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Executives

Kyle Kuvalanka – Senior Director Investor Relations

Dr. Deborah L. Dunsire – President, Chief Executive Officer& Director

Marsha H. Fanucci – Chief Financial Officer & SeniorVice President

Dr. Christophe M. Bianchi – Executive Vice PresidentCommercial Operations

Dr. Nancy A. Simonian – Chief Medical Officer

Analysts

Rachel McMinn – Cowen and Company, LLC

Howard Liang – Leerink Swan

Christopher J. Raymond – Robert W. Baird & Co., Inc.

James F. Reddoch – Friedman, Billings, Ramsey Group, Inc.

Katherine S. Kim – Banc of AmericaSecurities

Yaron Werber – Smith Barney Citigroup

May-Kin Ho – Goldman Sachs

Edward Tenthoff – Piper Jaffray

Matthew Rodin – JP Morgan

Brett Holly – CIBC World Markets

Thomas McGahren – Merrill Lynch

Sapna Srivastava – Morgan Stanley

Millennium Pharmaceuticals, Inc. (MLNM) 2008 Guidance Call January 4, 1969 ET

Operator

Good day everyone and welcome to today’s Millennium conference call. Today’s conference is being recorded and toget us started I’m pleased to turn the call over to Mr. Kyle Kuvalanka. Please go ahead sir.

Kyle Kuvalanka

Good morning everyone and thanks for joining us this morningto discuss our press release on Millennium’s goals and financial guidance for2008. The release was issued in advanceof the J.P. Morgan conference where we will be presenting on Wednesday, January9th at 3:30 PM pacific time. With me today are Dr. Deborah Dunsire, Millennium President and ChiefExecutive Officer; Marsha Fanucci, Chief Financial Officer and Senior VicePresident of Corporate Strategy; Dr. Christophe Bianchi, Executive VicePresident and Head of Commercial; and Dr. Nancy Simonian, Chief MedicalOfficer.

Deborah will open the call with our prepared remarks andthen the team will be available to take your questions. Before we begin let me remind you that wewill be making forward-looking statements when we discuss our growth, science,products and prospects our point of reference is how we as a company think,expect or believe the future will look based on information as we know ittoday. There are risks to our businessthat could cause actual results to differ materially from thesestatements. You can review a list ofthese risks with the reports we file with the SEC.

During this call we will be referring to non GAAP netincome, non GAAP research and development expenses and non GAAP selling,general and administrative expenses. These financial measures are not prepared in accordance with generallyaccepted accounting principals. Adescription of the differences between these non GAAP financial measures andthe most directly comparable GAAP measures is included in the press release weissued this morning. A discussion of whywe believe these measures are important are included in the Form 8K wefurnished to the SEC this morning. The press release and Form 8K are availablein the investor section of our website.

I will now turn the call over to Deborah.

Dr. Deborah L.Dunsire

Good morning and happy New Year to you all. 2007 was the most successful year inMillennium’s 15 year history. It wasdriven by record results across commercial, R&D and operations. We’re well positioned for continued successin 2008 and beyond and this morning we’re going to give you an overview of ourguidance and goals for 2008. The primaryfocus of course for us is to maximize the potential of VELCADE.

In 2007 USnet sales grew to $265 million a 20% increase over 2006 driven primarily fromincreased use in the relaxed myeloma settings. In 2008 our goals are going to be to drive the timely approval and verysuccessful launch in newly diagnosed multiple myeloma patients. We did file a supplemental new drugapplication in December of 2007 as we had told you and I view this as a verysignificant accomplishment given the data became available only inSeptember.

It was data based on the company sponsored Phase III VistaTrial. The data showed very successfulcomplete remission rates of 35% and a significant survival benefit for patientswho were ineligible for stem cell transplant and they’re generally older andsicker as you well know. The results areconsistent with other large well controlled Phase III trials that werepresented at ASH including the ISM and Cavo trials. So, we demonstrated excellent results reallyacross the full spectrum of myeloma patients.

With VELCADE we’re also looking to expand in non-Hodgkin’slymphoma and are on track to complete the patient enrollment into the Phase IIILYM3001 trial in the first half of this year. We’re also looking to initiate other combination studies in thenon-Hodgkin’s lymphoma settings. As youknow the relaxed setting of non-Hodgkin’s lymphoma is more patients than thereare in all multiple myeloma so we see this as a very significant future growthdriver for VELCADE beyond this current growth drive of the front line myelomapopulation. We’re also looking aregistration enabling trial of VELCADE for subcutaneous administrations whichis broadening administration options for our patients.

Moving on to the second strategic driver for 2008 moving ourinnovative development pipeline forward. MLN0002 is the latest stage product candidate in that pipeline and itrepresents the next revenue growth driver from the company’s own pipeline. MLN0002 is a gut-specific immuno therapy andit demonstrated significant improvement in physical remission rates in bothulcerative colitis and Crohn’s disease in randomized Phase II clinical trialswhich were published in the NEJM.

In 2007 we completed the patient enrollment in the veryimportant and core bridging trials and have demonstrated a favorablepharmacokinetic, pharmacodynamic and safety profile in these studies for thenew material generated in the cell line which we generated for thisproduct. So, we’re very excited aboutthe ability to move forward into pivotal trials towards the end of 2008.

