award of Stock granted to a Participant pursuant to Section 11 of the Plan.

(p)       “Director” means a member of the Board.

(q)       “Disability” means a condition causing a Participant to be disabled within the meaning of Section 409A(a)(2)(C) of the Code.

(r)        “Dividend Equivalent” means a credit, made at the discretion of the Committee or as otherwise provided by the Plan, to the account of a Participant in an amount equal to the cash dividends paid on one share of Stock for each share of Stock represented by an Award held by such Participant.

(s)       “Effective Date” means the date that the Plan is approved by the holders of a majority of shares of the outstanding Stock of the Company.  That date is May 19, 2005.

(t)        “Elective Deferred Period” shall have the meaning set forth in Section 11(b)(v).

(u)       “Employee” means any person treated as an employee (including an Officer or a member of the Board who is also treated as an employee) in the records of a Participating Company and, with respect to any Incentive Stock Option granted to such person, who is an employee for purposes of Section 422 of the Code; provided, however, that neither service as a member of the Board nor payment of a director’s fee shall be sufficient to constitute employment for purposes of the Plan. For purposes of the Plan, the Committee shall determine in good faith and in the exercise of its discretion whether an individual has become or has ceased to be an Employee and the effective date of such individual’s employment or termination of employment, as the case may be. For purposes of an individual’s rights, if any, under the Plan as of the time of the Committee’s determination, all such determinations by the Committee shall be final, binding and conclusive, notwithstanding that the Committee or any court of law or governmental agency subsequently makes a contrary determination.

(v)       “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(w)      “Fair Market Value” means, as of any date, the value of a share of Stock or other property as determined by the Committee, in its discretion, or by the Company, in its discretion, if such determination is expressly allocated to the Company herein, subject to the following:

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(i)        Except as otherwise determined by the Committee, if, on such date, the Stock is listed on a national or regional securities exchange or market system, the Fair Market Value of a share of Stock shall be the closing price of a share of Stock (or the mean of the closing bid and asked prices of a share of Stock if the Stock is so quoted instead) as quoted on the Nasdaq National Market, the Nasdaq SmallCap Market or such other national or regional securities exchange or market system constituting the primary market for the Stock, as reported in The Wall Street Journal or such other source as the Company deems reliable. If the relevant date does not fall on a day on which the Stock has traded on such securities exchange or market system, the date on which the Fair Market Value shall be established shall be the last day on which the Stock was so traded prior to the relevant date, or such other appropriate day as shall be determined by the Committee, in its discretion.

(ii)           Notwithstanding the foregoing, the Committee may, in its discretion, determine the Fair Market Value on the basis of the opening, closing, high, low or average sale price of a share of Stock or the actual sale price of a share of Stock received by a Participant, on such date or the trading day immediately preceding such date. The Committee may vary its method of determination of the Fair Market Value as provided in this Section for different purposes under the Plan.

(iii)          If, on such date, the Stock is not listed on a national or regional securities exchange or market system, the Fair Market Value of a share of Stock shall be as determined by the Committee in good faith without regard to any restriction other than a restriction which, by its terms, will never lapse.

(x)            “Full Value Award” means any of the following types of Awards to the extent such Awards are settled in shares of Stock:  Restricted Stock; Restricted Stock Units; Performance Shares; Performance Units; Deferred Stock Awards; and Other Stock-based Awards.

(y)           “Incentive Stock Option” means an Option intended to be (as set forth in the Award Agreement) and which qualifies as an incentive stock option within the meaning of Section 422(b) of the Code.

(z)            “Insider” means an Officer, a Director or any other person whose transactions in Stock are subject to Section 16 of the Exchange Act.

(aa)         “Nonqualified Stock Option” means an Option not intended to be (as set forth in the Award Agreement) or not qualifying as an incentive stock option within the meaning of Section 422(b) of the Code.

(bb)         “Officer” means any person designated by the Board as an officer of the Company.

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(cc)         “Option” means the right to purchase Stock at a stated price for a specified period of time granted to a Participant pursuant to Section 6 of the Plan. An Option may be either an Incentive Stock Option or a Nonqualified Stock Option.

(dd)         “Option Expiration Date” shall have the meaning set forth in Section 6(f).

(ee)         “Other Stock-based Awards” means awards that are valued in whole or in part by reference to or are otherwise based on the Stock, including without limitation, convertible debentures, but excluding Options, Restricted Stock Awards, Restricted Stock Units, Performance Awards, Stock Appreciation Rights, Deferred Stock Awards and Deferred Compensation Awards.

(ff)           “Parent Company” means any present or future “parent company” of the Company, as defined in Section 424(e) of the Code.

(gg)         “Participant” means any eligible person under the Plan who has been granted one or more Awards.

(hh)         “Participating Company” means the Company or any Parent Company, Subsidiary Company or Affiliate.

(ii)           “Participating Company Group” means, at any point in time, all entities collectively which are then Participating Companies.

(jj)           “Performance Award” means an Award of Performance Shares or Performance Units.

(kk)         “Performance Award Formula” means, for any Performance Award, a formula or table established by the Committee pursuant to Section 10 of the Plan which provides the basis for computing the value of a Performance Award at one or more threshold levels of attainment of the applicable Performance Goal(s) measured as of the end of the applicable Performance Period.

(ll)           “Performance Goal” means a performance goal established by the Committee pursuant to Section 10 of the Plan.

(mm)       “Performance Measure” shall have the meaning set forth in Section 10(d).

(nn)         “Performance Period” means a period established by the Committee pursuant to Section 10(c) of the Plan at the end of which one or more Performance Goals are to be measured.

(oo)         “Performance Share” means a bookkeeping entry representing a right granted to a Participant pursuant to Section 10 of the Plan to receive a payment equal to the Fair Market Value of a share of Stock, based upon a Performance Award Formula.

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(pp)         “Performance Targets” shall have the meaning set forth in Section 10(d).

(qq)         “Performance Unit” means a bookkeeping entry representing a right granted to a Participant pursuant to Section 10 of the Plan to receive a payment of up to $100, as determined by the Committee, based upon a Performance Award Formula.

(rr)           “Plan” means the Company’s 2005 Equity Incentive Plan.

(ss)         “Predecessor Plans” means each of the Company’s Amended and Restated 1991 Stock Option Plan, 1992 Stock Option Plan, 1994 Stock Option Plan, 1995 Stock Option Plan, 1996 Stock Option Plan, Houston Biotechnology Incorporated Replacement Stock Option Plan, Houston Biotechnology Incorporated 1994A Stock Option Plan, 1997 Stock Option Plan, 1999 Stock Option Plan, 2000 Stock Option Plan, 2000 Non-Director/Officer Employee Stock Option Plan, 2001 Non-Director/Officer Employee Stock Option Plan, 2001 Stock Option Plan, and 2002 New Employee Stock Option Plan.

(tt)           “Restricted Stock Award” means an Award of Restricted Stock.

(uu)         “Restricted Stock” means Stock granted to a Participant pursuant to Section 8 of the Plan.

(vv)         “Restricted Stock Unit” or “Stock Unit” means a bookkeeping entry representing a right granted to a Participant pursuant to Section 9 of the Plan, to receive a share of Stock on a date determined in accordance with the provisions of Section 9 and the Participant’s Award Agreement.

(ww)       “Restriction Period” means the period established in accordance with Section 8 of the Plan during which shares subject to a Restricted Stock Award are subject to Vesting Conditions.

(xx)          “Rule 16b-3” means Rule 16b-3 under the Exchange Act, as amended from time to time, or any successor rule or regulation.

(yy)         “SAR” or “Stock Appreciation Right” means a bookkeeping entry representing, for each share of Stock subject to such SAR, a right granted to a Participant pursuant to Section 7 of the Plan to receive payment of an amount equal to the excess, if any, of the Fair Market Value of a share of Stock on the date of exercise of the SAR over the exercise price.

(zz)          “Section 162(m)” means Section 162(m) of the Code.

(aaa)       “Securities Act” means the Securities Act of 1933, as amended.

(bbb)      “Service” means a Participant’s employment or service with the Participating Company Group, whether in the capacity of an Employee, Officer, Director or Consultant. Unless otherwise provided by the Committee, a Participant’s Service shall not be deemed to have terminated merely because of a change in the capacity in which the Participant

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renders such Service or a change in the Participating Company for which the Participant renders such Service, provided that there is no interruption or termination of the Participant’s Service. Furthermore, a Participant’s Service shall not be deemed to have terminated if the Participant takes any military leave, sick leave, or other bona fide leave of absence that is approved by the Company and otherwise complies with the provisions of Section 14 of the Plan. A Participant’s Service shall be deemed to have terminated either upon an actual termination of employment or service with the Participating Company Group or upon the entity for which the Participant performs Service ceasing to be a Participating Company. Subject to the foregoing, the Company, in its discretion, shall determine whether the Participant’s Service has terminated and the effective date of such termination.

(ccc)       “Spread” shall have the meaning set forth in Section 21(a)(3).

(ddd)      “Stock” means the common stock of the Company, as adjusted from time to time in accordance with Section 4(c) of the Plan.

(eee)       “Stock Unit” means a bookkeeping entry representing a right granted to a Participant pursuant to Section 13 of the Plan to receive a share of Stock on a date determined in accordance with the provisions of Section 13 and the Participant’s Award Agreement, if any.

(fff)         “Subsidiary Company” means any present or future “subsidiary company” of the Company, as defined in Section 424(f) of the Code.

(ggg)      “Ten Percent Owner” or “10% Owner” means a Participant who, at the time an Option is granted to the Participant, owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of a Participating Company (other than an Affiliate) within the meaning of Section 422(b)(6) of the Code.

(hhh)      “Vesting Conditions” mean those conditions established in accordance with Section 8 or Section 9 of the Plan prior to the satisfaction of which shares subject to a Restricted Stock Award or Restricted Stock Unit Award, respectively, remain subject to forfeiture or a repurchase option in favor of the Company upon the Participant’s termination of Service.

Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of the Plan. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular. Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.

Section 3.               Administration.

(a)           The Plan shall be administered by the Committee. All questions of interpretation of the Plan or of any Award shall be determined by the Committee, and such determinations shall be final and binding upon all persons having an interest in the Plan or such Award. A majority of the whole Committee present at a meeting at which a quorum is present, or an act approved in writing by all members of the Committee, shall be an act of the Committee. The Committee shall have full power and authority, subject to such resolutions not

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inconsistent with the provisions of the Plan as may from time to time be issued or adopted by the Board, to grant Awards to Participants, pursuant to the provisions of the Plan. The Committee shall also interpret the provisions of the Plan and any Award issued under the Plan (and any agreements relating thereto) and supervise the administration of the Plan.

(b)           The Committee shall: (i) select the Participants to whom Awards may from time to time be granted hereunder; (ii) determine whether Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock, Deferred Stock Awards, Restricted Stock Units, Performance Shares, Performance Units, Other Stock-based Awards, or Deferred Compensation Awards, or a combination of the foregoing, are to be granted hereunder; (iii) determine the number of shares of Stock to be covered by each Award granted hereunder; (iv) determine the terms, conditions and restrictions applicable to each Award (which need not be identical) and any shares acquired pursuant thereto, including, without limitation, (A) the exercise or purchase price of Stock purchased pursuant to any Award, (B) the method of payment for Stock purchased pursuant to any Award, (C) the method for satisfaction of any tax withholding obligation arising in connection with any Award, including by the withholding or delivery of shares of Stock, (D) the timing, terms and conditions of the exercisability or vesting of any Award or any shares acquired pursuant thereto, (E) the Performance Award Formula and Performance Goals applicable to any Award and the extent to which such Performance Goals have been attained, (F) the time of the expiration of any Award, (G) the effect of the Participant’s termination of Service on any of the foregoing, and (H) all other terms, conditions and restrictions applicable to any Award or Stock acquired pursuant thereto not inconsistent with the terms of the Plan; (v) determine whether, to what extent and under what circumstances Awards may be settled in cash; (vi) determine whether, to what extent, and under what circumstances Stock and other amounts payable with respect to an Award under this Plan shall be deferred either automatically or at the election of the Participant; and (vii) determine whether, to what extent, and under what circumstances Option grants and/or other Awards under the Plan are to be made, and operate, on a tandem basis.

