Document and Entity Information	3 Months Ended
Document and Entity Information	Mar. 31, 2011	Apr. 28, 2011
Document and Entity Information
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2011
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q1
Entity Registrant Name	ALEXION PHARMACEUTICALS INC
Entity Central Index Key	0000899866
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		91,917,665

Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2011	Dec. 31, 2010
Assets
Cash and cash equivalents	$ 289,430	$ 267,145
Marketable securities	59,354	94,460
Trade accounts receivable, net	200,729	168,732
Inventories	74,398	62,165
Deferred tax assets	20,470	19,643
Prepaid expenses and other current assets	24,865	34,411
Total current assets	669,246	646,556
Property, plant and equipment, net	160,625	162,240
Intangible assets, net	95,299	24,146
Goodwill	79,114	19,954
Deferred tax assets	144,844	154,569
Other assets	5,401	4,572
Total assets	1,154,529	1,012,037
Liabilities and Stockholders' Equity
Accounts payable	9,025	16,026
Accrued expenses	116,623	107,030
Deferred revenue	11,615	2,896
Revolving credit facility	60,000
Convertible notes	3,718
Current portion of capital lease obligations	1,052	715
Other current liabilities	15,149	11,848
Total current liabilities	217,182	138,515
Capital lease obligations, less current portion	462	744
Convertible notes		3,718
Deferred tax liabilities	10,259
Contingent consideration	15,617
Other liabilities	9,644	9,324
Total liabilities	253,164	152,301
Commitments and contingencies (Note 16)
Stockholders' Equity:
Preferred stock, $0.0001 par value; 5,000 shares authorized, no shares issued or outstanding
Common stock, $0.0001 par value; 145,000 shares authorized; 92,396 and 91,591 shares issued at March 31, 2011 and December 31, 2010, respectively	6	6
Additional paid-in capital	1,195,414	1,173,480
Treasury stock, at cost	(2,676)	(2,676)
Accumulated other comprehensive loss	(14,275)	(7,140)
Accumulated deficit	(277,104)	(303,934)
Total stockholders' equity	901,365	859,736
Total liabilities and stockholders' equity	$ 1,154,529	$ 1,012,037

Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Per Share data, unless otherwise specified	Mar. 31, 2011	Dec. 31, 2010
Condensed Consolidated Balance Sheets (Parenthetical)
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	5,000	5,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	145,000	145,000
Common stock, shares issued	92,396	91,591

Condensed Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2011	Mar. 31, 2010
Condensed Consolidated Statements of Operations
Net product sales	$ 166,126	$ 117,578
Cost of sales	19,228	13,999
Operating expenses:
Research and development	30,810	22,374
Selling, general and administrative	65,858	50,635
Acquisition-related costs	9,928
Amortization of purchased intangible assets	69
Total operating expenses	106,665	73,009
Operating income	40,233	30,570
Other income and expense:
Investment income	396	250
Interest expense	(198)	(210)
Foreign currency gain (loss)	395	(537)
Income before income taxes	40,826	30,073
Income tax provision	13,996	9,139
Net income	$ 26,830	$ 20,934
Earnings per common share
Basic	$ 0.30	$ 0.24
Diluted	$ 0.28	$ 0.23
Shares used in computing earnings per common share
Basic	90,862	88,506
Diluted	95,183	92,090

Condensed Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2011	Mar. 31, 2010
Cash flows from operating activities:
Net income	$ 26,830	$ 20,934
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	4,317	3,842
Change in value of contingent consideration	136
Share-based compensation expense	11,331	8,104
Deferred taxes	10,064	6,333
Marketable securities premium amortization	110	312
Unrealized foreign currency (gain) loss	(3,138)	2,977
Unrealized (gain) loss on forward contracts	(1,228)	2,672
Loss on disposal of property, plant and equipment		63
Changes in operating assets and liabilities, excluding the effect of acquisitions:
Accounts receivable	(26,560)	(17,434)
Inventories	(10,379)	(12,755)
Prepaid expenses and other assets	(1,053)	9,105
Accounts payable and accrued expenses	5,447	(4,371)
Deferred revenue	8,484	1,710
Net cash provided by operating activities	24,361	21,492
Cash flows from investing activities:
Purchases of marketable securities		(5,209)
Proceeds from maturity or sale of marketable securities	35,000	5,250
Purchases of property, plant and equipment	(2,222)	(2,317)
Payments for acquisition of business, net of cash acquired	(105,405)
Increase in restricted cash	(338)
Net cash used in investing activities	(72,965)	(2,276)
Cash flows from financing activities:
Payments on capital leases	(92)	(171)
Excess tax benefit from stock options	299	313
Proceeds from revolving credit facility	60,000
Net proceeds from the exercise of stock options	9,685	10,594
Net cash provided by financing activities	69,892	10,736
Effect of exchange rate changes on cash	997	(1,062)
Net change in cash and cash equivalents	22,285	28,890
Cash and cash equivalents at beginning of period	267,145	157,172
Cash and cash equivalents at end of period	$ 289,430	$ 186,062

Business	3 Months Ended
Business	Mar. 31, 2011
Business
Business	1. Business Alexion Pharmaceuticals, Inc. ("Alexion" or the "Company") is a biopharmaceutical company focused on serving patients with severe and ultra-rare disorders through the innovation, development and commercialization of life-transforming therapeutic products. Our marketed product Soliris^® (eculizumab) is the first and only therapy approved for the treatment of patients with paroxysmal nocturnal hemoglobinuria (PNH), an ultra-rare and life-threatening blood disorder. We are also evaluating other potential indications for Soliris, and we are progressing with other biotechnology product candidates which are now in the early stages of development. We were incorporated in 1992 and began commercial sale of Soliris in 2007.