We’re continuing also to strengthen our leadership positionin the area of protein homeostasis. Today we’re very pleased to announce the advancement of a wholly ownedsecond generation proteasome inhibitor. We call that MLN2238 just to confuse you. This accomplishment is very rewarding for themany employees of Millennium who are experts in the area and who have beenworking tirelessly over many years to select and bring forward a molecule withimproved characteristics over VELCADE which is a pretty hard act to follow. Pre-clinical studies with this molecule havedemonstrated that it is advantageous in multiple animal models of cancerincluding some that are relative to VELCADE. The results suggest that 2238 holds the potential for a broader clinicalutility than the current generation of proteasome inhibitors and we expect tomove this molecule forward both in the oral and IV administration form. We’ll be talking to you more about MLN2238throughout the year. Just to emphasizethis is the second molecule that came forward from the discovery pipelinefollowing MLN4924 against the novel [inaudible] NAE.

In 2008 our goals are to keep advancing that pipeline ofnovel molecules in the area of cancer and inflammation including initiating theglobal retrial program with MLN0002 in ulcer colitis and Chron’s disease at thevery end of the year or beginning of 09. There’s a lot of preparation that goes into those global Phase IIItrials. We’ll continue the flow ofinnovative molecules from discovery with the potential advancement of anothernovel development candidate throughout the year. In addition, we’ll continue to evaluateappropriate licensing, acquisition and partnership opportunities. The third strategic driver for 2008 is tofocus on delivering the top and bottom line financial growth while continuingto invest for the future.

For 2007 we’re on track to exceed the non GAAP net incomeand GAAP net loss estimates from the revised financial guidance outline in ourthird quarter 2007 earnings call on November 1st. This success was driven by a strong increasein worldwide VELCADE sales as well as by the early achievement of the $40million ex-US sales milestone payment. Comprehensive financial results for 2007 are going to be issued at ouryear end earnings release on February 7, 2008.

But, let me know talk about our financial guidance for2008. For VELCADE US net product saleswe expect a 20 to 30% increase resulting in sales between $320 and $345million. Royalty revenues is expected tobe in the range of $175 to $185 million. As you know the revenue primarily comes from royalties from productsales of VELCADE outside the US andfrom INTEGRILIN both inside and outside the US. We expect the royalties from INTEGRILIN salesto be slightly declined in 2008. But,royalty growth is expected to come from a strong increase in VELCADE ex-USsales.

Combined non GAAP R&D and SG&A expenses are expectedto be approximately $450 million. NonGAAP expenses will remain approximately flat with our 2007 guidance even as welaunch VELCADE in newly diagnosed myeloma and initiate the Phase III clinicalprogram with MLN0002 and continue to advance the rest of the pipeline. The GAAP R&D and SG&A expensesincluding stock based comp are expected to be approximately $480 million.

Our non GAAP net income is expected to be in the range of$80 to $95 million. As a reminder in2007 we received a $40 million one time sales milestone payment under ourstrategic alliance revenue line and I want to remind you that we don’t expectany significant milestone payments to be earned in 2008. Our GAAP net income guidance is in the rangeof approximately $10 to $25 million.

In closing I’d like to thank every person here at Millenniumfor making 2007 a record year for this company. I look forward to working with you all in 2008. We’re going to pause here for Q&A andwe’ll take your questions.

Kyle Kuvalanka

Operator please open the line for questions.

Question-and-AnswerSession

Operator

(Operator Instructions) Our first question will come from Rachel McMinn with Cowen andCompany.

Rachel McMinn – Cowenand Company, LLC

I wanted to better understand and I don’t know if you’reactually prepared to really talk about this but for the fourth quarter VELCADEnumbers can you talk about potentially any one time factors that may haveimpacted the fourth quarter VELCADE numbers? Were there any inventory changes there?

Dr. Christophe M.Bianchi

Good morning. No, wedon’t see any change in inventory in the fourth quarter our inventory remainedin low end of our desired range. I wouldlike to point out that in the fourth quarter of this year we saw a 34% increaseversus the fourth quarter of last year which is indeed showing the accelerationof VELCADE sales. But things have beeneven place on inventory.

Rachel McMinn – Cowenand Company, LLC

Okay. I guess what I’m trying to get at is just trying tounderstand the quarter-to-quarter fluctuations and perhaps maybe if there wasanything that happen in 3Q that didn’t happen in 4Q? Do you have a sense of whether [inaudible]was in any way was sort of kind of a one time boost to 3Q?

Marsha H. Fanucci

Rachel I think if you look back over the profile of thesales over time you do see these quarter-to-quarter fluctuations. When you look back at Q3 we did see theimpact of a price increase in that quarter which was not repeated in Q4. And, as Christophe mentioned the inventorywas not a factor in quarter-to-quarter performance. On a yearly basis we are ending the year at20% growth for the product. So, I thinkjust because of the profile that we tend to see why it’s very helpful to lookit at on a rolling basis and as Christophe pointed out as well on theyear-on-year changes for the quarter which were extremely strong at 34%.

Rachel McMinn – Cowenand Company, LLC

Great. Just two otherquestions one on the [subcu] formulation just based on your market researchwhat proportion of the US market do you think will actually benefit fromVELCADE? Or, is this really moreimportant in Europe?

