EPIX Pharmaceuticals SC TOI Issuer tender offer statement | EPIXE 7 Apr 09

Exhibit 99. (a)(1)(A)

Offer to Exchange and Consent Solicitation

EPIX Pharmaceuticals, Inc.

Offer to Exchange
Shares of Common Stock Plus a Cash Payment Plus Contingent Value Rights
for
Each $1,000 Principal Amount of Outstanding
3.00% Convertible Senior Notes due 2024
(the “Notes”)
CUSIP Nos. 26881QAB7 and 26881QAA9
and
Consent Solicitation
for
Amendments to the Related Indenture

EPIX Pharmaceuticals, Inc. (“EPIX Pharmaceuticals,” “we,” “us” or the “Company”) is offering (the “Exchange Offer”) to exchange (i) 339 shares of common stock, par value $0.01 per share (“common stock”), plus (ii) a cash payment of $180.00 (the consideration referenced in clauses (i) and (ii), the “Closing Consideration”), plus (iii) one (1) contingent value right (“Contingent Value Right”), as described below, for each $1,000 principal amount of our outstanding 3.00% Convertible Senior Notes due 2024 (the “Notes”), upon the terms and subject to the conditions set forth in this Offer to Exchange and Consent Solicitation and related offer materials, as amended and supplemented from time to time (the “Offer Documents”). Each Contingent Value Right represents the contractual right to receive additional payments, subject to certain exceptions, if after completion of the Exchange Offer the Company consummates any exchange, redemption, repurchase, prepayment or similar event on account of, or with respect to, Notes held by any holder of Notes who does not tender all of such holder’s Notes in the Exchange Offer (such holder, a “Non-Tendering Holder”) within a specified time period and which results in aggregate cash or non-cash payments to such Non-Tendering Holder having a fair market value (as set forth in the definitive agreement executed by the Company and such Non-Tendering Holder) in excess of the sum of (a) $180.00, (b) the lower of (i) $170.00 and (ii) the fair market value of 339 shares of common stock as of the date of consummation of the Exchange Offer and (c) any prior payments made by the Company pursuant to such Contingent Value Right, for each $1,000 of aggregate principal amount outstanding of the Notes tendered by such Non-Tendering Holder (each, a “CVR Payment Event”). We refer to the Closing Consideration together with the Contingent Value Rights as the “Exchange Consideration.” The Exchange Consideration will be in full satisfaction of the principal amount of, and any accrued but unpaid interest through the consummation of the Exchange Offer on, the Notes so tendered and accepted. The Closing Consideration and any amounts paid with respect to the Contingent Value Rights will be subject to any required withholding of taxes, and no interest will be paid thereon. The Contingent Value Rights will not be transferable, except under very limited circumstances as described herein.

Concurrently with this Exchange Offer, EPIX Pharmaceuticals is soliciting, upon the terms and subject to the conditions set forth in this Offer to Exchange and Consent Solicitation and the related Letter of Transmittal and Consent (which together constitute the “Offer”), consent from holders of the outstanding Notes to adopt proposed amendments to the Indenture between us and U.S. Bank National Association, as Indenture Trustee (the “Indenture Trustee”), dated as of June 7, 2004, as amended by the First Supplemental Indenture, dated as of January 7, 2005 (as amended, the “Indenture”), to remove certain restrictive covenants in the Indenture. These proposed amendments to the Indenture, together with the agreements giving effect to such amendments, are referred to herein as the “Proposed Amendments.” EPIX Pharmaceuticals is not offering to pay any separate or additional payment for the consents to the Proposed Amendments.

This Offer expires at 5:00 p.m., New York City time, on May 4, 2009, which we refer to as the Expiration Date, unless the Exchange Offer and Consent Solicitation is extended by us with the consent of the holders of at least 75% in outstanding principal amount of the Notes.

AN AD HOC COMMITTEE OF HOLDERS OF NOTES (THE “NOTEHOLDERS’ COMMITTEE”) AND ITS ADVISORS HAVE BEEN NEGOTIATING WITH THE COMPANY AND ITS ADVISORS FOR SEVERAL MONTHS. MEMBERS OF THE NOTEHOLDERS’ COMMITTEE HAVE AGREED TO THE TERMS OF THE OFFER. MEMBERS OF THE NOTEHOLDERS’ COMMITTEE, HOLDING APPROXIMATELY 83% OF THE

AGGREGATE PRINCIPAL AMOUNT OF THE OUTSTANDING NOTES , HAVE AGREED TO TENDER, SUBJECT TO CERTAIN TERMS AND CONDITIONS DESCRIBED MORE FULLY HEREIN, THEIR NOTES IN THE OFFER.

Holders of Notes are encouraged to read the Offer Documents in their entirety, including the “Risk Factors” section of this Offer to Exchange and Consent Solicitation beginning on page 16 before you make any decision regarding the Offer.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS OFFER IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The date of this Offer to Exchange and Consent Solicitation is April 7, 2009.

As of April 7, 2009, there is $100 million in aggregate principal amount of Notes outstanding.

Our common stock is listed on The NASDAQ Global Market under the symbol “EPIX.” On April 3, 2009, the last reported sales price of our common stock on The NASDAQ Global Market was $0.52 per share. As of April 3, 2009, we had 41,947,441 shares of common stock outstanding.

Our board of directors has approved this Offer. However, neither our board of directors nor any other person is making any recommendation as to whether you should choose to exchange your Notes for the Exchange Consideration or consent to the Proposed Amendments.

We are relying on Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”), to exempt the Exchange Offer from the registration requirements of the Securities Act. We are also relying on Section 18(b)(4)(C) of the Securities Act to exempt the Exchange Offer from the registration and qualification requirements of the state securities laws. We have no contract, arrangement or understanding relating to, and will not, directly or indirectly, pay any commission or other remuneration to any broker, dealer, salesperson, agent or any other person for soliciting tenders in the Exchange Offer. In addition, neither our financial advisor nor any broker, dealer, salesperson, agent or any other person, is engaged or authorized to express any statement, opinion, recommendation or judgment with respect to the relative merits and risks of the Exchange Offer.

HOLDERS OF NOTES THAT TENDER THROUGH THE DEPOSITORY TRUST COMPANY (“DTC”) NEED NOT SUBMIT A PHYSICAL LETTER OF TRANSMITTAL AND CONSENT TO THE EXCHANGE AGENT IF SUCH HOLDERS COMPLY WITH THE TRANSMITTAL PROCEDURES OF DTC.

The Exchange Agent is U.S. Bank National Association:


By Overnight Courier or Mail:	By Registered or Certified Mail:	By Hand:
U.S. Bank National Association 60 Livingston Avenue St. Paul, MN 55107 ATTN: Specialized Finance (if by mail, registered or certified recommended)	U.S. Bank National Association 60 Livingston Avenue St. Paul, MN 55107 ATTN: Specialized Finance	U.S. Bank National Association 60 Livingston Avenue 1^st Floor Bond Drop Window St. Paul, MN 55107 ATTN: Corporate Trust Services — Specialized Finance


By Facsimile:		To Confirm by Telephone:

(657)-495-8158 ATTN: Bondholder Communications		(800)-934-6802 ATTN: Bondholder Communications

For Information:
(800)-934-6802

Copies of this Offer to Exchange and Consent Solicitation may be obtained from
U.S. Bank National Association (the “Exchange Agent”)
at its address set forth above.

TABLE OF CONTENTS

No person has been authorized to give any information or to make any representations other than those contained in this Offer to Exchange and Consent Solicitation and, if given or made, such information or representations must not be relied upon as having been authorized. This Offer to Exchange and Consent Solicitation does not constitute an offer to buy or the solicitation of an offer to sell Notes in any circumstances or jurisdiction in which such offer or solicitation is unlawful. The delivery of this Offer to Exchange and Consent Solicitation shall not under any circumstances create any implication that the information contained herein is current as of any time subsequent to the date of such information. Neither EPIX Pharmaceuticals nor, to its knowledge, any of its affiliates, directors or executive officers are making any representation or recommendation to any holder as to whether or not to tender such holder’s Notes or consent to the Proposed Amendments. You should consult your own financial and tax advisors and must make your own decision as to whether to consent to the proposed Amendments and tender your Notes for exchange and, if so, the amount of Notes to tender.

SUMMARY TERMS OF THE OFFER

The Offer Documents contain important information that should be read carefully before any decision is made with respect to the Offer. The following summary is qualified in its entirety by the more detailed information appearing elsewhere or incorporated by reference in this Offer to Exchange and Consent Solicitation and the other Offer Documents. Capitalized terms not otherwise defined in this summary have the meanings assigned to them elsewhere in this Offer to Exchange and Consent Solicitation.

Questions and Answers About the Offer

• Who is making the Offer?

EPIX Pharmaceuticals, Inc., the issuer of the Notes, is making the Offer. The mailing address of our principal executive offices is 4 Maguire Road, Lexington, Massachusetts 02421. Our telephone number at these offices is(781) 761-7600. Our common stock is currently listed on the NASDAQ Global Market under the symbol “EPIX.” See “The Offer — Introduction.”

• Why are we making the Offer?

We are making the Offer to restructure our existing capital structure. In 2004, we issued the Notes pursuant to an Indenture between us and U.S. Bank National Association, as Indenture Trustee (the “Indenture Trustee”), dated as of June 7, 2004, as amended by the First Supplemental Indenture, dated as of January 7, 2005 (as amended, the “Indenture”), of which $100 million in aggregate principal amount remains outstanding.

We entered into a Restructuring Support Agreement (the “Restructuring Support Agreement”) with members of a noteholders’ committee (the “Noteholders’ Committee”) regarding a consensual restructuring of our obligations under the Notes. Members of the Noteholders’ Committee beneficially owning approximately 83% in principal amount of the outstanding Notes have agreed to tender their Notes in the Exchange Offer and Consent Solicitation, unless we commence any bankruptcy or similar proceeding or such a proceeding is commenced against us or the Restructuring Support Agreement is terminated for any other reason under the terms of the Restructuring Support Agreement.

The consummation of the Offer is a critical step in our financial restructuring plan. If we are unable to restructure our obligations under the Notes or otherwise raise sufficient funds to repay the Notes, we may be forced to seek protection under the United States bankruptcy laws. See “The Offer — Purposes; Plans.”


•	What is the source for the financial resources to make payment?

The Exchange Offer is being made in connection with the Company’s sale of certain of its patents relating to, and rights to commercialization of, MS-325 (formerly marketed as Vasovist, gadofosveset trisodium by Bayer Schering Pharma AG, Germany), in certain territories, pursuant to an Asset Purchase Agreement (the “Purchase Agreement”) between the Company and Lantheus Medical Imaging, Inc. (the “Product Sale”). The aggregate cash payment of up to $18,000,000 to be paid to the holders of Notes that tender in the Exchange Offer shall be funded primarily from the net proceeds of the Product Sale.


•	When does the Offer expire?

The Offer will expire at 5:00 p.m., New York City time, on Monday, May 4, 2009. See “The Offer — Expiration Date; Extensions; Amendments.”


•	Can the Offer be extended?

Yes, we can extend the Offer with the consent of the holders of at least 75% in outstanding principal amount of the Notes. See “The Offer — Expiration; Extensions; Amendments.”


•	What are the securities being sought in the Exchange Offer?

We are offering to exchange for shares of common stock, a cash payment and contingent value rights which represents the contractual right to receive additional consideration, upon the terms and subject to the conditions described in the Offer Documents, any and all of our outstanding $100 million in aggregate principal amount of the Notes validly exchanged and not validly withdrawn, as permitted under the terms herein, on or prior to the Expiration Date. See “The Offer — Terms of the Offer.”

The Notes were issued pursuant to the Indenture, of which $100 million in aggregate principal amount remains outstanding. Interest on the Notes accrues at 3.00% per year from the date of original issuance of the Notes, or from the most recent date to which interest had been paid or provided for. Interest is payable semi-annually in arrears on June 15 and December 15 of each year, commencing December 15, 2004, to holders of record at the close of business on the preceding June 1 and December 1, respectively. Interest is computed on the basis of a360-day year comprised of twelve30-day months. In the event of the maturity, conversion, repurchase by us at the option of the holder or redemption of a Note, interest ceases to accrue on the Note under the terms of and subject to the conditions of the Indenture. The terms of the Notes are those stated in the Indenture and holders of the Notes are referred to the Indenture for a complete description of the terms governing the Notes. See “Comparison of Rights Between The Notes And Common Stock” and “Description of Notes.”


•	What will I receive in the Exchange Offer?

If you tender your Notes in the Exchange Offer, you will receive for each $1,000 in principal amount of your Notes exchanged (i) a payment in cash of $180.00,plus(ii) 339 shares of common stock (the consideration referenced in clauses (i) and (ii), the “Closing Consideration”),plusone (1) contingent value right (“Contingent Value Right”), as described below. We refer to the Closing Consideration together with the Contingent Value Rights as the “Exchange Consideration.”

The Exchange Consideration will be in full satisfaction of the principal amount of, and any accrued but unpaid interest through the consummation of the Offer on, the Notes that are tendered and accepted in the Exchange Offer, including the interest payment that we are obligated to pay on June 15, 2009. See “The Offer — Terms of the Offer.”


•	What is the event that must occur for the contingent payments to be made?

Each Contingent Value Right represents the contractual right to receive additional payments, subject to certain exceptions, if after completion of the Exchange Offer the Company consummates any exchange, redemption, repurchase, prepayment or similar event on account of, or with respect to, Notes held by any holder of Notes who does not tender all of such holder’s Notes in the Exchange Offer (such holder, a “Non-Tendering Holder”) within a specified time period and which results in aggregate cash or non-cash payments to such Non-Tendering Holder having a fair market value (as set forth in the definitive agreement executed by the Company and such Non-Tendering Holder) in excess of the sum of (a) $180.00, (b) the lower of (i) $170.00 and (ii) the fair market value of 339 shares of common stock as of the date of consummation of the Exchange Offer and (c) any prior payments made by the Company pursuant to such Contingent Value Right, for each $1,000 of aggregate principal amount outstanding of the Notes tendered by such Non-Tendering Holder (each, a “CVR Payment Event”).

Notwithstanding the foregoing, holders of Contingent Value Rights will not be entitled to any consideration if a CVR Payment Event occurs solely as a result of a “designated event” as defined below under the heading “Description of the Notes — Repurchase at the Option of the Holder Upon a Designated Event”, other than, notwithstanding the definition of “designated event,” a “change in control” as defined below under the heading “Description of the Notes — Repurchase at the Option of the Holder Upon a Designated Event” that occurs on or prior to the date that is three (3) months after the consummation of the Exchange Offer.

The CVR Payment Event must occur prior to the Termination Date (defined below).

The term “Termination Date” means the earlier to occur of (a) a Qualified Financing (defined below) and (b) nine (9) months after the consummation of the Exchange Offer.

The term “Qualified Financing” means one or more Financings (defined below) consummated by the Company after the consummation of the Exchange Offer which has resulted in aggregate gross cash proceeds of at least $10,000,000 to the Company after the consummation of the Exchange Offer.

The term “Financing” means any sale by the Company of equity or equity-linked securities or other securities convertible into equity.

