PROGENICS PHARMACEUTICALS INC, 424A, 1997-10-28

PROGENICS PHARMACEUTICALS INC
424A, 1997-10-28
PHARMACEUTICAL PREPARATIONS

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<PAGE>
SUBJECT TO COMPLETION, DATED OCTOBER 27, 1997
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may
not be sold nor may offers to buy be accepted prior to the time the registration
statement becomes effective. This prospectus shall not constitute an offer to
sell or the solicitation of an offer to buy nor shall
there be any sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such State.
<PAGE>
2,000,000 SHARES

[COMPANY LOGO]
Progenics Pharmaceuticals, Inc.
COMMON STOCK
--------------

All of the shares of Common Stock offered hereby are being sold by Progenics
Pharmaceuticals, Inc. ("Progenics" or the "Company"). Prior to this offering,
there has been no public market for the Common Stock of the Company. It is
anticipated that the initial public offering price will be between $11.00 and
$13.00 per share. See "Underwriting" for a discussion of the factors to be
considered in determining the initial public offering price. Application has
been made to have the Common Stock approved for quotation on the Nasdaq National
Market, upon notice of issuance, under the symbol "PGNX."

THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 7.
-----------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
<S> <C> <C> <C>
Per Share.......................................... $ $ $
Total(3)........................................... $ $ $
</TABLE>

(1) See "Underwriting" for information concerning indemnification of the
Underwriters and other information.

(2) Before deducting expenses of the offering payable by the Company estimated
at $750,000.

(3) The Company has granted the Underwriters an option, exercisable within 30
days of the date hereof, to purchase up to 300,000 additional shares of
Common Stock at the Price to Public per share, less the Underwriting
Discount, for the purpose of covering over-allotments, if any. If the
Underwriters exercise such option in full, the total Price to Public,
Underwriting Discount and Proceeds to Company will be $ , $ and
$ , respectively. See "Underwriting."
-------------------

The shares of Common Stock are offered severally by the Underwriters when,
as and if delivered to and accepted by them, subject to their right to withdraw,
cancel or reject orders in whole or in part and subject to certain other
conditions. It is expected that delivery of the certificates representing the
shares will be made against payment on or about , 1997 at the office
of Oppenheimer & Co., Inc., Oppenheimer Tower, World Financial Center, New York,
New York 10281.

-------------------

OPPENHEIMER & CO., INC.

BANCAMERICA ROBERTSON STEPHENS

VECTOR SECURITIES INTERNATIONAL, INC.

The date of this Prospectus is , 1997
<PAGE>
GMK GANGLIOSIDE CONJUGATE VACCINE IS PROGENICS' LEAD CANCER THERAPEUTIC
CANDIDATE.

THE COMPANY IS CONDUCTING PIVOTAL PHASE III CLINICAL TRIALS OF GMK FOR THE
TREATMENT OF MALIGNANT MELANOMA IN COLLABORATION WITH BRISTOL-MYERS SQUIBB
COMPANY.

[DIAGRAM DEPICTING THE COMPANY'S GANGLIOSIDE CONJUGATE VACCINE, GMK]

------------------------

The Company was incorporated in December 1986. Its principal executive
offices are located at 777 Old Saw Mill River Road, Tarrytown, New York 10591
and its telephone number is (914) 789-2800.
------------------------

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK OF
THE COMPANY, INCLUDING ENTERING STABILIZING BIDS, EFFECTING SYNDICATE COVERING
TRANSACTIONS OR IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES,
SEE "UNDERWRITING."
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS AND RELATED NOTES APPEARING ELSEWHERE IN
THIS PROSPECTUS. UNLESS OTHERWISE INDICATED, ALL INFORMATION IN THIS PROSPECTUS:
(I) ASSUMES NO EXERCISE OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION; (II) GIVES
EFFECT TO A THREE-FOR-FOUR REVERSE STOCK SPLIT WITH RESPECT TO THE COMPANY'S
COMMON STOCK, PAR VALUE $.0013 (THE "COMMON STOCK"), EFFECTED IN 1996; AND (III)
GIVES EFFECT TO THE AUTOMATIC CONVERSION OF ALL OUTSTANDING SHARES OF THE
COMPANY'S PREFERRED STOCK, PAR VALUE $.001 PER SHARE (THE "PREFERRED STOCK"),
INTO AN AGGREGATE OF 4,259,878 SHARES OF COMMON STOCK. SEE "CAPITALIZATION,"
"DESCRIPTION OF CAPITAL STOCK" AND "NOTES TO FINANCIAL STATEMENTS." INVESTMENT
IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.

THE COMPANY

Progenics Pharmaceuticals, Inc. ("Progenics" or the "Company") is a
biopharmaceutical company focusing on the development and commercialization of
innovative products for the treatment and prevention of cancer and viral
diseases. The Company applies its immunology expertise to develop
biopharmaceuticals that induce an immune response or that mimic natural immunity
in order to fight cancers, such as malignant melanoma, and viral diseases, such
as human immunodeficiency virus ("HIV") infection. Progenics' most advanced
product candidate, GMK, is a therapeutic vaccine that is currently undergoing
two pivotal Phase III clinical trials for the treatment of melanoma, a deadly
form of skin cancer. Progenics' second vaccine product candidate, MGV, is being
developed for the treatment of various cancers and commenced Phase I/II clinical
trials in September 1996. Based on its participation in the discoveries of two
major receptors for HIV, the Company is engaged in research and development of
therapeutic products designed to block entry of HIV into human immune system
cells. Progenics commenced Phase I/II clinical trials of one of these product
candidates, PRO 542, in September 1997 and plans to initiate Phase I/II clinical
trials of another product candidate, PRO 367, in the first half of 1998. The
Company has entered into a collaboration with Bristol-Myers Squibb Company
("BMS") to develop and commercialize GMK and MGV.

CANCER THERAPEUTICS

The Company's GMK and MGV cancer therapeutics are based on proprietary
ganglioside conjugate vaccine technology designed to stimulate the immune system
to destroy cancer cells. This technology is exclusively licensed by the Company
from Memorial Sloan-Kettering Cancer Center ("Sloan-Kettering"). GMK is designed
to prevent recurrence of melanoma in patients who are at risk of relapse after
surgery. GMK is composed of a ganglioside antigen which is abundant in melanoma
cells, conjugated to an immunogenic carrier protein and combined with an
adjuvant (an immunological stimulator). In August 1996, the Company commenced
the first of three pivotal, randomized, multicenter Phase III clinical trials of
GMK. This trial is being conducted in the United States by cooperative cancer
research groups supported by the National Cancer Institute ("NCI"). The two
additional Phase III clinical trials of GMK will be conducted in a number of
countries outside of the United States. One of these trials commenced enrollment
of patients in June 1997. The other is expected to commence in the first half of
1998 and will be conducted in Europe by the European Organization for Research
and Treatment of Cancer ("EORTC").

MGV is being developed to treat a wide range of cancers, including
colorectal cancer, lymphoma, small cell lung cancer, sarcoma, gastric cancer,
neuroblastoma and melanoma. MGV incorporates two ganglioside antigens that are
abundant in these and other types of cancer cells. In September 1996, MGV
entered Phase I/II clinical trials at Sloan-Kettering.

In July 1997, the Company and BMS entered into a development and license
agreement under which Progenics granted BMS an exclusive worldwide license to
GMK and MGV. BMS made related cash payments to the Company of approximately
$13.3 million and is obligated to make future payments of up

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to $61.5 million upon the achievement of specified milestones. In addition, BMS
is required to fund continued clinical development of GMK and MGV and to pay
royalties on any product sales.

HIV THERAPEUTICS

There is considerable need for the development of new HIV therapeutics that
address the major problems of viral resistance and drug toxicity that are
inherent in currently approved drugs, which target certain enzymes necessary for
viral infection and replication. In contrast, the Company's HIV therapeutic
programs are based on the CD4 receptor and recently discovered co-receptors,
CCR5 and CXCR4, to which binding is necessary for attachment, fusion and entry
of the virus into the cell. Progenics applies its universal antiviral binding
agent ("UnAB") technology to produce antibody-like molecules designed to
neutralize or destroy HIV or HIV-infected cells. This program and the Company's
HIV attachment screening program are based on the CD4 receptor. The Company's
HIV co-receptor/fusion program is based on CCR5 and CXCR4.

Progenics' PRO 542 and PRO 367 product candidates utilize the Company's
proprietary UnAB technology. Progenics is developing PRO 542 to selectively
target HIV and prevent it from infecting healthy cells by binding to the sites
on the virus that are required for entry into the cell. PRO 542 is being
developed as an immunotherapy to treat HIV-positive individuals and has been
shown IN VITRO to neutralize a wide range of HIV clinical strains. The Company
initiated Phase I/II clinical trials of PRO 542 in September 1997.

Progenics is developing PRO 367 as a therapeutic agent designed to kill
HIV-infected cells. PRO 367 consists of a UnAB molecule linked to a therapeutic
radioisotope and is designed to bind to and destroy HIV-infected cells by
delivering a lethal dose of radiation. The Company plans to begin Phase I/II
clinical trials of PRO 367 in the first half of 1998.

In June 1996, the Company's scientists in collaboration with researchers at
the Aaron Diamond AIDS Research Center ("ADARC") described in an article
published in NATURE the discovery of CCR5, a co-receptor for HIV that mediates
fusion of HIV with the cell membrane. The Company is using its proprietary
ProSys assays in a program to discover compounds that specifically inhibit the
interaction of HIV with HIV co-receptors, including CCR5 and CXCR4, thereby
blocking viral fusion and entry. In addition, the Company is using its
proprietary HIV attachment assay in a research program to identify
small-molecule compounds that inhibit attachment of the virus to the CD4
receptor.

4
<PAGE>
THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the Company.......... 2,000,000 shares

Common Stock to be outstanding after the
offering................................... 8,701,553 shares (1)

Use of proceeds.............................. To fund research and development,
in-licensing of technology and clinical
trials and for working capital and general
corporate purposes.

Proposed Nasdaq National Market symbol....... PGNX

Risk factors................................. This offering involves a high degree of risk.
See "Risk Factors."
</TABLE>

- ------------------------

(1) Based on the number of shares outstanding at September 30, 1997. Excludes as
of such date 2,700,460 shares of Common Stock reserved for issuance pursuant
to outstanding options under the Company's stock option plans and pursuant
to outstanding warrants at a weighted average exercise price $4.68 per
share. See "Capitalization" and "Description of Capital Stock."

5
<PAGE>
SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------- --------------------
1994 1995 1996 1996 1997
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Research grants................................................... $ 504 $ 725 $ 521 $ 268 $ 489
Product sales..................................................... 52 50 98 67 50
Interest income................................................... 108 46 106 91 109
Collaboration revenue............................................. 13,276
--------- --------- --------- --------- ---------
Total revenues.................................................. 664 821 725 426 13,924
--------- --------- --------- --------- ---------
Expenses:
Research and development.......................................... 2,859 3,852 3,700 2,654 5,726
General and administrative........................................ 878 1,094 2,808 984 1,286
Interest expense.................................................. 50 87 51 40 236
Depreciation and amortization..................................... 289 291 309 230 238
--------- --------- --------- --------- ---------
Total expenses.................................................. 4,076 5,324 6,868 3,908 7,486
--------- --------- --------- --------- ---------
Operating (loss) income......................................... (3,412) (4,503) (6,143) (3,482) 6,438
Income taxes........................................................ 151
--------- --------- --------- --------- ---------
Net (loss) income............................................... ($ 3,412) ($ 4,503) ($ 6,143) ($ 3,482) $ 6,287
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Pro forma net (loss) income per common share(1)..................... ($0.83) $0.75
--------- ---------
--------- ---------
Pro forma weighted average common shares outstanding(1)............. 7,424 8,332
--------- ---------
--------- ---------
</TABLE>

<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
-------------------------
ACTUAL AS ADJUSTED(2)
--------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............................................................... $ 7,720 $ 29,290
Working capital......................................................................... 7,016 28,586
Total assets............................................................................ 8,511 30,081
Capital lease obligations and deferred lease
liability, long-term portion.......................................................... 106 106
Total stockholders' equity.............................................................. 7,595 29,165
</TABLE>

- ------------------------

(1) See Note 2 to the Company's Financial Statements for information concerning
computation of the pro forma per share data.

(2) As adjusted to reflect (i) the conversion of all outstanding shares of the
Company's Preferred Stock into an aggregate of 4,259,878 shares of Common
Stock pursuant to their terms and (ii) the sale of the 2,000,000 shares of
Common Stock offered by the Company hereby, assuming an initial public
offering price of $12.00 per share, and the receipt of the net proceeds
therefrom after deducting the underwriting discount and estimated offering
expenses. See "Use of Proceeds," "Description of Capital Stock" and the
Company's Financial Statements.

6
<PAGE>
RISK FACTORS

AN INVESTMENT IN THE SHARES OF COMMON STOCK OFFERED HEREBY IS SPECULATIVE IN
NATURE AND INVOLVES A HIGH DEGREE OF RISK. IN ADDITION TO THE OTHER INFORMATION
CONTAINED IN THIS PROSPECTUS, THE FOLLOWING FACTORS SHOULD BE CONSIDERED
CAREFULLY IN EVALUATING THE COMPANY AND ITS BUSINESS BEFORE PURCHASING THE
SHARES OF COMMON STOCK OFFERED HEREBY. THIS PROSPECTUS CONTAINS CERTAIN
FORWARD-LOOKING STATEMENTS. ANY STATEMENTS CONTAINED HEREIN THAT ARE NOT
STATEMENTS OF HISTORICAL FACT MAY BE DEEMED TO BE FORWARD-LOOKING STATEMENTS.
FOR EXAMPLE, THE WORDS "BELIEVES," "ANTICIPATES," "PLANS," "EXPECTS," "INTENDS"
AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS.
THERE ARE A NUMBER OF IMPORTANT FACTORS, INCLUDING THE RISK FACTORS SET FORTH
BELOW, THAT COULD CAUSE THE COMPANY'S ACTUAL RESULTS TO DIFFER MATERIALLY FROM
THOSE INDICATED BY SUCH FORWARD-LOOKING STATEMENTS.

EARLY STAGE OF PRODUCT DEVELOPMENT; TECHNOLOGICAL UNCERTAINTIES

The Company is at an early stage of development, and the successful
commercialization of any products will require significant further research,
development, testing and regulatory approvals and additional investment.
Substantially all of the Company's resources have been, and for the foreseeable
future will continue to be, dedicated to the development of products for cancer
and viral diseases, most of which are still in the early stages of development
and testing. There are a number of technological challenges that the Company
must successfully address to complete most of its development efforts. In
addition, the product development programs conducted by the Company and its
collaborators are subject to the risks of failure inherent in the development of
product candidates based on new technologies. These risks include the
possibility that the technologies used by the Company will prove to be
ineffective or any or all of the Company's product candidates will prove to be
unsafe or otherwise fail to receive necessary regulatory approvals; that the
product candidates, if safe and effective, will be difficult to manufacture on a
large scale or uneconomical to market; that the proprietary rights of third
parties will preclude the Company or its collaborators from marketing the
products utilizing the Company's technologies; or that third parties will market
superior or equivalent products. To the Company's knowledge, no cancer
therapeutic vaccine and no drug designed to treat HIV infection by blocking
viral entry has been approved for marketing and there can be no assurance that
any of the Company's products will be successfully developed. The commercial
success of the Company's products, if any, when and if approved for marketing by
the U.S. Food and Drug Administration (the "FDA"), will depend upon their
acceptance by the medical community and third party payors as clinically useful,
cost-effective and safe. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Business--Product Development,"
"--Manufacturing," "--Government Regulation" and "--Competition."

UNCERTAINTY ASSOCIATED WITH PRECLINICAL AND CLINICAL TESTING

The grant of regulatory approvals for the commercial sale of any of the
Company's potential products will depend in part on the Company and/or its
collaborators successfully conducting extensive preclinical and clinical testing
to demonstrate their safety and efficacy in humans. The results of preclinical
studies by the Company and/or its collaborators may be inconclusive and may not
be indicative of results that will be obtained in human clinical trials. In
addition, results attained in early human clinical trials relating to the
products under development by the Company may not be indicative of results that
will be obtained in later clinical trials. As results of particular preclinical
studies and clinical trials are received, the Company and/ or its collaborators
may abandon projects which they might otherwise have believed to be promising,
some of which may be described in this Prospectus.

Although human clinical trials have commenced with respect to the
development of GMK, MGV and PRO 542, the Company is developing other therapeutic
products, including PRO 367, on which it plans to file investigational new drug
applications ("INDs") with the FDA or make equivalent filings outside of the
U.S., and there can be no assurance that necessary preclinical studies on these
products will be completed satisfactorily, if at all, or that the Company
otherwise will be able to make its intended filings. Further, there can be no
assurance that the Company will be permitted to undertake and complete human
clinical

7
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trials of any of the Company's potential products, either in the U.S. or
elsewhere, or, if such trials are permitted, that such products will not have
undesirable side effects or other characteristics that may prevent them from
being approved or limit their commercial use if approved. Clinical testing is
very expensive, and the Company and/or its collaborators will have to devote
substantial resources for the payment of clinical trial expenses.

The rate of completion of the human clinical trials involving the Company's
product candidates, if permitted, will be dependent upon, among other factors,
the rate of patient enrollment. Patient enrollment is a function of many
factors, including the size of the patient population, the nature of the
protocol, the availability of alternative treatments, the proximity of eligible
patients to clinical sites and the eligibility criteria for the study. Delays in
planned patient enrollment might result in increased costs and delays, which
could have a material adverse effect on the Company. The Company, its
collaborators or the FDA or other regulatory agencies may suspend clinical
trials at any time if the subjects or patients participating in such trials are
being exposed to unacceptable health risks. In addition, clinical trials are
often conducted with patients having the most advanced stages of disease. During
the course of treatment, these patients can suffer adverse medical effects or
die for reasons that may not relate to the product being tested, but which can
nevertheless affect adversely any results generated from clinical trials. In
addition, there can be no assurance that clinical trials of products under
development will demonstrate safety and efficacy at all or to the extent
necessary to obtain regulatory approvals. Companies in the biotechnology
industry have suffered significant setbacks in advanced clinical trials, even
after obtaining promising results in earlier trials. Consequently, the period of
time necessary to complete clinical testing and receive regulatory approval can
be quite extensive and involve many years. The Company's most advanced product
candidates are intended for treating patients with relatively early stage cancer
and are designed to delay or prevent recurrence of disease. As a consequence,
clinical trials involving these product candidates are likely to take longer to
complete than clinical trials involving other types of therapeutics. The failure
to adequately demonstrate the safety and efficacy of a therapeutic product under
development could delay or prevent regulatory approval of the product and would
have a material adverse effect on the Company.

Lastly, the Company has limited experience in conducting clinical trials. In
certain circumstances the Company and its corporate collaborators rely, in part,
on academic institutions and on clinical research organizations to conduct and
monitor certain clinical trials. There can be no assurance that such entities
will conduct the clinical trials successfully. In addition, certain clinical
trials for the Company's products will be conducted by government-sponsored
agencies. Because the conduct of such trials will be dependent on government
participation and funding, the Company will have less control over such trials
than if the Company were the sole sponsor thereof. As a result, there can be no
assurance that these trials will commence or be completed as planned. Failure to
commence or complete any of its planned clinical trials could have a material
adverse effect on the Company's business, financial condition or results of
operations. See "Business--Product Development," "--Cancer Therapeutics," "--HIV
Therapeutics" and "--Government Regulation."

RISKS RELATING TO CORPORATE COLLABORATIONS

Progenics' business strategy includes entering into collaborations or
marketing and distribution arrangements with corporate partners, primarily
pharmaceutical companies, for the development (including clinical development),
commercialization, marketing and distribution of certain of its product
candidates. To date, the Company has entered into collaborative arrangements
with only one corporate partner, BMS. The compounds covered by the Company's
collaboration with BMS represent the most advanced product candidates of the
Company to date. Pursuant to this collaboration, Progenics has granted to BMS
the exclusive worldwide license to manufacture, use and sell GMK and MGV and any
other products to which Progenics has rights that include the GM2 or GD2
ganglioside antigens for the treatment or prevention of human cancer. As a
result of the governing agreements, the Company is dependent on BMS to fund
clinical testing, to make certain regulatory filings and to manufacture and
market products resulting from the collaboration. There can be no assurance that
the arrangements with BMS or any

8
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collaborator will be scientifically, clinically or commercially successful. In
the event that any such arrangement is terminated, such action could adversely
affect the Company's ability to develop, commercialize, market and distribute
certain of its product candidates. The Company's product candidates will only
generate milestone payments and royalties after significant preclinical and/or
clinical development, the procurement of requisite regulatory approvals, the
establishment of manufacturing capabilities and/or the successful marketing of
the product.

The amount and timing of resources dedicated by BMS or any collaborator to
their collaborations with the Company is not within the Company's control. If
any such collaborator breaches or terminates its agreements with the Company, or
fails to conduct its collaborative activities in a timely manner, the
commercialization of product candidates may be adversely affected. There can be
no assurance that the Company's collaborative partners will not change their
strategic focus or pursue alternative technologies or develop alternative
products either on their own or in collaboration with others, including the
Company's competitors, as a means for developing treatments for the diseases
targeted by these collaborative programs. For example, BMS manufactures and
sells a number of products that may compete against the products that BMS has
licensed from Progenics. The Company's business also will be affected by the
effectiveness of its corporate partners in marketing any successfully developed
products. A reduction in sales efforts or a discontinuance of sales of any
developed products by any collaborative partner could result in reduced revenues
and have a material adverse effect on the Company's business, financial position
and results of operations.

There can be no assurance that the Company's existing strategic alliances
will continue or be successful or that the Company will receive any further
research funding or milestone or royalty payments. If the Company's partners do
not develop products under these collaborations, there can be no assurance that
the Company would be able to do so. Disputes may arise between the Company and
its collaborators as to a variety of matters, including ownership of
intellectual property rights. These disputes may be both expensive and
time-consuming and may result in delays in the development and commercialization
of certain product candidates. There can be no assurance that the Company will
be able to negotiate any additional collaborative or marketing and distribution
arrangements, that such arrangements will be available to the Company on
acceptable terms or that any such relationships, if established, will be
scientifically or commercially successful. Furthermore, any additional
collaborations would likely be subject to some or all of the risks described
above with respect to the Company's current collaborations. See "Business--BMS
Collaboration."

HISTORY OF OPERATING LOSSES AND ACCUMULATED DEFICIT; NO PRODUCT REVENUE AND

UNCERTAINTY OF FUTURE PROFITABILITY

The Company has incurred substantial losses in each year since its
inception. As of September 30, 1997, the Company had an accumulated deficit of
approximately $17.5 million. Such losses have resulted principally from costs
incurred in the Company's research and development programs and general and
administrative costs associated with the Company's development. The Company has
derived only limited revenues from federal research grants and from the sale of
research reagents. Although through September 30, 1997, the Company had received
approximately $13.3 million under its agreement with BMS, no revenues had been
generated by the Company from product sales (other than for research purposes)
or royalties and no product sales (other than sales of research reagents) or
royalties are likely for a number of years, if ever. The Company expects to
incur additional operating losses over at least the next several years and
expects losses in the future to increase significantly as the Company expands
development and clinical trial efforts. The Company expects that losses will
fluctuate from quarter to quarter and that such fluctuations may be substantial.
The Company's ability to achieve profitability is dependent in part on obtaining
regulatory approvals for products and entering into agreements for
commercialization of such products. There can be no assurance that such
regulatory approvals will be obtained or such agreements will be entered into.
The failure to obtain any such necessary regulatory approvals or to enter into
any such necessary agreements could delay or prevent the Company from achieving
profitability and would have a

9
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material adverse effect on the business, financial position and results of
operations of the Company. Further, there can be no assurance that the Company's
operations will become profitable even if any product under development by the
Company or any collaborators is commercialized. See "Selected Financial Data"
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations."

NEED FOR ADDITIONAL FINANCING AND UNCERTAIN ACCESS TO CAPITAL FUNDING

Progenics' current development projects require substantial capital. The
Company does not have committed external sources of funding for certain of its
drug discovery and development projects. The Company believes that the net
proceeds of this offering, together with the Company's present capital
resources, should be sufficient to fund operations at least through the end of
1999, based on the Company's current operating plan. No assurance can be given
that there will be no change that would consume the Company's liquid assets
before such time. The Company will require substantial funds in addition to the
net proceeds of this offering to conduct development activities, preclinical
studies, clinical trials and other activities relating to the successful
commercialization of any potential products. The Company anticipates that it
will seek these funds from external sources. There can be no assurance, however,
that the Company will be able to negotiate such arrangements or obtain the
additional funds it will require on acceptable terms, if at all. In addition,
the Company's cash requirements may vary materially from those now planned
because of results of research and development, results of product testing,
potential relationships with in-licensors and collaborators, changes in the
focus and direction of the Company's research and development programs,
competitive and technological advances, the cost of filing, prosecuting,
defending and enforcing patent claims, the regulatory approval process,
manufacturing, marketing and other costs associated with the commercialization
of products following receipt of regulatory approvals and other factors.

If adequate funds are not available, the Company may be required to delay,
reduce the scope of or eliminate one or more of its programs; to obtain funds
through arrangements with collaborative partners or others that may require the
Company to relinquish rights to certain of its technologies, product candidates
or products that the Company would otherwise seek to develop or commercialize
itself; or to license the rights to such technologies, product candidates or
products on terms that are less favorable to the Company than might otherwise be
available. If the Company raises additional funds by issuing equity securities,
further dilution to stockholders may result and new investors could have rights
superior to existing stockholders. See "Use of Proceeds," "Capitalization" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."

COMPETITION AND TECHNOLOGICAL CHANGE

Competition in the biopharmaceutical industry is intense. The Company faces
competition from many companies and major universities and research institutions
in the United States and abroad. Many of the Company's competitors have
substantially greater resources, experience in conducting preclinical studies
and clinical trials and obtaining regulatory approvals for their products,
operating experience, research and development and marketing capabilities and
production capabilities than those of the Company. There can be no assurance
that the Company's competitors will not develop technologies and products that
are safer or more effective than any being developed by the Company or which
would render the Company's technology and products obsolete and noncompetitive,
and the Company's competitors may succeed in obtaining FDA approval for products
more rapidly than the Company. The Company will face competition from companies
marketing existing products or developing new products for diseases targeted by
the Company's technologies. The development of new products for those diseases
for which the Company is developing products could render the Company's product
candidates noncompetitive and obsolete. There can be no assurance that the
products under development by the Company and its collaborators will be able to
compete successfully with existing products or products under development by
other companies, universities and other institutions or that they will attain
regulatory approval in the United States or elsewhere. With respect to GMK, the
FDA and certain other regulatory authorities have approved high-

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dose alpha interferon for marketing as a treatment of patients with high risk
melanoma. High-dose alpha interferon has demonstrated some efficacy for this
indication, although it possesses certain drawbacks. With respect to the
Company's products for the treatment of HIV infection, two classes of products
made by competitors of the Company have been approved for marketing by the FDA
for the treatment of HIV infection and AIDS: reverse transcriptase inhibitors
and protease inhibitors. Both types of drugs are inhibitors of viral enzymes,
and although they each possess certain drawbacks, they have shown efficacy in
reducing the concentration of HIV in the blood and prolonging asymptomatic
periods in HIV-positive individuals, especially when administered in
combination.

A significant amount of research in the biopharmaceutical field is also
being carried out at academic and government institutions. The Company's
strategy is to in-license technology and product candidates from academic and
government institutions. These institutions are becoming increasingly aware of
the commercial value of their findings and are becoming more aggressive in
pursuing patent protection and negotiating licensing arrangements to collect
royalties for use of technology that they have developed. These institutions may
also market competitive commercial products on their own or in collaboration
with competitors and will compete with the Company in recruiting highly
qualified scientific personnel. Any resulting increase in the cost or decrease
in the availability of technology or product candidates from these institutions
may affect the Company's business strategy.

LIMITED MANUFACTURING CAPABILITIES

In order to successfully commercialize its product candidates, Progenics
and/or its collaborators must be able to manufacture its products in commercial
quantities, in compliance with regulatory requirements, at acceptable costs and
in a timely manner. The manufacture of the types of biopharmaceutical products
being developed by the Company presents several risks and difficulties. For
example, the manufacture of recombinant proteins used in certain of the
Company's current HIV products in development is complex, can be difficult to
accomplish even in small quantities, can be difficult to scale-up when large
scale production is required and can be subject to delays, inefficiencies and
poor or low yields of quality products. Although Progenics has constructed two
pilot-scale manufacturing facilities, one for the production of vaccines and one
for the production of recombinant proteins, which it believes will be sufficient
to meet the Company's initial needs for clinical trials, these facilities may be
insufficient for all of its late-stage clinical trials and for its
commercial-scale manufacturing requirements, if any. Accordingly, the Company
may be required to expand its manufacturing staff and facilities and obtain new
facilities or to contract with corporate collaborators or other third parties to
assist with production. Manufacture of some of Progenics' initial products for
commercialization may require third party contract manufacturers at a
significant cost to the Company. In employing third party manufacturers,
Progenics will not control all aspects of the manufacturing process. There can
be no assurance that the Company will be able to obtain from third party
manufacturers adequate supplies in a timely fashion for commercialization, or
that commercial quantities of any such products, if approved for marketing, will
be available from contract manufacturers at acceptable costs. In the event the
Company decides to establish a full-scale commercial manufacturing facility, the
Company will require substantial additional funds and will be required to hire
and train significant numbers of employees and comply with the extensive
regulations applicable to such a facility. There is no assurance that Progenics
will be able to develop a current Good Manufacturing Practices ("cGMP")
manufacturing facility sufficient for all clinical trials or commercial-scale
manufacturing. The cost of manufacturing certain products may make them
prohibitively expensive. In addition, in order to successfully commercialize its
product candidates, the Company may be required to reduce the cost of
production, and there can be no assurance that the Company will be able to do
so. See "Business-- Manufacturing."

AVAILABILITY OF MATERIALS

Although Progenics has not experienced any significant difficulties in
obtaining the raw materials necessary to perform its research, development and
manufacturing activities to date, there can be no assurance that sufficient
quantities of these materials will be available to support continued research,

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development or commercial manufacture of any of the Company's planned products.
The Company currently obtains supplies of critical materials used in production
of GMK and MGV from single sources. Specifically, commercialization of the
Company's GMK and MGV cancer vaccine candidates requires a certain adjuvant from
Aquila Biopharmaceuticals Inc. ("Aquila"). The Company has entered into a
license and supply agreement with Aquila pursuant to which Aquila agreed to
supply the Company with all of its requirements for the QS-21 adjuvant for use
in certain ganglioside-based cancer vaccines, including GMK and MGV. The
agreement grants to the Company a license to use Aquila's patented technology to
develop, manufacture and sell certain cancer vaccines using QS-21 and, if Aquila
is unable to supply the Company with sufficient quantities of QS-21, the Company
has the right to manufacture QS-21 itself or purchase it from third parties for
so long as Aquila is unable to supply the Company with sufficient quantities. In
connection with the Company's collaboration with BMS, Progenics granted to BMS a
non-exclusive sublicense under the Company's license and supply agreement with
Aquila, and BMS entered into a supply agreement with Aquila. There can be no
assurance that Aquila will be able to supply sufficient quantities of QS-21 to
the Company or BMS or that the Company or BMS will have the right or capability
to manufacture sufficient quantities of QS-21 to meet its needs if Aquila is
unable or unwilling to do so. In addition, the Company currently relies on one
source of pharmaceutical grade keyhole limpet hemocyanin ("KLH"), which is one
of the components of the Company's cancer vaccines. Although the Company has a
supply agreement with this supplier, there can be no assurance that the Company
will not be subject to delays or disruption in the supply of this component. Any
delay or disruption in the availability of QS-21 or KLH could have a material
adverse effect on the Company's business, financial condition or results of
operations. See "Business--Manufacturing."

GOVERNMENT REGULATION; NO ASSURANCE OF REGULATORY APPROVAL

The Company and its products are subject to comprehensive regulation by the
FDA in the United States and by comparable authorities in other countries. These
national agencies and other federal, state, and local entities regulate, among
other things, the preclinical and clinical testing, safety, effectiveness,
approval, manufacture, labeling, marketing, export, storage, record keeping,
advertising, and promotion of the Company's products. See "--Uncertainty
Associated with Preclinical and Clinical Testing."

Among other requirements, FDA approval of the Company's products, including
a review of the manufacturing processes and facilities used to produce such
products, will be required before such products may be marketed in the United
States. In order to obtain FDA approval of a product, the Company must
demonstrate to the satisfaction of the FDA that such product is safe and
effective for its intended uses and that the Company is capable of manufacturing
the product with procedures that conform to the FDA's cGMP regulations, which
must be followed at all times. The process of obtaining FDA approvals can be
costly, time consuming, and subject to unanticipated delays and the Company has
had only limited experience in filing and pursuing applications necessary to
gain regulatory approvals. There can be no assurance that such approvals will be
granted on a timely basis, or at all.