(c)           The Chief Executive Officer and the Chief Financial Officer or any other Officer designated by the Committee shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, determination or election which is the responsibility of or which is allocated to the Company herein. The Board or the Committee may, in its discretion, delegate to a committee comprised of one or more Officers the authority to grant one or more Awards, without further approval of the Board or the Committee, to any Employee, other than a person who, at the time of such grant, is an Insider; provided, however, that (i) such Awards shall not be granted for shares of Stock in excess of the maximum aggregate number of shares of Stock authorized for issuance pursuant to Section 4, (ii) the exercise price per share of each such Award which is an Option or Stock Appreciation Right shall be not less than the Fair Market Value per share of the Stock on the effective date of grant (or, if the Stock has not traded on such date, on the last day preceding the effective date of grant on which the Stock was traded), and (iii) each such Award shall be subject to the terms and conditions of the appropriate standard form of Award Agreement approved by the Board or the Committee and shall conform to the provisions of the Plan and such other guidelines as shall be established from time to time by the Board or the Committee.

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(d)           With respect to participation by Insiders in the Plan, at any time that any class of equity security of the Company is registered pursuant to Section 12 of the Exchange Act, the Plan shall be administered in compliance with the requirements, if any, of Rule 16b-3.

(e)           No member of the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Award thereunder.

Notwithstanding the foregoing, without the affirmative vote of holders of a majority of the shares of Stock cast in person or by proxy at a meeting of the shareholders of the Company at which a quorum representing a majority of all outstanding shares of Stock is present or represented by proxy, the Board shall not approve a program providing for either (i) the cancellation of outstanding Options or SARs and the grant in substitution therefore of new Options or SARs having a lower exercise price or (ii) the amendment of outstanding Options or SARs to reduce the exercise price thereof. This paragraph shall not be construed to apply to “issuing or assuming a stock option in a transaction to which section 424(a) applies,” within the meaning of Section 424 of the Code.

Section 4.               Stock Subject to the Plan; Individual Limitations on Awards.

(a)           Subject to adjustment as provided in subsections (b) and (c) below, the maximum aggregate number of shares of Stock that may be issued under the Plan shall be 6,500,000 shares and shall consist of (i) authorized but unissued shares, or (ii) reacquired shares (treasury) of Stock, or (iii) any combination thereof. Notwithstanding the foregoing, no more than 3,000,000 of such shares of Stock may be issued pursuant to all Full Value Awards.

If an outstanding Award for any reason expires or is terminated or canceled without having been exercised or settled in full, or if shares of Stock acquired pursuant to an Award subject to forfeiture or repurchase are forfeited or repurchased by the Company at the Participant’s purchase price, the shares of Stock allocable to the terminated portion of such Award or such forfeited or repurchased shares of Stock shall again be available for issuance under the Plan. Shares of Stock shall not be deemed to have been issued pursuant to the Plan (i) with respect to any portion of an Award that is settled in cash or (ii) to the extent such shares are withheld or reacquired by the Company in satisfaction of tax withholding obligations pursuant to Section 19. Upon payment in shares of Stock pursuant to the exercise of a SAR, the number of shares available for issuance under the Plan shall be reduced only by the number of shares actually issued in such payment. If the exercise price of an Option is paid by tender to the Company, or attestation to the ownership, of shares of Stock owned by the Participant, the number of shares available for issuance under the Plan shall be reduced by the net number of shares for which the Option is exercised. The maximum number of shares available for issuance under the Plan shall not be reduced to reflect any dividends or dividend equivalents that are reinvested into additional shares of Stock or credited as additional Performance Shares. The maximum number of shares of Stock shall not be reduced by the issuance of shares of Stock hereunder due to the assumption, conversion or substitution of Awards made by an entity acquired by the Company. For the purposes of computing the total number of shares of Stock granted under the Plan, where one or more types of Awards, both of which are payable in shares of Stock, are granted in tandem with each other, such that the exercise of one type of Award with respect to a number of shares

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cancels an equal number of shares of the other, the number of shares granted under both Awards shall be deemed to be equivalent to the number of shares under one of the Awards.

(b)           The maximum aggregate number of shares of Stock that may be issued under the Plan as set forth in subsection (a) above shall be cumulatively increased from time to time by:

(i)            the number of shares of Stock authorized and remaining available for the future grant of options under the Predecessor Plans as of the Effective Date;

(ii)           the number of shares of Stock subject to that portion of any option outstanding under a Predecessor Plan as of the Effective Date which, on or after the Effective Date, expires or is terminated or canceled for any reason without having been exercised; and

(iii)          the number of shares Stock that are withheld or reacquired by the Company on or after the Effective Date in satisfaction of tax withholding obligations pursuant to a Predecessor Plan.

Notwithstanding the foregoing, the aggregate number of shares of Stock authorized for issuance under the Predecessor Plans that may become authorized for issuance under the Plan pursuant to this subsection (b) shall not exceed 10,000,000 shares.

The Plan shall serve as the successor to the Predecessor Plans, and no further option grants shall be made under the Predecessor Plans. All options outstanding under the Predecessor Plans as of the Effective Date shall, immediately upon the Effective Date, be incorporated into the Plan and treated as outstanding Options under the Plan. However, each outstanding option so incorporated shall continue to be governed solely by the terms of the documents evidencing such option. No provision of the Plan shall be deemed to adversely affect or otherwise diminish the rights or obligations of the holders of such incorporated options with respect to their acquisition of shares of Stock which may exist under the terms of the Predecessor Plans under which such incorporated option was issued. Subject to the rights of the Participant under the incorporated option documents and Predecessor Plans, the discretion delegated to the Committee hereunder may be exercisable with respect to incorporated options to the same extent as it is exercisable with respect to options originally granted under this Plan.

(c)           Subject to any required action by the shareholders of the Company, in the event of any change in the Stock effected without receipt of consideration by the Company, whether through merger, consolidation, reorganization, reincorporation, recapitalization, reclassification, stock dividend, stock split, reverse stock split, split-up, split-off, spin-off, combination of shares, exchange of shares, or similar change in the capital structure of the Company, or in the event of payment of a dividend or distribution to the shareholders of the Company in a form other than Stock (excepting normal cash dividends) that has a material effect on the Fair Market Value of shares of Stock, appropriate adjustments shall be made in the number and kind of shares subject to the Plan and to any outstanding Awards and in the exercise or purchase price per share under any outstanding Award in order to prevent dilution

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or enlargement of Participants’ rights under the Plan. For purposes of the foregoing, conversion of any convertible securities of the Company shall not be treated as “effected without receipt of consideration by the Company.” Any fractional share resulting from an adjustment pursuant to this subsection (c) shall be rounded down to the nearest whole number, and in no event may the exercise or purchase price under any Award be decreased to an amount less than the par value, if any, of the stock subject to such Award. The Committee in its sole discretion, may also make such adjustments in the terms of any Award to reflect, or related to, such changes in the capital structure of the Company or distributions as it deems appropriate, including modification of Performance Goals, Performance Award Formulas and Performance Periods. The adjustments determined by the Committee pursuant to this Section 4(c) shall be final, binding and conclusive.

(d)           Notwithstanding any provision of the Plan to the contrary, no more than ten percent (10%) of the maximum aggregate number of shares of Stock that may be issued under the Plan shall be issued pursuant to the exercise or settlement of Restricted Stock Awards, Restricted Stock Unit Awards, Deferred Stock Awards and Other Stock-based Awards.

(e)           The maximum number of shares of Stock with respect to which Options and/or SARs may be granted to any Participant in any fiscal year of the Company shall be 1,000,000 shares.  The maximum number of shares with respect to which Full Value Awards, in the aggregate, may be granted to any Participant in any fiscal year of the Company shall be 200,000 shares.  In connection with a Participant’s (i) commencement of Service or (ii) promotion, a Participant may be granted Options and/or SARs for up to an additional 500,000 shares or may be granted Full Value Awards, in the aggregate, for up to an additional 50,000 shares none of which shall count against the limit set forth in the preceding sentence.  The foregoing limitations shall be adjusted proportionately in connection with any change in the Company’s capitalization pursuant to subsection (c) above.  To the extent required by Section 162(m) of the Code or the regulations thereunder, in applying the foregoing limitations with respect to a Participant, if any Awards are canceled, the canceled Awards shall continue to count against the maximum number of shares of Stock with respect to which Awards may be granted to the Participant.  For this purpose, if the Company reprices an Option (or in the case of a SAR, if the base amount on which the stock appreciation is calculated is reduced to reflect a reduction in the Fair Market Value of the Stock), and if such repricing or reduction (in the case of a SAR) is approved by the shareholders of the Company, then such repricing or reduction shall be treated as the cancellation of the existing Option or SAR and the grant of a new Option or SAR.

Section 5.               Eligibility.

(a)           Awards may, at the Committee’s sole discretion, be granted in the form of Options pursuant to Section 6, SARs pursuant to Section 7, Restricted Stock Awards pursuant to Section 8, Restricted Stock Unit Awards pursuant to Section 9, Performance Awards pursuant to Section 10, Deferred Stock Awards pursuant to Section 11, Other Stock-based Awards pursuant to Section 12, Deferred Compensation Awards pursuant to Section 13, or any combination thereof. All Awards shall be subject to the terms, conditions, restrictions and limitations of the Plan. The Committee may, in its sole judgment, subject an Award at any

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time to such other terms, conditions, restrictions and/or limitations, (including, but not limited to, the time and conditions of exercise and restrictions on transferability and vesting), provided they are not inconsistent with the terms of the Plan. Awards under a particular Section of the Plan need not be uniform and Awards under two or more Sections may be combined into a single Award Agreement. Any combination of Awards may be granted at one time and on more than one occasion to the same Participant.

(b)           In order to facilitate the making of any Award to Participants who are employed or retained by the Company outside the United States as Employees, Directors or Consultants (or who are foreign nationals temporarily within the United States), the Committee may provide for such modifications and additional terms and conditions (“special terms”) in Awards as the Committee may consider necessary or appropriate to accommodate differences in local law, policy or custom or to facilitate administration of the Plan. The special terms may provide that the grant of an Award is subject to (1) applicable governmental or regulatory approval or other compliance with local legal requirements and/or (2) the execution by the Participant of a written instrument in the form specified by the Committee, and that in the event such conditions are not satisfied, the grant shall be void.  The Committee may adopt or approve sub-plans, appendices or supplements to, or amendments, restatements, or alternative versions of, the Plan as it may consider necessary or appropriate for purposes of implementing any special terms, without thereby affecting the terms of the Plan as in effect for any other purpose; provided, however, no such sub-plans, appendices or supplements to, or amendments, restatements, or alternative versions of, the Plan shall: (i) increase the number of available shares under Section 4; (ii) cause the Plan to cease to satisfy any conditions of Rule 16b-3 under the Exchange Act or, with respect to Covered Employees, Section 162(m) of the Code; or (iii) revoke, remove or reduce any vested right of a Participant without the prior written consent of such Participant.

(c)           Unless otherwise specifically determined by the Committee, all Awards and payments pursuant to such Awards shall be determined in U.S. currency. The Committee shall determine, in its discretion, whether and to the extent any payments made pursuant to an Award shall be made in local currency, as opposed to U.S. dollars. In the event payments are made in local currency, the Committee may determine, in its discretion and without liability to any Participant, the method and rate of converting the payment into local currency.

(d)           The Committee shall have the right at any time and from time to time and without prior notice to modify outstanding Awards to comply with or satisfy local laws and regulations or to avoid costly governmental filings. By means of illustration, but not limitation, the Committee may restrict the method of exercise of an Award to facilitate compliance with applicable securities laws or exchange control filings, laws or regulations.

(e)           No Employee in any country shall have any right to receive an Award, except as expressly provided for under the Plan. All Awards made at any time are subject to the prior approval of the Committee.

(f)            Awards may be granted only to Employees, Consultants and Directors. For purposes of the foregoing sentence, “Employees,” “Consultants” and “Directors” shall include prospective Employees, prospective Consultants and prospective Directors to whom

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Awards are granted in connection with written offers of an employment or other service relationship with the Participating Company Group; provided, however, that no Stock subject to any such Award shall vest, become exercisable or be issued prior to the date on which such person commences Service.

