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; competing products currently on the market or in development might reduce the commercial potential of our products; 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; potential product liability; intellectual property, litigation, environmental and other risks; the risk that we may not be able to enter into favorable collaboration or other relationships or that existing or future relationships may not proceed as planned; the risk that current and pending patent protection for our products may be invalid, unenforceable or challenged, or fail to provide adequate market exclusivity, or that our rights to in-licensed 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. With the reacquisition of our rights to RELISTOR, we will be required either to enter into collaboration or other arrangements with new partners or to commercialize RELISTOR on our own. In order to commercialize RELISTOR and the other principal products that we have under development, with one or more new partners or on our own, we will be required, to the extent such tasks are not undertaken by our partner(s), to continue to address technological, clinical and commercial challenges and comply with comprehensive U.S. and ex-U.S. regulatory requirements. This will be particularly the case with the oral formulation of the drug, for which we are taking over development responsibilities as part of the Wyeth collaboration termination. We expect to incur additional operating losses, resulting in a higher cash burn rate, in the future, which could increase significantly as we expand clinical trial and other product development efforts that we choose or are obligated to undertake.

Supportive Care. Our first commercial product is RELISTOR (methylnaltrexone bromide) subcutaneous injection, a first-in-class therapy for opioid-induced constipation, approved for sale in over 30 countries worldwide, including the United States, European Union member states, Canada, Australia and Brazil. Marketing applications are pending elsewhere throughout the world.

On October 9, 2009, we and Wyeth Pharmaceuticals terminated our 2005 RELISTOR collaboration, as a result of which we are regaining all worldwide rights to RELISTOR. Under our Transition Agreement with Wyeth, there will be a transition period during which Wyeth will continue to market and sell RELISTOR for a U.S. Sales Period ending September 30, 2010 and an ex-U.S. Sales Period ending December 31, 2010. After the transition period, we will assume full control of and responsibility for future development and commercialization of RELISTOR. On October 14, 2009, Wyeth and Pfizer Inc. completed their previously announced merger, and Wyeth is now a wholly owned subsidiary of Pfizer.

We are pursuing a range of strategic alternatives for RELISTOR, including licensing, collaboration, strategic alliances and U.S. commercialization or co-promotion with our own sales force, as well as continuing to seek strategic collaborations and other funding support for product candidates in our pipeline.

Under the Transition Agreement, Wyeth has agreed to pay to us the sum of $10.0 million in six quarterly installments and is continuing certain ongoing development efforts for subcutaneous RELISTOR, at its expense, through September 30, 2010. Wyeth's international sales and marketing obligations during the ex-U.S. Sales Period are subject to certain extension and early transition options available to us. Wyeth will continue to pay royalties on worldwide sales as provided in the 2005 collaboration agreement except that no royalties will be payable in respect of ex-U.S. sales during (i) the fourth quarter of 2010 to the extent certain financial targets are not met or (ii) an extended ex-U.S. Sales Period in the subject country.

We regained control of the oral form of RELISTOR upon execution of the Transition Agreement, and expect to continue development as the transition progresses. Principal responsibility for regulatory submissions and interactions for all other formulations and presentations of RELISTOR will be transferred during and as part of the transition. Wyeth is also providing financial resources, aggregating up to approximately $14.5 million, and/or other assistance with respect to agreed-upon regulatory, manufacturing and supply matters. We have agreed to purchase Wyeth's remaining inventory of subcutaneous RELISTOR at the end of the Sales Periods on agreed-upon terms and conditions.

Our October 2008 out-license to Ono Pharmaceutical of the rights to subcutaneous RELISTOR in Japan is unaffected by termination of the Wyeth collaboration. In June 2009, Ono began clinical testing in Japan of RELISTOR subcutaneous injection.

In August 2009, we and Wyeth announced submission to U.S. and EU regulators of applications for subcutaneous RELISTOR in a new pre-filled syringe delivery system. Pre-filled syringes are designed to ease preparation and administration for patients and caregivers and, if approved, could be available to advanced-illness patients in the U.S. and Europe as early as the first half of 2010.

We 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. We and Wyeth recently completed enrollment in a one-year, open-label safety study, results from which, together with results from a previous phase 3 efficacy trial will support planned supplemental regulatory filings in the U.S., Europe and elsewhere for approval of RELISTOR to treat OIC in the chronic-pain setting in early 2011.

Our 2005 collaboration with Wyeth was terminated by the Transition Agreement, but the 2005 Wyeth Collaboration Agreement was in effect during the periods covered by this report. Prior to the Transition Agreement, we received upfront, milestone and royalty payments from Wyeth, and were reimbursed for expenses we incurred in connection with the development of RELISTOR; manufacturing and commercialization expenses for RELISTOR were funded by Wyeth.

At inception of the Wyeth collaboration, Wyeth paid to us a $60.0 million non-refundable upfront payment. Wyeth made $39.0 million in milestone payments thereafter. Costs for the development of RELISTOR incurred by Wyeth or us starting January 1, 2006 through termination of the 2005 collaboration agreement were paid by Wyeth. We were reimbursed by Wyeth for our development costs based on the number of our full-time equivalent employees (FTEs) devoted to the development project, all subject to Wyeth's audit rights and possible reconciliation. During the applicable royalty periods, Wyeth was obligated to pay us royalties on net sales, as defined (which included specified sales deductions), of RELISTOR by Wyeth throughout the world other than Japan, where we licensed rights to subcutaneous RELISTOR to Ono.