The Company's analysis of the results of its clinical studies is subject to
review and interpretation by the FDA, which may differ from the Company's
analysis. There can be no assurance that the Company's data or its
interpretation of data will be accepted by the FDA. In addition, delays or
rejections may be encountered based upon changes in applicable law or FDA policy
during the period of product development and FDA regulatory review. Any failure
to obtain, or delay in obtaining, FDA approvals would adversely affect the
ability of the Company to market its proposed products. Moreover, even if FDA
approval is granted, such approval may include significant limitations on
indicated uses for which a product could be marketed.

Both before and after approval is obtained, a product, its manufacturer and
the sponsor of the marketing application for the product are subject to
comprehensive regulatory oversight. Violations of regulatory requirements at any
stage, including the preclinical and clinical testing process, the approval
process, or post-approval marketing activities may result in various adverse
consequences, including the FDA's delay in approving or refusal to approve a
product, withdrawal of an approved product from the

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<PAGE>
market, and/or the imposition of criminal penalties against the manufacturer
and/or the holder of the marketing approval for the product. In addition, later
discovery of previously unknown problems relating to a marketed product may
result in restrictions on such product, manufacturer, or the holder of the
marketing approval for the product, including withdrawal of the product from the
market. Also, new government requirements may be established that could delay or
prevent regulatory approval of the Company's products under development.

The Company is also subject to numerous and varying foreign regulatory
requirements governing the design and conduct of clinical trials and the
manufacturing and marketing of its products. The approval procedure varies among
countries and can involve additional testing, and the time required to obtain
approval may differ from that required to obtain FDA approval. The foreign
regulatory approval process may include all of the risks associated with
obtaining FDA approval set forth above, and there can be no assurance that
foreign regulatory approvals will be obtained on a timely basis, if at all.
Approval by the FDA does not ensure approval by regulatory authorities in other
foreign countries. There can be no assurance that the Company or its partners
will file for regulatory approvals or receive necessary approvals to
commercialize product candidates in any market. Delays in receipt of or failure
to receive regulatory approvals, or the loss of previously received approvals,
would have a material adverse effect on the Company's business, financial
condition and results of operations.

The Company relies, in part, on academic institutions, clinical research
organizations and its corporate collaborators to conduct and monitor certain of
its clinical trials. There can be no assurance that such entities will perform
these tasks successfully. In addition, certain clinical trials for the Company's
products will be conducted by government-sponsored agencies. Because the conduct
of such trials will be dependent on government participation and funding, the
Company will have less control over such trials than if the Company were the
sole sponsor. As a result, there can be no assurance that these trials will
commence or be completed as planned. Failure to commence or complete any planned
clinical trial could have a material adverse affect on the Company's business,
financial position or results of operations. See "Business-- Government
Regulation."

DEPENDENCE ON THIRD PARTIES

The Company relies heavily on third parties (in addition to its reliance on
corporate collaborators described above under "--Risks Relating to Corporate
Collaborations") for a variety of functions, including certain functions
relating to research and development, manufacturing, clinical trials management
and regulatory affairs. As of September 30, 1997, the Company had only 31
full-time employees. The Company is party to several collaborative agreements
which place substantial responsibility on third parties for clinical development
of the Company's products. The Company also in-licenses technology from medical
and academic institutions in order to minimize investments in early research and
enters into collaborative arrangements with certain of these entities with
respect to clinical trials of product candidates.

Except for payments made to the Company under its collaboration with BMS,
most of the Company's revenues to date have been derived from federal research
grants. The government's obligation to make payments under these grants is
subject to appropriation by the United States Congress for funding in each year.
Moreover, it is possible that Congress or the government agencies that
administer these government research programs will determine to scale back these
programs or terminate them or that the government will award future grants to
competitors of the Company instead of the Company. In addition, there can be no
assurances that the Company will be awarded any such grants in the future or
that any amounts derived therefrom will not be less than those received to date.
Certain of the Company's clinical trials are expected to be partially paid for
by government funds. Any future reduction in the funding the Company receives
either from federal research grants or with respect to clinical trials could
adversely affect the Company's business, financial condition and results of
operations.

There can be no assurance that Progenics will be able to establish and
maintain any of the relationships described above on terms acceptable to the
Company, that the Company can enter into these

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<PAGE>
arrangements without undue delays or expenditures, or that these arrangements
will allow the Company to compete successfully against other companies.

LACK OF SALES AND MARKETING EXPERIENCE

If FDA and other approvals are obtained with respect to any of its products,
Progenics expects to market and sell its products through distribution,
co-marketing, co-promotion or licensing arrangements with third parties. The
Company's agreement with BMS grants to BMS the exclusive right to market any
products resulting from this collaboration. Progenics has no experience in
sales, marketing or distribution and its current management and staff are not
trained in these areas. To the extent that the Company enters into distribution,
co-marketing, co-promotion or licensing arrangements for the marketing and sale
of its products, any revenues received by the Company will be dependent on the
efforts of third parties. The Company would not control the amount and timing of
marketing resources such third parties would devote to the Company's products.
If any of such parties were to breach or terminate its agreement with the
Company or otherwise fail to conduct marketing activities successfully and in a
timely manner, the commercialization of product candidates would be delayed or
terminated, which could have a material adverse effect on the Company's
business, financial condition and results of operations. In addition, if the
Company markets products directly, significant additional expenditures and
management resources would be required to develop an internal sales force. There
can be no assurance that the Company will be able to establish a successful
sales force. See "Business--Business Strategy."

DEPENDENCE ON AND UNCERTAINTY OF PROTECTION OF PATENTS AND PROPRIETARY RIGHTS

The Company's success is dependent in part on obtaining, maintaining and
enforcing patent and other proprietary rights. Under a license agreement with
Sloan-Kettering, the Company obtained worldwide, exclusive rights to certain
technology relating to ganglioside conjugate vaccines, including GMK and MGV,
and their use to treat or prevent cancer. In addition, the Company licensed from
Columbia University worldwide, exclusive rights to certain technology relating
to CD4 and its use to treat or prevent HIV infection including patents and
patent applications. Progenics has also filed a number of U.S. and foreign
patent applications on its UnAB, ProSys and ProVax technologies and uses of
these technologies. The Company is required to make substantial cash payments
and achieve certain milestones and requirements, including, without limitation,
filing INDs, obtaining product approvals and introducing products, to maintain
its rights under these licenses. There is no assurance that the Company will be
able to make required cash payments when due or achieve the milestones and
requirements in order to maintain its rights under these licenses. Termination
of any of such licenses could result in the Company being unable to continue
development of its product candidates and production and marketing of approved
products, if any. Consequently, termination of the licenses could have a
material adverse effect on the business, financial condition and results of
operations of the Company.

There can be no assurance that patent applications owned by or licensed to
the Company will result in patents being issued or that, if issued, the patents
will afford protection against competitors with similar technology. Although a
patent has a statutory presumption of validity in the United States, the
issuance of a patent is not conclusive as to such validity or as to the
enforceable scope of the claims of the patent. There can be no assurance that
the Company's issued patents or any patents subsequently issued to or licensed
by the Company will not be successfully challenged in the future. The validity
or enforceability of a patent after its issuance by the patent office can be
challenged in litigation. The cost of litigation to uphold the validity of
patents and to prevent infringement can be substantial. If the outcome of the
litigation is adverse to the owner of the patent, third parties may then be able
to use the invention covered by the patent without payment. There can be no
assurance that the Company's patents will not be infringed or successfully
avoided through design innovation.

The Company may not retain all rights to developments, inventions, patents
and other proprietary information resulting from its collaborative arrangements,
whether in effect as of the date hereof or which may be entered into at some
future time with third parties. As a result, the Company may be required to

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<PAGE>
license such developments, inventions, patents or other proprietary information
from such third parties, possibly at significant cost to the Company. The
Company's failure to obtain any such licenses could have a material adverse
effect on the business, financial condition and results of operations of the
Company. ADARC is a co-owner with the Company of one of the patent applications
relating to the HIV co-receptor CCR5 and upon which the Company's HIV
co-receptor/fusion program is based. Unless the Company acquires from ADARC an
exclusive license to ADARC's rights in this patent application, there can be no
assurance that ADARC will not license such patent to a competitor of the
Company.

There may be patent applications and issued patents belonging to competitors
that may require the Company to alter its products, pay licensing fees or cease
certain activities. If the Company's products conflict with patents that have
been or may be granted to competitors, universities or others, such other
persons could bring legal actions against the Company claiming damages and
seeking to enjoin manufacturing and marketing of the affected products. If any
such actions are successful, in addition to any potential liability for damages,
the Company could be required to obtain a license in order to continue to
manufacture or market the affected products. There can be no assurance that the
Company would prevail in any such action or that any license required under any
such patent would be made available on acceptable terms or at all. There is
significant litigation in the biopharmaceutical industry regarding patent and
other intellectual property rights. Any litigation involving the Company could
require substantial resources and have a material adverse effect on the
Company's business, financial position and results of operations.

Progenics has also filed a number of U.S. and foreign patent applications
(one of which is owned jointly with ADARC) relating to the discovery of the HIV
co-receptor CCR5. In addition to the risks described above, the Company is aware
that other groups have claimed discoveries similar to that covered by the
Company's patent applications. These groups may have made their discoveries
prior to the discoveries covered by the Company's patent applications and may
have filed their applications prior to the Company's patent applications. The
Company does not expect to know for several years the relative strength of its
patent position as compared to these other groups.

In addition to the patents, patent applications, licenses and intellectual
property processes described above, the Company also relies on unpatented
technology, trade secrets and information. No assurance can be given that others
will not independently develop substantially equivalent information and
techniques or otherwise gain access to the Company's technology or disclose such
technology, or that the Company can meaningfully protect its rights in such
unpatented technology, trade secrets and information. The Company requires each
of its employees, consultants and advisors to execute a confidentiality
agreement at the commencement of an employment or consulting relationship with
the Company. The agreements generally provide that all inventions conceived by
the individual in the course of employment or in providing services to the
Company and all confidential information developed by, or made known to, the
individual during the term of the relationship shall be the exclusive property
of the Company and shall be kept confidential and not disclosed to third parties
except in limited specified circumstances. There can be no assurance, however,
that these agreements will provide meaningful protection for the Company's
information in the event of unauthorized use or disclosure of such confidential
information. See "Business--Patents and Proprietary Technology."

DEPENDENCE UPON KEY PERSONNEL

Progenics is dependent upon certain key management and scientific personnel.
In particular, the loss of Dr. Maddon could have a materially adverse effect on
Progenics, unless a qualified replacement could be found. Progenics maintains a
key-man life insurance policy on Dr. Maddon in the amount of $2.5 million. The
Company's employment agreement with Dr. Maddon expires in December 1998, and
there can be no assurance that it will be renewed by the parties thereto. See
"Management--Executive Compensation."

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ATTRACTION AND RETENTION OF PERSONNEL

Competition for qualified employees among companies in the biopharmaceutical
industry is intense. Progenics' future success depends upon its ability to
attract, retain and motivate highly skilled employees. Although Progenics has
established relationships with the scientists who serve on its Scientific
Advisory Boards, these individuals do not devote a substantial portion of their
time to Progenics-related activities and do not participate directly in the
development of Progenics' products on a daily basis. Attracting desirable
employees will require Progenics to offer competitive compensation packages,
including stock options. In order to successfully commercialize its products,
the Company must substantially expand its personnel, particularly in the areas
of manufacturing, clinical trials management, regulatory affairs, business
development and marketing. There can be no assurance that the Company will be
successful in hiring or retaining qualified personnel. Managing the integration
of new personnel and Company growth generally could pose significant risks to
the Company's development and progress. The addition of such personnel may
result in significant changes in the Company's utilization of cash resources and
its development schedule. See "Business--Human Resources."

UNCERTAINTY RELATED TO HEALTH CARE REFORM MEASURES AND REIMBURSEMENT

In recent years, there have been numerous proposals to change the health
care system in the United States. Some of these proposals have included measures
that would limit or eliminate payments for certain medical procedures and
treatments or subject the pricing of pharmaceuticals to government control.
Significant changes in the health care system in the United States or elsewhere
might have a substantial impact on the manner in which the Company conducts its
business. Such changes also could have a material adverse effect on the
Company's ability to raise capital. Furthermore, the Company's ability to
commercialize products may be adversely affected to the extent that such
proposals have a material adverse effect on the business, financial condition
and profitability of other companies that are collaborators or prospective
collaborators of the Company.

In addition, significant uncertainty exists as to the reimbursement status
of newly-approved health care products. The Company's and its collaborators'
success in generating revenue from sales of products may depend, in part, on the
extent to which reimbursement for the costs of such products will be available
from third-party payors, such as government health administration authorities,
private health insurers and health maintenance organizations ("HMOs"). In
addition, the trend towards managed health care in the United States and the
concurrent growth of organizations such as HMOs, which could control or
significantly influence the purchase of health care services and products, as
well as legislative proposals to reduce government insurance programs, may all
result in lower prices for products and could affect the market for products. If
the Company or one or more of its collaborators succeeds in bringing one or more
of Progenics' products to market, there can be no assurance that such products
will be considered cost-effective or that adequate third-party insurance
coverage will be available to establish and maintain price levels sufficient for
realization of an appropriate return on the Company's investment in product
development. Third-party payors are increasingly attempting to contain health
care costs by limiting both coverage and the level of reimbursement of new
products approved for marketing by the FDA. If adequate coverage and
reimbursement levels are not provided by government and third-party payors for
uses of the Company's products, the market acceptance of such products would be
adversely affected.

RISK OF PRODUCT LIABILITY; LIMITED AVAILABILITY OF INSURANCE

The Company's business exposes it to potential product liability risks which
are inherent in the testing, manufacturing, marketing and sale of human vaccine
and therapeutic products, and there can be no assurance that the Company will be
able to avoid significant product liability exposure. Product liability
insurance for the biopharmaceutical industry is generally expensive, if
available at all. The Company has obtained product liability insurance coverage
in the amount of $5 million per occurrence, subject to a $5 million aggregate
limitation. However, there can be no assurance that the Company's present
insurance

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<PAGE>
coverage is now or will continue to be adequate as the Company further develops
products. In addition, certain of the Company's license and collaborative
agreements require the Company to obtain product liability insurance and it is
possible that license and collaborative agreements which the Company may enter
into in the future may also include such a requirement. There can be no
assurance that in the future adequate insurance coverage will be available in
sufficient amounts or at a reasonable cost, or that a product liability claim or
recall would not have a material adverse effect on the Company.

HAZARDOUS MATERIALS; ENVIRONMENTAL MATTERS

The Company's research and development work and manufacturing processes
involve the use of hazardous, controlled and radioactive materials. The Company
is subject to federal, state and local laws and regulations governing the use,
manufacture, storage, handling and disposal of such materials and certain waste
products. Although the Company maintains safety procedures for handling and
disposing of such materials that it believes comply with the standards
prescribed by such laws and regulations, the risk of accidental contamination or
injury from these materials cannot be completely eliminated. In the event of
such an accident, the Company could be held liable for any damages that result
and any such liability could exceed the resources of the Company. Although the
Company believes that it is in compliance in all material respects with
applicable environmental laws and regulations, there can be no assurance that
the Company will not be required to incur significant costs to comply with
environmental laws and regulations in the future, or that the operations,
business or assets of the Company will not be materially or adversely affected
by current or future environmental laws or regulations.

The research and development efforts sponsored by the Company involve
laboratory animals. The Company may be adversely affected by changes in laws,
regulations or accepted procedures applicable to animal testing or by social
pressures that would restrict the use of animals in testing or by actions
against the Company or its collaborators by groups or individuals opposed to
such testing.

ABSENCE OF PRIOR TRADING MARKET; POSSIBLE VOLATILITY OF STOCK PRICE

Prior to this offering, there has been no public market for the Common
Stock, and there is no assurance that an active market will develop or be
sustained after this offering or that the market price of the Common Stock will
not decline below the initial public offering price. The initial public offering
price will be determined by negotiation between the Company and the
representatives of the Underwriters and may bear no relationship to the price at
which the Common Stock will trade after completion of this offering. See
"Underwriting" for factors to be considered in determining such offering price.
The market price of the shares of Common Stock, like that of the common stock of
many other biopharmaceutical companies, is likely to be highly volatile. Factors
such as the results of preclinical studies and clinical trials by the Company,
its collaborators or its competitors, other evidence of the safety or efficacy
of products of the Company, its collaborators or its competitors, announcements
of technological innovations or new commercial products by the Company, its
collaborators or its competitors, governmental regulation, changes in
reimbursement policies, health care legislation, developments in patent or other
proprietary rights, developments in the Company's relationships with existing
and, if any, future collaborative partners, public concern as to the safety and
efficacy of products developed by the Company or its collaborators, fluctuations
in the Company's operating results, and general market conditions may have a
significant impact on the market price of the Common Stock.

CONTROL BY EXISTING STOCKHOLDERS; ANTI-TAKEOVER PROVISIONS

Upon the completion of this offering, certain current stockholders of the
Company, including Dr. Maddon and stockholders affiliated with Tudor Investment
Corporation and Weiss, Peck & Greer, will beneficially own or control a
substantial portion of the outstanding shares of Common Stock and therefore may
have the ability, acting together, to elect all of the Company's directors, to
determine the outcome of most corporate actions requiring stockholder approval
and otherwise control the business of the Company.

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<PAGE>
Such control could have the effect of delaying or preventing a change in control
of the Company and consequently adversely affect the market price of the Common
Stock. In addition, the Company's Board of Directors is authorized to issue from
time to time shares of Preferred Stock, without further stockholder
authorization, in one or more designated series or classes. The issuance of
Preferred Stock, as well as certain provisions in certain of the Company's stock
options which provide for acceleration of exercisability upon a change of
control of the Company and certain provisions of the Delaware General
Corporation Law (Section 203, in particular), could make the takeover of the
Company or the removal of the Company's management more difficult, discourage
hostile bids for control of the Company in which stockholders may receive a
premium for their shares of Common Stock or otherwise dilute the rights of
holders of Common Stock and depress the market price of the Common Stock. See
"Principal Stockholders" and "Description of Capital Stock."

FUTURE SALES OF COMMON STOCK; REGISTRATION RIGHTS; POSSIBLE ADVERSE EFFECT ON
FUTURE MARKET PRICE

A substantial number of outstanding shares of Common Stock and shares of
Common Stock issuable upon exercise of outstanding options and warrants will
become eligible for future sale in the public market at prescribed times. Sales
of substantial numbers of shares of Common Stock in the public market following
this offering could adversely affect prevailing market prices. Commencing one
year after the date of this Prospectus, certain stockholders of the Company
(which stockholders hold, as of September 30, 1997, approximately 6.6 million
shares of Common Stock and have the right to acquire 330,455 shares of Common
Stock upon the exercise of outstanding warrants) are entitled to certain rights
with respect to the registration of such shares of Common Stock for offer or
sale to the public. The Company plans to file a Form S-8 registration statement
registering shares issuable pursuant to the Company's stock option plans. Any
sales by existing shareholders or holders of options or warrants may have an
adverse effect on the Company's ability to raise needed capital and may
adversely affect the market price of the Common Stock. See "Description of
Capital Stock," "Shares Eligible for Future Sale" and "Underwriting."

DILUTION

The initial public offering price will be substantially higher than the net
tangible book value per share of the Company which, at September 30, 1997, was
$1.13 per share. Investors purchasing shares of Common Stock in this offering
will suffer immediate, substantial net tangible book value dilution of $8.65 per
share, assuming an initial public offering price of $12.00 per share. In
addition, this dilution will be increased to the extent that holders of
outstanding options and warrants to purchase Common Stock at prices below the
net tangible book value per share of the Company after this offering exercise
such options or warrants. See "Dilution."

ABSENCE OF DIVIDENDS

The Company has never paid any cash dividends on its Common Stock and does
not anticipate paying cash dividends in the foreseeable future. The Company
currently intends to retain earnings, if any, for the development of its
business. See "Dividend Policy."

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<PAGE>
USE OF PROCEEDS

The net proceeds to the Company from the sale of the 2,000,000 shares of
Common Stock offered hereby, at an assumed initial public offering price of
$12.00 per share and after deducting the underwriting discount and estimated
expenses payable by the Company, are estimated to be approximately $21,570,000
($24,918,000 if the Underwriters' over-allotment option is exercised in full).
The Company expects to use the net proceeds to fund research and development,
in-licensing of technology and clinical trials of product candidates and for
working capital and general corporate purposes.

The Company believes that the net proceeds of this offering, together with
the Company's present capital resources, should be sufficient to fund operations
at least through the end of 1999, based on the Company's current operating plan.
No assurance can be given that there will be no change that would consume the
Company's liquid assets before such time. The Company will require substantial
funds in addition to the proceeds of this offering to conduct development
activities, preclinical studies, clinical trials and other activities relating
to the commercialization of any potential products. The Company cannot currently
estimate with any accuracy the amount of these additional funds because it may
vary significantly depending on results of research and development and product
testing, potential relationships with in-licensors and collaborators, changes in
the focus and direction of the Company's research and development programs,
competitive and technological advances, the cost of filing, prosecuting,
defending and enforcing patent claims, the regulatory approval process,
manufacturing, marketing and other costs associated with commercialization of
products following receipt of regulatory approvals and other factors. The
Company anticipates that it will seek these funds from external sources, such as
future offerings of equity or debt securities or agreements with corporate
partners and collaborators with respect to the development of the Company's
technology. There can be no assurance, however, that the Company will be able to
negotiate such arrangements or obtain the additional funds it will require on
acceptable terms, if at all.

In addition, the amount of the proceeds from this offering that the Company
will devote to each of the purposes described herein may vary significantly
because of results of research and development and product testing, potential
relationships with in-licensors and collaborators, changes in the focus and
direction of the Company's research and development programs, competitive and
technological advances, the cost of filing, prosecuting, defending and enforcing
patent claims, the regulatory approval process, the need to procure clinical
grade compounds, through third-parties or otherwise, marketing and other costs
associated with commercialization of products following receipt of regulatory
approvals and other factors. The Company's lease for all of its facilities
expires in April 1998. If the Company elects to move to a new location, it may
incur substantial expenses for leasehold improvements and relocation costs,
which the Company estimates will cost up to $2.0 million. If the Company remains
in its current facilities, it expects to incur costs of approximately $500,000
to enhance its manufacturing capabilities.

Pending such uses, the net proceeds from this offering will be invested by
the Company in short-term, interest bearing investment grade securities.

DIVIDEND POLICY

The Company has not paid any dividends since its inception and presently
anticipates that all earnings, if any, will be retained for development of the
Company's business and that no dividends on its Common Stock will be declared in
the foreseeable future.

19
<PAGE>
CAPITALIZATION

The following table sets forth the actual, the pro forma and the pro forma
as adjusted capitalization of the Company at September 30, 1997 as described
below. This table should be read in conjunction with the Company's Financial
Statements and related Notes included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
-------------------------------------------
<S> <C> <C> <C>
PRO FORMA
ACTUAL PRO FORMA(1) AS ADJUSTED(2)
---------- ------------- ----------------

<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C>
Cash and cash equivalents............................................ $ 7,720 $ 7,720 $ 29,290
---------- ------------- --------
---------- ------------- --------
Long-term portion of capital lease
obligations........................................................ $ 106 $ 106 $ 106
---------- ------------- --------
Stockholders' (deficit) equity:
Preferred Stock, $.001 par value; 20,000,000 shares authorized:
Series A Preferred Stock; 4,000,000 shares designated; 2,308,000
shares issued and outstanding, actual; and no shares issued and
outstanding, pro forma and pro forma as adjusted............... 2 -- --
Series B Preferred Stock; 2,500,000 shares designated; 1,982,830
shares issued and outstanding, actual; and no shares issued and
outstanding, pro forma and pro forma as adjusted............... 2 -- --
Series C Preferred Stock; 3,750,000 shares designated; 1,388,996
shares issued and outstanding, actual; and no shares issued and
outstanding, pro forma and pro forma as adjusted............... 1 -- --
Common Stock, $.0013 par value, 40,000,000 shares authorized,
2,441,675 shares issued and outstanding, actual; 6,701,553 shares
issued and outstanding, pro forma; and 8,701,553 shares issued
and outstanding, pro forma as adjusted(3)........................ 3 9 11
Additional paid-in capital......................................... 25,100 25,099 46,667
Accumulated deficit................................................ (17,513) (17,513) (17,513)
---------- ------------- --------
Total stockholders' equity....................................... 7,595 7,595 29,165
---------- ------------- --------
Total capitalization............................................. $ 7,701 $ 7,701 $ 29,271
---------- ------------- --------
---------- ------------- --------
</TABLE>

- ------------------------
(1) Gives effect to the conversion of all outstanding shares of the Company's
Preferred Stock into an aggregate of 4,259,878 shares of Common Stock
pursuant to their terms. See "Description of Capital Stock" and the
Company's Financial Statements.

(2) Assumes the sale of 2,000,000 shares of Common Stock offered hereby at an
assumed initial public offering price of $12.00 per share and the receipt of
the net proceeds therefrom after deducting the underwriting discount and
estimated offering expenses. See "Use of Proceeds."

(3) Excludes as of September 30, 1997 (i) 2,370,005 shares subject to
outstanding options at a weighted average exercise price of $4.51 per share,
of which options to purchase 974,701 shares at a weighted average exercise
price of $4.31 per share were exercisable; (ii) 330,455 shares of Common
Stock reserved for issuance upon the exercise of outstanding warrants, all
of which were exercisable, of which warrants for 260,455 shares had an
exercise price of $6.67 per share and warrants for 70,000 shares had an
exercise price of $3.00 per share, which will adjust to $6.00 per share upon
completion of this offering (assuming an initial public offering price of
$12.00 per share); and (iii) 207,006 shares available for future issuance
under the Company's stock option plans. The Company intends prior to
completion of this offering to authorize and reserve for issuance under its
stock option plans an additional 300,000 shares of Common Stock. See
"Management--Stock Option Plans" and "Description of Capital Stock."

20
<PAGE>
DILUTION

The net tangible book value of the Company as of September 30, 1997 was
$7,595,000 or $1.13 per share. Net tangible book value per share is determined
by dividing the net tangible book value of the Company (total tangible assets
less total liabilities) by the number of shares of Common Stock outstanding (on
a pro forma basis to give effect to the conversion of all outstanding shares of
Preferred Stock). Without taking into account any changes in the net tangible
book value after September 30, 1997, other than to give effect to the sale of
the 2,000,000 shares of Common Stock offered hereby (at an assumed initial
public offering price of $12.00 per share) and the application of the net
proceeds therefrom, the pro forma net tangible book value of the Company at
September 30, 1997 would have been $29,165,000 or $3.35 per share. This
represents an immediate increase in net tangible book value of $2.22 per share
to existing stockholders and an immediate dilution in net tangible book value of
$8.65 per share to new investors. The following table illustrates this per share
dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $ 12.00
Net tangible book value per share before offering......... $ 1.13
Increase in net tangible book value per share attributable
to
new investors........................................... 2.22
---------
Pro forma net tangible book value per share after
offering.................................................. 3.35
---------
Dilution per share to new investors......................... $ 8.65
---------
---------
</TABLE>

The following table sets forth, on the pro forma basis described above, as
of September 30, 1997 the number and percentage of shares of Common Stock
purchased from the Company, the total cash consideration (with respect to the
new investors, at an assumed initial public offering price of $12.00 per share),
and percentage of total cash consideration paid to the Company and the average
price per share paid by existing stockholders and new investors:

<TABLE>
<CAPTION>
TOTAL CASH CONSIDERATION
SHARES PURCHASED
------------------------ -------------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders........................... 6,701,553 77.0% $ 22,817,000 48.7% $ 3.40
New investors................................... 2,000,000 23.0 24,000,000 51.3 12.00
----------- ----- ------------- -----
Total..................................... 8,701,553 100.0% $ 46,817,000 100.0%
----------- ----- ------------- -----
----------- ----- ------------- -----
</TABLE>

The foregoing tables do not assume the exercise of outstanding options or
warrants. At September 30, 1997, there were outstanding options to purchase
2,370,005 shares of Common Stock under the Company's stock option plans at a
weighted average exercise price of $4.51 per share, and outstanding warrants to
purchase 330,455 shares of Common Stock, of which warrants for 260,455 shares
had an exercise price of $6.67 per share and warrants for 70,000 shares had an
exercise price of $3.00 per share, which will adjust to $6.00 per share upon
completion of this offering (assuming an initial public offering price of $12.00
per share). The exercise of such options and warrants would result in further
dilution to new investors. In addition, following the completion of this
offering, there will be 507,006 shares of Common Stock reserved for future
issuance under the Company's stock option plans (after giving effect to an
increase of 300,000 shares to be effected prior to completion of this offering).
See "Capitalization," "Management--Stock Option Plans" and "Description of
Capital Stock."

21
<PAGE>
SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The selected financial data presented below with respect to the balance
sheet data as of December 31, 1995 and 1996 and with respect to the statement of
operations data for each of the three years in the period ended December 31,
1996 and the nine months ended September 30, 1996, are derived from the
Company's financial statements, included elsewhere in this Prospectus, which
have been audited by Coopers & Lybrand L.L.P. The selected financial data
presented below with respect to the balance sheet data as of December 31, 1992,
1993 and 1994 and with respect to the statement of operations data for each of
the two years in the period ended December 31, 1993 are derived from the
Company's audited financial statements, not included in this Prospectus. The
selected financial data presented below as of September 30, 1997 and with
respect to the statement of operations data for the nine months ended September
30, 1997 have been derived from the Company's unaudited financial statements
included elsewhere in this Prospectus. Operating results for the nine months
ended September 30, 1997 are not necessarily indicative of results that may be
expected for the entire year ending December 31, 1997. The data set forth below
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Financial Statements and
related Notes included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
NINE
MONTHS
ENDED
SEPTEMBER
YEARS ENDED DECEMBER 31, 30,
----------------------------------------------------- ---------
1992 1993 1994 1995 1996 1996
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Research grants........................................... $ 67 $ 84 $ 504 $ 725 $ 521 $ 268
Product sales............................................. 38 50 52 50 98 67
Interest income........................................... 32 53 108 46 106 91
Collaboration revenue.....................................
--------- --------- --------- --------- --------- ---------
Total revenues.......................................... 137 187 664 821 725 426
--------- --------- --------- --------- --------- ---------
Expenses:
Research and development.................................. 1,207 1,547 2,859 3,852 3,700 2,654
General and administrative................................ 942 748 878 1,094 2,808 984
Interest expense.......................................... 59 38 50 87 51 40
Depreciation and amortization............................. 151 249 289 291 309 230
--------- --------- --------- --------- --------- ---------
Total expenses.......................................... 2,359 2,582 4,076 5,324 6,868 3,908
--------- --------- --------- --------- --------- ---------
Operating (loss) income................................. (2,222) (2,395) (3,412) (4,503) (6,143) (3,482)
Income taxes..............................................
--------- --------- --------- --------- --------- ---------
Net (loss) income....................................... ($2,222) ($2,395) ($3,412) ($4,503) ($6,143) ($3,482)
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Pro forma net (loss) income per common share(1)............. ($0.83)
---------
---------
Pro forma weighted average common shares outstanding(1)..... 7,424
---------
---------

<CAPTION>
1997
---------
<S> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Research grants........................................... $ 489
Product sales............................................. 50
Interest income........................................... 109
Collaboration revenue..................................... 13,276
---------
Total revenues.......................................... 13,924
---------
Expenses:
Research and development.................................. 5,726
General and administrative................................ 1,286
Interest expense.......................................... 236
Depreciation and amortization............................. 238
---------
Total expenses.......................................... 7,486
---------
Operating (loss) income................................. 6,438
Income taxes.............................................. 151
---------
Net (loss) income....................................... $ 6,287
---------
---------
Pro forma net (loss) income per common share(1)............. $ 0.75
---------
---------
Pro forma weighted average common shares outstanding(1)..... 8,332
---------
---------
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER
DECEMBER 31, 30, 1997
----------------------------------------------------- -----------
1992 1993 1994 1995 1996 ACTUAL
--------- --------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............................... $ 1,351 $ 2,137 $ 2,275 $ 559 $ 647 $ 7,720
Working capital......................................... 837 1,882 2,019 19 (1,109) 7,016
Total assets............................................ 1,976 2,858 3,489 1,736 1,663 8,511
Capital lease obligations and deferred lease liability,
long-term portion.................................... 105 75 235 213 156 106
Total stockholders' (deficit) equity.................... 1,547 2,523 2,827 852 (385) 7,595

AS ADJUSTED(2)
---------------
<S> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............................... $ 29,290
Working capital......................................... 28,586
Total assets............................................ 30,081
Capital lease obligations and deferred lease liability,
long-term portion.................................... 106
Total stockholders' (deficit) equity.................... 29,165
</TABLE>

- ------------------------

(1) See Note 2 to the Company's Financial Statements for information concerning
computation of the pro forma per share data.