(g)           Awards are granted solely at the discretion of the Committee. Eligible persons may be granted more than one Award. However, eligibility in accordance with this Section shall not entitle any person to be granted an Award, or, having been granted an Award, to be granted an additional Award.

Section 6.               Options. Any Option granted under the Plan shall be in such form as the Committee may from time to time approve. Any such Option shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall deem desirable.

(a)           Option Price. The purchase price per share of the Stock purchasable under an Option shall be determined by the Committee, but will be not less than 100% of the Fair Market Value of the Stock on the date of the grant of the Option, as determined in accordance with procedures established by the Committee. Notwithstanding the foregoing, the purchase price per share of the Stock purchasable under any Incentive Stock Option granted to any 10% Owner shall not be less then 110% of the Fair Market Value of the Stock on the date of the grant of the Option, as determined in accordance with procedures established by the Committee.

(b)           Option Period. The term of each Option shall be fixed by the Committee, but no Incentive Stock Option shall be exercisable after the expiration of 10 years from the date the Option is granted. Notwithstanding the foregoing, no Incentive Stock Option granted to a 10% Owner shall be exercisable after the expiration of five years from the date the Option is granted.

(c)           Exercisability.

(i)            Options shall be exercisable at such time or times as determined by the Committee at or subsequent to the date of grant. Unless otherwise determined by the Committee at or subsequent to the date of grant, no Option shall be exercisable until the first anniversary date of the granting of the Option, except as provided in subsections (f), (g), (h) or (i) of this Section 6 and subsection (a) of Section 21.

(ii)           Solely for Federal income tax purposes, to the extent that the aggregate Fair Market Value of Stock with respect to which Incentive Stock Options are exercisable for the first time by a Participant during any calendar year exceeds $100,000.00 (as of the date of grant), such Options shall be treated as Nonqualified Stock Options. For purposes of this rule, Options shall be taken into account in the order in which they were granted.

(d)           Method of Exercise. Options may be exercised, in whole or in part, by giving written notice of exercise to the Company specifying the number of shares to be

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purchased. Except as otherwise provided below, payment of the exercise price for the number of shares of Stock being purchased pursuant to any Option shall be made (i) in cash, by check or in cash equivalent, (ii) by tender to the Company, or attestation to the ownership, of shares of Stock owned by the Participant having a Fair Market Value not less than the exercise price, (iii) by delivery of a properly executed notice of exercise together with irrevocable instructions to a broker providing for the assignment to the Company of the proceeds of a sale or loan with respect to some or all of the shares being acquired upon the exercise of the Option (including, without limitation, through an exercise complying with the provisions of Regulation T as promulgated from time to time by the Board of Governors of the Federal Reserve System) (a “Cashless Exercise”), (iv) by such other consideration as may be approved by the Committee from time to time to the extent permitted by applicable law, or (v) by any combination thereof. The Committee may at any time or from time to time grant Options which do not permit all of the foregoing forms of consideration to be used in payment of the exercise price or which otherwise restrict one or more forms of consideration.

Notwithstanding the foregoing, an Option may not be exercised by tender to the Company, or attestation to the ownership, of shares of Stock to the extent such tender or attestation would constitute a violation of the provisions of any law, regulation or agreement restricting the redemption of the Company’s stock. Unless otherwise provided by the Committee, an Option may not be exercised by tender to the Company, or attestation to the ownership, of shares of Stock unless such shares either have been owned by the Participant for more than six (6) months (and not used for another Option exercise by attestation during such period) or were not acquired, directly or indirectly, from the Company.

The Company reserves, at any and all times, the right, in the Company’s sole and absolute discretion, to establish, decline to approve or terminate any program or procedures for the exercise of Options by means of a Cashless Exercise, including with respect to one or more Participants specified by the Company, notwithstanding that such program or procedures may be available to other Participants.

(e)       Restrictions on Transferability. During the lifetime of the Participant, an Option shall be exercisable only by the Participant or the Participant’s guardian or legal representative. Prior to the issuance of shares of Stock upon the exercise of an Option, the Option shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of descent and distribution. Notwithstanding the foregoing, to the extent permitted by the Committee, in its discretion, and set forth in the Award Agreement evidencing such Option, a Nonqualified Stock Option shall be assignable or transferable to a “family member” of the Participant as such term is defined in and subject to the applicable limitations, if any, described in the General Instructions to Form S-8 Registration Statement under the Securities Act.

(f)        Termination by Death. Except to the extent otherwise provided by the Committee at or after the time of grant, if a Participant’s Service terminates by reason of death, the Option may thereafter be immediately exercised in full by the legal representative of the estate or by the legatee of the Participant under the will of the Participant until the expiration of the stated period of the Option (the “Option Expiration Date”).

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(g)       Termination by Reason of Disability. Except to the extent otherwise provided by the Committee at or after the time of grant, if a Participant’s Service terminates by reason of Disability, any Option held by such Participant may thereafter be exercised in full at any time prior to three (3) years from the date of such termination, but in no event later than the Option Expiration Date. Notwithstanding the foregoing, if the Option is an Incentive Stock Option and is not exercised within 12 months of the date the Participant’s Service is terminated by reason of the Participant being permanently and totally disabled within the meaning of Section 22(e)(3) of the Code, the Option shall thereafter be treated as a Nonqualified Stock Option and not an Incentive Stock Option. If the Participant dies during the 12-month period commencing on the date his/her Service terminates by reason of such permanent and total disability, however, then the Option will continue to be an Incentive Stock Option until the Option Expiration Date.

(h)           Termination for Cause. If a Participant’s Service is terminated by reason of “Cause,” the Option to the extent unexercised and exercisable by the Participant on the date on which the Participant’s Service terminated, shall immediately terminate and shall be forfeited in its entirety. For the purposes of the Plan, “Cause” shall mean, unless otherwise provided in an Award Agreement: (i) any gross failure by the Participant (other than by reason of Disability) to faithfully and professionally carry out his or her duties or to comply with any other material provision of his or her employment agreement, if any, which continues for thirty (30) days after written notice by the Participating Company for which the Participant is performing services (the “Employer”); provided, that the Employer does not have to provide notice in the event that the failure is not susceptible to remedy or relates to the same type of acts or omissions as to which notice has been given on a prior occasion; (ii) the Participant’s dishonesty or other willful misconduct; (iii) the Participant’s conviction of any felony or of any other crime involving moral turpitude, whether or not relating to his or her employment; (iv) the Participant’s insobriety or use of drugs, chemicals or controlled substances either in the course of performing his or her duties and responsibilities for a Participating Company or otherwise affecting the ability of Participant to perform those duties and responsibilities; (v) the Participant’s failure to comply with a lawful written direction of the Employer; (vi) any wanton or willful dereliction of duties by the Participant; or (vii) breach of the Employer’s Standards of Integrity or insider trading policies. Notwithstanding the foregoing, in the event that a Participant is a party to an employment agreement with the Company or any other Participating Company that defines a termination on account of “Cause” (or a term having similar meaning), such definition shall apply as the definition of a termination of account of “Cause” for purposes hereof, but only to the extent that such definition provides the Participant with greater rights. A termination on account of Cause shall be communicated by written notice to the Participant, and shall be deemed to occur on the date such notice is sent to the Participant.

(i)            Other Termination. Unless otherwise determined by the Committee at or after grant, if the Participant’s Service terminates for any reason except Disability, death or Cause, the Option, to the extent unexercised and exercisable by the Participant on the date on which the Participant’s Service terminated, may be exercised by the Participant at any time prior to the expiration of three (3) months after the date on which the Participant’s Service terminated, but in any event no later than the Option Expiration Date. Notwithstanding the foregoing, if such termination is by action of the Company within 18 months following a

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Change in Control (other than discharge for Cause), any unexercised portion of the Option may be exercised by the Participant until the earlier of (x) six (6) months and one day after such termination or (y) the Option Expiration Date. Notwithstanding the foregoing, if the Option is not exercised within three (3) months of the date Participant’s Service is terminated, the Option shall be treated as a Nonqualified Option and not an Incentive Stock Option.

(j)            Extension if Exercise Prevented by Law. Notwithstanding the foregoing, if the exercise of an Option within the applicable time periods set forth above is prevented by the provisions of Section 22 below, the Option shall remain exercisable until three (3) months (or such longer period of time as determined by the Committee, in its discretion) after the date the Participant is notified in writing by the Company that the Option is exercisable, but in any event no later than the Option Expiration Date.

(k)           Extension if Participant Subject to Section 16(b). Notwithstanding the foregoing, if a sale within the applicable time periods set forth above of shares acquired upon the exercise of the Option would subject the Participant to suit under Section 16(b) of the Exchange Act, the Option shall remain exercisable until the earliest to occur of (i) the tenth (10th) day following the date on which a sale of such shares by the Participant would no longer be subject to such suit, (ii) the one hundred and ninetieth (190th) day after the Participant’s termination of Service, or (iii) the Option Expiration Date.

Section 7.               Stock Appreciation Rights.

(a)           Types of SARs Authorized. SARs shall be granted independently of and not in tandem with any Option.

(b)           Exercise Price. The exercise price for each SAR shall be established in the discretion of the Committee; provided, however, that the exercise price per share subject to a SAR shall be not less than the Fair Market Value of a share of Stock on the effective date of grant of the SAR.

(c)           Exercisability and Term of SARs. SARs shall be exercisable at such time or times, or upon such event or events, and subject to such terms, conditions, performance criteria and restrictions as shall be determined by the Committee and set forth in the Award Agreement evidencing such SAR; provided, however, that no SAR shall be exercisable after the expiration of ten (10) years after the effective date of grant of such SAR.

(d)           Exercise of SARs. Upon the exercise (or deemed exercise pursuant to subsection (e) below) of a SAR, the Participant (or the Participant’s legal representative or other person who acquired the right to exercise the SAR by reason of the Participant’s death) shall be entitled to receive payment of an amount for each share with respect to which the SAR is exercised equal to the excess, if any, of the Fair Market Value of a share of Stock on the date of exercise of the SAR over the exercise price. Subject to Section 409A of the Code, payment of such amount shall be made in cash, shares of Stock, or any combination thereof as determined by the Committee. Unless otherwise provided in the Award Agreement evidencing such SAR, payment shall be made in a lump sum as soon as practicable following the date of exercise of the SAR. Subject to Section 409A of the Code, the Award Agreement evidencing

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any SAR may provide for deferred payment in a lump sum or in installments. When payment is to be made in shares of Stock, the number of shares to be issued shall be determined on the basis of the Fair Market Value of a share of Stock on the date of exercise of the SAR. For purposes of Section 7, a SAR shall be deemed exercised on the date on which the Company receives notice of exercise from the Participant or as otherwise provided in Section 7(e).

(e)           Deemed Exercise of SARs. If, on the date on which a SAR would otherwise terminate or expire, the SAR by its terms remains exercisable immediately prior to such termination or expiration and, if so exercised, would result in a payment to the holder of such SAR, then any portion of such SAR which has not previously been exercised shall automatically be deemed to be exercised as of such date with respect to such portion.

(f)            Effect of Termination of Service. Subject to earlier termination of the SAR as otherwise provided herein and unless otherwise provided by the Committee in the grant of a SAR and set forth in the Award Agreement, a SAR shall be exercisable after a Participant’s termination of Service only during the applicable time period determined in accordance with Section 6(f) through (k) (treating the SAR as if it were an Option) and thereafter shall terminate.

(g)           Nontransferability of SARs. During the lifetime of the Participant, a SAR shall be exercisable only by the Participant or the Participant’s guardian or legal representative. Prior to the exercise of a SAR, the SAR shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of descent and distribution.

Section 8.               Restricted Stock Awards.

(a)           Stock and Administration. Shares of Restricted Stock may be issued either alone or in addition to Options, Deferred Stock Awards or other Awards granted under the Plan. The Committee shall determine the Directors, Consultants, and Employees of the Participating Company Group to whom, and the time or times at which, grants of Restricted Stock will be made, the number of shares to be awarded, the time or times within which such Restricted Stock Awards may be subject to forfeiture, and all other conditions of the Awards. The provisions of Restricted Stock Awards need not be the same with respect to each recipient.