Basis of Presentation and Principles of Consolidation	3 Months Ended
Basis of Presentation and Principles of Consolidation	Mar. 31, 2011
Basis of Presentation and Principles of Consolidation
Basis of Presentation and Principles of Consolidation	2. Basis of Presentation and Principles of Consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States 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 accounting principles generally accepted in the United States for complete financial statements. These accounting principles were applied on a basis consistent with those of the consolidated financial statements contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2010. In our opinion, the accompanying unaudited consolidated financial statements include all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of our financial statements for interim periods in accordance with accounting principles generally accepted in the United States. The condensed consolidated balance sheet data as of December 31, 2010 was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States. These interim financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2010 included in our Annual Report on Form 10-K. The results of operations for the three months ended March 31, 2011 are not necessarily indicative of the results to be expected for the full year. The financial statements of our subsidiaries with functional currencies other than the U.S. dollar are translated into U.S. dollars using period-end exchange rates for assets and liabilities, historical exchange rates for stockholders' equity and weighted average exchange rates for operating results. Translation gains and losses are included in accumulated other comprehensive income (loss), net of tax, in stockholders' equity. Foreign currency transaction gains and losses are included in the results of operations in other income and expense. The accompanying unaudited condensed consolidated financial statements include the accounts of Alexion Pharmaceuticals, Inc. and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. On March 30, 2011, we announced that our Board of Directors has approved a two-for-one stock split, payable in the form of a 100% stock dividend. The stock split is subject to approval by our stockholders of an amendment to our certificate of incorporation to increase the number of authorized shares of common stock from 145,000 to 290,000, which will be acted upon at our Annual Meeting of Stockholders on May 11, 2011.

- Definition

Description containing the entire organization, consolidation and basis of presentation of financial statements disclosure. May be provided in more than one note to the financial statements, as long as users are provided with an understanding of (1) the significant judgments and assumptions made by an enterprise in determining whether it must consolidate a VIE and/or disclose information about its involvement with a VIE, (2) the nature of restrictions on a consolidated VIE's assets reported by an enterprise in its statement of financial position, including the carrying amounts of such assets, (3) the nature of, and changes in, the risks associated with an enterprise's involvement with the VIE, and (4) how an enterprise's involvement with the VIE affects the enterprise's financial position, financial performance, and cash flows. Describes procedure if disclosures are provided in more than one note to the financial statements.

+ References+ Details

Acquisitions

3 Months Ended

Mar. 31, 2011

Acquisitions

Acquisitions

3. Acquisitions

Acquisition of Taligen Therapeutics, Inc.

On January 28, 2011, we acquired all of the outstanding capital stock of Taligen Therapeutics, Inc. (Taligen) in a transaction accounted for under the acquisition method of accounting for business combinations. Under the acquisition method of accounting, the assets acquired and liabilities assumed of Taligen were recorded as of the acquisition date, at their respective fair values. The reported consolidated financial condition and results of operations after completion of the acquisition reflect these fair values. Taligens's results of operations are included in the consolidated financial statements from the date of acquisition.

In the first quarter of 2011, we made initial payments of $111,792 in cash and may make additional future payments of up to $367,000 in contingent milestone payments. Prior to the acquisition, Taligen was a privately held development-stage biotechnology company involved in the development of preclinical compounds including product candidates for the potential treatment of patients with ophthalmic diseases such as age-related macular degeneration (AMD), as well as other novel antibody and protein regulators of the complement inflammatory pathways. We acquired Taligen to broaden our portfolio of preclinical compounds and to expand our capabilities in translational medicine.

During the three months ended March 31, 2011, we incurred approximately $9,438 in expenses related to the Taligen acquisition. Acquisition-related costs include separately identifiable transactions of $9,369, including payments to employees of $6,597 and banking, legal, accounting and valuation expenses totaling $2,688. The acquisition-related costs also include $84 related to the changes in fair value of contingent consideration.

The Taligen acquisition included contingent consideration which would obligate us to make up to $367,000 in cash milestone payments to the former Taligen shareholders upon achievement of various development and commercial milestones.

The initial fair value of contingent consideration was estimated at $10,313, which was recorded as a noncurrent liability. We determined the fair value of these obligations to pay additional milestone payments using various estimates, including probability of success, discount rates and amount of time until the conditions of the milestone payments are met. This fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement within the fair value hierarchy. The resulting probability-weighted cash flows were discounted using a 10-year BBB industrial index rate of 4.9%, which we believe is appropriate and representative of a market participant assumption. The range of estimated milestone payments is from zero if no clinical milestones are achieved for any product to $367,000 if six products gain both U.S and European marketing approval.

Subsequent to the acquisition date, we have adjusted the contingent consideration to fair value with changes in fair value recognized in operating earnings. Changes in fair values reflect new information about the probability and timing of meeting the conditions of the milestone payments. In the absence of new information, changes in fair value will only reflect the passage of time as development work progresses towards the achievement of the milestones. At March 31, 2011, the balance of the contingent consideration for Taligen was $10,397.

A reconciliation of upfront payments in accordance with the purchase agreement to the total purchase price is presented below:


	Taligen
Upfront payment in accordance with agreement	$	111,792
Expense related to employee payments		(6,259	)

Total consideration transferred	$	105,533

Estimated fair value of contingent consideration		10,313

Total purchase price	$	115,846

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


	Taligen
Cash and cash equivalents	$	2,678
Purchased technology		5,000
In-process research and development		59,500
Other assets		555

Assets acquired		67,733

Deferred tax liability (net)		(9,567	)
Other liabilities assumed		(1,084	)

Liabilities assumed		(10,651	)

Goodwill		58,764

Net assets acquired	$	115,846

Asset categories acquired in the Taligen acquisition included working capital, fixed assets, purchased technology and in-process research and development (IPR&D). The fair value of working capital was determined to approximate book values. The allocation of the purchase price for the acquisition has been prepared on a preliminary basis, and changes to that allocation may occur as additional information becomes available related to the valuation of intangible assets and deferred taxes.