We recognized 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 recognized revenue for a portion of the $60.0 million upfront payment we received from Wyeth, based on the proportion actually performed 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. Starting June 2008, we began recognizing royalty income based on net sales of RELISTOR 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. 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. Ono may request us to perform activities related to its development and commercialization responsibilities beyond our participation in joint 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.

Future royalty and milestone payments will depend on success in continued development and commercialization of RELISTOR. This success will in turn be dependent on many factors, such as the actions of Wyeth during the transition, Ono's efforts, decisions by the FDA and other regulatory bodies, the outcome of clinical and other testing of RELISTOR, and our own efforts, as well as those of any business partner(s) with which we may collaborate. Many of these matters are outside our control. In particular, we cannot guarantee that we will be able to successfully partner the RELISTOR franchise. We also cannot guarantee, in light of Wyeth's limited obligations under the Transition Agreement, its acquisition by Pfizer and its limited ongoing commercial interest in the RELISTOR franchise, that Wyeth's efforts during the transition will achieve any particular level of success in marketing and sales, regulatory approval or clinical development of subcutaneous RELISTOR.

Virology. In the area of virology, we are developing a viral-entry inhibitor -- a humanized monoclonal antibody, PRO 140 -- for human immunodeficiency virus (HIV), the virus that causes acquired immunodeficiency syndrome, or AIDS. We are developing the subcutaneous form of PRO 140 for treatment of HIV infection, which has the potential for weekly self-administration. In our hepatitis C virus infection efforts, we are evaluating second-generation HCV-entry inhibitors as possible development candidates. 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 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. To fund these programs, we are currently in discussions with government agencies to obtain pivotal-clinical-trial funding for PRO 140, and are pursuing strategic collaborations with biopharmaceutical companies to support development of PSMA ADC.

Results of Operations (dollars in thousands)

Revenues:

Our sources of revenue during the three and nine months ended September 30, 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                     Nine Months Ended
                               September 30,                         September 30,
Sources of                                      Percent                                Percent
Revenue             2008              2009      Change    2008          2009           Change
Research and
development         $   16,015   $      4,431    (72%)    $    54,896    $    29,206    (47%)
Royalty income              44            509    1057%             86            976    1035%
Research grants
and contract             1,377            404    (71%)          5,689          1,421    (75%)
Other revenues              61             75     23%             172            189     10%
Total               $   17,497   $      5,419    (69%)    $    60,843   $     31,792    (48%)

Research and development revenue:

Wyeth Collaboration. During the three months ended September 30, 2008 and 2009, we recognized $16,015 and $4,425, respectively, of revenue from Wyeth, consisting of (i) $2,092 and $3,240, respectively, from amortization of the $60,000 upfront payment we received upon entering into our Collaboration in December 2005, (ii) $3,923 and $1,185, respectively, as reimbursement for our development expenses, and (iii) $10,000 and $0, respectively, of non-refundable milestone payments.

During the nine months ended September 30, 2008 and 2009, we recognized $54,896 and $14,153, respectively, of revenue from Wyeth, consisting of (i) $8,132 and $9,417, respectively, from amortization of the $60,000 upfront payment we received upon entering into our Collaboration in December 2005, (ii) $21,764 and $4,736, respectively, as reimbursement for our development expenses, and (iii) $25,000 and $0, respectively, of non-refundable milestone payments.

From the inception of the Wyeth Collaboration through September 30, 2009, we recognized $54,855 of revenue from the $60,000 upfront payment, $104,054 as reimbursement for our development expenses, and a total of $39,000 for non-refundable milestone payments. We do not expect to receive additional reimbursement revenue due to termination of the Wyeth collaboration. Wyeth, at its expense, is continuing certain ongoing development efforts for subcutaneous RELISTOR through September 30, 2010.

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 2009 and, thereby, decreased the amount of revenue we are recognizing through September 30, 2009. The Transition Agreement shortened the obligation period from the end of 2009 to October 2009 and we will recognize the remaining $5.2 million of unamortized upfront payment as revenue during the fourth quarter 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 $15,000. We are entitled to receive potential milestones and royalty payments. During the three and nine months ended September 30, 2009, we recognized $0 and $15,000 of the upfront payment as revenue, upon satisfaction of our performance obligations and during the three and nine months ended September 30, 2009, we recorded $6 and $53, respectively, 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 September 30, 2008 and 2009, we earned royalties of $117 and $497, respectively, based on net sales of RELISTOR and recognized $44 and $509, respectively, of royalty income. During the nine months ended September 30, 2008 and 2009, we earned royalties of $438 and $1,264, respectively, and recognized $86 and $976, respectively, of royalty income. As of September 30, 2009, we have recorded a cumulative total of $807 as deferred revenue - current. The $807 of deferred royalty revenue will be recognized as royalty income during the fourth quarter of 2009, the period in which our development obligations under the Wyeth Collaboration Agreement terminated. 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, and increase on incremental sales as net sales in a calendar year exceed specified levels.