Upon a CVR Payment Event, each holder of a Contingent Value Right will be entitled to receive an amount equal to (a) the fair market value paid to any Non-Tendering Holder for each $1,000 of aggregate principal amount outstanding of the Notes tendered by such Non-Tendering Holder in connection with a CVR Payment Event,minus (b) $180.00 plus the fair market value of 339 shares of common stock,minus (c) all aggregate CVR Payment Amounts per Contingent Value Right previously received by such holder (such amount, the “CVR Payment Amount”). For the avoidance of doubt, in no event shall the total of all CVR Payment Amounts, when aggregated with the fair market value of the consideration received in the Exchange Offer for each $1,000 principal amount of Notes, exceed $1,000.

The CVR Payment Amount shall be payable, at the Company’s option, (i) in cash or (ii) in the same form and type of consideration paid to such Non-Tendering Holder in connection with the CVR Payment Event. In the event the Company elects to pay the CVR Payment Amount in accordance with clause (ii) above and the consideration paid consists of a combination of cash and property other than cash, the CVR Payment Amount shall be paid by the Company in the same proportion of such consideration paid to such Non-Tendering Holder in connection with the CVR Payment Event.


•	Is it possible that no payments will become payable to the holders of Contingent Value Rights?

If a CVR Payment Event described above does not occur within the specified time period, no payment will become payable to holders of Contingent Value Rights, in which case you will receive only the Closing Consideration for any Notes you tender in the Exchange Offer. It is not possible to predict whether payments will become payable with respect to the Contingent Value Rights or, if additional payments become payable, the exact timing or the amount or the form of those additional payments. See “The CVR Agreement and Contingent Value Rights — Payments with Respect to Contingent Value Rights.”


•	May I transfer my Contingent Value Rights?

The Contingent Value Rights will not be transferable except:


	•	on death by will or intestacy,

	•	pursuant to a court order,

	•	by operation of law,

	•	in the case of Contingent Value Rights held in book-entry or other similar nominee form, from a nominee to a beneficial owner, to the extent allowable by DTC in connection with a book-entry transfer,

	•	to any affiliate of the holder of the Contingent Value Right or any holder of equity interests in, or any general or limited partner or member of, such holder of the Contingent Value Right,

	•	a transfer to EPIX Pharmaceuticals, Inc. in connection with the holder’s abandonment of all rights therein and


	•	in connection with pledges in connection with bona fide margin accounts or other loan or financing agreement secured by the Contingent Value Right.


•	Are there other material terms of the contingent payments?

In addition to the terms and conditions described above, no interest will accrue or be payable in respect of any of the amounts that may become payable on the Contingent Value Rights.


•	What will the ownership of the Company be if the Exchange Offer is consummated?

Assuming all $100 million in outstanding Notes are tendered in the Exchange Offer, we will issue 33,900,000 shares, or approximately 44.7% of our outstanding common stock, immediately following the Exchange Offer.


•	Who may participate in the Offer?

All holders of Notes may participate in the Offer.


•	What are the conditions to the completion of the Exchange Offer and Consent Solicitation?

The Offer is conditioned upon the valid tender of at least 93% of the aggregate principal amount of the outstanding Notes. This condition may be modified by the Company with the consent of the holders of at least 75% in outstanding principal amount of the Notes. See “The Offer — Conditions to the Completion of the Offer.” We will not be required, but we reserve the right, to accept for exchange any existing Notes tendered (or, alternatively, we may terminate the Offer) if any of the conditions of the Offer as described under “The Offer — Conditions to the Completion of the Offer” remain unsatisfied, subject to the requirement that we obtain the consent of the holders of at least 75% in outstanding principal amount of the Notes in order to modify the 93% minimum tender condition.


•	How can I determine the market value of the Notes?

The Notes are eligible for trading on The PORTAL Market of The NASDAQ Stock Market. However, there is no established public reporting or trading system for the Notes and trading in the Notes has been limited. To the extent that the Notes are traded, prices of the Notes may fluctuate widely depending on trading volume, the balance between buy and sell orders, prevailing interest rates, our operating results and the market for similar securities. See “Comparison of Rights Between The Notes And Common Stock” and “Description of Notes.”


•	Will the new securities by freely tradable?

The Offer is being made to you in reliance on an exemption from registration provided by Section 3(a)(9) of the Securities Act. The new securities to be issued in the Exchange Offer have not been registered with the SEC. The new securities that you receive in the Exchange Offer should generally be freely tradable in accordance with Rule 144 under the Securities Act, except (i) by persons who are considered to be our affiliates, as that term is defined in the Securities Act and (ii) by members of the Noteholders’ Committee that are subject to alock-up provision set forth in the Restructuring Support Agreement. See “Restructuring Support Agreement.” The Company has agreed to file a registration statement with the SEC that will permit the resale on a continuous basis of all shares of common stock that are held by holders of Notes who tender in the Exchange Offer and who, as a result, may be deemed affiliates of the Company following consummation of the Offer. See “Comparison of Rights Between The Notes And Common Stock” and “Description of Notes.”


•	What risks should I consider in deciding whether or not to exchange my Notes or consent to the Proposed Amendments?

In deciding whether to participate in the Offer, you should carefully consider the discussion of the risks and uncertainties relating to the Offer, our Company and our industry described in the section entitled “Risk Factors,” beginning on page 16 of this Offer to Exchange and Consent Solicitation, and the documents incorporated by reference into this Offer to Exchange and Consent Solicitation.


•	What happens if I do not participate in the Offer?

If you currently hold Notes and do not tender them, following the completion of the Offer, your Notes will continue to be outstanding according to their terms, as amended. If we complete the Offer, the liquidity of any Notes that remain outstanding after completion of the Offer may be adversely affected. If the Company has the necessary capital, we expect to continue to make interest payments on the Notes that remain outstanding according to the terms thereof, as amended, to the extent we are able.

If the Proposed Amendments are approved by holders of a majority in aggregate principal amount of the Notes outstanding, we will use our reasonable best efforts to execute, and to cause the Indenture Trustee and any other relevant parties to execute, a second supplemental indenture to the Indenture (the “Second Supplemental Indenture”). The Second Supplemental Indenture giving effect to the Proposed Amendments is attached hereto as Annex A and made a part hereof. See “The Proposed Amendments.”

If we are unable to restructure our obligations under the Notes or otherwise raise sufficient funds to repay the Notes, we may be forced to seek protection under the United States bankruptcy laws. See “The Offer — Consequences of Failure to Exchange.”


•	How do I participate in the Offer?

To tender your Notes and deliver your consents to the Proposed Amendments, you must deliver the required documents to U.S. Bank National Association, as Exchange Agent, no later than 5:00 p.m., New York City time, on May 4, 2009.

HOLDERS THAT TENDER THROUGH DTC NEED NOT SUBMIT A PHYSICAL LETTER OF TRANSMITTAL AND CONSENT TO THE EXCHANGE AGENT IF SUCH HOLDERS COMPLY WITH THE TRANSMITTAL PROCEDURES OF DTC.

A holder whose Notes are held in certificated form must properly complete and execute the Letter of Transmittal and Consent, and deliver the Letter of Transmittal and Consent and Notes in certificated form to the Exchange Agent, with any other required documents and the certificates representing the Notes to be tendered in the Exchange Offer.

A holder whose Notes are held by a broker, dealer, commercial bank, trust company or other nominee must contact that nominee if that holder desires to tender its Notes and instruct that nominee to tender the Notes on the holder’s behalf.

A holder who is a DTC participant should tender their Notes electronically through DTC’s Automated Tenders over the Participant Terminal System (“PTS”), subject to the terms and procedures of that system. See “The Offer — Procedures for Tendering Notes in the Exchange Offer.”


•	May I consent to the Proposed Amendments without tendering my Notes?

No. In order to consent to the Proposed Amendments, you must tender your Notes with respect to which the consents relate. You cannot tender your Notes without consenting to the Proposed Amendments.


•	May I withdraw my tender of Notes or revoke my consent to the Proposed Amendments?

Yes. You can withdraw Notes previously tendered for exchangeand/or revoke your consents to the Proposed Amendments at any time before the Expiration Date. The intended Expiration Date is 5:00 p.m., New York City time, on May 4, 2009. “The Offer — Right of Withdrawal.” In addition, if we have not agreed to accept your Notes for exchange, you can withdraw them at any time after the expiration of 40 business days from the commencement of the tender offer. If you withdraw your tendered Notes, you will be deemed to have revoked your consents to the Proposed Amendments with respect to the withdrawn Notes. Consents provided in connection with a tender of Notes cannot be revoked without a concurrent valid withdrawal of the related tendered Notes.


•	How do I withdraw previously tendered Notes?

To withdraw previously tendered Notes, you must deliver an executed written notice of withdrawal substantially in the form attached, or a facsimile of one, to the Exchange Agent before 5:00 p.m., New York City time, on May 4, 2009.

If you withdraw your tendered Notes, you will be deemed to have revoked your consents to the Proposed Amendments with respect to the withdrawn Notes. Consents provided in connection with a tender of Notes cannot be revoked without a concurrent valid withdrawal of the related tendered Notes.

HOLDERS THAT WITHDRAW THROUGH DTC NEED NOT SUBMIT A PHYSICAL NOTICE OF WITHDRAWAL TO THE EXCHANGE AGENT IF SUCH HOLDERS COMPLY WITH THE WITHDRAWAL PROCEDURES OF DTC.

See “The Offer — Right of Withdrawal.”


•	What happens if my Notes are not accepted in the Exchange Offer?

If we decide for any reason not to accept your existing Notes for exchange, the existing Notes will be returned to you promptly after the expiration or termination of the Offer. In the case of Notes tendered by book entry transfer into the Exchange Agent’s account at DTC, any unaccepted Notes will be credited to your account at DTC. See “The Offer — Acceptance and Delivery of the Exchange Consideration.”


•	Do I need to do anything if I do not wish to tender my Notes?

No. If you do not deliver a properly completed and duly executed Letter of Transmittal and Consent to the Exchange Agent or tender your Notes electronically through DTC’s Automated Tenders over the Participant Terminal System before the Expiration Date, your Notes will remain outstanding subject to their terms, as amended.


•	If I choose to tender my Notes for exchange, do I have to tender all of my Notes?

No. You may tender all of your Notes, a portion of your Notes or none of your Notes for exchange. If you wish to tender a portion of your Notes for exchange, however, you must tender your Notes in a principal amount at maturity of $1,000 or an integral multiple of $1,000. See “The Offer — Terms of Exchange.”


•	What are the Proposed Amendments to the Indenture?

The Proposed Amendments to the Indenture would remove certain restrictive covenants in the Indenture.


•	How will I be taxed on the exchange of the Notes?

You generally will not recognize loss for U.S. federal income tax purposes as a result of exchanging your Notes for cash and shares of common stock, but you will recognize gain equal to the lesser of (i) any cash received and (ii) the amount of cash and the fair market value of any shares of common stock you receive less your adjusted tax basis in the Notes you exchange in the Exchange Offer. You should consult with your own tax advisor regarding the actual tax consequences to you. See “Certain Material U.S. Federal Income Tax Considerations.”


•	Has the board of directors adopted a position on the Offer?

Our board of directors has approved the making of the Offer. However, our directors do not make any recommendation as to whether you should tender your Notes pursuant to the Exchange Offer or consent to the Proposed Amendments. You must make the decision whether to tender your Notes and consent to the Proposed Amendments.


•	Who will pay the fees and expenses associated with the Offer?

We will bear all fees and expenses incurred in connection with consummating the Offer. See “The Offer — Fees and Expenses.”


•	Who can answer questions concerning the Offer?

Requests for assistance in connection with the tender of Notes pursuant to the Exchange Offer and the consent to the Proposed Amendments pursuant to the Consent Solicitation may be directed to U.S. Bank National Association at (800)-934-6802.


•	Do other holders of Notes support the Offer?

Yes. Currently, holders that beneficially own approximately 83% in principal amount of the outstanding Notes have agreed to tender their Notes and consent to the Proposed Amendments. See “The Offer — Purposes; Plans.”

The Company

We are a biopharmaceutical company focused on discovering and developing novel therapeutics through the use of our proprietary and highly efficient in silico drug discovery platform. We have a pipeline of internally-discovered drug candidates currently in clinical development to treat diseases of the central nervous system and lung conditions. Our blood-pool imaging agent, MS-325 (formerly marketed as Vasovist, gadofosveset trisodium by Bayer Schering Pharma AG, Germany), is approved for marketing in over 30 countries including the United States. We also have collaborations with SmithKline Beecham Corporation (GlaxoSmithKline), Amgen Inc. and Cystic Fibrosis Foundation Therapeutics, Incorporated. We were organized as a Delaware corporation in 1988 and commenced operations in 1992.

Our principal executive offices are located at 4 Maguire Road, Lexington, Massachusetts 02421. Our telephone number at that location is(781) 761-7600.

Purpose and Effect of Offer

We are making the Offer to restructure our existing capital structure. In 2004, we issued the Notes pursuant to the Indenture, of which $100 million in aggregate principal amount remains outstanding.

We retained CRG Partners Group LLC to serve as our financial advisor to assist with our evaluation of strategic alternatives and restructuring efforts with respect to the Notes. We entered into the Restructuring Support Agreement with certain members of an ad hoc committee of noteholders regarding a consensual restructuring of our obligations under the Notes. Noteholders who beneficially own approximately 83% in principal amount of the outstanding Notes, have agreed to tender their Notes in the Exchange Offer and consent to the Proposed Amendments, unless we commence any bankruptcy or similar proceeding or such a proceeding is commenced against us or the Restructuring Support Agreement is terminated for any other reason under the terms of the Restructuring Support Agreement. The consummation of the Offer is a critical step in our financial restructuring plan.

If we are unable to restructure our obligations under the Notes, we may be forced to seek protection under the United States bankruptcy laws.

Restructuring Support Agreement

The following summary description of the Restructuring Support Agreement is qualified in its entirety by reference to the Restructuring Support Agreement itself, which is included as an exhibit to the Tender Offer Statement on Schedule TO that we have filed with the SEC, which you may examine and copy as set forth — “Where to Find Additional Information.”

The Restructuring Support Agreement contains a number of important provisions that obligate certain holders of the Notes and the Company to take, or refrain from taking, certain actions. The Agreement provides the following:


	•	Support of the Exchange Offer and Consent Solicitation: The Noteholders that are party to the Restructuring Support Agreement, or that have otherwise agreed to tender their Notes for exchange and support the Offer, have agreed to tender in the Exchange Offer and consent to the Proposed Amendments on the terms described herein and not withdraw Notes that they beneficially own representing approximately 83% in aggregate principal amount of the Notes.

	•	Lock-Up Provision: The Noteholders party to the Restructuring Support Agreement have agreed that from the date of consummation of the Offer and ending on the date that is ninety (90) days after the date of consummation of the Offer, such period of time the“Lock-Up Period”, such Noteholders will not, without the prior written consent of the Company, directly or indirectly, (i) offer, sell, assign, transfer, pledge, contract to sell, or otherwise dispose of, any shares of common stock issued to such Noteholders in connection with the Offer, such shares of


		common stock the “Exchange Shares,” or (ii) enter into any swap, hedge or similar agreement or arrangement that transfers, in whole or in part, the economic risk of ownership of the Exchange Shares; provided, however, that (A) a Noteholder shall be permitted to transfer its Exchange Shares without obtaining such prior consent to any Affiliate (as defined in the Restructuring Support Agreement) of the Noteholder or to any holder of equity interests in, or any general or limited partner or member of, such Noteholder, provided that prior to any such transfer any such transferee agrees in writing to be bound by the terms of thelock-up provision, (B) a Noteholder shall be permitted to transfer its Exchange Shares pursuant to a merger, tender offer or exchange offer or other business combination, acquisition of assets or similar transaction or change of control of the Company and (C) a Noteholder shall receive the benefits of any release or modification of thelock-up provision for any other Noteholder subject to thelock-up provision. Notwithstanding the foregoing, each Noteholder party to the Restructuring Support Agreement will be permitted to transfer its respective Exchange Shares in the following amounts and on the following dates during theLock-Up Period: (A) beginning thirty (30) days after the consummation of the Offer, up to 33.33% of such Exchange Shares and (B) beginning sixty (60) days after the consummation of the Offer, up to 66.66% of such Exchange Shares.


