2139

Management's Report on Internal Control Over Financial Reporting

~~Item 14. Principal Accounting Fees~~Internal control over financial reporting is a process designed by, or under the supervision of, our CEO and ~~Services~~PFO and effected by our Board, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our management is responsible for establishing and maintaining adequate internal control over financial reporting which includes policies and procedures that:

·	Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of assets;

·	Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorization of management and directors; and

·	Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial statements.

~~Fees Billed for Services Rendered~~Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management has used the framework set forth in the report entitled Internal Control – Integrated Framework issued by ~~Current and Former Accounting Firms~~

the Committee of Sponsoring Organizations of the Treadway Commission (1992 framework), known as COSO, to evaluate the effectiveness of our internal control over financial reporting. Management has concluded that our internal control over financial reporting was effective as of December 31, 2013. The ~~following table discloses the fees that~~effectiveness of our internal control over financial reporting has been audited by Ernst & Young LLP, ~~(E&Y), our~~an independent registered public accounting firm, ~~for~~as of December 31, 2013 ~~billed or~~as stated in their report which is expected to bill for professional services rendered to us for 2012, and fees that our 2011 accountant, PricewaterhouseCoopers LLP (PwC), billed for professional services rendered to us for 2011 and 2012:provided below.

2012 2011
Audit Fees⁽¹⁾
$ 464,000 $ 587,204
Audit Related Fees - 40,650
⁽²⁾
Tax Fees⁽³⁾
15,000 108,000
All Other Fees⁽⁴⁾
4,075 1,933

~~____________~~

~~(1)~~

In connection with (i) the audit of our annual financial statements, including attestation services required under section 404 of the Sarbanes-Oxley Act of 2002 and reviews of quarterly interim financial statements ($319,000 by E&Y and $10,000 by PwC in 2012; $561,204 by PwC in 2011), (ii) filing of registration statements with the SEC ($10,000 by E&Y and $5,000 by PwC in 2012; $20,000 by PwC in 2011), (iii) statutory non-U.S. audit fees ($6,000 by PwC in 2011), and (iv) the Company's 2012 follow-on public offering ($60,000 by E&Y and $60,000 by PwC).

~~(2)~~

~~In connection with accounting consultations concerning financial accounting and reporting matters by PwC.~~

~~(3)~~

~~In connection with tax return preparation ($15,000 by E&Y in 2012 and $38,000 by PwC in 2011), and tax advice and consultations regarding IRC Section 382 analysis ($70,000 by PwC in 2011).~~

~~(4)~~

~~For proprietary internet-based services ($2,142 by E&Y and $1,933 by PwC in 2012; $1,933 by PwC in 2011) .~~

~~Pre-Approval of Audit and Non-Audit Services by the Audit Committee~~

Audit and non-audit services performed for the Company by its independent registered public accounting firm must be pre-approved by the Audit Committee in order to assure that the provision of such services does not impair the accounting firm's independence. In April of each year, the Committee reviews a schedule prepared by the accounting firm of certain types of services to be provided for that year along with projected fees. The Committee reviews the schedule and provides general pre-approval of those types of services. The fee amounts are updated to the extent necessary at regularly scheduled meetings of the Committee. Any additional service proposed to be provided after the annual pre-approval process requires specific pre-approval by the Audit Committee. The Committee may delegate either general or specific pre-approval authority to its chair or any other member(s). The member(s) to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the Committee at its next meeting. The Committee approved all services described above during 2012 and 2011.

2240

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of Progenics Pharmaceuticals, Inc.

We have audited Progenics Pharmaceuticals, Inc.'s internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 framework) (the COSO criteria). Progenics Pharmaceuticals, Inc.'s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Progenics Pharmaceuticals, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Progenics Pharmaceuticals, Inc. as of December 31, 2013 and 2012, and the related consolidated statements of operations, comprehensive (loss) income, stockholders' equity, and cash flows for the years then ended of Progenics Pharmaceuticals, Inc. and our report dated March 13, 2014 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Hartford, Connecticut

March 13, 2014

Item 9B. Other Information

None.

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PART III

The information required by the Form 10-K Items listed in the following table will be included under the respective headings specified for such Items in our definitive proxy statement for our 2014 Annual Meeting of Stockholders to be filed with the SEC:

Item of Form 10-K		Location in 2014 Proxy Statement

Item 10.	Directors, Executive Officers and Corporate Governance	Election of Directors. Executive and Other Officers. Corporate Governance. Code of Business Ethics and Conduct.* Section 16(a) Beneficial Ownership Reporting and Compliance. *The full text of our Code of Business Ethics and Conduct is available on our website (www.progenics.com).

Item 11.	Executive Compensation	Executive Compensation. Compensation Committee Report. Compensation Committee Interlocks and Insider Participation.

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	Equity Compensation Plan Information. Security Ownership of Certain Beneficial Owners and Management.

Item 13.	Certain Relationships and Related Transactions, and Director Independence	Certain Relationships and Related Transactions. Affirmative Determinations Regarding Director Independence and Other Matters.

Item 14.

Principal Accounting Fees and Services

Fees Billed for Services Rendered by our Independent Registered Public Accounting Firm.

Pre-approval of Audit and Non-Audit Services by the Audit Committee.

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PART IV

Item 15. Exhibits, Financial Statement Schedules

The following documents or the portions thereof indicated are filed as a part of this Annual Report.

(a)

Documents filed as part of this Annual Report:

Consolidated Financial Statements of Progenics Pharmaceuticals, Inc.:

Reports of Independent Registered Public Accounting Firms

Consolidated Balance Sheets at December 31, 2013 and 2012

Consolidated Statements of Operations for the years ended December 31, 2013, 2012 and 2011

Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, 2013, 2012 and 2011

Consolidated Statements of Stockholders' Equity for the years ended December 31, 2013, 2012 and 2011

Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012 and 2011

Notes to Consolidated Financial Statements

(b)

Financial Statement Schedules

Schedule II – Valuation and Qualifying Accounts

Financial statement schedules referred to in Item 12-01 of Regulation S-X and not listed above are inapplicable and therefore have been omitted.

(c)

Item 601 ~~Exhibits:~~Exhibits

~~Those exhibits~~Exhibits required to be filed by Item 601 of Regulation S-K are listed in the Exhibit Index immediately following the signature page ~~hereof~~of this Report and ~~preceding the exhibits filed herewith, which is~~ incorporated herein by ~~this~~ reference.

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PROGENICS PHARMACEUTICALS, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Reports of Independent Registered Public Accounting Firms	F-2
Financial Statements:
Consolidated Balance Sheets at December 31, 2013 and 2012	F-3
Consolidated Statements of Operations for the years ended December 31, 2013, 2012 and 2011	F-4
Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, 2013, 2012 and 2011	F-5
Consolidated Statements of Stockholders' Equity for the years ended December 31, 2013, 2012 and 2011	F-6
Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012 and 2011	F-7
Notes to Consolidated Financial Statements	F-8

F-1

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of Progenics Pharmaceuticals, Inc.

We have audited the accompanying consolidated balance sheets of Progenics Pharmaceuticals, Inc. as of December 31, 2013 and 2012, and the related consolidated statements of operations, comprehensive (loss) income, stockholders' equity, and cash flows for the years then ended. Our audits also included the financial statement schedule listed in the Index at Item 15(b). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 consolidated financial position of Progenics Pharmaceuticals, Inc. at December 31, 2013 and 2012, and the consolidated results of its operations and its cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Progenics Pharmaceuticals, Inc.'s internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 framework) and our report dated March 13, 2014 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Hartford, Connecticut

March 13, 2014

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

In our opinion, the consolidated statements of operations, comprehensive income (loss), of stockholders' equity and of cash flows for the year ended December 31, 2011 present fairly, in all material respects, the results of operations and cash flows of Progenics Pharmaceuticals, Inc. and its subsidiaries for the year ended December 31, 2011, in conformity with accounting principles generally accepted in the United States of America. 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 audit. We conducted our audit of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

New York, New York

March 15, 2012

F-2

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PROGENICS PHARMACEUTICALS, INC.

CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except for par value and share amounts)

	December 31,
	2012			2012
Assets
Current assets:
Cash and cash equivalents	$	65,860		$	58,838
Accounts receivable, net		2,879			6,937
Other current assets		1,943			1,692
Total current assets		70,682			67,467
Auction rate securities		2,208			3,240
Fixed assets, at cost, net of accumulated depreciation and amortization		2,413			3,399
Intangible assets, net (Note 3)		31,379			-
Goodwill		7,702			-
Deferred tax assets – long term		-			2,052
Other assets		157			150
Total assets	$	114,541		$	76,308

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses	$	6,512		$	5,640
Deferred tax liability - current		-			2,069
Deferred revenue - current		-			838
Other current liabilities		115			115
Total current liabilities		6,627			8,662
Contingent consideration liability		15,700			-
Deferred tax liability - long term		12,321			-
Other liabilities		914			1,078
Total liabilities		35,562			9,740
Commitments and contingencies (Note 10)
Stockholders' equity:
Preferred stock, $.001 par value; 20,000,000 shares authorized; issued and outstanding – none		-			-
Common stock, $.0013 par value; shares authorized - 160,000,000 in 2013 and 80,000,000 in 2012; issued – 61,025,404 in 2013 and 46,765,472 in 2012		79			61
Additional paid-in capital		548,510			493,613
Accumulated deficit		(466,677	)		(424,105	)
Accumulated other comprehensive loss		(192	)		(260	)
Treasury stock, at cost (200,000 shares in 2013 and 2012)		(2,741	)		(2,741	)
Total stockholders' equity		78,979			66,568
Total liabilities and stockholders' equity	$	114,541		$	76,308

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

F-3

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PROGENICS PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands, except net (loss) income per share)

	Years Ended December 31,
	2013			2012			2011
Revenues:
Royalty income	$	5,923		$	4,963		$	3,046
Collaboration revenue		1,595			8,525			76,764
Research grants		275			488			4,810
Other revenues		69			72			176
Total revenues		7,862			14,048			84,796

Expenses:
Research and development		33,903			31,840			53,183
License fees – research and development		567			1,170			578
Royalty expense		624			499			405
General and administrative		14,809			14,706			18,248
Depreciation and amortization		939			1,324			2,066
Total expenses		50,842			49,539			74,480

Operating (loss) income		(42,980	)		(35,491	)		10,316

Other income:
Interest income		46			60			65
Total other income		46			60			65

Net (loss) income before provision for income taxes		(42,934	)		(35,431	)		10,381

Income tax benefit		362			-			-

Net (loss) income	$	(42,572	)	$	(35,431	)	$	10,381

Net (loss) income per share - basic	$	(0.76	)	$	(1.02	)	$	0.31
Weighted-average shares - basic		55,798			34,754			33,375

Net (loss) income per share - diluted	$	(0.76	)	$	(1.02	)	$	0.31
Weighted-average shares - diluted		55,798			34,754			33,494

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

F-4

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PROGENICS PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(amounts in thousands)

	Years Ended December 31,
	2013			2012			2011
Net (loss) income	$	(42,572	)	$	(35,431	)	$	10,381
Other comprehensive income:
Net change in unrealized loss on auction rate securities		68			8			24
Total other comprehensive income		68			8			24
Comprehensive (loss) income	$	(42,504	)	$	(35,423	)	$	10,405

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

F-5

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PROGENICS PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the Years Ended December 31, 2013, 2012 and 2011

(amounts in thousands)

	Common Stock					Additional					Accumulated Other			Treasury Stock
	Shares			Amount		Paid-In Capital		Accumulated Deficit			Comprehensive Income (Loss)			Shares			Amount			Total
Balance at December 31, 2010		33,326		$	43	$	453,353	$	(399,055	)	$	(292	)		(200	)	$	(2,741	)	$	51,308
Net loss		-			-		-		10,381			-			-			-			10,381
Other comprehensive income		-			-		-		-			24			-			-			24
Compensation expenses for share-based payment arrangements		-			-		6,362		-			-			-			-			6,362
Forfeitures of restricted stock		(38	)		-		-		-			-			-			-			-
Sale of common stock under employee stock purchase plans and exercise of stock options		758			1		3,725		-			-			-			-			3,726
Balance at December 31, 2011		34,046			44		463,440		(388,674	)		(268	)		(200	)		(2,741	)		71,801
Net income		-			-		-		(35,431	)		-			-			-			(35,431	)
Other comprehensive income		-			-		-		-			8			-			-			8
Compensation expenses for share-based payment arrangements		-			-		6,536		-			-			-			-			6,536
Sale of common stock in public offering, net of underwriting discounts and commissions ($1,518) and offering expenses ($434)		12,650			17		23,331		-			-			-			-			23,348
Forfeitures of restricted stock		(6	)		-		-		-			-			-			-			-
Sale of common stock under employee stock purchase plans and exercise of stock options		75			-		306		-			-			-			-			306
Balance at December 31, 2012		46,765			61		493,613		(424,105	)		(260	)		(200	)		(2,741	)		66,568
Net loss		-			-		-		(42,572	)		-			-			-			(42,572	)
Other comprehensive income		-			-		-		-			68			-			-			68
Compensation expenses for share-based payment arrangements		-			-		3,546		-			-			-			-			3,546
Acquisition of subsidiary, net of issuance costs		4,472			6		11,214		-			-			-			-			11,220
Sale of common stock in public offering, net of underwriting discounts and commissions ($2,581) and offering expenses ($351)		9,775			12		40,066		-			-			-			-			40,078
Forfeitures of restricted stock		(1	)		-		-		-			-			-			-			-
Exercise of stock options		14			-		71		-			-			-			-			71
Balance at December 31, 2013		61,025		$	79	$	548,510	$	(466,677	)	$	(192	)		(200	)	$	(2,741	)	$	78,979

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

F-6

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PROGENICS PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in thousands)

	Years Ended December 31,
	2013			2012			2011
Cash flows from operating activities:
Net (loss) income	$	(42,572	)	$	(35,431	)	$	10,381
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization		939			1,324			2,066
Losses (gains) on sales of fixed assets		204			(327	)		-
Intangible impairment charge		919			-			-
Deferred income tax		(362	)		-			-
Change in contingent consideration liability		(200	)		-			-
Expenses for share-based compensation awards		3,546			6,536			6,362
Changes in assets and liabilities:
Decrease (increase) in accounts receivable		4,114			(5,421	)		767
Decrease (increase) in other current assets		336			(754	)		882
Decrease (increase) in deferred tax and other assets		2,044			(2,002	)		1,050
(Decrease) in accounts payable and accrued expenses		(1,956	)		(691	)		(3,352	)
(Decrease) increase in deferred revenue – current		(886	)		634			204
(Decrease) increase in deferred tax and other current liabilities		(2,069	)		2,069			3
(Decrease) increase in deferred revenue - long term		-			(162	)		162
(Decrease) in other liabilities		(164	)		(419	)		(138	)
Net cash (used in) provided by operating activities		(36,107	)		(34,644	)		18,387
Cash flows from investing activities:
Cash acquired in acquisition of subsidiary		1,888			-			-
Capital expenditures		(137	)		(767	)		(226	)
Proceeds from sales of fixed assets		174			390			-
Proceeds from redemption of auction rate securities		1,100			100			300
Net cash provided by (used in) investing activities		3,025			(277	)		74
Cash flows from financing activities:
Equity issuance costs in connection with acquisition of subsidiary		(45	)		-			-
Proceeds from public offering of common stock, net of underwriting discounts and commissions and offering expenses		40,078			23,348			-
Proceeds from the exercise of stock options and sale of common stock under the employee stock purchase plans		71			306			3,726
Net cash provided by financing activities		40,104			23,654			3,726
Net increase (decrease) in cash and cash equivalents		7,022			(11,267	)		22,187
Cash and cash equivalents at beginning of period		58,838			70,105			47,918
Cash and cash equivalents at end of period	$	65,860		$	58,838		$	70,105

Supplemental disclosure of cash flow information:
Contingent consideration liability	$	15,700		$	-		$	-
Stock acquisition consideration	$	11,265		$	-		$	-

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

F-7

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PROGENICS PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(amounts in thousands, except per share amounts or as otherwise noted)

1. Organization and Business

Progenics Pharmaceuticals, Inc. ("Progenics," "we" or "us") develops innovative medicines for oncology. Our clinical development efforts center on late-stage oncology assets. We are conducting phase 2 clinical trials of two product candidates for prostate cancer: our therapeutic candidate, PSMA ADC, a fully human monoclonal antibody-drug conjugate (ADC), and 1404 (trofolastat), an imaging agent candidate, and resuming a pivotal phase 2 clinical trial of Azedra™, our ultra-orphan radiotherapy candidate for pheochromocytoma. We have also decided to move forward MIP-1095, a compound originally developed by Molecular Insight, into clinical development, and expect to file an IND application in the U.S. later this year.