22
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Progenics is a biopharmaceutical company focusing on the development and
commercialization of innovative products for the treatment and prevention of
cancer and viral diseases. The Company commenced principal operations in late
1988 and since that time has been engaged primarily in organizational efforts,
including recruitment of scientific and management personnel, research and
development efforts, development of its manufacturing capabilities,
establishment of corporate collaborations and raising capital. In order to
commercialize the principal products that the Company has under development, the
Company will need to address a number of technological challenges and comply
with comprehensive regulatory requirements. Accordingly, it is not possible to
predict the amount of funds that will be required or the length of time that
will pass before the Company receives revenues from sales of any of its
products. To date, product sales have consisted solely of limited revenues from
the sale of research reagents. The Company expects that sales of research
reagents in the future will not significantly increase over current levels. The
Company's other sources of revenues through the date of this Prospectus have
been payments received under its collaboration with BMS, research grants related
to the Company's HIV programs and interest income.

To date, a majority of the Company's expenditures have been for research and
development activities. The Company expects that its research and development
expenses will increase significantly as its programs progress and the Company
makes filings for related regulatory approvals. The Company has incurred losses
since its inception and had an accumulated deficit of $17,513,000 at September
30, 1997. The Company has financed its operations primarily through the private
sale and issuance of equity securities, a line of credit that has since been
repaid and terminated and payments received under its collaboration with BMS
beginning in July 1997. The Company will require additional funds to complete
the development of its products, to fund the cost of clinical trials, and to
fund operating losses which are expected to continue for the foreseeable future.
The Company does not expect its products under development to be commercialized
for the next several years.

In July 1997, Progenics entered into a Joint Development and Master License
Agreement (the "BMS License Agreement") and related agreements with BMS. These
agreements provide for BMS to fund further development, clinical trials and
regulatory filings related to GMK and MGV. Consequently, Progenics does not
expect to make significant additional expenditures relating to these product
candidates for so long as these agreements remain in force. In connection with
the establishment of this collaboration, BMS paid to the Company in July 1997 an
aggregate of approximately $13.3 million, representing reimbursement for
expenses previously incurred by Progenics in the development of GMK and MGV,
licensing fees and reimbursement of clinical development costs for the period
April 15, 1997 to September 30, 1997. In connection with payments made by BMS to
the Company under the BMS License Agreement, the Company made certain payments
to licensors and incurred other related expenses. See "Business-- BMS
Collaboration."

RESULTS OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997

Revenues from research grants increased from $268,000 for the nine months
ended September 30, 1996 to $489,000 for the nine months ended September 30,
1997. The increase resulted from the funding of a greater number of grants in
the nine months ended September 30, 1997. Sales of research reagents decreased
from $67,000 for the nine months ended September 30, 1996 to $50,000 for the
nine months ended September 30, 1997 resulting from decreased orders for such
reagents during the first nine months of 1997. Interest income increased from
$91,000 for the nine months ended September 30, 1996 to $109,000 for the nine
months ended September 30, 1997 due to the increase in cash available for
investing

23
<PAGE>
as the Company received funding from the BMS License Agreement in July 1997.
Collaboration revenue increased to $13,276,000 for the nine months ended
September 30, 1997 as the Company received a licensing fee and reimbursement of
clinical development costs in connection with the BMS License Agreement executed
in July 1997.

Research and development expenses increased from $2,654,000 for the nine
months ended September 30, 1996 to $5,726,000 for the nine months ended
September 30, 1997. The increase was principally due to payments to licensors in
connection with the BMS License Agreement, additional costs of manufacturing GMK
in 1997 for the Company's Phase III clinical trials and compensation expense
related to the issuance of stock options to consultants.

General and administrative expenses increased from $984,000 for the nine
months ended September 30, 1996 to $1,286,000 for the nine months ended
September 30, 1997 as costs related to the Company's cancer programs increased.
Such costs included consultants fees and legal costs associated with the
negotiation of license arrangements and patent filings. Interest expense
increased from $40,000 for the nine months ended September 30, 1996 to $236,000
for the nine months ended September 30, 1997 as a result of borrowings
commencing in March 1997 under a line of credit.

For the nine months ended September 30, 1997, the Company recognized a
provision for income taxes of $151,000 which was based upon prevailing federal
and state tax rates reduced by the utilization of net operating loss
carryforwards to the extent permitted.

The Company's net loss for the nine months ended September 30, 1996 was
$3,482,000 compared to net income of $6,287,000 for the nine months ended
September 30, 1997.

YEARS ENDED DECEMBER 31, 1995 AND 1996

Revenues from research grants decreased from $725,000 in 1995 to $521,000 in
1996. The decrease for 1996 resulted from a fewer number of grants in that year.
Sales of research reagents increased from $50,000 in 1995 to $98,000 in 1996 as
orders increased due to the addition of Intracel Corporation ("Intracel") as a
second seller of such reagents. Interest income increased from $46,000 in 1995
to $106,000 in 1996 due to the investment of the proceeds from the private
placement of the Company's Series C Preferred Stock.

Although the Company shifted certain resources from its HIV programs into
its cancer programs, research and development expenses remained relatively
constant in 1995 and 1996.

General and administrative expenses increased from $1,094,000 in 1995 to
$2,808,000 in 1996. The increase in 1996 was principally due to additional
professional services and printing costs associated with the Company's
unsuccessful efforts to sell Common Stock in a registered public offering.
Interest expense decreased from $87,000 in 1995 to $51,000 in 1996 resulting
from repayment of a line of credit. Depreciation and amortization remained
relatively unchanged from $291,000 in 1995 to $309,000 in 1996.

The Company's net loss in 1995 was $4,503,000 compared to a net loss in 1996
of $6,143,000.

YEARS ENDED DECEMBER 31, 1994 AND 1995

Revenues from research grants increased from $504,000 in 1994 to $725,000 in
1995. The increase for 1995 resulted from a greater number of grants in that
year. Sales of research reagents remained relatively unchanged from $52,000 in
1994 to $50,000 in 1995. Interest income decreased from $108,000 in 1994 to
$46,000 in 1995 due to the reduction of cash available for investing as the
Company continued to fund its operations.

Research and development expenses increased from $2,859,000 for 1994 to
$3,852,000 for 1995. The increase in 1995 primarily resulted from the Company's
preparation for clinical trials for GMK, including outside consulting expenses.
The Company hired a new Vice President of Medical Affairs in October 1994

24
<PAGE>
and, during 1995, hired a Manager of Clinical Trials and other related staff. In
addition, the Company incurred expenses in 1995 related to a new license and
supply agreement with Aquila. Rent expense also increased by $115,000 in 1995
resulting from occupation of the Company's expanded laboratory space for the
full fiscal year; the expanded space was occupied at the end of the second
quarter of 1994. These increases were partially offset by a reduction in
scientific staff in the Company's HIV department during the second half of 1995.

General and administrative expenses increased from $878,000 in 1994 to
$1,094,000 for 1995. The increase in 1995 was principally due to additional
legal fees of $120,000 relating to in-licensing activities, filing new patent
applications and personnel expenses, additional rent expense of $35,000
resulting from the expansion of the Company's office space at the end of the
second quarter of 1994, and increased insurance costs related, in part, to
coverage for the Company's clinical trials. Interest expense increased from
$50,000 in 1994 to $87,000 in 1995 due, in part, to the financing of additional
equipment under capitalized leases during 1994 and 1995. The Company also
recognized interest expense of $24,000 on amounts advanced to the Company during
1995 in the aggregate principal amount of $1,200,000. Depreciation and
amortization remained relatively unchanged from $289,000 in 1994 to $291,000 in
1995.

The Company's net loss in 1994 was $3,412,000 compared to a net loss of
$4,503,000 in 1995.

LIQUIDITY AND CAPITAL RESOURCES

The Company has funded its operations since inception primarily through
private placements of equity securities, which provided aggregate cash proceeds
of $22,817,000 (including loans that were subsequently converted into equity
securities) and payments received under its collaboration with BMS. Through
September 30, 1997, the Company had also received cash proceeds of $2,477,000
from research grants, $757,000 from interest on investments and $439,000 from
the sale of research reagents. Through September 30, 1997, the Company had
financed $1,256,000 of equipment purchases through capitalized leases and a
promissory note.

During the fourth quarter of 1995 and the first quarter of 1996, the Company
raised $897,000 and $4,777,000 in net proceeds from the sale of approximately
44,900 units and 241,203 units, respectively, in a private placement of shares
of the Company's Series C Preferred Stock in a unit offering. Each $20.00 unit
("Series C Unit") consisted of four shares of Series C Preferred Stock and one
warrant entitling the holder to purchase one share of Series C Preferred Stock
for $5.00 any time within five years of the date of issuance ("Series C
Warrant"). In addition, during December 1995, a note payable in the aggregate
principal amount of $1,200,000, plus accrued and unpaid interest of $24,000 was
converted into approximately 61,200 Series C Units. At September 30, 1997, there
were 347,249 Series C Warrants outstanding which if exercised in full would
result in $1,736,000 of net proceeds to the Company and the issuance of 347,249
shares of Series C Preferred Stock or, if exercised subsequent to the offering,
260,455 shares of Common Stock.

In March 1997, the Company entered into a credit agreement with Chase
Capital Bank (the "Chase Loan Agreement"), which provided for borrowings of up
to $2,000,000. The Company borrowed the full amount available under this
facility in drawings made between March and June 1997. Borrowings made by the
Company had a stated interest rate of prime and were used to fund working
capital. The Company repaid all outstanding borrowings in July 1997 from
proceeds of payments received by the Company under the BMS License Agreement.
Upon such repayment, the line of credit terminated. The Company's obligations
under the Chase Loan Agreement were guaranteed by two affiliates of the Company,
and in consideration of such guarantee these affiliates were issued between
March and July 1997 warrants to purchase an aggregate of 70,000 shares of Common
Stock at an exercise price of $3.00 per share, subject to adjustment in certain
events. See "Certain Transactions."

As of September 30, 1997, the Company had cash and cash equivalents totaling
$7,720,000 compared with $647,000 at December 31, 1996. Planned operations for
the last three months of 1997 currently

25
<PAGE>
contemplate expenditures for capital assets of approximately $150,000, mainly
consisting of laboratory equipment and leasehold improvements to expand the
Company's manufacturing capabilities. The Company plans to finance a significant
portion of equipment purchases through capitalized leases. However, there can be
no assurance that the Company will successfully enter into such new
arrangements. The Company's lease for all of its facilities expires in April
1998. If the Company elects to move to a new location, it may incur substantial
expenses for leasehold improvements and relocation costs, which the Company
estimates will cost up to approximately $2.0 million. If the Company remains in
its current facilities, it expects to incur costs of approximately $500,000 to
enhance its manufacturing capabilities.

After the completion of the offering, the Company will have no committed
external sources of capital other than to the extent specified in the BMS
License Agreement and, as discussed above, expects no significant product
revenues for a number of years as it will take at least that much time to bring
the Company's products to the commerical marketing stage. The Company may seek
additional financing, such as through future offerings of equity or debt
securities or agreements with corporate partners and collaborators with respect
to the development of the Company's technology, to fund future operations. There
can be no assurance, however, that the Company will be able to obtain additional
funds on acceptable terms, if at all. If adequate funds are not available, the
Company may be required to delay, reduce the scope of or eliminate one or more
of its research or development programs; to obtain funds through arrangements
with collaborative partners or others that may require the Company to relinquish
rights to certain technologies, product candidates or products that the Company
would otherwise seek to develop or commercialize itself; or to license the
rights to such products on terms that are less favorable to the Company than
might otherwise be available. See "Risk Factors--History of Operating Losses and
Accumulated Deficit; No Product Revenue and Uncertainty of Future Profitability"
and "--Need for Additional Financing and Uncertain Access to Capital Funding."

IMPACT OF THE ADOPTION OF RECENTLY ISSUED ACCOUNTING STANDARD

In February 1997, the Financial Accounting Standards Board issued Financial
Accounting Standard No. 128, "Earnings Per Share" ("SFAS No. 128"). SFAS No. 128
will require the Company to replace the current presentation of "primary" per
share data with "basic" and "diluted" per share data. Currently, management
estimates that the future adoption of SFAS No. 128 will not have a material
impact on the Company's per share data. SFAS No. 128 will be adopted by the
Company for periods ending after December 15, 1997.

26
<PAGE>
BUSINESS

OVERVIEW

Progenics is a biopharmaceutical company focusing on the development and
commercialization of innovative products for the treatment and prevention of
cancer and viral diseases. The Company applies its immunology expertise to
develop biopharmaceuticals that induce an immune response or that mimic natural
immunity in order to fight cancers, such as malignant melanoma, and viral
diseases, such as HIV infection. Progenics' most advanced product candidate,
GMK, is a therapeutic vaccine that is currently undergoing two pivotal Phase III
clinical trials for the treatment of melanoma, a deadly form of skin cancer.
Progenics' second vaccine product candidate, MGV, is being developed for the
treatment of various cancers and commenced Phase I/II clinical trials in
September 1996. Based on its participation in the discoveries of two major
receptors for HIV, the Company is engaged in research and development of
therapeutic products designed to block entry of HIV into human immune system
cells. Progenics commenced Phase I/II clinical trials of one of these product
candidates, PRO 542, in September 1997 and plans to initiate Phase I/II clinical
trials of another product candidate, PRO 367, in the first half of 1998. The
Company has entered into a collaboration with BMS to develop and commercialize
GMK and MGV.

CANCER THERAPEUTICS

The Company's GMK and MGV cancer therapeutics are based on proprietary
ganglioside conjugate vaccine technology designed to stimulate the immune system
to destroy cancer cells. This technology is exclusively licensed by the Company
from Sloan-Kettering. GMK is designed to prevent recurrence of melanoma in
patients who are at risk of relapse after surgery. GMK is composed of a
ganglioside antigen which is abundant in melanoma cells, conjugated to an
immunogenic carrier protein and combined with an adjuvant (an immunological
stimulator). In August 1996, the Company commenced the first of three pivotal,
randomized, multicenter Phase III clinical trials of GMK. This trial is being
conducted in the United States by cooperative cancer research groups supported
by the NCI. The two additional Phase III clinical trials of GMK will be
conducted in a number of countries outside of the United States. One of these
trials commenced enrollment of patients in June 1997. The other is expected to
commence in the first half of 1998 and will be conducted in Europe by the EORTC.

In July 1997, the Company and BMS entered into the BMS License Agreement
under which Progenics granted BMS an exclusive worldwide license to GMK and MGV.
BMS made related cash payments to the Company of approximately $13.3 million and
is obligated to make future payments of up to $61.5 million upon the achievement
of specified milestones. In addition, BMS is required to fund continued clinical
development of GMK and MGV and to pay royalties on any product sales.

HIV THERAPEUTICS

There is a considerable need for the development of new HIV therapeutics
that address the major problems of viral resistance and drug toxicity that are
inherent in currently approved drugs, which target certain enzymes necessary for
viral infection and replication. In contrast, the Company's HIV therapeutic
programs are based on the CD4 receptor and recently discovered co-receptors,
CCR5 and CXCR4, to which binding is necessary for attachment, fusion and entry
of the virus into the cell. Progenics applies its UnAB technology to produce
antibody-like molecules designed to neutralize or destroy HIV or HIV-infected
cells. This program and the Company's HIV attachment screening program are based
on the CD4 receptor. The Company's HIV co-receptor/fusion program is based on
CCR5 and CXCR4.

27
<PAGE>
Progenics' PRO 542 and PRO 367 product candidates utilize the Company's
proprietary UnAB technology. Progenics is developing PRO 542 to selectively
target HIV and prevent it from infecting healthy cells by binding to the sites
on the virus that are required for entry into the cell. PRO 542 is being
developed as an immunotherapy to treat HIV-positive individuals and has been
shown IN VITRO to neutralize a wide range of HIV clinical strains. The Company
initiated Phase I/II clinical trials of Pro 542 in September 1997.

Progenics' is developing PRO 367 as a therapeutic agent designed to kill
HIV-infected cells. PRO 367 consists of a UnAB molecule linked to a therapeutic
radioisotope and is designed to bind to and destroy HIV-infected cells by
delivering a lethal dose of radiation. The Company plans to begin Phase I/II
clinical trials of PRO 367 in the first half of 1998.

In June 1996, the Company's scientists in collaboration with researchers at
ADARC described in an article published in NATURE the discovery of CCR5, a
co-receptor for HIV that mediates fusion of HIV with the cell membrane. The
Company is using its proprietary ProSys assays in a program to discover
compounds that specifically inhibit the interaction of HIV with HIV
co-receptors, including CCR5 and CXCR4, thereby blocking viral fusion and entry.
In addition, the Company is using its proprietary HIV attachment assay in a
collaborative research program to identify small-molecule compounds that inhibit
attachment of the virus to the CD4 receptor.

THE HUMAN IMMUNE SYSTEM

The human immune system functions to protect the body from disease by
specifically recognizing and destroying foreign invaders, including viruses and
bacteria. In addition, the immune system is capable of recognizing and
eliminating abnormal cells in the body, such as cancer cells and cells infected
with viruses and bacteria. White blood cells, particularly B and T lymphocytes,
have the ability to recognize antigens made by these infectious agents and
abnormal cells and react to them. For example, B lymphocytes produce antibodies
that recognize specific antigens. Antibodies can bind to these antigens and
neutralize or eliminate infectious agents and cancer cells. Vaccines can induce
the production of antibodies against antigens on infectious agents and abnormal
cells and thereby protect the body from illness. Vaccines are also being
developed as therapeutics to fight ongoing diseases. In addition, genetic
engineering techniques have enabled the production of antibodies or
antibody-like molecules in the laboratory. These genetically designed antibody
molecules may function in situations where the immune response is failing or not
present by mimicking the body's own immune response.

PRODUCT DEVELOPMENT

The Company applies its expertise in immunology to the development of
therapeutic biopharmaceuticals that use components of the immune system,
particularly antibodies, to fight diseases. The Company's two principal programs
are directed towards cancer and HIV. In the case of cancer, the Company is
developing vaccine products that are designed to induce specific antibody
responses to cancer antigens in order to fight certain cancers. In the case of
HIV, the Company is developing therapeutic products by genetically engineering
molecules that function as antibodies and selectively target HIV and
HIV-infected cells for neutralization or destruction. The Company also is
actively engaged in research and discovery of compounds based on the HIV
receptor, CD4, and HIV co-receptors, including CCR5 and CXCR4, and their roles
in viral attachment, fusion and entry.

28
<PAGE>
The following table summarizes the status of the principal development
programs, product candidates and products of the Company and identifies any
related corporate collaborator:

<TABLE>
<CAPTION>
CORPORATE
PROGRAM/PRODUCT INDICATION/USE STATUS(1) COLLABORATOR
- ----------------------------- ----------------------------- ----------------------------- ------------
<S> <C> <C> <C>

CANCER THERAPEUTICS
GMK Vaccine for melanoma Phase III BMS
MGV Vaccine for colorectal Phase I/II BMS
cancer, lymphoma, small cell
lung cancer, sarcoma, gastric
cancer, neuroblastoma and
melanoma
HIV THERAPEUTICS

PRO 542 HIV therapy Phase I/II --
PRO 367 HIV therapy Phase I/II expected to --
commence in the first half of
1998
HIV Co-receptor/ Fusion HIV therapy Research --
(using
ProSys assays)

HIV Attachment Drug Screen HIV therapy Research AHP(2)
ProVax HIV vaccine Research --
ASSAYS AND REAGENTS

ONCOTECT GM Clinical assay for cancer In clinical investigational --
prognosis use

sCD4, gp120 Research reagents On market DuPont,
Intracel
</TABLE>

--------------------------

(1) "Research" means initial research related to specific molecular targets,
synthesis of new chemical entities, assay development and/or screening for
the identification of lead compounds.
Phase I-III clinical trials denote safety and efficacy tests in humans as
follows:
"Phase I": Evaluation of safety.
"Phase II": Evaluation of safety, dosage and efficacy.
"Phase III": Larger scale evaluation of safety and efficacy potentially
requiring larger patient numbers, depending on the clinical indication for
which marketing approval is sought.

"In clinical investigation use" means being used by the Company to measure
antibody levels of
patients in clinical trials.
See "Business--Government Regulation" and "--Assays and Reagents."

(2)"AHP" means the Wyeth-Ayerst Research Division of American Home Products
Corporation.

29
<PAGE>
CANCER THERAPEUTICS

Cancer is a set of different diseases, each of which is characterized by
aberrations in cell growth and differentiation. The establishment and spread of
a tumor is a function of its growth characteristics and its ability to suppress
or evade the body's normal defenses, including surveillance and elimination of
cancer cells by the immune system. Eradication of malignant cells which can
metastasize (I.E., spread) to vital organs, leading to death, is central to the
effective treatment of cancer.

To date, the principal therapies for cancer have been surgery, radiation and
chemotherapy. Despite recent advances in treatment, cures in many cancer areas
continue to suffer from serious limitations. A significant drawback to
conventional anti-cancer therapy is that occult (I.E., hidden) or residual
disease is difficult or impossible to eliminate fully, which can lead to
relapse. Surgery may be used to remove primary masses of some solid tumors;
however, it cannot be used to remove occult disease. Conventional treatment with
combination chemotherapy and radiation may not be capable of eradicating cancers
completely because of inadequate potency at the tumor site resulting from
limitations on drug or radiation doses due to potential side-effects to healthy
tissues. Moreover, while more recently introduced biological drugs, such as
interferons, have in some cases represented an improvement over traditional
cytotoxic therapy, they have proven effective only on a limited basis and only
in certain types of cancer and have adverse side effects.

Because of the inability to address adequately occult and residual cancers,
non-specific toxicities and limited potency associated with conventional
anti-cancer therapies, a significant need exists for new therapeutic products.
To address this demand, cancer vaccines are now being developed to stimulate the
natural defense mechanisms of the immune system to fight cancer. Unlike
traditional infectious disease vaccines that are used to prevent infection in
the general population, most cancer vaccines are therapeutic, meaning that they
are being developed to prevent recurrence of cancer in people whose cancer is in
remission following treatment by conventional therapies (including surgical
removal). In some cases, cancer vaccines are also being designed for use in the
prevention of cancer in individuals who are at high risk for the disease.

A major challenge in cancer vaccine development is that the natural human
immune response generally does not produce sufficient antibodies to fight cancer
cells because the immune system often does not recognize the difference between
normal cells and cancer cells. Consequently, a primary objective in the
development of cancer vaccines is to train the immune system to recognize cancer
cells as a threat. If this can be achieved and the immune system can produce
sufficient antibodies to the cancer, then the recurrence of the cancer may be
prevented. Most cancer vaccines of parties other than the Company that are in
clinical development consist of dead cancer cells or crude extracts from cancer
cells. Unlike the Company's vaccine technology, the limitations of these
approaches include the inability to identify the active components of the
vaccine and to measure specific immune responses.

PROGENICS' TECHNOLOGY: GANGLIOSIDE CONJUGATE VACCINES

Progenics' cancer vaccine program is different from other approaches in that
it involves the use of purified gangliosides as cancer antigens. Gangliosides
are chemically-defined molecules which are composed of carbohydrate and lipid
components. Certain gangliosides are usually found in low amounts in normal
human tissue, but are abundant in certain cancers, such as melanoma, colorectal
cancer, lymphoma, small cell lung cancer, sarcoma, gastric cancer and
neuroblastoma.

Gangliosides alone, however, do not normally trigger an immune response in
humans. To overcome this, Progenics attaches gangliosides to large, highly
immunogenic carrier proteins to form "conjugate" vaccines designed to trigger
specific immune responses to ganglioside antigens. The technique of conjugating
carbohydrate molecules to carrier proteins has been successfully used by others
in the past to create effective vaccines for certain infectious diseases. For
example, conjugate vaccines have been approved for marketing by the FDA and are
currently administered to infants and children to prevent certain bacterial
infections. To further augment the immune response to gangliosides, Progenics
adds a potent immunological stimulator known as an "adjuvant" to its
ganglioside-carrier protein conjugate. The following diagram illustrates the
components of the Company's ganglioside conjugate vaccines.

30
<PAGE>
[DIAGRAM ILLUSTRATING THE COMPONENTS OF THE COMPANY'S GANGLIOSIDE
CONJUGATE VACCINES]

The Company's ganglioside conjugate vaccines stimulate the immune system to
produce specific antibodies to ganglioside antigens. These antibodies have been
shown IN VITRO to recognize and destroy cancer cells. Based on these tests and
the clinical trial results described below, the Company believes that
vaccination of cancer patients with ganglioside conjugate vaccines will delay or
prevent recurrence of cancer and prolong overall survival.

The Company's cancer vaccines use known amounts of chemically-defined
antigens, not dead cancer cells or crude extracts from cancer cells. As a
result, Progenics is able to measure specific immune responses to the
gangliosides in its vaccines. The Company also believes that there is a reduced
likelihood of variability in its products as compared to vaccines which are
prepared from dead cancer cells or crude extracts from cancer cells or which
require complicated manufacturing processes.

GMK: THERAPEUTIC VACCINE FOR MALIGNANT MELANOMA

Progenics' most advanced product under development is GMK, a proprietary
therapeutic vaccine for melanoma that is currently in pivotal Phase III clinical
trials. The Company is collaborating with BMS on this program. GMK is the first
cancer vaccine based on a defined cancer antigen to enter Phase III clinical
trials. GMK is designed to prevent recurrence of melanoma in patients who are at
risk of relapse after surgery. GMK is composed of the ganglioside GM2 conjugated
to the carrier protein KLH (keyhole limpet hemocyanin) and combined with the
adjuvant QS-21. QS-21 is the lead compound in the Stimulon-TM- family of
adjuvants developed and owned by Aquila.

TARGET MARKET

Melanoma is a highly lethal cancer of the skin cells that produce the
pigment melanin. In early stages melanoma is limited to the skin, but in later
stages it spreads to the lungs, liver, brain and other organs. The Company
estimates that there are 300,000 melanoma patients in the U.S. today. The
American Cancer Society estimates that 40,300 patients in the U.S. will be newly
diagnosed with melanoma in 1997. In the U.S., the incidence of melanoma is
increasing at a rate of approximately 6% per year, an increase in incidence that
is faster than that of any other cancer in men and second only to lung cancer in
women. Projections suggest that melanoma will develop in one in 90 Americans by
the year 2000. Increased exposure to the ultraviolet rays of the sun may be an
important factor contributing to the increase in new cases of melanoma.

Melanoma patients are categorized according to the following staging system:
<TABLE>
<S> <C> <C> <C>
MELANOMA STAGING

<CAPTION>
STAGE I STAGE II STAGE III STAGE IV
- --------------------- --------------------- --------------------- ---------------------
<S> <C> <C> <C>
- - lesion less than - lesion greater - metastasis to - distant
1.5 mm thickness than 1.5 mm regional draining metastasis
thickness lymph nodes
- - no apparent - local spread from - regional spread
metastasis primary cancer from primary
site cancer site
</TABLE>

GMK is designed for the treatment of patients with Stage II or Stage III
melanoma. It is estimated that these patients comprise about 50% of the total
number of melanoma patients and, accordingly, the Company estimates that there
are currently 150,000 Stage II and III melanoma patients in the U.S. According
to the American Cancer Society, an estimated 60% to 80% of Stage III melanoma
patients will experience recurrence of their cancer and die within five years
after surgery.

31
<PAGE>
CURRENT THERAPIES

Standard treatment for all melanoma patients includes surgical removal of
the cancer. Thereafter, therapy varies depending on the stage of the disease.
For Stage I and II melanoma patients, treatment generally consists of close
monitoring for recurrence. The only approved treatment for Stage III melanoma
patients is high-dose alpha interferon. In a recently reported study, the median
recurrence-free survival period after surgery for patients treated with
high-dose alpha interferon was 20 months versus 12 months for patients who
received no treatment. In addition, the median overall survival period after
surgery was 46 months for the treated group versus 34 months for the untreated
group. However, treatment with high-dose alpha interferon causes substantial
toxicities, requires an intensive treatment over twelve months (intravenous
injections five days a week for the first month followed by subcutaneous
injections three times a week for the remaining eleven months) and costs about
$35,000 per year.

Other approaches for treatment of Stage II or III melanoma patients are
currently under investigation, but none has been approved for marketing. These
experimental therapies include chemotherapy, low-dose alpha interferon and other
vaccines.

CLINICAL TRIALS

GMK entered pivotal Phase III clinical trials in the United States in August
1996. In addition, Progenics plans two international Phase III clinical trials
of GMK, one of which commenced enrollment of patients in June 1997 and the other
of which is expected to commence in the first half of 1998. GMK is administered
in the studies by 12 subcutaneous injections over a two-year period on an
out-patient basis.

The ongoing U.S. Phase III trial compares GMK with high-dose alpha
interferon in Stage IIb (advanced Stage II) and Stage III melanoma patients who
have undergone surgery but are at high risk for recurrence. This randomized
trial, which is expected to enroll 850 patients, is being conducted nationally
by the Eastern Cooperative Oncology Group ("ECOG") in conjunction with the
Southwest Oncology Group ("SWOG") and other major cancer centers, cooperative
cancer research groups, hospitals and clinics. ECOG and SWOG are leading
cooperative cancer research groups supported by the NCI and are comprised of
several hundred participating hospitals and clinics, primarily in the United
States. The primary endpoint of the trial is to compare the recurrence of
melanoma in patients receiving GMK versus in patients receiving high-dose alpha
interferon. The study will also compare quality of life and overall survival of
patients in both groups.

The second Phase III clinical trial is a randomized double-blind,
placebo-controlled study in Stage IIb and Stage III melanoma patients who have
undergone surgery but are at high risk for recurrence. This trial, which
enrolled its first patients in June 1997 in New Zealand, will be conducted by
major cancer centers, hospitals and clinics in Europe, Australia, New Zealand
and South Africa. In the United Kingdom, the study will be conducted by the
Institute of Cancer Research ("ICR") of the United Kingdom, a major
government-sponsored cancer research organization. The primary endpoint of the
trial is to compare the recurrence of melanoma in patients receiving GMK versus
in patients receiving placebo. The study will also compare overall survival of
patients in both groups.

The third Phase III clinical trial will be a randomized study exclusively in
Stage IIa (early Stage II) melanoma patients who have undergone surgery but are
at intermediate risk for recurrence. This trial, which the Company expects will
commence in the first half of 1998, will be conducted in Europe by the EORTC,
the major cooperative cancer research group in Europe. Patients will be
randomized to receive either GMK or observation with no treatment. The primary
endpoint of the trial is to compare the recurrence of melanoma in patients
receiving GMK versus in patients receiving observation with no treatment. The
study will also compare overall survival of patients in both groups.

A predecessor of GMK, called GM2-BCG, which combined GM2 ganglioside with
the adjuvant BCG, underwent clinical testing at Sloan-Kettering in the late
1980s. In a double-blind, randomized Phase II study in 122 Stage III melanoma
patients, subjects in the treated group received GM2-BCG for six months after
surgery; subjects in the control group received the same regimen with BCG alone.
The median recurrence-free survival period after surgery for patients treated
with GM2-BCG was 33 months versus 17 months for the patients in the control
group. In addition, the median overall survival period after surgery

32
<PAGE>
for patients in the treated group was 70 months versus 30 months for patients in
the control group. Approximately 85% of treated patients developed antibodies to
GM2 ganglioside. The presence of these antibodies significantly correlated with
improved recurrence-free and overall survival of patients.

Phase I/II clinical trials of GMK under institutional INDs were conducted at
Sloan-Kettering over the last six years. In these studies, approximately 120
patients, most of whom had Stage III melanoma, were treated with GMK. All
patients receiving GMK at the dose level being used in the current Phase III
trials of GMK developed antibodies to GM2 ganglioside. Patients treated with GMK
had levels of antibody to GM2 ganglioside that were on average four times higher
and also were longer lasting than in patients treated with GM2-BCG in the
GM2-BCG Phase II trial. In addition, GMK was well tolerated by all patients in
these studies, and no clinically significant side effects attributable to the
vaccine were observed.

MGV: THERAPEUTIC VACCINE FOR CERTAIN CANCERS

Progenics' second ganglioside conjugate vaccine in development, MGV, is a
proprietary therapeutic vaccine for cancers which express GD2 or GM2
gangliosides. These cancers include colorectal cancer, lymphoma, small cell lung
cancer, sarcoma, gastric cancer, neuroblastoma and melanoma. The Company is
collaborating with BMS on this program. MGV has three components: (i) GM2-KLH
(GM2 ganglioside conjugated to KLH); (ii) GD2-KLH (GD2 ganglioside conjugated to
KLH); and, (iii) QS-21 adjuvant. MGV is designed to prevent recurrence of cancer
and prolong overall survival of patients after their cancer has been removed by
surgery or reduced by chemotherapy or radiation therapy.