Dr. Christophe M.Bianchi

It’s a bit early to tell. We’re developing VELCADE [subcu] for the long run – what we know rightnow is that we want to give as options for physicians to be able to administerVELCADE. In some practices givingVELCADE subcutaneously will be a tremendous advantage because it will allowphysicians and patients to get the drug even more quickly. In some of the practices it will be of evengreater advantage because VELCADE could be administered at home. There is a lot of things that needs to happenbetween now and then but you could consider giving VELCADE at home under thesupervision of a physician, under the supervision of a nurse. It’s going to bring value in the [inaudible]delivery options and as a flexibility for the usage of VELCADE.

Rachel McMinn – Cowenand Company, LLC

The timing of the pivotal study when could that start andwhen could you actually get an expansion in your label?

Dr. Nancy A. Simonian

We are going to initiate the trial that’s necessary forregistration in this year, 2008. And, Ithink as time goes on we can be more specific about the timing for thesubmission of the filing.

Operator

Our next question will come from Howard Liang at LeerinkSwan.

Howard Liang –Leerink Swan

You mentioned that the out performance on the bottom linebasis in 2007 was driven in part by the $40 million milestone. Can you say without that $40 million wouldyou have accretive year goal?

Marsha H. Fanucci

Howard, we’re not prepared to talk about the full yearresults at this point in time because we’re going to be discussing that on theFebruary call. But, I think if you lookat the components of value you certainly can see that both the US and the ex-USrevenues were a primary driver of performance for the company and thatmilestone was something that occurred earlier than we had anticipated but allof our planning and all of our excitement about the performance of the companyare really stemming from the fundamental – let’s say aside from that milestonewhich were all strong.

Howard Liang – LeerinkSwan

I have a few questions regarding 2238 the [inaudible]proteasome inhibitor. Can you say whenit will be in the clinics and also can you talk about the proteasome inhibitionspecificity in terms of [inaudible] and the different proteasome specificities. Is it a boronic acid based compound?

Kyle Kuvalanka

We’re going to have Nancy takethose questions. So, she’ll start offwith when it’s going to go in the clinic and then a little bit more about themechanism.

Dr. Nancy A. Simonian

We’re quite excited abut 2238. As Deborah mentioned VELCADE is a very toughact to follow because it’s so effective but we believe that we have a moleculethat has the potential to be superior to VELCADE and really opens the avenue totreatment of cancers beyond the hematologic malignancies. At this juncture we are as we said we’ve justnominated this as a development candidate. We are moving into pre-clinical development and we are going to be veryaggressively pursuing an I&D and that will happen really near the end of2008. And, as it relates to anymorespecificity on the molecule I think we will be in a position over 2008 to giveyou more details about the molecule but it is a boracic acid.

Operator

Your next question will come from Chris Raymond at Robert W.Baird.

Christopher J.Raymond – Robert W. Baird & Co., Inc.

Maybe to follow on Howard’s questions on 2239 just quicklydo you have any data, clinical data on its renal tox profile?

Dr. Nancy A. Simonian

In the studies that we’ve done to date we haven’t seen anyevidence of renal toxicity. Obviously,the GLP tox studies are the next step but based on what we know about thismolecule, what we know about VELCADE we wouldn’t anticipate that there would beany issues of renal toxicity.

Christopher J.Raymond – Robert W. Baird & Co., Inc.

So not like some of the other proteasome inhibitors.

Dr. Nancy A. Simonian

That’s correct.

Christopher J.Raymond – Robert W. Baird & Co., Inc.

Maybe switching back to VELCADE and to sort of continuingbeating a dead horse here on Q4 just trying to understand it was a littlesurprising to see the numbers as they were given the script data. Can you maybe comment, I know you guysprobably subscribe to the same services we do is there some issue with thecapture rate that might have provided a bit of a [headsake]?

Marsha H. Fanucci

Chris I think we have emphasized pretty strongly over timethat we really encourage people not to rely on the short term information fromthese sources because in our experience there is not a good correlation in theshort term time horizon. And, sometimeswhen the quarter ends because the rolling corrections just don’t happen tomatch the end of the nice fiscal quarters you see a bigger differential thanothers and I think the only thing that we can do is to continue to say we findit very challenging to correlate that information on a short term basis and wedo not recommend that others try to do so.

Christopher J.Raymond – Robert W. Baird & Co., Inc.

I know it’s only been a month since ASH but have you seenany dynamics in physicians prescribing patterns in terms of frontline use? Anything you can talk about with regard tohow docs – how things have changed since the vista data and others at ASH?

Dr. Deborah L.Dunsire

I think we saw tremendous enthusiasm from the participantsat ASH and to actually see randomized Phase III data from three large wellcontrolled trials and we know from physicians that Phase III data is extremelyimpactfull. However, I will say that ASHcomes sort of in the middle of the month and then is followed by a lot ofholiday weeks so we certainly have not seen impact on prescribing as yet. We also know that really the full impact ofthe data will come with the approval which we anticipate in the middle of theyear having filed the supplemental NDA in December.

Operator

We’ll move forward to Jim Reddoch with FBR.

James F. Reddoch –Friedman, Billings, Ramsey Group, Inc.

