Note Regarding Forward-Looking Statements

This document contains statements that do not relate strictly to historical fact, any of which may be forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. When we use the words "anticipates," "plans," "expects" and similar expressions, we are identifying forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties which may cause our actual results, performance or achievements to be materially different from those expressed or implied by forward-looking statements. While it is impossible to identify or predict all such matters, these differences may result from, among other things, the inherent uncertainty of the timing and success of, and expense associated with, research, development, regulatory approval and commercialization of our products and product candidates, including the risks that clinical trials will not commence or proceed as planned; products appearing promising in early trials will not demonstrate efficacy or safety in larger-scale trials; clinical trial data on our products and product candidates will be unfavorable; our products will not receive marketing approval from regulators or, if approved, do not gain sufficient market acceptance to justify development and commercialization costs; we, our collaborators or others might identify side effects after the product is on the market; or efficacy or safety concerns regarding marketed products, whether or not originating from subsequent testing or other activities by us, governmental regulators, other entities or organizations or otherwise, and whether or not scientifically justified, may lead to product recalls, withdrawals of marketing approval, reformulation of the product, additional pre-clinical testing or clinical trials, changes in labeling of the product, the need for additional marketing applications, declining sales or other adverse events.

We are also subject to risks and uncertainties associated with the actions of our corporate, academic and other collaborators and government regulatory agencies, including risks from market forces and trends, such as those relating to the recently-announced acquisition of our RELISTOR® collaborator, Wyeth Pharmaceuticals, by Pfizer Inc.; potential product liability; intellectual property, litigation, environmental and other risks; the risk that licenses to intellectual property may be terminated for our failure to satisfy performance milestones; the risk of difficulties in, and regulatory compliance relating to, manufacturing products; and the uncertainty of our future profitability.

Risks and uncertainties also include general economic conditions, including interest- and currency exchange-rate fluctuations and the availability of capital; changes in generally accepted accounting principles; the impact of legislation and regulatory compliance; the highly regulated nature of our business, including government cost-containment initiatives and restrictions on third-party payments for our products; trade buying patterns; the competitive climate of our industry; and other factors set forth in this document and other reports filed with the U.S. Securities and Exchange Commission (SEC). In particular, we cannot assure you that RELISTOR will be commercially successful or be approved in the future in other formulations, indications or jurisdictions, or that any of our other programs will result in a commercial product.

We do not have a policy of updating or revising forward-looking statements, and we assume no obligation to update any statements as a result of new information or future events or developments. It should not be assumed that our silence over time means that actual events are bearing out as expressed or implied in forward-looking statements.

Overview

General. We are a biopharmaceutical company focusing on the development and commercialization of innovative therapeutic products to treat the unmet medical needs of patients with debilitating conditions and life-threatening diseases. Our principal programs are directed toward supportive care, virology and oncology. Progenics commenced principal operations in 1988, became publicly traded in 1997 and throughout has been engaged primarily in research and development efforts, developing manufacturing capabilities, establishing corporate collaborations and raising capital. We have only recently begun to derive revenue from a commercial product. In order to commercialize the principal products that we have under development, we continue to address a number of technological and clinical challenges and comply with comprehensive U.S. and non-U.S. regulatory requirements. We expect to incur additional operating losses in the future, which could increase significantly as we expand our clinical trial programs and other product development efforts.

Supportive Care. Our first commercial product, RELISTOR® (methylnaltrexone bromide) subcutaneous injection, was approved by the U.S. Food and Drug Administration (FDA) in April 2008 for sale in the United States. Our collaboration partner, Wyeth Pharmaceuticals (Wyeth), commenced sales of RELISTOR subcutaneous injection in June, and we have begun earning royalties on world-wide sales. Regulatory approvals have also been obtained in Canada, the European Union, Australia, Venezuela and Chile. Marketing applications have been approved or are pending or scheduled in other countries, and 13 markets are expected to launch in 2009, including Spain, Italy, France, Argentina and Brazil, the largest individual markets after the U.S. In October 2008, we out-licensed to Ono Pharmaceutical Co., Ltd. (Ono), Osaka, Japan, the rights to subcutaneous RELISTOR in Japan where Wyeth elected not to develop the product. We continue development and clinical trials with respect to other indications for RELISTOR.