CLINICAL TRIALS

MGV entered Phase I/II clinical trials in September 1996 under an
institutional IND at Sloan-Kettering. The primary objectives of the study are to
establish the safety of MGV and the ability of the vaccine to induce specific
immune responses to both GD2 and GM2 gangliosides in patients with different
cancer types, beginning with melanoma patients. In addition, a goal of the study
is to optimize the ratio of GD2 and GM2 gangliosides in MGV to be used in future
clinical trials.

The GM2-KLH/QS-21 (GMK) and GD2-KLH/QS-21 components of MGV have each
undergone separate clinical testing. The results of clinical studies with GMK
are discussed above. To date, six melanoma patients have received GD2-KLH/QS-21
alone in Phase I/II clinical trials under an institutional IND at
Sloan-Kettering. All six subjects developed antibodies to GD2 ganglioside
following vaccination. In addition, the vaccine was well tolerated and no
clinically significant side effects attributable to the vaccine were observed.
Therefore, the Company expects that patients receiving MGV will develop
antibodies to both GD2 and GM2 gangliosides.

HIV THERAPEUTICS

HIV infection causes a slowly progressive deterioration of the immune system
which results in AIDS. AIDS is characterized by a general collapse of the immune
system leading to a wasting syndrome, frequent opportunistic infections, rare
forms of cancer, central nervous system degeneration, and eventual death. HIV
infection is unusual in that individuals testing positive for the virus can
survive for many years without symptoms of the disease. There are three major
routes of transmission of the virus: sexual contact, exposure to
HIV-contaminated blood or blood products and mother-to-child transmission.

HIV specifically infects cells that have the CD4 receptor on their surface
("CD4+"). CD4+ cells are critical components of the immune system, and include T
lymphocytes, monocytes, macrophages and dendritic cells. The deleterious effects
of HIV are largely due to the replication of the virus in these cells and the
resulting dysfunction and destruction of these cells.

HIV-positive individuals display both antibodies and other immune system
responses which are specific to the virus. However, the high fatality rate of
this disease makes it clear that these natural immune system responses do not
provide adequate long-term protection. There are two reasons why these natural
responses are inadequate. First, as described above, the CD4+ T lymphocytes
required to mount an effective immune response against HIV are destroyed,
leaving the immune system too weak to eliminate the virus. Second, HIV displays
a remarkable degree of variability as a result of high rates of mutation that

33
<PAGE>
permit different strains of the virus to escape the immune system response and
progressively replicate throughout the body.

Viral infection involves the binding of the virus to cells, viral entry into
those cells and, ultimately, the commandeering of the host cells' reproductive
machinery, which permits replication of the viral genetic information and the
generation of new copies of the virus. The Company's scientists and their
collaborators have made important discoveries in understanding how HIV enters
human cells and initiates viral replication. In the 1980s, Company scientists in
collaboration with researchers at Columbia University, the ICR and the Centers
for Disease Control and Prevention ("CDC") demonstrated that the initial step of
HIV infection involves the specific attachment of the virus to the CD4 receptor
on the surface of human immune system cells. These researchers also showed that
the gp120 glycoprotein located on the HIV envelope binds with high affinity to
the CD4 receptor. Although these researchers demonstrated that CD4 was necessary
for HIV attachment, this step is not sufficient to enable the virus to enter the
cell and initiate viral replication.

In June 1996, Company scientists in collaboration with researchers at ADARC
described in an article in NATURE the discovery of a co-receptor for HIV on the
surface of human immune system cells. This co-receptor, CCR5, enables fusion of
HIV with the cell membrane after binding of the virus to the CD4 receptor. This
fusion step results in entry of the viral genetic information into the cell and
subsequent viral replication. Recently, Company scientists in collaboration with
researchers at ADARC demonstrated that it is the gp120 glycoprotein that binds
to the CCR5 co-receptor as well as to the CD4 receptor. This process is shown
below.

[DIAGRAM DEPICTING THE GP120 GLYCOPROTEIN BINDING TO THE CCR5 OR
CXCR4 CO-RECEPTOR AND THE CD4 RECEPTOR AND ALSO THE FUSION OF THE VIRUS WITH
THE HUMAN CELL MEMBRANE]

PROGENICS' HIV RECEPTOR TECHNOLOGIES

Based on the Company's participation in the discoveries of two major
receptors for HIV, Progenics is pursuing several approaches in the research and
development of products designed to block entry of HIV into human immune system
cells. The Company's UnAB and attachment screening programs are based on the CD4
receptor while its HIV co-receptor fusion program is based on recently
discovered co-receptors, CCR5 and CXCR4.

Because HIV must first attach to the CD4 receptor to infect human cells, the
Company believes that the part of the gp120 glycoprotein that attaches to the
CD4 receptor must remain constant across all strains of the virus. The gp120
glycoprotein is located on the exterior of both HIV and HIV-infected cells.
Progenics' UnABs incorporate a part of the CD4 receptor into
genetically-engineered molecules that function like antibodies and are designed
to bind specifically to the gp120 glycoprotein of HIV or HIV-infected cells. In
IN VITRO tests, the Company's UnABs have demonstrated the ability to bind with
high affinity to gp120 glycoproteins from a wide range of HIV strains, including
the strains most prevalent in the U.S. and the rest of the world. Because the
Company's UnAB technology is targeted to a part of HIV that

34
<PAGE>
is believed to be necessary for the virus to enter cells and not to mutate, the
Company believes that its technology may address the obstacles presented by the
high mutation rate of the virus.

Two of the Company's HIV products under development are based on its
proprietary UnAB technology, although they employ the technology in different
ways. PRO 542 is designed to bind to the gp120 glycoprotein located on the virus
itself, neutralizing the virus and thereby preventing it from infecting healthy
cells. PRO 367 is designed to bind to the gp120 glycoprotein located on the
exterior of HIV-infected cells and destroy those cells by delivering a lethal
dose of radiation. The two products also differ in that each molecule of PRO 542
has four binding sites for HIV while each molecule of PRO 367 has two binding
sites. See the inside back cover of this Prospectus for diagrams of these
products.

Progenics also is applying its HIV technology in two programs designed to
use the Company's proprietary screening assays to identify and develop potential
HIV therapeutics. In its co-receptor/fusion program, the Company is using its
ProSys assays to identify compounds that inhibit the interaction between HIV and
HIV co-receptors, including CCR5 and CXCR4, thereby blocking viral fusion and
entry. In the Company's HIV attachment program, Progenics is using its
proprietary HIV attachment assay to identify small-molecule compounds that
inhibit the interaction between HIV and CD4, thereby blocking viral attachment.

TARGET MARKET

Progenics' therapeutic product candidates are designed primarily for use in
asymptomatic HIV-positive individuals. Accordingly, the target population for
these products is patients who are aware of their infection but do not yet have
AIDS. Although there are few signs of disease in an HIV-positive individual
during the asymptomatic period, the virus is replicating in the body by
infecting healthy cells. It is estimated that in 1996 more than 830,000 people
in North America and 20,000,000 people worldwide were infected with HIV. The CDC
estimated that as of December 1996, approximately 220,000 people in the U.S. had
AIDS.

CURRENT THERAPIES

At present, two classes of products have received FDA marketing approval for
the treatment of HIV infection and AIDS: reverse transcriptase inhibitors and
protease inhibitors. Both types of drugs are inhibitors of viral enzymes and
have shown efficacy in reducing the concentration of HIV in the blood and
prolonging asymptomatic periods in HIV-positive individuals, especially when
administered in combination.

While combination therapy slows the progression of disease, it is not a
cure. HIV's rapid mutation rate results in the development of viral strains that
are resistant to reverse transcriptase and protease inhibitors. The potential
for resistance is exacerbated by interruptions in dosing which lead to lower
drug levels and permit increased viral replication. Non-compliance is common in
patients on combination therapies as these drug regimens require more than a
dozen tablets to be taken at specific times each day. An additional problem is
that currently approved drugs exhibit substantial toxicities in many patients,
affecting a variety of organs and tissues, including the peripheral nervous
system and gastrointestinal tract. These toxicities often result in patients
interupting or discontinuing therapy.

PRO 542: HIV THERAPY

Progenics is developing PRO 542 for the treatment of HIV infection. PRO 542
is a proprietary UnAB-based product with four binding sites for the gp120
glycoprotein on HIV. PRO 542 is designed to neutralize HIV through one of two
mechanisms: (i) binding to the gp120 glycoprotein and thereby preventing
infection of healthy cells; or (ii) binding to and detaching the gp120
glycoprotein from the virus.

In IN VITRO and EX VIVO tests conducted by Progenics in collaboration with
scientists at ADARC and the CDC, PRO 542 potently neutralized a wide variety of
clinical strains of HIV as well as viruses in the plasma of HIV-positive
individuals. In comparative IN VITRO studies at ADARC using a panel of
neutralizing antibodies to HIV, PRO 542 was found to be more potent and broadly
neutralizing than the antibodies to which it was compared. In further studies at
ADARC, PRO 542 protected severe combined immune

35
<PAGE>
deficient ("SCID") mice transplanted with human peripheral blood lymphocytes
against infection by the three HIV strains tested, including strains of the
virus isolated from HIV-positive individuals.

Progenics initiated two dose-escalation Phase I/II clinical trials of PRO
542 in September 1997. The first study is being conducted in HIV-positive adult
patients at Mount Sinai Medical Center in New York City. The second trial is
being conducted in HIV-positive children at Baylor College of Medicine in
Houston, the University of California at San Francisco and the University of
Pennsylvania by the AIDS Clinical Trials Group, ("ACTG"), a leading cooperative
HIV research group supported by the National Institute of Allergy and Infectious
Diseases ("NIAID"). Both trials will measure safety, pharmacokinetics and
antiviral activity of PRO 542.

In September 1997, the Company entered into a collaboration agreement with
Genzyme Transgenics Corporation ("GTC") with the objective of developing a
transgenic source of PRO 542 using GTC proprietary technology. This
collaboration is designed to result in the commercial-scale manufacture of PRO
542 by GTC using a herd of transgenic goats.

PRO 367: HIV THERAPY

Progenics is developing PRO 367 as a therapeutic agent designed to destroy
HIV-infected cells. PRO 367 is composed of a proprietary UnAB molecule with two
binding sites for the gp120 glycoprotein linked to a therapeutic radioisotope.
PRO 367 is designed to specifically bind with high affinity to the gp120
glycoprotein on HIV-infected cells and to destroy these cells by delivering a
lethal dose of radiation.

The Company plans to initiate dose-escalation Phase I/II clinical trials of
PRO 367 in the first half of 1998, subject to obtaining necessary regulatory
clearances. The PRO 367 study will be conducted by the French Association
Nationale de Recherches contre le SIDA at the Pitie-Salpetriere Hospital in
Paris. The study will assess safety, pharmacokinetics, biodistribution and
antiviral effects of PRO 367 in HIV-positive adult patients.

36
<PAGE>
In IN VITRO tests, PRO 367 specifically bound with high affinity to the
gp120 glycoprotein on the cell surface. In addition, a pilot Phase I clinical
trial in AIDS patients of a trace-labelled precursor of PRO 367 was conducted
under an institutional IND at Sloan-Kettering. This trial assessed the safety
and pharmacology of the compound with low doses of iodine-131. The compound was
well tolerated by all patients, no clinically significant side effects
attributable to the compound were observed and the compound exhibited suitable
pharmacokinetics for further development.

HIV CO-RECEPTOR/FUSION: HIV THERAPY

The Company's first application of its HIV co-receptor technology is through
the use of its proprietary ProSys assays. These assays model fusion of HIV with
human cells rapidly, automatically, sensitively and without the use of
infectious virus. Progenics is currently seeking pharmaceutical collaborators
for this program.

HIV ATTACHMENT DRUG SCREEN: HIV THERAPY

As part of a collaborative research project with the Wyeth-Ayerst Research
Division of American Home Products Corporation ("AHP"), Progenics has developed
a proprietary drug screening assay designed to identify small-molecule compounds
which inhibit attachment of HIV to the CD4 receptor. This assay has been used in
a high-throughput screening program, and the compounds discovered are undergoing
additional studies by the Company and AHP to evaluate further their antiviral
activity.

PROVAX: HIV VACCINE

Progenics is conducting research with respect to its ProVax vaccine, a
vaccine candidate which it believes may be useful as a preventative or a
therapeutic treatment for HIV-positive individuals. Progenics is currently
performing government-funded research and development of the ProVax vaccine in
collaboration with ADARC, the Southwest Foundation for Biomedical Research in
San Antonio and the University of Oklahoma Medical Center.

ASSAYS AND REAGENTS

Through its immunology expertise, Progenics has developed certain assays, in
addition to its ProSys and HIV attachment assays, which are used both
independently and in collaboration with partners, as well as certain reagents
which are being sold for research use only.

ONCOTECT GM

Progenics has developed ONCOTECT GM, a clinical assay for assessing
prognosis in patients with melanoma and other cancers. ONCOTECT GM measures the
levels of antibody to GM2 ganglioside in the blood. In clinical trials of a
therapeutic vaccine for melanoma, the presence of these antibodies significantly
correlated with improved recurrence-free and overall survival of patients. The
Company is currently using ONCOTECT GM in its cancer vaccine clinical trials.

RESEARCH REAGENTS: SCD4 AND GP120

Progenics manufactures the research reagents sCD4 and gp120 which it sells
to DuPont de Nemours & Company ("DuPont") and Intracel for resale. DuPont
markets and sells gp120 and sCD4 under both the Progenics and the DuPont names.
Intracel markets and sells gp120 and sCD4 under both the Progenics and Intracel
names. These products are sold worldwide for research use. While the Company's
only customers for these reagents are DuPont and Intracel, in light of the
limited revenues received from sales of these reagents, the Company does not
believe that the loss of either of these customers would have a material adverse
effect on the Company.

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BUSINESS STRATEGY

Progenics' strategy is to develop and commercialize innovative products for
the treatment and prevention of cancer and viral diseases based upon its
expertise in immunology. Key elements of the Company's strategy are as follows:

ESTABLISH TIMELY COLLABORATIONS TO OPTIMIZE COMMERCIAL POTENTIAL. Progenics
has entered into a variety of collaborations designed to mitigate the cost of
drug development and increase the likelihood of a successful commercial
introduction. By collaborating with BMS on the clinical development of GMK and
MGV after launching GMK's Phase III trials, the Company was able to contract for
a combination of significant payments, milestones and royalties from a world
leader in cancer therapies. The Company holds the rights to certain ganglioside
conjugate vaccine technology in addition to that on which GMK and MGV is based,
as well as to its two lead HIV product candidates, PRO 542 and PRO 367.
Progenics believes that its relationships with academic and government
institutions and international clinical research groups give it the financial
flexibility to choose the timing and scope of future corporate collaborations.
In pursuing additional collaborations, the Company plans to employ a flexible
approach in determining the timing and nature of its alliances in an effort to
optimize their value to the Company.

LEVERAGE CORE PROPRIETARY TECHNOLOGIES. Progenics intends to continue
developing a portfolio of therapeutic cancer vaccines and HIV treatments
utilizing its proprietary ganglioside conjugate vaccine, UnAB and HIV receptor
and co-receptor/fusion technologies. Progenics has commenced pivotal Phase III
clinical trials of GMK, Phase I/II clinical trials of MGV and Phase I/II
clinical trials of PRO 542. In its cancer vaccine area, the Company is screening
additional cancers for the presence of specific gangliosides in order to develop
further ganglioside conjugate vaccines to treat a variety of cancers. In the HIV
area, the Company expects to launch clinical trials for PRO 367 in the first
half of 1998 and is continuing its research based on the CD4 receptor and the
newly discovered HIV co-receptors, CCR5 and CXCR4, and their roles in viral
attachment, fusion and entry.

IN-LICENSE ADDITIONAL PRODUCT CANDIDATES AND TECHNOLOGIES. The Company
intends to continue in-licensing technologies and product candidates that
complement its existing capabilities. Sources for these technologies range from
academic institutions and research organizations to other biotechnology and
pharmaceutical companies. The Company's license agreement with Sloan-Kettering
covers certain potential developments in the cancer vaccine field resulting from
work performed in a laboratory at Sloan-Kettering beyond the MGV and GMK vaccine
products that Progenics has licensed to BMS. The Company believes its
in-licensing strategy will enable it to bring products to market more quickly,
efficiently and at lower cost while it focuses its expertise on product
development and pre-clinical and clinical trial design and implementation.

BMS COLLABORATION

In July 1997, the Company and BMS entered into the BMS License Agreement.
Pursuant to the BMS License Agreement, the Company granted to BMS an exclusive,
worldwide license to make, have made, use, sell, have sold and develop GMK and
MGV and any other product to which Progenics has rights that include the GM2 or
GD2 ganglioside antigens and are used for the treatment or prevention of human
cancer. BMS is entitled under the BMS License Agreement to grant sublicenses,
subject to certain restrictions.

Pursuant to the BMS License Agreement and the related sublicense agreements
(collectively, the "BMS Agreements"), BMS has made certain payments to the
Company and is required to make milestone payments and pay royalties on sales of
licensed products. In July 1997, BMS paid the Company approximately $13.3
million, representing (i) $11.5 million as reimbursement for expenses previously
incurred by Progenics in the development of GMK and MGV and licensing fees and
(ii) $1.8 million as reimbursement of the Company's clinical development costs
for the period from April 15, 1997 to September 30, 1997.

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BMS is also required to make future payments of up to $61.5 million upon
achievement of specified milestones relating to the development and regulatory
approval of GMK, MGV or other products that include the GM2 or GD2 ganglioside
antigens. The amount of these milestone payments will depend on the product
candidate achieving the specified milestone and, with respect to MGV, the
indications for which it is developed. BMS is also required to pay royalties on
any sale of licensed products and to fund continued development, clinical trials
and regulatory activities of GMK and MGV pursuant to plans agreed to by the
parties. There can be no assurance that the Company will receive milestone or
royalty payments from BMS or that funding for the GMK or MGV programs will not
be curtailed or terminated.

In connection with the BMS License Agreement, the Company granted to BMS
sublicenses to the technology and other rights licensed to the Company from each
of Sloan-Kettering, The Regents of the University of California (the "Regents")
and Aquila under the licenses with these entities discussed under "--Licenses."
These sublicenses are exclusive as to the Sloan-Kettering and the Regents
sublicenses and non-exclusive as to the Aquila sublicense and are intended, in
general, to make available to BMS the technology licensed by the Company from
these entities and used to make GMK and MGV. BMS is entitled under these
sublicenses to grant further sublicenses, subject to certain restrictions.

In connection with payments made by BMS to the Company under the BMS License
Agreement, the Company made certain payments to licensors. Future payments made
by BMS to the Company under the BMS License Agreement also trigger payment
obligations to these licensors. See "--Licenses."

The BMS Agreements terminate at various times related, in general, to the
expiration or abandonment of the related patents. The agreements can also be
terminated by either party upon a material, uncured breach by the other party.
BMS has the further right to terminate the BMS License Agreement (including its
funding and milestone obligations) as to specified licensed products at
specified times.

LICENSES

The Company is a party to license arrangements under which it has obtained
rights to use certain technologies in its cancer and HIV programs. Set forth
below is a summary of those licenses that the Company believes to be important
to its business.

The Company is party to a license agreement with Sloan-Kettering under which
the Company obtained the worldwide, exclusive rights to certain technology
relating to ganglioside conjugate vaccines, including GMK and MGV, and their use
to treat or prevent cancer. The Sloan-Kettering license terminates upon the
expiration of the last of the licensed patents or 15 years from the date of the
first commercial sale of a licensed product pursuant to the agreement, whichever
is later. In addition to patent applications, the Sloan-Kettering license
includes the exclusive rights to use certain relevant technical information and
know-how, as well as rights to certain future developments. A number of
Sloan-Kettering physician-scientists also serve as consultants to the Company.

The Company is party to a license agreement with the Regents under which the
Company obtained the exclusive rights to an issued U.S. patent covering certain
ganglioside conjugate vaccines. The license agreement terminates upon the
expiration of the patent.

The Company is party to a license agreement with Columbia University under
which the Company has obtained exclusive, worldwide rights to certain technology
and materials relating to CD4 and its use to treat or prevent HIV infection. The
license agreement will terminate upon the expiration of the last of the licensed
patents.

The Company has entered into a license and supply agreement with Aquila
pursuant to which Aquila agreed to supply the Company with all of its
requirements for the QS-21 adjuvant for use in certain ganglioside-based cancer
vaccines, including GMK and MGV. The agreement grants to the Company a license
to use Aquila's patented technology to develop, manufacture and sell certain
cancer vaccines using QS-21 and, if Aquila is unable to supply the Company with
sufficient quantities of QS-21, the Company has

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the right to manufacture QS-21 itself or purchase it from third parties for so
long as Aquila is unable to supply the Company with sufficient quantities of
QS-21. QS-21 is the lead compound in the Stimulon-TM- family of adjuvants
developed and owned by Aquila. The license terminates upon the expiration of the
last of the licensed patents.

The licenses to which the Company is a party impose various milestone,
commercialization, sublicensing, royalty and other payment, insurance and other
obligations on the Company. Failure by the Company to comply with these
requirements could result in the termination of the applicable agreement, which
could have a material adverse effect on the Company's business.

In connection with the BMS License Agreement, the Company granted to BMS
sublicenses to the technology and other rights licensed to the Company from each
of Sloan-Kettering, the Regents and Aquila under the licenses with these
entities described above. See "--BMS Collaboration."

GOVERNMENT GRANTS AND CONTRACTS

Through September 30, 1997, the Company had been awarded government grants,
aggregating approximately $2,377,000 under the Small Business Innovation
Research ("SBIR") program of the NIH for the Company's commercial development of
PRO 542, PRO 367, ProVax vaccine and ProSys assays. Through September 30, 1997
the Company had recognized approximately $1,769,000 of such amount as revenue.
In addition, the Company has been awarded a $812,000 multi-year grant under a
contract with the Department of Defense for work related to ProVax vaccine.
Through September 30, 1997 the Company had recognized approximately $708,000 of
such amount as revenue.

Under the terms of these grants, the Company has, subject to certain rights
of the government described below, all right, title and interest to all patents,
copyrights and data pertaining to any product developed. However, under existing
regulations, the government receives a royalty-free license for federal
government use with respect to patents developed by grant recipients. In
addition, the government may, in certain circumstances, require the Company to
license technology resulting from the funded projects to third parties and may
require that the Company manufacture substantially all of the products resulting
from a particular grant in the United States.

The government's obligation to make payments under these grants is subject
to appropriation by the United States Congress for funding in each such year.
Moreover, it is possible that Congress or the government agencies that
administer these government research programs will determine to scale back these
programs or terminate them or that the government will award future grants to
competitors of the Company instead of the Company. In addition, while Progenics
intends to pursue additional government grants related to its areas of research
and development, there can be no assurances that the Company will be awarded any
such grants in the future or that any amounts derived therefrom will not be less
than those received to date.

On September 30, 1997, the Company was awarded a two-year, protein
manufacturing contract for $1,601,000 from the NIH. Through September 30, 1997,
no revenue had been recognized related to this contract.

PATENTS AND PROPRIETARY TECHNOLOGY

Progenics' policy is to protect its proprietary technology, and the Company
considers the protection of such rights to be important to its business. In
addition to seeking U.S. patent protection for many of its inventions, the
Company generally files patent applications in Canada, Japan, Western European
countries and additional foreign countries on a selective basis in order to
protect the inventions deemed to be important to the development of its foreign
business.

Under a license agreement with Sloan-Kettering, Progenics obtained
worldwide, exclusive rights to certain technology relating to ganglioside
conjugate vaccines, including GMK and MGV, and their use to

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treat or prevent cancer. This technology is the subject of a patent application
filed by Sloan-Kettering in the U.S. and 14 foreign countries claiming
composition of matter and methods of production and use of certain ganglioside
conjugate vaccines for the treatment or prevention of human cancer.

Under a license agreement with Columbia University, Progenics obtained
worldwide, exclusive rights to certain technology relating to CD4 and its use to
treat or prevent HIV infection. This technology is the subject of issued U.S.
and European patents and several related U.S. and foreign patent applications
filed by Columbia University. The issued patents and the patent applications
claim composition of matter and methods of production and use of certain
CD4-based products for the treatment or prevention of HIV infection. Progenics
has also filed a number of U.S. and foreign patent applications on its UnAB,
ProSys and ProVax technologies and clinical uses of these technologies.

There can be no assurance that patent applications owned by or licensed to
the Company will result in patents being issued or that, if issued, the patents
will afford protection against competitors with similar technology. Although a
patent has a statutory presumption of validity in the United States, the
issuance of a patent is not conclusive as to such validity or as to the
enforceable scope of the claims of the patent. There can be no assurance that
the Company's issued patents or any patents subsequently issued to or licensed
by the Company will not be successfully challenged in the future. The validity
or enforceability of a patent after its issuance by the patent office can be
challenged in litigation. The cost of litigation to uphold the validity of
patents and to prevent patent infringement can be substantial. If the outcome of
the litigation is adverse to the owner of the patent, third parties may then be
able to use the invention covered by the patent without payment. There can be no
assurance that the Company's patents will not be infringed or successfully
avoided through design innovation.

There may be patent applications and issued patents belonging to competitors
that may require the Company to alter its products, pay licensing fees or cease
certain activities. If the Company's products conflict with patents that have
been or may be granted to competitors, universities or others, such other
persons could bring legal actions against the Company claiming damages and
seeking to enjoin manufacturing and marketing of the affected products. If any
such actions are successful, in addition to any potential liability for damages,
the Company could be required to obtain a license in order to continue to
manufacture or market the affected products. There can be no assurance that the
Company would prevail in any such action or that any license required under any
such patent would be made available on acceptable terms or at all. The Company
believes that there may be significant litigation in the industry regarding
patent and other intellectual property rights. If the Company becomes involved
in such litigation, it could consume substantial resources.

Progenics has also filed a number of U.S. and foreign patent applications
(one of which is owned jointly with ADARC) relating to the discovery of an HIV
co-receptor, CCR5. In addition to the risks described above, the Company is
aware that other groups have claimed discoveries similar to that covered by the
Company's patent applications. These groups may have made their discoveries
prior to the discoveries covered by the Company's patent applications and may
have filed their applications prior to the Company's patent applications. The
Company does not expect to know for several years the relative strength of its
patent position as compared to these other groups.

The enactment of the legislation implementing the General Agreement on
Tariffs and Trade has resulted in certain changes to United States patent laws
that became effective on June 8, 1995. Most notably, the term of patent
protection for patent applications filed on or after June 8, 1995 is no longer a
period of seventeen years from the date of grant. The new term of United States
patents will commence on the date of issuance and terminate twenty years from
the earliest effective filing date of the application. Because the time from
filing to issuance of patent applications is often more than three years, a
twenty-year term from the effective date of filing may result in a substantially
shortened term of patent protection, which may adversely impact the Company's
patent position.

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In addition to the patents, patent applications, licenses and intellectual
property processes described above, the Company also relies on unpatented
technology, trade secrets and information. No assurance can be given that others
will not independently develop substantially equivalent information and
techniques or otherwise gain access to the Company's technology or disclose such
technology, or that the Company can meaningfully protect its rights in such
unpatented technology, trade secrets and information. The Company requires each
of its employees, consultants and advisors to execute a confidentiality
agreement at the commencement of an employment or consulting relationship with
the Company. The agreements generally provide that all inventions conceived by
the individual in the course of employment or in providing services to the
Company and all confidential information developed by, or made known to, the
individual during the term of the relationship shall be the exclusive property
of the Company and shall be kept confidential and not disclosed to third parties
except in limited specified circumstances. There can be no assurance, however,
that these agreements will provide meaningful protection for the Company's
information in the event of unauthorized use or disclosure of such confidential
information.

GOVERNMENT REGULATION

FDA approval of the Company's products, including a review of the
manufacturing processes and facilities used to produce such products, will be
required before such products may be marketed in the United States. The process
of obtaining approvals from the FDA can be costly, time consuming, and subject
to unanticipated delays. There can be no assurance that approvals of the
Company's proposed products, processes, or facilities will be granted on a
timely basis, or at all. Any failure to obtain or delay in obtaining such
approvals would adversely affect the ability of the Company to market its
proposed products. Moreover, even if regulatory approval is granted, such
approval may include significant limitations on indicated uses for which a
product could be marketed.

The process required by the FDA before the Company's products may be
approved for marketing in the United States generally involves (i) preclinical
laboratory and animal tests, (ii) submission to the FDA of an IND, which must
become effective before clinical trials may begin, (iii) adequate and
well-controlled human clinical trials to establish the safety and efficacy of
the product for its intended indication, (iv) submission to the FDA of a
marketing application and (v) FDA review of the marketing application in order
to determine, among other things, whether the product is safe and effective for
its intended uses. There is no assurance that the FDA review process will result
in product approval on a timely basis, or at all.

An IND is a submission which the sponsor of a clinical trial of an
investigational new drug must make to the FDA, and which must become effective
before clinical trials may commence. The IND submission must include, among
other things, a description of the sponsor's investigational plan; protocols for
each planned study; chemistry, manufacturing, and control information;
pharmacology and toxicology information; and a summary of previous human
experience with the investigational drug.

A New Drug Application ("NDA") is an application to the FDA to market a new
drug. The NDA must contain, among other things, information on chemistry,
manufacturing, and controls; nonclinical pharmacology and toxicology; human
pharmacokinetics and bioavailability; and clinical data. The new drug may not be
marketed in the United States until the FDA has approved the NDA.

A Product License Application ("PLA") is an application to the FDA to market
a biological product. The PLA must contain, among other things, data derived
from nonclinical laboratory and clinical studies which demonstrate that the
product meets prescribed standards of safety, purity and potency, and a full

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description of manufacturing methods. The biological product may not be marketed
in the United States until a product license is issued, and until the
establishment where the product is to be manufactured has been issued an
establishment license.

Preclinical tests include laboratory evaluation of product chemistry and
animal studies to gain preliminary information about a product's pharmacology
and toxicology and to identify any safety problems that would preclude testing
in humans. Products must generally be manufactured according to cGMP and
preclinical safety tests must be conducted by laboratories that comply with FDA
regulations regarding good laboratory practices. The results of the preclinical
tests are submitted to the FDA as part of an IND and are reviewed by the FDA
prior to the commencement of human clinical trials. Unless the FDA objects to,
or makes comments or raises questions concerning, an IND, the IND will become
effective 30 days following its receipt by the FDA and initial clinical studies
may begin, although companies often obtain affirmative FDA approval before
beginning such studies. There can be no assurance that submission of an IND will
result in FDA authorization to commence clinical trials. See "Risk
Factors--Uncertainty Associated with Preclinical and Clinical Testing."

Clinical trials involve the administration of the investigational new drug
to healthy volunteers and to patients under the supervision of a qualified
principal investigator. Clinical trials must be conducted in accordance with the
FDA's Good Clinical Practice requirements under protocols that detail, among
other things, the objectives of the study, the parameters to be used to monitor
safety, and the effectiveness criteria to be evaluated. Each protocol must be
submitted to the FDA as part of the IND. Further, each clinical study must be
conducted under the auspices of an Institutional Review Board ("IRB"). The IRB
will consider, among other things, ethical factors, the safety of human
subjects, the possible liability of the institution and the informed consent
disclosure which must be made to participants in the clinical trial.

Clinical trials are typically conducted in three sequential phases, although
the phases may overlap. During Phase I, when the drug is initially administered
to human subjects, the product is tested for safety, dosage tolerance,
absorption, metabolism, distribution, and excretion. Phase II involves studies
in a limited patient population to (i) evaluate preliminarily the efficacy of
the product for specific, targeted indications, (ii) determine dosage tolerance
and optimal dosage, and (iii) identify possible adverse effects and safety
risks. When a new product is found to have an effect and to have an acceptable
safety profile in Phase II evaluation, Phase III trials are undertaken in order
to further evaluate clinical efficacy and to further test for safety within an
expanded patient population. The FDA may suspend clinical trials at any point in
this process if it concludes that clinical subjects are being exposed to an
unacceptable health risk.

The results of the preclinical studies and clinical studies, the chemistry
and manufacturing data, and the proposed labelling, among other things, are
submitted to the FDA in the form of an NDA or PLA, approval of which must be
obtained prior to commencement of commercial sales. The FDA may refuse to accept
the NDA or PLA for filing if certain administrative and content criteria are not
satisfied, and even after accepting the NDA or PLA for review, the FDA may
require additional testing or information before approval of the NDA or PLA. In
any event, the FDA must deny an NDA or PLA if applicable regulatory requirements
are not ultimately satisfied. Moreover, if regulatory approval of a product is
granted, such approval may be made subject to various conditions, including
post-marketing testing and surveillance to monitor the safety of the product, or
may entail limitations on the indicated uses for which it may be marketed.
Finally, product approvals may be withdrawn if compliance with regulatory
standards is not maintained or if problems occur following initial marketing.