	•	Registration Rights Agreement: The Restructuring Support Agreement requires that the Company enter into a Registration Rights Agreement with holders of the common stock that are held by holders of Notes who tender in the Exchange Offer and who, as a result, may be deemed affiliates of the Company under federal securities laws in order to permit such holders to resell the common stock received in the Exchange Offer and any other common stock owned by such holder as of the date of the Registration Rights Agreement.

	•	Contingent Value Rights Agreement: The Restructuring Support Agreement requires that, immediately prior to the consummation of the Offer, the Company enter into a Contingent Value Rights Agreement, which we refer to as the “CVR Agreement,” with U.S. Bank National Association, as Rights Agent, in favor of the holders of Notes who tender in the Exchange Offer and who, as a result of such tender, receive Contingent Value Rights.

	•	Termination of Restructuring Support Agreement: The Restructuring Support Agreement is terminable in a variety of circumstances. In the event the Restructuring Support Agreement is terminated, the holders of Notes party thereto shall no longer be required to tender their Notes for exchange and not withdraw their Notes and shall not be required to consent to the Proposed Amendments.

	•	Consent and Acknowledgement Regarding Product Sale: The Exchange Offer is being made in connection with the Company’s sale of certain of its patents relating to, and rights to commercialization of, MS-325 (formerly marketed as Vasovist, gadofosveset trisodium by Bayer Schering Pharma AG, Germany), in certain territories, pursuant to an Asset Purchase Agreement (the “Purchase Agreement”) between the Company and Lantheus Medical Imaging, Inc. (the “Product Sale”). The Restructuring Support Agreement contains a provision whereby each Noteholder that is party thereto acknowledges and agrees that:


	•	it will not take a position contrary to the position that the sale by the Company of the purchased assets in the Product Sale does not (i) constitute a Change in Control (as defined in the Indenture) or a Designated Event (as defined in the Indenture) under the Indenture, the Notes or any related documents (collectively, the “Indenture Documents”), (ii) constitute a breach of any provision of the Indenture Documents, or (iii) require or result in an obligation to offer to repurchase or assume the indebtedness relating to the Indenture Documents as a result of the consummation of the Product Sale; and

	•	it has no reason to believe based on the provisions of the Purchase Agreement that it has, and shall not assert, any claims against Lantheus Medical Imaging, Inc. and its present or former officers, directors, agents, employees, shareholders and affiliates, in each case, in their capacity as such, and the successors and assigns of any of the foregoing (collectively, the “Buyer Parties”) under the Indenture Documents, or under any applicable law or in equity, including without limitation, in the nature of any fraudulent conveyance, preference claim or similar claims, arising from or related to the consummation of the Product Sale.

In addition, each Noteholder that is party to the Restructuring Support Agreement (on behalf of itself, each of its affiliates and each successor and assign of the foregoing) agreed to a full release in favor of the Buyer Parties of all claims arising directly or indirectly out of, based upon, or in any way related to or in connection with, the Product Sale.

The Restructuring Support Agreement contains a provision whereby the Company acknowledges that the Noteholders that are party thereto have not waived any claims that they might have against the Company. The parties agreed that upon consummation of the Offer, the holders of Notes would release certain claims that they may have against the Company as more fully described in this Offer to Exchange and Consent Solicitation.

Summary of Exchange Offer and Consent Solicitation


THE OFFER		If you tender your Notes in the Exchange Offer, you will receive for each $1,000 in principal amount of your Notes exchanged, (i) a payment in cash of $180.00,plus (ii) 339 shares of common stock of the Company (the consideration referenced in clauses (i) and (ii), the “Closing Consideration”),plus one (1) contingent value right (“Contingent Value Right”), as described below. Each Contingent Value Right represents the contractual right to receive additional payments, subject to certain exceptions, if after completion of the Exchange Offer the Company consummates any exchange, redemption, repurchase, prepayment or similar event on account of, or with respect to, Notes held by any holder of Notes who does not tender all of such holder’s Notes in the Exchange Offer (such holder, a “Non-Tendering Holder”) within a specified time period and which results in aggregate cash or non-cash payments to such Non-Tendering Holder having a fair market value (as set forth in the definitive agreement executed by the Company and such Non-Tendering Holder) in excess of the sum of (a) $180.00, (b) the lower of (i) $170.00 and (ii) the fair market value of 339 shares of common stock as of the date of consummation of the Exchange Offer and (c) any prior payments made by the Company pursuant to such Contingent Value Right, for each $1,000 of aggregate principal amount outstanding of the Notes tendered by such Non-Tendering Holder (each, a “CVR Payment Event”). We refer to the Closing Consideration together with the Contingent Value Rights as the “Exchange Consideration.” The Company has agreed, immediately prior to the consummation of the Exchange Offer, to enter into a Contingent Value Rights Agreement, which we refer to as the “CVR Agreement,” with U.S. Bank National Association, as Rights Agent, in favor of the holders of Notes who tender in the Exchange Offer and who, as a result of such tender, receive Contingent Value Rights.

		The Exchange Consideration will be in full satisfaction of the principal amount of, and any accrued but unpaid interest through the consummation of the Offer on, the Notes so tendered and accepted.

		The Exchange Offer is being made to you in reliance on an exemption from registration provided by Section 3(a)(9) of the Securities Act. The new securities to be issued in the Exchange Offer have not been registered with the SEC. The new securities that you receive in the Exchange Offer should generally be freely tradable in accordance with Rule 144 under the Securities Act, except (i) by persons who are considered to be our affiliates, as that term is defined in the Securities Act and (ii) by members of the Noteholders’ Committee that are subject to alock-up provision set forth in the Restructuring Support Agreement. See “Restructuring Support Agreement.” The Company has agreed to file a registration statement with the SEC that will permit the resale on a continuous basis of all shares of common stock, that are held by holders of Notes who tender in the Exchange Offer and who, as a result, may be deemed affiliates of the Company following consummation of the Offer. See “Comparison of Rights Between The Notes And Common Stock” and “Description of Notes.”


		The Exchange Offer is being made in connection with the Company’s sale of certain of its patents relating to, and rights to commercialization of, MS-325 (formerly marketed as Vasovist, gadofosveset trisodium by Bayer Schering Pharma AG, Germany), in certain territories, pursuant to an Asset Purchase Agreement (the “Purchase Agreement”) between the Company and Lantheus Medical Imaging, Inc. (the “Product Sale”). The aggregate cash payment of up to $18,000,000 to be paid to the holders of Notes that tender in the Exchange Offer shall be funded primarily from the net proceeds of the Product Sale.

		The Company is soliciting consents from the holders of the Notes to the Proposed Amendments. Holders of Notes may not tender their Notes without delivering the related consents. Holders of Notes may not deliver consents to the Proposed Amendments without tendering the related Notes.

		The Proposed Amendments will remove certain restrictive covenants in the Indenture.

EXPIRATION DATE; ACCEPTANCE OF TENDERS; DELIVERY OF NEW SECURITIES		The Offer will expire at 5:00 p.m., New York City time, on Monday, May 4, 2009, unless we extend the Expiration Date with the consent of the holders of at least 75% in outstanding principal amount of the Notes. During any extension, any Notes previously tendered and not withdrawn will remain subject to the Offer. During any such period, you will have the right to withdraw any previously tendered Notes and revoke any consents to the Proposed Amendments. We will issue the new securities, the cash payment and the Contingent Value Rights promptly following the Expiration Date upon our determination that the conditions of the Offer have been fulfilled or we decide to waive any unfulfilled conditions. If we decide for any reason not to accept the Notes that any holder has tendered for exchange, those Notes will be returned to such holder without cost promptly after the expiration or termination of the Offer. Any unaccepted Notes tendered by book entry transfer into the Exchange Agent’s account at DTC, as described below, will be credited to the tendering holder’s account at DTC. See “The Offer — Expiration; Extensions; Amendments,” “The Offer — The Right of Withdrawal,” and “The Offer — Procedures for Tendering Notes in the Exchange Offer” for a more complete description of the tender procedures.

WITHDRAWAL RIGHTS AND REVOCATION		Tenders of Notes and consents to the Proposed Amendments may be withdrawn at any time prior to the Expiration Date (and any extensions thereto) by delivering a written notice of withdrawal to the Exchange Agent in conformity with the procedures set forth below under “The Offer — Right of Withdrawal.” In addition, if we have not agreed to accept your Notes for exchange, you can withdraw them at any time after the expiration of 40 business days from the commencement of the tender offer. See “The Offer — Right of Withdrawal.”

CONDITIONS TO THE OFFER		The Offer is subject to customary conditions, which we may assert, modify or waive. In addition, the Exchange Offer and Consent Solicitation is also conditioned on the valid tender of 93% of the outstanding aggregate principal amount of the Notes and that such validly tendered Notes are not withdrawn. We may not modify this minimum tender condition without the consent of the holders of at least 75% in outstanding principal amount of the Notes. See “The Offer — Conditions to the Completion of the Exchange Offer and Consent Solicitation.”


SPECIAL PROCEDURES FOR BENEFICIAL OWNERS		If you are a beneficial owner whose Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender your Notes in the Exchange Offer, you should promptly contact the person in whose name the Notes are registered and instruct that person to tender on its behalf. “The Offer — Procedures for Tendering Notes in the Exchange Offer.”

CONSEQUENCES TO HOLDERS NOT TENDERING IN THE EXCHANGE OFFER		If you currently hold Notes and do not tender them, following the completion of the Exchange Offer and Consent Solicitation, your Notes will continue to be outstanding subject to their terms, as amended. If we complete the Exchange Offer and Consent Solicitation, the liquidity of any Notes that remain outstanding after completion of the Exchange Offer and Consent Solicitation may be adversely affected.

		If the Proposed Amendments are approved by holders of a majority in aggregate principal amount of the Notes outstanding, we will use our reasonable best efforts to execute, and to cause the Indenture Trustee and any other relevant parties to execute, the Second Supplemental Indenture attached hereto as Annex A, which will give effect to the Proposed Amendments. See “The Proposed Amendments.”

		If we are unable to restructure our obligations under the Notes, we may be forced to seek protection under the United States bankruptcy laws.

MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS		You generally will not recognize loss for U.S. federal income tax purposes as a result of exchanging your Notes for cash and the shares of common stock, but you will recognize gain equal to the lesser of (i) any cash received and (ii) the amount of cash and the fair market value of any shares of common stock you receive less your adjusted tax basis in the Notes you exchange in the Exchange Offer. You should consult with your own tax advisor regarding the actual tax consequences to you. See “Certain Material U.S. Federal Income Tax Considerations.”

		YOU ARE STRONGLY URGED TO CONSULT YOUR TAX ADVISORS REGARDING THE UNITED STATES FEDERAL, STATE, LOCAL AND ANY FOREIGN TAX CONSEQUENCES OF THE OFFER.

EXCHANGE AGENT		U.S. Bank National Association is the Exchange Agent for the Offer. Holders can find the address and telephone number for the Exchange Agent set forth on the cover of this Offer to Exchange and Consent Solicitation. See “The Offer — Exchange Agent.”

FEES AND EXPENSES		We will bear all expenses related to the Offer and the Restructuring Support Agreement. See “The Offer — Fees and Expenses.”

CONSEQUENCES OF FAILURE TO CONSUMMATE THE OFFER		If the Offer is not consummated for any reason, including if the minimum tender condition is not satisfied or modified by us with the consent of the holders of at least 75% in outstanding principal amount of the Notes by the Expiration Date, or the Offer’s other conditions are not satisfied or waived, we may commence reorganization cases under chapter 11 of the U.S. Bankruptcy Code. See “The Offer — Consequences of Failure to Exchange.”


TERMINATION		We reserve the right to terminate the Offer at any time prior to the Expiration Date if the conditions to the Offer are not met. See “The Offer — Conditions to the Completion of the Offer.”

RISK FACTORS		When deciding whether to participate in the Offer, you should carefully consider the information in the section titled “Risk Factors” beginning on page 16 of this Offer to Exchange and Consent Solicitation, and the other information included in or incorporated by reference into this Offer to Exchange and Consent Solicitation.

Summary Description of Registration Rights Agreement


REGISTRATION RIGHTS		The following summary description of the Registration Rights Agreement is qualified in its entirety by reference to the form of Registration Rights Agreement itself, which is included as an exhibit to the Tender Offer Statement on Schedule TO that we have filed with the SEC, which you may examine and copy as set forth — “Where to Find Additional Information.”

		On the closing date of the Offer, we will execute a registration rights agreement with holders of shares of common stock that are held by holders of Notes who tender in the Exchange Offer and who, as a result, may be deemed affiliates of the Company following consummation of the Offer. The registration rights agreement will require us to file, upon demand from applicable Noteholders, registration statements with the SEC that will permit the resale on a continuous basis, or pursuant to a firm commitment underwritten offering, of the common stock and any other common stock owned by the Noteholder as of the date of the Registration Rights Agreement. We have agreed to keep the registration statement effective until (i) such shares have been disposed of pursuant to an effective Registration Statement and the Securities Act, (ii) such shares shall have been transferred pursuant to a transaction under Rule 144 or (iii) such shares shall have become eligible for sale without restriction or limitation pursuant to Rule 144 and without the requirement to be in compliance with Rule 144(c)(1) (or any successor thereto) promulgated under the Securities Act.

SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA

The following tables present summary historical consolidated financial data for the Company. The information set forth below should be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” our historical audited consolidated financial statements and the notes thereto included in our 2008 Annual Report onForm 10-K, which are incorporated by reference. See “Incorporation by Reference.”


										Pro Forma
	Historical									Year Ended
	Years Ended December 31,									December 31,
	2006			2007			2008			2008
	(In thousands, except per share data)

Statement of Operations Data:
Revenues:
Product development revenue	$	2,910		$	10,239		$	26,190		$	26,190
Royalty revenue		1,603			1,018			626			626
License fee revenue		1,528			3,703			1,812			1,812

Total revenues		6,041			14,960			28,628			28,628
Operating expenses:
Research and development		26,255			57,527			46,241			46,241
Acquired in-process research and development		123,500			—			—			—
General and administrative		12,258			20,052			13,024			13,024
Royalties		1,063			595			3,362			3,362
Restructuring		633			350			242			242

Total operating expenses		163,709			78,524			62,869			62,869

Operating loss		(157,668	)		(63,564	)		(34,241	)		(34,241	)
Interest and other income		5,496			4,901			1,354			1,354
Interest expense		(5,076	)		(4,068	)		(3,784	)		(255	)

Loss before provision for income taxes		(157,248	)		(62,731	)		(36,671	)		(33,142	)
Provision for income taxes		145			58			—			—

Net loss	$	(157,393	)	$	(62,789	)	$	(36,671	)	$	(33,142	)

Weighted average shares:
Basic and diluted		20,789			33,936			41,466			75,366

Net loss per share, basic and diluted	$	(7.57	)	$	(1.85	)	$	(0.88	)	$	(0.44	)


	As of December 31, 2008
	Historical			Pro Forma

Balance Sheet Data:
Cash and cash equivalents	$	24,597		$	5,397
Total assets		41,069			20,485
Convertible debt		100,000			—
Long-term liabilities		118,276			18,276
Stockholders’ deficit		(94,091	)		(14,550	)
Book value per share		(2.24	)		(0.19	)

On a pro forma basis, due to our losses in 2008, our ratio of earnings to fixed charges showed a deficiency of pro forma earnings to cover fixed charges by $33.1 million for the year ended December 31, 2008.