We have licensed our first commercial drug, Relistor^® (methylnaltrexone bromide) subcutaneous injection for the treatment of opioid induced constipation (OIC), to Salix Pharmaceuticals, Inc., and have partnered other internally-developed or acquired compounds and technologies with third parties. We continue to consider opportunities for strategic collaborations, out-licenses and other arrangements with biopharmaceutical companies involving proprietary research, development and clinical programs, and may in the future also in-license or acquire additional oncology compounds and/or programs.

Our current principal sources of revenue from operations are royalty, commercialization milestone and revenue-sharing payments from Salix's Relistor operations. Royalty and milestone payments from Relistor depend on success in development and commercialization, which is dependent on many factors, such as Salix's efforts, decisions by the FDA and other regulatory bodies such as the July 2012 Complete Response Letter in respect of the Relistor chronic pain sNDA, competition from drugs for the same or similar indications, and the outcome of clinical and other testing of Relistor.

We fund our operations to a significant extent from capital-raising. During 2013, we completed an underwritten public offering of 9.8 million shares of common stock at a public offering price of $4.40 per share, resulting in net proceeds of approximately $40.1 million, and in early 2014 sold an additional 8.75 million shares at $4.60 per share for net proceeds of approximately $37.5 million.

Progenics commenced principal operations in 1988, became publicly traded in 1997 and throughout has been engaged primarily in research and development efforts, establishing corporate collaborations and related activities. Certain of our intellectual property rights are held by wholly owned subsidiaries. All of our operations are conducted at our facilities in Tarrytown, New York. We operate under a single research and development segment.

Funding and Financial Matters. At December 31, 2013, we held $65.9 million in cash and cash equivalents, an increase of $7.1 million from $58.8 million at December 31, 2012. We expect that this amount, together with the additional 2014 public offering proceeds, will be sufficient to fund operations as currently anticipated beyond one year. We may require additional funding in the future, and if we are unable to conclude favorable collaboration, license, asset sale, capital raising or other financing transactions, we will have to reduce, delay or eliminate spending on some current operations, and/or reduce salary and other overhead expenses, to extend our remaining operations. We expect to incur operating losses during the near term. At December 31, 2013, cash, cash equivalents and auction rate securities increased $6.0 million to $68.1 million from $62.1 million at December 31, 2012.

2. Acquisition of Molecular Insight Pharmaceuticals, Inc.

Molecular Insight's operations from January 18, 2013, the date we acquired this subsidiary which significantly expanded the Company's focus on PSMA as an oncology target while broadening the oncology pipeline, are included in the Consolidated Financial Statements. The acquisition consideration included 4,566,210 shares (500,000 of which were placed in an escrow expiring in April 2014) of Progenics common stock in a private transaction not taxable to Progenics. (The closing NASDAQ market price of Progenics' freely transferable common shares on January 18, 2013 was $2.83 per share.) Under the acquisition agreement, Progenics also agreed to pay to the stockholders potential milestones, in cash or Progenics stock at Progenics' option, of up to $23 million contingent upon achieving specified commercialization events and up to $70 million contingent upon achieving specified sales targets relating to all MIP products. Of the 500,000 placed in escrow, shares have been returned to Progenics to date pursuant to financial adjustment provisions of the agreement.

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PROGENICS PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

(amounts in thousands, except per share amounts or as otherwise noted)

The acquisition was accounted for using the acquisition method of accounting, under which assets and liabilities of the acquired entity are recorded at their respective fair values as of the acquisition date (estimated as described below) and added to those of the acquiring entity. The difference between the estimated fair value of the acquisition consideration paid and fair value of the identifiable net assets represents potential future economic benefits arising from combining Progenics and MIP, taking into account a deferred tax liability related to in process research and development (IPR&D) intangible assets, and has been recorded as goodwill. The results of operations of MIP's business, the estimated fair market values of the assets acquired and liabilities assumed, and goodwill are included in our consolidated financial statements since the date of the acquisition.

During the year ended December 31, 2013, the Company incurred $790 in transaction costs related to the acquisition, which primarily consisted of legal, accounting and valuation-related expenses and reduced additional paid-in capital in the first quarter of 2013 by $45 for acquisition-related equity issuance costs. The transaction costs were recorded in general and administrative expenses in the accompanying consolidated statements of operations. During the year ended December 31, 2013, MIP's business contributed $884 of revenues and $11,379 of net loss.

Purchase Price Allocation: We have accounted for the Molecular Insight acquisition by allocating our estimate of the fair market value of the consideration we paid to the fair values of the assets acquired and liabilities assumed at the effective date of the acquisition, estimated using the valuation models summarized below. Given the uniqueness of and uncertainties attendant to the assets and liabilities, the derived values do not reflect actual transactions or quoted prices. Acquired intangible assets, including goodwill, are not deductible for tax purposes.

	Amount
Consideration:
Progenics common stock consideration paid	$	11,265
Contingent consideration (pursuant to future milestone obligations)		15,900
Total consideration		27,165

Tangible assets acquired and liabilities assumed:
Cash and cash equivalents		1,888
Accounts receivable		56
Other current assets		529
Fixed assets		249
Accounts payable, accrued expenses and deferred revenue - current		(2,876	)
Deferred tax liability – long term		(12,683	)
Total tangible assets acquired and liabilities assumed		(12,837	)

Intangible assets – in process research and development		32,300
Total tangible and intangible assets acquired and liabilities assumed		19,463

Goodwill	$	7,702

Intangible assets and goodwill: In connection with the acquisition of Molecular Insight, in process research and development and goodwill are initially measured at estimated fair value and capitalized as an intangible asset. We perform an impairment test for these intangibles annually in the fourth quarter, unless impairment indicators require an earlier evaluation. Upon and subject to commercialization of the Company's product candidates, the IPR&D will be amortized over its estimated useful life.

We valued as intangible assets the in process research and development projects acquired as follows:

(i) 1404, an imaging agent in phase 2 development, at an estimated fair value of $23.2 million resulting from a probability adjusted discounted cash flow model which includes estimates of significant cash inflows beginning in 2017 and a 18% discount rate;

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(amounts in thousands, except per share amounts or as otherwise noted)

(ii) Azedra, a small molecule candidate for the treatment of pheochromocytoma and paraganglioma in phase 2b development, and for neuroblastoma in phase 2a development, at an estimated fair value of $4.9 million resulting from a probability adjusted discounted cash flow model which includes estimates of significant cash inflows beginning in 2017 and a 15% discount rate;

(iii) small molecule candidate MIP-1095, in preclinical development for the treatment of prostate cancer, at an estimated fair value of $2.7 million resulting from a probability adjusted discounted cash flow model which includes estimates of significant cash inflows beginning in 2021 and a 20% discount rate; and

(iv) Onalta, a drug candidate in phase 2 development for the treatment of metastatic carcinoid and pancreatic neuroendocrine tumors, at an estimated fair value of $1.5 million resulting from a probability adjusted discounted cash flow model which includes estimates of significant cash inflows beginning in 2014 and a 15% discount rate.

On the acquisition date, we recorded a contingent consideration liability at an estimated fair value of $15.9 million resulting from probability adjusted discounted cash flow and Monte Carlo simulation models which include estimates of significant milestone payments to former MIP stockholders under the acquisition agreement ranging from 2016 to 2022 and risk adjusted discount rates ranging from 10% to 12.5%.

Pro forma financial information (unaudited): The following unaudited pro forma information presents the results of operations of the combined companies for the periods indicated as if the acquisition had been consummated on January 1, 2012, combining the respective historical results of Progenics and MIP for each period. Non-recurring transaction expenses of $790, incurred in the year ended December 31, 2013, are reflected in the pro forma information as if these were incurred in the corresponding 2012 period, due to the pro forma assumption of January 1, 2012 as the date of the acquisition consummation.

	Three Months Ended December 31,						Year Ended December 31,
	2013			2012			2013			2012
Revenues	$	2,968		$	12,801		$	7,867		$	18,235
Net loss		(8,551	)		(3,458	)		(43,736	)		(57,877	)
Basic and diluted loss per share		(0.14	)		(0.08	)		(0.78	)		(1.48	)

3. Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial statements have been prepared on the basis of accounting principles generally accepted in the U.S. (GAAP). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. On an ongoing basis, the Company evaluates its estimates, including but not limited to those related to collectability of receivables, intangible assets and contingencies. As additional information becomes available or actual amounts become determinable, the recorded estimates are revised and reflected in the operating results. Actual results could differ from those estimates.

Consolidation

The consolidated financial statements include the accounts of Progenics and PSMA LLC, as of and for the years ended December 31, 2013, 2012 and 2011 and Molecular from January 18, 2013, the date we acquired this subsidiary. Inter-company transactions have been eliminated in consolidation.

Revenue Recognition

We recognize revenue from all sources based on the provisions of the SEC's Staff Accounting Bulletin (SAB) No. 104 (SAB 104) and ASC 605 Revenue Recognition. Under ASC 605, delivered items are separate units of accounting, provided (i) the delivered items have value to a collaborator on a stand-alone basis, and (ii) if the arrangement includes a general right of return relative to the delivered item, delivery or performance of the undelivered items is considered probable and substantially in our control. A separate update to ASC 605 provides guidance on the criteria that should be met when determining whether the milestone method of revenue recognition is appropriate.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

(amounts in thousands, except per share amounts or as otherwise noted)

If we are involved in a steering or other committee as part of a multiple-deliverable arrangement, we assess whether our involvement constitutes a performance obligation or a right to participate. For those committees that are deemed obligations, we will evaluate our participation along with other obligations in the arrangement and will attribute revenue to our participation through the period of our committee responsibilities. We recognize revenue for payments that are contingent upon performance solely by our collaborator immediately upon the achievement of the defined event if we have no related performance obligations. Reimbursement of costs is recognized as revenue provided the provisions of ASC 605 are met, the amounts are determinable and collection of the related receivable is reasonably assured.

Amounts received prior to satisfying the above revenue recognition criteria are recorded as deferred revenue. Amounts not expected to be recognized within one year of the balance sheet date are classified as long-term. The estimate of the classification of deferred revenue as short- or long-term is based upon the period in which we expect to perform joint committee services.

Royalty revenue is recognized in the period the sales occur, provided the royalty amounts are fixed or determinable, collection of the related receivable is reasonably assured and we have no remaining performance obligations under the arrangement providing for the royalty.

During the past three years, we also recognized revenue from sales of research reagents and from government research grants, awarded to us by the National Institutes of Health (NIH), which we used in proprietary research programs. NIH grant revenue is recognized as efforts are expended and as related program costs are incurred. We performed work under the NIH grants on a best-effort basis.

Under Molecular's 2013 license of certain research, development and commercialization rights to Onalta™, we received a $0.2 million in upfront payment and are eligible for future milestone and royalty payments. In consideration for the upfront payment, we have delivered relevant know-how (including patent rights), inventory and non-reimbursable services.

In the fourth quarter of 2012, we out-licensed our C. difficile program to MedImmune, LLC for a $5.0 million upfront payment, and the right to receive potential future milestone and royalty payments. In consideration for the upfront payment, we have delivered relevant know-how (including patent rights) and non-reimbursable services.

Under our 2012 agreement with CytoDyn Inc. for our PRO 140 program, we received $3.5 million payment and are eligible for future milestone and royalty payments. In consideration for the upfront payment, we have delivered relevant know-how (including patent rights), inventory and non-reimbursable services.

Under our license agreement, Salix is responsible for further developing and commercializing Relistor worldwide other than Japan. In consideration of the $60.0 million upfront payment from Salix, we have granted Salix an exclusive license of relevant know-how, patent rights and technology, assigned relevant third-party contracts, and served on joint committees provided for in the License Agreement through end of 2013.

These deliverables, which have stand-alone value and represent separate units of accounting, include (i) the exclusive license which was delivered for revenue recognition purposes during the 2011 second quarter, (ii) performing reimbursable development services at Salix's direction during the 2011 second quarter, the period in which we and Salix finalized the development plan, and (iii) joint committee services, which have been performed through 2013. We determined that the license has stand-alone value as the license was delivered to Salix for revenue recognition purposes in the second quarter of 2011 and Salix is responsible for continuing research and development.

We developed a best estimate of selling price for each deliverable as vendor-specific objective evidence and third-party evidence was not available. We allocated the best estimate of selling price, on a relative basis, to each of the three units of accounting as the $60.0 million upfront payment was the only payment from Salix which was fixed and determinable at the inception of the arrangement. As a result, $58.4 million, $1.1 million and $0.5 million was allocated to the license, reimbursable development services and our participation in the joint committees as provided in the License Agreement, respectively. We recognized $58.4 million for the license and relevant know-how, patent rights and technology and $1.1 million for the reimbursable development services, respectively, during the second quarter of 2011, the period in which we delivered these items and performed the development services. We recognized $0.2 million, $0.2 million and $59.6 million during 2013, 2012 and 2011, respectively. At December 31, 2012, the remaining deferred revenue of $0.2 million, pertaining to joint committee services, was recognized as collaboration revenue in 2013, as such activities were performed.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

(amounts in thousands, except per share amounts or as otherwise noted)

Ono is responsible for developing and commercializing subcutaneous Relistor in Japan, including conducting the clinical development necessary to support regulatory marketing approval. Ono will own the filings and approvals related to subcutaneous Relistor in Japan. In addition to the $15.0 million upfront payment from Ono, we are entitled to receive up to an additional $20.0 million, payable upon achievement by Ono of its development milestones. Ono is also obligated to pay to us royalties and commercialization milestones on sales by Ono of subcutaneous Relistor in Japan. Ono has the option to acquire from us the rights to develop and commercialize in Japan other formulations of Relistor, including intravenous and oral forms, on terms to be negotiated separately. Ono may request us to perform activities related to its development and commercialization responsibilities, beyond our participation in joint committees and specified technology transfer-related tasks, at its expense payable at the time we perform such services. Revenue earned from activities we perform for Ono is recorded in collaboration revenue. See Note 10.