Just a different direction of question – it seems to me thatyou would have some flexibility on the price of VELCADE because on an annualbasis it turns out to be about half the price of REVLIMID. Have you thought about what you can dothere? How do you know that it’s reallypriced with what the market will allow or would be happy to pay? Secondly, just talking about ex-US it doeslook like that is a particularly robust area for VELCADE sales so far. Can you give us the Europe versus outside of Europebreak down? And secondly, what exactly –you did mention that you did expect that to be strong in 2008 what are thedrivers of that area of that geography’s growth if they are any different fromthe US.

Dr. Deborah L.Dunsire

They’re all great questions Jim. I think on the price we did take a 2.67%price increase Jan 1. The last priceincrease we had taken was approximately that in July. One of the challenges we have with the wayPart B drugs are reimbursed is that price increases that go beyond that putphysicians in a place where they’re actually underwriting the drug and not gettingfully reimbursed for what they’re paying and that tends to be very poorlyreceived. So, that’s something we alwayskeep in mind as we think about the price increases. With oral drugs they can essentially do whatthey like until the market doesn’t like it anymore. So, there is a difference between the Part Band Part D drug reimbursements.

I think that we’ll continue to evaluate mechanisms of priceincrease but for now we’ll continue to take the price increases as we have beenin the past and ensure that there isn’t a great impediment to physicians makingthe right choice for the patients to use VELCADE. VELCADE also delivers extraordinary value forpatients as you point out. Deliveringthe survival advantage that it has in the relaxed setting and now thesetremendous PR rates and the survival advantage in the frontline setting at avery cost efficient rate. I think thatpayers are as we’ve seen with what happen with the ESAs they are looking at thecost of oncology drugs and they will demand that the relationship between thedelivery of advocacy and cost be a factor in prescribing. And, that’s something that we have seen withrespect to some of the payers.

VELCADE is going to be a backbone of therapythroughout. We know that frontlinemyeloma can only really be treated in combination therapy and VELCADE as wedemonstrated at ASH can be used across all the different regiments and so as wepursue our course of making VELCADE the front line combination agent of choicewe feel very confident that the price will certainly not impede that andVELCADE will be able to be that backbone giving it the ability to be usedacross all the frontline and then into with re-treatment into the relaxedsetting. But, I think that’s actually atremendous advantage for the product.

To turn now to your questions about outside the USwe’ve seen growth of VELCADE through the excellent efforts of our partnersJohnson & Johnson across all the territories. VELCADE being approved in over 85 countriesand growth is coming throughout. As youknow with the worldwide roll out of a drug it takes different lengths of timein different countries. So, we’ve seenthe ramp as the countries have rolled out first the third line and then thesecond line. We did see our partners submittingto the EMEA at the same time that we submitted at the FDA. So, the frontline approval will be the nextstrong growth driver but, obviously European approval does take a little bitlonger than priority review in the US. So, we won’t see that kick in until very latein the year or early into 2009. And, I’msure Johnson & Johnson will be able to give you more color on theirexpectations for the brand.

I think you had wanted to see whether there is adifferential growth rate in the [inaudible] and I think that’s something theywould have to give you more color on.

James F. Reddoch –Friedman, Billings, Ramsey Group, Inc.

Actually I was just asking for a breakdown in sort ofabsolute proportions.

Dr. Deborah L.Dunsire

That would be something that they would have to give to you.

James F. Reddoch –Friedman, Billings, Ramsey Group, Inc.

Lastly is there some way to get the extra six months oftreatment that were present in the Vista Trial that are not present on thecurrent VELCADE label – someway to get those included in the listing beforeofficial approval? And, will that extrasix months be stated overtly in the ultimate label?

Dr. Deborah L.Dunsire

Well, I’ll start and then I’d ask Nancyto comment on the labeling. The way thatcompendium reviewed the data is based on the trials at hand. So, the submission to compendium included allthe data from the various different trials that were available at the time ofthe submission. So, they accept the dataas the trials are planned. So, in otherwords there’s no limitation placed on the length of therapy. So, that’s not something that has to beexplicitly stated. The trials are whatdrives the compendium acceptance.

Dr. Nancy A. Simonian

Jim, in the label in the package insert it will discuss inthe dosing section the dosing regiment of VMP that was used in the study andthat is based on a 54 weeks of VELCADE treatment. So, that’s explicit because that’s theregiment that gave the benefit to patients.

James F. Reddoch –Friedman, Billings, Ramsey Group, Inc.

Okay. Great so thedoubling of time will actually be stated in the compendium.

Operator

Next we’ll take a question from Katherine Kim at Banc ofAmerica Securities.

Katherine S. Kim –Banc of America Securities

Regarding the European approval is there a milestone paymentconnected with it? And, can you tell ushow much?

Marsha H. Fanucci

What we have said is that we’re not anticipating anymaterial milestones next year Katherine.

Katherine S. Kim –Banc of America Securities

What about – I’m just wondering what the magnitude of themilestone payment will be? I’m assumingit will be in 2009?

Marsha H. Fanucci

Well you know our perspective on guidance with milestones isto try and give you some color when we get close to those events and so I’lldefer in commenting on that right now. Ijust would mention that we have received nearly $150 million in milestonesrelated to the multiple myeloma indication to date. So, it has been a very significant componentof the deal structure even in the earlier lines of therapy.

Katherine S. Kim –Banc of America Securities

So there is going to be a milestone payment connected thoughwith the approval?

Marsha H. Fanucci

We’re not going to speak specifically about the milestones atthis point in time.

Katherine S. Kim –Banc of America Securities

In terms of in the USwhen will you know whether or not you will get priority review?