In January 2009, Wyeth and Pfizer Inc. announced a definitive agreement under which Pfizer is to acquire Wyeth. We understand that the transaction is currently expected to close in late 2009 and is subject to a variety of conditions. The proposed acquisition does not trigger any change-of-control provisions in our collaboration with Wyeth, and if the acquisition is completed in the transaction structure announced by the parties, the combined Pfizer/Wyeth organization will continue to have the same rights and responsibilities under the Collaboration following the acquisition as Wyeth had before. We may not, however, learn of any plans the parties may have for RELISTOR and our Collaboration unless and until or even after the proposed transaction closes.

We and Wyeth are also developing subcutaneous RELISTOR for treatment of opioid-induced constipation (OIC) outside the advanced illness setting, in individuals with chronic pain not related to cancer, such as severe back pain that requires treatment with opioids (a phase 3 trial conducted by Wyeth), and in individuals rehabilitating from an orthopedic surgical procedure in whom opioids are used to control post-operative pain (a hypothesis generating phase 2 trial conducted by us). We are no longer enrolling patients in this latter trial and are analyzing data from the treated population. Based on positive results from the phase 3 chronic pain trial, we and Wyeth recently initiated an FDA-required one-year, open-label safety study in chronic, non-cancer pain patients and the study results found RELISTOR to be generally well tolerated. Results from this phase 3 trial and open-label safety study are intended to yield a consolidated safety database to enable filing a supplemental New Drug Application (sNDA), which is planned for submission by the end of 2010 for treatment of OIC in the chronic, non-cancer pain population.

We and Wyeth also have had in development an intravenous formulation of RELISTOR for the management of post-operative ileus (POI), a temporary impairment of the gastrointestinal tract function. Results from two phase 3 clinical trials of this formulation showed that treatment did not achieve primary or secondary end points. Recent results from a third phase 3 trial evaluating an intravenous formulation of RELISTOR in patients following abdominal hernia repair have confirmed these earlier findings.

Wyeth is leading development of an oral formulation of RELISTOR for the treatment of OIC in patients with chronic, non-cancer pain. We and Wyeth are evaluating information from optimization studies of a formulation of this product candidate to determine the next stages of development.

Development and commercialization of RELISTOR is being conducted under the Wyeth Collaboration Agreement. Under that agreement, we (i) have received an upfront payment from Wyeth, (ii) have received and are entitled to receive further additional payments as certain developmental milestones for RELISTOR are achieved, (iii) have been and are entitled to be reimbursed by Wyeth for expenses we incur in connection with the development of RELISTOR under an agreed-upon development plan and budget, and (iv) have received and are entitled to receive royalties and commercialization milestone payments. These payments will depend on continued success in development and commercialization of RELISTOR, which are in turn dependent on the actions of Wyeth and the FDA and other regulatory bodies, as well as the outcome of clinical and other testing of RELISTOR. Many of these matters are outside our control. Manufacturing and commercialization expenses for RELISTOR are funded by Wyeth.

At inception of the Wyeth collaboration, Wyeth paid to us a $60.0 million non-refundable upfront payment. Wyeth has made $39.0 million in milestone payments since that time and is obligated to make up to $295.0 million in additional payments to us upon the achievement of milestones and contingent events in the development and commercialization of RELISTOR, taking into account the Ono transaction discussed below. Costs for the development of RELISTOR incurred by Wyeth or us starting January 1, 2006 are paid by Wyeth. We are being reimbursed for our out-of-pocket development costs by Wyeth and receive reimbursement for our efforts based on the number of our full-time equivalent employees devoted to the development project, all subject to Wyeth's audit rights and possible reconciliation as provided in the Agreement. During the applicable royalty periods, Wyeth is obligated to pay to us royalties on the net sales of RELISTOR by Wyeth throughout the world other than Japan, where we have licensed the rights to subcutaneous RELISTOR to Ono.

We recognize revenue from Wyeth for reimbursement of our development expenses for RELISTOR as incurred during each quarter under the development plan agreed to by us and Wyeth. We also recognize revenue for a portion of the $60.0 million upfront payment we received from Wyeth, based on the proportion of the expected total effort for us to complete our development obligations, as reflected in the most recent development plan and budget approved by us and Wyeth, that was actually performed during that quarter. Starting June 2008, we began recognizing royalty income based on the net sales of RELISTOR, as defined, by Wyeth.