Research and Development Expenses

Research and development expenses include costs directly attributable to the conduct of research and development programs, including the cost of salaries, payroll taxes, employee benefits, materials, supplies, maintenance of research equipment, costs related to research collaboration and licensing agreements, the purchase of in-process research and development, the cost of services provided by outside contractors, including services related to our clinical trials, the full cost of manufacturing drug for use in research, pre-clinical development and clinical trials. All costs associated with research and development are expensed as incurred.

At each period end, we evaluate the accrued expense balance related to these activities based upon information received from the suppliers and estimated progress towards completion of the research or development objectives to ensure that the balance is reasonably stated. Such estimates are subject to change as additional information becomes available.

Use of Estimates

Significant estimates include useful lives of fixed assets, the periods over which certain revenues and expenses will be recognized, including collaboration revenue recognized from non-refundable up-front licensing payments and expense recognition of certain clinical trial costs which are included in research and development expenses, the amount of non-cash compensation costs related to share-based payments to employees and non-employees and the periods over which those costs are expensed, the likelihood of realization of deferred tax assets and the assumptions used in the valuations of in-process research and development and contingent consideration liability.

Patents

As a result of research and development efforts conducted by us, we have applied, or are applying, for a number of patents to protect proprietary inventions. All costs associated with patents are expensed as incurred.

Net (Loss) Income Per Share

We prepare earnings per share (EPS) data in accordance with ASC 260 Earnings Per Share. Basic net (loss) income per share amounts have been computed by dividing net (loss) income by the weighted-average number of common shares outstanding during the period. For 2013 and 2012, we reported net losses and, therefore, potential common shares, amounts of unrecognized compensation expense and windfall tax benefits have been excluded from diluted net loss per share since they would be anti-dilutive. For 2011, we reported net income, and the computation of diluted earnings per share is based upon the weighted-average number of our common shares and dilutive effect, determined using the treasury stock method, of potential common shares outstanding including amounts of unrecognized compensation expense. As of December 31, 2012 and 2011, 28 and 98, respectively, shares of unvested restricted stock outstanding have non-forfeitable rights to dividends; all such shares were vested at the end of December 31, 2013. The allocation of 2013 and 2012 net losses and the 2011 net income to these participating securities pursuant to the two-class method is not material to both basic and diluted earnings per share.

Concentrations of Credit Risk

Financial instruments which potentially subject Progenics to concentrations of risk consist principally of cash, cash equivalents, auction rate securities and receivables. We invest our excess cash in money market funds. We have established guidelines that relate to credit quality, diversification and maturity and that limit exposure to any one issue of securities. We hold no collateral for these financial instruments.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

(amounts in thousands, except per share amounts or as otherwise noted)

Cash and Cash Equivalents

We consider 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 and cash equivalents subject us to concentrations of credit risk. At December 31, 2013 and 2012, we have invested approximately $60,364 and $56,224, respectively, in cash equivalents in the form of money market funds with one major investment company and held approximately $4,898 and $2,614, respectively, in a single commercial bank.

Accounts Receivable

We estimate the level of accounts receivable which ultimately will be uncollectable based on a review of specific receivable balances, industry experience and the current economic environment. We reserve for affected accounts receivable an allowance for doubtful accounts, which at December 31, 2013 was $7.

Auction Rate Securities

In accordance with ASC 320 Investments – Debt and Equity Securities, investments are classified as available-for-sale. Available-for-sale securities are carried at fair value, with the unrealized gains and losses reported in comprehensive (loss) income. The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization is included in interest income or expense. Realized gains and losses and declines in value judged to be other-than-temporary, if any, on available-for-sale securities are included in other income or expense. In computing realized gains and losses, we compute the cost of its investments on a specific identification basis. Such cost includes the direct costs to acquire the securities, adjusted for the amortization of any discount or premium. The fair value of auction rate securities has been estimated based on a three-level hierarchy for fair value measurements. Interest and dividends on securities classified as available-for-sale are included in interest income (see Note 4).

At December 31, 2013 and 2012, our investment in auction rate securities (recorded as long-term assets in the Consolidated Balance Sheets) amounted to $2,208 and $3,240, respectively. Valuation of securities is subject to uncertainties that are difficult to predict, such as changes to credit ratings of the securities and/or the underlying assets supporting them, default rates applicable to the underlying assets, underlying collateral value, discount rates, counterparty risk, ongoing strength and quality of market credit and liquidity and general economic and market conditions. The valuation of the auction rate securities we hold is based on an internal analysis of timing of expected future successful auctions, collateralization of underlying assets of the security and credit quality of the security. We re-evaluated the valuation of these securities as of December 31, 2013 and the temporary impairment amount decreased $68 from $260 at December 31, 2012 to $192. All income generated from these investments was recorded as interest income (see Note 4).

In-Process Research and Development and Goodwill

The fair values of in-process research and development (IPR&D) acquired in business combinations are capitalized. The Company utilizes the "income method," which applies a probability weighting that considers the risk of development and commercialization to the estimated future net cash flows that are derived from projected sales revenues and estimated costs. These projections are based on factors such as relevant market size, patent protection, historical pricing of similar products and expected industry trends. The estimated future net cash flows are then discounted to the present value using an appropriate discount rate. This analysis is performed for each project independently. These assets are treated as indefinite-lived intangible assets until completion or abandonment of the projects, at which time the assets are amortized over the remaining useful life or written off, as appropriate. IPR&D intangible assets which are determined to have a decline in their fair value are adjusted downward and an expense is recognized as part of the general and administrative expenses in the Consolidated Statements of Operations. These are tested at least annually or when a triggering event occurs that could indicate a potential impairment.

Goodwill represents excess consideration in a business combination over the fair value of identifiable net assets acquired. Goodwill is not amortized, but is subject to impairment testing at least annually or when a triggering event occurs that could indicate a potential impairment. The Company determines whether goodwill may be impaired by comparing the fair value of the reporting unit, calculated as the product of shares outstanding and the share price as of the end of a period, to its carrying value. No goodwill impairment has been recognized as of December 31, 2013. The Company has determined that it has only one reporting unit, which includes the acquired Molecular Insight.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

(amounts in thousands, except per share amounts or as otherwise noted)

The following table reflects the components of the finite lived intangible assets as of December 31, 2013:

	Gross Amount		Accumulated Amortization		Net Carrying Value
Finite lived intangible assets	$	21	$	2	$	19
Total	$	21	$	2	$	19

The weighted-average remaining life of the finite lived intangible assets is five years at December 31, 2013.

Amortization expense is calculated on a straight-line basis over the estimated useful life of the asset. Amortization expense for the period from January 18, 2013 to December 31, 2013 was $2. Estimated amortization expense related to intangible assets existing as of December 31, 2013 is approximately $4 annually for each of the succeeding five years.

The following table summarizes the activity related to the Company's goodwill and indefinite lived IPR&D:

	Goodwill		IPR&D
Balance at January 1, 2013	$	-	$	-
Increase related to MIP acquisition		7,702		32,300
Reclassification to finite lived IPR&D		-		(21	)
Impairment		-		(919	)
Balance at December 31, 2013	$	7,702	$	31,360

Fair Value Measurements

In accordance with ASC 820 Fair Value Measurements and Disclosures, we use a three-level hierarchy for fair value measurements of certain assets and liabilities for financial reporting purposes that distinguishes between market participant assumptions developed from market data obtained from outside sources (observable inputs) and our own assumptions about market participant assumptions developed from the best information available to us in the circumstances (unobservable inputs). We assign hierarchy levels to assets constituting our available-for-sale portfolio and to our contingent consideration liability arising from the MIP acquisition based on our assessment of the transparency and reliability of the inputs used in the valuation. ASC 820 defines the three hierarchy levels as:

·	Level 1 - Valuations based on unadjusted quoted market prices in active markets for identical securities.

·	Level 2 - Valuations based on observable inputs other than Level 1 prices, such as quoted prices for similar assets at the measurement date, quoted prices in markets that are not active or other inputs that are observable, either directly or indirectly.

·	Level 3 - Valuations based on unobservable inputs that are significant to the overall fair value measurement, which as noted above involve management judgment.

Recurring Fair Value Measurements

We believe the carrying amounts of the Company's cash equivalents, accounts receivable, other current assets, other assets (restricted cash providing collateral for a letter of credit securing lease obligations) and accounts payable and accrued expenses approximated their fair values as of December 31, 2013 and 2012, due to their short-term nature; we consider them Level 1 instruments.

The fair value of the contingent consideration liability, consisting of future potential milestone payments related to the MIP acquisition was $15.7 million as of December 31, 2013 and $15.9 million as January 18, 2013, the acquisition date (see Note 2). The fair value of the contingent consideration liability is categorized as a Level 3 instrument, as displayed in Note 4. The Company records the contingent consideration liability at fair value with changes in estimated fair values recorded in general and administrative expenses in the Consolidated Statements of Operations. As of December 31, 2013, we reassessed the fair value of the contingent consideration and recorded a $0.2 million decrease, due to an increase in the discount period, and a corresponding credit in the general and administrative expenses in the fourth quarter of 2013. The December 31, 2013 contingent consideration of $15.7 million results from probability adjusted discounted cash flow and Monte Carlo simulation models which include estimates of significant milestone payments to former MIP stockholders under the acquisition agreement ranging from 2017 to 2022 and risk adjusted discount rates ranging from 10% to 12.5%.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

(amounts in thousands, except per share amounts or as otherwise noted)

Nonrecurring Fair Value Measurements

The Company's non-financial assets, such as intangible assets and property and equipment, are measured and recorded at fair value on the acquisition date, and if indicators of impairment exist, we assess recoverability by measuring the amount of any impairment by comparing the carrying value of the asset to its then-current estimated fair value (for intangible assets) or to market prices for similar assets (for property and equipment). If the carrying value is not recoverable we record an impairment charge as a general and administrative expense in the Consolidated Statements of Operations. The company reassessed the value of the indefinite lived intangible assets and recorded a non-cash charge to earnings of $919 in the fourth quarter of 2013. This impairment was the result of change in the Level 3 assumptions: (i) the timing of the estimated beginning of cash inflows from 2014 to 2018 and (ii) an increase in discount rate from 15% to 18% for the Onalta intangible asset. In connection with the second quarter amendment of the Company's Tarrytown lease, we recognized impairment losses of $347 on leasehold improvements and machinery and equipment removed from service which are included in Research and development expenses in our accompanying Consolidated Statements of Operations for the year ended December 31, 2013. As a result of closing our biologics pilot facilities in 2011, an impairment loss of $22 was included in Research and development expenses in our accompanying Consolidated Statement of Operations during 2011. No impairments occurred for the year ended December 31, 2012.

Other current assets are comprised of prepaid expenses, interest, deferred tax asset and other receivables of $1,943 and $1,692 at December 31, 2013 and 2012, respectively, which are expected to be settled within one year. Restricted cash of $157 and $150 at December 31, 2013 and 2012, respectively, consists of collateral for a letter of credit securing lease obligations. We believe the carrying value of these assets approximates fair value.

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. Costs of construction of long-lived assets are capitalized but are not depreciated until the assets are placed in service.

Expenditures for maintenance and repairs which do not materially extend the useful lives of the assets are charged to expense as incurred. The cost and accumulated depreciation of assets retired or sold are removed from the respective accounts and any gain or loss is recognized in operations. The estimated useful lives of fixed assets are as follows:

Computer equipment	3 years
Machinery and equipment	5-7 years
Furniture and fixtures	5 years
Leasehold improvements	Earlier of life of improvement or lease

Deferred Lease Liability and Incentive

Our lease agreements include fixed escalations of minimum annual lease payments and we recognize rental expense on a straight-line basis over the lease terms and record the difference between rent expense and current rental payments as deferred rent. Deferred lease incentive includes a construction allowance from our landlord which is amortized as a reduction to rental expense on a straight-line basis over the lease term. As of December 31, 2013 and 2012, the Consolidated Balance Sheets include the following:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

(amounts in thousands, except per share amounts or as otherwise noted)

	2013		2012
Other current liabilities:
Deferred lease incentive	$	115	$	115
Total other current liabilities	$	115	$	115
Other liabilities:
Deferred lease liability	$	224	$	273
Deferred lease incentive		690		805
Total other liabilities	$	914	$	1,078

Income Taxes

We account for income taxes in accordance with the provisions of ASC 740 Income Taxes, which requires that we 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 assets and liabilities 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. A valuation allowance is established for deferred tax assets for which realization is uncertain.

In accordance with ASC 718 Compensation – Stock Compensation and ASC 505 Equity, we have made a policy decision related to intra-period tax allocation, to account for utilization of windfall tax benefits based on provisions in the tax law that identify the sequence in which amounts of tax benefits are used for tax purposes (i.e., tax law ordering).

Uncertain tax positions are accounted for in accordance with ASC 740 Income Taxes, which prescribes a comprehensive model for the manner in which a company should recognize, measure, present and disclose in its financial statements all material uncertain tax positions that we have taken or expect to take on a tax return. ASC 740 applies to income taxes and is not intended to be applied by analogy to other taxes, such as sales taxes, value-add taxes, or property taxes. We review our nexus in various tax jurisdictions and our tax positions related to all open tax years for events that could change the status of our ASC 740 liability, if any, or require an additional liability to be recorded. Such events may be the resolution of issues raised by a taxing authority, expiration of the statute of limitations for a prior open tax year or new transactions for which a tax position may be deemed to be uncertain. Those positions, for which management's assessment is that there is more than a 50 percent probability of sustaining the position upon challenge by a taxing authority based upon its technical merits, are subjected to the measurement criteria of ASC 740. We record the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information. Any ASC 740 liabilities for which we expect to make cash payments within the next twelve months are classified as "short term." In the event that we conclude that we are subject to interest and/or penalties arising from uncertain tax positions, we will record interest and penalties as a component of income taxes (see Note 13).