Dr. Nancy A. Simonian

It is basically in February of this year. It is a certain number of days after yousubmit that you will hear. 45 days.

Katherine S. Kim –Banc of America Securities

So when they announce the acceptance they will tell youwhether or not you’ll get priority review?

Dr. Nancy A. Simonian

Yes, essentially.

Katherine S. Kim – Bancof America Securities

Then in terms of the expenses can you give us an idea on theSG&A line in particular how much incremental will come from the launch inthe label expansion?

Marsha H. Fanucci

When we give our annual results in February we’ll talk alittle bit more about the color around the division between R&D andSG&A. We probably will not get tothat level of granularity even in that conversation but, I certainly will tryand help you understand the R&D and SG&A divide when we do our annualpresentation results.

Dr. Deborah L.Dunsire

Just to add to that Katherine I think the frontline launchis such a critical component of our growth and so important for patients thatwe intend to insure that’s resourced effectively.

Operator

Yaron Werber at Citi, your line is open.

Yaron Werber – SmithBarney Citigroup

I have a few questions. First point just some housekeeping. To the extent that you can, can you just give us a little bit of senseof the revenues on strategic alliances how should we model that relative to07? Obviously, in 07 we need to excludethe $40 million payment so maybe you have a $49 million line thereroughly. Should it be fairly flatyear-over-year? Should it go up? Should it go down?

Marsha H. Fanucci

The strategic alliance revenue line is comprised primarilyof reimbursement revenues for R&D activities and a little bit for supplychain activities and then the milestones. And, when we look at the R&D reimbursement the impact from a NOIstandpoint is really very minimal and it does tend to bounce around quite abit. And, we do not expect any materialmilestones next year. So, I think youjust have to keep in mind that it is a number that does tend to fluctuationwith reimbursement. The primary driverimpacting the NOI is a milestone payment and we don’t anticipate majormilestones next year. Beyond that Idon’t think I can give you any more color.

Yaron Werber – SmithBarney Citigroup

Just remind us in 07 in addition to the $40 million paymentmilestone was that the only milestone or was there another one?

Marsha H. Fanucci

That was the only material milestone in 2007.

Yaron Werber – SmithBarney Citigroup

Can you give us a little bit of a sense just following onprevious VELCADE questions how should we think about the run rate? It sounds like you’ll get approval assumingeverything should go as it should well at the FDA review you’ll get theapproval by June 21st or so for the label expansion and thenobviously you’ll have a big up kick in the second half. How should we think of the growth in thefirst half relative to the current run rate?

Dr. Christophe M.Bianchi

Our guidance for 2008 is really to show growths of between20 and 30% on VELCADE. As you have seenwe’ve had a run rate quarter-over-quarter of roughly 5, 6, 7% Q-on-Q based on –and I’m talking about net sales of course and we would expect to see the samekind of growth rate for the beginning of the year with an acceleration in thelater part of the year once the full benefit of our promotion activities startto kick in.

Dr. Deborah L.Dunsire

I think that the growth has really been coming in therelapse setting as we see re-treatment. We’ve also had some growth in [mantel cell] with use in combinations andwe don’t see that as being over. We dosee that there are some patients that get VELCADE in the frontline settingalready. But, while that may increaseslightly we really believe that it is the approval and the promotion that willgive us the major up tick for VELCADE in the frontline setting.

Yaron Werber – SmithBarney Citigroup

If I projected you did roughly like $73.5 million in salesin Q4 and I just take that forward, I mean if you look at that run raterelative to your guidance your guidance is looking at maybe a 4 to 12% year-over-yeargrowth relative to that run rate and you just did a 2.7% roughly priceincrease. If you do another one of thosein the fall that’s about 4% net benefit from price. So, you’re almost guiding to -1 to about an8% growth relative to the current run rate. Is that a conservative outlook for 08?

Dr. Deborah L.Dunsire

What we see is there’s a lot of features that can vary as wethink about the timing of the frontline approval we said we are anticipating apriority review, we’re looking at what the label will actually say, the ramp upin the run rate, you know what happens between now and then. But, we certainly anticipate strong growthbetween 20 and 30% year-over-year through this launch. There are a lot of patients in the frontlinesetting. The launch really kicking in,in the middle of the year so even though patients have treated for longer thosepatients will be coming on at the back end of the year. So, the full benefit that you’re kind ofseeing will be from those longer treated patients who will spill over into2009. But, we have ever confidence inthis brand’s ability to grow and deliver.

Operator

Next we’ll go to May-Kin Ho at Goldman Sachs

May-Kin Ho – GoldmanSachs

I have two questions. One is what is the plan for compendium listing for first line data andthen the second is on MLN02 on the manufacturing – where are you with thecommercial lots and who will be doing the manufacturing?

Kyle Kuvalanka

May-Kin we’re going to have Christophe take the question oncompendia and then Nancy will takethe question on 0002.

Dr. Christophe M.Bianchi

Indeed we received compendium listing in Drug Point in thelast quarter and it’s really a testimony to the quality of VELCADE. VELCADE in large Phase II trials has shownsome great advocacy and we were delighted to see this recognized by thiscompendium. Compendia is one thing, theability to promote and the ability to really fully educate physicians of thebenefit of VELCADE is really what drives the behaviors of those physicians anddrive the adoption of VELCADE. So whycompendia is important is we really do expect to see the full benefit of ourlaunch to come at the time of the launch. That’s where the [inaudible] of the year.