Book Value

As of December 31, 2008, we had a net tangible book value of $(94,091), or $(2.24) per share of common stock. Net tangible book value per share is equal to our total tangible assets less total liabilities, divided by the number of shares of our outstanding common stock.

After giving effect to the Exchange Offer, our pro forma net tangible book value as adjusted as of December 31, 2008, will be approximately $(14,550), or approximately $(0.19) per pro forma share of common stock. The discussion excludes:


	•	3,273,979 shares of common stock issuable upon exercise of stock options outstanding as of December 31, 2008;

	•	5,876,390 shares of common stock available for future grant under our stock option plans as of December 31, 2008; and

	•	400,000 shares of common stock issuable upon exercise of warrants outstanding as of December 31, 2008.

Ratio of Earnings to Fixed Charges

The computation of the ratio of earnings to fixed charges includes EPIX Pharmaceuticals, Inc. and our consolidated subsidiaries. The ratio of earnings to fixed charges is calculated by dividing:


	•	earnings before income taxes adjusted for fixed charges, by

	•	fixed charges, which include interest expense under our indebtedness and interest expense under operating leases that we deem a reasonable approximation of the interest factor.

The following table shows our ratios of earnings to fixed charges for each of the five most recent fiscal years.

Ratio of Earnings to Fixed Charges


	Year Ended December 31,
	2008			2007			2006			2005			2004
	(In thousands)

Fixed charges:
Interest expense, including amortization of debt issuance costs	$	3,785		$	4,068		$	5,076		$	3,613		$	2,129
Portion of rent expense representative of interest		639			1,015			495			426			394

Total fixed charges		4,424			5,083			5,571			4,039			2,523

Earnings (loss):
Loss before provision for income taxes		(36,671	)		(62,730	)		(157,248	)		(21,269	)		(22,621	)
Fixed charges per above		4,424			5,083			5,571			4,039			2,523

Total loss before fixed charges		(32,247	)		(57,647	)		(151,677	)		(17,230	)		(20,098	)

Deficiency of earnings available to cover fixed charges	$	(36,671	)	$	(62,730	)	$	(157,248	)	$	(21,269	)	$	(22,621	)

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Offer to Exchange and Consent Solicitation (including any document incorporated by reference herein or therein) contains statements with respect to the Company which constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. and of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “believes,” “budget,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “potential,” “predicts,” “project,” “should,” “will” and similar expressions, or the negatives of these words and expressions, are intended to identify such forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, which are difficult to predict and many of which are beyond our control. A number of important factors could cause actual results to differ materially from those in the forward-looking statements, including those factors discussed in the “Risk Factors” section of this Offer to Exchange and Consent Solicitation beginning on page 16 and in the documents incorporated by reference herein. Factors that could cause actual results to differ from those reflected in forward-looking statements relating to our operations and business include:


	•	our ability to successfully consummate the Exchange Offer and Consent Solicitation;

	•	our ability to raise substantial additional capital in order to fund operations;

	•	the competitive environment in the life sciences industry;

	•	whether we can successfully develop new products and the degree to which these gain market acceptance;

	•	the success and timing of our pre-clinical studies and clinical trials;

	•	our ability to obtain and maintain regulatory approval for our product candidates and the timing of such approvals;

	•	our ability to research, develop and commercialize our product candidates;

	•	regulatory developments in the United States and foreign countries; and

	•	our ability to obtain and maintain intellectual property protection for our product candidates.

We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. We disclaim any obligation, except as specifically required by law and the rules of the SEC, to publicly update or revise any such statements to reflect any change in company expectations or in events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.

You should read this Offer to Exchange and Consent Solicitation, and the documents that we reference herein, completely and with the understanding that our actual future results may be materially different from what we expect. You should assume that the information appearing in this Offer to Exchange and Consent Solicitation is accurate as of the date on the front cover of this Offer to Exchange and Consent Solicitation only. Our business, financial condition, results of operations and prospects may change. We may not update these forward-looking statements, even though our situation may change in the future, unless we have obligations under the Federal securities laws to update and disclose material developments related to previously disclosed information. We qualify all of the information presented in this Offer to Exchange and Consent Solicitation, and particularly our forward-looking statements, by these cautionary statements.

RISK FACTORS

Exchanging your Notes for cash, common stock and Contingent Value Rights and consent to the Proposed Amendments involves a high degree of risk. Failure to exchange your Notes also involves significant risk. You should carefully consider the risks and uncertainties described below before making a decision whether to participate in the Offer. The risks and uncertainties described below are not the only ones facing our Company. Additional risks and uncertainties that we do not presently know or that we currently deem immaterial may also impair our business operations, including risks and uncertainties generally applicable to companies that have undertaken restructuring transactions.

If any of the following risks actually occur, they could materially adversely affect our business, financial condition or operating results. In that case, the trading price of our common stock could decline.

Risks Related to the Offer

If not enough holders tender their Notes and/or conditions to closing have not been satisfied, or we otherwise fail to consummate the Offer, we do not anticipate that we will be able to repurchase the Notes tendered to us, and we may be required to seek protection from creditors. We do not expect that additional financing is available for this purpose.

If the Offer is not consummated for any reason, including the failure to satisfy the conditions to the Offer, we may be required to cease our operationsand/or reorganize under chapter 11 of the U.S. Bankruptcy Code in order to seek protection from creditors.

The completion of the Offer is subject to the condition that at least 93% of the outstanding aggregate principal amount of the Notes are validly tendered, accepted, and not withdrawn. This condition may be modified by the Company with the consent of the holders of at least 75% in outstanding principal amount of the Notes.

An alternative to the Offer presented in this Offer to Exchange and Consent Solicitation may not be available to us and, even if available and completed, may be less attractive than the financial restructuring we are proposing.

We believe that the completion of the Offer is critical to our continuing viability. If we do not consummate the Offer, we will be required to consider other alternatives to adjust our capital structure. An alternative financial restructuring arrangement may not be available or, if available, may not result in a successful reorganization or be on terms as favorable to our creditors and equity holders as the terms of the Offer we are proposing.

Alternative financial restructuring arrangements may include seeking protection under chapter 11 of the U.S. Bankruptcy Code. The expenses of any such case would reduce the assets available for payment or distribution to our creditors, including holders of the Notes. In addition, we believe that a bankruptcy filing (either voluntary or involuntary) would not increase the amount of any payment or distribution that holders of the Notes would receive. In fact, a bankruptcy filing could reduce such amount and, in any event, would delay receipt of any such payment or distribution by such holders.

A long and protracted restructuring could cause us to lose key management employees and otherwise adversely affect our business.

If we fail to consummate the Offer on a timely basis, any alternative we pursue, whether in or out of court, may take substantially longer to consummate than the Offer. A protracted financial restructuring could disrupt our business and would divert the attention of our management from operation of our business and implementation of our business plan. It is likely that such a prolonged financial restructuring or bankruptcy proceeding would cause us to lose many of our key management employees, including the most senior members of management. Such losses of key management employees would likely make it difficult for the Company to complete a financial restructuring and may make it less likely that we will be able to continue as a viable business.

The uncertainty surrounding a prolonged financial restructuring could also have other adverse effects on us. For example, it could also adversely affect:


	•	our ability to raise additional capital;


	•	our ability to capitalize on business opportunities and react to competitive pressures;

	•	our ability to attract and retain employees;

	•	our liquidity;

	•	how our business is viewed by investors, lenders, strategic partners or licensing partners; and

	•	our enterprise value.

Future changes in the composition of our stockholder population, including those resulting from the issuance of the common stock in the Offer, are likely to limit our ability to use our net operating losses.

We have substantial tax loss carryforwards for U.S. federal income tax purposes. As a result of prior changes in the stock ownership of the Company our ability to use such carryforwards to offset future income or tax liability is limited under section 382 of the Internal Revenue Code of 1986, as amended (the “Code”). As a result of the implementation of the Exchange Offer, it is likely that our ability to use these loss carryforwards will be further restricted.

Recognition of cancellation of debt income may increase our income tax liability and adversely impact our financial position.

The Company generally will recognize cancellation of debt income for U.S. federal income tax purposes as a result of the Exchange Offer if, and to the extent, the outstanding balance of the Notes exchanged exceeds the cash payment and the fair market value of the common stock delivered in the Exchange Offer. Even though the Company expects that, as a result of the Offer, it will recognize significant cancellation of debt income and its net operating losses will be limited, the Company believes that it has sufficient tax losses, including loss carryforwards and taking into account any applicable section 382 limitations, to offset all of the anticipated income for U.S. federal income tax purposes. Thus, the Company believes it will not incur a liability for regular corporate federal income tax purposes from the implementation of the Offer (although there may be some liability for federal alternative minimum tax and state income tax). However, if it were determined that the available tax loss carryforwards were significantly less than the amount estimated, the Company could have a significantly greater income tax liability as a result of the Offer.

Restructuring our obligations under our Notes by offering the common stock has resulted in increased costs to us and significant dilution to holders of our common stock.

We are incurring significant additional costs to finance the Offer, and holders of our common stock will suffer significant dilution. The holders of the Notes will receive a payment of cash in connection with the Exchange Offer which will decrease the cash available to fund future operations. The Offer and Restructuring Support Agreement have also resulted in significant costs to us as we pay advisory and professional fees in connection with evaluating our alternatives under the Notes and pursuing the Offer.

We have not obtained a third-party determination that the Offer is fair to holders of the Notes.

We are not making a recommendation as to whether holders of the Notes should exchange their Notes or consent to the Proposed Amendments. We have not retained and do not intend to retain any unaffiliated representative to act solely on behalf of the holders of the Notes for purposes of negotiating the Offer or preparing a report concerning the fairness of the Offer. We cannot assure holders of the Notes that the value of the cash, common stock and Contingent Value Rights received in the Exchange Offer will in the future equal or exceed the value of the Notes tendered and we do not take a position as to whether you ought to participate in the Offer.

If the Offer is consummated, holders of Notes that do not exchange their Notes in the Exchange Offer will be subject to certain risks.

Holders that do not exchange their Notes will not be entitled to receive the cash payment, common stock and Contingent Value Rights delivered to tendering holders. If the Proposed Amendments are approved by holders of a majority in aggregate principal amount of the Notes outstanding, we will use our reasonable best efforts to execute, and to

cause the Indenture Trustee and any other relevant parties to execute, the Second Supplemental Indenture attached hereto as Annex A, which will give effect to the Proposed Amendments. See “The Proposed Amendments.”

Consummation of the Exchange Offer and Consent Solicitation could adversely affect the trading market, if any, for the untendered Notes. This could adversely affect the liquidity, market price, and price volatility of any untendered Notes. If a market for untendered Notes exists, such Notes may trade at a discount to the price at which the Notes would trade if the amount outstanding had not been reduced, depending on prevailing interest rates, the market for similar securities, and other factors.

If an insufficient number of Notes are tendered, we will consider all financial alternatives available to us at such time, which is likely to result in a reorganization under chapter 11 of the U.S. Bankruptcy Code. Any reorganization that may result could be on terms less favorable to the holders than the terms of the Exchange Offer and Consent Solicitation. If a protracted and non-orderly reorganization were to occur, there is a risk that the ability of the holders to recover their investments would be substantially delayed and more impaired than under the proposed restructuring transactions.

If holders of the Notes have claims against us resulting from their acquisition or ownership of Notes, they will give up those claims if they exchange their Notes.

By tendering Notes in the Exchange Offer, upon closing of the Offer, holders of the Notes will be deemed to have released and waived any and all claims they, their successors and their assigns have or may have had against


	•	us, our subsidiaries, our affiliates and their stockholders, and

	•	our directors, officers, employees, attorneys, accountants, advisors, agents and representatives, in each case whether current or former, as well as the directors, officers, employees, attorneys, accountants, advisors, agents and representatives of our subsidiaries, our affiliates and our stockholders arising from, related to, or in connection with, their acquisition or ownership of the Notes, including claims for accrued interest, unless those claims arise under federal or state securities laws. Because it is not possible to estimate the likelihood of their success in pursuing these legal claims or the magnitude of any recovery to which they ultimately might be entitled, it is possible that the consideration holders of the Notes receive in the Exchange Offer will have a value less than the value of the legal claims such holders of the Notes are relinquishing. Moreover, holders who do not tender their Notes for exchange and former holders who have already sold their Notes will continue to have the right to prosecute their claims against us.

Holders of Notes who participate in the Offer will lose their rights under the existing Indenture.

Holders who tender their Notes and consent to the Proposed Amendments will receive new securities but will lose all rights associated with the Notes. The Notes obligate us to pay holders a certain amount of annual interest, which tendering holders will forfeit.

Holders of Notes who do not participate in the Offer may be paid the principal amount of their Notes before payment is made to holders of common stock in a subsequent bankruptcy or liquidation.

The Notes represent indebtedness rather than equity. If the Offer is completed, in the case of a subsequent bankruptcy or liquidation, any Notes not tendered in this Exchange Offer would be repaid prior to any payment to the holders of common stock.

Consideration paid to holders in the Exchange Offer could be subject to avoidance as a preferential transfer.

There is also a possibility that if we were to become a debtor in a case under the U.S. Bankruptcy Code within 90 days after the consummation of the Offer (or, with respect to any insiders, as defined in the U.S. Bankruptcy Code, within one year after consummation of the Offer) and certain other conditions were met, the consideration paid to holders in the Exchange Offer, absent any of the U.S. Bankruptcy Code’s defenses to avoidance, could be subject to avoidance, in whole or in part, as a preferential transfer and, to the extent avoided, the value of such consideration could be recovered from such holders and possibly from subsequent transferees.

Risks Related to Our Business

For a discussion of risks relating to our business, see Item 1A of our Annual Report onForm 10-K for the year ended December 31, 2008 incorporated by reference herein.

Risks Related to our Intellectual Property

For a discussion of risks relating to our intellectual property, see Item 1A of our Annual Report onForm 10-K for the year ended December 31, 2008 incorporated by reference herein.

Risks Related To Our Securities

For a discussion of risks relating to our securities, see Item 1A of our Annual Report onForm 10-K for the year ended December 31, 2008 incorporated by reference herein.

USE OF PROCEEDS

We will not receive any cash proceeds from the exchange of the Notes for the cash payment, shares of common stock and Contingent Value Rights pursuant to the Exchange Offer.

PRICE RANGE OF COMMON STOCK

The Notes are eligible for trading on The PORTAL Market of The NASDAQ Stock Market. However, there is no established public reporting or trading system for the Notes and trading in the Notes has been limited. To the extent that the Notes are traded, prices of the Notes may fluctuate widely depending on trading volume, the balance between buy and sell orders, prevailing interest rates, the operating results of EPIX Pharmaceuticals and the market for similar securities. The Notes are held through DTC, and Cede & Co., as nominee of DTC, is the sole record holder of the Notes.

Our common stock is listed for trading on The NASDAQ Global Market. The following table presents the range of high and low quarterly sales prices of shares of EPIX Pharmaceuticals common stock on The NASDAQ Global Market (through the close of trading on April 3, 2009) since January 1, 2007.