Risks and Uncertainties

We have to date relied principally on external funding, collaborations with Salix, Fuji and others, out-licensing and asset sale arrangements, royalty and product revenue to finance our operations. There can be no assurance that our research and development will be successfully completed, that any products developed will obtain necessary marketing approval by regulatory authorities or that any approved products will be commercially viable. In addition, we operate in an environment of rapid change in technology, and we are dependent upon satisfactory relationships with our partners and the continued services of our current employees, consultants and subcontractors. We are also dependent upon Salix, Fuji and Ono fulfilling their manufacturing obligations, either on their own or through third-party suppliers. For 2013, 2012 and 2011, the primary sources of our revenues were Salix, Ono, Fuji, asset out-licensing and disposition, and research grant revenues from the NIH. There can be no assurance that revenues from asset out-licensing and disposition, Salix, Ono and Fuji or from research awards will continue. Substantially all of our accounts receivable at December 31, 2013 and 2012 were from the above-named sources.

Comprehensive (Loss) Income

Comprehensive (loss) income represents the change in net assets of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Our comprehensive (loss) income includes net (loss) income adjusted for the change in net unrealized gain or loss on auction rate securities. The disclosures required by ASC 220 Comprehensive Income for 2013, 2012 and 2011 have been included in the Consolidated Statements of Comprehensive (Loss) Income. There was no income tax expense/benefit allocated to any component of Other Comprehensive (Loss) Income (see Note 13).

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

(amounts in thousands, except per share amounts or as otherwise noted)

Impact of Recently Adopted Accounting Standards

In February 2013, the FASB issued ASU No. 2013-02, which requires presentation of amounts reclassified out of accumulated other comprehensive income by component. The ASU is effective for reporting periods beginning after December 15, 2012. We adopted this new standard on January 1, 2013 and it had no material impact on our consolidated financial statements.

4. Fair Value Measurements

We record auction rate securities at fair value in the accompanying Consolidated Balance Sheets in accordance with ASC 320 Investments – Debt and Equity Securities. The change in the fair value of these securities is recorded as a component of other comprehensive (loss) income. We also record the contingent consideration liability resulting from the MIP acquisition at fair value in accordance with ASC 820-10-50.

The following tables present our money market funds, included in cash and cash equivalents, and auction rate securities assets and contingent consideration liability measured at fair value on a recurring basis as of the dates indicated, classified by valuation hierarchy:

			Fair Value Measurements at December 31, 2013
	Balance at December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds	$	60,364	$	60,364	$	-	$	-
Auction rate securities		2,208		-		-		2,208
Total Assets	$	62,572	$	60,364	$	-	$	2,208

Liability:
Contingent consideration	$	15,700	$	-	$	-	$	15,700
Total Liability	$	15,700	$	-	$	-	$	15,700

			Fair Value Measurements at December 31, 2012
	Balance at December 31, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

Money market funds	$	56,224	$	56,224	$	-	$	-
Auction rate securities		3,240		-		-		3,240
Total	$	59,464	$	56,224	$	-	$	3,240

At December 31, 2013, we hold $2,208 in auction rate securities which are classified as Level 3. The fair value of these securities includes $2,208 of U.S. government subsidized securities collateralized by student loan obligations, with maturities greater than 10 years. We will not realize cash in respect of the principal amount of these securities until the issuer calls or restructures the security, the security reaches any scheduled maturity and is paid, or a buyer outside the auction process emerges. As of December 31, 2013, we have received all scheduled interest payments on these securities, which, in the event of auction failure, are reset according to the contractual terms in the governing instruments.

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PROGENICS PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

(amounts in thousands, except per share amounts or as otherwise noted)

The valuation of auction rate securities we hold is based on Level 3 unobservable inputs which consist of our internal analysis of (i) timing of expected future successful auctions or issuer calls of the securities, (ii) collateralization of underlying assets of the security and (iii) credit quality of the security. Significant increases (decreases) in the redemption period or discount rates would result in a significantly lower (higher) fair value measurement. In re-evaluating the valuation of these securities as of December 31, 2013, the temporary impairment amount, the duration of which is greater than 12 months, decreased from $260 at December 31, 2012, to $192, which is reflected as a part of accumulated other comprehensive loss on our accompanying Consolidated Balance Sheets and based on such re-evaluation, we believe that we have the ability to hold these securities until recovery of fair value. Due to the uncertainty related to the liquidity in the auction rate security market and therefore when individual positions may be liquidated, we have classified these auction rate securities as long-term assets on our accompanying Consolidated Balance Sheets. We continue to monitor markets for our investments and consider the impact, if any, of market conditions on the fair market value of our investments. We do not believe the carrying values of our investments are other than temporarily impaired and therefore expect the positions will eventually be liquidated without significant loss.

The estimated fair value of the contingent consideration liability of $15.7 million represents future potential milestone payments to former MIP stockholders. The Company considers this liability a Level 3 instrument (one with significant unobservable inputs) in the fair value hierarchy. The estimated fair value was determined based on probability adjusted discounted cash flow and Monte Carlo simulation models that included significant estimates and assumptions pertaining to commercialization events and sales targets. The most significant unobservable inputs were the probabilities of achieving regulatory approval of the development projects and subsequent commercial success, and discount rates. Significant changes in any of the probabilities of success would result in a significantly higher or lower fair value measurement, respectively. Significant changes in the probabilities as to the periods in which milestones will be achieved would result in a significantly lower or higher fair value measurement, respectively. The Company records the contingent consideration liability at fair value with changes in estimated fair values recorded in general and administrative expenses in the Consolidated Statements of Operations.

The following table presents quantitative information pertaining to the fair value measurement of the Level 3 inputs:

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PROGENICS PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

(amounts in thousands, except per share amounts or as otherwise noted)

	Fair Value as of December 31, 2013		Valuation Technique	Unobservable Input	Range (Weighted Average)

Asset:
Auction Rate Securities	$	2,208	Discounted cash flow model	Redemption period	5 to 15 years (6 years)
				Discount rate		0.25% - 3.00% (1.55%)
Contingent consideration liability:

Azedra commercialization	$	2,300	Probability adjusted discounted cash flow model	Probability of success		40%
				Period of milestone expected achievement		2017
				Discount rate		10%

1404 commercialization	$	2,000	Probability adjusted discounted cash flow model	Probability of success		31%
				Period of milestone expected achievement		2018
				Discount rate		10%

MIP-1095 commercialization	$	500	Probability adjusted discounted cash flow model	Probability of success		19%
				Period of milestone expected achievement		2021
				Discount rate		10%

Net sales targets	$	10,900	Monte-Carlo simulation	Probability of success		19% - 40% (32.8%)
				Period of milestone expected achievement		2018 - 2022
				Discount rate		12.5%

	Fair Value as of December 31, 2012		Valuation Technique	Unobservable Input	Range (Weighted Average)

Asset:
Auction Rate Securities	$	3,240	Discounted cash flow model	Redemption period	4 to 15 years (5.9 years)
				Discount rate		0.125% - 2.102% (0.71%)

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PROGENICS PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

(amounts in thousands, except per share amounts or as otherwise noted)

For those financial instruments with significant Level 3 inputs, the following table summarizes the activities for the periods indicated:

	Asset – Auction Rate Securities Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Description	2013			2012
Balance at beginning of period	$	3,240		$	3,332
Transfers into Level 3		-			-
Total realized/unrealized gains (losses)
Included in net income (loss)		-			-
Included in comprehensive income (loss)		68			8
Settlements		(1,100	)		(100	)
Balance at end of period	$	2,208		$	3,240
Total amount of unrealized gains (losses) for the period included in other comprehensive loss attributable to the change in fair market value of related assets still held at the reporting date	$	-		$	-

	Liability – Contingent Consideration Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Description	2013			2012
Balance at beginning of period	$	-		$	-
Fair value of contingent consideration – acquisition of Molecular Insight		15,900			-
Fair value adjustment to contingent consideration included in net loss		(200	)		-
Balance at end of period	$	15,700		$	-
Changes in unrealized gains or losses for the period included in earnings (or changes in net assets) for liabilities held at the end of the reporting period	$	(200	)	$	-

The following tables summarize the amortized cost basis, the aggregate fair value and gross unrealized holding gains and losses at December 31, 2013 and 2012:

	Amortized		Fair		Unrealized Holding
2013:	Cost Basis		Value		Gains		(Losses)			Net
Maturities greater than ten years:
Auction rate securities	$	2,400	$	2,208	$	-	$	(192	)	$	(192	)
	$	2,400	$	2,208	$	-	$	(192	)	$	(192	)

	Amortized		Fair		Unrealized Holding
2012:	Cost Basis		Value		Gains		(Losses)			Net
Maturities greater than ten years:
Auction rate securities	$	2,500	$	2,300	$	-	$	(200	)	$	(200	)
Investments without stated maturity dates:
Auction rate securities		1,000		940		-		(60	)		(60	)
	$	3,500	$	3,240	$	-	$	(260	)	$	(260	)

We compute the cost of its investments on a specific identification basis. Such cost includes the direct costs to acquire the securities, adjusted for the amortization of any discount or premium.

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PROGENICS PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

(amounts in thousands, except per share amounts or as otherwise noted)

The following table shows the gross unrealized losses and fair value of our auction rate securities with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2013 and 2012.

2013:	Less than 12 Months				12 Months or Greater					Total
Description of Securities	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses			Fair Value		Unrealized Losses

Auction rate securities	$	-	$	-	$	2,208	$	(192	)	$	2,208	$	(192	)
Total	$	-	$	-	$	2,208	$	(192	)	$	2,208	$	(192	)

2012:	Less than 12 Months				12 Months or Greater					Total
Description of Securities	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses			Fair Value		Unrealized Losses

Auction rate securities	$	-	$	-	$	3,240	$	(260	)	$	3,240	$	(260	)
Total	$	-	$	-	$	3,240	$	(260	)	$	3,240	$	(260	)

Other-than-temporary impairment analysis on auction rate securities. The unrealized losses on our auction rate securities resulted from an internal analysis of timing of expected future successful auctions, collateralization of underlying assets of the security and credit quality of the security. At December 31, 2013 there was one and at December 31, 2012, there were two securities with a gross unrealized loss position of $192 and $260 ($2,208 and $3,240 of the total fair value), respectively.

The severity of the unrealized losses for auction rate securities at December 31, 2013 and 2012 was 8 percent below amortized cost, and the weighted average duration of the unrealized losses for these securities was 70 and 58 months, respectively.

We have evaluated our individual auction rate securities holdings for other-than-temporary impairment and determined that the unrealized losses as of December 31, 2013 and 2012 are attributable to uncertainty in the liquidity of the auction rate security market. Because we do not intend to sell these securities, and believe it is not more likely than not that we would be required to sell these securities before recovery of principal, we do not consider these securities to be other-than-temporarily impaired at December 31, 2013 and 2012.

5. Accounts Receivable

Our accounts receivable represent amounts due to Progenics from collaborators, royalties, research grants and the sales of research reagents and as of December 31, 2013 and 2012, consisted of the following:

	2013			2012
Collaborators	$	12		$	6,125
Royalties		2,862			781
Research grants		-			12
Other		12			19
		2,886			6,937
Less, allowance for doubtful accounts		(7	)		-
Total	$	2,879		$	6,937

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PROGENICS PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

(amounts in thousands, except per share amounts or as otherwise noted)

6. Fixed Assets

Fixed assets as of December 31, 2013 and 2012 consisted of the following:

	2013			2012
Computer equipment	$	2,234		$	2,166
Machinery and equipment		7,091			8,031
Furniture and fixtures		170			133
Leasehold improvements		5,020			5,327
Other		16			12
		14,531			15,669
Less, accumulated depreciation and amortization		(12,118	)		(12,270	)
Total	$	2,413		$	3,399

At December 31, 2013 and 2012, $2.0 million and $2.6 million, respectively, of leasehold improvements, net were being amortized over periods of 8.5-10.8 years, under leases with terms through December 31, 2020.

7. Accounts Payable and Accrued Expenses

The carrying value of our accounts payable and accrued expenses approximates fair value, as it represents amounts due to vendors and employees, which will be satisfied within one year. Accounts payable and accrued expenses as of December 31, 2013 and 2012, consisted of the following:

	2013		2012
Accrued consulting and clinical trial costs	$	2,672	$	2,193
Accrued payroll and related costs		2,123		1,552
Restructuring accrual		-		813
Legal and professional fees		608		774
Accounts payable		793		229
Other		316		79
Total	$	6,512	$	5,640

8. Restructuring

We reduced headcount in the third and fourth quarters of 2011, resulting in a restructuring accrual of $1.3 million for severance and related benefits which were paid through August 2012. We incurred other exit and contract termination costs, including expenses related to a lease amendment and consolidation of employees within reduced facility space. We also reduced headcount in the third quarter of 2012, resulting in a restructuring accrual of $1.9 million which was paid through August 2013, and the first quarter of 2013, resulting in an approximately $1.5 million restructuring accrual which was paid through the end of 2013. During the second quarter of 2013, we incurred other exit and contract termination costs, including lease termination and amendment and consolidation expenses ($1,359).

Activity in the restructuring accrual, which is included in accounts payable and accrued expenses in our Consolidated Balance Sheets, and in research and development and general and administrative expenses in the Consolidated Statements of Operations, is specified below.

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PROGENICS PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

(amounts in thousands, except per share amounts or as otherwise noted)

	Severance and Related Benefits			Other Exit Costs			Contract Termination Costs			Total Restructuring Accrual
Balance at December 31, 2010	$	-		$	-		$	-		$	-
Additions, net		1,341			8			292			1,641
Payments		(770	)		(2	)		(138	)		(910	)
Balance at December 31, 2011		571			6			154			731
Additions, net		1,905			184			3			2,092
Payments		(1,663	)		(190	)		(157	)		(2,010	)
Balance at December 31, 2012		813			-			-			813
Additions, net		1,492			15			1,359			2,866
Payments		(2,305	)		(15	)		(1,359	)		(3,679	)
Balance at December 31, 2013	$	-		$	-		$	-		$	-

9. Stockholders' Equity

We are authorized to issue 160.0 million shares of Common Stock, par value $.0013, and 20.0 million shares of preferred stock, par value $.001. The Board of Directors has the authority to issue common and preferred shares, in series, with rights and privileges as determined by the Board of Directors. In July 2013, we completed a public offering of 9,775 shares of common stock, with net proceeds of approximately $40.1 million.

10. Commitments and Contingencies

a. Operating Leases

As of December 31, 2013, we leased office, manufacturing and laboratory space, under lease agreements expiring in December 2020.

Rental payments are recognized as rent expense on a straight-line basis over the term of the lease. In addition to rents due under these agreements, we are obligated to pay additional facilities charges, including utilities, taxes and operating expenses.

As of December 31, 2013, future minimum annual payments under all operating lease agreements are as follows:

Years ending December 31,	Minimum Annual Payments
2014	$	1,841
2015		1,887
2016		1,934
2017		1,983
2018		2,032
Thereafter		4,218
Total	$	13,895

Rental expense totaled approximately $3,548, $2,074 and $3,475 for 2013, 2012 and 2011, respectively. For 2013 and 2012, amounts paid exceeded rent expense by $164 and $419, respectively, due to the recognition of lease incentives. For 2011, we recognized rent expense in excess of amounts paid of $63, due to the recognition of escalation clauses and lease incentives. Additional facility charges, including utilities, taxes and operating expenses, for 2013, 2012 and 2011 were approximately $2,330, $2,845 and $4,033, respectively.