Under our License Agreement with Ono, in November 2008 we received from Ono an upfront payment of $15.0 million, and are entitled to receive potential milestones, upon achievement of development responsibilities by Ono, of up to $20.0 million, commercial milestones and royalties on sales by Ono of subcutaneous RELISTOR in Japan. These payments will depend on continued success in development and commercialization of RELISTOR, which are in turn dependent on the actions of Wyeth, Ono, the FDA, Japanese pharmaceutical regulatory authorities and other regulatory bodies, as well as the outcome of clinical and other testing of RELISTOR. Many of these matters are outside our control. Ono also has the option to acquire from us the rights to develop and commercialize in Japan other formulations of RELISTOR, including intravenous and oral forms, on terms to be negotiated separately. Supervision of and consultation with respect to Ono's development and commercialization responsibilities will be carried out by joint committees consisting of members from both Ono and us. Ono may request us to perform activities related to its development and commercialization responsibilities beyond our participation in these committees and specified technology transfer related tasks which will be at its expense, and payable to us for the services it requests, at the time we perform services for them.

Because Wyeth is not developing RELISTOR in Japan, we will not receive from it Japan-related milestone payments provided in the original Wyeth Collaboration Agreement. These potential future milestone payments would have totaled $22.5 million (of which $7.5 million related to the subcutaneous formulation of RELISTOR and the remainder to the intravenous and oral formulations). As a result, we now have the potential to receive a total of $334.0 million in development and commercialization milestone payments from Wyeth under the Wyeth Collaboration (of which $60.0 million relate to the intravenous formulation of RELISTOR), and of which $39.0 million ($5.0 million relating to the intravenous formulation) have been paid to date.

Virology. In the area of virology, we are developing two viral-entry inhibitors:
a humanized monoclonal antibody, PRO 140, for treatment of human immunodeficiency virus (HIV), the virus that causes acquired immunodeficiency syndrome (AIDS), and a proprietary orally-available small-molecule drug candidate, PRO 206, for treatment of hepatitis C virus infection (HCV). Based on results from previous phase 2 clinical trials, we are developing the subcutaneous form of PRO 140 for treatment of HIV infection, which has the potential for convenient, weekly self-administration, and we are conducting preclinical development activities in preparation for filing an Investigational New Drug (IND) application for PRO 206. We are also engaged in research regarding a prophylactic vaccine against HIV infection.

Oncology. In the area of prostate cancer, we are conducting a phase 1 clinical trial of a fully human monoclonal antibody-drug conjugate (ADC) directed against prostate specific membrane antigen (PSMA), a protein found at high levels on the surface of prostate cancer cells and also on the neovasculature of a number of other types of solid tumors. We are also developing therapeutic vaccines designed to stimulate an immune response to PSMA. Our PSMA programs are conducted through our wholly owned subsidiary, PSMA Development Company (PSMA LLC).

Our virology and oncology product candidates are not as advanced in development as RELISTOR, and we do not expect any recurring revenues from sales or otherwise with respect to these product candidates in the near term.

Results of Operations (dollars in thousands)

Revenues:

Our sources of revenue during the three months ended March 31, 2008 and 2009
included our Collaboration with Wyeth, our License Agreement with Ono, our
research grants and contract from the National Institutes of Health (NIH) and,
to a small extent, our sale of research reagents. In June 2008, we began
recognizing royalty income from net sales by Wyeth of subcutaneous RELISTOR.

                                       Three Months Ended March 31,
                                                                            Percent
     Sources of Revenue                      2008              2009          Change

     Research and development       $       12,110       $       20,144         66%
     Royalty income                              -                  175         N/A
     Research grants and contract            2,613                  507        (81%)
     Other revenues                             39                   78        100%
     Total                          $       14,762       $       20,904         42%

Research and development revenue:

· Wyeth Collaboration. During the three months ended March 31, 2008 and 2009, we recognized $12,110 and $5,097, respectively, of revenue from Wyeth, consisting of $3,234 and $3,182, respectively, from amortization of the $60,000 upfront payment we received upon entering into our Collaboration in December 2005, and $8,876 and $1,915, respectively, as reimbursement for our development expenses.