	High		Low

Year 2007
First Quarter	$	7.20	$	6.08
Second Quarter		7.28		5.08
Third Quarter		5.90		3.67
Fourth Quarter		5.40		2.89
Year 2008
First Quarter		4.41		1.33
Second Quarter		2.50		1.28
Third Quarter		2.16		0.84
Fourth Quarter		1.87		0.21
Year 2009
First Quarter		1.10		0.30
Second Quarter (through April 3, 2009)		0.61		0.50

On April 3, 2009, the last reported sale price of EPIX Pharmaceuticals common stock on the NASDAQ Global Market was $0.52 per share. As of April 3, 2009, we had 41,947,441 shares of common stock outstanding. We urge you to obtain current market information for the Notes, to the extent available, and the common stock before making any decision to surrender your Notes and consent to the Proposed Amendments pursuant to the Offer.

CAPITALIZATION

The following table sets forth the following information:


	•	our actual capitalization, without giving effect to the Exchange Offer, at December 31, 2008; and

	•	our capitalization as of December 31, 2008, on a pro forma basis, to give effect to the issuance of the shares of common stock and the cash payment in the Exchange Offer on the assumption that all of the outstanding Notes were validly tendered and accepted for exchange.


	December 31, 2008
	Actual			Pro Forma
	(In thousands except share data)

Cash and cash equivalents:
Cash and cash equivalents(1)	$	24,597		$	5,397

Capitalization:
Debt:
3.00% Convertible Senior Notes Due 2024	$	100,000		$	—

Total debt		100,000			—
Commitments and contingencies
Stockholders’ deficit:
Preferred stock, $0.01 par value, 1,000,000 shares authorized, no shares issued		—			—
Common stock $0.01 par value, 100,000,000 shares authorized; 41,914,691 shares issued and outstanding at December 31, 2008(1)		419			758	(1)
Additional paid-in capital(1)		350,318			367,607	(1)
Accumulated deficit(2)		(444,828	)		(382,915	)(2)
Accumulated other comprehensive income		—			—

Total stockholders’ deficit		(94,091	)		(14,550	)

Total Capitalization	$	5,909		$	(14,550	)


(1)		Assumes cash payment of $18.0 million, payment of estimated offering expenses of $1.2 million and the issuance of 33,900,000 shares of common stock in exchange for the extinguishment of $100.0 million of the Notes and $125,000 of accrued interest at December 31, 2008. The fair value of the common stock of $17.6 million is based on the closing price of our common stock of $0.52 on April 3, 2009.

(2)		Assumes a gain on extinguishment of $61.9 million This gain is significantly impacted by the value of the common shares issued as discussed in footnote (1) and thus may be greater or less that this amount at the time the Exchange Offer expires.

DIVIDEND POLICY

No cash dividends have been paid on the common stock to date and we do not expect to pay cash dividends on the common stock in the foreseeable future.

Any future declaration and payment of dividends will be subject to the discretion of our board of directors, will be subject to applicable law and will depend upon our results of operations, earnings, financial condition, contractual limitations, cash requirements, future prospects and any other factors deemed relevant by our board of directors.

UNAUDITED PRO FORMA FINANCIAL DATA

Unaudited Pro Forma Financial Statements

The following unaudited pro forma financial statements are based on, and should be read in conjunction with our audited financial statements for the fiscal year ended December 31, 2008 and related notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for such period, all of which are incorporated by reference into this Offer to Exchange and Consent Solicitation. See “Where You Can Find More Information” and “Incorporation of Documents by Reference.”

The unaudited pro forma financial statements give effect to the financial impact of the consummation of the Offer, as if the Offer was consummated on the date or at the beginning of the periods indicated including:


	•	the tender and cancellation of $100 million of the existing Notes;

	•	the issuance of common stock and the cash payment of $18 million in exchange for the tender and cancellation of the principal amount of the Notes and payment of the accrued interest as of the period indicated; and

	•	the payment of fees and expenses related to the Offer.

The unaudited pro forma financial statements are for informational purposes only, are not indications of future performance, and should not be considered indicative of actual results that would have been achieved had the restructuring transactions actually been consummated on the dates or at the beginning of the periods presented.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of December 31, 2008


	Historical			Adjustments			Pro Forma
	(In thousands, except per share data)

ASSETS
Current assets:
Cash and cash equivalents	$	24,597		$	(19,200	)(1)	$	5,397
Accounts receivable		1,752						1,752
Prepaid expenses and other assets		1,424						1,424

Total current assets		27,773			(19,200	)		8,573
Property and equipment, net		5,300						5,300
Other assets		3,056			(1,384	)(2)		1,672
Goodwill		4,940						4,940

Total assets	$	41,069		$	(20,584	)	$	20,485


LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	1,059					$	1,059
Accrued expenses		9,646			(125	)(1)		9,521
Contract advances		3,679						3,679
Current portion of capital lease obligation		222						222
Current portion of deferred revenue		1,500						1,500
Other current liabilities		778						778

Total current liabilities		16,884			(125	)		16,759
Deferred revenue		13,792						13,792
Capital lease obligation		214						214
Other liabilities		4,270						4,270
Convertible debt		100,000			(100,000	)(1)		—

Total liabilities		135,160			(100,125	)		35,035
Commitment and contingencies
Stockholders’ deficit
Preferred stock, $0.01 par value, 1,000,000 shares authorized; no shares issued		—			—			—
Common stock $0.01 par value, 100,000,000 shares authorized; 41,914,691 shares issued and outstanding at December 31, 2008		419			339	(1)		758
Additionalpaid-in-capital		350,318			17,289	(1)		367,607
Accumulated deficit		(444,828	)		61,913	(3)		(382,915	)
Accumulated other comprehensive income		—						—

Total stockholders’ deficit		(94,091	)		79,541			(14,550	)

Total liabilities and stockholders’ deficit	$	41,069		$	(20,584	)	$	20,485


(1)		Assumes cash payment of $18.0 million, payment of estimated offering expenses of $1.2 million and the issuance of 33,900,000 shares of common stock in exchange for the extinguishment of $100.0 million of the Notes and $125,000 of accrued interest at December 31, 2008. The fair value of the common stock of $17.6 million is based on the closing price of our common stock of $0.52 on April 3, 2009.

(2)		Represents the write-off of debt issuance costs at December 31, 2008 relating the original issuance of the Notes.

(3)		Assumes a gain on extinguishment of $61.9 million. This gain is significantly impacted by the value of the common shares issued as discussed in footnote (1) and thus may be greater or less that this amount at the time the Exchange Offer expires.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the Fiscal Year Ended December 31, 2008


	Historical			Adjustments			Pro Forma
	(In thousands, except per share data)

Statement of Operations Data:
Revenues:
Product development revenue	$	26,190		$	—		$	26,190
Royalty revenue		626			—			626
License fee revenue		1,812			—			1,812

Total revenues		28,628			—			28,628
Operating expenses:
Research and development		46,241			—			46,241
General and administrative		13,024			—			13,024
Royalties		3,362			—			3,362
Restructuring		242			—			242

Total operating expenses		62,869			—			62,869

Operating loss		(34,241	)		—			(34,241	)
Interest and other income		1,354			—			1,354
Interest expense		(3,784	)		3,529	(1)		(255	)

Loss before provision for income taxes		(36,671	)		3,529	(2)		(33,142	)
Provision for income taxes		—			—			—

Net loss	$	(36,671	)	$	3,529		$	(33,142	)

Weighted average shares:
Basic and diluted		41,466			33,900			75,366

Net loss per share, basic and diluted	$	(0.88	)				$	(0.44	)


(1)		Represents the reduction in interest expense pro forma for the Exchange Offer.

(2)		Excludes an estimated gain on debt extinguishment of $61.9 million as this is a material non-recurring item.

FINANCIAL PROJECTIONS

In connection with our negotiations with the Noteholders’ Committee described in “The Restructuring Support Agreement — History of the Negotiations of the Restructuring Support Agreement,” we provided the Noteholders’ Committee with certain non-public business and financial information under a confidentiality agreement. The Restructuring Support Agreement requires that we disclose material, non-public information provided to the Noteholders’ Committee. The information provided by us included certain projections of our cash position, as well as our projected net revenues, expenses and net profit (loss) under a base model scenario and a stretch model scenario. The projections covered the fiscal 2009, 2010 and 2011 periods, and were presented in November 2008 to the Noteholders’ Committee.

The projections included in the information do not give effect to the proposed Exchange Offer and Consent Solicitation. The projections also do not give effect to the recent reductions in force and other cost saving initiatives that we undertook subsequent to November 2008 or the actual net proceeds of the sale to Lantheus Medical Imaging on April 6, 2009 of our U.S., including Puerto Rico, Canadian, and Australian rights for MS-325 (formerly marketed as Vasovist, gadofosveset trisodium by Bayer Schering Pharma AG, Germany), our blood pool magnetic resonance angiography agent (the “Product Sale”). The projections assume, among other things, that we will able to raise at least $50 million in additional capital and that we will be able to raise sufficient funds to continue our operations beyond the end of August 2009. Accordingly, it is expected that there will be material differences between actual and projected results, and actual results are likely to be materially different than those set forth below.

We do not, as a matter of course, publicly disclose projections as to future revenues or earnings. The projections were not prepared with a view to public disclosure and are included in this Offer to Exchange and Consent Solicitation only because such information was made available to the Noteholders’ Committee we are obligated under the Restructuring Support Agreement to disclose such information. The projections were not prepared with a view toward public disclosure, nor were they prepared with a view toward compliance with published guidelines of the SEC, the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of financial forecasts, or generally accepted accounting principles. In addition, the prospective financial information contained in the summary projections included in this document has been prepared by, and is the responsibility of, our management. Our accountants, Ernst& Young LLP, have neither examined, compiled nor performed any procedures with respect to the accompanying summary projections and, accordingly, Ernst& Young LLP does not express an opinion, any assurance on their reasonableness, accuracy or achievability or any other form of assurance with respect thereto. The Ernst& Young LLP report incorporated in this document relates to our historical financial information. It does not extend to the summary projections and should not be read to do so. The financial projections do not comply with generally accepted accounting principles.

The summary projections are not being included in this Offer to Exchange and Consent Solicitation to influence any decision as to whether to participate in the Exchange Offer, but only because such information was made available to the Noteholders’ Committee. The inclusion of the summary projections in this Offer to Exchange and Consent Solicitation should not be regarded as an indication that we, our board of directors, or any of our financial advisors considered or consider the projections to be a reliable prediction of future events, and the summary projections should not be relied upon as such. Neither we nor our board of directors intends to update or otherwise revise the summary projections to reflect circumstances existing after the date when made or to reflect the occurrence of future events even in the event that any or all of the assumptions underlying the projections are shown to be in error or to otherwise have changed.

The projections that we provided to the Noteholders’ Committee are summarized below. The projections were based on expectations and assumptions at the time they were prepared in November 2008 and were based on numerous variables and assumptions that are inherently uncertain and may be beyond the control of our management and may prove not to have been, or may no longer be, accurate. See the accompanying footnotes to the tables below.

Base Model(1)(2)


	Year Ended December 31,
	2009			2010			2011

Net Revenue	$	31,723,953		$	55,855,845		$	86,336,679

Net Expenses		60,435,242			65,941,343			74,038,660

Net Interest		3,467,563			3,767,563			3,767,563

Net Profit (Loss)	$	(32,178,852	)	$	(13,853,060	)	$	8,530,456

Cash Burn	$	(31,697,808	)	$	(14,041,272	)	$	8,426,684

Stretch Model(1)(2)(3)


	Year Ended December 31,
	2009		2010			2011

Net Revenue	$	64,229,837	$	54,855,845		$	104,336,679

Net Expenses		60,486,568		63,974,676			74,771,993

Net Interest		3,467,563		3,767,563			3,767,563

Net Profit (Loss)	$	275,706	$	(12,886,394	)	$	25,797,123

Cash Burn	$	756,750	$	(13,074,606	)	$	25,693,351


(1)		Assumes. among other things, that we receive additional funding of at least $50 million from a capital raising transaction prior to the end of August 2009. As of December 31, 2008, we had $24.6 million of cash and cash equivalents to fund our future operations. We believe that our cash and cash equivalents, along with anticipated revenue that we expect to earn during the first half of 2009, will fund our operations only through the end of August 2009. If we are unable to obtain additional capital to fund our operations beyond August 2009, we will not be able to sustain our operations and would be required to cease our operations and/or seek bankruptcy protection.

(2)		Does not reflect, among other things, our March 2009 efforts to reduce our cost structure by eliminating approximately 50% of our workforce, narrowing the focus of our research and development efforts to our lead clinical programs,PRX-03140 being developed for the treatment of Alzheimer’s disease andPRX-08066 being developed for the treatment of pulmonary hypertension associated with chronic obstructive pulmonary disease, and our partnered preclinical programs with SmithKline Beecham Corporation (GlaxoSmithKline) and Cystic Fibrosis Foundation Therapeutics, Incorporated; and reducing our research and development obligations under our collaboration agreement with GlaxoSmithKline through September 13, 2009 for programs other than the PRX-03140 program. In addition to reducing our future net expenses, these efforts also significantly reduced our ability to achieve projected revenues.

(3)		The stretch projections were prepared to highlight the maximum potential for our business and did not take into account our resources and ability to optimally execute on our strategy, including the timing and maximum amounts that we could potentially receive in connection with the monetization ofMS-325 (formerly marketed as Vasovist, gadofosveset trisodium by Bayer Schering Pharma AG, Germany) in 2009 and potential licensing of PRX-08066. Actual proceeds from the Product Sale were materially lower than assumed in the stretch projections.


		Important factors that may affect actual results and result in the projections not being achieved include, but are not limited to, the inherently unpredictable nature of projections and the fact that they do not reflect a final board of directors approved strategic plan; our ability to raise capital to fund our operations beyond August 2009; the fact that the projections do not reflect our actual net proceeds from the Product Sale; the fact that the projections do not reflect our reductions in force and other cost saving initiatives since November 2008; and other risks described in our report onForm 10-K filed with the securities and Exchange Commission for the fiscal year ended December 31, 2008. In addition, the projection will be affected by our ability to achieve strategic goals, objectives and targets over the applicable period. These assumptions upon which the projections were based necessarily involve judgments with respect to, among other things, future economic, competitive and regulatory conditions and financial market conditions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. The projections also reflect assumptions as to certain business decisions relating to our company that are subject to change.

THE RESTRUCTURING SUPPORT AGREEMENT

History of the Negotiations of the Restructuring Support Agreement

In 2004, we issued the Notes pursuant to the Indenture, of which $100 million in aggregate principal amount remains outstanding.

Between November 20-25, 2008, we entered into confidentiality agreements with the members of the Noteholders’ Committee pursuant to which we agreed to provide each member with confidential information pertaining to the Company and under which we engaged in initial discussions regarding the restructuring of our obligations under the Notes. On January 16, 2009, we entered into an agreement with Schulte Roth & Zabel LLP (“SRZ”) pursuant to which we agreed to provide SRZ with confidential information pertaining to the Company and agreed to pay SRZ’s fees and reimburse its expenses incurred in connection with their representation of the Noteholders’ Committee. We were informed that the Noteholders represented by SRZ would each be acting individually in all capacities. From November 2008 through April 6, 2009, we engaged in a series of negotiations and presentations to SRZ and/or one or more of the Noteholders. In addition, we also provided a variety of due diligence information to SRZ, subject to the confidentiality restrictions contained in our agreement with SRZ. Following the negotiations, we entered into the Restructuring Support Agreement on April 6, 2009 with the members of the Noteholders’ Committee regarding a consensual restructuring of our obligations under the Notes. Members of the Noteholders’ Committee beneficially owning approximately 82.5% in principal amount of the outstanding Notes have agreed in the Restructuring Support Agreement to tender their Notes in the Exchange Offer and Consent Solicitation, unless we commence any bankruptcy or similar proceeding or such a proceeding is commenced against us or the Restructuring Support Agreement is terminated for any other reason under the terms of the Restructuring Support Agreement.