May-Kin Ho – GoldmanSachs

Thank you. I wasreally referring to the launch of compendia.

Kyle Kuvalanka

May-Kin that’s what he’s talking about the drug point.

Dr. Deborah L.Dunsire

The compendia listing I think you’re referring to May-Kin wedid achieve at the end of the third quarter, I think we announced it on ourthird quarter call in the Drug Point Compendia. So, we haven’t had a different one since then. Is that clear? Nancy,perhaps you’d like to take on 0002?

Dr. Nancy A. Simonian

So, as we said we have the commercially scalable sell line. We have material from that sell line at aproduction level that is going to be similar to what we’re going to be havingfor the safety material and commercial material in that’s what’s in currentlythe bridging trials that we described that we’re seeing very favorable PK andPE in safety. So, that’s a reallycritical piece of data. There’sadditional scale up working that is ongoing to get us ready for the productionfor Phase III. And, we have not beenexplicit about who is actually doing the contact manufacturing for us. But, we’ve been very pleased with theprogress that we’ve made as it relates to the material and the yield from thecell line that we have.

May-Kin Ho – GoldmanSachs

So the gating factor right now is to make the clinicalmaterial?

Dr. Nancy A. Simonian

Between now and the start of Phase III there are multiplethings that are ongoing. First of allit’s to gather all of the data from the ongoing studies to make sure that wehave the appropriate doses that we’re selecting for the Phase III. That’s a critical decision in terms of – butthings are looking very favorable in terms of the previous materially. Secondly, we have a significant regulatoryinteractions that are ongoing both with the USand European authorities. And thirdly,we have the clinical trial material that is on track but is in progress forPhase III. So, all of those together arewhat are the gating factors for starting Phase III.

May-Kin Ho – GoldmanSachs

Just to follow up you need to actually find the dose?

Dr. Nancy A. Simonian

As you know the original Phase II studies that were donewere using material from a different cell line and so as you know when youdevelop a new cell line you have to demonstrate that your material hascomparability to your previous material. So, that’s really where we are and in addition to the comparability thephysical chemicals comparability we want to ensure that the pharmacokinetics ofthe new material look similar to the previous material. And, the good news is that it’s looking verysimilar and that’s going to then allow us to translate in the doses that wereeffective in the Phase II study to the doses in the Phase III.

May-Kin Ho – GoldmanSachs

I was just commenting on what you said that you actuallyneed to find the dose. Because, myunderstanding is that your bridging study tells you that it’s very similartherefore you can use the former dose.

Dr. Nancy A. Simonian

Sorry. Okay, so whatI was saying is that the bridging study are the vehicle by which we determinethe appropriate doses for Phase III. Thepreliminary data that we have suggests that the new material is very similarbut, we want to make sure that we have that actually completely confirmedbefore we select the final doses which will be likely similar to what was usedin previous studies.

Operator

Edward Tenthoff with Piper Jaffray your line is open.

Edward Tenthoff –Piper Jaffray

I may have missed this but is the non-Hodgkin’s lymphomaenrollment still on track for early 08?

Dr. Nancy A. Simonian

I think we said that we’re over two third of the patientsthat are enrolled. This is a very largeinternational Phase II trial and that we plan to have enrollment complete inthe first half of 2008. We’re on trackfor that.

Edward Tenthoff –Piper Jaffray

I realize a lot of the other questions have been answeredbut the focus has really been on leveraging the top line growth here and toearnings but when you consider the strength of the balance sheet and also theincrease in your equity capital recently how are you guys evaluating strategicoptions in particular to grow the oncology franchise?

Dr. Deborah L.Dunsire

I think as we’ve talked about before we have a very strongand busy ongoing program evaluating appropriate opportunities to bring into thecompany, to strengthen the pipeline, looking at acquisitions, licensing anddifferent partnerships. We will continueto do that and we will continue to be very disciplined in looking at the pricepoints and the value of those assets. Itis competitive but there are certainly some interesting programs that wecontinue to look at. And, it is apriority for us but there’s also many things out there that sound good but whenyou dig under the surface we don’t believe will be successful so we avoid thoseones or that are simply priced beyond their ability to deliver value back toour shareholders so we don’t choose to go forward with those either. We’ve focused very much on keeping ourselveson track moving our own pipeline forward but have a very strong dedicatedeffort to looking for those transformative value opportunities to bring intothe company to strengthen it.

Operator

We’ll go next to Geoff Meacham with JP Morgan.

Matthew Rodin – JPMorgan

Hi this is Matt Rodin in for Geoff today. I guess it’s a question for Christophe I’mjust wondering if you could talk a little bit broader about your guidance forVELCADE for 2008 specifically with respect to where growth should come from interms of segments of multiple myeloma market. So, specifically for front line versus [inaudible] and then in thefrontline transplant eligible versus ineligible.

Dr. Christophe M.Bianchi

We do expect number one we’re the leader in relaxed settingand we do expect to keep a leadership position in the relax setting formultiple myeloma. This being said a bigaccelerator of our growth in the second half of the year once we get theapproval will be in the frontline setting. I think naturally we are seeing some off label sales of VELCADE,unsolicited sales of VELCADE in the frontline setting and we tended to see abit more of those sales in the transplant setting than we did in the nontransplant settings this probably because the transplant setting is being doneby academic physicians. So, we wouldexpect to see based on the Vista data a big area of growth with the nontransplant eligible patients because the Vista data is non transplant eligiblepatients and the data is very impressive indeed.