From the inception of the Wyeth Collaboration through March 31, 2009, we recognized $48,619 of revenue from the $60,000 upfront payment, $101,233 as reimbursement for our development expenses, and a total of $39,000 for non-refundable milestone payments. We expect reimbursement revenue to decline during the remainder of 2009 compared to 2008, as research and development for RELISTOR decreases.

We recognize a portion of the upfront payment in a reporting period in accordance with the proportionate performance method, which is based on the percentage of actual effort performed on our development obligations in that period relative to total effort expected for all of our performance obligations under the arrangement, as reflected in the most recent development plan and budget approved by Wyeth and us. During the third quarter of 2007, a revised budget was approved, which extended our performance period to the end of 2009 and, thereby, decreased the amount of revenue we are recognizing thru March 31, 2009. We expect revenue from amortization of the remaining $11.4 million of unamortized upfront premium to increase during the remainder of 2009 compared to 2008, and that the amortization will be completed by the end of 2009.

· Ono License Agreement. In October 2008, we entered into a License Agreement with Ono and in November 2008, received an upfront payment of $15.0 million. We are entitled to receive potential milestones and royalty payments. During the three months ended March 31, 2009, we recognized the upfront payment as revenue, upon satisfaction of our performance obligations and recorded $47 of reimbursement revenue for activities requested by Ono.

Royalty income. We began earning royalties from net sales by Wyeth of subcutaneous RELISTOR in June 2008. During the three months ended March 31, 2009, we earned royalties of $280, based on net sales of RELISTOR and recognized $175 of royalty income. As of March 31, 2009, we have recorded a cumulative total of $624 as deferred revenue - current. The $624 of deferred royalty revenue is expected to be recognized as royalty income over the period of our development obligations relating to RELISTOR, which we currently estimate will terminate at the end of 2009. Our royalties from net sales by Wyeth of RELISTOR, as defined, are based on specified royalty rates ranging up to 30% of U.S. and 25% of foreign net sales at the highest sales levels. Royalty rates will increase on incremental sales as net sales in a calendar year exceed specified levels.

Global net sales of RELISTOR, which began last June, were $1.9 million for the first quarter of 2009, an increase of 23% compared to $1.5 million in the fourth quarter of 2008. This quarterly increase includes a 42% increase in U.S. RELISTOR sales from $0.8 million in the prior year's fourth quarter to $1.2 million in the first quarter of 2009. Non-U.S. RELISTOR sales totaled $0.7 million in the first quarter of 2009, unchanged from the prior quarter. The number of U.S. institutions ordering RELISTOR in the first quarter of 2009 grew by approximately 27% over the fourth quarter of 2008 as formulary approvals continue to increase.

Research grants and contract. In 2003, we were awarded a contract by the NIH (NIH Contract) to develop a prophylactic vaccine (ProVax) designed to prevent HIV from becoming established in uninfected individuals exposed to the virus. Funding under the NIH Contract provided for pre-clinical research, development and early clinical testing. These funds were used principally in connection with our ProVax HIV vaccine program. The NIH Contract originally provided for up to $28,562 in funding to us, subject to annual funding approvals and compliance with its terms, over five years. The total of our approved award under the NIH Contract through December 2008 amounted to $15,509. Funding under this contract included the payment of an aggregate of $1,617 in fees, subject to achievement of specified milestones. Through December 31, 2008, we had recognized revenue of $15,509 from this contract, including $180 for the achievement of two milestones. We were informed by the NIH that it has decided to fund the NIH Contract only through December 2008. We have applied for additional awards for this program and are currently funding it with our own resources pending a decision on that application.

Revenues from research grants and contract from the NIH decreased from $2,613 for the three months ended March 31, 2008 to $507 for the three months ended March 31, 2009; $2,093 and $507 from grants and $520 and zero from the NIH Contract for the three months ended March 31, 2008 and 2009, respectively. The decrease in grant and contract revenue resulted from fewer active grants and reimbursable expenses in 2009 than in 2008, and the expiration of the NIH Contract in December 2008.

Other revenues, primarily from orders for research reagents, increased from $39 for the three months ended March 31, 2008 to $78 for the three months ended March 31, 2009.