Terms of the Restructuring Support Agreement

The Restructuring Support Agreement was the result of arms length negotiations between the Company and one or more members of the Noteholders’ Committee and the advisor thereto. To our knowledge, none of the Noteholders that are party to the Restructuring Support Agreement or otherwise have agreed in writing to tender their Notes in the Exchange Offer and Consent Solicitation are affiliated with any director or officer of EPIX.


	•	Support of the Exchange Offer and Consent Solicitation: The Noteholders that are party to the Restructuring Support Agreement, or that have otherwise agreed to be bound by the provisions of the Restructuring Support Agreement summarized within this section entitled “Support of the Exchange Offer and Consent Solicitation,”


		have agreed to tender in the Exchange Offer and Consent Solicitation on the terms described herein, and not withdraw, Notes that they beneficially own representing approximately 83% in aggregate principal amount of the Notes. The material terms of the Exchange Offer and Consent Solicitation that these Noteholders have agreed to support by tendering and not withdrawing their Notes include:


	•	the amount of the cash payment, the number of shares common stock and the Contingent Value Rights to be issued in the Exchange Offer,

	•	the expiration date of the Exchange Offer and that such date may only be extended with the consent of the holders of at least 75% in aggregate principal amount of the Notes, and

	•	the condition that at least ninety-three percent (93%) in aggregate principal amount of the Notes be validly tendered and not withdrawn, which condition may only be modified with the consent of the holders of at least 75% in aggregate principal amount of the Notes.


	•	Lock-Up Provision: The Noteholders party to the Restructuring Support Agreement have agreed that from the date of consummation of the Offer and ending on the date that is ninety (90) days after the date of consummation of the Offer, such period of time the“Lock-Up Period”, such Noteholders will not, without the prior written consent of the Company, directly or indirectly, (i) offer, sell, assign, transfer, pledge, contract to sell, or otherwise dispose of, any shares of common stock issued to such Noteholders in connection with the Offer, such shares of common stock the “Exchange Shares,” or (ii) enter into any swap, hedge or similar agreement or arrangement that transfers, in whole or in part, the economic risk of ownership of the Exchange Shares; provided, however, that (A) a Noteholder shall be permitted to transfer its Exchange Shares without obtaining such prior consent to any Affiliate (as defined in the Restructuring Support Agreement) of the Noteholder or to any holder of equity interests in, or any general or limited partner or member of, such Noteholder, provided that prior to any such transfer any such transferee agrees in writing to be bound by the terms of thelock-up provision, (B) a Noteholder shall be permitted to transfer its Exchange Shares pursuant to a merger, tender offer or exchange offer or other business combination, acquisition of assets or similar transaction or change of control of the Company and (C) a Noteholder shall receive the benefits of any release or modification of thelock-up provision for any other Noteholder subject to thelock-up provision. Notwithstanding the foregoing, each Noteholder party to the Restructuring Support Agreement will be permitted to transfer its respective Exchange Shares in the following amounts and on the following dates during theLock-Up Period: (A) beginning thirty (30) days after the consummation of the Offer, up to 33.33% of such Exchange Shares and (B) beginning sixty (60) days after the consummation of the Offer, up to 66.66% of such Exchange Shares.

	•	Registration Rights Agreement: The Restructuring Support Agreement requires that the Company enter into a Registration Rights Agreement with holders of the common stock that are held by holders of Notes who tender in the Exchange Offer and who, as a result, may be deemed affiliates of the Company under federal securities laws in order to permit such holders to resell the common stock received in the Exchange Offer and any other common stock owned by such holder as of the date of the Registration Rights Agreement.

	•	Contingent Value Rights Agreement: The Restructuring Support Agreement requires that, immediately prior to the consummation of the Offer, the Company enter into a Contingent Value Rights Agreement, which we refer to as the “CVR Agreement,” with U.S. Bank National Association, as Rights Agent, in favor of the holders of Notes who tender in the Exchange Offer and who, as a result of such tender, receive Contingent Value Rights.

	•	Termination of Restructuring Support Agreement: The Restructuring Support Agreement is terminable in a variety of circumstances. In the event the Restructuring Support Agreement is terminated, the holders of Notes party thereto shall no longer be required to tender their Notes for exchange and not withdraw their Notes and shall not be required to consent to the Proposed Amendments.

	•	Consent and Acknowledgement Regarding Product Sale: The Exchange Offer is being made in connection with the Company’s sale of certain of its patents relating to, and rights to commercialization of,MS-325 (formerly marketed as Vasovist, gadofosveset trisodium by Bayer Schering Pharma AG, Germany), in certain territories, pursuant to an Asset Purchase Agreement (the “Purchase Agreement”) between the Company and Lantheus


		Medical Imaging, Inc. (the “Product Sale”). The Restructuring Support Agreement contains a provision whereby each Noteholder that is party thereto acknowledges and agrees that:


	•	it will not take a position contrary to the position that the sale by the Company of the purchased assets in the Product Sale does not (i) constitute a Change in Control (as defined in the Indenture) or a Designated Event (as defined in the Indenture) under the Indenture, the Notes or any related documents (collectively, the “Indenture Documents”), (ii) constitute a breach of any provision of the Indenture Documents, or (iii) require or result in an obligation to offer to repurchase or assume the indebtedness relating to the Indenture Documents as a result of the consummation of the Product Sale; and

	•	it has no reason to believe based on the provisions of the Purchase Agreement that it has, and shall not assert, any claims against Lantheus Medical Imaging, Inc. and its present or former officers, directors, agents, employees, shareholders and affiliates, in each case, in their capacity as such, and the successors and assigns of any of the foregoing (collectively, the “Buyer Parties”) under the Indenture Documents, or under any applicable law or in equity, including without limitation, in the nature of any fraudulent conveyance, preference claim or similar claims, arising from or related to the consummation of the Product Sale.

THE OFFER

The Offer Documents contain or incorporate by reference important information that should be read carefully before any decision is made with respect to the Offer.

We are a biopharmaceutical company focused on discovering and developing novel therapeutics through the use of our proprietary and highly efficient in silico drug discovery platform. We have a pipeline of internally-discovered drug candidates currently in clinical development to treat diseases of the central nervous system and lung conditions. Our blood-pool imaging agent, MS-325 (formerly marketed as Vasovist, gadofosveset trisodium by Bayer Schering Pharma AG, Germany), is approved for marketing in over 30 countries including the United States. We also have collaborations with SmithKline Beecham Corporation (GlaxoSmithKline), Amgen Inc., and Cystic Fibrosis Foundation Therapeutics, Incorporated. We were organized as a Delaware corporation in 1988 and commenced operations in 1992.

Our principal executive offices are located at 4 Maguire Road, Lexington, Massachusetts 02421. Our telephone number at that location is(781) 761-7600.

Introduction

We are offering, upon the terms and subject to the conditions set forth the in the Offer Documents, to exchange a cash payment, shares of common stock and Contingent Value Rights for any and all of the outstanding $100 million in aggregate principal amount of the Notes validly tendered, and not validly withdrawn, to the Exchange Agent on or prior to the Expiration Date. The cash payment, shares of common stock and Contingent Value Rights will be in full satisfaction of the principal amount of, and any accrued but unpaid interest through the consummation of the Offer on, the Notes that are tendered and accepted in the Exchange Offer.

Concurrently with the Exchange Offer, we are also soliciting, upon the terms and subject to the conditions set forth in the Offer, consents to the adoption of the Proposed Amendments. We are not offering any separate or additional

payment for the consents to the Proposed Amendments. Pursuant to the terms of the Indenture, the Proposed Amendments require the receipt of consents from holders of at least a majority in aggregate principal amount of outstanding Notes (the “Required Consents”). Our obligation to accept for purchase and to pay for Notes validly tendered and not withdrawn in the Offer is conditioned upon, among other things, the receipt of the Required Consents on or prior to the Expiration Date.

If the Required Consents with respect to the Notes are received, the Proposed Amendments will be binding on all holders of the Notes and their transferees, regardless of whether a holder has consented to the Proposed Amendments.

Terms of the Exchange Offer

We are offering to exchange shares of common stock, a cash payment and Contingent Value Rights for your Notes. For each $1,000 in principal amount of your Notes exchanged, you will receive the following consideration: (i) a payment in cash of $180.00,plus(ii) 339 shares of common stock (the consideration referenced in clauses (i) and (ii), the “Closing Consideration”),plusone (1) contingent value right (“Contingent Value Right”), as described below. Each Contingent Value Right represents the contractual right to receive additional payments, subject to certain exceptions, if after completion of the Exchange Offer the Company consummates any exchange, redemption, repurchase, prepayment or similar event on account of, or with respect to, Notes held by any holder of Notes who does not tender all of such holder’s Notes in the Exchange Offer (such holder, a “Non-Tendering Holder”) within a specified time period and which results in aggregate cash or non-cash payments to such Non-Tendering Holder having a fair market value (as set forth in the definitive agreement executed by the Company and such Non-Tendering Holder) in excess of the sum of (a) $180.00, (b) the lower of (i) $170.00 and (ii) the fair market value of 339 shares of common stock as of the date of consummation of the Exchange Offer and (c) any prior payments made by the Company pursuant to such Contingent Value Right, for each $1,000 of aggregate principal amount outstanding of the Notes tendered by such Non-Tendering Holder (each, a “CVR Payment Event”). We refer to the Closing Consideration together with the Contingent Value Rights as the “Exchange Consideration.”

The Exchange Consideration will be in full satisfaction of the principal amount of, and any accrued but unpaid interest through the consummation of the Exchange Offer and Consent Solicitation on, the Notes so tendered and accepted.

We are offering to acquire up to $100 million aggregate principal amount of Notes that are validly tendered on the terms and subject to the conditions of the Offer Documents. The validly tendered Notes will be cancelled.

You may tender all, some or none of your Notes, subject to the terms and conditions of the Offer. Under the terms of the Offer, the completion, execution and delivery of the Letter of Transmittal and Consent and any additional documents required thereby by a holder of Notes in connection with the tender of Notes prior to 5:00 p.m., New York City time, on the Expiration Date will be deemed to constitute the delivery of the consent of that tendering holder to the Proposed Amendments. Holders of Notes must tender their Notes in a minimum $1,000 principal amount and multiples thereof.

Expiration Date; Extensions; Amendments

The Offer will expire at 5:00 p.m., New York City time, on Monday, May 4, 2009, unless extended by the Company with the consent of the holders of at least 75% in outstanding principal amount of the Notes. Holders of 83% of the Notes have agreed in writing to support the Offer. If the Offer is not completed by May 4, 2009, and the Offer expiration is not extended by the Company with the consent of the holders of at least 75% in outstanding principal amount of the Notes, the 83% of existing holders of Notes who have agreed to support the Offer may terminate their support of the Offer.

To extend the Expiration Date, we will notify the Exchange Agent of any extension by written notice prior to 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date and we will notify the holders of the Notes, or cause them to be notified, by such time and date by public announcement. Such notification will state the new expiration date.

We expressly reserve the right to delay acceptance of any Notes, to extend the Offer with the consent of the holders of at least 75% in outstanding principal amount of the Notes, or to terminate the Offer and not accept the Notes not previously accepted, if any of the conditions (as the same may be modified) set forth under “Conditions to the Completion

of the Offer” shall not have been waived or satisfied by us prior to the Expiration Date. If we exercise any such right, we will give written notice to the Exchange Agent as promptly as practicable. If the Offer is amended in a manner determined by us to constitute a material change, we will promptly disclose such amendment in a manner reasonably calculated to inform the holders of the Notes of such amendment.

Source and Amount of Funds

The Exchange Offer is being made in connection with the Company’s sale of certain of its patents relating to, and rights to commercialization of,MS-325 (formerly marketed as Vasovist, gadofosveset trisodium by Bayer Schering Pharma AG, Germany), in certain territories, pursuant to an Asset Purchase Agreement (the “Purchase Agreement”) between the Company and Lantheus Medical Imaging, Inc. (the “Product Sale”). The aggregate cash payment of up to $18,000,000 to be paid to the holders of Notes that tender in the Exchange Offer shall be funded primarily from the net proceeds of the Product Sale. There are no alternative financing arrangements or alternative financing plans in the event the primary financing falls through.

Release of Legal Claims by Tendering Holders

By tendering your Notes in the Exchange Offer, effective upon payment to you in full of the consideration payable in the Exchange Offer, you will, as of the closing of the Offer, be deemed to have released and waived any and all claims or causes of action of any kind whatsoever, whether known or unknown that, directly or indirectly arise out of, are based upon or are in any manner connected with your or your successors’ and assigns’ ownership or acquisition of the Notes so tendered, including any accrued interest and any related transaction, event, circumstance, action, failure to act or occurrence of any sort or type, whether known or unknown, including without limitation any approval or acceptance given or denied, which occurred, existed, was taken, permitted or begun prior to the date of such release, in each case, that you, your successors and your assigns have or may have had against (i) our Company, subsidiaries, affiliates and stockholders and (ii) our directors, officers, employees, attorneys, accountants, advisors, agents and representatives, whether current or former, as well as those of our subsidiaries, affiliates and stockholders, unless such claims arise under federal or state securities laws.

No Solicitation

There are no persons directly or indirectly employed, retained or to be compensated to make solicitations or recommendations in connection with the Offer.

Procedures for Tendering Notes in the Exchange Offer and consenting to the Proposed Amendments pursuant to the Consent Solicitation

Holders will not be entitled to receive the Exchange Consideration for their Notes unless they validly tender and do not withdraw the Notes on or before 5:00 p.m., New York City time, on May 4, 2009. Only registered holders of Notes are authorized to tender their Notes for exchange. If holders do not validly tender their Notes on or before 5:00 p.m., New York City time, on May 4, 2009, their Notes will remain outstanding subject to the terms of the Notes, as amended.

Under the terms of the Offer, the completion, execution and delivery of the Letter of Transmittal and Consent and any additional documents required thereby by a holder of Notes in connection with the tender of Notes prior to 5:00 p.m., New York City time, on the Expiration Date will be deemed to constitute the delivery of the consent of that tendering holder to the Proposed Amendments. The Proposed Amendments will remove certain restrictive covenants in the Indenture.

Method of Delivery.

The method of delivery of Notes, the related Letter of Transmittal and Consent and all other required documents, including delivery through DTC and acceptance through DTC’s Participant Terminal System (“PTS”) at the election and risk of the person tendering such Notes and delivering such Letter of Transmittal and Consent and, except as expressly otherwise provided in the Letter of Transmittal and Consent, delivery will be deemed made only when actually received by the Exchange Agent. The date of any postmark or other indication of when a Note or the Letter of Transmittal and Consent was sent will not be taken into account in determining whether such materials were timely received. If delivery is

by mail, it is suggested that holders use properly insured, registered mail with return receipt requested, and that holders mail the required documents sufficiently in advance of May 4, 2009 to permit delivery to the Exchange Agent before 5:00 p.m., New York City time, on May 4, 2009.

Delivery of Notes.