Purchased technology includes a platform technology that can be used for the development of other compounds. The estimated fair value was determined using the relief from royalty method, an approach under which fair value is estimated to be the present value of royalties saved because we own the intangible asset and therefore do not have to pay a royalty for its use. Our estimated useful life of the purchased technology is 12 years.

Intangible assets associated with IPR&D projects relate to two preclinical Taligen product candidates. Management estimated the acquisition-date fair value of intangible assets related to IPR&D to be $59,500. The estimated fair value was determined using the cost approach. The cost approach estimates the costs that would be incurred to replace the assets being purchased. The fair value using the cost approach was dependent on an estimated rate of return on historical costs incurred of 25%, which represents a rate of return that a market participant would expect for these assets. Intangible assets related to IPR&D projects are considered to be indefinite-lived until the completion or abandonment of the associated research and development efforts. During the period the assets are considered indefinite-lived, they will not be amortized but will be tested for impairment on an annual basis, as well as between annual tests if we become aware of any events occurring or changes in circumstances that would indicate a reduction in the fair value of the IPR&D projects below their respective carrying amounts. If and when development is complete, which generally occurs when regulatory approval to market a product is obtained, the associated assets would be deemed finite-lived and would then be amortized based on their respective estimated useful lives at that point in time.

The excess of purchase price over the fair value amounts assigned to the assets acquired and liabilities assumed represents the goodwill amount resulting from the acquisition. We do not expect any portion of this goodwill to be deductible for tax purposes. The goodwill attributable to our acquisition of Taligen has been recorded as a noncurrent asset and is not amortized, but is subject to an annual review for impairment. The factors that contributed to the recognition of goodwill included the synergies that are specific to our business and not available to market participants, including our unique ability to leverage our knowledge in the areas of complement inhibition and rare diseases for the development of the Taligen compounds and technology, the acquisition of a talented workforce that brings translational medicine expertise to all of our preclinical compounds and our ability to utilize our research capacity to the development of additional compounds using acquired technology.

We recorded a net deferred tax liability of $9,959. This amount was primarily comprised of $21,537 related to IPR&D, offset by acquired net operating losses and research credit carryovers totaling $13,338.

Pro forma financial information (unaudited)

The following unaudited pro forma information presents the combined results of operations for the three months ended March 31, 2011 and 2010 as if the acquisition of Taligen had been completed on January 1, 2010. The pro forma results do not reflect any material adjustments, operating efficiencies or potential cost savings which may result from the consolidation of operations.


	Three months ended March 31,
	2011		2010
Revenues	$	166,126	$	117,578
Net income		25,724		18,237
Earnings per common share
Basic	$	0.28	$	0.21
Diluted	$	0.27	$	0.20

We have determined that the presentation of Taligen's results of operations is impracticable for the three months ended March 31, 2011 due to the integration of Taligen into our operations upon acquisition.

Acquisition of Orphatec Pharmaceuticals GmbH Assets

On February 8, 2011, we acquired certain patents and assets from Orphatec Pharmaceuticals GmbH (Orphatec) related to an investigational therapy for patients with molybdenum cofactor deficiency (MoCD) Type A, an ultra-rare genetic disorder characterized by severe brain damage and rapid death in newborns. The acquisition was accounted for under the acquisition method of accounting for business combinations. Orphatec is a privately held development-stage biotechnology company with headquarters in Cologne, Germany.

In February 2011, we made an initial payment of $2,550 in cash, and we paid an additional $500 in April 2011 related to post closing conditions in the asset purchase agreement. The $500 was reflected in other current liabilities and included in the total purchase price as of March 31, 2011. We may also make additional future payments of up to $42,000 in contingent milestone payments. We will also make future payments to Orphatec for manufacturing, development, and other services, which we estimate to be fair value. We acquired these assets to advance our mission to provide life-transforming treatments for patients with severe and life-threatening disease states.

During the three months ended March 31, 2011, we incurred approximately $559 in expenses related to the Orphatec acquisition. Acquisition-related costs include separately identifiable transactions of $507, including legal, accounting and valuation expenses, as well as $52 related to the changes in fair value of contingent consideration.

The Orphatec acquisition included contingent consideration which would obligate us to make up to $42,000 in cash milestone payments to the former Orphatec shareholders upon various development, regulatory and commercial milestones.

The initial fair value of contingent considerations was $5,168, which was recorded as a noncurrent liability. We determined the fair value of these obligations to pay additional milestone payments using various estimates, including probability of success, discount rates and amount of time until the conditions of the milestone payments are met. This fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement within the fair value hierarchy. The resulting probability-weighted cash flows were discounted at the rate of 6% for development milestones and 23% for commercial milestones, which we believe is appropriate and representative of a market participant assumption. The range of estimated milestone payments is from zero if no products gain market approval to $42,000 if all indications for up to two products gain both U.S and European marketing approval and reach applicable sales levels.

Subsequent to the acquisition date, we have measured the contingent consideration arrangement at fair value with changes in fair value recognized in operating earnings. Changes pertaining to facts and circumstances that existed as of the acquisition date will be recognized as adjustments to goodwill. Changes in fair values reflect new information about the IPR&D assets and the passage of time. In the absence of new information, changes in fair value will only reflect the passage of time as development work progresses towards the achievement of the milestones. At March 31, 2011, the balance of the contingent consideration for Orphatec was $5,220.

