LICENSE AGREEMENT WITH MGI PHARMA, INC./EISAI CORPORATION

3 Months Ended

Mar. 31, 2012

LICENSE AGREEMENT WITH MGI PHARMA, INC./EISAI CORPORATION

LICENSE AGREEMENT WITH MGI PHARMA, INC./EISAI CORPORATION

NOTE 7. LICENSE AGREEMENT WITH MGI PHARMA, INC./EISAI CORPORATION

        In August 2004, we entered into a license agreement with MGI PHARMA, Inc., a Minnesota corporation ("MGI") relating to Dacogen® (decitabine) for Injection, an anti-cancer therapeutic. Pursuant to the terms of the license agreement, MGI received exclusive worldwide rights to the development, commercialization and distribution of Dacogen for all indications. We are entitled to royalties from MGI on all sales of licensed product worldwide.

        In May 2006, the United States Food and Drug Administration ("FDA") approved Dacogen for the treatment of patients with myelodysplastic syndromes ("MDS") and MGI commenced commercial sales of Dacogen in the United States. In July 2006, MGI executed an agreement to sublicense Dacogen to Janssen-Cilag, a Johnson & Johnson company, granting exclusive development and commercialization rights in all territories outside North America. MGI was acquired by Eisai Corporation of North America ("Eisai") in January 2008.

        Eisai is required to pay us royalties starting at 20% and escalating to a maximum of 30% of net worldwide Dacogen sales within 45 days after the end of each calendar quarter. We recognize royalty revenue when we receive the royalty statement from Eisai, due 45 days after the end of each calendar quarter, because we do not have sufficient ability to accurately estimate Dacogen sales prior to that time. During the three months ended March 31, 2012 and 2011, we recorded royalty revenue of $20,594,000 and $16,971,000, respectively.