Under current FDA regulations, in addition to the licensing of a vaccine
product itself through the PLA process, any establishment used to manufacture a
vaccine product must also be licensed. To obtain the necessary establishment
license, an establishment license application ("ELA") describing the facilities,
equipment, processes, and personnel used to manufacture the product in question
must be submitted to the FDA. The establishment license will be granted only
after the FDA inspects the establishment and determines that the establishment
complies with all applicable standards, including, but not limited to,

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compliance with cGMP and the ability to consistently manufacture the product at
the establishment in accordance with the PLA. FDA approval of both the PLA and
ELA must be received prior to marketing of a vaccine product. Therefore, any
delay in FDA's approval of the ELA, or refusal to approve the ELA, would delay
or prevent the marketing of the product in question.

On May 14, 1996, the FDA adopted a new regulation, effective May 24, 1996,
regarding the license application process for certain biological products. Those
biological products that fall within the regulation will be reviewed on the
basis of a single biologics license application ("BLA"), rather than a PLA/ELA.
The BLA includes the same information as the current PLA, but certain of the
data now required as part of the ELA do not have to be submitted or reviewed
during the approval process. This new rule is intended, at least in part, to
lessen the regulatory burden on manufacturers of certain biologics and
accelerate the approval process. There can be no assurance, however, that the
FDA will consider the new regulation applicable to any of the Company's
products, or that the BLA process, if applicable to the Company's products, will
have the intended effect of reducing review times.

Both before and after approval is obtained, a product, its manufacturer, and
the sponsor of the marketing application for the product are subject to
comprehensive regulatory oversight. Violations of regulatory requirements at any
stage, including the preclinical and clinical testing process, the approval
process, or thereafter (including after approval) may result in various adverse
consequences, including FDA delay in approving or refusal to approve a product,
withdrawal of an approved product from the market and/or the imposition of
criminal penalties against the manufacturer and/or sponsor. In addition, later
discovery of previously unknown problems may result in restrictions on such
product, manufacturer, or sponsor, including withdrawal of the product from the
market. Also, new government requirements may be established that could delay or
prevent regulatory approval of the Company's products under development.

The FDA has implemented accelerated approval procedures for certain
pharmaceutical agents that treat serious or life-threatening diseases and
conditions, and that provide meaningful therapeutic benefit over existing
treatments. The Company believes that certain of its products in development may
qualify for accelerated approval. The Company cannot predict the ultimate
impact, however, of the FDA's accelerated approval procedures on the timing or
likelihood of approval of any of its potential products or those of any
competitor. In addition, the approval of a product under the accelerated
approval procedures is subject to various conditions, including the requirement
to verify clinical benefit in postmarketing studies, and the authority on the
part of the FDA to withdraw approval under streamlined procedures if such
studies do not verify clinical benefit or under various other circumstances.

Whether or not FDA approval has been obtained, approval of a pharmaceutical
product by comparable government regulatory authorities in foreign countries
must be obtained prior to marketing such product in such countries. The approval
procedure varies from country to country, and the time required may be longer or
shorter than that required for FDA approval. Although there are some procedures
for unified filing for certain European countries, in general, each country has
its own procedures and requirements. The Company does not currently have any
facilities or personnel outside of the United States.

In addition to regulations enforced by the FDA, the Company also is subject
to regulation under the Occupational Safety and Health Act, the Environmental
Protection Act, the Toxic Substances Control Act, the Resource Conservation and
Recovery Act and other present and potential future federal, state or local
regulations. The Company's research and development involves the controlled use
of hazardous materials, chemicals, viruses and various radioactive compounds.
Although the Company believes that its safety procedures for storing, handling,
using and disposing of such materials comply with the standards prescribed by
applicable regulations, the risk of accidental contaminations or injury from
these materials cannot be completely eliminated. In the event of such an
accident, the Company could be held liable for any damages that result and any
such liability could have a material adverse effect of the Company. See "Risk
Factors --Government Regulation; No Assurance of Regulatory Approval" and
"--Hazardous Materials; Environmental Matters."

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MANUFACTURING

The Company currently manufactures GMK, MGV, PRO 542 and PRO 367 in its two
pilot production facilities in Tarrytown, New York. One of these facilities is
for the production of vaccines and the other is for the production of
recombinant proteins. The Company believes that its existing production
facilities will be sufficient to meet the Company's initial needs for clinical
trials. However, these facilities may be insufficient for all of the Company's
late-stage clinical trials and for its commercial-scale requirements.
Accordingly, the Company expects to be required in the future to expand its
manufacturing staff and facilities and obtain new facilities or to contract with
third parties or its corporate collaborators to assist with production. Pursuant
to the BMS License Agreement, the Company granted to BMS manufacturing rights
with respect to GMK and MGV. In the event the Company decides to establish a
full-scale commercial manufacturing facility, the Company will require
substantial additional funds and will be required to hire and train significant
numbers of employees and comply with the extensive cGMP regulations applicable
to such a facility. In addition, if any of the Company's products produced at
its facilities were regulated as biologics, the Company could be required to
submit an ELA and obtain an establishment license for its facilities.

SALES AND MARKETING

Progenics plans to market products for which it obtains regulatory approval
through co-marketing, co-promotion, licensing and distribution arrangements with
third party collaborators. The Company believes that this approach will both
increase market penetration and commercial acceptance of its products and enable
the Company to avoid expending significant funds to develop a large sales and
marketing organization. Pursuant to their collaboration, the Company granted to
BMS exclusive worldwide marketing rights to GMK and MGV. In addition, the
Company has entered into collaborative marketing arrangements with DuPont and
Intracel with respect to the sCD4 and gp120 research reagents.

COMPETITION

Competition in the biopharmaceutical industry is intense. The Company faces
competition from many companies, major universities and research institutions in
the United States and abroad. Many of the Company's competitors have
substantially greater resources, experience in conducting preclinical studies
and clinical trials and obtaining regulatory approvals for their products,
operating experience, research and development and marketing capabilities and
production capabilities than those of the Company. The Company will face
competition from companies marketing existing products or developing new
products for diseases targeted by the Company's technologies. The development of
new products for those diseases for which the Company is developing products
could render the Company's product candidates noncompetitive and obsolete.

A significant amount of research in this industry is also being carried out
at academic and government institutions. These institutions are becoming
increasingly aware of the commercial value of their findings and are becoming
more aggressive in pursuing patent protection and negotiating licensing
arrangements to collect royalties for use of technology that they have
developed. These institutions may also market competitive commercial products on
their own or in collaboration with competitors. Any resulting increase in the
cost or decrease in the availability of technology or product candidates from
these institutions may affect the Company's business strategy.

Competition with respect to the Company's technologies and product
candidates is and will be based, among other things, on effectiveness, safety,
reliability, availability, price and patent position. Another important factor
will be the timing of market introduction of the Company's or competitive
products. Accordingly, the speed with which Progenics can develop products,
complete the clinical trials and approval processes and ultimately supply
commercial quantities of the products to the market is expected to be an
important competitive factor. The Company's competitive position will also
depend upon its

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ability to attract and retain qualified personnel, to obtain patent protection
or otherwise develop proprietary products or processes, and to secure sufficient
capital resources for the often substantial period between technological
conception and commercial sales.

PRODUCT LIABILITY

The testing, manufacturing and marketing of the Company's products involves
an inherent risk of product liability attributable to unwanted and potentially
serious health effects. To the extent the Company elects to test, manufacture or
market products independently, it will bear the risk of product liability
directly. Pursuant to the BMS License Agreement, BMS is required to indemnify
the Company for liabilities and expenses resulting from, among other things, the
manufacture, use or sale of Licensed Products (as defined in the BMS License
Agreement), subject to certain conditions. The Company has obtained insurance in
the amount of $5,000,000 against the risk of product liability. This insurance
is subject to certain deductibles and coverage limitations. There is no
guarantee that insurance will continue to be available at a reasonable cost, or
at all, or that the amount of such insurance will be adequate.

HUMAN RESOURCES

At September 30, 1997, the Company had 31 full-time employees, three of whom
(including Dr. Maddon) hold Ph.D. degrees or foreign equivalents and two of whom
(including Dr. Maddon) hold M.D. degrees. At such date, 24 employees were
engaged in research and development, medical and regulatory affairs and
manufacturing activities and seven were engaged in finance, administration and
business development. The Company considers its relations with its employees to
be good. None of its employees is covered by a collective bargaining agreement.

FACILITIES

Progenics leases approximately 24,000 square feet of laboratory,
manufacturing and office space in Westchester County, New York, approximately
twenty-five miles north of New York City. The Company leases this space under an
operating lease which terminates in April 1998. Progenics has two pilot
production facilities within its leased facilities for the manufacture of
products for clinical trials. The Company believes that its current facilities
are adequate for its current needs, and it is negotiating a new lease for these
facilities to take effect upon expiration of the term of its existing lease, in
which event it may upgrade these facilities to enhance its manufacturing
capabilities. However, the Company may nonetheless choose to move to new
facilities.

LEGAL PROCEEDINGS

The Company is not party to any material legal proceedings.

46
<PAGE>
SCIENTIFIC ADVISORY BOARDS

An important component of Progenics' scientific strategy is its
collaborative relationship with leading researchers in cancer and virology.
Certain of these researchers are members of the Company's two Scientific
Advisory Boards (each an "SAB"), one in cancer and one in virology. The members
of each SAB attend periodic meetings and provide Progenics with specific
expertise in both research and clinical development. In addition, Progenics has
collaborative research relationships with certain individual SAB members. All
members of the SABs are employed by employers other than the Company and may
have commitments to or consulting or advisory agreements with other entities
that may limit their availability to the Company. These companies may also be
competitors of Progenics. Several members of the SABs have, from time to time,
devoted significant time and energy to the affairs of the Company. However, no
member is regularly expected to devote more than a small portion of his time to
Progenics. In general, Progenics' scientific advisors are granted stock options
in the Company and receive financial remuneration for their services.

CANCER SCIENTIFIC ADVISORY BOARD

<TABLE>
<CAPTION>
NAME POSITION/AFFILIATION
- --------------------------------------------- ---------------------------------------------
<S> <C>
Alan N. Houghton, M.D. (Chairman)............ Chairman, Immunology Program, Sloan-Kettering
and Professor, Cornell University Medical
College ("CUMC")
Angus G. Dalgleish, M.D., Ph.D............... Chairman and Professor of Medical Oncology,
St. George's Hospital, London
Samuel J. Danishefsky, Ph.D.................. Kettering Professor and Head, Bioorganic
Chemistry, Memorial Sloan-Kettering Research
Institute and Professor of Chemistry,
Columbia University
David W. Golde, M.D.......................... Physician-in-Chief, Sloan-Kettering and
Professor, CUMC
David R. Klatzmann, M.D., Ph.D............... Professor of Immunology, Pitie-Salpetriere
Hospital, Paris
Philip O. Livingston, M.D.................... Associate Member, Sloan-Kettering and
Associate Professor, CUMC
John Mendelsohn, M.D......................... President, The University of Texas M.D.
Anderson Cancer Center
David A. Scheinberg, M.D., Ph.D.............. Chief, Leukemia Service, Sloan-Kettering and
Associate Professor, CUMC
</TABLE>

VIROLOGY SCIENTIFIC ADVISORY BOARD

<TABLE>
<CAPTION>
NAME POSITION/AFFILIATION
- --------------------------------------------- ---------------------------------------------
<S> <C>
Stephen P. Goff, Ph.D. (Chairman)............ Professor of Biochemistry, Columbia
University
Mark Alizon, M.D., Ph.D...................... Director of Research, Institut Cochin, Paris
Lawrence A. Chasin, Ph.D..................... Professor of Biological Sciences, Columbia
University
Leonard Chess, M.D........................... Professor of Medicine, Columbia University
Wayne A. Hendrickson, Ph.D................... Professor of Biochemistry, Columbia
University
Israel Lowy, M.D., Ph.D...................... Assistant Professor of Medicine, Mount Sinai
Medical Center
J. Steven McDougal, M.D...................... Chief, Immunology Branch, CDC, Atlanta
Luc Montagnier, M.D.......................... Professor and Chairman of Virology, Pasteur
Institute, Paris
Sherie L. Morrison, Ph.D..................... Professor of Microbiology, UCLA
Robin A. Weiss, Ph.D......................... Professor and Director of Research, ICR,
Royal Cancer Hospital, London
</TABLE>

47
<PAGE>
MANAGEMENT

DIRECTORS, EXECUTIVE OFFICERS AND KEY MANAGEMENT

The directors, executive officers and key management of the Company are as
follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>

Paul J. Maddon, M.D., Ph.D........................... 38 Chairman of the Board, Chief Executive Officer,
President and Chief Science Officer

Robert J. Israel, M.D................................ 40 Vice President, Medical Affairs

Robert A. McKinney................................... 41 Vice President, Finance and Operations and Treasurer

William C. Olson, Ph.D............................... 35 Director, Research and Development

Patricia C. Fazio.................................... 38 Director, Project Management and Health & Safety

Charles A. Baker (1)................................. 65 Director

Mark F. Dalton (1)................................... 47 Director

Stephen P. Goff, Ph.D. (2)........................... 46 Director

Elizabeth M. Greetham (2)............................ 48 Director

Paul F. Jacobson (1)................................. 43 Director

David A. Scheinberg, M.D., Ph.D. (2)................. 41 Director
</TABLE>

- ------------------------------

(1) Member of Compensation Committee

(2) Member of Audit Committee

PAUL J. MADDON, M.D., PH.D. is the founder of the Company and has served in
various capacities since its inception, including Chairman of the Board of
Directors, Chief Executive Officer, President and Chief Science Officer. From
1981 to 1988, Dr. Maddon performed research at the Howard Hughes Medical
Institute at Columbia University in the laboratory of Dr. Richard Axel. Dr.
Maddon serves on two NIH scientific review committees and is a member of the
editorial board of the JOURNAL OF VIROLOGY. He received a B.A. in biochemistry
and mathematics and an M.D. and a Ph.D. in biochemistry and molecular biophysics
from Columbia University. Dr. Maddon has been an Adjunct Assistant Professor of
Medicine at Columbia University since 1989.

ROBERT J. ISRAEL, M.D. joined the Company in October 1994 and has been Vice
President, Medical Affairs since that time. From 1991 to 1994, Dr. Israel was
Director, Clinical Research-Oncology and Immunohematology at Sandoz
Pharmaceuticals Corporation, a pharmaceutical company. From 1988 to 1991, he was
Associate Director, Oncology Clinical Research at Schering-Plough Corporation, a
pharmaceutical company. Dr. Israel is a licensed physician and is board
certified in both internal medicine and medical oncology. He received a B.A. in
physics from Rutgers University and an M.D. from the University of Pennsylvania
and completed an oncology fellowship at Sloan-Kettering. Dr. Israel has been a
consultant to the Solid Tumor Service at Sloan-Kettering since 1987.

ROBERT A. MCKINNEY joined the Company in September 1992. Mr. McKinney served
as Director, Finance and Operations and Treasurer from 1992 to January 1993,
when he was appointed Vice President, Finance and Operations and Treasurer of
Progenics. From 1991 to 1992, he was Corporate Controller at VIMRx
Pharmaceuticals, Inc., a biotechnology research company. From 1990 to 1991, Mr.
McKinney was Manager, General Accounting at Micrognosis, Inc., a software
integration company. From 1985 to 1990, he

48
<PAGE>
was an audit supervisor at Coopers & Lybrand L.L.P., an international accounting
firm. Mr. McKinney studied finance at the University of Michigan, received a
B.B.A. in accounting from Western Connecticut State University, and is a
Certified Public Accountant.

WILLIAM C. OLSON, PH.D. joined the Company in May 1994 and presently serves
as Director, Research and Development. From 1989 to 1992, Dr. Olson served as a
Research Scientist at Johnson & Johnson, and from 1992 until 1994 he was a
Development Scientist at MicroGeneSys, Inc., a biotechnology company. Dr. Olson
received a Ph.D. from the Massachusetts Institute of Technology and a B.S. from
the University of North Dakota. Both degrees were awarded in the field of
chemical engineering.

PATRICIA C. FAZIO joined the Company in August 1992. Ms. Fazio has served in
various management positions at Progenics, most recently as Director, Project
Management and Health & Safety. From 1987 to 1992, she was Senior Research
Technician and Laboratory Manager at the Howard Hughes Medical Institute at
Columbia University. From 1982 to 1987, Ms. Fazio was Chief Laboratory
Technologist in the Department of Pathology at Columbia Presbyterian Medical
Center. She received a B.S. in biology and chemistry at the College of New
Rochelle.

CHARLES A. BAKER has been a Director of the Company since January 1994. Mr.
Baker has been the Chairman, President and Chief Executive Officer of The
Liposome Company, Inc., a biotechnology company located in Princeton, NJ, since
1989. Mr. Baker is currently a director of Regeneron Pharmaceuticals, Inc., a
biotechnology company. He serves on the Scientific Advisory Council of Rutgers
University and is a member of the Council of Visitors of the Marine Biological
Laboratory at Woods Hole, MA. Mr. Baker has more than 30 years of pharmaceutical
industry experience, and has held senior management positions at Pfizer, Abbott
Laboratories, Squibb Corporation, and A.L. Laboratories. Mr. Baker received a
B.A. from Swarthmore College and a J.D. from Columbia University.

MARK F. DALTON has been a Director of the Company since July 1990. Mr.
Dalton has been the President, Chief Operating Officer and a director of Tudor
Investment Corporation, an investment advisory company, and its affiliates since
1988. From 1979 to 1988, he served in various senior management positions at
Kidder, Peabody & Co. Incorporated, including Chief Financial Officer. Mr.
Dalton is currently a director of several private companies in the U.S., Europe
and Asia. Mr. Dalton received a B.A. from Denison University and a J.D. from
Vanderbilt University.

STEPHEN P. GOFF, PH.D. has been a Director of the Company since February
1993. Dr. Goff has been a member of the Virology Scientific Advisory Board since
1988 and has been its Chairman since April 1991. Dr. Goff has been the Higgins
Professor in the Departments of Biochemistry and Microbiology at Columbia
University since June 1990. He received an A.B. in biophysics from Amherst
College and a Ph.D. in biochemistry from Stanford University. Dr. Goff performed
post-doctoral research at the Massachusetts Institute of Technology in the
laboratory of Dr. David Baltimore.

ELIZABETH M. GREETHAM has been a Director of the Company since January 1994.
Ms. Greetham has been the Portfolio Manager for Weiss, Peck & Greer ("WPG") Life
Sciences Fund, L.P. and WPG Institutional Life Sciences Fund, L.P. since 1992
and was a Health Care Analyst at WPG, L.L.C. from 1990 to 1992. Ms. Greetham is
also a director of Guilford Pharmaceuticals, a biopharmaceutical company, and
ChiRex Inc. and Pathogenesis Corporation, both of which are pharmaceutical
companies. She received an M.A. (hons) in Economics from Edinburgh University.

PAUL F. JACOBSON has been a Director of the Company since July 1990. Mr.
Jacobson has been a Managing Director of fixed income securities at Deutsche
Bank since January 1996. He was President of Jacobson Capital Partners from 1993
to 1996. From 1986 to 1993, Mr. Jacobson was a partner at Goldman, Sachs, where
he was responsible for government securities trading activities. Mr. Jacobson
received a B.A. from Vanderbilt University and an M.B.A. from Washington
University.

DAVID A. SCHEINBERG, M.D., PH.D. has been a Director of the Company since
May 1996 and a member of the Cancer Scientific Advisory Board since January
1994. Dr. Scheinberg has been associated with Sloan-Kettering since 1986, where
he has held the positions of Associate Professor (since 1994) and Chief

49
<PAGE>
(since 1992), Leukemia Service, Member of the Clinical Immunology Service (since
1987) and Head, Laboratory of Hematopoietic Cancer Immunochemistry,
Sloan-Kettering Institute (since 1989). He also has held the position of
Associate Professor of Medicine and Molecular Pharmacology, Cornell University
Medical College (since 1994). He received a B.A. from Cornell University, and an
M.D. and a Ph.D. in pharmacology and experimental therapeutics from The Johns
Hopkins University.

All directors hold office until the next annual meeting of stockholders and
until their successors have been elected and qualified. Officers are appointed
to serve, subject to the discretion of the Board of Directors, until their
successors are appointed. There are no family relationships among any of the
executive officers or directors of the Company.

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors has a Compensation Committee, which makes
recommendations concerning salaries and incentive compensation for employees of
and consultants to the Company, establishes and approves salaries and incentive
compensation for certain senior officers and employees and administers and
grants stock options pursuant to the Company's stock option plans, and an Audit
Committee, which reviews the annual financial statements of the Company prior to
their submission to the Board of Directors, consults with the Company's
independent auditors, and examines and considers such other matters in relation
to the internal and external audit of the Company's account and in relation to
the financial affairs of the Company and its accounts, including the selection
and retention of independent auditors.

COMPENSATION OF DIRECTORS

Directors do not receive compensation in their capacities as directors. All
of the directors are reimbursed for their expenses in connection with their
attendance at Board and committee meetings. In addition, Dr. Goff and Dr.
Scheinberg receive annual compensation in the amounts of $30,000 and $18,000,
respectively, for their services as members of the Company's Virology Scientific
Advisory Board and Cancer Scientific Advisory Board, respectively. See "Certain
Transactions."

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

No interlocking relationship exists between the Company's Board of Directors
or Compensation Committee and the board of directors or compensation committee
of any other company, nor has any such interlocking relationship existed in the
past. The members of the Compensation Committee are Charles A. Baker, Mark F.
Dalton and Paul F. Jacobson.

50
<PAGE>
EXECUTIVE COMPENSATION

SUMMARY COMPENSATION

The following table sets forth certain information with respect to
compensation awarded or paid by the Company during the fiscal year ended
December 31, 1996 to its Chief Executive Officer and the Company's other
executive officers who earned more than $100,000 during the year ended December
31, 1996 (collectively, the "Named Executive Officers"):

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
-------------
ANNUAL COMPENSATION SECURITIES
--------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS OPTIONS(1) COMPENSATION
- ------------------------------------------------------------ ---------- --------- ------------- -------------
<S> <C> <C> <C> <C>

Paul J. Maddon, M.D., Ph.D.
Chairman of the Board, Chief Executive Officer, President
and Chief Science Officer................................. $ 165,000 $ 70,000 -- $ 1,662(2)

Robert J. Israel, M.D.
Vice President, Medical Affairs........................... 175,000 25,000 18,750 --

Robert A. McKinney
Vice President, Finance and Operations and Treasurer...... 100,000 9,000 15,000 --
</TABLE>

- ------------------------

(1) Represents only those options granted during 1996.

(2) Represents the premium paid by the Company on a long-term disability policy.

OPTION GRANTS

The following table sets forth certain information concerning grants of
options to purchase Common Stock to the Named Executive Officers during the
fiscal year ended December 31, 1996.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------ VALUE AT
% OF TOTAL ASSUMED ANNUAL RATES
NUMBER OF OPTIONS OF STOCK
SECURITIES GRANTED TO EXERCISE PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES PRICE OPTION TERM(3)
OPTIONS IN FISCAL PER EXPIRATION ----------------------
NAME GRANTED YEAR(1) SHARE(2) DATE 5% 10%
- --------------------------------------------------- ----------- --------------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>

Paul J. Maddon, M.D., Ph.D......................... -- -- -- -- -- --

Robert J. Israel, M.D.............................. 18,750 24% $ 4.00 12/31/05 $ 291,501 $ 508,592

Robert A. McKinney................................. 15,000 19% 4.00 12/31/05 233,201 406,874
</TABLE>

- ------------------------

(1) Based on an aggregate of 79,500 options granted to employees of the Company
in fiscal 1996, including the Named Executive Officers.

(2) These options were repriced in April 1997. The exercise price is equal to
100% of the Board of Directors' estimate of fair market value of the Common
Stock on the date of repricing.

(3) The potential realizable value is calculated based on the term of the option
at the time of grant (10 years). Stock price appreciation of 5% and 10% is
assumed pursuant to rules promulgated by the Securities and Exchange
Commission and does not represent the Company's prediction of its stock
price performance. The potential realizable value at 5% and 10% appreciation
is calculated by assuming that the initial public offering price appreciates
at the indicated rate for the entire term of the option and that the option
is exercised at the exercise price and sold on the last day of its term at
the appreciated price.

51
<PAGE>
OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES

The following table sets forth certain information concerning the number and
value of securities underlying exercisable and nonexercisable stock options as
of the end of the fiscal year ended December 31, 1996 held by each Named
Executive Officer. No options were exercised by these individuals in fiscal
1996.

FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING OPTIONS AT IN-THE-MONEY OPTIONS AT
FISCAL YEAR-END FISCAL YEAR-END(1)
-------------------------- ---------------------------

<S> <C> <C> <C> <C>
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ------------ -------------

Paul J. Maddon, M.D., Ph.D............................... 300,000 450,000(2) $ 1,964,182 $ 2,992,295

Robert J. Israel, M.D.(3)................................ 22,500 52,500 180,000 420,000

Robert A. McKinney(3).................................... 39,000 28,500 321,900 230,475
</TABLE>

- ------------------------

(1) The value of the unexercised, in-the-money options on December 31, 1996 is
based on the difference between the assumed public offering price of the
Common Stock ($12.00 per share), and the per share option exercise price,
multiplied by the number of shares of Common Stock underlying the options.

(2) The exercisability of all of these options shall be accelerated in the event
of a change of control of the Company.

(3) On April 1, 1997, additional options to purchase 75,000 shares of Common
Stock were granted to Dr. Israel and additional options to purchase 40,000
shares of Common Stock were granted to Mr. McKinney. These options have an
exercise price of $4.00 per share and are not reflected in the above table.

EMPLOYMENT AGREEMENTS

Pursuant to the terms of the Employment Agreement (the "Employment
Agreement") dated December 15, 1993 between the Company and Dr. Maddon, the
Company has retained Dr. Maddon as Chairman of the Board, President, Chief
Executive Officer and Chief Science Officer of the Company at an annual salary
of $150,000. Effective July 1, 1997, Dr. Maddon's salary was increased to
$250,000 per year. The Employment Agreement expires on December 15, 1998 but is
automatically renewed annually thereafter for up to five successive one-year
periods, unless either the Company or Dr. Maddon gives notice to the other party
of its or his intention not to renew at least 90 days before the end of the
initial term or any renewal term. Under the Employment Agreement, each year
following the closing of this offering Dr. Maddon's salary then in effect shall
be increased at the rate of 10% per year, although the Board of Directors has
authority to grant additional compensation increases. In addition, Dr. Maddon
will be paid a bonus of not less than $15,000 per year. In July 1997, Dr. Maddon
was paid a bonus of $100,000. If Dr. Maddon's employment is terminated without
"cause" (as defined in the Employment Agreement), he will be entitled to receive
his annual salary through December 14, 1998) and any of the 750,000 options
granted to him under the 1993 Executive Stock Option Plan that have not
previously vested will vest. Dr. Maddon is also bound by certain non-competition
obligations.

Pursuant to the terms of a letter dated August 25, 1994 between the Company
and Robert J. Israel, M.D., the Company has retained Dr. Israel as Vice
President of Medical Affairs of the Company at an annual salary of $165,000 per
year. Effective January 1, 1997, Dr. Israel's salary was increased to $185,000.
In addition, the Company paid Dr. Israel a $10,000 bonus upon his hire. Under
the Letter Agreement, Dr. Israel is entitled to nine months salary if his
employment is terminated without cause.

STOCK OPTION PLANS

The Company has historically maintained stock option plans as an integral
component of its compensation program for key employees, directors and
consultants. The Company believes that such plans provide long-term incentives
to such persons and encourage the ownership of the Company's

52
<PAGE>
Common Stock. In May 1996, the Company adopted the 1996 Stock Incentive Plan
(the "1996 Plan"), which provides for the grant of stock options as well as
other types of stock and incentive awards. Outstanding stock options that were
granted under the Company's previous stock incentive plans will remain subject
to the terms and conditions of the plan pursuant to which they were originally
granted.

1989 NON-QUALIFIED STOCK OPTION PLAN

The Company's 1989 Non-Qualified Stock Option Plan (the "1989 Option Plan")
was adopted by the Company in April 1989. The 1989 Option Plan provided for the
grant of stock options to employees, consultants, directors of the Company and
other individuals who render services to the Company. Under the 1989 Option
Plan, the Company could grant options not intended to qualify as incentive stock
options within the meaning of Section 422A of the Internal Revenue Code of 1986,
as amended (the "Code"). A total of 375,000 shares of Common Stock were
originally authorized for issuance under the 1989 Option Plan. As of September
30, 1997 options to purchase 327,011 shares of Common Stock at exercise prices
ranging from $1.33 to $5.33 per share were outstanding under the 1989 Option
Plan, of which options to purchase 279,948 shares were exercisable. Options
outstanding under the 1989 Option Plan expire at various dates through January
28, 2011. As of September 30, 1997, options to purchase 27,000 shares of Common
Stock under this plan had been exercised.

Payment of the option exercise price may be made in cash, shares of Common
Stock, a combination of cash or stock or by any other method. Options are not
assignable or transferable except by will or under the laws of descent and
distribution. For a period of ten years following the termination for any reason
of an optionee's employment or active involvement with the Company, as
determined by the Board of Directors, the Company has the right to repurchase
from the optionee any or all shares of Common Stock held by the optionee and/or
any or all of the vested but unexercised portion of any option granted under the
1989 Option Plan at a purchase price defined therein.

The 1989 Option Plan terminated on April 1, 1994. However any options
granted prior to such termination shall continue in effect until such option is
exercised or expires in accordance with its terms and the terms of the 1989
Option Plan.

1993 STOCK OPTION PLAN

The Company's 1993 Stock Option Plan (the "1993 Option Plan") was adopted by
the Company in December 1993. The 1993 Option Plan provided for the grant of
stock options to key employees (including officers who may be members of the
Company's Board of Directors), directors who are not employees and other
individuals who render services of a special importance to the management,
operation or development of the Company. Under the 1993 Option Plan, the Company
could grant options intended to qualify as incentive stock options within the
meaning of Section 422 of the Code and options not intended to qualify as
incentive stock options. A total of 750,000 shares of Common Stock were
originally authorized for issuance under the 1993 Option Plan. As of September
30, 1997, options to purchase a total of 736,494 shares of Common Stock at
exercise prices ranging from $4.00 to $6.67 per share were outstanding under the
1993 Option Plan, of which options to purchase 319,254 shares were exercisable.
No options have been exercised to date and options outstanding expire at various
dates through December 31, 2005.

Payment of the option exercise price may be made in cash, shares of Common
Stock, a combination of cash or stock or by any other method. Options are not
assignable or transferable except by will or under the laws of descent and
distribution and, in the case of nonqualified options, to a designated
transferee, subject to approval by the Compensation Committee. For a period of
ten years following the termination for any reason of an optionee's employment
or active involvement with the Company, as determined by the Board of Directors,
the Company shall have the right to repurchase from the optionee any or all
shares of Common Stock acquired under the 1993 Option Plan and held by the
optionee and/or any or all of the vested but unexercised portion of any option
granted under the 1993 Option Plan at a purchase price defined therein. In
addition, the Company has certain rights of first refusal with respect to
transfers of optionees' vested and unvested stock except in the case of a
registered public offering.

53
<PAGE>
Following this offering, no further shares will be available for grant under
the 1993 Option Plan and the Company does not anticipate that there will be any
further grants of options under the 1993 Option Plan. However, any option
outstanding under the 1993 Option Plan shall remain outstanding until such
option is exercised or expires in accordance with its terms and the terms of the
1993 Option Plan.

1993 EXECUTIVE STOCK OPTION PLAN

The Company's 1993 Executive Stock Option Plan (the "1993 Executive Option
Plan") was adopted by the Company in December 1993. The 1993 Executive Option
Plan provided for the grant of stock options to senior executive employees
(including officers who may be members of the Company's Board of Directors).
Under the 1993 Executive Option Plan, the Company may grant incentive stock
options or nonqualified options. A total of 750,000 shares of Common Stock were
originally authorized for issuance upon the exercise of options granted under
the 1993 Executive Option Plan. As of September 30, 1997, options to purchase a
total of 750,000 shares of Common Stock at exercise prices of $5.33 or $5.87 per
share were outstanding under the 1993 Executive Option Plan, of which options to
purchase 300,000 shares were exercisable. No options have been exercised to date
and options outstanding expire at various dates through December 15, 2007.