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PROGENICS PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

(amounts in thousands, except per share amounts or as otherwise noted)

b. Licensing, Service and Supply Agreements

Progenics and its subsidiaries have entered into intellectual property-based license and service agreements in connection with product development programs, and have recognized milestone, license and sublicense fees and supply costs, included in research and development expenses, totaling approximately $567, $1,170 and $578 during the last three years, respectively.

	Paid from inception to December 31, 2013		Future ⁽¹⁾ Commitments		Terms
Progenics agreements with:
Lonza Sales AG	$	909	$	824	Annual license fee payments, milestones and royalties, as applicable, in respect of oncology and other products.

PSMA LLC agreements with:
Seattle Genetics, Inc.		4,400		13,900	Milestone and periodic maintenance payments to use ADC technology to link chemotherapeutic agents to monoclonal antibodies that target prostate specific membrane antigen. ADC technology is based in part on technology licensed by SGI from third parties.
Amgen Fremont, Inc. (formerly Abgenix)		1,350		5,750	Milestones and royalties to use XenoMouse^® technology for generating fully human antibodies to PSMA LLC's PSMA antigen.
Former member of PSMA LLC		278		52,188	Annual minimum royalty payments and milestones to use technology related to PSMA.

	Paid from acquisition date to December 31, 2013		Future ⁽¹⁾ Commitments		Terms
MIP agreements with:

University of Zurich and the Paul Scherrer Institute		65		1,225	Annual maintenance and license fee payments, milestones and royalties in respect of licensed technology related to 1404.
University of Western Ontario		4		374	Annual minimum royalty, administration and milestone payments in respect of licensed technology related to Azedra.
Novartis Pharma AG and other interests		-		4,600	Milestone and royalty payments in respect of licensed technology related to Onalta.
Bayer Schering Pharma AG		-		9,000	Milestone and royalty payments in respect of licensed technology related to a MIP asset.

⁽¹⁾ Amounts based on known contractual obligations as specified in the respective license agreements, which are dependent on the achievement or occurrence of future milestones or events and exclude amounts for royalties which are dependent on future sales and are unknown.

We are seeking to out-license or terminate non-germane Molecular Insight licenses and service agreements, as to which we have paid $216 through December 31, 2013, and have future commitments of $3,453, subject to occurrence of future milestones or events.

c. Consulting Agreements

As part of our research and development efforts, we have from time to time entered into consulting agreements with external scientific specialists. These agreements contain various terms and provisions, including fees to be paid by us and royalties, in the event of future sales, and milestone payments, upon achievement of defined events, payable by us. Certain of these scientists are advisors to Progenics, and some have purchased our Common Stock or received stock options which are subject to vesting provisions. We have recognized expenses with regard to the consulting agreements of $39, $8 and $27 for 2013, 2012 and 2011, respectively. Those expenses include the fair value of stock options granted during 2013 and 2011, which were fully vested at grant date, of approximately $7 and $11, respectively. Such amounts of fair value are included in research and development expense for each year presented (see Note 11).

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PROGENICS PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

(amounts in thousands, except per share amounts or as otherwise noted)

d. Retirement Agreement

On March 14, 2012, Progenics and company founder Paul J. Maddon entered into an agreement providing for his retirement as Chief Science Officer. In connection with Dr. Maddon's retirement and termination of his employment agreement, Progenics agreed to pay him an amount equal to $1,789 and provide other benefits under the agreement.

e. Related Party Agreement

In December 2012, Progenics entered into a financial advisory agreement with MTS Health Partners, L.P., of which the Company's Board Chair is a Senior Managing Director and partner, on customary terms and conditions, whereby, in 2013, MTS has received monthly retainers totaling $55 during the term of the agreement and $300 for MTS' services in connection with the Molecular Insight acquisition described in Note 2. This agreement was terminated in June 2013.

f. Legal Proceedings

Progenics is a party to a proceeding brought by a former employee complaining that the Company violated the anti-retaliation provisions of the federal Sarbanes-Oxley law by terminating the former employee. The Company believes the former employee's claims are without merit and is contesting the matter vigorously. The federal District Court hearing the case issued in July 2013 an order denying our motion for summary judgment dismissing the former employee's complaint, making it likely that the proceeding will continue to trial. Given the inherent uncertainty attendant to the proceeding, it is not possible at this time to estimate the likelihood or potential magnitude of any outcome, and we have accordingly not recorded any associated liability in these Consolidated Financial Statements.

Progenics in October 2013 commenced an arbitration with Ono under the provisions of the parties' License Agreement, following a communication from Ono that it has determined to discontinue development of subcutaneous Relistor in Japan because of "commercial concerns" that Ono contends would permit it to cease development and terminate the Agreement. Under our Agreement with Ono, Ono may cease development of subcutaneous Relistor only if it terminates the License Agreement, which it may do unilaterally only if Progenics is in material default. Progenics is not in default under the Agreement, and Ono has neither asserted that Progenics is, nor terminated the Agreement.

11. Share-Based Payment Arrangements

Our share-based compensation to employees includes non-qualified stock options, restricted stock and shares issued under our Purchase Plans, which are compensatory under ASC 718 Compensation – Stock Compensation. During the second quarter of 2011, we accelerated the vesting of outstanding awards to non-management employees in connection with a change in program eligibility and termination of the Company's employee stock purchase plans. We account for share-based compensation to non-employees, including non-qualified stock options and restricted stock, in accordance with ASC 505 Equity.

Compensation cost for share-based awards will be recognized in our financial statements over the related requisite service periods; usually the vesting periods for awards with a service condition. We have made an accounting policy decision to use the straight-line method of attribution of compensation expense, under which the grant date fair value of share-based awards will be recognized on a straight-line basis over the total requisite service period for the total award.

We have adopted two stock incentive plans, the 1996 Amended Stock Incentive Plan (terminated in 2006) and the 2005 Stock Incentive Plan. Under these Plans as amended, up to 5,000 and 8,450 shares of common stock, respectively, have been reserved for the issuance of awards to employees, consultants, directors and other individuals who render services to Progenics (collectively, Awardees). The Plans contain anti-dilution provisions in the event of a stock split, stock dividend or other capital adjustment as defined. Each Plan provides for the Board or Committee to grant to Awardees stock options, stock appreciation rights, restricted stock, performance awards or phantom stock, as defined (collectively, Awards). The Committee is also authorized to determine the term and vesting of each Award and the Committee may in its discretion accelerate the vesting of an Award at any time. Stock options granted under the Plans generally vest pro rata over three to five years and have terms of ten years. Restricted stock issued under either Plan generally vested annually over three to five years, unless specified otherwise by the Committee. The exercise price of outstanding non-qualified stock options is usually equal to the fair value of our common stock on the date of grant. The exercise price of non-qualified stock options granted from the 2005 Plan and incentive stock options (ISO) granted from the Plans may not be lower than the fair value of our common stock on the dates of grant. At December 31, 2013, 2012 and 2011, all outstanding stock options were non-qualified options. The 2005 Plan will terminate in April 2015; options granted before termination of the Plans will continue under the respective Plans until exercised, cancelled or expired.

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PROGENICS PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

(amounts in thousands, except per share amounts or as otherwise noted)

We apply a forfeiture rate to the number of unvested awards in each reporting period in order to estimate the number of awards that are expected to vest. Estimated forfeiture rates are based upon historical data on vesting behavior of employees. We adjust the total amount of compensation cost recognized for each award, in the period in which each award vests, to reflect the actual forfeitures related to that award. Changes in our estimated forfeiture rate will result in changes in the rate at which compensation cost for an award is recognized over its vesting period.

Under ASC 718 Compensation – Stock Compensation, the fair value of each non-qualified stock option award is estimated on the date of grant using the Black-Scholes option pricing model, which requires input assumptions noted in the following table. Ranges of assumptions for inputs are disclosed where the value of such assumptions varied during the related period. Historical volatilities are based upon daily quoted market prices of our common stock on The NASDAQ Stock Market LLC over a period equal to the expected term of the related equity instruments. We rely only on historical volatility since it provides the most reliable indication of future volatility. Future volatility is expected to be consistent with historical; historical volatility is calculated using a simple average calculation; historical data is available for the length of the option's expected term and a sufficient number of price observations are used consistently. Since our stock options are not traded on a public market, we do not use implied volatility. For 2013, 2012 and 2011 our expected term was calculated based upon historical data related to exercise and post-termination cancellation activity; accordingly, for grants issued to employees and directors and officers (excluding our former CEO in 2011), we are using expected terms of 5.3 and 7.4 years, 5.4 and 7.4 years and 5.3 and 7.4 years, respectively. The expected term of stock options granted to our former CEO in 2011 was calculated separately from stock options granted to employees and directors and officers, and was 8 years for 2011. The expected term for options granted to non-employees was also calculated separately from stock options granted to employees and directors and officers and was ten years, which is the contractual term of those options. We have never paid dividends and do not expect to pay dividends in the future. Therefore, our dividend rate is zero. The risk-free rate for periods within the expected term of the options is based on the U.S. Treasury yield curve in effect at the time of grant. The following table presents assumptions used in computing the fair value of option grants during 2013, 2012 and 2011:

	2013			2012			2011

Expected volatility		73% – 90	%		70% – 85	%		68% – 78	%
Expected dividends	Zero			Zero			Zero
Expected term (years)		5.3 – 10			5.3 – 10			5.3 – 10
Weighted average expected term (years)		5.96			6.11			6.17
Risk-free rate		0.76% – 2.83	%		0.57% – 1.71	%		0.77% – 2.97	%

A summary of option activity under the Plans as of December 31, 2013 and changes during the year then ended is presented below:

Options	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Yr.)		Aggregate Intrinsic Value

Outstanding at January 1, 2013		5,366		$	12.27
Granted		1,018			5.13
Exercised		(14	)		5.08
Forfeited		(608	)		10.63
Expired		(463	)		14.70
Outstanding at December 31, 2013		5,299			10.89		5.82	$	304
Exercisable at December 31, 2013		3,875		$	12.45		4.86	$	118

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PROGENICS PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

(amounts in thousands, except per share amounts or as otherwise noted)

The weighted average grant-date fair value of options granted under the Plans during 2013, 2012 and 2011 was $3.74, $6.38 and $5.51, respectively. The total intrinsic value of options exercised during 2013, 2012 and 2011 was $11, $174 and $345, respectively.

The options granted under the Plans, described above, include non-qualified stock options granted to our former CEO on July 3, 2006. For the 2006 award, the requisite service period is the shortest of the explicit or implied service periods and the explicit service period for this award is nine years and 11 months from the grant date. On July 1, 2011 and March 1, 2012, we granted option awards to our CEO which vests on the basis of the achievement of specified performance-based milestones. The options have exercise prices equal to the closing price of our common stock on the dates of grant. The awards are valued using the Black-Scholes option pricing model. The expense related to the grants with performance and market-based milestones will be recognized over the shortest estimated time for the achievement of the performance or market conditions. The awards will not vest unless one of the milestones is achieved or the market condition is met. Changes in the estimate of probability of achievement of any performance or market condition will be reflected in compensation expense of the period of change and future periods affected by the change.

At December 31, 2013, the estimated requisite service periods for the 2006, 2011 and 2012 awards, described above, were 2.5, 1.0 and 1.0 years, respectively. For 2013, 2012 and 2011, the total compensation expense recognized for the performance-based options was $0.1 million, $2.0 million and $0.4 million, respectively.

A summary of the status of our outstanding restricted stock awarded under the Plans as of December 31, 2013 and changes during the year then ended is presented below:

Restricted Stock Awards	Shares			Weighted Average Grant-Date Fair Value

Nonvested at January 1, 2013		28		$	5.35
Granted		-			-
Vested		(27	)		5.35
Forfeited		(1	)		5.35
Nonvested at December 31, 2013		-		$	-

Two employee stock purchase plans (the Purchase Plans), the 1998 Employee Stock Purchase Plan (the Qualified Plan) and the 1998 Non-Qualified Employee Purchase Plan (the Non-Qualified Plan), as amended, provided for the issuance of up to 4,400 and 1,100 shares of common stock, respectively. Issuances of common stock under the Purchase Plans, terminated by the Company during the second quarter of 2011, provided for the grant to all employees of options to use an amount equal to 25% of their quarterly compensation, as such percentage was determined by the Board of Directors prior to the date of grant, to purchase shares of our common stock at a price per share equal to the lesser of the fair market value of the common stock on the date of grant or 85% of the fair market value on the date of exercise. Options were granted automatically on the first day of each fiscal quarter and expired six months after the date of grant. The Qualified Plan was not available to employees owning more than five percent of the common stock and imposed certain other quarterly limitations on option grants. Options under the Non-Qualified Plan were granted to the extent that option grants were restricted under the Qualified Plan.

The fair value of shares purchased under the Purchase Plans was estimated on the date of grant in accordance with ASC 718 Compensation – Stock Compensation, via the same option valuation model used for options granted under the Plans, but with the following assumptions during 2011:

	2011

Expected volatility		43% – 51	%
Expected dividends	zero
Expected term	6 months
Risk-free rate		0.06% – 0.22	%

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PROGENICS PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

(amounts in thousands, except per share amounts or as otherwise noted)

Purchases of common stock under the Purchase Plans during 2011 are summarized as follows:

	Qualified Plan						Non-Qualified Plan
	Shares Purchased		Price Range		Weighted Average Grant-Date Fair Value		Shares Purchased		Price Range		Weighted Average Grant-Date Fair Value

2011		428	$	4.62 – $5.65	$	0.88		162	$	4.62 – $5.65	$	0.84

The total compensation expense of shares, granted to both employees and non-employees, under all of our share-based payment arrangements that was recognized in operations during 2013, 2012 and 2011 was:

	2013		2012		2011
Recognized as:
Research and Development	$	2,524	$	4,568	$	4,499
General and Administrative		1,022		1,968		1,863
Total	$	3,546	$	6,536	$	6,362

No tax benefit was recognized related to such compensation cost because of the Company's net operating losses and the related deferred tax assets were fully offset by valuation allowance. Accordingly, no amounts related to windfall tax benefits have been reported in cash flows from operations or cash flows from financing activities for the periods presented.

As of December 31, 2013, there was $4.4 million of total unrecognized compensation cost related to non-vested stock options under the 1996 and 2005 Plans. Those costs are expected to be recognized over a weighted average period of 2.1 years. Cash received from exercises under all share-based payment arrangements for 2013 was $0.1 million. We issue new shares of our common stock upon share option exercises.