(b)           Awards and Certificates. The prospective recipient of an Award of shares of Restricted Stock shall not, with respect to such Award, be deemed to have become a Participant, or to have any rights with respect to such Award, until and unless such recipient shall have executed an agreement or other instrument evidencing the Award and delivered a fully executed copy thereof to the Company and otherwise complied with the then applicable terms and conditions.

(i)            Each Participant shall be issued a stock certificate in respect of shares of Restricted Stock awarded under the Plan. Such certificate shall be registered in the name of the Participant, and shall bear an appropriate legend

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referring to the terms, conditions, and restrictions applicable to such Award, substantially in the following form:

“The transferability of this certificate and the shares of stock represented hereby are subject to the terms and conditions (including forfeiture) of the Medarex, Inc. 2005 Equity Incentive Plan and an Agreement entered into between the registered owner and Medarex, Inc. Copies of such Plan and Agreement are on file in the offices of Medarex, Inc., 707 State Road, Princeton, New Jersey 08540.”

The Committee shall require that the stock certificates evidencing such shares be held in custody by the Company until the restrictions thereon shall have lapsed, and shall require, as a condition of any Restricted Stock Award, that the Participant shall have delivered a stock power, endorsed in blank, relating to the Stock covered by such Award.

(c)           Restrictions and Conditions. The shares of Restricted Stock awarded pursuant to the Plan shall be subject to the following restrictions and conditions:

(i)            subject to the provisions of this Plan, during a period set by the Committee commencing with the date of such Award (the “restriction period”), the Participant shall not be permitted to sell, transfer, pledge, or assign shares of Restricted Stock awarded under the Plan. Within these limits the Committee may provide for the lapse of such restrictions in installments where deemed appropriate. Notwithstanding the foregoing, or any other provision of the Plan, any Awards of Restricted Stock which vest on the basis of the Participant’s continuous Service with the Company or any Participating Company shall not provide for vesting which is any more rapid than annual pro rata vesting over a three-year period and any Awards of Restricted Stock which provide for vesting upon the attainment of Performance Goals shall provide for a Performance Period of at least 12 months.

(ii)           Except as provided in subsection (c)(i) of this Section 8, the Participant shall have, with respect to the shares of Restricted Stock, all of the rights of a Shareholder of the Company, including the right to vote the Restricted Stock and the right to receive any cash dividends. The Committee, in its sole discretion, may permit or require the payment of cash dividends to be deferred and, if the Committee so determines, reinvested in additional Restricted Stock or otherwise reinvested. Certificates for shares of unrestricted Stock shall be delivered to the Participant promptly after, and only after, the period of forfeiture shall expire without forfeiture in respect of such shares of Restricted Stock.

(iii)          Subject to the provisions of subsection (d) of this Section 8, upon termination of Service of any reason during the restriction period, all shares still subject to restriction shall be forfeited by the Participant and reacquired by the Company.

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(d)Effect of Termination of Service. Unless otherwise provided by the Committee in the grant of a Restricted Stock Award and set forth in the Award Agreement or determined by the Committee in its sole discretion after the date of grant, if a Participant’s Service terminates for any reason, whether voluntary or involuntary (including the Participant’s death or Disability), then the Participant shall forfeit to the Company any Restricted Stock pursuant to the Award which remain subject to Vesting Conditions as of the date of the Participant’s termination of Service.

(e)Section 83(b) Election. If a Participant makes an election pursuant to Section 83(b) of the Code with respect to a Restricted Stock Award, the Participant shall file, within 30 days following the date of grant of a Restricted Stock Award, a copy of such election with the Company and with the Internal Revenue Service, in accordance with the regulations under Section 83 of the Code. The Committee may provide in an Award Agreement that the Restricted Stock Award is conditioned upon the Participant’s making or refraining from making an election with respect to the Award under Section 83(b) of the Code.

Section 9.Terms and Conditions of Restricted Stock Unit Awards.

(a)Grant of Restricted Stock Unit Awards. Restricted Stock Unit Awards may be granted upon such conditions as the Committee shall determine, including, without limitation, upon the attainment of one or more Performance Goals described in Section 10(d). If either the grant of a Restricted Stock Unit Award or the Vesting Conditions with respect to such Award is to be contingent upon the attainment of one or more Performance Goals, the Committee shall follow procedures substantially equivalent to those set forth in Sections 10(c) through 10(e)(i).

(b)Purchase Price. No monetary payment (other than applicable tax withholding, if any) shall be required as a condition of receiving a Restricted Stock Unit Award, the consideration for which shall be services actually rendered to a Participating Company or for its benefit.

(c)Vesting. Restricted Stock Units may or may not be made subject to Vesting Conditions based upon the satisfaction of such Service requirements, conditions, restrictions or performance criteria, including, without limitation, Performance Goals as described in Section 10(d), as shall be established by the Committee and set forth in the Award Agreement evidencing such Award. Notwithstanding the foregoing, or any other provision of the Plan, any Awards of Restricted Stock Units which vest on the basis of the Participant’s continuous Service with the Company or any Participating Company shall not provide for vesting which is any more rapid than annual pro rata vesting over a three-year period and any Awards of Restricted Stock Units which provide for vesting upon the attainment of Performance Goals shall provide for a Performance Period of at least 12 months.

(d)Voting Rights, Dividend Equivalent Rights and Distributions. Participants shall have no voting rights with respect to shares of Stock represented by Restricted Stock Units until the date of the issuance of such shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). However, the Committee, in its discretion, may provide in the Award Agreement

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evidencing any Restricted Stock Unit Award that the Participant shall be entitled to receive Dividend Equivalents with respect to the payment of cash dividends on Stock having a record date prior to date on which Restricted Stock Units held by such Participant are settled. Such Dividend Equivalents, if any, shall be paid by crediting the Participant with additional whole Restricted Stock Units as of the date of payment of such cash dividends on Stock. The number of additional Restricted Stock Units (rounded to the nearest whole number) to be so credited shall be determined by dividing (x) the amount of cash dividends paid on such date with respect to the number of shares of Stock represented by the Restricted Stock Units previously credited to the Participant by (y) the Fair Market Value per share of Stock on such date. Such additional Restricted Stock Units shall be subject to the same terms and conditions and shall be settled in the same manner and at the same time (or as soon thereafter as practicable) as the Restricted Stock Units originally subject to the Restricted Stock Unit Award. In the event of a dividend or distribution paid in shares of Stock or any other adjustment made upon a change in the capital structure of the Company as described in Section 4(c), appropriate adjustments shall be made in the Participant’s Restricted Stock Unit Award so that it represents the right to receive upon settlement any and all new, substituted or additional securities or other property (other than normal cash dividends) to which the Participant would be entitled by reason of the shares of Stock issuable upon settlement of the Award, and all such new, substituted or additional securities or other property shall be immediately subject to the same Vesting Conditions as are applicable to the Award.

(e)Effect of Termination of Service. Unless otherwise provided by the Committee in the grant of a Restricted Stock Unit Award and set forth in the Award Agreement or determined by the Committee in its sole discretion after the date of grant, if a Participant’s Service terminates for any reason, whether voluntary or involuntary (including the Participant’s death or disability), then the Participant shall forfeit to the Company any Restricted Stock Units pursuant to the Award which remain subject to Vesting Conditions as of the date of the Participant’s termination of Service.

(f)Settlement of Restricted Stock Unit Awards. The Company shall issue to a Participant on the date on which Restricted Stock Units subject to the Participant’s Restricted Stock Unit Award vest or on such other date determined by the Committee, in its discretion, and set forth in the Award Agreement one (1) share of Stock (and/or any other new, substituted or additional securities or other property pursuant to an adjustment described in Section 9(d)) for each Restricted Stock Unit then becoming vested or otherwise to be settled on such date, subject to the withholding of applicable taxes. Notwithstanding the foregoing, if permitted by the Committee and set forth in the Award Agreement, and subject to Section 409A of the Code, the Participant may elect in accordance with terms specified in the Award Agreement to defer receipt of all or any portion of the shares of Stock or other property otherwise issuable to the Participant pursuant to this Section.

(g)Nontransferability of Restricted Stock Unit Awards. Prior to the issuance of shares of Stock in settlement of a Restricted Stock Unit Award, the Award shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of descent and distribution. All rights with respect to a Restricted Stock Unit Award granted to a Participant hereunder shall be

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exercisable during his or her lifetime only by such Participant or the Participant’s guardian or legal representative.

Section 10.Terms and Conditions of Performance Awards.

(a)Types of Performance Awards Authorized. Performance Awards may be in the form of either Performance Shares or Performance Units. Each Award Agreement evidencing a Performance Award shall specify the number of Performance Shares or Performance Units subject thereto, the Performance Award Formula, the Performance Goal(s) and Performance Period applicable to the Award, and the other terms, conditions and restrictions of the Award.

(b)Initial Value of Performance Shares and Performance Units. Unless otherwise provided by the Committee in granting a Performance Award, each Performance Share shall have an initial value equal to the Fair Market Value of one (1) share of Stock, subject to adjustment as provided in Section 4(c), on the effective date of grant of the Performance Share, and each Performance Unit shall have an initial value of one hundred dollars ($100). The final value payable to the Participant in settlement of a Performance Award determined on the basis of the applicable Performance Award Formula will depend on the extent to which Performance Goals established by the Committee are attained within the applicable Performance Period established by the Committee.  No Participant shall be granted within any one fiscal year of the Company, Performance Units which in the aggregate have a maximum initial value in excess of $2,000,000.

(c)Establishment of Performance Period, Performance Goals and Performance Award Formula. In granting each Performance Award, the Committee shall establish in writing the applicable Performance Period, Performance Award Formula and one or more Performance Goals which, when measured at the end of the Performance Period, shall determine on the basis of the Performance Award Formula the final value of the Performance Award to be paid to the Participant. Unless otherwise permitted in compliance with the requirements under Section 162(m) with respect to “performance-based compensation,” the Committee shall establish the Performance Goal(s) and Performance Award Formula applicable to each Performance Award no later than the earlier of (a) the date ninety (90) days after the commencement of the applicable Performance Period or (b) the date on which 25% of the Performance Period has elapsed, and, in any event, at a time when the outcome of the Performance Goals remains substantially uncertain. Once established, the Performance Goals and Performance Award Formula shall not be changed during the Performance Period. The Company shall notify each Participant granted a Performance Award of the terms of such Award, including the Performance Period, Performance Goal(s) and Performance Award Formula.

(d)Measurement of Performance Goals. Performance Goals shall be established by the Committee on the basis of targets to be attained (“Performance Targets”) with respect to one or more measures of business or financial performance (each, a “Performance Measure”), subject to the following:

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(i)Performance Measures. Performance Measures shall have the same meanings as used in the Company’s financial statements, or, if such terms are not used in the Company’s financial statements, they shall have the meanings used generally in the Company’s industry. Performance Measures shall be calculated with respect to the Company and each Subsidiary Company consolidated therewith for financial reporting purposes or such division or other business unit as may be selected by the Committee. For purposes of the Plan, any financial Performance Measures applicable to a Performance Award shall be calculated in accordance with the Company’s past accounting practices.  Adjustments, if any, shall be made solely for the purpose of providing a consistent basis from period to period for the calculation of Performance Measures in order to prevent the dilution or enlargement of the Participant’s rights with respect to a Performance Award. Performance Measures may be one or more of the following, as determined by the Committee: (1) cost of sales, (2) earnings per share, (3) cash flow (including but not limited to net operating cash flow, free cash flow and cash flow return on capital), (4) marketing and sales expenses, (5) net income or net earnings (before or after taxes), (6) operating margin, (7) product approvals, (8) product sales, (9) projects in clinical or preclinical development, (10) regulatory filings, (11) research and development efforts, (12) working capital, (13) revenue, (14) achievement of specified milestones in the discovery, development, commercialization, or manufacturing of one or more of the Company’s products and/or services, (15) expense targets, (16) personal management objectives, (17) share price (including, but not limited to, growth measures and total shareholder return), (18) operating efficiency, (19) gross margin, (20) return measures (including, but not limited to, return on assets, capital, equity, or sales), (21) productivity ratios, (22) operating income, (23) net operating profit, (24) earnings before or after interest, taxes, depreciation, and/or amortization, (25) economic value added, (26) market share, (27) customer satisfaction, (28) joint ventures, corporate partnerships and strategic alliances, (29) spin-offs, split ups and the like, (30) reorganizations, (31) strategic investments or recapitalizations, restructurings, financings (issuance of debt or equity) or refinancings, (32) acquisitions or divestitures, (33) organizational realignments, (34) infrastructure changes, and (35) assets. The Performance Measures and Performance Goals may differ from Participant to Participant and from Award to Award. Any criteria used may be measured, as applicable, (A) in absolute terms, (B) in relative terms (including, but not limited to, passage of time and/or against another company or companies), (C) on a per-share basis, (D) against the performance of the Company as a whole or a segment of the Company and/or (E) on a pre-tax or after-tax basis.  Partial achievement of the specified criteria may result in a payment or vesting corresponding to the degree of achievement as specified in the applicable Award Agreement.