A reconciliation of upfront payments in accordance with the purchase agreement to the total purchase price is presented below:


	Orphatec
Upfront payments in accordance with agreement	$	3,050
Estimated fair value of contingent consideration		5,168

Total purchase price	$	8,218


	Orphatec
In-process research & development	$	8,050
Other noncurrent assets		73

Assets acquired		8,123

Deferred tax liability (net)		(301	)

Liabilities assumed		(301	)

Goodwill		396

Net assets acquired	$	8,218

Asset categories acquired in the Orphatec acquisition included patents, licenses, fixed assets and IPR&D. The allocation of the purchase price for the acquisition has been prepared on a preliminary basis, and changes to that allocation may occur as additional information becomes available related to the valuation of intangible assets and transition services.

Intangible assets associated with IPR&D projects relate to the preclinical product candidate. Management estimated the acquisition-date fair value of intangible assets related to IPR&D to be $8,050. The estimated fair value was determined using the income approach, which discounts expected future cash flows to present value. We estimated the fair value using a present value discount rate of 23%, which is based on the estimated weighted-average cost of capital for companies with profiles substantially similar to that of Orphatec. This is comparable to the estimated internal rate of return for their operations and represents the rate that market participants would use to value the intangible assets. The projected cash flows from the IPR&D project was based on key assumptions such as: estimates of revenues and operating profits related to the project considering its stage of development; the time and resources needed to complete the development and approval of the product candidate; the life of the potential commercialized product and associated risks, including the inherent difficulties and uncertainties in developing a drug compound such as obtaining marketing approval from the FDA and other regulatory agencies; and risks related to the viability of and potential alternative treatments in any future target markets.

The $301 of deferred tax liabilities resulting from the acquisition was primarily related to IPR&D.

We do not consider the acquisition of Orphatec to be a material business combination and therefore have not disclosed the pro forma results of operations as required for material business combinations.

Revenue and Accounts Receivable	3 Months Ended
Revenue and Accounts Receivable	Mar. 31, 2011
Revenue and Accounts Receivable
Revenue and Accounts Receivable	4. Revenue and Accounts Receivable Revenue We recognize revenue from product sales when persuasive evidence of an arrangement exists, title to product and associated risk of loss has passed to the customer, the price is fixed or determinable, collection from the customer is reasonably assured and we have no further performance obligations. Revenue is recorded upon receipt of the product by the end customer, which is typically a hospital, physician's office, private or government pharmacy or other health care facility. Amounts collected from customers and remitted to governmental authorities, such as value-added taxes (VAT) in foreign jurisdictions, are presented on a net basis in the Company's statements of operations and do not impact net product sales. Because of factors such as the pricing of Soliris, the limited number of patients, the short period from product sale to patient infusion and the lack of contractual return rights, Soliris customers often carry limited inventory. We also monitor inventory within our sales channels to determine whether additional deferrals are appropriate based on these inventory levels. To date, actual refunds and returns have been negligible. We have volume-based arrangements with governments in certain countries in which reimbursement is limited to a contractual amount. As we ship product under these arrangements, we estimate and record the incremental discounts as a reduction of revenue. In addition to sales in countries where Soliris is commercially available, we have also recorded revenue on sales for patients receiving Soliris treatment through named-patient programs. The relevant authorities or institutions in those countries have agreed to reimburse for product sold on a named-patient basis where Soliris has not received final approval for commercial sales. We record estimated rebates payable under governmental programs, including Medicaid in the United States and other programs outside the United States, as a reduction of revenue at the time of product sale. Our calculations related to these rebate accruals require analysis of historical claim patterns and estimates of customer mix to determine which sales will be subject to rebates and the amount of such rebates. We update our estimates and assumptions each period and record any necessary adjustments, which may have an impact on revenue in the period in which the adjustment is made. Generally, the length of time between product sale and the processing and reporting of the rebates is three to six months. We record distribution and other fees paid to our customers as a reduction of revenue, unless we receive an identifiable and separate benefit for the consideration and we can reasonably estimate the fair value of the benefit received. If both conditions are met, we record the consideration paid to the customer as an operating expense. These costs are typically known at the time of sale, resulting in minimal adjustments subsequent to the period of sale. We enter into foreign exchange forward contracts to hedge exposures resulting from portions of our forecasted intercompany revenues that are denominated in currencies other than the U.S. dollar. These hedges are designated as cash flow hedges upon inception. We record the effective portion of these cash flow hedges to revenue in the period in which the sale is made to an unrelated third party and the derivative contract is settled. Accounts Receivable Our product sales to government-owned or government-funded customers in certain European countries, including Greece, are subject to payment terms that are statutorily determined. Because these customers are government-owned or government-funded, we may be impacted by declines in sovereign credit ratings or sovereign defaults in these countries. In 2010, the Greek government announced a plan for repayment of its debt to international pharmaceutical companies. This plan calls for the majority of pharmaceutical industry receivables from 2007 to 2009 to be settled in non-interest bearing bonds issued by the Greek government, with maturity dates ranging from 1 to 4 years. For non-interest bearing receivables with an estimated payment beyond one year and for Greek bonds, we discount the accounts receivable to present value, with a corresponding adjustment to revenue. A significant or further decline in sovereign credit ratings or a default in Greece, or in other countries, may decrease the likelihood that we will collect accounts receivable or may increase the discount rates and the length of time until receivables are collected, which could result in a negative impact to our operating results.

Inventories

3 Months Ended

Mar. 31, 2011

Inventories

Inventories

5. Inventories

Inventories are stated at the lower of cost or estimated realizable value. We determine the cost of inventory using the weighted-average cost method.