Global net sales of RELISTOR, which began last June, were $3.3 million for the third quarter of 2009, compared to (i) $0.8 million in the third quarter of 2008, an increase of 326% and (ii) $3.2 million in the second quarter of 2009, an increase of 2%.

U.S. RELISTOR net sales totaled $1.8 million in the third quarter of 2009, compared to (i) $0.1 million in the third quarter of 2008, an increase of 1169% and (ii) $2.0 million in the second quarter of 2009, a decrease of 10%. Non-U.S. RELISTOR net sales totaled $1.5 million in the third quarter of 2009, compared to (i) $0.7 million in the third quarter of 2008, an increase of 139% and (ii) $1.2 million in the second quarter of 2009, an increase of 22%.

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. Through December 31, 2008, we had recognized revenue of $15,509 from this contract, including $180 for the achievement of two milestones. In June 2009, we were awarded, commencing in the second quarter, an NIH grant for a five-year period totaling up to $14.5 million to continue this work, subject to annual funding approvals and customary compliance obligations.

Revenues from research grants and contract from the NIH decreased from $1,377 for the three months ended September 30, 2008 to $404 for the three months ended September 30, 2009; $1,009 and $404 from grants and $368 and $0 from the NIH Contract for the three months ended September 30, 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.

Revenues from research grants and contract from the NIH decreased from $5,689 for the nine months ended September 30, 2008 to $1,421 for the nine months ended September 30, 2009; $4,185 and $1,421 from grants and $1,504, and $0 from the NIH Contract for the nine months ended September 30, 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 $61 for the three months ended September 30, 2008 to $75 for the three months ended September 30, 2009. Other revenues, primarily from orders for research reagents, increased from $172 for the nine months ended September 30, 2008 to $189 for the nine months ended September 30, 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 $21,788 for the three months ended September 30,
2008 to $11,532 for the same period of 2009, and decreased from $69,988 for the
nine months ended September 30, 2008 to $40,114 for the same period of 2009, as
follows:

                    Three Months Ended               Nine Months Ended
                      September 30,                    September 30,
                                          Percent                         Percent
                     2008        2009     Change    2008        2009      Change

Salaries and
benefits (cash)    $6,138       $5,222     (15%)    $19,311     $17,118    (11%)

Three Months: Salaries and benefits (cash) decreased due to a decline in average headcount from 195 to 168 for the three months ended September 30, 2008 and 2009, respectively, in the research and development, manufacturing and clinical departments as part of our efforts to manage costs.

Nine Months: Salaries and benefits (cash) decreased due to a decline in average headcount from 197 to 179 for the nine months ended September 30, 2008 and 2009, respectively, in the research and development, manufacturing and clinical departments as part of our efforts to manage costs.

                    Three Months Ended              Nine Months Ended
                      September 30,                   September 30,
                                          Percent                       Percent
                     2008        2009     Change    2008       2009     Change

Share-based
compensation

Three Months: Share-based compensation (non-cash) decreased due to lower restricted stock compensation and employee stock purchase plan expenses partially offset by an increase in stock option plans expenses for the three months ended September 30, 2009 compared to the three months ended September 30, 2008. See Critical Accounting Policies - Share-Based Payment Arrangements.

Nine Months: Share-based compensation (non-cash) increased due to higher restricted stock compensation and stock option plans expenses partially offset by a decrease in employee stock purchase plans expenses for the nine months ended September 30, 2009 compared to the nine months ended September 30, 2008. See Critical Accounting Policies - Share-Based Payment Arrangements.

                          Three Months Ended                 Nine Months Ended
                            September 30,                      September 30,
                                                  Percent                         Percent

Clinical trial costs $2,932 $452 (85%) $13,834 $1,982 (86%)

Three Months: Clinical trial costs decreased primarily due to lower expenses for
(i) RELISTOR ($1,424), from reduced clinical trial activities, and (ii) HIV ($1,231), due to decreased PRO 140 clinical trial activities, partially offset by an increase in expenses for Cancer ($176), all for the three months ended September 30, 2009 compared to the three months ended September 30, 2008.

Nine Months: Clinical trial costs decreased primarily due to lower expenses for
(i) RELISTOR ($9,439), from reduced clinical trial activities, and (ii) HIV ($2,469), due to decreased PRO 140 clinical trial activities, partially offset by an increase in expenses for Cancer ($57), all for the nine months ended September 30, 2009 compared to the nine months ended September 30, 2008.

                         Three Months Ended                Nine Months Ended
                           September 30,                     September 30,
                                                 Percent                       Percent

Laboratory supplies $866 $795 (8%) $3,024 $2,370 (22%)

Three Months: Laboratory supplies decreased due to lower expenses for (i) HIV ($349), from a decline in the purchases of drug supplies, and (ii) Other projects ($21), partially offset by an increase in Cancer ($299), due to higher expenses for PSMA, all for the three months ended September 30, 2009 compared to . . .