(ii)Performance Targets. Performance Targets may include a minimum, maximum, target level and intermediate levels of performance, with the final value of a Performance Award determined under the applicable Performance Award Formula by the level attained during the applicable

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Performance Period. A Performance Target may be stated as an absolute value or as a value determined relative to a standard selected by the Committee.

(e)Settlement of Performance Awards.

(i)Determination of Final Value. As soon as practicable following the completion of the Performance Period applicable to a Performance Award, the Committee shall certify in writing the extent to which the applicable Performance Goals have been attained and the resulting final value of the Award earned by the Participant and to be paid upon its settlement in accordance with the applicable Performance Award Formula.

(ii)Discretionary Adjustment of Award Formula. In its discretion, the Committee may, either at the time it grants a Performance Award or at any time thereafter, provide for the positive or negative adjustment of the Performance Award Formula applicable to a Performance Award granted to any Participant who is not a Covered Employee to reflect such Participant’s individual performance in his or her position with the Company or such other factors as the Committee may determine. If permitted under a Covered Employee’s Award Agreement, the Committee shall have the discretion, on the basis of such criteria as may be established by the Committee, to reduce some or all of the value of the Performance Award that would otherwise be paid to the Covered Employee upon its settlement notwithstanding the attainment of any Performance Goal and the resulting value of the Performance Award determined in accordance with the Performance Award Formula. No such reduction may result in an increase in the amount payable upon settlement of another Participant’s Performance Award.

(iii)Effect of Leaves of Absence. Unless otherwise required by law, payment of the final value, if any, of a Performance Award held by a Participant who has taken in excess of thirty (30) days in leaves of absence during a Performance Period shall be prorated on the basis of the number of days of the Participant’s Service during the Performance Period during which the Participant was not on a leave of absence.

(iv)Notice to Participants. As soon as practicable following the Committee’s determination and certification in accordance with Sections 10(e)(i) and (ii), the Company shall notify each Participant of the determination of the Committee.

(v)Payment in Settlement of Performance Awards. As soon as practicable following the Committee’s determination and certification in accordance with Sections 10(e)(i) and (ii), and in no event later than the date required by Section 409A of the Code to avoid a payment of deferred compensation, payment shall be made to each eligible Participant (or such Participant’s legal representative or other person who acquired the right to receive such payment by reason of the Participant’s death) of the final value of

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the Participant’s Performance Award. Payment of such amount shall be made in cash, shares of Stock, or a combination thereof as determined by the Committee. Unless otherwise provided in the Award Agreement evidencing a Performance Award, payment shall be made in a lump sum. Subject to Section 409A of the Code, an Award Agreement may provide for deferred payment in a lump sum or in installments. If any payment is to be made on a deferred basis, the Committee may, but shall not be obligated to, provide for the payment during the deferral period of Dividend Equivalents or interest.

(vi)Provisions Applicable to Payment in Shares. If payment is to be made in shares of Stock, the number of such shares shall be determined by dividing the final value of the Performance Award by the value of a share of Stock determined by the method specified in the Award Agreement. Such methods may include, without limitation, the closing market price on a specified date (such as the settlement date) or an average of market prices over a series of trading days. Shares of Stock issued in payment of any Performance Award may be fully vested and freely transferable shares or may be shares of Stock subject to Vesting Conditions as provided in Section 9(c). Any shares subject to Vesting Conditions shall be evidenced by an appropriate Award Agreement and shall be subject to the provisions of Sections 9(c), (d), (e) and (g) above.

(f)Voting Rights; Dividend Equivalent Rights and Distributions. Participants shall have no voting rights with respect to shares of Stock represented by Performance Share Awards until the date of the issuance of such shares, if any (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). However, the Committee, in its discretion, may provide in the Award Agreement evidencing any Performance Share Award that the Participant shall be entitled to receive Dividend Equivalents with respect to the payment of cash dividends on Stock having a record date prior to the date on which the Performance Shares are settled or forfeited. Such Dividend Equivalents, if any, shall be credited to the Participant in the form of additional whole Performance Shares as of the date of payment of such cash dividends on Stock. The number of additional Performance Shares (rounded to the nearest whole number) to be so credited shall be determined by dividing (x) the amount of cash dividends paid on such date with respect to the number of shares of Stock represented by the Performance Shares previously credited to the Participant by (y) the Fair Market Value per share of Stock on such date. Dividend Equivalents may be paid currently or may be accumulated and paid to the extent that Performance Shares become non-forfeitable, as determined by the Committee. Settlement of Dividend Equivalents may be made in cash, shares of Stock, or a combination thereof as determined by the Committee, and may be paid on the same basis as settlement of the related Performance Share as provided in Section 10(e). Dividend Equivalents shall not be paid with respect to Performance Units. In the event of a dividend or distribution paid in shares of Stock or any other adjustment made upon a change in the capital structure of the Company as described in Section 4(c), appropriate adjustments shall be made in the Participant’s Performance Share Award so that it represents the right to receive upon settlement any and all new, substituted or additional securities or other property (other than normal cash dividends) to which the Participant would entitled by reason of the shares of Stock issuable upon settlement of the Performance Share Award, and all such new, substituted or additional securities or other

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property shall be immediately subject to the same Performance Goals as are applicable to the Award.

(g)Effect of Termination of Service. Unless otherwise provided by the Committee in the grant of a Performance Award and set forth in the Award Agreement or determined by the Committee in its sole discretion after the date of grant, the effect of a Participant’s termination of Service on the Performance Award shall be as follows:

(i)Termination for Cause and Voluntary Termination of Service by Participant. If a Participant’s Service terminates for reason of Cause or voluntary termination before the completion of the Performance Period applicable to the Performance Award, such Award shall be forfeited in its entirety.

(ii)Other Termination of Service. If the Participant’s Service terminates for any reason except for Cause or voluntary termination before the completion of the Performance Period applicable to the Performance Award, the final value of the Participant’s Performance Award shall be determined by the extent to which the applicable Performance Goals have been attained with respect to the entire Performance Period and shall be prorated based on the number of months of the Participant’s Service during the Performance Period. Payment shall be made following the end of the Performance Period in any manner permitted by Section 10(e).

(h)Nontransferability of Performance Awards. Prior to settlement in accordance with the provisions of the Plan, no Performance Award shall be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of descent and distribution. All rights with respect to a Performance Award granted to a Participant hereunder shall be exercisable during his or her lifetime only by such Participant or the Participant’s guardian or legal representative.

Section 11.Deferred Stock Awards.

(a)Stock and Administration. Subject to the requirements of Section 409A of the Code, Deferred Stock Awards of the right to receive Stock that is not to be distributed to the Participant until after a specified deferral period may be made either alone or in addition to Options, Restricted Stock, or other Awards granted under the Plan. The Committee shall determine the Participants to whom, and the time or times at which, Deferred Stock Awards shall be awarded, the number of shares of Stock to be awarded to any Participant, the duration of the period (the “Deferral Period”) during which, and the conditions under which, receipt of the Stock will be deferred, and the terms and conditions of the Deferred Stock Award in addition to those contained in subsection (b) of this Section 11. In its sole discretion, the Committee may provide for a minimum payment at the end of the applicable Deferral Period based on a stated percentage of the Fair Market Value on the date of grant of the number of shares of Stock covered by a Deferred Stock Award. The Committee may also

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provide for the grant of deferred Stock upon the completion of a specified Performance Period. The provisions of Deferred Stock Awards need not be the same with respect to each recipient.

(b)Terms and Conditions. Deferred Stock Awards made pursuant to this Section 11 shall be subject to the following terms and conditions:

(i)Subject to the provisions of the Plan, the shares of stock to be issued pursuant to a Deferred Stock Award may not be sold, assigned, transferred, pledged or otherwise encumbered during the Deferral Period or Elective Deferral Period (defined below), where applicable, and may be subject to a risk of forfeiture during all or such portion of the Deferral Period as shall be specified by the Committee. At the expiration of the Deferral Period and Elective Deferral Period, share certificates shall be delivered to the Participant, or the Participant’s legal representative, representing the number of shares covered by the Deferred Stock Award.

(ii)Amounts equal to any dividends declared during the Deferral Period with respect to the number of shares of Stock covered by a Deferred Stock Award will be paid to the Participant currently, or deferred and deemed to be reinvested in additional deferred Stock or otherwise reinvested, as determined at the time of the Deferred Stock Award by the Committee, in its sole discretion.

(iii)Subject to the provisions of subsection (b)(iv) of this Section 11, upon termination of the Service for any reason during the Deferral Period for a given Deferred Stock Award, the Stock subject to such Deferred Stock Award shall be forfeited by the Participant.

(iv)In the event of the Participant’s Disability or death during the Deferral Period (or Elective Deferral Period, where applicable), or in cases of special circumstances, the Committee may, in its sole discretion, when it finds that a waiver would be in the best interests of the Company, waive in whole or in part any or all of the remaining deferral limitations imposed hereunder with respect to any or all of the Participant’s Deferred Stock Award; provided, however, that if such Deferred Stock Award is subject to Section 409A of the Code, such waiver may only occur in the event of the Participant’s Disability or death, or upon the occurrence of an unforeseeable emergency (as such term is defined under Section 409A of the Code and Treasury Regulations thereunder) and (ii) the Award Agreement evidencing such Deferred Stock Award must provide for such waiver at the time of grant of such Deferred Stock Award.  Anything in the Plan to the contrary notwithstanding, upon the occurrence of a Change in Control, the Deferral Period and the Elective Deferral Period with respect to each Deferred Stock Award shall expire immediately and all share certificates relating to such Deferred Stock Award shall be delivered to each Participant or the Participant’s legal representative; provided, however, that if such Award is subject to Section 409A of the Code, (i) such delivery shall only occur if the Change in Control is deemed to be a change in the ownership of the

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Company, a change in effective control of the Company, or a change in the ownership of a substantial portion of the assets of the Company (as such terms are defined under Section 409A of the Code and Treasury Regulations thereunder) and (ii) the Award Agreement evidencing such Deferred Stock Award must provide for such delivery at the time of grant of such Deferred Stock Award.

(v)Subject to Section 409A of the Code, prior to completion of the Deferral Period, a Participant may elect to defer further the receipt of the Deferred Stock Award for a specified period or until a specified event (the “Elective Deferred Period”), subject in each case to the approval of the Committee and under such terms as are determined by the Committee, all in its sole discretion.

(vi)Each Deferred Stock Award shall be confirmed by an Award Agreement or other instrument executed by the Committee and by the Participant.

Section 12.Other Stock-Based Awards.

(a)Stock and Administration. Subject to the requirements of Section 409A of the Code, Other Stock-based Awards may be granted either alone or in addition to other Awards granted under the Plan. Subject to the provisions of the Plan, the Committee shall have sole and complete authority to determine the Participants to whom and the time or times at which such Other Stock-based Awards shall be made, the number of shares of the Stock to be awarded pursuant to such Other Stock-based Awards and all other conditions of the Other Stock-based Awards. The Committee may also provide for the grant of the Stock upon the completion of a specified Performance Period. The provisions of Other Stock-based Awards need not be the same with respect to each recipient.

(b)Terms and Conditions. Other Stock-based Awards made pursuant to this Section 12 shall be subject to the following terms and conditions:

(i)Subject to the provisions of this Plan, shares or interests in shares subject to Other Stock-based Awards made under this Section 12 may not be sold, assigned, transferred, pledged or otherwise encumbered prior to the date on which the shares are issued, or, if later, the date on which any applicable restriction, performance or deferral period lapses.