No further shares are available for grant under the 1993 Executive Option
Plan and the Company does not anticipate that there will be any further grants
of options under the 1993 Executive Option Plan. However, any option outstanding
under the 1993 Executive Option Plan shall remain outstanding until such option
is exercised or expires in accordance with its terms and the terms of the 1993
Executive Option Plan.

1996 STOCK INCENTIVE PLAN

The 1996 Plan was adopted by the Company in May 1996. The 1996 Plan permits
the Compensation Committee of the Board of Directors to make awards to
employees, advisors and consultants of the Company and its subsidiaries. The
1996 Plan provides for grant of stock options, including both incentive stock
options and nonqualified options, as well as stock appreciation rights,
restricted stock, performance shares and phantom stock, as described below. All
awards under the 1996 Plan are nontransferable by the participant, except upon
the participant's death in accordance with his will or applicable law.

RESERVATION OF SHARES. The Company authorized and reserved 750,000 shares
of Common Stock for issuance under the 1996 Plan. The shares may be unissued
shares or treasury shares. If any shares of Common Stock that are the subject of
an award are not issued or transferred and cease to be issuable or transferable
for any reason, such shares will no longer be charged against such maximum share
limitation and may again be made subject to awards under the 1996 Plan. In the
event of certain corporate reorganizations, recapitalizations, or other
specified corporate transactions affecting the Company or the Common Stock,
proportionate adjustments may be made to the number of shares available for
grant and to the number of shares and prices under outstanding awards made
before the event. The Company intends prior to completion of this offering to
authorize and reserve for issuance under the 1996 Plan an additional 300,000
shares of Common Stock.

STOCK OPTIONS. The 1996 Plan authorizes the grant of nonqualified stock
options to employees, consultants and advisors of the Company and its
subsidiaries. Incentive stock options may only be granted to employees of the
Company and its subsidiaries. The exercise price of a nonqualified stock option
may be determined by the Compensation Committee in its discretion. The exercise
price of an incentive stock option may not be less than the fair market value of
the Common Stock on the date of grant (110% of the fair market value in the case
of an incentive stock option granted to a stockholder owning in excess of 10% of
the Common Stock). The value of Common Stock (determined at the time of grant)
that may be subject

54
<PAGE>
to incentive stock options that become exercisable by any one employee in any
one year is limited by the Code to $100,000. The maximum term of stock options
granted under the 1996 Plan is 10 years from the date of grant. The Compensation
Committee shall determine the extent to which an option shall become and/or
remain exercisable in the event of the termination of employment or service of a
participant under certain circumstances, including retirement, death or
disability, subject to certain limitations for incentive stock options. Under
the 1996 Plan, the exercise price of an option is payable by the participant in
cash or, in the discretion of the Compensation Committee, in Common Stock or a
combination of cash and Common Stock.

STOCK APPRECIATION RIGHTS. A stock appreciation right may be granted in
connection with an option, either at the time of grant or at any time thereafter
during the term of the option. A stock appreciation right granted in connection
with an option entitles the holder, upon exercise, to surrender the related
option and receive a payment based on the difference between the exercise price
of the related option and the fair market value of the Company's Common Stock on
the date of exercise. A stock appreciation right granted in connection with an
option is exercisable only at such time or times as the related option is
exercisable and expires no later than the time when the related option expires.
A stock appreciation right also may be granted without relationship to an option
and will be exercisable as determined by the Compensation Committee, but in no
event after ten years from the date of grant. A stock appreciation right granted
without relationship to an option entitles the holder, upon exercise, to a
payment based on the difference between the base price assigned to the stock
appreciation right by the Compensation Committee on the date of grant and the
fair market value of the Company's Common Stock on the date of exercise. Payment
to the holder in connection with the exercise of a stock appreciation right may
be in cash or shares of Common Stock or in a combination of cash and shares.

RESTRICTED STOCK AWARDS. The Committee may award shares of Common Stock to
participants under the 1996 Plan, subject to such restrictions on transfer and
conditions of forfeiture as it deems appropriate. Such conditions may include
requirements as to the continued service of the participant with the Company,
the attainment of specified performance goals or any other conditions determined
by the Compensation Committee. Subject to the transfer restrictions and
forfeiture restrictions relating to the restricted stock award, the participant
will otherwise have the rights of a stockholder of the Company, including all
voting and dividend rights, during the period of restriction.

PERFORMANCE AWARDS. The Compensation Committee may grant performance awards
denominated in specified dollar units ("Performance Units") or in shares of
Common Stock ("Performance Shares"). Performance awards are payable upon the
achievement of performance goals established by the Compensation Committee at
the beginning of the performance period, which may not exceed ten years from the
date of grant. At the time of grant, the Compensation Committee establishes the
number of units or shares, the duration of the performance period, the
applicable performance goals and, in the case of performance units, the
potential payment or range of payments for the performance awards. At the end of
the performance period, the Compensation Committee determines the payment to be
made based on the extent to which the performance goals have been achieved. The
Compensation Committee may consider significant unforeseen events during the
performance period when making the final award. Payments may be made in cash or
shares of Common Stock or in a combination of cash and shares.

PHANTOM STOCK. An award of phantom stock gives the participant the right to
receive cash at the end of a fixed vesting period based on the value of a share
of Common Stock at that time. Phantom stock units are subject to such
restrictions and conditions to payment as the Compensation Committee determines
are appropriate. At the time of grant, the Compensation Committee determines, in
its sole discretion, the number of units and the vesting period of the units,
and it may also set a maximum value of a unit. If the participant remains
employed by the Company throughout the applicable vesting period, he is entitled
to receive payment of a cash amount for each phantom stock unit equal in value
to the fair market value of one share of Common Stock on the last day of the
vesting period, subject to any maximum value limitation.

55
<PAGE>
AWARDS TO DATE. As of September 30, 1997, options to purchase an aggregate
of 556,500 shares of Common Stock at an exercise price of $4.00 per share were
outstanding under the 1996 Stock Incentive Plan, of which options to purchase
75,500 shares were exercisable. No options have been exercised to date, and
options outstanding expire at various dates through March 31, 2007.

ADMINISTRATION. The 1996 Plan shall be administered by the Compensation
Committee of the Board of Directors, or such other committee as may be appointed
by the Board. Subject to the limitations set forth in the 1996 Plan, the
Compensation Committee has the authority to determine the persons to whom awards
will be granted, the time at which awards will be granted, the number of shares,
units or other rights subject to each award, the exercise, base or purchase
price of an award (if any), the time or times at which the award will become
vested, exercisable or payable and the duration of the award. The Compensation
Committee may provide for the acceleration of the vesting or exercise period of
an award at any time prior to its termination or upon the occurrence of
specified events. With the consent of the affected participant, the Compensation
Committee has the authority to cancel and replace awards previously granted with
new options for the same or a different number of shares and having a higher or
lower exercise or base price, and may amend the terms of any outstanding awards
to provide for an exercise or base price that is higher or lower than the
current exercise or base price.

TERM AND AMENDMENT. The 1996 Plan has a term of 10 years, subject to
earlier termination or amendment by the Board of Directors. All awards granted
under the 1996 Plan prior to its termination remain outstanding until exercised,
paid or terminated in accordance with their terms. The Board of Directors may
amend the 1996 Plan at any time, except that shareholder approval is required
for certain amendments to the extent necessary for purposes of Rule 16b-3 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act").

401(K) SAVINGS AND RETIREMENT PLAN

In 1993 the Company adopted the provisions of the amended and restated
Progenics 401(k) Plan (the "401(k) Plan"), a tax-qualified plan covering all
eligible employees, as defined therein. Each eligible employee may elect to
reduce his or her current compensation by 15%, subject to the statutory limit (a
maximum of $9,500 in 1996) and have the amount of the reduction contributed to
the 401(k) Plan. The Company has agreed to match 25% of up to the first 8% of
compensation that eligible employees contribute to the 401(k) Plan. In addition,
the Company may also make a discretionary contribution, as defined in the 401(k)
Plan, each year on behalf of all participants who are non-highly compensated
employees, as defined therein. The Company made matching contributions in an
aggregate amount of approximately $10,000 to eligible employees under the 401(k)
Plan in 1996. No matching contributions were made in 1996 to any of the Named
Executive Officers.

56
<PAGE>
CERTAIN TRANSACTIONS

Since January 1, 1993, the Company has sold securities in the following
transactions with the following directors, officers, and stockholders who
beneficially own more than 5% of the outstanding Common Stock of the Company
("5% Stockholders"), and affiliates of such directors, officers and 5%
Stockholders.

<TABLE>
<CAPTION>
SERIES B
PREFERRED STOCK
ISSUED UPON
SERIES B EXERCISE OF SERIES C TOTAL
NAME UNITS(1) WARRANTS(2) UNITS(3) CONSIDERATION
- ------------------------------------------------------- ---------- ----------------- ---------- -------------
<S> <C> <C> <C> <C>
Entities affiliated with Tudor Investment
Corporation(4)........................................ 758,750 375,000 180,000 $ 8,510,000
Entities affiliated with Weiss, Peck & Greer
L.L.C.(5)............................................. 125,000 125,000 20,000 1,525,000
Paul F. Jacobson(6).................................... 12,500 12,500 5,000 212,500
David A. Scheinberg, M.D., Ph.D.(7).................... -- -- 1,250 25,000
---------- -------- ---------- -------------
Total.................................................. 896,250 512,500 206,250 $ 10,272,500
---------- -------- ---------- -------------
---------- -------- ---------- -------------
</TABLE>

- ------------------------------

(1) Each Series B Unit consisted of one share of Series B Preferred Stock and
one warrant to purchase one share of Series B Preferred Stock ("Series B
Warrant"). The purchase price per unit was $4.00. The sale of all the Series
B Units occurred in 1993.

(2) Shares issued upon exercise of Series B Warrants for an exercise price of
$5.00 per share. The issuance of shares of Series B Preferred Stock upon
exercise of Series B Warrants occurred in 1994.

(3) Each Series C Unit consists of four shares of Series C Preferred Stock and
one warrant to purchase one share of Series C Preferred Stock ("Series C
Warrant"). The purchase price per unit was $20.00. The Series C Warrants
remain outstanding. Except for 100,000 Series C Units sold during the fourth
quarter of 1995, the Series C Units were sold in 1996.

(4) The 180,000 Series C Units includes approximately 61,200 units issued in
exchange for the note plus accrued interest held by Tudor Investment
Corporation described below. Mr. Dalton, a director of the Company, is
associated with Tudor Investment Corporation. See "Management."

(5) Ms. Greetham, a director of the Company, is associated with Weiss, Peck &
Greer. See "Management."

(6) Mr. Jacobson is a director of the Company. See "Management."

(7) Dr. Scheinberg is a director of the Company. See "Management."

During 1995, the Company borrowed under a note an aggregate of $1,200,000
from certain affiliates of Tudor Investment Corporation, a stockholder of the
Company. The note provided for the accrual of interest at the rate of 10% per
annum, with interest and principal payable on demand. In December 1995, the
principal amount of the note plus accrued interest of approximately $24,000 were
exchanged for approximately 61,200 Series C Units. See "Principal Stockholders"
and "Description of Capital Stock."

In March 1997, the Company entered into a loan guarantee agreement (the
"Loan Guarantee Agreement") with a principal stockholder of the Company, Tudor
BVI Futures, Ltd. ("Tudor BVI"), and with Tudor Group Holdings LLC ("Tudor
Group" and, together with Tudor BVI, the "Guarantors"), an affiliate of Tudor
Investment Corporation, a principal stockholder of the Company, wherein the
Guarantors agreed to guarantee the performance of the Company's obligations
under the Chase Loan Agreement, which provided for borrowings of up to
$2,000,000. Tudor BVI agreed to provide 78% of the guarantee, and Tudor Group
agreed to provide the remaining 22% of the guarantee. In consideration for these
guarantees, the Company issued to Tudor BVI and Tudor Global Trading LLC
("TGT"), a subsidiary of Tudor Group, warrants to purchase in the aggregate
54,600 shares and 15,400 shares of Common Stock, respectively, at an exercise
price of $3.00 per share, which will adjust to $6.00 per share upon completion
of this offering (assuming a public offering price of $12.00 per share). These
warrants are immediately exercisable and expire in March 2002. In July 1997, the
Company repaid $2.0 million in borrowings outstanding under the Chase Loan
Agreement, representing all borrowings thereunder. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources" and "Description of Capital Stock--Warrants."

57
<PAGE>
Various directors, officers, 5% Stockholders of the Company and affiliates
of such persons are entitled to certain registration rights with respect to
their securities of the Company. See "Shares Eligible for Future Sale."

The Company believes that the transactions described above were entered into
on terms no less favorable to the Company than could be obtained from third
parties on an arm's length basis.

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information with respect to the
aggregate number of shares of Common Stock beneficially owned as of September
30, 1997, assuming conversion of all shares of the Company's Preferred Stock
into an aggregate of 4,259,878 shares of Common Stock upon the closing of this
offering, by: (i) each person (or group of affiliated persons) known by the
Company to be a beneficial owner of more than 5% of the outstanding Common Stock
of the Company; (ii) each director of the Company; (iii) each of the Named
Executive Officers; and (iv) all directors and executive officers of the Company
as a group.

<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES BENEFICIALLY
NUMBER OF OWNED(1)(2)
SHARES --------------------------
BENEFICIALLY BEFORE AFTER
NAME OWNED(1)(2) OFFERING OFFERING(3)
- ------------------------------------------------------------------------ ----------------- ----------- -------------
<S> <C> <C> <C>
Entities affiliated with Tudor Investment Corporation(4)(5)
600 Steamboat Road
Greenwich, CT 06830................................................... 2,384,314 34.5% 26.8%
Paul J. Maddon, M.D., Ph.D.(6)
777 Old Saw Mill River Road
Tarrytown, NY 10591................................................... 1,050,000 15.0% 11.7%
Paul Tudor Jones, II(4)(5)
600 Steamboat Road
Greenwich, CT 06830................................................... 488,625 7.3% 5.6%
Charles A. Baker(7)..................................................... 41,250 * *
Mark F. Dalton(8)....................................................... 48,000 * *
Stephen P. Goff, Ph.D.(9)............................................... 60,000 * *
Elizabeth M. Greetham(10)............................................... 262,500 3.9% 3.0%
Paul F. Jacobson(11).................................................... 189,039 2.8% 2.2%
David A. Scheinberg, M.D., Ph.D.(12).................................... 93,948 1.4% 1.1%
Robert J. Israel, M.D.(13).............................................. 38,437 * *
Robert A. McKinney(14).................................................. 50,250 * *
All directors and executive officers as a group (9 persons)(15)......... 1,833,424 25.2% 19.8%
</TABLE>

- ------------------------

* Less than 1%

(1) Except as indicated in the footnotes to this table and pursuant to
applicable community property laws, each stockholder possesses sole voting
and investment power with respect to the shares of Common Stock listed.

(2) The number of shares of Common Stock beneficially owned includes the shares
issuable pursuant to stock options and warrants that may be exercised within
60 days after September 30, 1997. Shares issuable pursuant to such options
and warrants are deemed outstanding for computing the percentage of
beneficial ownership of the person holding such options and warrants but are
not deemed outstanding for computing the percentage of beneficial ownership
of any other person.

(3) Assumes no exercise of the Underwriters' over-allotment option. See
"Underwriting."

(4) The number of shares owned by entities affiliated with Tudor Investment
Corporation ("TIC") consists of 1,704,501 shares held of record by Tudor BVI
Futures, Ltd., an international business company organized under the law of
the British Virgin Islands ("Tudor BVI"), 142,851 shares of Common Stock
issuable to Tudor BVI upon the exercise of currently exercisable warrants,

58
<PAGE>
287,813 shares held of record by TIC, 164,499 shares held of record by Tudor
Arbitrage Partners L.P. ("TAP"), 41,125 shares of Common Stock issuable to
TAP upon the exercise of currently exercisable warrants, 22,500 shares held
of record by Tudor Proprietary Trading, L.L.C., a UK-based limited liability
corporation ("TPT"), 5,625 shares of Common Stock issuable to Tudor Global
Trading LLC ("TPT") upon the exercise of currently exercisable warrants and
15,400 shares of Common Stock issuable to TGT upon the exercise of currently
exercisable warrants. In addition, because TIC provides investment advisory
services to Tudor BVI, it may be deemed to beneficially own the shares held
by such entity. TIC disclaims beneficial ownership of such sharess. TGT is
the general partner of TAP. TGT disclaims beneficial ownership of shares
held by TAP. Excludes, as to TIC, TGT, TAP and TPT, shares beneficially
owned by Mr. Jones. See Note 5.

(5) Excludes, as to Mr. Jones, shares beneficially owned by TIC, TGT, TAP and
TPT. Mr. Jones is the Chairman and principal stockholder of TIC, the
Chairman and indirect principal equity owner of TGT, the indirect principal
equity owner of TAP, and the Chairman and indirect principal equity owner of
TPT. Mr. Jones may be deemed to beneficially own the shares beneficially
owned, or deemed beneficially owned, by such entities. Mr. Jones disclaims
beneficial ownership of such shares. See Note 4.

(6) Includes 300,000 shares subject to stock options held by Dr. Maddon
exercisable within 60 days of the date of this table. Excludes 150,000
shares of Common Stock issuable upon exercise of options that will vest upon
completion of this offering, (assuming an initial public offering price of
$12.00 per share).

(7) Includes 3,750 shares of Common Stock issuable to the Baker Family Limited
Partnership ("BFLP") upon the exercise of currently exercisable warrants,
15,000 shares owned by the BFLP, and 22,500 shares subject to stock options
held by Mr. Baker exercisable within 60 days of the date of this table.

(8) Includes 31,500 shares held of record directly by Mr. Dalton and 16,500
shares of record held by DF Partners, a family partnership of which Mr.
Dalton is the managing general partner with a 5% interest. The remaining 95%
interest is held by trusts for the benefit of Mr. Dalton's children. As to
such 95% interest, Mr. Dalton disclaims beneficial interest. Mr. Dalton is
President of TIC, TGT and TPT. Mr. Dalton disclaims beneficial ownership of
shares beneficially owned, or deemed beneficially owned, by TIC, TGT, TPT
and TAP, and consequently the shares shown as beneficially owned by Mr.
Dalton exclude shares owned by these entities.

(9) Includes 22,500 shares subject to stock options held by Dr. Goff exercisable
within 60 days of the date of this table.

(10) Consists of 131,250 shares held of record by Weiss, Peck & Greer ("WPG")
Life Sciences Fund, L.P. ("WPGLSF") and 9,375 shares of Common Stock
issuable to WPGLSF upon the exercise of currently exercisable warrants and
116,250 shares held of record by WPG Institutional Life Sciences Fund, L.P.
("WPGILSF") and 5,625 shares of Common Stock issuable to WPGILSF upon the
exercise of currently exercisable warrants. Ms. Greetham, who is the
Portfolio Manager for both WPGLSF and WPGILSF, disclaims beneficial
ownership of all such shares except to the extent of her beneficial interest
in WPGLSF.

(11) Includes 3,750 shares of Common Stock issuable to Mr. Jacobson upon the
exercise of currently exercisable warrants and 27,000 shares subject to
stock options held by Mr. Jacobson exercisable within 60 days of the date of
this table.

(12) Includes 938 shares of Common Stock issuable to Dr. Scheinberg upon the
exercise of currently exercisable warrants and 89,260 shares subject to
stock options held by Dr. Scheinberg exercisable within 60 days of the date
of this table.

(13) Consists of 38,437 shares subject to stock options held by Dr. Israel
exercisable within 60 days of the date of this table.

(14) Consists of 50,250 shares subject to stock options held by Mr. McKinney
exercisable within 60 days of the date of this table.

(15) Includes shares held by affiliated entities as set forth in the above
table, 549,947 shares subject to stock options held by all officers and
directors exercisable within 60 days of the date of this table and 23,438
shares issuable upon the exercise of currently exercisable warrants
beneficially owned by certain directors.

59
<PAGE>
DESCRIPTION OF CAPITAL STOCK

AUTHORIZED STOCK; ISSUED AND OUTSTANDING SHARES

Upon the completion of this offering, the authorized capital stock of the
Company will consist of 40,000,000 shares of Common Stock, par value $.0013 per
share, and 20,000,000 shares of Preferred Stock, par value $.001 per share.

In October 1996 the Board of Directors and shareholders of the Company
approved a three-for-four reverse stock split of the Company's Common Stock,
which became effective in 1996. All information in this Prospectus has been
adjusted to reflect the reverse stock split.

As of September 30, 1997, 2,441,675 shares of Common Stock and 5,679,826
shares of Preferred Stock were outstanding. Simultaneously with the closing of
this offering, each outstanding share of Preferred Stock will automatically be
converted into .75 shares of Common Stock, or an aggregate of 4,259,878 shares
of Common Stock, pursuant to its terms.

COMMON STOCK

Assuming conversion of all outstanding Preferred Stock, at September 30,
1997 there were 6,701,553 shares of Common Stock outstanding held by
approximately 130 stockholders of record. Holders of Common Stock are entitled
to one vote for each share held of record on any matters voted upon by
stockholders and do not have any cumulative voting rights. Subject to
preferences that may be applicable to any outstanding Preferred Stock, holders
of Common Stock are entitled to receive ratably such dividends as may be
declared by the Board of Directors out of funds legally available therefor. See
"Dividend Policy." In the event of a liquidation, dissolution or winding up of
the Company, holders of Common Stock are entitled to share ratably in all assets
remaining after payment of liabilities and the liquidation preferences of any
outstanding Preferred Stock. Holders of Common Stock have no preemptive rights
and no right to convert their Common Stock into any other securities. There are
no redemption or sinking fund provisions applicable to the Common Stock. All
outstanding shares of Common Stock are, and all shares of Common Stock to be
outstanding upon completion of this offering will be, validly issued, fully paid
and nonassessable. All shares of Common Stock issuable upon conversion of the
Preferred Stock and upon exercise of warrants will be, upon such conversion or
exercise, validly issued, fully paid and nonassessable. The rights, preferences
and privileges of holders of Common Stock are subject to, and may be adversely
affected by, the rights of the holders of shares of any series of Preferred
Stock which the Company may designate and issue in the future.

PREFERRED STOCK

Upon the closing of this offering, the conversion of the outstanding Series
A, Series B and Series C Preferred Stock and the filing of a Certificate of
Amendment to Certificate of Incorporation removing the designation of those
Series, the Company's Certificate of Incorporation will authorize the issuance
of up to 20,000,000 shares of Preferred Stock, $.001 par value per share, and
none of those shares will be outstanding or designated into any series. Under
the terms of the Certificate of Incorporation, the Board of Directors is
authorized, subject to any limitations prescribed by law, further without
stockholder approval, to issue such shares of Preferred Stock in one or more
series. Each such series of Preferred Stock shall have such rights, preferences,
privileges and restrictions, including voting rights, dividend rights,
conversion rights, redemption privileges and liquidation preferences, as shall
be determined by the Board of Directors.

The purpose of authorizing the Board of Directors to issue Preferred Stock
and determine its rights and preferences is to eliminate delays associated with
a stockholder vote on specific issuances. The issuance of Preferred Stock, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could have the effect of making it more difficult for
a third party to acquire,

60
<PAGE>
or of discouraging a third party from acquiring, a majority of the outstanding
voting stock of the Company. The Company has no present plans to issue any
shares of Preferred Stock.

WARRANTS

The Company has issued warrants (the "Warrants") to purchase 347,249 shares
of Series C Preferred Stock. Each Warrant entitles the holder to purchase one
share of Series C Preferred Stock at a purchase price of $5.00 per share
(subject to adjustment in certain circumstances) during the five-year period
commencing on the warrant issuance date (December 8, 1995 or February 23, 1996).
Following the closing of this offering, the Warrants will become exercisable for
260,455 shares of Common Stock at a purchase price of $6.67 per share of Common
Stock (subject to adjustment in certain circumstances). If at any time the
Company issues: (i) additional shares of Common Stock; (ii) securities that are
convertible into or exchangeable for shares of Common Stock; or (iii) warrants
or other rights to subscribe for shares of Common Stock (collectively,
"Additional Shares") at a price per share that is lower than the then current
market price (as defined) per share of the Common Stock, then the exercise price
of the Warrant will be reduced to a price equal to (a) the sum of (i) the total
number of shares of the Company outstanding immediately prior to the issuance of
the Additional Shares multiplied by the then current exercise price of the
Warrant, plus (ii) the consideration received by the Company for the Additional
Shares, divided by (b) the total number of shares of capital stock of the
Company outstanding immediately after the issuance of the Additional Shares. In
such case the number of shares subject to the Warrant shall be proportionally
increased. In no event is any adjustment of the exercise price of the Warrant or
the number of shares subject to the Warrant required upon the grant of stock
options or other stock incentives to employees or consultants of the Company or
upon the exercise of such options or incentives.

In consideration for a guarantee given by Tudor BVI and Tudor Group to the
Company with respect to borrowings under the Chase Loan Agreement, the Company
issued warrants (the "Tudor Warrants") to purchase 54,600 shares of Common Stock
to Tudor BVI and warrants to purchase 15,400 shares of Common Stock to TGT, a
subsidiary of Tudor Group. These warrants were issued in three tranches in
March, June and July of 1997. The exercise price of the Tudor Warrants is $3.00
per share, subject to adjustment in the event (i) the Company completes an
initial public offering of its Common Stock ("IPO") prior to December 31, 1997,
in which case the exercise price shall become 50% of the gross sales price of a
share of Common Stock in the IPO, or (ii) a Sale (as defined in the Tudor
Warrants) of the Company occurs prior to December 31, 1997, in which case the
exercise price shall become 50% of the per share Sale Price (as defined in the
Tudor Warrants). The warrants allow for "cashless exercises." The Tudor Warrants
are also entitled to the same anti-dilution rights set forth above with respect
to the Warrants.

DELAWARE LAW AND CERTAIN CHARTER AND BY-LAW PROVISIONS

The Company is subject to the provisions of Section 203 of the General
Corporation Law of Delaware. Section 203 prohibits a publicly held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless the business
combination is approved in a prescribed manner. A "business combination"
includes mergers, asset sales and other transactions resulting in a financial
benefit to the interested stockholder. Subject to certain exceptions, an
"interested stockholder" is a person who, together with affiliates and
associates, owns, or within three years did own, 15% or more of a corporation's
voting stock.

The Certificate of Incorporation contains certain provisions permitted under
the General Corporation Law of Delaware relating to the liability of directors.
The provisions eliminate a director's liability for monetary damages for a
breach of fiduciary duty, except in certain circumstances involving wrongful
acts, such as the breach of a director's duty of loyalty or acts or omissions
which involve intentional misconduct or a knowing violation of law. Further, the
Certificate of Incorporation contains provisions to indemnify the Company's
directors and officers to the fullest extent permitted by the General
Corporation Law of

61
<PAGE>
Delaware. The Company believes that these provisions will assist the Company in
attracting and retaining qualified individuals to serve as directors.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is American Stock
Transfer & Trust Company.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, based upon the number of shares
outstanding at September 30, 1997, there will be 8,701,553 shares of Common
Stock outstanding (exclusive of 1,305,156 shares covered by vested options and
warrants outstanding at September 30, 1997 and including 4,259,878 shares of
Common Stock to be issued upon the automatic conversion of the outstanding
shares of Preferred Stock upon consummation of this offering). The 2,000,000
shares of Common Stock sold in this offering will be immediately eligible for
resale in the public market without restriction under the Securities Act of
1933, as amended (the "Securities Act"), except that any shares purchased in
this offering by "affiliates" of the Company, as that term is defined in Rule
144 under the Securities Act ("Affiliates"), may generally be resold only in
compliance with applicable provisions of Rule 144. Of the remaining shares to be
outstanding after this offering (and without taking into account the lock-up
agreements described below), approximately 2,659,000 shares will be immediately
eligible for sale in the public market without restriction pursuant to Rule
144(k) under the Securities Act and an additional 230,000 shares will become so
eligible from time to time during the 90 day period following this offering.
Beginning 90 days after the date of this Prospectus (and without taking into
account the lock-up agreements described below), approximately 3,693,000
additional shares of Common Stock and approximately 1,367,000 shares covered by
options exercisable within the 90-day period following the date of this
Prospectus will become eligible for resale in the public market, subject to
compliance with applicable provisions of Rules 144 and 701.

The Company, the executive officers and directors of the Company and certain
securityholders, which executive officers, directors and securityholders in the
aggregate hold approximately 6,392,000 shares of Common Stock and 2,699,000
shares issuable upon the exercise of outstanding options and warrants (including
1,304,000 shares of Common Stock that may be acquired pursuant to the exercise
of vested options or warrants held by them) at September 30, 1997, have agreed
pursuant to certain agreements that they will not, without the prior written
consent of Oppenheimer & Co., Inc., offer, sell or otherwise dispose of the
shares of Common Stock beneficially owned by them for a period of 180 days from
the date of this Prospectus. The shares subject to the lock-up agreements
include 2,579,000 of the shares of Common Stock that will become eligible for
resale in the public market pursuant to Rule 144(k) immediately upon completion
of this offering or during the 90-day period thereafter, and 3,693,000 of the
shares of Common Stock and 1,366,000 of the shares covered by options
exercisable within the 90-day period following the date of this Prospectus that
will become eligible for resale in the public market beginning 90 days after the
date of this Prospectus, subject to compliance with the applicable provisions of
Rules 144 and 701.

In general, under Rule 144 as currently in effect, beginning 90 days after
the effective date of the Registration Statement of which this Prospectus is a
part, a stockholder, including an Affiliate, who has beneficially owned
restricted securities (as that term is defined in Rule 144) for at least one
year from the later of the date such securities were acquired from the Company
or (if applicable) the date they were acquired from an Affiliate is entitled to
sell, within any three-month period, a number of such shares that does not
exceed the greater of 1% of the then outstanding shares of Common Stock
(approximately 87,000 shares immediately after this offering) or the average
weekly trading volume in the Common Stock during the four calendar weeks
preceding the date on which notice of such sale was filed under Rule 144,
provided certain requirements concerning availability of public information,
manner of sale and notice of sale are satisfied. In addition, under Rule 144(k),
if a period of at least two years has elapsed between the later of the date
restricted securities were acquired from the Company or (if applicable) the date
they were acquired from an Affiliate of the Company, a stockholder who is not an
Affiliate of the Company at the

62
<PAGE>
time of sale and has not been an Affiliate of the Company for at least three
months prior to the sale is entitled to sell the shares immediately without
compliance with the foregoing requirements under Rule 144.

Rule 701 under the Securities Act provides an exemption from the
registration requirements of the Securities Act for offers and sales of
securities issued pursuant to certain compensatory benefit plans, such as the
Company's stock option and stock incentive plans, of a company not subject to
the reporting requirements of Section 13 or 15(d) of the Exchange Act.
Securities issued pursuant to Rule 701 are defined as restricted securities for
purposes of Rule 144. However, 90 days after the issuer becomes subject to the
reporting provisions of the Exchange Act, the Rule 144 resale restrictions,
except for the broker's transaction requirement, are inapplicable for
non-affiliates. Affiliates are subject to all Rule 144 restrictions after this
90-day period other than the holding period restriction. In addition, the
Company plans to file a Form S-8 registration statement registering shares of
stock issuable pursuant to the Company's stock option plans.

Commencing on the first anniversary of the date of this Prospectus, certain
stockholders of the Company, holding in the aggregate approximately 6.6 million
shares of Common Stock and warrants to purchase 330,455 shares of Common Stock
(collectively, the "Registrable Shares"), will be entitled under the terms of
agreements with the Company to certain rights with respect to the registration
under the Securities Act of the resale of such shares. The holders of 20% of the
Registrable Shares (the "Minimum Number of Holders") may trigger the obligation
of the Company to use its best efforts to effect no more than two public
offerings on Forms S-1 or S-2, provided that the offering price per share is at
least $6.67 and the aggregate offering price to the public is at least $5
million. In addition, the Minimum Number of Holders shall have the right to
demand an unlimited number of registrations on Form S-3, provided that the
aggregate proposed public offering price of the securities to be included in
such registration shall be at least $1 million. In addition, if the Company
files a registration statement with the Securities and Exchange Commission ("the
Commission"), stockholders may elect to include therein their respective
Registrable Shares. There is no limit with respect to the number of times
holders of Registrable Shares may exercise such "piggyback" registration rights.
In addition, pursuant to the Employment Agreement between the Company and Dr.
Maddon, the Company granted to Dr. Maddon separate "piggyback" registration
rights which may be exercised at any time with respect to his shares of Common
Stock or shares of Common Stock issuable upon exercise of any options (as of
September 30, 1997, Dr. Maddon held options to purchase 750,000 shares of Common
Stock, of which options to purchase 300,000 shares of Common Stock were
exercisable on that date or within 60 days thereafter and an additional 150,000
shares of Common Stock will become exercisable upon completion of this offering,
assuming a public offering price of $12.00 per share). Aquila also has been
granted "piggyback" registration rights with respect to the registration of
45,000 shares of Common Stock held by it, which rights may be exercised at any
time. The Company's obligation to register shares pursuant to exercise of any of
the foregoing "demand" or "piggyback" registration rights is subject in any
underwritten offering to the right of the underwriters to exclude shares
necessary to avoid interfering with the successful marketing of the underwritten
offering. The Company is generally obligated to bear the expenses, other than
underwriting discounts and commissions, of all of these registrations.