In applying the treasury stock method for the calculation of diluted EPS, amounts of unrecognized compensation expense and windfall tax benefits are required to be included in the assumed proceeds in the denominator of the diluted EPS calculation unless they are anti-dilutive. We incurred net losses for 2013 and 2012 and, therefore, such amounts have not been included in the calculations for those periods since they would be anti-dilutive. As a result, basic and diluted EPS are the same for the 2013 and 2012 periods. We reported net income for 2011 and included the dilutive effect of unrecognized compensation expense in the assumed proceeds in the denominator of the diluted EPS calculation. We have made an accounting policy decision to calculate windfall tax benefits/shortfalls, for purposes of diluted EPS calculation, excluding the impact of deferred tax assets. This policy decision will apply when we have net income and windfall tax benefits/shortfalls are realizable.

12. Employee Savings Plan

The terms of the amended and restated Progenics Pharmaceuticals 401(k) Plan (the Amended Plan), among other things, allow eligible employees 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. During the three years ended December 31, 2013, we matched 50% of those employee contributions that are equal to 5%-8% of compensation and are made by eligible employees to the Amended Plan (the Matching Contribution). In addition, we may also make a discretionary contribution each year on behalf of all participants who are non-highly compensated employees. We made Matching Contributions of approximately $330, $535 and $597 to the Amended Plan for 2013, 2012 and 2011, respectively. No discretionary contributions were made during those years.

13. Income Taxes

We account for income taxes using the liability method in accordance with ASC 740 Income Taxes. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

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PROGENICS PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

(amounts in thousands, except per share amounts or as otherwise noted)

There is no provision or benefit for federal or state income taxes for 2013, 2012 and 2011, other than $0.4 million income tax benefit in 2013, resulting from the change in the temporary difference between carrying amounts of in-process research and development assets for financial reporting purposes and the amounts used for income tax purposes. We have completed a calculation through March 31, 2011, under Internal Revenue Code Section 382, the results of which indicate that past ownership changes will limit utilization of NOLs in the future. Ownership changes subsequent to March 31, 2011, may further limit the future utilization of net operating loss and tax credit carry-forwards as defined by the federal and state tax codes.

Deferred tax assets and liabilities as of December 31, 2013 and 2012, consisted of the following:

	2013			2012
Deferred tax assets:
Depreciation and amortization	$	6,165		$	6,497
R&E tax credit carry-forwards		5,129			11,843
NYS investment tax credit carry-forwards		1,095			1,084
AMT credit carry-forwards		211			211
Net operating loss carry-forwards		190,263			112,966
Capitalized research and development expenditures		25,231			30,884
Stock compensation		13,826			14,436
Other items		1,097			2,193
Total gross deferred tax assets		243,017			180,114
Less: Valuation allowance		(243,017	)		(178,045	)
Deferred tax assets		-			2,069
Deferred tax liability - current		-			(2,069	)
Deferred tax liability – long term		(12,321	)		-
Net deferred tax liability	$	(12,321	)	$	-

We do not recognize deferred tax assets considering our history of taxable losses and the uncertainty regarding our ability to generate sufficient taxable income in the future to utilize these deferred tax assets. For 2013 and 2012, we incurred net losses for tax purposes. For 2011, we had income for tax purposes and such amount was offset completely by our available net operating loss carry-forwards. We recognized a full tax valuation against deferred taxes at December 31, 2013. In 2012, we recognized deferred income tax assets, net of a valuation allowance, of $2,069 ($17 in current assets and $2,052 in non-current assets) and in 2013 and 2012 we recognized deferred income tax liabilities of $12,321 and $2,069, respectively to reflect the net tax effects of temporary differences between the carrying amounts of certain assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The recognition of these deferred income tax assets and liabilities had no effect on our net loss for 2012, however, it resulted in $362 income tax benefit for 2013.

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PROGENICS PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

(amounts in thousands, except per share amounts or as otherwise noted)

The following is a reconciliation of income taxes computed at the Federal statutory income tax rate to the actual effective income tax provision during 2013, 2012 and 2011:

	2013			2012			2011

U.S. Federal statutory rate		(34.0	)%		(35.0	)%		35.0	%
State income taxes, net of Federal benefit		(4.9	)		(5.4	)		8.0
Research and experimental tax credit		(3.6	)		-			(4.1	)
Change in valuation allowance		11.4			34.7			(22.6	)
Effect of federal tax rate bracket change on valuation allowance		8.7			-			(34.8	)
Equity compensation		3.1			4.2			17.0
Investment tax credit		(0.1	)		-			(0.1	)
NOL expiration – Section 382		18.6			-			-
Other		-			1.5			1.6
Income tax provision (benefit)		(0.8	)%		0.0	%		0.0	%

As of December 31, 2013, we had available, for tax return purposes, unused federal NOLs of approximately $513.8 million, which will expire in various years from 2018 to 2033, $18.2 million of which were generated from deductions post January 1, 2006 that, when realized, will reduce taxes payable and will increase paid-in-capital and are not reflected in our deferred tax assets above. Additionally, $11.2 million of the valuation allowance relates to NOLs attributable to excess tax deductions for equity compensation pre January 1, 2006. When realized this will also be reflected as an increase to paid-in-capital. Also, we had available, for tax return purposes, unused state NOLs of approximately $453.1 million, which will expire in various years from 2019 to 2033.

We have reviewed our nexus in various tax jurisdictions and our tax positions related to all open tax years for events that could change the status of our ASC 740 Income Taxes liability, if any, or require an additional liability to be recorded. During 2013, 2012 and 2011, we had no unrecognized tax benefits resulting from tax positions during a prior or current period, settlements with taxing authorities or the expiration of the applicable statute of limitations, except for the $0.4 million income tax benefit recognized in 2013, resulting from the change in the difference between carrying amounts of in-process research and development assets for financial reporting purposes and the amounts used for income tax purposes. We have not, as of yet, conducted a study of our research and development credit carry-forwards. Such a study might result in an adjustment to our research and development credit carry-forwards, but until a study is completed and any adjustment is known, no amounts are being presented as an uncertain tax position under ASC 740-10. A full valuation allowance has been provided against the Company's research and development credits and, if an adjustment is required, this adjustment would be offset by an adjustment to the valuation allowance. Thus, there would be no impact to the statements of operations and comprehensive loss if an adjustment was required.

As of December 31, 2013, we are subject to federal and state income tax in the U.S. Open tax years relate to years in which unused net operating losses were generated or, if used, for which the statute of limitation for examination by taxing authorities has not expired. Our open tax years extend back to 1996. No amounts of interest or penalties were recognized in our Consolidated Statements of Operations or Consolidated Balance Sheets as of and for 2013, 2012 and 2011.

Our research and experimental (R&E) tax credit carry-forwards of approximately $5.1 million at December 31, 2013 expire in various years from 2018 to 2033. During 2013, research and experimental tax credit carry-forwards of approximately $20 expired. The American Taxpayer Relief Act of 2012, enacted on January 2, 2013, retroactively reinstated the federal research and development credit for 2012 and extended these credits through 2013.

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PROGENICS PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

(amounts in thousands, except per share amounts or as otherwise noted)

As of December 31, 2013, we have not recognized any liability for uncertain tax positions, because of our full valuation allowance. We will recognize interest and penalties related to these positions, should such costs be assessed. As of December 31, 2013, we have not recognized interest and penalties. The recognition of unrecognized tax benefits would not affect our effective tax rate because the tax benefit would be offset by an increase in our valuation allowance.

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits for the year ended December 31, 2013.

	2013

Beginning uncertain tax benefits	$	2,661
Current year - increases		-
Current year - decreases		-
Settlements		-
Expired statuses		-
Ending uncertain tax benefits	$	2,661

14. Net Income (Loss) Per Share

Our basic net (loss) income per share amounts have been computed by dividing net (loss) income by the weighted-average number of common shares outstanding during the period. For 2013 and 2012, we reported net losses and, therefore, potential common shares were not included since such inclusion would have been anti-dilutive. For 2011, we reported net income, and the computation of diluted earnings per share is based upon the weighted-average number of our common shares and dilutive effect, determined using the treasury stock method, of potential common shares outstanding. As of December 31, 2012 and 2011, our 28 and 98, respectively, shares of unvested restricted stock with non-forfeitable rights to dividends were outstanding; all such shares were vested at the end of December 31, 2013. The allocation of 2012 net losses and the 2011 net income to these participating securities pursuant to the two-class method is not material to both basic and diluted earnings per share. The calculations of net loss per share, basic and diluted, are as follows:

	Net (Loss) Income (Numerator)			Weighted Average Common Shares (Denominator)		Per Share Amount
2013:
Basic and diluted	$	(42,572	)		55,798	$	(0.76	)
2012:
Basic and diluted	$	(35,431	)		34,754	$	(1.02	)
2011:
Basic	$	10,381			33,375	$	0.31
Dilutive effect of stock options		-			66
Dilutive effect of restricted stock		-			53
Diluted	$	10,381			33,494	$	0.31

During 2013, 2012 and 2011, anti-dilutive common shares excluded from diluted per share amounts consist of the following:

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PROGENICS PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

(amounts in thousands, except per share amounts or as otherwise noted)

	2013				2012				2011
	Weighted Average Number		Weighted Average Exercise Price		Weighted Average Number		Weighted Average Exercise Price		Weighted Average Number		Weighted Average Exercise Price
Options		5,969	$	11.54		5,947	$	12.32		4,543	$	14.92
Restricted stock		-				60				45
Total		5,969				6,007				4,588

15. Unaudited Quarterly Results (unaudited)

Summarized quarterly financial data during 2013 and 2012 are as follows:

	2013 Quarter Ended
	March 31			June 30			September 30			December 31
Revenues	$	2,226		$	1,801		$	867		$	2,968
Net loss		(11,258	)		(12,263	)		(10,500	)		(8,551	)
Net loss per share - basic and diluted		(0.22	)		(0.24	)		(0.17	)		(0.14	)

	2012 Quarter Ended
	March 31			June 30			September 30			December 31
Revenues ⁽¹⁾	$	2,226		$	1,820		$	1,117		$	8,885
Net loss		(13,086	)		(10,720	)		(11,301	)		(324	)
Net loss per share - basic and diluted		(0.39	)		(0.32	)		(0.33	)		(0.01	)

_______________

(1)	Revenues in the fourth quarter of 2012 include $5.0 million and $2.8 million from the MedImmune and CytoDyn Agreements, respectively.

16. Subsequent Event

During the first quarter of 2014, we established a $150 million shelf registration statement (inclusive of approximately $31.7 million of availability under a superseded registration) which we used for our recent underwritten public offering of 8.75 million shares of common stock at a public offering price of $4.60 per share, resulting in net proceeds of approximately $37.5 million.

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SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS

Allowance for Doubtful Accounts

Year ended December 31,	Beginning Balance		Additions Charged to General and administrative expenses		Deductions Accounts Written Off During Period		Ending Balance
(in thousands)
2013	$	-	$	7	$	-	$	7

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the ~~Registrant~~registrant has duly caused this report to be signed on its behalf by the undersigned, ~~hereunto~~thereunto duly authorized.

	PROGENICS PHARMACEUTICALS, INC.
	By:	/s/ MARK R. BAKER
		Mark R. Baker Chief Executive Officer and Director (Principal Executive Officer)

Date: March 13, 2014

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.

Signature	Capacity	Date
/s/ PETER J. CROWLEY	Chairman	March 13, 2014
Peter J. Crowley

/s/ PAUL J. MADDON	Vice Chairman	March 13, 2014
Paul J. Maddon, M.D., Ph.D.

/s/ MARK R. BAKER	Chief Executive Officer and Director	March 13, 2014
Mark R. Baker	(Principal Executive Officer)

/s/ KAREN J. FERRANTE	Director	March 13, 2014
Karen J. Ferrante, M.D.

/s/ MICHAEL D. KISHBAUCH	Director	March 13, 2014
Michael D. Kishbauch

/s/ DAVID A. SCHEINBERG	Director	March 13, 2014
David A. Scheinberg, M.D., Ph.D.

/s/ NICOLE S. WILLIAMS	Director	March 13, 2014
Nicole S. Williams

/s/ ANGELO W. LOVALLO, JR.
	~~Angelo W. Lovallo, Jr.~~ ~~(Duly authorized officer of the Registrant and~~ Vice President, Finance and Treasurer ~~(Principal~~	March 13, 2014
Angelo W. Lovallo, Jr.	(Principal Financial and Accounting Officer))

~~Date: April 30, 2013~~

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EXHIBIT INDEX


Exhibit
Number *	Description
3.1(1)	Amended and Restated Certificate of Incorporation of the Registrant.
3.2(2)	Amended and Restated By-laws of the Registrant.
4.1(3)	Specimen Certificate for Common Stock, $0.0013 par value per share, of the Registrant.
~~10.1(3)~~		~~Form of Registration Rights Agreement.~~
~~10.2(3)~~		~~1989 Non-Qualified Stock Option Plan‡~~
~~10.3(3)~~		~~1993 Stock Option Plan, as amended‡~~
~~10.4(3)~~		~~1993 Executive Stock Option Plan‡~~
10.5(4)	Amended and Restated 1996 Stock Incentive Plan‡
10.6.3(5)	Amended 2005 Stock Incentive Plan ‡
10.6.4(6)	Form of Non-Qualified Stock Option Award Agreement ‡
10.6.5(6)	Form of Restricted Stock Award Agreement ‡
10.7(7)	Form of Indemnification Agreement‡
~~10.8(8)~~10.8.2(8)	~~Employment Agreement, dated December 31, 2007, between the Registrant and Dr. Paul J. Maddon‡~~
~~10.8.1(9)~~		~~First Amendment to Employment Agreement, dated March 31, 2011, between the Registrant and Dr. Paul J. Maddon‡~~
~~10.8.2(10)~~		Retirement Agreement, dated as of March 14, 2012, between the Registrant and Dr. Paul J. Maddon‡
10.9(3)	Letter dated August 25, 1994 between the Registrant and Dr. Robert J. Israel‡
~~10.16(11)~~10.16(9)†	Development and License Agreement, dated April 30, 1999, between Protein Design Labs, Inc. and the Registrant.
~~10.16.1(12)~~10.16.1(10)	Letter Agreement, dated November 24, 2003, relating to the Development and License Agreement between Protein Design Labs, Inc. and the Registrant.
~~10.18(13)~~		~~Director Stock Option Plan‡~~
~~10.19(14)~~10.19(11)†	Exclusive Sublicense Agreement, dated September 21, 2001, between the Registrant and UR Labs, Inc.
~~10.19.1(15)~~10.19.1(12)	Amendment to Exclusive Sublicense Agreement, dated September 21, 2001, between the Registrant and UR Labs, Inc.
~~10.21.1(16)~~10.21.1(13)	Amended and Restated Agreement of Lease, dated October 28, 2009, between BMR-Landmark at Eastview LLC and the Registrant.
10.23	Information concerning compensation of the Registrant's non-employee directors is included in the Registrant's proxy material for its ~~2012~~2013 Annual Meeting of Stockholders and its Current Report on Form 8-K filed on September 12, 2013 and is incorporated herein by reference.‡
~~10.25(17)~~10.25(14) †	Option and License Agreement, dated May 8, 1985, by and between the University of Chicago and UR Labs, Inc., as amended by (i) Amendment to Option and License Agreement, dated September 17, 1987, by and between the University of Chicago and UR Labs, Inc., (ii) Second Amendment to Option and License Agreement, dated March 3, 1989, by and among the University of Chicago, ARCH Development Corporation and UR Labs, Inc., and (iii) Letter Agreement Related to Progenics' Relistor In-License dated, December 22, 2005, by and among the University of Chicago, acting on behalf of itself and ARCH Development Corporation, the Registrant, Progenics Pharmaceuticals Nevada, Inc. and Wyeth, acting through its Wyeth Pharmaceuticals Division.
~~10.26(18)~~10.26(15)	Membership Interest Purchase Agreement, dated April 20, 2006, between the Registrant Inc. and Cytogen Corporation.
~~10.27(18)~~10.27(15) †	Amended and Restated PSMA/PSMP License Agreement, dated April 20, 2006, by and among the Registrant, Cytogen Corporation and PSMA Development Company LLC.
~~10.28(19)~~		Consulting Agreement, dated May 1, 1995, between Active Biotherapies, Inc. and Dr. David A. Scheinberg, M.D., Ph.D., as amended on June 13, 1995, as assigned to the Registrant, and as amended on January 1, 2001‡
~~10.29(20)~~10.29(16) †	License Agreement, dated as of October 16, 2008, by and among Ono Pharmaceutical Co., Ltd. and the Registrant.
~~10.30(20)~~10.30(16) †	Partial Termination and License Agreement, dated October 16, 2008, by and among Wyeth, acting through Wyeth Pharmaceuticals Division, Wyeth-Whitehall Pharmaceuticals, Inc. and Wyeth-Ayerst Lederle, Inc. and the Registrant and Progenics Pharmaceuticals Nevada, Inc.
~~10.31(20)~~10.31(16) †	Consent, Acknowledgment and Agreement, dated as of October 16, 2008, by and among Wyeth, acting through Wyeth Pharmaceuticals Division, Wyeth-Whitehall Pharmaceuticals, Inc. and Wyeth-Ayerst Lederle, Inc., the Registrant and Ono Pharmaceutical Co., Ltd.
~~10.32(20)~~10.32(16) †	2008 Agreement Related to Progenics' MNTX In-License, dated October 16, 2008, by and among the University of Chicago, acting on behalf of itself and ARCH Development Corporation, the Registrant, Progenics Pharmaceuticals Nevada, Inc. and Ono Pharmaceutical Co., Ltd.
~~10.33(21)~~