(ii)Subject to the provisions of this Plan and the Other Stock-based Award agreement, the recipients of Other Stock-based Awards under this Section 12 shall be entitled to receive, currently or on a deferred basis, interest or dividends or interest or Dividend Equivalents with respect to the number of shares or interests therein covered by the Other Stock-based Awards, as determined at the time of grant of the Other Stock-based Awards by the Committee, in its sole discretion, and the Committee may provide that such

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amounts (if any) shall be deemed to have been reinvested in additional Stock or otherwise reinvested.

(iii)Any Other Stock-based Awards granted under this Section 12 and any Stock covered by any such Other Stock-based Award may be forfeited to the extent so provided in the Other Stock-based Award agreement, as determined by the Committee, in its sole discretion.

(iv)In the event of the Participant’s Disability or death, or in cases of special circumstances, the Committee may, in its sole discretion, waive in whole or in part any or all of the remaining limitations imposed hereunder (if any) with respect to any or all Other Stock-based Awards; provided, however, that if such Other Stock-based Awards are subject to Section 409A of the Code, such waiver may only occur in the event of the Participant’s Disability or death, or upon the occurrence of an unforeseeable emergency (as such term is defined under Section 409A of the Code and Treasury Regulations thereunder) and (ii) the Award Agreement evidencing such Other Stock-based Awards must provide for such waiver at the time of grant of such Other Stock-based Awards. Anything in the Plan to the contrary notwithstanding, upon the occurrence of a Change in Control, any limitations imposed with respect to any Other Stock-based Award under this Section 12, including any provision providing for the forfeiture of any Other Stock-based Award under any circumstance, shall terminate immediately and the number of shares of or interests in the Stock subject to such Other Stock-based Award shall be delivered to the Participant (or, in the case of an Other Stock-based Award with respect to which such number is not determinable, such number of shares of or interests in the Stock as is determined by the Committee and set forth in the terms of such Other Stock-based Award); provided, however, that if such Other Stock-based Award is subject to Section 409A of the Code, (i) such delivery shall only occur if the Change in Control is deemed to be a change in the ownership of the Company, a change in effective control of the Company, or a change in the ownership of a substantial portion of the assets of the Company (as such terms are defined under Section 409A of the Code and Treasury Regulations thereunder) and (ii) the Award Agreement evidencing such Other Stock-based Award must provide for such delivery at the time of grant of such Other Stock-based Award.

(v)Each Other Stock-based Award under this Section 12 shall be confirmed by an agreement or other instrument executed by the Company and by the Participant.

(vi)The Stock or interests therein (including securities convertible into the Stock) paid or awarded on a bonus basis under this Section 12 shall be issued for no cash consideration; the Stock or interests therein (including securities convertible into the Stock) purchased pursuant to a purchase right Awarded under this Section 12 shall be priced at least at 50% of the Fair Market Value of the Stock on the date of grant.

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(vii)The Committee, in its sole discretion, may impose such restrictions on the transferability of Other Stock-based Awards as it deems appropriate. Any such restrictions shall be set forth in the written agreement between the Company and the Participant with respect to such Award.

(viii)Each Other Stock-based Award to an Insider under this Section 12 shall be subject to all of the limitations and qualifications that may be required by Section 16 of the Exchange Act and all of the rules and regulations promulgated thereunder.

Section 13.Deferred Compensation Awards.

(a)Establishment of Deferred Compensation Award Programs. This Section 13 shall not be effective unless and until the Committee determines to establish a program pursuant to this Section. The Committee, in its discretion and upon such terms and conditions as it may determine, and subject to the requirements of Section 409A of the Code, may establish one or more programs pursuant to the Plan under which:

(1)A Participant designated by the Committee who is an Insider or otherwise among a select group of management and highly compensated Employees may irrevocably elect, prior to a date specified by the Committee, to reduce such Participant’s compensation otherwise payable in cash (subject to any minimum or maximum reductions imposed by the Committee) and to be granted automatically at such time or times as specified by the Committee one or more Awards of Stock Units with respect to such numbers of shares of Stock as determined in accordance with the rules of the program established by the Committee and having such other terms and conditions as established by the Committee.

(2)Participants designated by the Committee who are Insiders or otherwise among a select group of management and highly compensated Employees may irrevocably elect, prior to a date specified by the Committee, to be granted automatically an Award of Stock Units with respect to such number of shares of Stock and upon such other terms and conditions as established by the Committee in lieu of:

(i)shares of Stock otherwise issuable to such Participant upon the exercise of an Option;

(ii)cash or shares of Stock otherwise issuable to such Participant upon the exercise of an SAR; or

(iii)cash or shares of Stock otherwise issuable to such Participant upon the settlement of a Performance Award.

(b)Terms and Conditions of Deferred Compensation Awards. Deferred Compensation Awards granted pursuant to this Section 13 may be evidenced by Award Agreements in such form as the Committee shall from time to time establish. Deferred Compensation Awards may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions:

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(c)Vesting Conditions. Deferred Compensation Awards shall be subject to such vesting conditions as shall be determined by the Committee.

(d)Terms and Conditions of Stock Units.

(i)Voting Rights; Dividend Equivalent Rights and Distributions. Participants shall have no voting rights with respect to shares of Stock represented by Stock Units until the date of the issuance of such shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). However, a Participant shall be entitled to receive Dividend Equivalents with respect to the payment of cash dividends on Stock having a record date prior to date on which Stock Units held by such Participant are settled. Such Dividend Equivalents shall be paid by crediting the Participant with additional whole and/or fractional Stock Units as of the date of payment of such cash dividends on Stock. The method of determining the number of additional Stock Units to be so credited shall be specified by the Committee and set forth in the Award Agreement. Such additional Stock Units shall be subject to the same terms and conditions and shall be settled in the same manner and at the same time (or as soon thereafter as practicable) as the Stock Units originally granted under the Award Agreement. In the event of a dividend or distribution paid in shares of Stock or any other adjustment made upon a change in the capital structure of the Company as described in Section 4(c), appropriate adjustments shall be made in the Participant’s Stock Units so that the Participant receives upon settlement any and all new, substituted or additional securities or other property (other than normal cash dividends) to which the Participant would entitled by reason of the shares of Stock issuable upon settlement of the Award.

(ii)Settlement of Stock Units. A Participant electing to receive an Award of Stock Units pursuant to this Section 13, shall specify at the time of such election a settlement date with respect to such Award. The Company shall issue to the Participant as soon as practicable following the earlier of the settlement date elected by the Participant or the date of termination of the Participant’s Service, a number of whole shares of Stock equal to the number of whole Stock Units granted under the Award Agreement. Such shares of Stock shall be fully vested, and the Participant shall not be required to pay any additional consideration (other than applicable tax withholding) to acquire such shares. Any fractional Stock Units shall be settled by the Company by payment in cash of an amount equal to the Fair Market Value as of the payment date of such fractional share.

(iii)Nontransferability of Stock Units. Prior to their settlement in accordance with the provision of the Plan, no Stock Unit shall be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of descent and distribution. All rights with respect to a Stock Unit granted to a Participant hereunder shall

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be exercisable during his or her lifetime only by such Participant or the Participant’s guardian or legal representative.

Section 14.Transfer, Leave of Absence, etc. For purposes of the Plan: (a) a transfer of an Employee from the Company to a Participating Company, or vice versa, or from one Participating Company to another; (b) a leave of absence, duly authorized in writing by the Company, for military service or sickness, or for any other purposes approved by the Company if the period of such leave does not exceed 90 days; or (c) a leave of absence in excess of 90 days, duly authorized in writing by the Company, shall not be deemed a termination of Service. However, if any such leave of absence taken by a Participant exceeds ninety (90) days, then on the one hundred eighty-first (181st) day following the commencement of such leave any Incentive Stock Option held by the Participant shall cease to be treated as an Incentive Stock Option and instead shall be treated thereafter as a Nonqualified Stock Option, unless the Participant’s right to return to Service is guaranteed by statute or contract.

Section 15.Amendments and Termination. The Board may amend, alter, or discontinue the Plan, but no amendment, alteration, or discontinuation shall be made (i) which would impair the rights of a Participant under any Award theretofore granted, without the Participant’s consent, or (ii) which, without the approval of the shareholders, would:

(a)except as is provided in Section 4 of the Plan, increase the total number of shares available for the purpose of the Plan;

(b)subsequent to the date of grant, decrease the option price of any Option to less than 100% (110% in the case of a 10% Owner of an Incentive Stock Option) of the Fair Market Value on the date of the granting of the Option;

(c)extend the maximum option period under Section 6(b) of the Plan;

(d)otherwise materially increase the benefits accruing to Participants under, or materially modify the requirements as to eligibility for participation in, the Plan; or

(e)violate any applicable law, rule or regulation enacted or promulgated by any governmental authority, securities exchange, market system or self regulatory organization.

The Committee may amend the terms of any Award theretofore granted, prospectively or retroactively, but no such amendment shall impair the rights of any holder without such holder’s consent. Notwithstanding the foregoing, the Board or the Committee may, in its discretion, amend the Plan or terms of any outstanding Award held by a person then subject to Section 16 of the Exchange Act without the consent of any holder in order to preserve exemptions under said Section 16 which are or become available from time to time under rules of the Securities and Exchange Commission.

Section 16.Unfunded Status of the Plan. The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation. With respect to any payments not yet made to a Participant by the Company, nothing contained herein shall give any such Participant any rights that are greater than those of a general creditor of the Company. In its

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sole discretion, the Committee may authorize the creation of trusts or other arrangements to meet the obligations created under the Plan to deliver the Stock; provided, however, that the existence of such trusts or other arrangements is consistent with the unfunded status of the Plan.

Section 17.Employment at Will. Nothing contained in the Plan, or in any Award granted pursuant to the Plan, or in any agreement made pursuant to the Plan, shall confer upon any Participant any right with respect to continuance of employment by a Participating Company or its subsidiaries, nor interfere in any way with the right of a Participating Company or its subsidiaries to terminate the Participant’s employment at will or change the Participant’s compensation at any time.

Section 18.Additional Compensation Arrangements. Nothing contained in this Plan shall prevent the Board of Directors from adopting other or additional compensation arrangements, subject to shareholder approval if such approval is required; and such arrangements may be either generally applicable or applicable only in specific cases.

Section 19.Taxes.

(a)Participants shall make arrangements satisfactory to the Committee regarding payment of any federal, state, or local taxes of any kind required by law to be withheld with respect to any income which the Participant is required, or elects, to include in his gross income and the Company and its subsidiaries shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the Participant. Anything contained herein to the contrary notwithstanding, the Committee may, in its sole discretion, authorize acceptance of Stock received in connection with the grant or exercise of an Award or otherwise previously acquired in satisfaction of withholding requirements.

(b)Notwithstanding any provisions to the contrary in this Section 19, an Insider may only satisfy tax withholding requirements with the settlement of a stock appreciation right or with shares of the Stock if he or she has held such stock or stock appreciation right for at least six (6) months or the cash settlement of the tax obligation occurs no earlier than six (6) months after the date of an irrevocable election made by an Insider.

Section 20.Standard Forms of Award Agreement.

(a)Award Agreements. Each Award shall comply with and be subject to the terms and conditions set forth in the appropriate form of Award Agreement approved by the Committee and as amended from time to time. Any Award Agreement may consist of an appropriate form of notice of grant and a form of agreement incorporated therein by reference, or such other form or forms, including electronic media, as the Committee may approve from time to time.

(b)Authority to Vary Terms. The Committee shall have the authority from time to time to vary the terms of any standard form of Award Agreement either in connection with the grant or amendment of an individual Award or in connection with the authorization of a new standard form or forms; provided, however, that the terms and

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conditions of any such new, revised or amended standard form or forms of Award Agreement are not inconsistent with the terms of the Plan.

Section 21.Change in Control.

(a)Effect of Change in Control on Options and SARs.