This being said we also got a great presentation off the IFMdata at ASH which will provide further data for the market. Bottom line, we’ll keep growing, we’ll keepour leadership position and we’ll make some [inaudible] in the area offrontline especially probably in the non transplant eligible patients.

Matthew Rodin – JPMorgan

Just a question to follow up on that IFM study do you knowshould we expect to see survival data from that study in a conference mid yearor perhaps later in the year?

Dr. Nancy A. Simonian

As you know this is a cooperative group study that’s beingled by [inaudible] so, I think it’s likely that he will present follow up datain 2008 and at major medical meetings. And, I think clearly as the data maturesthere will have the opportunity to see survival data it’s just a question ofthe maturity of the data. But, I think Iwould expect that you would see an update this year.

Matthew Rodin – JPMorgan

Can you comment on the risk that the payment arrangement inthe UK could be see broader adoptionacross Europe?

Dr. Deborah L.Dunsire

Obviously our partners Johnson & Johnson would be muchcloser to that situation. I think whathas been publicly said by them is that this is a specific arrangement for the UKand they have different arrangements with different health authorities but theydo not see expansion of the UK beyondthat in Europe. But, they would be able to give you much more color on that.

Operator

We go next to Brett Holly with CIBC.

Brett Holly – CIBCWorld Markets

I just had a quick question on when we might expect datafrom the Phase II trial in non-Hodgkin’s lymphoma in 2009 I assume?

Dr. Nancy A. Simonian

I think that the first key milestone is completing patientaccruals. The end point to the study areevent based driven and I think we’ll be in a position as the year goes on tobetter inform you about when we think we’re going to hit those event datemilestones that will trigger the analysis from the trials.

Operator

Next we’ll go to Lehman Brothers’ James Birchenough.

James

A couple of questions – one, I’m just interested if you cancomment on the differential dynamics between the community physicians and thelarger academic centers in terms of what percentage of patients are treated inthe community versus larger centers. Ifyou could comment specifically on a magnitude of any economic incentives forcommunity physicians to use VELCADE and as well whether there’s any limitationsin community physicians given the infusions?

Dr. Christophe M.Bianchi

The breakdown of sales in academic centers and communitycenters is probably more than 80% of the patients get treated in non academiccenters in community centers. The marketdynamic are sometimes a bit different for instance I spoke earlier about thefrontline transplant setting usage of VELCADE and in the academic setting theytend to sometimes adopt drugs more quickly because they can effectively buy theproduct. And, even if CMS does notreimburse for it later on it because it’s not covered yet they may eat up thecost and give VELCADE to the patients. So, we tend to see a quicker adoption pre-approval in academic centers.

This being said the dynamics eventually are going to be Ibelieve the same because VELCADE brings the value both for the academic treatedpatients and the non academic treated patients. What will drive the behaviors of those physicians and the treatment thepatients will receive is the advocacy of the product. You spoke about the economic incentive forthe physician in the community setting and we don’t think this plays a majorrole. Physicians make decisions based onthe benefit their patient gets and with VELCDE in the relapse settings getsgreat survival and we do expect that they will get great survival with VELCADEin the frontline setting. There is someissue on fees but we know the physicians treat the patients for the bestinterest of the patient and economic incentives don’t play a major role intheir decisions especially after the change in regulations of Medicare a fewyears ago. The economic incentive forthe physician is limited.

James

Just in terms of easy gains can you describe what percent ofpatients right now in the frontline setting may be getting already melphalanprednisone where they’d go to VMP pretty quickly?

Dr. Christophe M.Bianchi

We have seen an increase melphalan prednisone in combinationwith – this because melphalan prednisone in the USwas not really tested to be a very strong contender but when it’s associatedwith other treatment and VELCADE is definitely one we will expect to see a biggrowth of that because advocacy will drive behavior. So, there is some patients that do get MP andonly MP and we would be in a great position to transfer those patients from MPto VMP. This being said there is also asegment of the market that is right now using [Celldex] and we may see someunsolicited use from [Celldex] for those patients to get VELCADE [Celldex]based on the strength of the [inaudible] that was released at ASH. If you remember when you add VELCADE to a [Celldex]regiment the response rate quadruples. It’s quite spectacular the complete response rate goes from 9 to 36%which is really a spectacular increase. Our supplemental NDA is not incorporating

this data coming from Italybut still it may drive some unsolicited use.

James

I know this may change with the Vistadata but just currently what’s the duration of therapy with VELCADE on thefrontline setting versus the relapse setting. If you could comment on that?

Dr. Deborah L.Dunsire

I think what we’ve said is in responding patients the relaxedpatients are getting about six cycles of therapy and the frontline Vista trialsis a 54 week regiment. Now, not everypatient gets all the weeks for a number of different reasons. In the Phase II trial that had a similardesign I think they averaged about 44 vials of therapy in the Phase II trailsthat were the same design as Vista. Though, you know, it’s certainly looking likeabout double in the frontline setting for the utilization of VELCADE.