The components of inventory are as follows:


	March 31, 2011		December 31, 2010
Raw materials	$	4,901	$	4,835
Work-in-process		49,542		37,312
Finished goods		19,955		20,018

	$	74,398	$	62,165

Intangible Assets

3 Months Ended

Mar. 31, 2011

Intangible Assets

Intangible Assets

6. Intangible Assets

The following table summarizes the carrying amount of our intangible assets:


	March 31, 2011		December 31, 2010
Finite-lived intangible assets	$	27,749	$	24,146
Indefinite-lived intangible assets		67,550		—

Intangible assets	$	95,299	$	24,146

Goodwill	$	79,114	$	19,954

The following table summarizes the changes in the carrying amount of goodwill:


Balance at December 31, 2010	$	19,954
Goodwill resulting from the acquisition of Taligen		58,764
Goodwill resulting from the acquisition of Orphatec		396

Balance at March 31, 2011	$	79,114

As of March 31, 2011, we had indefinite-lived intangible assets of $67,550, which consisted of $59,500 and $8,050 of purchased IPR&D from our acquisitions of Taligen and Orphatec, respectively.

Comprehensive Income

3 Months Ended

Mar. 31, 2011

Comprehensive Income

Comprehensive Income

7. Comprehensive Income

The following table summarizes components of our comprehensive income:


	Three months ended March 31
	2011			2010
Net income	$	26,830		$	20,934
Unrealized gain (loss) on hedge contracts, net of tax		(7,851	)		13,273
Net unrealized gain (loss) on available for sale securities, net of tax		7			(52	)
Foreign currency translation adjustment		709			(651	)

Comprehensive income	$	19,695		$	33,504

- Definition

This label may include the following: 1) the amount of income tax expense or benefit allocated to each component of other comprehensive income, including reclassification adjustments, 2) the reclassification adjustments for each classification of other comprehensive income and 3) the ending accumulated balances for each component of comprehensive income. Components of comprehensive income include: (1) foreign currency translation adjustments; (2) gains and losses on foreign currency transactions that are designated as, and are effective as, economic hedges of a net investment in a foreign entity; (3) gains and losses on intercompany foreign currency transactions that are of a long-term-investment nature, when the entities to the transaction are consolidated, combined, or accounted for by the equity method in the reporting enterprise's financial statements; (4) change in the market value of a futures contract that qualifies as a hedge of an asset reported at fair value; (5) unrealized holding gains and losses on available-for-sale securities and that resulting from transfers of debt securities from the held-to-maturity category to the available-for-sale category; (6) a net loss recognized as an additional pension liability not yet recognized as net periodic pension cost; and (7) the net gain or loss and net prior service cost or credit for pension plans and other postretirement benefit plans.

+ References+ Details

Debt	3 Months Ended
Debt	Mar. 31, 2011
Debt
Debt	8. Debt In March 2011, we entered into a Second Amended and Restated Credit Agreement (the Amended Credit Agreement), that provides for an available $100,000 revolving credit facility through March 7, 2014, with up to a $20,000 sublimit for letters of credit, that can be used for working capital requirements, acquisitions and other general corporate purposes. With the consent of the lenders and the administrative agent and subject to satisfaction of certain conditions, we may increase the facility to $150,000. The loan is collateralized by substantially all of Alexion Pharmaceuticals, Inc.'s assets, including the pledge of the equity interests of certain direct subsidiaries and real estate located in Rhode Island, but excluding intellectual property and assets of foreign subsidiaries. We may elect that the loans under the agreement bear interest at a rate per annum equal to (i) LIBOR plus 1.75% to 2.25% depending on the ratio of our cash to liabilities (as calculated in accordance with the agreement), or (ii) a Base Rate equal to the higher of the (A) Prime Rate then in effect, (B) Federal Funds Rate then in effect plus 0.50%, and (C) Eurodollar Rate then in effect plus 1.00%, plus 0.75% to 1.25% depending on the ratio of our cash to liabilities (as calculated in accordance with the agreement). Interest is payable quarterly for Base Rate loans and, in the case of LIBOR-based loans, at the end of the applicable interest period, with the principal due on March 7, 2014, the maturity date. The Amended Credit Agreement requires us to comply with certain financial covenants on a quarterly basis. Further, the agreement includes negative covenants, subject to exceptions, restricting or limiting our ability and the ability of our subsidiaries to, among other things, incur additional indebtedness, grant liens, engage in certain investment, acquisition and disposition transactions, and enter into transactions with affiliates. The agreement also contains customary representations and warranties, affirmative covenants and events of default, including payment defaults, breach of representations and warranties, covenant defaults and cross defaults. If an event of default occurs, the interest rate would increase and the administrative agent would be entitled to take various actions, including the acceleration of amounts due under the loan. As of March 31, 2011, we borrowed $60,000 under the revolving credit facility, and we had open letters of credit of $6,745. Our borrowing availability was approximately $33,000 at March 31, 2011. In April 2011, we issued an additional 190,747 shares of our common stock for a conversion with respect to $3,000 principal amount of our 1.375% Notes. As of April 30, 2011, $718 of the 1.375% Notes remains outstanding.

Earnings Per Common Share

3 Months Ended

Mar. 31, 2011

Earnings Per Common Share

Earnings Per Common Share

9. Earnings Per Common Share

Basic earnings per common share (EPS) are computed by dividing net income by the weighted-average number of shares of common stock outstanding. For purposes of calculating diluted EPS, net income is adjusted for the after-tax amount of interest and deferred financing costs associated with our convertible debt, and the denominator reflects the potential dilution that could occur if stock options, unvested restricted stock or other contracts to issue common stock were exercised or converted into common stock, using the treasury stock method, as well as the potential dilution if the remaining convertible notes were converted to common stock.