Prior to this offering, there has been no public market for the Common
Stock. No precise prediction can be made as to the effect, if any, that market
sales of shares or the availability of shares for sale will have on the market
price of the Common Stock prevailing from time to time. The Company is unable to
estimate the number of shares that may be sold in the public market pursuant to
Rule 144, since this will depend on the market price of the Common Stock, the
personal circumstances of the sellers and other factors. Nevertheless, sales of
significant amounts of the Common Stock in the public market could adversely
affect the market price of the Common Stock and could impair the Company's
ability to raise capital through an offering of its equity securities.

63
<PAGE>
UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Company has agreed to sell to each of the Underwriters named below, and each of
the Underwriters, for whom Oppenheimer & Co., Inc., BancAmerica Robertson
Stephens and Vector Securities International, Inc. are acting as
Representatives, has severally agreed to purchase from the Company, the
respective number of shares of Common Stock set forth opposite the name of each
Underwriter below.

<TABLE>
<CAPTION>
NUMBER
NAME OF SHARES
- -------------------------------------------------------------------------------- ------------
<S> <C>
Oppenheimer & Co., Inc..........................................................
BancAmerica Robertson Stephens..................................................
Vector Securities International, Inc............................................

------------
Total..................................................................... 2,000,000
------------
------------
</TABLE>

The Underwriters propose to offer the shares of Common Stock directly to the
public at the initial public offering price set forth on the cover page of this
Prospectus and in part to certain securities dealers at such price less a
concession of $ per share. The Underwriters may allow, and such dealers
may reallow, a concession not in excess of $ per share to certain other
brokers and dealers. After the shares of Common Stock are released for sale to
the public, the offering price and other selling terms may, from time to time,
be varied by the Representatives. The Underwriters are obligated to take and pay
for all of the shares of Common Stock offered hereby (other than those covered
by the over-allotment option described below), if any are taken.

The Company has granted to the Underwriters an option, exercisable for up to
30 days after the date of this Prospectus, to purchase up to an aggregate of
300,000 additional shares of Common Stock to cover over-allotments, if any. If
the Underwriters exercise such option, the Underwriters have severally agreed,
subject to certain conditions, to purchase approximately the same percentage
thereof that the number of shares to be purchased by each of them bears to the
2,000,000 shares of Common Stock offered hereby. The Underwriters may exercise
such option only to cover over-allotments made in connection with the sale of
the shares of Common Stock offered hereby. The Representatives have advised the
Company that the Underwriters do not intend to confirm sales in excess of 5% of
the shares offered hereby to any account over which they exercise discretionary
authority.

The Company has agreed to indemnify the Representatives of the Underwriters
and the several Underwriters against certain liabilities, including, without
limitation, liabilities under the Securities Act.

The Company's officers and directors and certain stockholders who own an
aggregate of shares of Common Stock (including shares issuable upon
exercise of outstanding options and warrants) have agreed that they will not
directly or indirectly, sell, offer, contract to sell, make a short sale, pledge
or otherwise dispose of any shares of Common Stock (or any securities
convertible into or exchangeable or exercisable for any other rights to purchase
or acquire Common Stock other than shares of Common Stock issuable upon exercise
of outstanding options) owned by them, for a period of 180 days after the date
of this Prospectus, without the prior written consent of Oppenheimer & Co.,
Inc., subject to certain limited exceptions. The Company has also agreed not to
issue, sell or register with the Commission for its own

64
<PAGE>
account or otherwise dispose of, directly or indirectly, any equity securities
of the Company (or any securities convertible into or exercisable or
exchangeable for equity securities of the Company) for a period of 180 days
after the date of this Prospectus, without the prior written consent of
Oppenheimer & Co., Inc., subject to certain limited exceptions.

Certain persons participating in this offering may overallot or effect
transactions which stabilize, maintain or otherwise affect the market price of
the Common Stock at levels above those which might otherwise prevail in the open
market, including by entering stabilizing bids, effecting syndicate covering
transactions or imposing penalty bids. A stabilizing bid means the placing of
any bid or effecting of any purchase, for the purpose of pegging, fixing or
maintaining the price of the Common Stock. A syndicate covering transaction
means the placing of any bid on behalf of the underwriting syndicate or the
effecting of any purchase to reduce a short position created in connection with
the offering. A penalty bid means an arrangement that permits the Underwriters
to reclaim a selling concession from a syndicate member in connection with the
offering when shares of Common Stock sold by the syndicate member are purchased
in syndicate covering transactions. Such transactions may be effected, where
permitted, on the Nasdaq National Market, in the over-the-counter market, or
otherwise. Such stabilizing, if commenced, may be discontinued at any time.

Prior to this offering, there has been no public market for the Common
Stock. The initial public offering price will be negotiated between the Company
and the Representatives. Among the factors to be considered in determining the
initial public offering price of the Common Stock, in addition to prevailing
market conditions, will be the Company's historical performance, capital
structure, estimates of the business potential and earnings prospects of the
Company, an assessment of the Company's management and consideration of the
above factors in relation to market values of companies in related businesses.

65
<PAGE>
LEGAL MATTERS

The validity of the Common Stock being offered hereby will be passed upon
for the Company by Dewey Ballantine LLP, 1301 Avenue of the Americas, New York,
New York 10019, and for the Underwriters by Hale and Dorr LLP, 60 State Street,
Boston, Massachusetts 02109.

EXPERTS

The balance sheets as of December 31, 1995 and 1996 and the statements of
operations, stockholders' equity (deficit) and cash flows for each of the three
years in the period ended December 31, 1996 and the statements of operations and
cash flows for the nine months ended September 30, 1996, included in this
Prospectus, have been included herein in reliance on the report of Coopers &
Lybrand L.L.P., independent accountants, given on the authority of that firm as
experts in accounting and auditing.

ADDITIONAL INFORMATION

The Company has filed with the Commission a Registration Statement on Form
S-1 under the Securities Act with respect to the Common Stock offered hereby.
This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and the schedules thereto. For further
information with respect to the Company and such Common Stock, reference is made
to the Registration Statement and exhibits and schedules thereto. Statements
contained in this Prospectus as to the contents of any contract or other
document referred to are not necessarily complete, and, with respect to any
contract or other document filed as an exhibit to the Registration Statement,
each such statement is qualified in all respects by reference to such exhibit.
Copies of the Registration Statement and the exhibits thereto are on file at the
offices of the Commission and may be obtained upon payment of the prescribed fee
or may be examined without charge at the Commission's Public Reference Section,
Room 1024, 450 Fifth Street, Suite 1300, N.W., Washington D.C. 20549, as well as
at the Commission's Regional Offices at Seven World Trade Center, New York, New
York 10048, and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such material can be obtained in person from the
Public Reference Section of the Commission at its principal office located at
450 Fifth Avenue, N.W., Washington, D.C. 20549, upon payment of the prescribed
fees. In addition, the Company is required to file electronic versions of these
documents with the Commission through the Commission's Electronic Data
Gathering, Analysis and Retrieval (EDGAR) system. The Commission maintains a
World Wide Web site at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission.

Upon completion of the offering, the Company will be subject to the
reporting requirements of the Exchange Act and in accordance therewith will file
annual and quarterly reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information may be
inspected, and copies of such material may be obtained upon payment of the
prescribed fees, at the Commission's Public Reference Section at the addresses
set forth above.

66
<PAGE>
PROGENICS PHARMACEUTICALS, INC.
INDEX TO FINANCIAL STATEMENTS

Report of Independent Accountants.......................................................................... F-2

Financial Statements:

Balance Sheets as of December 31, 1995, 1996 and September 30, 1997 (unaudited).......................... F-3

Statements of Operations for the years ended December 31, 1994, 1995 and 1996, for the nine months ended
September 30, 1996 and for the nine months ended June 30, 1997 (unaudited)............................. F-4

Statements of Stockholders' Equity (Deficit) for the years ended December 31, 1994, 1995 and 1996 and for
the nine months ended September 30, 1997 (unaudited)................................................... F-5

Statements of Cash Flows for the years ended December 31, 1994, 1995 and 1996, for the nine months ended
June 30, 1996 and for the nine months ended September 30, 1997 (unaudited)............................. F-6

Notes to Financial Statements............................................................................ F-7
</TABLE>

F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
Progenics Pharmaceuticals, Inc.:

We have audited the accompanying balance sheets of PROGENICS
PHARMACEUTICALS, INC. (the "Company") as of December 31, 1995 and 1996 and the
related statements of operations and cash flows for each of the three years in
the period ended December 31, 1996 and the statements of operations and cash
flows for the nine months ended September 30, 1996. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Company as of December
31, 1995 and 1996 and the results of its operations and its cash flows for each
of the three years in the period ended December 31, 1996 and the nine months
ended September 30, 1996, in conformity with generally accepted accounting
principles.

COOPERS & LYBRAND L.L.P.

New York, New York
April 18, 1997 except for the second

paragraph of Note 1, Note 7(c) and Note 11

as to which the date is July 9, 1997.

F-2
<PAGE>
PROGENICS PHARMACEUTICALS, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------ SEPTEMBER 30,
1995 1996 1997
-------------- -------------- --------------
<S> <C> <C> <C>
(UNAUDITED)
ASSETS:
Current assets:
Cash and cash equivalents............................................ $ 559,294 $ 646,664 $ 7,720,001
Grant revenue receivable............................................. 112,749 81,993 40,112
Other current assets................................................. 18,445 53,168 65,771
-------------- -------------- --------------
Total current assets............................................. 690,488 781,825 7,825,884
Fixed assets, at cost, net of accumulated depreciation and
amortization......................................................... 966,118 842,607 648,267
Security deposits and other assets..................................... 79,118 38,212 36,426
-------------- -------------- --------------
Total assets..................................................... $ 1,735,724 $ 1,662,644 $ 8,510,577
-------------- -------------- --------------
-------------- -------------- --------------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT):
Current liabilities:
Accounts payable and accrued expenses................................ $ 487,089 $ 1,785,844 $ 594,935
Income taxes payable................................................. 151,310
Capital lease obligations, current portion........................... 184,344 105,076 63,549
-------------- -------------- --------------
Total current liabilities........................................ 671,433 1,890,920 809,794
Capital lease obligations.............................................. 162,824 139,649 106,230
Deferred lease liability............................................... 49,740 16,735
-------------- -------------- --------------
Total liabilities................................................ 883,997 2,047,304 916,024
-------------- -------------- --------------
Commitments and contingencies
Stockholders' equity (deficit):
Preferred stock, $.001 par value; 20,000,000 shares authorized:
Series A Preferred Stock, convertible; 4,000,000 shares
designated; shares issued and outstanding--
2,308,000 in 1995, 1996 and 1997 (liquidation value,
$6,055,750)...................................................... 2,308 2,308 2,308
Series B Preferred Stock, convertible; 2,500,000 shares designated;
shares issued and outstanding--1,982,830 in 1995, 1996 and 1997
(liquidation value, $8,650,630).................................. 1,983 1,983 1,983
Series C Preferred Stock, convertible; 3,750,000 shares designated;
shares issued and outstanding--424,184 in 1995 and 1,388,996 in
1996 and 1997 (liquidation value, $2,120,920 in 1995 and
$6,944,980 in 1996 and 1997)..................................... 424 1,389 1,389
-------------- -------------- --------------
Total preferred stock............................................ 4,715 5,680 5,680
Common Stock, $.0013 par value; 40,000,000 shares authorized; shares
issued and outstanding--2,294,675 in 1995 and 1996, 2,441,675 in
1997............................................................... 2,983 2,983 3,174
Additional paid-in capital........................................... 18,501,808 23,407,130 25,098,746
Accumulated deficit.................................................. (17,657,779) (23,800,453) (17,513,047)
-------------- -------------- --------------
Total stockholders' equity (deficit)............................. 851,727 (384,660) 7,594,553
-------------- -------------- --------------
Total liabilities and stockholders' equity (deficit)............. $ 1,735,724 $ 1,662,644 $ 8,510,577
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-3
<PAGE>
PROGENICS PHARMACEUTICALS, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------------- ------------------------
1994 1995 1996 1996 1997
---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)

Revenues:
Research grants.................................... $ 503,518 $ 725,348 $ 520,929 $ 267,606 $ 488,928
Product sales...................................... 51,971 49,752 98,049 67,422 49,908
Interest income.................................... 108,036 46,378 105,808 91,300 109,281
Collaboration revenue.............................. -- 13,276,000
---------- ---------- ---------- ---------- ------------
Total revenues................................. 663,525 821,478 724,786 426,328 13,924,117
---------- ---------- ---------- ---------- ------------
Expenses:
Research and development........................... 2,858,547 3,853,001 3,700,204 2,654,460 5,725,265
General and administrative......................... 877,906 1,093,821 2,807,668 984,191 1,285,699
Interest expense................................... 50,399 87,279 50,706 39,564 235,944
Depreciation and amortization...................... 288,407 290,873 308,882 229,687 238,493
---------- ---------- ---------- ---------- ------------
Total expenses................................. 4,075,259 5,324,974 6,867,460 3,907,902 7,485,401
---------- ---------- ---------- ---------- ------------
Operating (loss) income........................ (3,411,734) (4,503,496) (6,142,674) (3,481,574) 6,438,716
Income taxes 151,310
---------- ---------- ---------- ---------- ------------
Net (loss) income $(3,411,734) $(4,503,496) $(6,142,674) $(3,481,574) $ 6,287,406
---------- ---------- ---------- ---------- ------------
---------- ---------- ---------- ---------- ------------
Pro forma net (loss) income per share data:
Pro forma net (loss) income per share
(unaudited)...................................... $(0.83) $0.75
---------- ------------
---------- ------------
Pro forma weighted average common shares
outstanding (unaudited).......................... 7,423,736 8,331,933
---------- ------------
---------- ------------
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-4
<PAGE>
PROGENICS PHARMACEUTICALS, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 (UNAUDITED)

<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK ADDITIONAL
---------------------- ---------------------- PAID-IN ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT TOTAL
---------- ---------- ---------- ---------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993............ 3,571,520 $ 3,572 2,249,675 $ 2,924 $12,259,115 $ (9,742,549) $2,523,062
Exercise of Series B Preferred Stock
warrants for cash ($5.00 per share)... 719,310 719 3,595,831 3,596,550
Compensation expense in connection with
the issuance of stock options......... 119,062 119,062
Net loss for the year ended December 31,
1994.................................. (3,411,734) (3,411,734)
---------- ---------- ---------- ---------- ----------- ------------ ----------
Balance at December 31, 1994........ 4,290,830 4,291 2,249,675 2,924 15,974,008 (13,154,283) 2,826,940
Sale of Series C Preferred Stock units
for cash ($20.00 per unit)............ 179,450 179 897,070 897,249
Compensation expense in connection with
the issuance of stock options......... 107,363 107,363
Conversion of note payable and accrued
interest of $23,671 into Series C
Preferred Stock units ($20.00 per
unit)................................. 244,734 245 1,223,426 1,223,671
Issuance of Common Stock in
consideration for obtaining a license
and supply agreement at estimated
value ($6.67 per share)............... 45,000 59 299,941 300,000
Net loss for the year ended December 31,
1995.................................. (4,503,496) (4,503,496)
---------- ---------- ---------- ---------- ----------- ------------ ----------
Balance at December 31, 1995........ 4,715,014 4,715 2,294,675 2,983 18,501,808 (17,657,779) 851,727
Sale of Series C Preferred Stock units
for cash, net of expenses ($20.00 per
unit)................................. 964,812 965 4,776,359 4,777,324
Compensation expense in connection with
the issuance of stock options......... 128,963 128,963
Net loss for the year ended December 31,
1996.................................. (6,142,674) (6,142,674)
---------- ---------- ---------- ---------- ----------- ------------ ----------
Balance at December 31, 1996........ 5,679,826 5,680 2,294,675 2,983 23,407,130 (23,800,453) (384,660)
Expenses incurred in connection with the
issuance of stock options and warrants
(unaudited)........................... 781,277 781,277
Exercise of stock options ($1.33 per
share) (unaudited).................... 27,000 35 35,875 35,910
Issuance of common stock in
consideration for an amendment to an
agreement ($7.50 per share)
(unaudited)........................... 120,000 156 899,844 900,000
Costs incurred in connection with sale
of common stock (unaudited)........... (25,380) (25,380)
Net income for the nine months ended
September 30, 1997 (unaudited)........ 6,287,406 6,287,406
---------- ---------- ---------- ---------- ----------- ------------ ----------
Balance at September 30, 1997
(unaudited)....................... 5,679,826 $ 5,680 2,441,675 $ 3,174 $25,098,746 $(17,513,047) $7,594,553
---------- ---------- ---------- ---------- ----------- ------------ ----------
---------- ---------- ---------- ---------- ----------- ------------ ----------
</TABLE>

Securities issued for non-cash consideration were valued based upon the
Board of Directors' estimate of fair value of the securities issued at the time
the services were rendered.

The accompanying notes are an integral part of the financial statements.

F-5
<PAGE>
PROGENICS PHARMACEUTICALS, INC.

STATEMENTS OF CASH FLOWS

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------
1994 1995 1996
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net (loss) income................................................................ $ (3,411,734) $ (4,503,496) $ (6,142,674)
Adjustments to reconcile net (loss) income to net cash (used in) provided by
operating activities:
Depreciation and amortization................................................ 288,407 290,873 308,882
Expenses incurred in connection with issuance of common stock, stock options
and warrants............................................................... 119,062 431,034 128,963
Changes in assets and liabilities:
(Increase) decrease in grant revenue receivable............................ (112,749) 30,756
(Increase) decrease in other current assets................................ (62,867) 49,522 (34,723)
(Increase) decrease in security deposits and other assets.................. (2,663) (5,834) 40,906
Increase (decrease) in accounts payable and accrued expenses............... 69,165 273,399 1,270,099
Increase (decrease) in deferred lease liability............................ 18,323 24,307 (4,349)
Increase in income taxes payable...........................................
------------ ------------ ------------
Net cash (used in) provided by
operating activities................................................... (2,982,307) (3,552,944) (4,402,140)
------------ ------------ ------------
Cash flows from investing activities:
Capital expenditures............................................................. (323,426) (158,445) (96,672)
Redemption of certificates of deposit............................................ 10,000 113,850
Purchase of certificates of deposit.............................................. (10,000)
------------ ------------ ------------
Net cash used in
investing activities................................................... (323,426) (44,595) (96,672)
------------ ------------ ------------
Cash flows from financing activities:
Proceeds from issuance of equity securities, less offering expenses.............. 3,596,550 897,249 4,777,324
Payment of capital lease obligations............................................. (132,414) (215,652) (191,142)
Proceeds from notes payable...................................................... 1,200,000
Repayments of notes payable...................................................... (20,638)
Other............................................................................
------------ ------------ ------------
Net cash provided by (used in) financing activities...................... 3,443,498 1,881,597 4,586,182
------------ ------------ ------------
Net increase (decrease) in cash and cash equivalents..................... 137,765 (1,715,942) 87,370
Cash and cash equivalents at beginning of period................................... 2,137,471 2,275,236 559,294
------------ ------------ ------------
Cash and cash equivalents at end of period............................... $ 2,275,236 $ 559,294 $ 646,664
------------ ------------ ------------
------------ ------------ ------------
Supplemental disclosure of cash flow information:
Cash paid for interest......................................................... $ 47,618 $ 90,060 $ 50,706
------------ ------------ ------------
------------ ------------ ------------
Supplemental disclosure of noncash investing and financing activities:
Increase in capital lease obligations.......................................... $ 423,000 $ 139,000 $ 89,000
Conversion of debt for equity.................................................. 1,224,000

<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------------
1996 1997
------------ ------------
<S> <C> <C>
(UNAUDITED)
Cash flows from operating activities:
Net (loss) income................................................................ $ (3,481,574) $ 6,287,406
Adjustments to reconcile net (loss) income to net cash (used in) provided by
operating activities:
Depreciation and amortization................................................ 229,687 238,493
Expenses incurred in connection with issuance of common stock, stock options
and warrants............................................................... 98,523 1,681,277
Changes in assets and liabilities:
(Increase) decrease in grant revenue receivable............................ 33,111 41,881
(Increase) decrease in other current assets................................ (41,925) (12,603)
(Increase) decrease in security deposits and other assets.................. 14,482 1,786
Increase (decrease) in accounts payable and accrued expenses............... (137,545) (1,190,909)
Increase (decrease) in deferred lease liability............................ (3,262) (16,735)
Increase in income taxes payable........................................... 151,310
------------ ------------
Net cash (used in) provided by
operating activities................................................... (3,288,503) 7,181,906
------------ ------------
Cash flows from investing activities:
Capital expenditures............................................................. (73,303) (24,158)
Redemption of certificates of deposit............................................
Purchase of certificates of deposit..............................................
------------ ------------
Net cash used in
investing activities................................................... (73,303) (24,158)
------------ ------------
Cash flows from financing activities:
Proceeds from issuance of equity securities, less offering expenses.............. 4,777,324 35,910
Payment of capital lease obligations............................................. (156,046) (94,941)
Proceeds from notes payable...................................................... 2,000,000
Repayments of notes payable...................................................... (2,000,000)
Other............................................................................ (72,990) (25,380)
------------ ------------
Net cash provided by (used in) financing activities...................... 4,548,288 (84,411)
------------ ------------
Net increase (decrease) in cash and cash equivalents..................... 1,186,482 7,073,337
Cash and cash equivalents at beginning of period................................... 559,294 646,664
------------ ------------
Cash and cash equivalents at end of period............................... $ 1,745,776 $ 7,720,001
------------ ------------
------------ ------------
Supplemental disclosure of cash flow information:
Cash paid for interest......................................................... $ 39,564 $ 235,944
------------ ------------
------------ ------------
Supplemental disclosure of noncash investing and financing activities:
Increase in capital lease obligations.......................................... $ 81,000 $ 20,000
Conversion of debt for equity..................................................
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-6
<PAGE>
PROGENICS PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS

(1997 INTERIM DATA IS UNAUDITED)

1. ORGANIZATION AND BUSINESS

Progenics Pharmaceuticals, Inc. (the "Company") is a biopharmaceutical
company focusing on the development and commercialization of innovative products
for the treatment and prevention of cancer and viral diseases, including human
immunodeficiency virus ("HIV") infection. Prior to July 1997, the Company was in
the development stage. The Company was incorporated in Delaware on December 1,
1986. The Company has no products approved for sale by the U.S. Food and Drug
Administration. In addition to the normal risks associated with a new business
venture, there can be no assurance that the Company's research and development
will be successfully completed, that any products developed will obtain
necessary government regulatory approval or that any approved products will be
commercially viable. In addition, the Company operates in an environment of
rapid change in technology and is dependent upon the continued services of its
current employees, consultants and subcontractors.

The Company has sustained net losses and negative cash flows from operations
since its inception and expects these conditions to continue for the foreseeable
future. As discussed in Note 7(c), the Company received approximately $13.3
million from Bristol-Myers Squibb Company ("BMS") during July 1997. The Company
estimates that this amount combined with BMS's commitment to fund future
clinical development conducted by the Company, will enable it to continue to
operate beyond one year. In the future, the Company will need to raise
additional financing through public or private equity financings, collaborative
or other arrangements with corporate sources, or other sources of financing to
fund operations. There can be no assurance that such additional financing, if at
all available, can be obtained on terms reasonable to the Company. In the event
the Company is unable to raise additional capital, operations will need to be
scaled back or discontinued.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRODUCT SALES

The Company has derived all of its product revenue from the sale of research
reagents to four customers. Product sales revenue is recognized at the time
reagents are shipped. The reagents are products of the Company's research and
development efforts. The Company maintains no inventory of reagent and cost of
product sales is not material.

RESEARCH GRANTS

The Company has been awarded government research grants from two grantors
("Grantors"). The respective grants are used to subsidize the Company's research
projects ("Projects") regarding HIV. Grant revenue is recognized on a pro rata
basis as subsidized Project costs are incurred. Such method approximates the
straight-line basis over the lives of the Projects. Receivables from the
Grantors represent a concentration of credit risk to the Company. For each of
the three years in the period ended December 31, 1996, all of the Company's
research grant revenue came from the Grantors.

F-7
<PAGE>
PROGENICS PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(1997 INTERIM DATA IS UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FIXED ASSETS

Leasehold improvements, furniture and fixtures, and equipment are stated at
cost. Furniture, fixtures, and equipment are depreciated on a straight-line
basis over their estimated useful lives. Leasehold improvements are amortized on
a straight-line basis over the life of the lease or of the improvement,
whichever is shorter. The estimated useful lives of fixed assets are as follows:

<TABLE>
<CAPTION>
<S> <C>
Computer equipment...................... 5 years
Machinery and equipment................. 5-7 years
Furniture and fixtures.................. 5 years
Leasehold improvements.................. Life of lease
</TABLE>

PATENTS

As a result of research and development efforts conducted by the Company, it
has applied, or is applying, for a number of patents to protect proprietary
inventions. All costs associated with patents are expensed as incurred.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments which have maturities of
three months or less, when acquired, to be cash equivalents. The carrying amount
reported in the balance sheet for cash and cash equivalents approximates its
fair value. Cash, cash equivalents and certificates of deposit, subject the
Company to concentrations of credit risk. At December 31, 1996, the Company had
invested approximately $569,000 in funds with a major investment company and
held approximately $78,000 in a single commercial bank. At December 31, 1995,
the Company had invested approximately $33,000 in funds with a major investment
company and held approximately $526,000 in a single commercial bank.

NET (LOSS) INCOME PER SHARE

PRO FORMA PER SHARE DATA (UNAUDITED)

The pro forma per share data included in the Statements of Operations has
been computed using the weighted average number of shares of common stock
outstanding. Common stock issuable upon the exercise of outstanding stock
options and warrants are included in the calculation, using the treasury stock
method, when the effect is dilutive, except that, pursuant to Securities and
Exchange Commission Staff Accounting Bulletin No. 83 ("SAB No. 83"), certain
equity securities, including options and warrants that are anti-dilutive, issued
at prices below the assumed public offering price of $12.00 during the period
prior to the proposed offering, beginning June 15, 1995, have been included in
the calculation, using the treasury stock method, as if they were outstanding
for all periods presented. In addition, the weighted average number of shares of
convertible preferred stock that will convert automatically into shares of
common stock upon the closing of the Company's proposed initial public offering
has been included in the calculation from their original date of issuance.

PER SHARE DATA IN ACCORDANCE WITH SAB NO. 83

The per share data found below has been computed in accordance with
Accounting Principles Board Opinion No. 15, "Earnings Per Share" ("APB No. 15")
adjusted for SAB No. 83. Such computation is

F-8
<PAGE>
PROGENICS PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(1997 INTERIM DATA IS UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
based on the weighted average number of shares of common stock outstanding.
Common stock issuable upon the exercise of outstanding options and warrants and
the conversion of preferred stock are included in the calculation, using the
treasury stock method, when the effect is dilutive, except that, pursuant to SAB
No. 83, equity securities, including preferred stock, stock options and warrants
that are anti-dilutive, issued at prices below the assumed public offering price
of $12.00 during the period prior to the proposed offering, beginning June 15,
1995, have been included in the calculation, using the treasury stock method, as
if outstanding for all periods presented.

<TABLE>
<CAPTION>
NINE MONTHS
YEARS ENDED DECEMBER 31, ENDED SEPTEMBER 30,
----------------------------------------- --------------------------
1994 1995 1996 1996 1997
------------ ------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Net (loss) income per share:
Per APB No. 15.......................... $ (1.52) $ (1.99) $ (2.68) $ (1.52) $ 0.78
Effect of SAB No. 83.................... 0.71 0.92 1.22 0.69 (0.03)
------------ ------------- ------------ ------------ ------------
Per SAB No. 83........................ $ (0.81) $ (1.07) $ (1.46) $ (0.83) $ 0.75
------------ ------------- ------------ ------------ ------------
------------ ------------- ------------ ------------ ------------
Shares used in calculating per share
amounts:
Per APB No. 15.......................... 2,249,675 2,264,839 2,294,675 2,294,675 8,092,108
Effect of SAB No. 83.................... 1,955,930 1,940,766 1,910,930 1,910,930 239,825
------------ ------------- ------------ ------------ ------------
Per SAB No. 83........................ 4,205,605 4,205,605 4,205,605 4,205,605 8,331,933
------------ ------------- ------------ ------------ ------------
------------ ------------- ------------ ------------ ------------
</TABLE>

INCOME TAXES

The Company accounts for income taxes in accordance with the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("SFAS No. 109"). SFAS No. 109 requires that the Company recognize
deferred tax liabilities and assets for the expected future tax consequences of
events that have been included in the financial statements or tax returns. Under
this method, deferred tax liabilities and assets are determined on the basis of
the difference between the tax basis of assets and liabilities and their
respective financial reporting amounts ("temporary differences") at enacted tax
rates in effect for the years in which the temporary differences are expected to
reverse.

RISKS AND UNCERTAINTIES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Significant estimates relate to fixed assets and deferred
taxes. Actual results could differ from those estimates. See also Notes 1 and
7(c).

EMPLOYEE STOCK-BASED COMPENSATION

The accompanying financial position and results of operations of the Company
have been prepared in accordance with APB Opinion No. 25, "Accounting for Stock
Issued to Employees" ("APB No. 25"). Under APB No. 25, generally, no
compensation expense is recognized in the financial statements in

F-9
<PAGE>
PROGENICS PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(1997 INTERIM DATA IS UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
connection with the awarding of stock option grants to employees provided that,
as of the grant date, all terms associated with the award are fixed and the fair
value of the Company's stock, as of the grant date, is equal to or less than the
amount an employee must pay to acquire the stock as defined.

Disclosures required by Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("SFAS No. 123"), including pro forma
operating results had the Company prepared its financial statements in
accordance with the fair-value-based method of accounting for stock-based
compensation, have been included in Note 8.

IMPACT OF THE FUTURE ADOPTION OF RECENTLY ISSUED ACCOUNTING STANDARDS

3. FIXED ASSETS

Fixed assets, including amounts under capitalized lease obligations, consist
of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------- SEPTEMBER 30,
1995 1996 1997
------------- ------------ -------------
<S> <C> <C> <C>
(UNAUDITED)
Computer equipment.................................................. $ 286,425 $ 173,868 $ 191,808
Machinery and equipment............................................. 1,637,460 1,404,775 1,430,988
Furniture and fixtures.............................................. 190,008 138,415 138,415
Leasehold improvements.............................................. 29,702 29,702 29,702
------------- ------------ -------------
2,143,595 1,746,760 1,790,913
Less, accumulated depreciation and amortization..................... (1,177,477) (904,153) (1,142,646)
------------- ------------ -------------
$ 966,118 $ 842,607 $ 648,267
------------- ------------ -------------
------------- ------------ -------------
</TABLE>

F-10
<PAGE>
PROGENICS PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(1997 INTERIM DATA IS UNAUDITED)

4. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ SEPTEMBER 30,
1995 1996 1997
---------- ------------ -------------
<S> <C> <C> <C>
(UNAUDITED)
Accounts payable........................................................ $ 153,749 $ 701,472 $ 394,205
Fees payable to Scientific Advisory Board members....................... 116,250 60,000 4,500
Accrued payroll and related costs....................................... 56,235 53,874 49,410
Legal and accounting fees payable....................................... 156,506 937,493 121,833
Deferred lease liability, current portion............................... 4,349 33,005 24,987
---------- ------------ -------------
$ 487,089 $ 1,785,844 $ 594,935
---------- ------------ -------------
---------- ------------ -------------
</TABLE>

5. STOCKHOLDERS' EQUITY

On October 2, 1996, the Board of Directors (the "Board") of the Company
approved a three-for-four reverse stock split of common stock. All common stock
data, including per share data and weighted average number of shares outstanding
has been retroactively amended to reflect the stock split. The Company's
Certificate of Incorporation, as amended, authorizes the Company to issue
60,000,000 shares, of which 40,000,000 shares are designated as common shares,
par value $.0013 ("Common Stock"), and 20,000,000 shares are designated as
preferred shares, par value $.001. The Board has the authority to issue common
and preferred shares, in series, with rights and privileges determined by the
Board. 4,000,000 preferred shares are designated as Series A Preferred Stock
("Series A"), 2,500,000 shares are designated as Series B Preferred Stock
("Series B") and 3,750,000 shares are designated as Series C Preferred Stock
("Series C") (collectively the "Preferred Stock"). In the event that the Company
declares and pays a dividend, the Preferred Stock and Common Stock will receive
such dividend on a pro rata basis, as defined. Distributions in liquidation
shall be pro rated to the Preferred Stock and Common Stock up to specified
amounts, as defined and, thereafter, pro rata based upon the number of shares
outstanding on a Common Stock equivalent basis, as defined. Each share of
Preferred Stock is convertible, at the option of the holder, into .75 share of
Common Stock, adjusted in accordance with a formula should the Company sell
Preferred or Common Stock at a per share price below the original issuance price
paid by existing Preferred Stock shareholders ("Preferred Stockholder"), as
defined. Conversion is automatic at the earlier of (i) the closing of a public
offering of the Company's Common Stock in which certain defined aggregate
proceeds are raised and the per share selling price exceeds a defined level, or
(ii) the date the Preferred Stockholders have converted a defined number of
shares of Preferred Stock. The conversion rate is subject to anti-dilution
provisions, as defined. Preferred Stockholders are entitled to vote with Common
Stockholders as a single class. In addition, certain changes in the Company's
capital structure, as defined, which includes, under certain situations, the
issuance of additional series of Preferred or Common Stock (the "Proposal"),
require a separate vote by Preferred Stockholders. If less than a majority of
Preferred Stockholders vote in favor of the Proposal and if the Common
Stockholders approve the Proposal, the Company has the right to redeem all
outstanding shares of Preferred Stock at per share prices ranging from $3.74 to
$8.84, as defined. The Preferred Stock also is subject to transfer restrictions,
as defined, and the Company has the right of first refusal to acquire such
shares in the event the holder proposes to sell any or all shares to any person
other than a permitted transferee.