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10.34(17) †	Termination and Transition Agreement, effective as of October 1, 2009, by and among Wyeth, acting through Wyeth Pharmaceuticals Division, Wyeth-Whitehall Pharmaceuticals, Inc., Wyeth-Ayerst Lederle, Inc., and AHP Manufacturing B.V., and the Registrant, Progenics Pharmaceuticals Nevada, Inc. and Excelsior Life Sciences Ireland Limited.
~~10.33.1(22) †~~			First Amendment to Termination and Transition Agreement, effective as of October 1, 2010, by and among Wyeth LLC, acting through Wyeth Pharmaceuticals Division, Wyeth-Whitehall Pharmaceuticals LLC, Wyeth-Ayerst Lederle LLC, and AHP Manufacturing B.V., and the Registrant, Progenics Pharmaceuticals Nevada, Inc. and Excelsior Life Sciences Ireland Limited.
~~10.34(23) †~~			Collaboration Agreement, effective June 14, 2005, by and between Seattle Genetics, Inc. and PSMA Development Company, LLC.
10.37(9) †	License Agreement dated as of February 3, 2011, by and between Salix Pharmaceuticals, Inc., the Registrant, Progenics Pharmaceuticals Nevada, Inc. and Excelsior Life Sciences Ireland Limited.
10.37.1(9) †	2010 Agreement Related to Progenics' MNTX In-License, dated February 3, 2011, by and among the University of Chicago, acting on behalf of itself and ARCH Development Corporation, the Registrant, Progenics Pharmaceuticals Nevada, Inc. and Salix Pharmaceuticals, Inc.
10.38(18) †	Stock Purchase and Sale Agreement, dated January 16, 2013, by and between Molecular Insight Pharmaceuticals, Inc., its Stockholders, the Registrant, and Highland Capital Management, L.P., as Stockholders Representative.
10.39(18) †	License Agreement, dated September 1, 2012, by and between FUJIFILM RI Pharma Co., Ltd. and Molecular Insight Pharmaceuticals, Inc.
10.40 ††	License Agreement, dated May 2, 2012, between Molecular Insight Pharmaceuticals, Inc., the University of Zurich and the Paul Scherrer Institute.
10.41(19)	License Agreement, dated as of December 15, 2000, between Molecular Insight Pharmaceuticals, Inc. and The Board of Governors of the University of Western Ontario.
10.42(19)	License Agreement, dated as of November 3, 2006, between Molecular Insight Pharmaceuticals, Inc. and Novartis Pharma AG, together with First Amendment, dated January 4, 2007, thereto.
10.43(20)	Controlled Equity Offering^SM Sales Agreement dated as of January 23, 2014, by and between the Registrant and Cantor Fitzgerald & Co. (filed as Exhibit 1.1 to Registration Statement on Form S-3, Commission File No. 333-193521.
12.1	Statement re computation of ratio of earnings (loss) to combined fixed charges and preferred stock dividends.
21.1	Subsidiaries of the Registrant.
23.1	Consent of PricewaterhouseCoopers LLP.
23.2	Consent of Ernst & Young LLP.
31.1		~~Certification of Mark R. Baker, Chief Executive Officer of the Registrant pursuant to 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended.~~
~~31.2~~			Certification of Angelo W. Lovallo, Jr., Senior Executive Director, Financial Reporting & Treasurer of the Registrant pursuant to 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended.
31.3**		Certification of Mark R. Baker, Chief Executive Officer of the Registrant pursuant to 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended.
31.4**31.2	Certification of Angelo W. Lovallo, Jr., Vice President, Finance & Treasurer of the Registrant pursuant to 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended.
32.1	Certification of Mark R. Baker, Chief Executive Officer of the Registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Angelo W. Lovallo, Jr., ~~Senior Executive Director, Financial Reporting & Treasurer of the Registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~
32.3**			~~Certification of Mark R. Baker, Chief Executive Officer of the Registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~
32.4**			~~Certification of Angelo W. Lovallo, Jr., Senior Executive Director, Financial Reporting~~Vice President, Finance & Treasurer of the Registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	Interactive Data File
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Document

~~E-1~~

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*		Exhibits footnoted as previously filed have been filed as an exhibit to the document of the Registrant or other registrant referenced in the footnote below, and are incorporated by reference herein. ~~Exhibits not so footnoted and not filed herewith were filed with the Registrant's Annual Report on Form 10-K for the year ended December 31, 2012 filed with the SEC March 15, 2012.~~

**(1)		~~Filed herewith.~~

~~(1)~~		Previously filed in ~~Quarterly~~Current Report on Form ~~10-Q for the quarter ended~~8-K filed on June ~~30, 2011.~~13, 2013.
(2)		Previously filed in Current Report on Form 8-K filed on March 16, 2012.
(3)		Previously filed in Registration Statement on Form S-1, Commission File No. 333-13627.
(4)		Previously filed in Registration Statement on Form S-8, Commission File No. 333-120508.
(5)		Previously filed in Current Report on Form 8-K filed on ~~November 28, 2012.~~June 17, 2013.
(6)		Previously filed in Current Report on Form 8-K filed on July 8, 2008.
(7)		~~Previously filed in Quarterly Report on Form 10-Q for the quarterly period ending March 31, 2007~~
~~(8)~~		~~Previously filed in Annual Report on Form 10-K for the year ended December 31, 2007.~~
~~(9)~~		Previously filed in Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2011.~~2007.
~~(10)~~(8)		Previously filed in Quarterly Report on Form 10-Q for the quarter ended March 31, 2012.
~~(11)~~(9)		Previously filed in Quarterly Report on Form 10-Q for the ~~quarterly period~~quarter ended June 30, 1999.
~~(12)~~(10)		Previously filed in Annual Report on Form 10-K for the year ended December 31, 2004.
~~(13)~~		~~Previously filed in Annual Report on Form 10-K for the year ended December 31, 1999.~~
~~(14)~~(11)		Previously filed in Annual Report on Form 10-K for the year ended December 31, 2002.
~~(15)~~(12)		Previously filed in Current Report on Form 8-K filed on September 20, 2004.
~~(16)~~(13)		Previously filed in Current Report on Form 8-K filed on November 28, 2012.
~~(17)~~(14)		Previously filed in Annual Report on Form 10-K for the year ended December 31, 2005.

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Table of Contents

~~(18)~~(15)		Previously filed in Quarterly Report on Form 10-Q for the ~~quarterly period ending~~quarter ended June 30, ~~2006.~~2006
~~(19)~~(16)		~~Previously filed in Annual Report on Form 10-K/A for the year ended December 31, 2006.~~
~~(20)~~		Previously filed in Annual Report on Form 10-K for the year ended December 31, 2008.
~~(21)~~(17)		~~Previously filed in Annual Report on Form 10-K for the year ended December 31, 2009.~~
~~(22)~~		~~Previously filed in Annual Report on Form 10-K for the year ended December 31, 2010.~~
~~(23)~~		Previously filed in Amendment No. 2 to Annual Report on Form 10-K/A for the year ended December 31, 2009.
(18)		Previously filed in Quarterly Report on Form 10-Q for the quarter ended March 31, 2013.
(19)		Previously filed in Registration Statement on Form S-1, Commission File No. 333-129570 filed by Molecular Insight Pharmaceuticals, Inc.
(20)		Previously incorporated in Current Report on Form 8-K filed on January 24, 2014 by reference to Exhibit 1.1 to Registration Statement on Form S-3, Commission File No. 333-193521.


†		Confidential treatment granted as to certain portions omitted and filed separately with the Commission.
††		Confidential treatment requested as to certain portions omitted and filed separately with the Commission.
‡		Management contract or compensatory plan or arrangement.

~~E-2~~

E-3

Delaware	13-3379479
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Name of each exchange on which registered
Common Stock, par value $0.0013 per share	The NASDAQ Stock Market LLC

Large ~~Accelerated Filer~~accelerated filer ¨	Accelerated ~~Filer~~filer x
Non-accelerated ~~Filer~~filer ¨ (Do not check if a smaller reporting company)	Smaller ~~Reporting Company~~reporting company ¨


OUR PRODUCT CANDIDATES

~~PART IV~~
~~Item 15.~~	~~Exhibits, Financial Statement Schedules~~	23

~~SIGNATURES~~		~~S-1~~
~~EXHIBIT INDEX~~		~~E-1~~

			~~Director Since~~		~~Position with the Company~~
~~Peter J. Crowley~~ ^(3)(4)(5)	~~2009~~	~~Chairman~~
~~Paul J. Maddon~~	~~1986~~	~~Vice Chairman~~
~~Charles A. Baker~~^(1)(2)(3)*	~~1994~~	~~Director~~
~~Mark R. Baker~~ ⁽⁴⁾⁽⁵⁾	~~2009~~	~~Chief Executive Officer and Director~~
~~Kurt W. Briner~~^*	~~1998~~	~~Director~~
~~Stephen P. Goff~~ ⁽²⁾⁽⁴⁾	~~1993~~In development for	~~Director~~Status
~~David A. Scheinberg~~ ^(1)(4)(5)							~~1996~~	~~Director~~
~~Nicole S. Williams~~ ⁽¹⁾ PSMA ADC			~~2007~~	Treatment of prostate cancer	~~Director~~	Phase 2 testing in chemotherapy-experienced patients completed; a second cohort in chemotherapy-naïve patients ongoing

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	~~For the fiscal year ended December 31, 2012~~
	Or

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	~~For the transition period from ___________ to ___________~~


	~~Explanatory Note~~	1
PART I
Item 1.	Business	2
Item 1A.	Risk Factors	12
Item 1B.	Unresolved Staff Comments	25
Item 2.	Properties	25
Item 3.	Legal Proceedings	25
Item 4.	Not Applicable	25
PART II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	25
Item 6.	Selected Financial Data	27
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	28
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	39
Item 8.	Financial Statements and Supplementary Data	39
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	39
Item 9A.	Controls and Procedures	39
Item 9B.	Other Information	41
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	242
Item 11.	Executive Compensation	642
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	1842
Item 13.	Certain Relationships and Related Transactions, and Director Independence	2142
Item 14.	Principal Accounting Fees and Services	2242
PART IV
Item 15.	Exhibits, Financial Statement Schedules	43
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS		F-1
SIGNATURES		S-1
EXHIBIT INDEX		E-1

		~~Position with the Company~~
~~John W. Babich~~1404	Imaging agent for prostate cancer		Phase 2 testing completed
		~~Senior Vice President~~
~~Robert J. Israel~~Azedra™	Treatment of pheochromocytoma and paraganglioma		Phase 2b registrational trial under Special Protocol Assessment (SPA)
		~~Senior Vice President, Medical Affairs & Clinical Research~~
~~William C. Olson~~ RELISTOR^®
		~~Senior Vice President, Research & Development~~
~~Nitya G. Ray~~Relistor-Subcutaneous injection	Treatment of opioid induced constipation (OIC) in advanced-illness patients receiving palliative care when laxative therapy has not been sufficient		Marketed in the U.S., E.U., Canada, Australia and elsewhere; licensed to Salix Pharmaceuticals
		~~Senior Vice President, Manufacturing~~
~~Ann Marie Assumma~~Relistor-Subcutaneous injection	Treatment of OIC in patients with non-cancer pain		Complete Response Letter received in 2012 on pending sNDA; awaiting meeting date of Advisory Committee convened by FDA
		~~Vice President, Regulatory Affairs~~
~~Angelo W. Lovallo, Jr.~~Relistor-Oral	Treatment of OIC		Phase 3 testing completed
		~~Vice President, Finance and Treasurer~~
~~Vivien Wong~~		~~Vice President, Product Development~~
~~David E. Martin~~

	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Full Year
					(in thousands)
2013:
Net Sales	$	7,700	$	7,900	$	4,800	$	19,000	$	39,400
Royalties Earned		1,155		1,174		719		2,847		5,895
2012:
Net Sales	$	12,300	$	10,800	$	4,900	$	5,200	$	33,200
Royalties Earned		1,834		1,619		728		782		4,963
2011:
Net Sales	$	3,300	$	5,200	$	9,700	$	8,800	$	27,000
Royalties Earned		-		527		1,240		1,279		3,046

Clinical and Research	Number of Patents		Expiration	Number of Patent Applications
Candidates; Relistor	U.S.	International	Dates ⁽¹⁾	U.S.	International

Development programs	21	76	2015-2031	15	49

Relistor	19	112	2015-2031	23	218

Other	1	1	2029	4	19

	·	pre-clinical laboratory and animal tests;
	·	submission to and favorable review by the FDA of an investigational new drug application before clinical trials may begin;
	·	adequate and well-controlled human clinical trials to establish the safety and efficacy of the product for its intended indication (animal and other nonclinical studies also are typically conducted during each phase of human clinical trials);
	·	submission to the FDA of a marketing application; and
	·	FDA review of the marketing application in order to determine, among other things, whether the product is safe and effective for its intended uses.