The following table summarizes the calculation of basic and diluted EPS for the three months ended March 31, 2011 and 2010:


	Three months ended March 31
	2011		2010
Net income used for basic calculation	$	26,830	$	20,934
Weighted-average effect of dilutive securities:
Interest expense and debt financing cost amortization, net of tax, related to our 1.375% convertible senior notes		12		41

Net income used for diluted calculation		26,842		20,975

Shares used in computing earnings per common share—basic		90,862		88,506
Weighted-average effect of dilutive securities:
Shares issuable upon the assumed conversion of our 1.375% convertible senior notes		237		610
Stock awards		4,084		2,974

Dilutive potential common shares		4,321		3,584

Shares used in computing earnings per common share—diluted		95,183		92,090

Earnings per common share:
Basic	$	0.30	$	0.24
Diluted	$	0.28	$	0.23

The following table represents the potentially dilutive shares excluded from the calculation of EPS for the three months ended March 31, 2011 and 2010 because their effect is anti-dilutive:


	Three months ended March 31
	2011		2010
Potentially dilutive securities:
Options to purchase common stock		649		1,161
Unvested restricted stock		10		—

		659		1,161

On March 30, 2011, we announced that our Board of Directors has approved a two-for-one stock split, payable in the form of a 100% stock dividend, subject to approval by our stockholders. Pro forma common shares outstanding and earnings per share, giving retroactive effect to the stock split at March 31, 2011 and 2010, would have been as follows:


	Three months ended March 31
	2011		2010
Shares used in computing earnings per common share—basic		181,724		177,012
Shares used in computing earnings per common share—diluted		190,366		184,180

Earnings per common share:
Basic	$	0.15	$	0.12
Diluted	$	0.14	$	0.11

Marketable Securities

3 Months Ended

Mar. 31, 2011

Marketable Securities

Marketable Securities

10. Marketable Securities

The following tables summarize our marketable securities at March 31, 2011 and December 31, 2010:


March 31, 2011	Amortized Cost Basis		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Other Than Temporary Impairments		Aggregate Fair Value
Commercial paper	$	24,973	$	15	$	(5	)	$	—	$	24,983
Corporate bonds		24,350		13		—			—		24,363
Federal agency obligations		10,001		7		—			—		10,008

Total	$	59,324	$	35	$	(5	)	$	—	$	59,354


December 31, 2010	Amortized Cost Basis		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Other Than Temporary Impairments		Aggregate Fair Value
Commercial paper	$	65,244	$	44	$	(27	)	$	—	$	65,261
Corporate bonds		19,186		6		(8	)		—		19,184
Federal agency obligations		10,003		12		—			—		10,015

Total	$	94,433	$	62	$	(35	)	$	—	$	94,460

No realized gains or losses were recorded for the three months ended March 31, 2011 and 2010. We utilize the specific identification method in computing realized gains and losses.

Derivative Instruments and Hedging Activities

3 Months Ended

Mar. 31, 2011

Derivative Instruments and Hedging Activities

Derivative Instruments and Hedging Activities

11. Derivative Instruments and Hedging Activities

We operate internationally and, in the normal course of business, are exposed to fluctuations in foreign currency exchange rates. The exposures result from portions of our revenues, as well as the related receivables, and expenses that are denominated in currencies other than the U.S. dollar, primarily the Euro, Japanese Yen, Swiss Franc, British Pound and Australian Dollar. We manage our foreign currency transaction risk within specified guidelines through the use of derivatives. All of our derivative instruments are utilized for risk management purposes, and we do not use derivatives for speculative trading purposes.

We enter into foreign exchange forward contracts, with durations of up to 36 months, to hedge exposures resulting from portions of our forecasted intercompany revenues that are denominated in currencies other than the U.S. dollar. The purpose of the hedges of intercompany revenue is to reduce the volatility of exchange rate fluctuations on our operating results and to increase the visibility of the foreign exchange impact on forecasted revenues. These hedges are designated as cash flow hedges upon contract inception. As of March 31, 2011, we have open contracts with notional amounts totaling $360,356 that qualified for hedge accounting.

The impact on other comprehensive income (OCI) and earnings from foreign exchange contracts that qualified as cash flow hedges, for the three months ended March 31, 2011 and 2010, are as follows:


	Three months ended March 31
	2011			2010
Gain (loss) recognized in OCI, net of tax	$	(7,851	)	$	13,273

Gain reclassified from OCI to net product sales (Effective portion)	$	400		$	1,123

Loss reclassified from OCI to other income and expense (Ineffective portion)	$	(658	)	$	(435	)

Assuming no change in foreign exchange rates from market rates at March 31, 2011, $8,239 of the loss recognized in other comprehensive income is expected to be reclassified to revenue over the next 12 months.

We enter into foreign exchange forward contracts, with durations of approximately 30 days, designed to limit the balance sheet exposure of monetary assets and liabilities. We enter into these hedges to reduce the impact of fluctuating exchange rates on our operating results. These derivative instruments do not qualify for hedge accounting under the guidance; however, gains and losses on these hedge transactions are designed to offset gains and losses on underlying balance sheet exposures. As of March 31, 2011, the notional amount of foreign exchange contracts that do not qualify for hedge accounting was $132,536.

We recognized a gain (loss) of $(6,957) and $3,508, in other income and expense, for the three months ended March 31, 2011 and 2010, respectively, associated with foreign exchange contracts not designated as hedging instruments under the guidance. These amounts were largely offset by gains or losses in monetary assets and liabilities.