F-11
<PAGE>
PROGENICS PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(1997 INTERIM DATA IS UNAUDITED)

5. STOCKHOLDERS' EQUITY (CONTINUED)
During 1988, the Company entered into subscription agreements ("Agreements")
in connection with the sale of approximately 1,000,000 shares of its Common
Stock at a per share price of $1.07. The Agreements contain a provision whereby
investors have the right to receive additional shares of Common Stock, as
defined, in the event the Company sells Common Stock at a per share price below
$1.07. This right terminates upon any registered public offering, any sale of
the Company or its assets, or upon the Company selling an aggregate of 7,500,000
shares of Common Stock.

During 1989 and 1990, the Company raised $2,913,000 from the sale of
1,165,000 Units (the "A Units") in a private placement. Each A Unit consisted of
one share of Series A Preferred Stock and one warrant (the "A Warrant") which
entitled the holder to purchase one share of Series A Preferred Stock at a price
of $2.75 per share. During 1991, 1,143,000 A Warrants were exercised yielding
$3,143,000 to the Company. The remaining unexercised A Warrants have expired.

During 1992 and 1993, the Company raised $5,049,000, after expenses, from
the sale of 1,263,520 Units (the "B Units") in a private placement. Each B Unit
consisted of one share of Series B Preferred Stock and one warrant (the "B
Warrant") which, as amended, entitled the holder to purchase one share of Series
B Preferred Stock at a price of $5.00 per share. During 1994, 719,310 B Warrants
were exercised yielding $3,597,000 to the Company. The remaining unexercised B
Warrants have expired.

During 1995 and 1996, the Company raised $897,000 and $4,777,000, net of
expenses, from the sale of approximately 44,900 Units and 241,203 Units,
respectively, (the "C Units") in a private placement. In addition, during
December 1995, a stockholder converted a note payable into approximately 61,200
C Units (see Note 6). Each C Unit consists of four shares of Series C Preferred
Stock and one five-year warrant (the "C Warrant") which entitles the holder to
purchase one share of Series C Preferred Stock at $5.00 per share or, if
exercised subsequent to an initial public offering, as defined, .75 share of
Common Stock at $6.67 per share. The number of C Warrants and their exercise
price are subject to adjustment in the event the Company issues additional
shares of Common Stock at below defined per share prices. As of December 31,
1996, 347,249 C Warrants were issued and outstanding and fully exercisable.

6. NOTE PAYABLE--STOCKHOLDER

During 1995, the Company borrowed $1,200,000 under a promissory note from a
stockholder. The promissory note, as amended and restated, provided for interest
to accrue at a rate of 10% per annum. Interest and principal were payable upon
demand, but not before December 8, 1995. During December 1995, the promissory
note plus accrued interest of $23,671 were exchanged for approximately 61,200 C
Units (see Note 5).

F-12
<PAGE>
PROGENICS PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(1997 INTERIM DATA IS UNAUDITED)

7. COMMITMENTS AND CONTINGENCIES:

(A) OPERATING LEASES

The Company leases office and laboratory space under noncancelable lease
agreements expiring April 30, 1998 (the "Leases"). The Leases provide for
escalations of the minimum rent during the lease term as well as additional
charges based upon usage of certain utilities in excess of defined amounts
("Additional Utility Charges"). The Company recognizes rental expense from the
Leases on the straight-line basis. During 1994 and 1995, the Company recognized
rental expense in excess of amounts paid of approximately $18,000 and $24,000,
respectively, while during the year ended December 31, 1996, approximately
$4,000 of previously recognized rent expense, which had been included as a
deferred lease liability at December 31, 1995 was paid.

The Company also leases office equipment and an automobile under
noncancelable operating leases. The leases expire at various times through March
1998.

Future minimum annual payments under all operating lease agreements,
including the Leases, are as follows:

Rental expense totaled approximately $506,000, $657,000, $645,000, $481,000
and $484,000 (unaudited) for the years ended December 31, 1994, 1995 and 1996,
and the nine months ended September 30, 1996 and 1997, respectively. Additional
Utility Charges, as defined above, were not material for these periods.

(B) CAPITAL LEASES

The Company leases certain equipment under various noncancelable capital
lease agreements. The leases are for periods ranging from three to five years,
after which the Company: (i) either has the option or is required to purchase
the equipment at defined amounts or (ii) may extend the lease for up to one
additional year at defined monthly payments or (iii) is required to return the
equipment, as per the respective lease agreements.

F-13
<PAGE>
PROGENICS PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(1997 INTERIM DATA IS UNAUDITED)

7. COMMITMENTS AND CONTINGENCIES: (CONTINUED)
As of December 31, 1996 minimum annual payments under all capital leases,
including required payments to acquire leased equipment, are as follows:

<TABLE>
<CAPTION>
MINIMUM
YEARS ENDING ANNUAL
DECEMBER 31, PAYMENTS
--------------- ----------
<S> <C>
1997.............................................................................. $ 142,145
1998.............................................................................. 82,780
1999.............................................................................. 51,084
2000.............................................................................. 30,944
2001.............................................................................. 16,282
----------
323,235
Less, amounts representing interest............................................... 78,510
----------
Present value of net minimum capital lease payments............................... $ 244,725
----------
----------
</TABLE>

Leased equipment included as a component of fixed assets was approximately
$731,000 and $807,000 at December 31, 1995 and 1996, respectively; related
accumulated depreciation was approximately $242,000 and $383,000 for the same
respective periods.

(I) UNIVERSITIES

In March 1989, the Company (as licensee) entered into a worldwide licensing
agreement with Columbia University ("Columbia"). The license, as amended during
October 1996, provides the Company with the exclusive right to use certain
technology developed on behalf of Columbia. According to the terms of the
agreement, the Company is required to pay nonrefundable licensing fees
("Licensing Fees"), payable in installments by defined dates or, if earlier, as
certain milestones associated with product development ("Milestones") occur, as
defined, which include the manufacture and distribution of a product which uses
the licensed technology, at various times over the next eight years. The Company
expenses Licensing Fees when they become payable by the Company to Columbia. In
addition, the Company is required to remit royalties based upon the greater of
minimum royalties, as defined, or a percentage of net sales of products which
utilize the licensed technology and a portion of sublicensing income, as
defined. The licensing agreement may be terminated by Columbia under certain
circumstances which includes the Company's failure to achieve the Milestones;
however, Columbia shall not unreasonably withhold its consent to revisions to
the due dates for achieving the Milestones under certain circumstances. If not
terminated early, the agreement shall continue until expiration, lapse or
invalidation of Columbia's patents on the licensed technology. The Company has
the right to terminate the agreement at any time upon 90 days prior written
notice. The termination of the license could have a material adverse effect on
the business of the Company.

In January 1991, the Company (as licensee) also entered into a non-exclusive
licensing agreement with Stanford University whereby the Company has the
non-exclusive, non-transferable right to use certain technology owned by the
university. According to the terms of the agreement, the Company will be
required to remit royalties based upon the greater of minimum royalties, as
defined or various precentages

F-14
<PAGE>
PROGENICS PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(1997 INTERIM DATA IS UNAUDITED)

7. COMMITMENTS AND CONTINGENCIES: (CONTINUED)
of sales of products resulting from the use of licensed patent rights, as
defined. Royalties shall continue to be payable, irrespective of termination of
this license agreement, until such time as all sales of products which utilize
the licensed technology shall have ceased.

In September 1996, the Company (as licensee) entered into a licensing
agreement with The Regents of the University of California ("Regents").
According to the terms of the agreement, the Company is required to remit
royalties based upon the greater of minimum royalties or a percentage of product
sales and a portion of sublicensing income, as defined. The agreement can be
terminated by the Company upon 90 days notice or by Regents in the event the
Company fails to perform, which includes the achievement of certain defined
milestones; otherwise the agreement terminates upon the lapse of Regents' patent
regarding the licensed technology. Early termination of the agreement could have
a material adverse effect on the business of the Company. Although the Company
intends to use its best efforts to comply with the terms of the agreement, there
can be no assurances that the agreement will not be terminated.

(II) SLOAN-KETTERING INSTITUTE FOR CANCER RESEARCH

In November 1994, the Company (as licensee) entered into a worldwide
exclusive licensing agreement with Sloan-Kettering Institute for Cancer Research
("Sloan-Kettering") whereby the Company has the exclusive right to use certain
technology owned by Sloan-Kettering. Certain employees of Sloan-Kettering are
consultants to the Company (see Note 7(d)). According to the terms of the
agreement, the Company was required to pay a nonrefundable, noncreditable
licensing fee in installments. Commencing in 1995, the Company is required to
remit royalties based upon the greater of minimum royalties, as defined, or as a
percentage of sales of any licensed product, as defined ("Product Royalties"),
and sublicense income, as defined, earned under sublicenses granted by the
Company in accordance with this licensing agreement ("Sublicense Royalties"). In
the event that no Product Royalties or Sublicense Royalties are due in a given
calendar year, then a defined percentage of that year's minimum royalty will be
creditable against future Product Royalties or Sublicense Royalties due
Sloan-Kettering. The licensing agreement may be terminated by Sloan-Kettering in
the event that the Company fails to achieve certain defined objectives, which
include the manufacture and distribution of a product which uses the licensed
technology, over the next six years, or if the Company fails to satisfy certain
other contractual obligations ("Early Termination"); otherwise the agreement
shall terminate either upon the expiration or abandonment of Sloan-Kettering's
patents on the technology licensed, or 15 years from the date of first
commercial sale, as defined, whichever is later. With regard to Early
Termination, Sloan-Kettering shall not unreasonably withhold its consent to
revisions to the due dates for achieving the defined objectives under certain
circumstances. The Company has the right to terminate the agreement at any time
upon 90 days prior written notice ("Company Termination"). In the event of Early
Termination or Company Termination, all licensing rights under the agreement
would revert to Sloan-Kettering. Early Termination of the license could have a
material adverse effect on the business of the Company. Although the Company
intends to use its best efforts to comply with the terms of the license, there
can be no assurance that the licensing agreement will not be terminated.

(III) AQUILA BIOPHARMACEUTICALS, INC.

In August 1995, the Company (as licensee) entered into a license and supply
agreement (the "L&S Agreement") with Aquila Biopharmaceuticals, Inc. ("Aquila").
Under the terms of the L&S Agreement,

F-15
<PAGE>
PROGENICS PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(1997 INTERIM DATA IS UNAUDITED)

7. COMMITMENTS AND CONTINGENCIES: (CONTINUED)
the Company obtained a coexclusive license to use certain technology and a right
to purchase QS-21 adjuvant (the "Product") from Aquila for use in the Company's
research and development activities. In consideration for the license, the
Company paid a nonrefundable, noncreditable license fee and issued 45,000
restricted shares of the Company's Common Stock ("Restricted Shares") to Aquila.
The Restricted Shares are nontransferable with this restriction lapsing upon the
Company's achievement of certain milestones ("L&S Milestones"), as defined. In
the event that any one or more L&S Milestones do not occur, the underlying
Restricted Shares would be returned to the Company. The fair value of the
Restricted Shares, combined with the noncreditable license fee, were expensed
during 1995 as research and development. In addition, the Company will be
required to remit royalties based upon the net sales of products sold using the
licensed technology ("Licensed Products") and a defined percentage of any
sublicense fees and royalties payable to the Company with respect to Licensed
Products. The L&S Agreement may be terminated by Aquila in the event that the
Company fails to achieve certain defined objectives, which include the
manufacture and distribution of a Licensed Product, over the next seven years
("Early Termination"); otherwise the L&S Agreement shall terminate upon the
expiration of Aquila's patents on the technology licensed. With regard to Early
Termination, Aquila shall not unreasonably withhold its consent to revisions to
the due dates for achieving the L&S Milestones under certain circumstances. The
Company has the right to terminate the L&S Agreement at any time upon 90 days
prior written notice ("Company Termination"), as defined. In the event of Early
Termination or Company Termination, all licensing rights under the agreement
would revert to Aquila. Early termination of the L&S Agreement would have a
material adverse effect on the business of the Company. Although the Company
intends to use its best efforts to comply with the terms of the L&S Agreement,
there can be no assurance that the agreement will not be terminated.

(IV) BRISTOL-MYERS SQUIBB COMPANY

In July 1997, the Company and BMS entered into a Joint Development and
Master License Agreement (the "BMS License Agreement") under which BMS obtained
an exclusive worldwide license to manufacture, use and sell products resulting
from development of the Company's products related to certain therapeutic cancer
vaccines (the "Cancer Vaccines"). Upon execution of the agreement, BMS made cash
payments of $9.5 million, as reimbursement for expenses previously incurred by
the Company in the development of the Cancer Vaccines, $2.0 million as a
licensing fee and approximately $1.8 million as reimbursement of the Company's
budgeted clinical development costs for the Cancer Vaccines for the period April
15, 1997 through September 30, 1997. In addition, BMS is obligated to make
future payments as defined upon the achievement of specified milestones. BMS is
also required to fund continued development, clinical trials and regulatory
filings related to the Cancer Vaccines, and to pay royalties on any product
sales. The Company recognized as revenue the reimbursement of prior expenses and
the licensing fee upon receipt of the funds. The Company recognizes revenue for
the funding of budgeted clinical development costs as the related expenses are
incurred.

The BMS License Agreement and related sublicenses terminate at various
times, generally upon the expiration or abandonment of the related patents. The
agreements can also be terminated by either party upon a material uncured breach
by the other party. BMS has the further right to terminate the BMS License
Agreement (including its funding and milestone obligations) as to specified
licensed products at specified times.

F-16
<PAGE>
PROGENICS PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(1997 INTERIM DATA IS UNAUDITED)

7. COMMITMENTS AND CONTINGENCIES: (CONTINUED)
In connection with the above agreements, the Company has recognized research
and development expenses, including transaction costs, totaling approximately
$22,500, $382,500, $170,500, $22,500 and $1,831,000 (unaudited) for the years
ended December 31, 1994, 1995 and 1996 and the nine months ended September 30,
1996 and 1997, respectively. Such expenses include the fair value of shares of
Common Stock issued in connection with the above agreements. In addition, as of
September 30, 1997 remaining payments associated with milestones and defined
objectives with respect to the above agreements total $650,000 (unaudited) in
cash. Future annual minimum royalties under the licensing agreements described
in (i) through (iii) above are not significant.

(D) CONSULTING AGREEMENTS

As part of the Company's research and development efforts it enters into
consulting agreements with external scientific specialists ("Scientists"). These
consulting agreements contain varying terms and provisions which include fees to
be paid by the Company and services to be provided by the Scientists, some of
whom are members of the Company's Scientific Advisory Board. Certain Scientists
have purchased Common Stock or received stock options which are subject to
vesting provisions, as defined. The Company has recognized expenses with regards
to these consulting agreements totaling approximately $261,000, $245,000,
$268,000, $232,000 and $732,000 (unaudited) for the years ended December 31,
1994, 1995 and 1996 and the nine months ended September 30, 1996 and 1997,
respectively. Such expenses include the fair value of stock options.

8. STOCK OPTION PLANS:

The Company adopted three stock option plans, the Non-Qualified Stock Option
Plan, the Stock Option Plan and the Amended Stock Incentive Plan (individually
the "89 Plan," "93 Plan" and "96 Plan," respectively, or collectively, the
"Plans"). Under the 89 Plan, the 93 Plan and the 96 Plan, a maximum of 375,000,
750,000 and 750,000 shares of Common Stock, respectively, are available for
awards to employees, consultants, directors and other individuals who render
services to the Company (collectively, "Optionees"). The Plans contain certain
anti-dilution provisions in the event of a stock split, stock dividend or other
capital adjustment as defined. The 89 Plan and 93 Plan provide for the Board, or
the Compensation Committee ("Committee") of the Board, to grant stock options to
Optionees and to determine the exercise price, vesting term and expiration date.
The 96 Plan provides for the Board or Committee to grant to Optionees stock
options, stock appreciation rights, restricted stock performance awards or
phantom stock, as defined (collectively "Awards"). The Committee will also
determine the term and vesting of the Award and the Committee may in its
discretion accelerate the vesting of an Award at any time. Except as noted
below, the exercise price of outstanding awards was equal to the fair value of
the Company's common stock on the dates of grant. Under the 89 and 93 Plans, for
a period of ten years following the termination for any reason of an Optionee's
employment or active involvement with the Company, as determined by the Board,
the Company has the right to repurchase any or all shares of Common Stock held
by the Optionee and/or any or all of the vested but unexercised portion of any
option granted to such Optionee at a purchase price defined by the respective
Plans. Under the 93 Plan, that right will terminate upon the Company's
completion of a public offering of securities, as defined. The 89 Plan
terminated in April, 1994 and the 93 Plan will terminate in December, 2003;
however, any option granted before termination of the 89 Plan and the 93 Plan
will continue under the terms of the respective Plans.

F-17
<PAGE>
PROGENICS PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(1997 INTERIM DATA IS UNAUDITED)

8. STOCK OPTION PLANS: (CONTINUED)
The following table summarizes stock option information for the Plans as of
December 31, 1996:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
----------------------------------------------------- ------------------------------
RANGE OF WEIGHTED-AVERAGE
EXERCISE NUMBER REMAINING WEIGHTED-AVERAGE NUMBER WEIGHTED-AVERAGE
PRICES OUTSTANDING CONTRACTUAL LIFE EXERCISE PRICE EXERCISABLE EXERCISE PRICE
- -------------- ----------- --------------------- ----------------- ----------- -----------------
<S> <C> <C> <C> <C> <C>
$1.33 218,823 3.4 $ 1.33 182,449 $ 1.33
$3.67 - $5.33 730,913 6.9 $ 5.15 305,354 $ 4.93
$6.67 91,500 9.3 $ 6.67 750 $ 6.67
----------- -----------
1,041,236 488,553
----------- -----------
----------- -----------
</TABLE>

Transactions involving stock option award under the Plans during 1994, 1995,
and 1996 are summarized as follows:

<TABLE>
<CAPTION>
NUMBER WEIGHTED-AVERAGE
OF SHARES EXERCISE PRICE
---------- -----------------
<S> <C> <C>
Balance, December 31, 1993..................................... 429,495 $ 2.97

1994: Granted.................................................. 582,000 5.46
Cancelled................................................. (259) 1.33
----------
Balance outstanding, December 31, 1994.................... 1,011,236 4.40

1995: Granted.................................................. 4,500 6.67
Cancelled................................................. (45,000) 4.91
----------
Balance outstanding, December 31, 1995.................... 970,736 4.39

1996: Granted.................................................. 94,500 6.56
Cancelled................................................. (24,000) 5.33
----------
Balance outstanding, December 31, 1996.................... 1,041,236 4.57
----------
----------
</TABLE>

As of December 31, 1996, shares available for future grants under the 93
Plan and the 96 Plan amounted to 62,775 and 750,000, respectively.

On April 1, 1997, the exercise price of 216,225 options granted under the
Plans, having exercise prices in excess of $4.00 per share, was reduced to $4.00
per share, the fair value of the Company's Common Stock, as determined by the
Board of Directors on that date. All other aspects of the options, including
vesting schedules, remain unchanged. The above table does not reflect this
repricing.

Certain options issued under the 89 Plan entitle the holders to purchase
shares of Common Stock at a per share price of $1.33, which was less than the
estimated fair market value of the Common Stock, as determined by the Board, on
the date of grant. As a result, the Company is recognizing compensation expense
on a pro rata basis, over the respective options' vesting periods of three to
ten years, for the difference between the estimated fair market value of the
Common Stock on the date the option was granted and the exercise price. The
Company recognized compensation expense of approximately $33,000, $21,000,
$22,000, $17,000 and $16,000 (unaudited) and for the years ended December 31,
1994, 1995 and

F-18
<PAGE>
PROGENICS PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(1997 INTERIM DATA IS UNAUDITED)

8. STOCK OPTION PLANS: (CONTINUED)
1996 and the nine months ended September 30, 1996 and 1997, respectively, in
connection with these options.

During 1994, the Committee granted 582,000 stock options under the 93 Plan.
Included therein were 450,000 stock options ("94 Options") which entitle the
holders to purchase shares of Common Stock at a per share price of $5.33, which
was less than the estimated fair market value of the Common Stock, as determined
by the Board, on the date of grant. As a result, the Company is recognizing
compensation expense on a pro rata basis, over the respective options' vesting
periods of seven years, for the difference between the estimated fair market
value of the Common Stock on the date of the option was granted and the exercise
price. In addition, during 1996, the Committee granted 94,500 options under the
93 Plan. Included therein were 15,000 options issued to consultants
("Consultants' Options") that are compensatory. Accordingly, the Company is
recognizing compensation expense on a pro rata basis over the respective
options' vesting periods of four to five years. The Company recognized
compensation expense of approximately $86,000, $86,000, $107,000, $82,000 and
$74,000 (unaudited) for the years ended December 31, 1994, 1995 and 1996 and the
nine months ended September 30, 1996 and 1997, respectively, in connection with
the 94 Options and the Consultants' Options.

During 1993, the Company adopted an Executive Stock Option Plan (the
"Executive Plan"), under which a maximum of 750,000 shares of Common Stock,
adjusted for stock splits, stock dividends, and other capital adjustments, as
defined, are available for stock option awards. Awards issued under the
Executive Plan may qualify as incentive stock options ("ISOs"), as defined by
the Internal Revenue Code, or may be granted as non-qualified stock options.
Under the Executive Plan, the Board may award options to senior executive
employees (including officers who may be members of the Board) of the Company,
as defined. The Executive Plan will terminate on December 15, 2003; however, any
option outstanding as of the termination date shall remain outstanding until
such option expires in accordance with the terms of the respective grant.

During December 1993, the Board awarded a total of 750,000 stock options
under the Executive Plan to one officer, of which 664,774 were non-qualified
options ("NQOs") and 85,226 were ISOs. The NQOs and ISOs entitle the officer to
purchase an equal number of shares of Common Stock at prices of $5.33 and $5.87
per share, respectively, which represented the estimated fair market value and
110% of the estimated fair market value of the Company's Common Stock at the
date of grant, as determined by the Board of Directors. 375,000 of the options
vest pro rata over a period of five years, with the remaining 375,000 options
vesting in full on the tenth anniversary of the date of grant; however, vesting
with respect to the options vesting on the tenth anniversary will be accelerated
in the event of the effective date of an initial public offering of the
Company's Common Stock that yields certain gross per share amounts, as defined,
or immediately before the closing of an acquisition of the Company.

The following table summarizes stock option information for the Executive
Plan as of December 31, 1996:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------------------- ------------------------------
WEIGHTED-AVERAGE
NUMBER REMAINING WEIGHTED-AVERAGE NUMBER WEIGHTED-AVERAGE
RANGE OF EXERCISE PRICES OUTSTANDING CONTRACTUAL LIFE EXERCISE PRICE EXCERCISABLE EXERCISE PRICE
- -------------------------------- ----------- ----------------- ----------------- ----------- -----------------
<S> <C> <C> <C> <C> <C>
$5.33-$5.86 750,000 7.2 yrs $ 5.39 300,000 $ 5.45
</TABLE>

F-19
<PAGE>
PROGENICS PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(1997 INTERIM DATA IS UNAUDITED)

8. STOCK OPTION PLANS: (CONTINUED)
The following table summarizes the pro forma operating results of the Company
had compensation costs for the Plans and the Executive Plan been determined in
accordance with the fair value based method of accounting for stock based
compensation as prescribed by SFAS No. 123. Since option grants awarded during
1995 and 1996 vest over several years and additional awards are expected to be
issued in the future, the pro forma results shown below are not likely to be
representative of the effects on future years of the application of the fair
value based method.

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1995 1996
------------- -------------
<S> <C> <C>
Pro forma net loss.......................................... $ (4,505,130) $ (6,189,086)
------------- -------------
------------- -------------
Pro forma net loss per share................................ $ (1.75) $ (2.42)
------------- -------------
------------- -------------
</TABLE>

For the purpose of the above pro forma calculation, the fair value of each
option granted was estimated on the date of grant using the Black-Scholes option
pricing model. The weighted-average fair value of the options granted during
1995 and 1996 was $4.59 and $4.60, respectively. The following assumptions were
used in computing the fair value of option grants: expected volatility of 81%,
expected lives of 5 years after vesting; zero dividend yield and
weighted-average risk-free interest rates of 6.0% in 1995 and 1996.

9. EMPLOYEE SAVINGS PLAN

The Company, during 1993, adopted the provisions of the amended and restated
Progenics Pharmaceuticals 401(k) Plan (the "Amended Plan"). The terms of the
Amended Plan, among other things, allow eligible employees, as defined, to
participate in the Amended Plan by electing to contribute to the Amended Plan a
percentage of their compensation to be set aside to pay their future retirement
benefits, as defined. The Company has agreed to match 25% of up to the first 8%
of compensation that eligible employees contribute to the Amended Plan, as
defined. In addition, the Company may also make a discretionary contribution, as
defined, each year on behalf of all participants who are non-highly compensated
employees, as defined. The Company made matching contributions of approximately
$10,000, $12,000, $10,000, $8,000 and $7,000 (unaudited) to the Amended Plan for
the years ended December 31, 1994, 1995 and 1996 and the nine months ended
September 30, 1996 and 1997, respectively.

10. INCOME TAXES

There is no provision (benefit) for federal or state income taxes for the
years ended December 31, 1994, 1995 and 1996, and the nine months ended
September 30, 1996 since the Company has incurred operating losses and has
established a valuation allowance equal to the total deferred tax asset.

F-20
<PAGE>
PROGENICS PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(1997 INTERIM DATA IS UNAUDITED)

10. INCOME TAXES (CONTINUED)
The tax effect of temporary differences, net operating loss carry-forwards
and research and experimental tax credit carry-forwards as of December 31, 1995
and 1996 are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1995 1996
---------- -----------
<S> <C> <C>
Deferred tax assets and valuation allowance:
Net operating loss carry-forwards............... $4,350,960 $ 5,995,737
Fixed assets.................................... 133,225 165,219
Deferred charges................................ 2,666,772 3,491,832
Research and experimental tax credit
carry-forwards................................ 491,681 585,618
Valuation allowance............................. (7,642,638) (10,238,406)
---------- -----------
$ -- $ --
---------- -----------
---------- -----------
</TABLE>

As of December 31, 1996, the Company has available, for tax purposes, unused
net operating loss carry-forwards of approximately $14,482,000 which will expire
in various years from 2002 to 2011. The Company's research and experimental tax
credit carry-forwards expire in various years from 2003 to 2011. Future
ownership changes may limit the future utilization of these net operating loss
and research and experimental tax credit carry-forwards as defined by the
federal tax code.

The tax provision for the nine months ended September 30, 1997 has been
computed based upon the prevailing federal and state tax rates, offset by the
utilization of the net operating loss carryforwards to the extent permitted by
the alternative minimum tax rules of the federal and state tax codes.

11. LINE OF CREDIT

During March 1997 the Company obtained a line of credit ("Line") from a
bank. The terms of the Line provide for the Company to borrow up to $2 million.
Outstanding borrowings accrue interest, payable monthly, at the bank's prime
rate of interest. The Line expired on July 31, 1997. The repayment of the Line
was guaranteed by two affiliates of a stockholder of the Company ("Affiliates").

In consideration for the guarantee noted above, the Company issued 50,000
warrants (the "March Warrants") to the Affiliates. Such warrants vest
immediately. The March Warrants expire after five years and the exercise price
will be determined on or before December 31, 1997, based upon the occurrence of
the following events: (i) the Company completes an initial public offering of
its common stock ("IPO"); (ii) the Company closes a corporate partnership
agreement as defined; or (iii) the Company is acquired (collectively "Events").
In the event the Company completes an IPO or is acquired on or before December
31, 1997, the exercise price of the March Warrants will equal 50% of the IPO
price per share or 50% of the price paid per share to acquire the Company. If
only the corporate partnership occurs, the exercise price will be $3.00 per
share. The corporate partnership agreement was consummated in July 1997. The
Affiliates received an additional 10,000 warrants as the guarantee was
outstanding for 90 days and an additional 10,000 warrants as the guarantee was
outstanding for an additional 30 days beyond the initial 90 days. The terms of
such warrants were identical to the March Warrants. The line was fully repaid in
July 1997. The Company recognized the fair value of the March Warrants, and the
first issue of 10,000 warrants, as an expense in the six month period ended June
30, 1997. The fair value of the remaining 10,000 warrants was expensed in the
quarter ending September 30, 1997.

F-21
<PAGE>
PROGENICS PHARMACEUTICALS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(1997 INTERIM DATA IS UNAUDITED)

12. NOTE TO INTERIM FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1997 (UNAUDITED)

BASIS OF PRESENTATION

The interim financial statements as of and for the nine months ended
September 30, 1997 are unaudited and reflect adjustments, consisting only of
normal recurring accruals, which are, in the opinion of the Company's
management, necessary for a fair presentation of the financial position and
results of operations for the periods presented. Operating results for any
interim period are not necessarily indicative of the results for the full year.

STOCK OPTION PLANS

During the nine months ended September 30, 1997, 73,175 and 556,500 options
to purchase shares of the Company's common stock at an exercise price of $4.00
per share were granted under the 93 Plan and 96 Plan, respectively. During the
same period, 27,000 options were exercised and 23,906 options were cancelled
under the 89 Plan and 93 Plan, respectively.

F-22
<PAGE>
PRO 542 IS PROGENICS' THERAPEUTIC PRODUCT CANDIDATE DESIGNED TO NEUTRALIZE HIV.
PRO 542 COMMENCED PHASE I/II CLINCIAL TRIALS IN 1997.

[Diagram depicting PRO 542, Progenics' therapeutic
product candidate designed to neutralize HIV]

PRO 367 IS PROGENICS' THERAPEUTIC PRODUCT CANDIDATE DESIGNED TO DESTROY
HIV-INFECTED CELLS. THE COMPANY EXPECTS TO COMMENCE PHASE I/II CLINICAL TRIALS
OF PRO 367 IN THE FIRST HALF OF 1998.

[Diagram depicting PRO 367, Progenics' therapeutic
product candidate designed to destroy HIV-infected cells]
<PAGE>
- ------------------------------------------------
------------------------------------------------
- ------------------------------------------------
------------------------------------------------

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF ANY OFFER TO BUY BY ANYONE IN ANY JURISDICTION IN
WHICH SUCH OFFER TO SELL OR A SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE
PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE AS OF WHICH INFORMATION IS FURNISHED.
-------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Prospectus Summary............................................ 3
Risk Factors.................................................. 7
Use of Proceeds............................................... 19
Dividend Policy............................................... 19
Capitalization................................................ 20
Dilution...................................................... 21
Selected Financial Data....................................... 22
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 23
Business...................................................... 27
Management.................................................... 48
Certain Transactions.......................................... 57
Principal Stockholders........................................ 58
Description of Capital Stock.................................. 60
Shares Eligible for Future Sale............................... 62
Underwriting.................................................. 64
Legal Matters................................................. 66
Experts....................................................... 66
Additional Information........................................ 66
Index to Financial Statements................................. F-1
</TABLE>

-------------------

UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

2,000,000 SHARES

[COMPANY LOGO]
PROGENICS
PHARMACEUTICALS, INC.

COMMON STOCK

--------------

PROSPECTUS

--------------

OPPENHEIMER & CO., INC.
BANCAMERICA ROBERTSON STEPHENS
VECTOR SECURITIES INTERNATIONAL, INC.
, 1997

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