(1)Accelerated Vesting. The Committee, in its discretion, may provide in any Award Agreement evidencing an Option or SAR Award or, in the event of a Change in Control, may take such actions as it deems appropriate to provide, for the acceleration of the exercisability and vesting in connection with such Change in Control of any or all outstanding Options and SARs and shares acquired upon the exercise of such Options and SARs upon such conditions and to such extent as the Committee shall determine.

(2)Assumption or Substitution. In the event of a Change in Control, the Surviving Company, may, without the consent of any Participant, either assume the Company’s rights and obligations under outstanding Options and SARs or substitute for outstanding Options and SARs substantially equivalent options and SARs (as the case may be) for the stock of the Surviving Company or other Person acquiring the Company’s Voting Securities in such Change in Control (the “Acquirer”). Any Options or SARs which are not assumed or substituted in connection with the Change in Control nor exercised as of the time of consummation of the Change in Control shall terminate and cease to be outstanding effective as of the time of consummation of the Change in Control.

(3)Cash-Out of Options or SARs. The Committee, in its discretion and without the consent of any Participant, may determine that, upon the occurrence of a Change in Control, each or any Option or SAR outstanding immediately prior to the Change in Control shall be canceled in exchange for a payment with respect to each vested share of Stock subject to such canceled Option or SAR in (i) cash, (ii) stock of the Company or of a corporation or other business entity a party to the Change in Control, or (iii) other property which, in any such case, shall be in an amount having a Fair Market Value equal to the excess of the Fair Market Value of the consideration to be paid per share of Stock in the Change in Control over the exercise price per share under such Option or SAR (the “Spread”). In the event such determination is made by the Committee, the Spread (reduced by applicable withholding taxes, if any) shall be paid to Participants in respect of their canceled Options and SARs as soon as practicable following the date of the Change in Control.

(b)Effect of Change in Control on Restricted Stock Awards. The Committee, in its discretion, may provide in any Award Agreement evidencing a Restricted Stock Award or, in the event of a Change in Control, may take such actions as it deems appropriate to provide, that the lapsing of the Restriction Period applicable to the shares subject to the Restricted Stock Award held by a Participant whose Service has not terminated prior to the Change in Control shall be accelerated effective immediately prior to the consummation of the Change in Control to such extent as the Committee shall determine.

(c)Effect of Change in Control on Restricted Stock Unit Awards. The Committee, in its discretion, may provide in any Award Agreement evidencing a Restricted

34

Stock Unit Award or, in the event of a Change in Control, may take such actions as it deems appropriate to provide, that the Restricted Stock Unit Award held by a Participant whose Service has not terminated prior to the Change in Control shall be settled effective as of the date of the Change in Control to such extent as the Committee shall determine; provided, however, that if such Restricted Stock Unit Award is subject to Section 409A of the Code, (i) such settlement shall only occur if the Change in Control is deemed to be a change in the ownership of the Company, a change in effective control of the Company, or a change in the ownership of a substantial portion of the assets of the Company (as such terms are defined under Section 409A of the Code and Treasury Regulations thereunder) and (ii) the Award Agreement evidencing such Restricted Stock Unit Award must provide for such settlement at the time of grant of such Restricted Stock Unit Award.

(d)Effect of Change in Control on Performance Awards. The Committee, in its discretion, may provide in any Award Agreement evidencing a Performance Award or, in the event of a Change in Control, may take such actions as it deems appropriate to provide, that the Performance Award held by a Participant whose Service has not terminated prior to the Change in Control or whose Service terminated by reason of the Participant’s death or Disability shall become payable effective as of the date of the Change in Control to such extent as the Committee shall determine; provided, however, that if such Performance Award is subject to Section 409A of the Code, (i) such payment shall only occur if the Change in Control is deemed to be a change in the ownership of the Company, a change in effective control of the Company, or a change in the ownership of a substantial portion of the assets of the Company (as such terms are defined under Section 409A of the Code and Treasury Regulations thereunder) and (ii) the Award Agreement evidencing such Performance Award must provide for such payment at the time of grant of such Performance Award.

(e)Effect of Change in Control on Deferred Stock Awards, Other Stock-Based Awards and Deferred Compensation Awards. The Committee, in its discretion, may provide in any Award Agreement evidencing a Deferred Stock Award, Other Stock-based Award or a Deferred Compensation Award or, in the event of a Change in Control, may take such actions as it deems appropriate to provide, that the stock or stock units pursuant to such Award shall be settled effective as of the date of the Change in Control; provided, however, that if such Award is subject to Section 409A of the Code, (i) such settlement shall only occur if the Change in Control is deemed to be a change in the ownership of the Company, a change in effective control of the Company, or a change in the ownership of a substantial portion of the assets of the Company (as such terms are defined under Section 409A of the Code and Treasury Regulations thereunder) and (ii) the Award Agreement evidencing such Award must provide for such settlement at the time of grant of such Award.

(f)Excise Tax Limit. In the event that the vesting of Awards together with all other payments and the value of any benefit received or to be received by a Participant would result in all or a portion of such payment being subject to the excise tax under Section 4999 of the Code, then the Participant’s payment shall be either (i) the full payment or (ii) such lesser amount that would result in no portion of the payment being subject to excise tax under Section 4999 of the Code (the “Excise Tax”), whichever of the foregoing amounts, taking into account the applicable federal, state, and local employment taxes, income taxes, and the Excise Tax, results in the receipt by the Participant, on an after-tax basis, of the greatest amount of the

35

payment notwithstanding that all or some portion of the payment may be taxable under Section 4999 of the Code. All determinations required to be made under this Section 21(f) shall be made by the nationally recognized accounting firm which is the Company’s outside auditor immediately prior to the event triggering the payments that are subject to the Excise Tax (the “Accounting Firm”). The Company shall cause the Accounting Firm to provide detailed supporting calculations of its determinations to the Company and the Participant. All fees and expenses of the Accounting Firm shall be borne solely by the Company. The Accounting Firm’s determinations must be made with substantial authority (within the meaning of Section 6662 of the Code). For the purposes of all calculations under Section 280G of the Code and the application of this Section 21(f), all determinations as to present value shall be made using 120 percent of the applicable Federal rate (determined under Section 1274(d) of the Code) compounded semiannually, as in effect on December 30, 2004.

Section 22.Compliance With Securities Law. The grant of Awards and the issuance of shares of Stock pursuant to any Award shall be subject to compliance with all applicable requirements of federal, state and foreign law with respect to such securities and the requirements of any stock exchange or market system upon which the Stock may then be listed. In addition, no Award may be exercised or shares issued pursuant to an Award unless (a) a registration statement under the Securities Act shall at the time of such exercise or issuance be in effect with respect to the shares issuable pursuant to the Award or (b) in the opinion of legal counsel to the Company, the shares issuable pursuant to the Award may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance and sale of any shares hereunder shall relieve the Company of any liability in respect of the failure to issue or sell such shares as to which such requisite authority shall not have been obtained. As a condition to issuance of any Stock, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation, warranty or covenant with respect thereto as may be requested by the Company.

Section 23.Miscellaneous Provisions.

(a)Deferrals of Payment. In addition to the grant of Deferred Stock Awards or Deferred Compensation Awards under Section 11 or 13 of the Plan, the Committee may in its discretion permit a Participant to defer the receipt of payment of cash or delivery of shares of Stock that would otherwise be due to the Participant by virtue of the exercise of a right or the satisfaction of vesting or other conditions with respect to an Award. If any such deferral is to be permitted by the Committee, the Committee shall establish rules and procedures relating to such deferral in a manner intended to comply with the requirements of Section 409A of the Code, including, without limitation, the time when an election to defer may be made, the time period of the deferral and the events that would result in payment of the deferred amount, the interest or other earnings attributable to the deferral and the method of funding, if any, attributable to the deferred amount.

(b)Repurchase Rights. Shares issued under the Plan may be subject to one or more repurchase options, or other conditions and restrictions as determined by the

36

Committee in its discretion at the time the Award is granted. The Company shall have the right to assign at any time any repurchase right it may have, whether or not such right is then exercisable, to one or more persons as may be selected by the Company. Upon request by the Company, each Participant shall execute any agreement evidencing such repurchase options or transfer restrictions prior to the receipt of shares of Stock hereunder and shall promptly present to the Company any and all certificates representing shares of Stock acquired hereunder for the placement on such certificates of appropriate legends evidencing any such repurchase options or transfer restrictions.

(c)Provision of Information. Each Participant shall be given access to information concerning the Company equivalent to that information generally made available to the Company’s common shareholders.

(d)Rights as Employee, Consultant or Director. No person, even though eligible pursuant to Section 5, shall have a right to be selected as a Participant, or, having been so selected, to be selected again as a Participant. Nothing in the Plan or any Award granted under the Plan shall confer on any Participant a right to remain an Employee, Officer, Consultant or Director or interfere with or limit in any way any right of a Participating Company to terminate the Participant’s Service at any time. To the extent that an Employee of a Participating Company other than the Company receives an Award under the Plan, that Award shall in no event be understood or interpreted to mean that the Company is the Employee’s employer or that the Employee has an employment relationship with the Company.

(e)Rights as a Shareholder. A Participant shall have no rights as a shareholder with respect to any shares covered by an Award until the date of the issuance of such shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). No adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date such shares are issued, except as provided in Section 4(c) or another provision of the Plan.

(f)Fractional Shares. The Company shall not be required to issue fractional shares upon the exercise or settlement of any Award; provided, however, that if the Company does not issue fractional shares upon the exercise or settlement of any Award, it shall make a cash payment equal to the Fair Market Value of such fractional shares unless such fractional shares are rounded up.

(g)Severability. If any one or more of the provisions (or any part thereof) of this Plan shall be held invalid, illegal or unenforceable in any respect, such provision shall be modified so as to make it valid, legal and enforceable, and the validity, legality and enforceability of the remaining provisions (or any part thereof) of the Plan shall not in any way be affected or impaired thereby.

(h)Beneficiary Designation. Subject to local laws and procedures, each Participant may file with the Company a written designation of a beneficiary who is to receive any benefit under the Plan to which the Participant is entitled in the event of such Participant’s death before he or she receives any or all of such benefit. Each designation will revoke all prior

37

designations by the same Participant, shall be in a form prescribed by the Company, and will be effective only when filed by the Participant in writing with the Company during the Participant’s lifetime. If a married Participant designates a beneficiary other than the Participant’s spouse, the effectiveness of such designation may be subject to the consent of the Participant’s spouse. If a Participant dies without an effective designation of a beneficiary who is living at the time of the Participant’s death, the Company will pay any remaining unpaid benefits to the Participant’s legal representative.

(i)Choice of Law. Except to the extent governed by applicable federal law, the validity, interpretation, construction and performance of the Plan and each Award Agreement shall be governed by the laws of the State of New Jersey, without regard to its conflict of law rules.

Section 24.Effective Date of the Plan. The Plan shall be effective on the date it is approved by the vote of the holders of a majority of all outstanding shares of Stock.

Section 25.Term of the Plan. No Award shall be granted pursuant to the Plan after May 19, 2015, but Awards theretofore granted may extend beyond that date.

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EXHIBIT B

STOCK POWER

FOR VALUE RECEIVED                                                                                                      

Please insert Social Security or other

   Identification number of assignee

Hereby sell, assign and transfer unto:                                                                                                                                    

                                                                                                                                                          & nbsp;                                     

(                                ) Shares of the                            Capital Stock of                                                                                        

                                                                   standing in my (our) name(s) on the books of said Corporation represented by Certificate(s) No.(s)                                                                                                                                                                         ;                                                                                                                                                                           &nb sp;                              herewith and do hereby irrevocably constitute and appoint                                                                                                                                                                                                                                                                                      &nb sp;                             

Attorney to transfer the said stock on the books of said Corporation with full power of substitution in the premises.

Dated:	By:
Signature Guaranteed*

* An eligible guarantor is a member of one of the Acceptable Signature Guarantee Medallion Programs (STAMP, SEMP, NYSEMSP) with a bond limit of $500,000 or more, or has applied to us and has been accepted by Continental Stock Transfer & Trust Company as of current date.