I think the other thing to say you had a question on anylimitations on administration and I just wanted to circle back with you on thatand I think the administration of VELCADE is basically a three secondpush. So, patients can be in and outvery quickly. It’s not something thatabsorbs a lot of chair time and in a community practice that’s important. So, the physicians are able to move thepatient through very quickly. They do gain an infusion fee from the utilizationof VELCADE but they don’t occupy their infusion suite for prolonged periods oftime with the VELCADE patients. So,we’ve seen that be very efficient for them and as Christophe pointed out withthe non transplant eligible and also they are often elderly that’s a veryimportant thing to be able to be seen in the community setting and have an administrationthat is very quick and efficient. So, Ithink that’s going to be an important driver for VELCADE.

Operator

Next we’ll move to Tom McGahren at Merrill Lynch.

Thomas McGahren –Merrill Lynch

Specifically when will we see additional data for MLN0002 in2008? Secondly, are there any updates onthe evolution in upfront trials in the frontline setting? And, is there any progress in [inaudible] theMLN1202 program? And then I have onefinancial question.

Kyle Kuvalanka

We’re going to have Nancytake the question on 0002 evolution and upfront. We’ll have Deborah talk about 1202 and thenMarsha will take your financial question.

Dr. Nancy A. Simonian

Tom I think we said that we will have the full data from thebridges study available 2008. We haven’tbeen explicit about where we will present that data but I think certainly wewould not be able to discuss it externally with all of you. In terms of evolution and upfront both ofthose trials are progressing as planned and I think we may have data available,at least preliminary data near the end of the year from probably at least oneof those studies.

Dr. Deborah L.Dunsire

On 1202 that’s something that initially when the MS trialwas running we looked at potentially [inaudible] I think now we look at outlicensing that molecule and our business development colleagues are active onthat front. It’s an important objectivefor us but it does require that we find the right partner.

Kyle Kuvalanka

And you had some more questions on financials?

Thomas McGahren –Merrill Lynch

Just one question – do you think there’s any potential foractually reducing R&D spending going forward? It looks like I know you didn’t bring it downbetween R&D and SG&A for the expense guidance but is there anyway ofactually reducing that R&D spend to maybe better leverage the VELCADE topline to the bottom line?

Marsha H. Fanucci

I think first of all Tom a lot of our focus in the companywith respect to expense management has been more on the G&A side of thecompany because I think we’re having to really gain that leverage through theareas that are not as direct value drivers. And, there’s been a lot of attention to efficiency there. As we look at the R&D and SG&A lines,as I mentioned when we finish the year I certainly will give you some moredirectional information about the breakout but I think you do need to keep inmind that we have a long patent life on VELCADE. We do certainly view VELCADE as a continuedgrowth driver for the company and therefore the investment in VELCADE includethe NHL trial, the subcutaneous trial, upfront, evolution, two Phase III trialsfor 0002 and a emerging pipeline in the oncology area of some very excitingassets. So, while we are certainlyextremely attentive to operating leverage and continuing to grow that and asyou look at the profile just over the guidance that we had gave you for 2007and the guidance for 2008 you see that we are intending to double thatperformance for the company. You have toalso keep in mind that we have a very robust pipeline that we want to ensuresees the light of day and we will continue to invest in that albeit prudentlywith consideration to delivering operating leverage.

Thomas McGahren –Merrill Lynch

Have there been any [inaudible] commissions paid to J&Jto this point with regard to the co-promote?

Marsha H. Fanucci

When you see the final results for the year any of thosepayments are going to show up in the SG&A lines and they fall within theguidance that we had given you earlier and that we had provided on the Q3call. So, you’ll see them more visiblywith the year end results. But, they arecertainly incorporated in the guidance.

Thomas McGahren –Merrill Lynch

Is it possible to give a percentage of the SG&A that isthe commissions?

Marsha H. Fanucci

We haven’t got to that level of detail but it’s a very minorportion of SG&A.

Operator

Our last question will come from Sapna Srivastava withMorgan Stanley.

Sapna Srivastava –Morgan Stanley

Almost all my questions have been answered. Just two quick questions – one is could yougive us your market share through the [inaudible] currently and for the secondand third line? And then secondly ifyou’re willing to comment on what exactly are you seeking for the frontline?

Kyle Kuvalanka

We’re going to have Christophe take the question on marketshare and then Nancy will take thequestion on our label discussions with the FDA.

Dr. Christophe M.Bianchi

What I can tell you is in second and third line we are themarket leader in those fields. We doperform studies on a regular basis but we really use them for giving us a senseof direction of where the market is moving but they are not that accurate, theyare not so accurate that we give you the numbers. But, I can tell you that is VELCADE is themarket leader in the relapse multiple myeloma setting and we do intend tobecome the leader in the frontline setting as well.

Dr. Nancy A. Simonian

We would obviously want to seek the broadest label possiblein the frontline. So, we have proposalsand then we have discussions with the FDA and obviously those things haven’toccurred yet. You know, we think basedon the strength of all the data [inaudible].

Dr. Deborah L.Dunsire

Thanks everybody for taking time to join us this morning andwe look forward to seeing many of you in San Francisconext week. Bye-bye.

Operator

This does conclude today’s Millennium business updateconference. We thank you allfor your participation. You may nowdisconnect your lines and have agreat day.

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Source: Millennium Pharmaceuticals 2008 Guidance Call Transcript
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