Notes in Certificated Form. If you hold Notes in certified, definitive form, to validly tender those Notes, you should properly complete and validly execute the Letter of Transmittal and Consent. The Letter of Transmittal and Consent must be received by the Exchange Agent at its address set forth in this Offer to Exchange and Consent Solicitation on or before 5:00 p.m., New York City time, on May 4, 2009.

Notes Held Through a Custodian. A holder whose Notes are held by a broker, dealer, commercial bank, trust company or other nominee must contact such nominee if such holder desires to tender his or her Notes and instruct such nominee to tender the Notes for exchange on the holder’s behalf.

Notes in Global Form. A holder who is a DTC participant may elect to tender to the Company his or her beneficial interest in the Notes by:


	•	delivering to the Exchange Agent’s account at DTC through DTC’s book-entry system his or her beneficial interest in the Notes on or before 5:00 p.m., New York City time, on May 4, 2009; and

	•	electronically transmitting his or her tender through DTC’s PTS, subject to the terms and procedures of that system. In tendering through PTS, the electronic instructions sent to DTC by the holder, and transmitted by DTC to the Exchange Agent, will acknowledge, on behalf of DTC and the holder, receipt by the holder of and agreement to be bound by the Letter of Transmittal and Consent.

Notes and the Letter of Transmittal and Consent must be delivered to the Exchange Agent to tender. Delivery of documents to DTC or EPIX Pharmaceuticals does not constitute delivery to the Exchange Agent.

HOLDERS THAT TENDER THROUGH DTC NEED NOT SUBMIT A PHYSICAL LETTER OF TRANSMITTAL AND CONSENT TO THE EXCHANGE AGENT IF SUCH HOLDERS COMPLY WITH DTC’S TRANSMITTAL PROCEDURES.

Guaranteed Delivery

If a registered holder of Notes desires to tender any Notes and the Notes are not immediately available, or time will not permit the holder’s Notes or other required documents to reach the Exchange Agent before the Expiration Date of the Exchange Offer, or the procedures for book-entry transfer cannot be completed on a timely basis, a tender may be effected if:


	•	the tender is made through an eligible institution;

	•	before the expiration date of the Exchange Offer, the Exchange Agent receives from the eligible institution a properly completed and duly executed Letter of Transmittal and Consent and notice of guaranteed delivery, substantially in the form provided by us. The notice of guaranteed delivery must state the name and address of the holder of the Notes, the certificate number(s) and principal amount of the Notes tendered, that the tender is being made thereby and guaranteeing that within three business days after the date of execution of the notice of guaranteed delivery, the certificates for all physically tendered Notes, in proper form for transfer, or a book-entry confirmation, as the case may be, and any other documents required by the Letter of Transmittal and Consent will be deposited by the eligible institution with the Exchange Agent; and

	•	the certificates for all physically tendered Notes, in proper form for transfer, or a book-entry confirmation, as the case may be, and all other documents required by the Letter of Transmittal and Consent are received by the Exchange Agent within three business days after the date of execution of the notice of guaranteed delivery.

Book-Entry Transfer

The Exchange Agent will make a request to establish an account with respect to the Notes at DTC for purposes of the Exchange Offer within two business days after the date of this Offer to Exchange and Consent Solicitation. Any financial institution that is a participant in DTC’s systems may make book-entry delivery of Notes by causing DTC to

transfer such Notes into the Exchange Agent’s account at DTC in accordance with DTC’s procedures for transfer. Although delivery of Notes may be effected through book-entry transfer at DTC, the Letter of Transmittal and Consent or a facsimile thereof (with any required signature guarantees and any other required documents) should also be transmitted to and received by the Exchange Agent at the address set forth on the back cover page of this offer to exchange on or prior to the expiration date. Delivery of a Letter of Transmittal and Consent to DTC will not constitute valid delivery to the Exchange Agent, and the tender will not be valid.

The Exchange Agent and DTC have confirmed that any financial institution that is a participant in DTC may utilize DTC’s Automatic Tender Offer Program (“ATOP”) procedures to tender Notes.

Any participant in DTC may make book-entry delivery of Notes by causing DTC to transfer such Notes into the Exchange Agent’s account in accordance with DTC’s ATOP procedures for transfer. The exchange for the Notes so tendered will only be made, however, after a book-entry confirmation of such book-entry transfer of such Notes into the Exchange Agent’s account, and timely receipt by the Exchange Agent of any documents required by the Letter of Transmittal and Consent. An agent’s message is a message, transmitted by DTC and received by the Exchange Agent and forming part of a book-entry confirmation, that states that DTC has received an express acknowledgment from a participant tendering Notes that are the subject of such book-entry confirmation that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and Consent and that we may enforce that agreement against that participant.

Letters of transmittal and consent and Notes must be sent only to the Exchange Agent. Do not send letters of transmittal and consent or Notes to us or DTC.

THE METHOD OF DELIVERY OF NOTES AND ALL OTHER DOCUMENTS, INCLUDING DELIVERY THROUGH DTC AND ANY ACCEPTANCE OF AN AGENT’S MESSAGE THROUGH THE AUTOMATED TENDER OFFER PROGRAM, IS AT YOUR ELECTION AND RISK. IF YOU SEND THESE DOCUMENTS BY MAIL, WE RECOMMEND THAT YOU USE REGISTERED MAIL, RETURN RECEIPT REQUESTED, THAT YOU OBTAIN PROPER INSURANCE, AND THAT YOU MAIL THOSE DOCUMENTS SUFFICIENTLY IN ADVANCE OF THE DATE ON WHICH THE EXCHANGE OFFER AND CONSENT SOLICITATION EXPIRES TO PERMIT DELIVERY TO THE EXCHANGE AGENT ON OR BEFORE SUCH DATE.

Right of Withdrawal

Notes tendered for exchange may be withdrawn at any time before 5:00 p.m., New York City time, on May 4, 2009. In addition, if we have not agreed to accept your Notes for exchange, you can withdraw them at any time after the expiration of 40 business days from the commencement of the tender offer. A valid withdrawal of tendered Notes effected on or prior to the Expiration Date will constitute the concurrent valid revocation of such holder’s related consents. In order to withdraw Notes, holders must either comply with DTC’s withdrawal procedures or deliver to the Exchange Agent written notice containing:


	•	the certificate number of the Note with respect to which the notice of withdrawal is being submitted or if any of the Note is in the form of a “Global” Note on hand at DTC, then a beneficial owner of a Note shall comply with the procedures of DTC applicable to withdrawal of a Letter of Transmittal and Consent;

	•	the principal amount at maturity of the Note with respect to which such notice of withdrawal is being submitted; and

	•	the principal amount at maturity, if any, of such Note that remains subject to the original Letter of Transmittal and Consent and that has been or will be delivered for purchase by us.

The signature on the notice of withdrawal must be guaranteed by an Eligible Guarantor Institution (as defined inRule 17Ad-15 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”)) unless such Notes have been tendered for purchase for the account of an Eligible Guarantor Institution. Any properly withdrawn Notes will be deemed not validly tendered for purposes of the Exchange Offer and will constitute the concurrent valid revocation of such holder’s consents pursuant to the Consent Solicitation. Notes withdrawn from the Exchange Offer may be retendered by following the tender procedures described above.

HOLDERS THAT WITHDRAW THROUGH DTC NEED NOT SUBMIT A PHYSICAL NOTICE OF WITHDRAWAL TO THE EXCHANGE AGENT IF SUCH HOLDERS COMPLY WITH DTC’S WITHDRAWAL PROCEDURES.

Acceptance and Delivery of the Exchange Consideration

Upon satisfaction or waiver of all of the conditions to the Offer, all Notes validly tendered and not withdrawn will be accepted and the new securities will be issued, and the cash payment will be made promptly after expiration of the Offer. See “— Conditions to the Completion of the Offer.” In all cases, the consideration for the Notes exchanged pursuant to the Exchange Offer will be made by deposit of (i) shares of common stock and (ii) U.S. dollars by us on the business day following the Expiration Date with the Exchange Agent, which will act as agent for tendering holders for the purpose of receiving the exchange consideration from us and transmitting it to tendering holders. For purposes of the Exchange Offer, Notes shall be deemed to have been accepted as validly tendered for exchange when, as and if we have given written notice thereof to the Exchange Agent. For each $1,000 principal amount outstanding of Notes exchanged, the holder will receive the cash payment of $180.00 and 339 shares of common stock. The common stock will be delivered promptly following acceptance of the tendered Notes. The cash payment and the common stock will be in full satisfaction of the principal amount of, and any accrued but unpaid interest through the consummation of the Offer on, the Notes so tendered and accepted.

In all cases, issuances of cash and shares of common stock for Notes that are accepted for exchange pursuant to the Exchange Offer will be made only after timely receipt by the Exchange Agent of a timely confirmation of a book-entry transfer of Notes into the Exchange Agent’s account at DTC or of a Letter of Transmittal and Consent along with certificates for tendered Notes.

Immediately prior to the consummation of the Offer, the Company will enter into the CVR Agreement, with U.S. Bank National Association, as Rights Agent, in favor of the holders of Notes who tender in the Exchange Offer and who, as a result of such tender, receive Contingent Value Rights. The Rights Agent will keep a register for the purpose of registering the Contingent Value Rights and any permitted transfers of Contingent Value Rights in accordance with the CVR Agreement.

If any Notes are not accepted for any reason set forth under “— Conditions to the Completion of the Offer,” such unaccepted or such unexchanged Notes will be credited to an account maintained with DTC or, in the case of certificated, definitive Notes returned to the registered holder thereof, promptly after the expiration or termination of the Offer.

Conditions to the Completion of the Offer

Notwithstanding any other provision of the Offer, or any extension of the Offer, we shall not be required to accept for exchange any Notes, issue any new securities, or make any cash payment, and we may terminate or amend the Offer if at any time prior to acceptance for exchange of the Notes if we determine, in our reasonable judgment, that any of the following conditions has not been satisfied:


	•	at least 93% of the outstanding aggregate principal amount of the Notes have not been validly tendered;

	•	there shall not have occurred or be likely to occur any event materially affecting our business or financial affairs that would or might reasonably be expected to prohibit, prevent, restrict or delay consummation of the Offer or that might reasonably be expected to be material to holders in deciding whether to participate in the Offer; and

	•	there shall not have been any action taken or threatened, or any statute, rule, regulation, judgment, order, stay, decree or injunction promulgated, enacted, entered, enforced or deemed applicable to the Offer or the exchange of Notes pursuant to the Exchange Offer, by or before any court or governmental regulatory or administrative agency or authority, tribunal, domestic or foreign, which (i) challenges the making of the Offer or might reasonably be expected to, directly or indirectly, prohibit, prevent, restrict or delay consummation of, or might otherwise reasonably be expected to adversely affect in any material manner, the Offer or (ii) could reasonably be expected to materially adversely affect our business, condition (financial or otherwise), income, operations, properties, assets, liabilities or prospects, or materially impair the contemplated benefits of the Offer, or the consummation of the Offer as a whole to us or that might be material to holders in deciding whether to participate in the Offer.

The foregoing conditions will be waivable at any time and from time to time; provided that the minimum tender condition, the first bullet item in the list above, may only be modified by the Company with the consent of the holders of at least 75% in outstanding principal amount of the Notes; provided further, that if we accept the Notes tendered to us, all of the conditions to the Offer will have been satisfied or waived by us at or prior to the time of such acceptance. The failure by us at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time by us prior to the Expiration Date.

Consequences of Failure to Exchange

If you currently hold Notes and do not tender them, following the completion of the Exchange Offer and Consent Solicitation, your Notes will continue to be outstanding pursuant to their terms, as amended. If we complete the Exchange Offer and Consent Solicitation, the liquidity of any Notes that remain outstanding after completion of the Exchange Offer and Consent Solicitation may be adversely affected. If the Company has the necessary capital, we expect to continue to make interest payments on the Notes that remain outstanding according to the terms thereof to the extent we are able.

If the Proposed Amendments are approved by holders of a majority in aggregate principal amount of the Notes outstanding, we will use our reasonable best efforts to execute, and to cause the Indenture Trustee and any other relevant parties to execute, the Second Supplemental Indenture attached hereto as Annex A, which will give effect to the Proposed Amendments. See “The Proposed Amendments.”

If we are unable to restructure our obligations under the Notes or otherwise raise sufficient funds to repay the Notes, we may be forced to seek protection under the United States bankruptcy laws.

Exchange Agent

U.S. Bank National Association has been appointed as Exchange Agent for the Offer. Letters of transmittal and consent, notices of guaranteed delivery and all correspondence in connection with the Offer should be sent or delivered by each holder or a beneficial owner’s broker, dealer, commercial bank, trust company or other nominee to the Exchange Agent at the addresses on the cover of this Offer to Exchange and Consent Solicitation and in the Letter of Transmittal and Consent. We will pay the Exchange Agent reasonable and customary fees for its services and will reimburse it for its reasonableout-of-pocket expenses in connection therewith.

Advisors

EPIX Pharmaceuticals’ Financial Advisor and Agent

We have retained CRG Partners Group LLC as our financial advisor in connection with the Offer. We are paying CRG Partners customary fees for its services and we are indemnifying CRG Partners. CRG Partners has not been retained to solicit and is not soliciting acceptances of the Exchange Offer or consents pursuant to the Consent Solicitation, nor is it making any recommendation with respect thereto.

Noteholders’ Committee Advisors and Agents

We are paying the fees and expenses of Schulte Roth & Zabel LLP, which is serving as legal counsel to the Noteholders’ Committee. Schulte Roth & Zabel LLP is not soliciting acceptances of the Exchange Offer or consents pursuant to the Consent Solicitation or making any recommendation with respect thereto.

Fees and Expenses

We will bear all fees and expenses incurred in connection with the Offer, including paying brokerage firms and other custodians, nominees and fiduciaries the reasonableout-of-pocket expenses incurred by them in forwarding copies of this Offer to Exchange and Consent Solicitation and related materials to the beneficial owners of Notes.

Purposes; Plans

We are making the Exchange Offer and Consent Solicitation to restructure our existing capital structure. In 2004, we issued the Notes pursuant to the Indenture, of which $100 million in aggregate principal amount remains outstanding.

We retained CRG Partners Group LLC to serve as our financial advisor to assist with our evaluation of strategic alternatives and restructuring efforts with respect to the Notes. We entered into the Restructuring Support Agreement with certain members of the Noteholders’ Committee regarding a consensual restructuring of our obligations under the Notes. Noteholders that are party to the Restructuring Support Agreement, or that have otherwise agreed to support the Offer, beneficially own approximately 83% in principal amount of the outstanding Notes and have agreed to tender their Notes in the Exchange Offer and Consent Solicitation, unless we commence any bankruptcy or similar proceeding or such a proceeding is commenced against us or the Restructuring Support Agreement is terminated for any other reason under the terms of the Restructuring Support Agreement. The consummation of the Exchange Offer and Consent Solicitation is a critical step in our financial restructuring plan. If we are unable to restructure our obligations under the Notes or otherwise raise sufficient funds to repay the Notes, we may be forced to seek protection under the United States bankruptcy laws.