The following tables summarize the fair value of outstanding derivatives at March 31, 2011 and December 31, 2010:

March 31, 2011

Asset Derivatives

Liability Derivatives

Balance Sheet

Location

Fair
Value

Balance Sheet

Location

Fair
Value

Derivatives designated as hedging instruments:

Foreign exchange forward contracts

Other current assets

2,224

Other current liabilities

10,885

Foreign exchange forward contracts

Other non-current assets

589

Other non-current liabilities

3,408

Derivatives not designated as hedging instruments:

Foreign exchange forward contracts

Other current assets

653

Other current liabilities

2,829

Total fair value of derivative instruments

3,466

17,122

December 31, 2010

Asset Derivatives

Liability Derivatives

Balance Sheet

Location

Fair
Value

Balance Sheet

Location

Fair
Value

Derivatives designated as hedging instruments:

Foreign exchange forward contracts

Other current assets

8,015

Other current liabilities

7,124

Foreign exchange forward contracts

Other non-current assets

590

Other non-current liabilities

3,380

Derivatives not designated as hedging instruments:

Foreign exchange forward contracts

Other current assets

1,350

Other current liabilities

4,724

Total fair value of derivative instruments

9,955

15,228

Share-Based Compensation

3 Months Ended

Mar. 31, 2011

Share-Based Compensation

Share-Based Compensation

12. Share-Based Compensation

The following table summarizes the components of share-based compensation expense in the consolidated statements of operations:


	Three months ended March 31
	2011		2010
Cost of sales	$	545	$	315
Research and development		2,733		2,085
Selling, general and administrative		8,053		5,704

Total share-based compensation expense	$	11,331	$	8,104

The following table summarizes the share-based compensation capitalized to inventory:


	Three months ended March 31
	2011		2010
Share-based compensation expense capitalized to inventory	$	844	$	743

Fair Value Measurement

3 Months Ended

Mar. 31, 2011

Fair Value Measurement

Fair Value Measurement

13. Fair Value Measurement

Authoritative guidance establishes a valuation hierarchy for disclosure of the inputs to the valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value.

The following tables present information about our assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2011 and December 31, 2010, and indicate the fair value hierarchy of the valuation techniques we utilized to determine such fair value.


		Fair Value Measurement at March 31, 2011
Balance Sheet Classification	Type of Instrument	Total		Level 1		Level 2		Level 3
Cash equivalents	Money market funds	$	145,079	$	—	$	145,079	$	—

Marketable securities	Commercial paper	$	24,983	$	—	$	24,983	$	—

Marketable securities	U.S. Corporate bonds	$	24,363	$	—	$	24,363	$	—

Marketable securities	Federal agency obligations	$	10,008	$	—	$	10,008	$	—

Other current assets	Foreign exchange forward contracts	$	2,877	$	—	$	2,877	$	—

Other assets	Foreign exchange forward contracts	$	589	$	—	$	589	$	—

Other current liabilities	Foreign exchange forward contracts	$	13,714	$	—	$	13,714	$	—

Other liabilities	Foreign exchange forward contracts	$	3,408	$	—	$	3,408	$	—

Contingent consideration	Acquisition-related contingent consideration	$	15,617	$	—	$	—	$	15,617


		Fair Value Measurement at December 31, 2010
Balance Sheet Classification	Type of Instrument	Total		Level 1		Level 2		Level 3
Cash equivalents	Money market funds	$	186,565	$	—	$	186,565	$	—

Marketable securities	Commercial paper	$	65,261	$	—	$	65,261	$	—

Marketable securities	U.S. Corporate bonds	$	19,184	$	—	$	19,184	$	—

Marketable securities	Federal agency obligations	$	10,015	$	—	$	10,015	$	—

Other current assets	Foreign exchange forward contracts	$	9,365	$	—	$	9,365	$	—

Other assets	Foreign exchange forward contracts	$	590	$	—	$	590	$	—

Other current liabilities	Foreign exchange forward contracts	$	11,848	$	—	$	11,848	$	—

Other liabilities	Foreign exchange forward contracts	$	3,380	$	—	$	3,380	$	—

The following table represents a roll-forward of the fair value of Level 3 instruments, comprised solely of acquisition-related contingent consideration:


	March 31, 2011
Balance at beginning of period	$	—
Amounts acquired or issued		(15,481	)
Net accretion		(136	)

Balance at end of period	$	(15,617	)

Valuation Techniques

Items classified as Level 2 within the valuation hierarchy, consisting of an institutional money market fund held at a multinational financial institution and corporate and federal agency bonds and commercial paper are valued based upon pricing of securities with similar investment characteristics and holdings. Our derivative assets and liabilities include foreign exchange derivatives that are measured at fair value using observable market inputs such as forward rates, interest rates, our own credit risk and our counterparties' credit risks. Based on these inputs, the derivative assets and liabilities are classified within Level 2 of the valuation hierarchy. Item classified as Level 3 within the valuation hierarchy, consisting of contingent consideration liabilities related to the Taligen and Orphatec acquisitions, were valued based on various estimates, including probability of success, discount rates and amount of time until the conditions of the milestone payments are met.

As of March 31, 2011, there has not been any impact to the fair value of our derivative liabilities due to our own credit risk. Similarly, there has not been any significant adverse impact to our derivative assets based on our evaluation of our counterparties' credit risks.

- Definition

This item represents the complete disclosure regarding the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments, assets, and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the Company is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risk is are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References+ Details

Income Taxes

3 Months Ended

Mar. 31, 2011

Income Taxes

Income Taxes

14. Income Taxes

We utilize the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement carrying amounts and tax basis of assets and liabilities using enacted tax rates in effect for years in which the temporary differences are expected to reverse. We provide a valuation allowance when it is more likely than not that deferred tax assets will not be realized. We recognize the benefit of an uncertain tax position that has been taken or we expect to take on income tax returns if such tax position is more likely than not to be sustained.

We continue to maintain a valuation allowance against certain other deferred tax assets where realization is not certain. We periodically evaluate the likelihood of the realization of deferred tax assets and reduce the carrying amount of these deferred tax assets by a valuation allowance to the extent we believe a portion will not be realized.