~~Acorda Therapeutics, Inc.~~	~~Idenix Pharmaceuticals, Inc.~~
~~Adolor Corp.~~	~~Immunomedics Inc.~~
~~Allos Therapeutics Inc.~~	~~Infinity Pharmaceuticals Inc.~~
~~Alnylam Pharmaceuticals Inc.~~	~~Nektar Therapeutics~~
~~Ariad Pharmaceuticals Inc.~~	~~Neurocrine Biosciences, Inc.~~
~~Array Biopharma Inc.~~	~~Sangamo Biosciences Inc.~~
~~Dyax Corp.~~	~~Sucampo Pharmaceuticals, Inc.~~
~~GTx Inc.~~	~~Synta Pharmaceuticals Corp.~~

	Year	Salary			Bonus ⁽¹⁾		Stock Awards ⁽²⁾		Option Awards⁽²⁾		Non-Equity Incentive Plan Compen- sation		All Other Compen-sation⁽³⁾⁽⁴⁾		Total
Mr. Baker	2012	$	517,500		$	155,250		-	$	689,244		-	$	15,612	$	1,377,606
(CEO; President	2011		487,500			312,500		-		1,685,158		-		37,906		2,523,064
before March 3, 2011)	2010		425,000			350,000		-		883,275		-		46,360		1,704,635

Mr. Lovallo (VP; PFO)	2012		236,025			56,120		-		63,584		-		8,261		363,990

Mr. McKinney	2012		245,979			-		-		331,020		-		258,072		835,071
(CFO before	2011		313,664			137,228		-		349,125		-		25,493		825,510
September 30, 2012	2010		301,600			105,560		53,500		106,386		-		32,370		599,416

Dr. Israel	2012		397,407			83,455		-		331,020		-		15,448		827,330
(SVP)	2011		383,968			143,988		-		349,125		-		27,028		904,109
	2010		369,200			110,760		53,500		106,386		-		35,150		674,996

Dr. Olson	2012		314,007			65,941		-		331,020		-		14,140		725,108
(SVP)

Ms. Assumma	2012		279,864			61,592		-		264,816		-		15,607		621,879
(VP)

Dr. Maddon (Vice	2012		257,237	⁽⁵⁾		-		-		53,451		-		1,801,940		2,112,628
Chairman; CSO	2011		465,208			150,000		-		428,077		-		13,964		1,057,250
before March 14, 2012;	2010		618,000			250,000		-		405,260		-		13,893		1,287,153
CEO before March 3, 2011)

	Grant Date	Estimated Future Payouts Under Equity Incentive Plan Awards (#)⁽¹⁾		All Other Stock Awards: Number of Shares of Stock or Units (#)	All Other Option Awards: Number of Securities Underlying Options (#)⁽²⁾		Exercise or Base Price of Option Awards ($/Share)		Grant Date Fair Value of Stock and Option Awards ($)⁽³⁾⁽⁴⁾
Mr. Baker	3/1/2012					66,666	$	9.81	$	441,356
	3/1/2012		33,334				$	9.81	$	247,888

Mr. Lovallo	3/1/2012					10,000	$	9.81	$	63,584

Mr. McKinney	3/1/2012					50,000	$	9.81	$	331,020

Dr. Israel	3/1/2012					50,000	$	9.81	$	331,020

Dr. Olson	3/1/2012					50,000	$	9.81	$	331,020

Ms. Assumma	3/1/2012					40,000	$	9.81	$	264,816

	Option Awards												Stock Awards
	No. of Securities Underlying Unexercised Options (#) Exercisable			No. of Securities Underlying Unexercised Options (#) Unexercisable			Equity Incentive Plan Awards: No. of Securities Underlying Unexercised Unearned Options (#)			Option Exercise Price ($)		Option Expiration Date	No. of Shares or Units of Stock That Have Not Vested (#)⁽¹⁾		Market Value of Shares or Units of Stock That Have Not Vested ($)		Equity Incentive Plan Awards: No. of Unearned Shares, Units or Other Rights That Have Not Vested (#)	Equity Incentive Plan Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
Mr. Baker		-						33,334	⁽²⁾	$	9.81	3/1/2022
		-			66,666	⁽³⁾				$	9.81	3/1/2022
		20,833			41,667	⁽⁴⁾				$	7.40	7/1/2021
		46,875						15,625	⁽²⁾	$	7.40	7/1/2021
		50,000			150,000	⁽⁵⁾				$	7.66	6/8/2021
		150,000						50,000	⁽²⁾	$	5.35	7/1/2020
		83,333			41,667	⁽⁶⁾				$	5.35	7/1/2020
		60,000								$	16.05	7/1/2018
		10,000								$	22.01	7/2/2017
		25,000								$	24.26	7/3/2016
		60,000								$	27.71	2/21/2016
		50,000								$	20.02	6/20/2015

Mr. Lovallo		-			10,000	⁽³⁾				$	9.81	3/1/2022
		3,000			6,000	⁽⁴⁾				$	7.40	7/1/2021
		2,666			1,334	⁽⁶⁾				$	5.35	7/1/2020
		3,375								$	5.33	7/1/2019
		4,800			1,200	⁽⁷⁾				$	14.27	9/2/2018
														444	$	1,323
Mr. McKinney⁽⁸⁾		-			50,000					$	9.81	3/1/2022
		23,333			46,667					$	7.40	7/1/2021
		20,000			10,000					$	5.35	7/1/2020
		50,000								$	5.33	7/1/2019
		25,000								$	16.05	7/1/2018
		10,000								$	22.01	7/2/2017
		25,000								$	24.26	7/3/2016
		12,500								$	21.39	7/1/2015
		25,000								$	22.68	3/1/2015
		25,000								$	15.06	7/1/2013
														3,333	$	9,932
Dr. Israel					50,000	⁽³⁾				$	9.81	3/1/2022
		23,333			46,667	⁽⁴⁾				$	7.40	7/1/2021
		20,000			10,000	⁽⁶⁾				$	5.35	7/1/2020
		25,000								$	5.33	7/1/2019
		20,000								$	16.05	7/1/2018
		7,000								$	22.01	7/2/2017
		17,500								$	24.26	7/3/2016
		10,000								$	21.39	7/1/2015
		35,000								$	15.06	7/1/2013
														3,333	$	9,932
Dr. Olson		-			50,000	⁽³⁾				$	9.81	3/1/2022
		23,333			46,667	⁽⁴⁾				$	7.40	7/1/2021
		20,000			10,000	⁽⁶⁾				$	5.35	7/1/2020
		50,000								$	5.33	7/1/2019
		20,000								$	16.05	7/1/2018
		7,000								$	22.01	7/2/2017
		17,500								$	24.26	7/3/2016
		12,500								$	21.39	7/1/2015
		25,000								$	15.06	7/1/2013
														3,333	$	9,932
Ms. Assumma		-			40,000	⁽³⁾				$	9.81	3/1/2022
		20,000			40,000	⁽⁴⁾				$	7.40	7/1/2021
		16,666			8,334	⁽⁶⁾				$	5.35	7/1/2020
		30,000								$	5.33	7/1/2019
		10,000								$	16.05	7/1/2018
		2,400								$	22.01	7/2/2017
		4,500								$	24.26	7/3/2016
		4,000								$	21.39	7/1/2015
		10,000								$	11.50	8/9/2014
														2,777	$	8,275
Dr. Maddon		10,000	⁽⁹⁾							$	7.93	6/13/22
		28,333			56,667	⁽⁴⁾				$	7.40	7/1/2021
		100,000								$	5.35	7/1/2020
		50,000								$	5.35	7/1/2020
		175,000								$	5.33	7/1/2019
		75,000								$	16.05	7/1/2018
		112,500								$	22.01	7/2/2017
		145,000								$	24.26	7/3/2016
		75,000								$	21.39	7/1/2015
		37,500								$	16.85	7/1/2014
		37,500								$	16.85	7/1/2014
		112,500								$	15.06	7/1/2013
		112,500								$	15.06	7/1/2013

	Option Awards		Stock Awards
	No. of Shares Acquired on Exercise (#)	Value Realized on Exercise ($)	No. of Shares Acquired on Vesting (#)	Value Realized on Vesting ($)
Mr. Baker	-	-	-	-
Mr. Lovallo	-	-	819	7,101
Mr. McKinney	-	-	3,333	28,897
Dr. Israel	7,000	29,842	3,333	28,897
Dr. Olson	-	-	3,333	28,897
Ms. Assumma	-	-	2,778	24,085
Dr. Maddon	-	-	18,750	176,438

Circumstances of Termination by the Company	Cash Severance				Equity		Benefits Continuation ($)	Gross up of I.R.C. Golden Parachute Excise Tax Resulting from Change in Control ($)	Total ($)
	Base Salary		Bonus		Value of Vested Equity ($)	Value of Accelerated Unvested Equity ($)
	Multiple	($)	Multiple	($)	Value of Vested Equity ($)	Value of Accelerated Unvested Equity ($)
For cause	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	-
Without cause	N/A	298,055	N/A	N/A	N/A	N/A	21,712	N/A	319,767

Circumstances of Termination⁽¹⁾	Cash Severance				Equity		Benefits Continuation ($)⁽⁵⁾	Gross up Of I.R.C. Golden Parachute Excise Tax Resulting From Change in Control ($)	Total ($)
	Base Salary		Bonus⁽²⁾		Value of Vested Equity ($)⁽³⁾	Value of Accelerated Unvested Equity ($)⁽⁴⁾
	Multiple	($)	Multiple	($)	Value of Vested Equity ($)⁽³⁾	Value of Accelerated Unvested Equity ($)⁽⁴⁾
For cause or voluntary termination	N/A	N/A	N/A	N/A	535,764	N/A	N/A	N/A	535,764

Death or disability⁽⁶⁾	1	425,000	N/A	366,667	535,764	N/A	35,292	N/A	1,362,722
Without cause or by the executive with good reason⁽⁷⁾	2	850,000	2	583,333	535,764	1,070,211	35,292	N/A	3,074,600
Without cause or by the executive with good reason following a change in control⁽⁸⁾	3	1,275,000	3	800,000	535,764	1,070,211	52,937	N/A	3,733,912

		High		Low
2013:	Fourth quarter	$	5.90	$	3.45
	Third quarter		6.47		4.36
	Second quarter		5.57		3.54
	First quarter		5.96		2.53

2012:	Fourth quarter	$	3.30	$	1.41
	Third quarter		11.00		2.81
	Second quarter		11.34		7.44
	First quarter		10.50		8.32

Sources of Revenue	2013		2012		2011		2013 vs. 2012			2012 vs. 2011
							Percent Change

Royalty income	$	5,923	$	4,963	$	3,046		19	%		63	%
Collaboration revenue		1,595		8,525		76,764		(81	%)		(89	%)
Research grants		275		488		4,810		(44	%)		(90	%)
Other revenues		69		72		176		(4	%)		(59	%)
Total	$	7,862	$	14,048	$	84,796		(44	%)		(83	%)

	Relistor Net Sales Reported by Collaborators
	Years Ended December 31,
	2013		2012		2011
U.S.	$	35,000	$	29,200	$	21,500
Ex-U.S.		4,400		4,000		5,500
Global	$	39,400	$	33,200	$	27,000

	Fees Earned or Paid in Cash		Option Awards⁽¹⁾		All Other Compensation		Total
Mr. Briner	$	44,000	$	53,451		-	$	97,451
Mr. Charles Baker		68,000		53,451		-		121,451
Mr. Crowley		105,500		213,804		-		319,304
Mr. Dalton⁽²⁾		15,250		-		-		15,250
Dr. Goff		62,000		53,451		-		115,451
Dr. Maddon⁽²⁾		32,750		53,451		-		86,201
Dr. Scheinberg		74,000		53,451		-		127,451
Ms. Williams		71,000		53,451		-		124,451

			Payments due by Year-end
	Total		2014			2015-2016		2017-2018	Thereafter
	(in millions)
Operating leases	$	13.9	$	1.9	$	3.8	$	4.0	$	4.2
License, collaboration and other agreements:
Fixed payments		1.3		0.3		0.4		0.6		-
Contingent payments (1)		105.7		-		2.3		7.7		95.7
Total	$	120.9	$	2.2	$	6.5	$	12.3	$	99.9

	Shares Beneficially Owned⁽²⁾
Name and Address of Beneficial Owner⁽¹⁾	Number	Percent
Federated Investors, Inc.⁽³⁾ Federated Investors Tower Pittsburgh, PA 15222-3779	12,538,268	24.52 %
FMR LLC⁽⁴⁾ 82 Devonshire Street Boston, MA 02109	5,146,395	10.06 %
Broadfin Capital, LLC⁽⁵⁾ 237 Park Avenue, Suite 900 New York, NY 10017	3,651,666	7.14%
Tudor Investment Corporation and affiliates⁽⁶⁾ 1275 King Street Greenwich, CT 06831	2,888,513	5.65%
Charles A. Baker⁽⁷⁾	116,481	*
Mark R. Baker⁽⁸⁾	739,403	1.43%
Kurt W. Briner⁽⁹⁾	213,000	*
Peter J. Crowley⁽¹⁰⁾	150,000	*
Stephen P. Goff⁽¹¹⁾	158,500	*
Paul J. Maddon⁽¹²⁾	1,924,890	3.69%
David A. Scheinberg⁽¹³⁾	160,289	*
Nicole S. Williams⁽¹⁴⁾	90,000	*
Angelo W. Lovallo, Jr.⁽¹⁵⁾	20,563	*
Robert A. McKinney⁽¹⁶⁾	276,913	*
Robert J. Israel⁽¹⁷⁾	209,549	*
William C. Olson⁽¹⁸⁾	237,543	*
Ann Marie Assumma⁽¹⁹⁾	128,869	*
All directors and executive officers as a group⁽²⁰⁾	4,426,000	8.16%

	Number of shares to be issued upon exercise of outstanding options, warrants and rights⁽¹⁾		Weighted average exercise price of outstanding options, warrants and rights		Number of shares remaining available for future issuance (excluding securities reflected in first column)⁽²⁾
Equity compensation plans approved by stockholders		5,999,976	$	12.26		1,979,090
Equity compensation plans not approved by stockholders		-		-		-
Total⁽³⁾		5,999,976	$	12.26		1,979,090

	2012		2011
Audit Fees⁽¹⁾	$	464,000	$	587,204
Audit Related Fees		-		40,650	⁽²⁾
Tax Fees⁽³⁾		15,000		108,000
All Other Fees⁽⁴⁾		4,075		1,933