Date:2/25/2011

ng of the PGP Acquisition on October 30, 2009 and the ENABLEX Acquisition on October 18, 2010. During 2009 and the majority of 2010, ENABLEX revenue was recorded based on the contractual percentage we received of Novartis' net sales. Effective October 18, 2010 as a result of the ENABLEX Acquisition, we began to record sales of ENABLEX in product net sales on a gross basis as we became the principal in the sales transactions.

Cost of Sales (excluding Amortization of Intangible Assets) Cost of sales decreased $95.3 million, or 53%, in the quarter ended December 31, 2010 compared with the prior year quarter. Our cost of sales in the quarter ended December 31, 2009 was impacted by two items resulting from the PGP Acquisition and the LEO Transaction. First, the application of purchase accounting increased the opening value of the inventories acquired in the PGP Acquisition which resulted in a non-recurring charge that was recorded in our costs of sales as that inventory was sold. This resulted in a $73.5 million expense recorded in cost of sales as a portion of this inventory was sold in the fourth quarter of 2009. Second, we recognized $76.8 million of expenses in cost of sales as we recorded sales at nominal distributor margins under our distribution agreement with LEO. These expenses were offset, in part, by a $34.2 million gain relating to the sale of certain inventories in connection with the LEO Transaction included in the quarter ended December 31, 2009. Excluding the purchase accounting expense included in cost of sales as a result of the PGP Acquisition and the impact of the gain and nominal distributor margins resulting from the LEO Transaction, our gross profit margin on total revenue was 89.4% in the quarter ended December 31, 2009 as compared to 87.8% in the quarter ended December 31, 2010. This decline is due to product mix, including the effects of the ENABLEX Acquisition.

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