The following table provides a comparative summary of our provision for income taxes and effective tax rate for the three months ended March 31, 2011 and 2010, respectively:


	Three months ended March 31
	2011			2010
Provision for income taxes	$	13,996		$	9,139
Effective tax rate		34.3	%		30.4	%

The tax provision for the three months ended March 31, 2011 and 2010 is principally attributable to the U.S. federal, state and foreign income taxes on our profitable operations.

Employee Benefit Plans

3 Months Ended

Mar. 31, 2011

Employee Benefit Plans

Employee Benefit Plans

15. Employee Benefit Plans

Defined Contribution Plan

We have one qualified 401(k) plan covering all eligible employees. Under the plan, employees may contribute up to the statutory allowable amount for any calendar year. We make matching contributions equal to:

•

$1.00 for each dollar contributed up to the first 4% of an individual's base salary and incentive cash bonus; and

•

$0.50 for each dollar contributed of the next 2% of such compensation.

For the three months ended March 31, 2011 and 2010, we recorded matching contributions of approximately $877 and $555, respectively.

Defined Benefit Plan

We maintain defined benefit plans for employees outside the United States, including a retirement benefit plan required by local law. The plans are valued by independent actuaries using the projected unit credit method. The liabilities correspond to the projected benefit obligations of which the discounted net present value is calculated based on years of employment, expected salary increases, and pension adjustments.

The components of net periodic benefit cost are as follows:


	Three months ended March 31
	2011			2010
Service cost	$	983		$	291
Interest cost		90			45
Expected return on plan assets		(94	)		(46	)
Amortization		56			8
Employee contribution		(239	)		(93	)

Total net periodic benefit cost	$	796		$	205

- Definition

Description containing the entire pension and other postretirement benefits disclosure as a single block of text.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 158

-Paragraph 7, 21, 22

Reference 2: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 132R

-Paragraph 5, 6, 7, 8

Reference 3: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 132R

-Paragraph 8

-Subparagraph m

Reference 4: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 106

-Paragraph 518

Reference 5: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 87

-Paragraph 264

Reference 6: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 132R

-Paragraph 5

-Subparagraph b

Reference 7: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 132R

-Paragraph 5

-Subparagraph a

Reference 8: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 132R

-Paragraph 5

-Subparagraph h

Reference 9: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 132R

-Paragraph 5

-Subparagraph q

Reference 10: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name FASB Staff Position (FSP)

-Number FAS106-2

-Paragraph 20, 21, 22

Reference 11: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Emerging Issues Task Force (EITF)

-Number 03-2

-Paragraph 8

Reference 12: http://www.xbrl.org/2003/role/presentationRef

-Publisher AICPA

-Name Accounting Principles Board Opinion (APB)

-Number 30

-Paragraph 26

Reference 13: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Implementation Guide (Q and A)

-Number FAS88

-Paragraph 63

+ Details

Commitments and Contingencies	3 Months Ended
Commitments and Contingencies	Mar. 31, 2011
Commitments and Contingencies
Commitments and Contingencies	16. Commitments and Contingencies Contingent liabilities We are currently involved in various claims and legal proceedings. On a quarterly basis, we review the status of each significant matter and assess its potential financial exposure. If the potential loss from any claim, asserted or unasserted, or legal proceeding is considered probable and the amount can be reasonably estimated, we accrue a liability for the estimated loss. Because of uncertainties related to claims and litigation, accruals are based on our best estimates based on available information. On a periodic basis, as additional information becomes available, or based on specific events such as the outcome of litigation or settlement of claims, we may reassess the potential liability related to these matters and may revise these estimates, which could result in a material adverse adjustment to our operating results. On January 26, 2011, Novartis Vaccines & Diagnostics, Inc. (Novartis) filed a civil action against Alexion Pharmaceuticals, Inc. and other biopharmaceuticals companies in the U.S. District Court for the District of Delaware. Novartis claims willful infringement by us of U.S. Patent No. 5,688,688. Novartis seeks, among other things, monetary damages. If it is finally determined that we infringe the Novartis patent, we may be required to pay royalties to Novartis on sales of Soliris regarding certain manufacturing technology. Although we do not believe that the manufacture of Soliris infringes a valid patent claim owned by Novartis, we cannot guarantee that we will be successful in defending against such action. Given the early stages of this litigation, management does not currently believe that a loss related to this matter is probable and the potential magnitude of such loss, if any, can be reasonably estimated. In addition to Novartis's claim, other third parties may claim that the manufacture, use or sale of Soliris or other drugs under development infringes patents owned or granted to such third parties. We are aware of broad patents owned by others relating to the manufacture, use and sale of recombinant humanized antibodies, recombinant human antibodies, and recombinant human single chain antibodies. Soliris and many of our product candidates are genetically engineered antibodies, including recombinant humanized antibodies, recombinant human antibodies, or recombinant human single chain antibodies. In addition to the action described above, we have received notices from the owners of some of these patents claiming that their patents may be infringed by the development, manufacture or sale of Soliris or some of our drug candidates. We are also aware of other patents owned by third parties that might be claimed by such third parties to be infringed by the development and commercialization of Soliris and some of our drug candidates. In respect to some of these patents, we have obtained licenses, or expect to obtain licenses. We estimate our obligations for probable contingent liabilities based on our assessment of estimated royalties potentially owed to other third parties. A costly license, or inability to obtain a necessary license, could have a material adverse effect on our business. However the amount of such loss, if any, beyond amounts currently accrued cannot be reasonably estimated. As of March 31, 2011 and December 31, 2010, we have recorded $56,893 and $50,133, respectively, in accrued expenses for royalties. Our cost of sales for the three months ended March 31, 2011 and 2010 includes amounts recorded for existing royalty agreements and for changes in contingent liabilities described above.