EX-10.10

Exhibit 10.10

Nonqualified Stock Option No. 1 Option for 500,000 Shares

MEDAREX, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
FOR 2005 EQUITY INCENTIVE PLAN

MEDAREX, INC., a New Jersey corporation (the “Company”), in consideration of the value to it of the continuing services of HOWARD H. PIEN (hereinafter called “Optionee”), which continuing services the grant of this Option is designed to secure, and in consideration of the various undertakings made herein by Optionee, and pursuant to its 2005 Equity Incentive Plan (hereinafter called the “Plan”), hereby grants to Optionee an option (the “Option”), evidenced by this Option Agreement, exercisable for the period and upon the terms hereinafter set out, to purchase 500,000 shares (the “Option Amount”) of $.01 par value common stock of the Company (“Common Stock”) at a price of $14.355 per share (the “Option Price”), which price represents at least the Fair Market Value (as such term is defined in the Plan) of the shares as of the Date of Grant (as hereinafter defined).

1.             Term of Option.  This Option is granted and dated on the date set forth next above the signature shown (sometimes hereinafter called the “Date of Grant”), and will terminate and expire, to the extent not previously exercised, one day prior to the end of ten (10) years after the Date of Grant (i.e., on the 28th day of June, 2017), or at such earlier time as may be specified in Section 5 hereof.

2.             Vesting.  Except as set forth in the immediately following sentence or as otherwise provided in the Plan or this Option Agreement, this Option will vest and be exercisable as follows, provided that vesting will cease upon the termination of the Optionee’s Service: 166,667 shares shall vest on each of the first and second anniversaries of the Date of Grant, and 166,666 shares shall vest on the third anniversary of the Date of Grant; provided, however, that upon the occurrence of an event constituting a Change in Control (as defined in the Optionee’s Employment Agreement with the Company dated May 16, 2007 (the “Employment Agreement”)) or in the event that the Optionee’s employment is terminated by the Company Without Cause or by the Optionee for Good Reason (as such terms are defined in the Employment Agreement), the Option Amount shall become immediately vested and exercisable in full.

3.             Non-Transferability.  An Optionee may not sell or otherwise transfer an Option except by will or the laws of descent and distribution or to an Optionee’s family members pursuant to a gift (in accordance with the Plan) or by means of a domestic relations order.

4.             Manner of Exercise.  The Optionee (or other person entitled to exercise the Option) shall purchase shares of Common Stock subject hereto by the payment to the Company of the Option Price in full.  This Option is to be exercised by written notice to the Company stating the full number of shares to be purchased and the time of delivery thereof, which shall be at least 15 days after the giving of notice unless an earlier date shall have been agreed upon between Optionee (or other person entitled to exercise the Option) and the Company.  At such time, the Company shall, without transfer or issue tax to the Optionee (or other person entitled to

exercise the Option), deliver at the principal office of the Company, or at such other place as shall be mutually agreed upon, a certificate or certificates for such shares against payment of the Option Price therefor in full for the number of shares to be delivered; provided, however, that the time of delivery may be postponed by the Company for such period as may be required for it to comply with reasonable diligence with any requirements of law.  Payment of the Option Price shall be made in cash either by a certified or official bank check.

Notwithstanding the foregoing, provided that at the time of exercise the Common Stock is publicly traded, payment in whole or in part of the Option Price may be made in unrestricted shares of Common Stock which are already owned by the Optionee free and clear of any liens, claims, encumbrances or security interests, based upon the Fair Market Value (as defined in the Plan) of the Common Stock on the date the Option is exercised.  No shares of Common Stock shall be issued until full payment therefor has been made and any tax withholding obligations have been satisfied (in accordance with Section 10(d)).  If the Optionee (or other persons entitled to exercise the Option) fails to accept a delivery of, or to pay for all or any part of the number of shares specified in such notice upon tender or delivery thereof, the right to exercise the Option with respect to such undelivered shares shall be thereupon terminated.

Notwithstanding the foregoing, provided that at the time of exercise the Common Stock is publicly traded, payment in whole or in part of the Option Price may be made pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of Common Stock, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the sales proceeds.

5.             Termination of Service.

(a)           Death.  If any Optionee’s relationship with or employment by the Company and/or any of its subsidiaries terminates by reason of death, this Option may thereafter be exercised immediately in full by the legal representative of the estate or by the legatee of the Optionee under the will of the Optionee until the expiration of the stated term of the Option.

(b)           Disability.  If the Optionee’s relationship with or employment by the Company and/or any of its subsidiaries terminates by reason of “Disability” (as defined in Section 409A(a)(2)(C) of the Code), this Option may thereafter be exercised in full by the Optionee for a period of three years from the date of such termination or expiration of the stated term of the Option, whichever period is the shorter.

(c)           Termination for Cause.  If the Optionee’s relationship with or employment by the Company is terminated by the Company for “Cause” (as defined in the Employment Agreement), the Option shall thereupon terminate.  Notwithstanding the foregoing, nothing herein shall be deemed to alter the at-will employment status of an employee of the Company in any way.

(d)           Other Termination.  If the Optionee’s relationship with or employment by the Company terminates for any reason other than pursuant to Section 5(a), (b) or (c) hereof, this Option may, to the extent such Option has vested, thereafter be exercised by the Optionee for a

period of 90 days following the date of such termination or expiration of the stated term of the Option, whichever period is the shorter.

6.             Adjustments on Recapitalization; Change in Control; Dissolution or Liquidation.  The number of shares of Common Stock subject hereto and the Option Price per share shall be proportionately adjusted for any increase or decrease in the number of issued shares of the Common Stock resulting from the subdivision or consolidation of the shares, or the payment of a stock dividend after the Date of Grant, or other decrease or increase in the shares of Common Stock outstanding effected without receipt of consideration by the Company; provided, however, that any Options to purchase fractional shares resulting from such adjustments shall be eliminated.

In the event of a Change in Control (as defined in the Employment Agreement), if the Option is not assumed or substituted in connection with the Change in Control, the Option shall be canceled in exchange for a cash payment with respect to each share of Common Stock subject to such canceled Option in an amount having a Fair Market Value equal to the excess of the Fair Market Value of the consideration to be paid per share of stock in the Change in Control over the exercise price per share under the Option.

Notwithstanding anything in this Option Agreement to the contrary, in the event of the proposed dissolution, liquidation or reorganization of the Company, other than pursuant to certain mergers or consolidations), the Option granted hereunder shall terminate as of a date to be fixed by the Committee (as that term is defined in the Plan); provided that not less than 30 day’s prior written notice of the date so fixed shall be given to the Optionee, and the Optionee shall have the right, during the period of thirty (30) days preceding such termination, to exercise his or her Option as to all or any part of the shares covered thereby, including shares as to which such Option would not otherwise be exercisable.

7.             Subject to Plan.  This Option is subject to all the terms and conditions of the Plan (and specifically to the power of the Committee to make interpretations of the Plan and of the Options granted thereunder, and of the Board of Directors of the Company (“Board of Directors”) to alter, amend, suspend or discontinue the Plan subject to the limitations expressed in the Plan), the provisions of which are hereby made a part of this Option.  By acceptance hereof, Optionee acknowledges receipt of a copy of a Summary Plan Description, which describes the basic terms and conditions of the Plan, and recognizes and agrees that determinations, interpretations or other actions respecting the Plan may be made by a majority of the Board of Directors or of the Committee, and that such determinations, interpretations or other actions are final, conclusive and binding upon all parties, including Optionee.  In the event of any conflict between the provisions of this Option Agreement and those of the Plan, the provisions of the Plan shall control.

8.             Rights as Shareholder.  This Option shall not entitle Optionee or any permitted transferee hereof to any rights of a shareholder of the Company or to any notice of proceedings of the Company or to any notice of proceedings of the Company in respect of any shares issuable upon exercise of this Option unless and until the Optionee has given to the Company a written notice of exercise, has paid in full the Option Price for such shares and, if applicable, has given a representation to the Company that he or she is purchasing such shares for investment only and

not with a view towards any distribution.  The Company shall not be required to issue or deliver any certificate for shares of its Common Stock purchased hereunder prior to compliance with applicable federal and state laws and regulations with respect to the issuance, registration or listing of such shares.

9.             Securities Laws.  Optionee acknowledges that he or she has been informed of, or is otherwise familiar with, the nature and the limitations imposed by the Securities Act of 1933, as amended (the “Act”), the Exchange Act, and the rules and regulations thereunder (in particular, Rule 144, promulgated under the Act and Section 16 of the Exchange Act, and Rule 16b-3 promulgated thereunder), concerning the shares issuable upon exercise of this Option and agrees to be bound by the restrictions embodied in such Act, the Exchange Act, and all the rules and regulations promulgated thereunder.

10.          Miscellaneous; Governing Law.

(a)           In the event the Option shall be exercised in whole, this Option Agreement shall be surrendered to the Company for cancellation.  In the event the Option shall be exercised in part, or a change in the number or designation of the Common Stock shall be made, this Option Agreement shall be delivered by Optionee to the Company for the purpose of making appropriate notation thereon, or of otherwise reflecting, in such manner as the Company shall determine, the partial exercise or the change in the number of designation of the Common Stock.

(b)           The Option shall be exercised in accordance with such administrative regulations as the Committee shall from time to time adopt.

(c)           The Option and this Option Agreement shall be construed, administered and governed in all respects under and by the laws of the State of New Jersey.

(d)           Optionee hereby agrees that he or she will make such arrangements as the Company deems necessary to discharge any federal, state, or local income or payroll tax withholding obligations imposed upon the Company with respect to this Option.  Upon Optionee’s request and subject to the Company’s approval, in its sole discretion, and in compliance with any applicable conditions or restrictions of law, the Company may withhold from fully vested shares of Common Stock otherwise issuable to Optionee upon exercise of the Option a number of whole shares of Common Stock having a Fair Market Value, determined as of the date of exercise, not in excess of the minimum amount of tax required to be withheld by law.

(e)           Nothing contained in this Agreement shall confer upon Optionee the right to employment by the Company or any of its subsidiaries.

IN WITNESS WHEREOF, this Option Agreement is executed as of the 29th day of June, 2007.

MEDAREX, INC.
By	/s/ Christian S. Schade July 30, 2007

The undersigned Optionee hereby accepts the foregoing Non-qualified Stock Option Agreement No. 1 dated as of June 29, 2007 (the “Date of Grant”), and the undertakings on his or her part contained therein, and agrees to all of the terms and conditions thereof.

DATED:
	July 30, 2007	,	/s/ Howard H. Pien
		Optionee – Howard H. Pien

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Howard H. Pien, President and Chief Executive Officer of Medarex, Inc., certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Medarex, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 3, 2007		/s/  HOWARD H. PIEN
	President and Chief Executive Officer (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Christian S. Schade, Senior Vice President and Chief Financial Officer of Medarex, Inc., certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Medarex, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 3, 2007		/s/  CHRISTIAN S. SCHADE
	Senior Vice President/ Finance & Administration and Chief Financial Officer (Principal Financial and Accounting Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF
CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Howard H. Pien, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Medarex, Inc. on Form 10-Q for the three months ended June 30, 2007 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report of Medarex, Inc. on Form 10-Q fairly presents in all material respects the financial condition and results of operations of Medarex, Inc.

Date: August 3, 2007	By:	/s/  HOWARD H. PIEN
	Name:	Howard H. Pien
	Title:	President and Chief Executive Officer

Signed originals of these written statements required by Section 906, or other documents authenticating, acknowledging or otherwise adopting the signatures that appear in typed form within the electronic version of these written statements required by Section 906, have been provided to Medarex, Inc. and will be retained by Medarex, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

This Certification is being furnished pursuant to Rule 15(d) and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of that section. This Certification shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF
CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Christian S. Schade, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Medarex, Inc. on Form 10-Q for the three months ended June 30, 2007 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report of Medarex, Inc. on Form 10-Q fairly presents in all material respects the financial condition and results of operations of Medarex, Inc.

Date: August 3, 2007	By:	/s/  CHRISTIAN S. SCHADE
	Name:	Christian S. Schade
	Title:	Senior Vice President and Chief Financial Officer

Signed originals of these written statements required by Section 906, or other documents authenticating, acknowledging or otherwise adopting the signatures that appear in typed form within the electronic version of these written statements required by Section 906, have been provided to Medarex, Inc. and will be retained by Medarex, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

This Certification is being furnished pursuant to Rule 15(d) and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of that section. This Certification shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.