Except as described in this Offer to Exchange and Consent Solicitation, including our retention of CRG Partners Group LLC to serve as our financial advisor to assist with our evaluation of strategic alternatives and restructuring efforts with respect to the Notes, there presently are no plans that relate to or would result in: (i) any extraordinary transaction, such as a merger, reorganization or liquidation, involving us or any of our subsidiaries; (ii) any purchase, sale or transfer of a material amount of our assets; (iii) any material change in the present dividend rate or policy, or our indebtedness or capitalization; (iv) any change in our management, including, but not limited to, any plans or proposals to change the number or the term of directors or to fill any existing vacancies on the board or to change any material term of the employment contract of any executive officer; (v) any other material change in our corporate structure or business; (vi) any class of our equity securities becoming eligible for termination of registration under Section 12(g)(4) of the Exchange Act; (vii) the suspension of our obligation to file reports under Section 15(d) of the Exchange Act; (viii) the acquisition by any person of additional securities of EPIX Pharmaceuticals (other than upon exercise of outstanding stock options), or the disposition of securities of EPIX Pharmaceuticals or (ix) any changes in our charter, bylaws or other governing instruments or other actions that could impede the acquisition of control of EPIX Pharmaceuticals.

Interests of Directors, Executive Officers and Affiliates of EPIX Pharmaceuticals in the Notes.

Neither the Company nor, to our knowledge, any of our affiliates, subsidiaries, directors or executive officers have any beneficial interest in the Notes. None of the officers or directors of our subsidiaries have any beneficial interest in the Notes. We will not purchase any Notes from such persons and, since January 1, 2009 neither the Company nor, to our knowledge, any of our executive officers, directors or affiliates have engaged in any transactions in the Notes.

A list of our directors and executive officers is attached to this Offer to Exchange and Consent Solicitation as Annex B and made a part hereof.

Except as described in this Offer to Exchange and Consent Solicitation, including the Restructuring Support Agreement described herein, neither the Company nor, to our knowledge, any of our affiliates, directors or executive officers is a party to any contract, arrangement, understanding or agreement with any other person relating, directly or indirectly, to the Offer or with respect to any of our securities including, but not limited to, any contract, arrangement, understanding or agreement concerning the transfer or the voting of the securities, joint ventures, loan or option arrangement, puts or calls, guarantees of loans, guarantees against loss or the giving or withholding of proxies, consents or authorizations.

Certain of our directors and executive officers and our affiliates are parties to ordinary course stock option plans and arrangements involving shares of our common stock, as we disclosed before the date of this Offer to Exchange and Consent Solicitation.

CVR AGREEMENT AND CONTINGENT VALUE RIGHTS

The following summary description of the CVR Agreement is qualified in its entirety by reference to the form of CVR Agreement itself, which is included as an exhibit to the Tender Offer Statement on Schedule TO that we have filed with the SEC, which you may examine and copy as set forth — “Where to Find Additional Information.”

We have agreed, at or prior to the consummation of the Exchange Offer, to enter into the CVR Agreement with U.S. Bank National Association, as Rights Agent. The following description assumes that the CVR Agreement will be duly executed by us and the Rights Agent. The CVR Agreement sets forth the circumstances under which we will be obligated to deposit with the Rights Agent the contingent payments for distribution to the holders of Contingent Value Rights and the procedures for making any such distributions.

Contingent Value Payment Events. Each Contingent Value Right represents the contractual right to receive additional payments, subject to certain exceptions, if after completion of the Exchange Offer the Company consummates any exchange, redemption, repurchase, prepayment or similar event on account of, or with respect to, Notes held by any holder of Notes who does not tender all of such holder’s Notes in the Exchange Offer (such holder, a “Non-Tendering Holder”) within a specified time period and which results in aggregate cash or non-cash payments to such Non-Tendering Holder having a fair market value (as set forth in the definitive agreement executed by the Company and such Non-Tendering Holder) in excess of the sum of (a) $180.00, (b) the lower of (i) $170.00 and (ii) the fair market value of 339 shares of common stock as of the date of consummation of the Exchange Offer and (c) any prior payments made by the Company pursuant to such Contingent Value Right, for each $1,000 of aggregate principal amount outstanding of the Notes tendered by such Non-Tendering Holder (each, a “CVR Payment Event”).

The CVR Payment Event must occur prior to the Termination Date (defined below).

The term “Termination Date” means the earlier to occur of (a) a Qualified Financing (defined below) and (b) nine (9) months after the consummation of the Exchange Offer.

The term “Financing” means any sale by the Company of equity or equity-linked securities or other securities convertible into equity.

The term “fair market value” means (a) with respect to cash, the amount of cash payments, (b) with respect to shares of common stock of the Company, (i) if the common stock of the Company is traded on the NASDAQ Global Market or NASDAQ Capital Market as of the date of determination, each share of common stock will be valued at a price equal to the greater of book value or the closing bid price of such share on the NASDAQ Global Market or NASDAQ Capital Market, as applicable, as of the date of consummation of the Exchange Offer and (ii) if the common stock is not traded on the NASDAQ Global Market or NASDAQ Capital Market as of the date of determination, the fair market value of such property as set forth in the definitive agreement executed by the Company and the other parties in connection with the CVR Payment Event, and (c) with respect to property other than cash or common stock, the fair market value of such property as set forth in the definitive agreement executed by the Company and the other parties in connection with the CVR Payment Event; provided, that, such determination is reasonable and has been determined in good faith. For purposes of clause (b)(i) above, in the event (1) Rule 4350(i) of the NASDAQ Rules or any interpretation thereof is amended to provide a different threshold for purposes of determining whether shares of stock are issued at a discount, (2) Rule 4350(i) of the NASDAQ Rules or any interpretation thereof is eliminated for purposes of determining whether shares of stock are issued at a discount, or (3) NASDAQ applies Rule 4350(i) of the NASDAQ Rules to the Exchange in a manner that would allow a lower threshold for determining whether the shares of Common Stock issued in the Exchange

(including those issued under the Contingent Value Right) are issued at a discount, then the fair market value shall be the greater of (x) the amount determined in accordance with clause (b)(ii) above and (y) the amount determined in accordance with such revised threshold pursuant to (1), (2) and (3) above.

Payments with Respect to Contingent Value Rights. Upon a CVR Payment Event, each holder of a Contingent Value Right will be entitled to receive an amount per Contingent Value Right equal to (a) the fair market value paid to any Non-Tendering Holder for each $1,000 of aggregate principal amount outstanding of the Notes tendered by such Non-Tendering Holder in connection with a CVR Payment Event,minus (b) $180.00 plus the fair market value of 339 shares of common stock,minus (c) all aggregate CVR Payment Amounts per Contingent Value Right previously received by such holder (such amount, the “CVR Payment Amount”). For the avoidance of doubt, in no event shall the total of all CVR Payment Amounts, when aggregated with the fair market value of the consideration received in the Exchange Offer for each $1,000 principal amount of Notes, exceed $1,000.

If a CVR Payment Event occurs, the Company is required to deliver, within 10 business days following the occurrence of such CVR Payment Event, to the Rights Agent a compliance certificate certifying as to (1) the date of the satisfaction of the CVR Payment Event, (2) the amount that each holder of a Contingent Value Right is entitled to receive and (3) the aggregate amount of the CVR Payment Amount payable to the holders of Contingent Value Rights. The Rights Agent will send a copy of the applicable compliance certificate to each holder of a Contingent Value Right within 3 business days of receipt of the Company’s compliance certificate relating to such payment.

If a CVR Payment Event has not occurred prior to the Termination Date, then, no later than 5 business days after the Termination Date, the Company shall deliver to the Rights Agent a non-compliance certificate certifying that no CVR Payment Event has occurred, and as a result the holders are not entitled to receive any CVR Payment Amount. The Rights Agent will send a copy of the non-compliance certificate to each holder of a Contingent Value Right within 3 business days of receipt of the Company’s non-compliance certificate.

Upon written notice by any holder or holders of at least 20% in the aggregate of the outstanding Contingent Value Rights received by the Rights Agent within 10 business days after distribution by the Rights Agent of a compliance certificate or non-compliance certificate (the “Objection Period”), the Rights Agent shall forward such notice to the Company, which notice must certify that such holder or holders hold at least 20% in the aggregate of the outstanding Contingent Value Rights, and further shall, (i) specify that such holder or holders object to the determination of the Company (A) that a CVR Payment Event did not occur or (B) of the aggregate amount of the CVR Payment Amount payable to the Holders, as applicable and (ii) state in reasonable detail the basis upon which such holder or holders have determined that (i) a CVR Payment Event has occurred on or prior to the Termination Date or (ii) the Company’s determination of the aggregate amount of the CVR Payment Amount is incorrect (a “Notice of Objection”).

If a Notice of Objection with respect to a non-compliance certificate has not been received by the Rights Agent within the Objection Period, then the holders shall have no right to receive the CVR Payment Amount, in which case you will receive only the Closing Consideration for any Notes you tender in the Exchange Offer.

If the Company delivers a compliance certificate to the Rights Agent or if the CVR Payment Amount is determined to be payable in connection with a Notice of Objection, the Company shall establish a CVR payment date that is within twenty (20) calendar days of the date of the compliance certificate or the date of final determination in connection with a Notice of Objection, as applicable (the “CVR Payment Date”), and shall notify the Rights Agent of such date in writing. In the event the Company elects to pay all or a portion of a CVR Payment Amount in cash, at least 3 business days prior

to such CVR Payment Date, the Company shall cause the applicable cash portion of such CVR Payment Amount to be delivered to the Rights Agent, who will in turn, on the CVR Payment Date, or if such date is not a business day, the following business day, distribute the applicable cash portion of such CVR Payment Amount to the holders (the amount to which each holder is entitled to receive will be calculated by the Company and based on the applicable cash portion of such CVR Payment Amount multiplied by the number of CVRs held by such holder) by check mailed to the address of each holder. In the event the Company elects to pay all or a portion of a CVR Payment Amount in property other than cash, on the CVR Payment Date, or if such date is not a business day, the following business day, the Company shall distribute or cause to be distributed by Computershare Trust Company, as the transfer agent for the common stock of the Company to, as applicable, the applicable non-cash portion of such CVR Payment Amount to the holders (the amount to which each holder is entitled to receive will be calculated by the Company and based on the applicable non-cash portion of such CVR Payment Amount multiplied by the number of CVRs held by such holder) by property other than cash mailed to the address of each Holder.

Restrictions on Transfer. The Contingent Value Rights will not be transferable except:


	•	on death by will or intestacy,

	•	pursuant to a court order,

	•	by operation of law,

	•	in the case of Contingent Value Rights held in book-entry or other similar nominee form, from a nominee to a beneficial owner, to the extent allowable by DTC in connection with a book-entry transfer,

	•	to any affiliate of the holder of the Contingent Value Right or any holder of equity interests in, or any general or limited partner or member of, such holder of the Contingent Value Right,

	•	a transfer to EPIX Pharmaceuticals, Inc. in connection with the holder’s abandonment of all rights therein and

	•	in connection with pledges in connection with bona fide margin accounts or other loan or financing agreement secured by the Contingent Value Right.

The Rights Agent will keep a register for the purpose of registering the Contingent Value Rights and any permitted transfers of Contingent Value Rights in accordance with the CVR Agreement.

Amendments to the CVR Agreement. Without the consent of any holders of Contingent Value Rights or the Rights Agent, the Company, with board authorization, at any time, may enter into one or more amendments to the CVR Agreement to evidence the succession of another person to the Company and the assumption by any such successor of the Company’s covenants in the CVR Agreement.

Without the consent of any holders of Contingent Value Rights, the Company, with board authorization, and the Rights Agent, in its sole discretion, at any time, may enter into one or more amendments to the CVR Agreement for any of the following purposes:


	•	to evidence the succession of another person to U.S. Bank National Association, as the rights agent, and the assumption by any such successor of the covenants and obligations of U.S. Bank National Association in the CVR Agreement;

	•	to add to the Company’s covenants such further covenants, restrictions, conditions or provisions as its board of directors and the Rights Agent consider to be for the protection of the holders of Contingent Value Rights, provided that the provisions do not adversely affect the interests of the holders of Contingent Value Rights;

	•	to cure any ambiguity, to correct or supplement any provision in the CVR Agreement that may be defective or inconsistent with any other provision in the CVR Agreement, or to make any other provisions with respect to matters or questions arising under the CVR Agreement, provided that the provisions do not adversely affect the interests of the holders of Contingent Value Rights;

	•	as may be necessary or appropriate to ensure that the Contingent Value Rights are not subject to registration under the Securities Act or the Exchange Act, provided that the provisions do not adversely affect the interests of the holders of Contingent Value Rights; or


	•	to add, eliminate or change any provisions of the CVR Agreement unless the addition, elimination or change is adverse to the interests of the holders of Contingent Value Rights.

With the consent of not less than a majority of the holders of outstanding Contingent Value Rights, the Company, with board authorization, and the Rights Agent may enter into one or more amendments to the CVR Agreement to add, change or eliminate any of the provisions of the CVR Agreement even if the addition, elimination or change is materially adverse to the interests of the holders of Contingent Value Rights.

Termination of the CVR Agreement. The CVR Agreement will terminate and no payments will be required to be made on the Termination Date.

THE PROPOSED AMENDMENTS

The following is a summary of the Proposed Amendments. Capitalized terms used but not defined in the following summary have the meanings assigned to them in the Indenture.

The Proposed Amendments, if adopted and effected, would remove certain restrictive covenants in the Indenture. The purpose of the consent solicitation is to effect the Proposed Amendments.

The Proposed Amendments will be effected by the Second Supplemental Indenture attached hereto as Annex A, which will be executed by the Company promptly following the Expiration Date. Although the Second Supplemental Indenture will be executed promptly following the Expiration Date, the Proposed Amendments will not become effective until validly tendered Notes are accepted for purchase by the Company pursuant to the Offer. If the Offer is terminated or withdrawn, or the Notes are not purchased hereunder, the Proposed Amendments will not become effective.

The Proposed Amendments constitute a single proposal and a tenderingand/or consenting holder must consent as an entirety and may not consent selectively with respect to certain Proposed Amendments. Pursuant to the terms of the Indenture, the Proposed Amendments require the consent of the holders of a majority in aggregate principal amount of Notes then outstanding under the Indenture. As of the date of this Offer to Exchange and Consent Solicitation, the aggregate outstanding principal amount of the Notes is $100,000,000. If the Required Consents are received and the Proposed Amendments become effective, the Proposed Amendments will be binding on all non-tendering holders.

The foregoing summary does not purport to be comprehensive or definitive, and is qualified in its entirety by reference to the Indenture and the form of Second Supplemental Indenture, each of which has been filed with the SEC as an Exhibit to the Schedule TO, and is incorporated herein by reference.

The Proposed Amendments would remove the following covenants from the Indenture:

A. THE PROPOSED AMENDMENTS

The following language in Section 10.3:“Money for Security Payments to Be Held in Trust. If the Company shall act as its own Paying Agent, it will, on or before each due date of the principal of or interest, on any of the Securities, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal and interest, so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and the Company will promptly notify the Trustee, in writing, of its action or failure so to act.

Whenever the Company shall have one or more Paying Agents, it will, no later than the opening of business on each due date of the principal of or interest on any Securities, deposit with the Trustee a sum in funds immediately payable on the payment date sufficient to pay the principal or interest, so becoming due, such sum to be held for the benefit of the Persons entitled to such principal or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee, in writing, of any failure so to act.

The Company will cause each Paying Agent other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will:

(1) hold all sums held by it for the payment of the principal of or interest on Securities for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided;

(2) give the Trustee written notice of any default by the Company (or any other obligor upon the Securities) in the making of any payment of principal or interest; and

(3) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held by such Paying Agent.

The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.

Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of or interest on any Security and remaining unclaimed for two years after such principal or interest and Additional Interest, if any, has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease.”