Expenses:

Research and Development Expenses include scientific labor, supplies, facility
costs, clinical trial costs, product manufacturing costs, royalty payments and
license fees. Research and development expenses, including license fees and
royalty expense, decreased from $23,939 for the three months ended March 31,
2008 to $15,478 for the three months ended March 31, 2009, as follows:

                                       Three Months Ended March 31,
                                                                        Percent
                                        2008                 2009       Change

       Salaries and benefits (cash)      $6,559            $6,115        (7%)

Salaries and benefits (cash) decreased due to a decline in average headcount from 200 to 190 for the three months ended March 31, 2008 and 2009, respectively, in the research and development, manufacturing and clinical departments due to transfers of information technology personnel from the research and development to general and administrative departments.

Three Months Ended March 31, Percent 2008 2009 Change

Share-based compensation (non-cash) $2,012 $2,106 5%

Share-based compensation (non-cash) increased due to higher compensation expenses from the vesting of additional share-based compensation awards partially offset by a decrease in employee stock purchase plan expenses for the three months ended March 31, 2009 compared to the three months ended March 31, 2008. See Critical Accounting Policies - Share-Based Payment Arrangements.

                                   Three Months Ended March 31,
                                                                    Percent
                                     2008               2009        Change

          Clinical trial costs      $4,863             $975          (80%)

Clinical trial costs decreased primarily due to lower expenses for (i) RELISTOR ($3,325), from reduced clinical trial activities, (ii) HIV ($494), due to decreased PRO 140 clinical trial activities, and (iii) Cancer ($69), all for the three months ended March 31, 2009 compared to the three months ended March 31, 2008.

                                   Three Months Ended March 31,
                                                                    Percent
                                     2008               2009        Change

           Laboratory supplies      $1,182             $889          (25%)

Laboratory supplies decreased due to lower expenses for (i) HIV ($553), from a decline in the purchases of drug supplies, and (ii) Other projects ($83), partially offset by an increase in Cancer ($345), due to higher expenses for PSMA, all for the three months ended March 31, 2009 compared to the three months ended March 31, 2008.

                                     Three Months Ended March 31,
                                                                      Percent
                                       2008               2009         Change

        Contract manufacturing
        and subcontractors            $4,646            $2,629         (43%)

Contract manufacturing and subcontractors decreased due to lower (i) HIV expenses ($2,099), from a decline in manufacturing expenses for PRO 140 and (ii) RELISTOR expenses ($724), partially offset by increases in both Cancer ($420), due to higher contract manufacturing expenses for PSMA, and Other ($386), all for the three months ended March 31, 2009 compared to the three months ended March 31, 2008. These expenses are related to the conduct of clinical trials, including manufacture by third parties of drug materials, testing, analysis, formulation and toxicology services, and vary as the timing and level of such services are required.

                              Three Months Ended March 31,
                                                               Percent
                                 2008              2009        Change

               Consultants      $1,635            $318          (81%)

Consultants expenses decreased due to lower expenses for (i) RELISTOR ($877),
(ii) Cancer ($273) and (iii) Other projects ($163), all for the three months ended March 31, 2009 compared to the three months ended March 31, 2008. These expenses are related to the monitoring of clinical trials as well as the analysis of data from completed clinical trials and vary as the timing and level of such services are required.

                               Three Months Ended March 31,
                                                                Percent
                                  2008              2009        Change

               License fees      $1,149            $630          (45%)

License fees decreased primarily due to a decline in HIV expenses ($779), partially offset by an increase in Cancer ($250), all for the three months ended March 31, 2009 compared to the three months ended March 31, 2008.

                                Three Months Ended March 31,
                                                                 Percent
                                   2008              2009        Change

             Royalty expense       $ -               $18           N/A

We incurred $28 of royalty costs and recognized $18 of royalty expenses during the three months ended March 31, 2009. As of March 31, 2009, we recorded a cumulative total of $62 of deferred royalty charges from the royalty costs incurred since we began earning royalties in the second quarter of 2008. The $62 of deferred royalty charges are expected to be recognized as royalty expense over the period of our development obligations relating to RELISTOR, which we currently estimate will terminate at the end of 2009.

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