Progenics Pharmaceuticals
Annual Report 2015

Plain-text annual report

PROGENICS PHARMACEUTICALS INC FORM 10-K (Annual Report) Filed 03/11/16 for the Period Ending 12/31/15 Address Telephone CIK Symbol SIC Code Industry 777 OLD SAW MILL RIVER ROAD TARRYTOWN, NY 10591 9147892800 0000835887 PGNX 2834 - Pharmaceutical Preparations Biotechnology & Drugs Sector Healthcare Fiscal Year 12/31 http://www.edgar-online.com © Copyright 2016, EDGAR Online, Inc. All Rights Reserved. Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use. UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549FORM 10-K(Mark One)☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2015Or☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition periodfrom ___________ to ___________Commission File No. 000-23143PROGENICS PHARMACEUTICALS, INC.(Exact name of registrant as specified in its charter)Delaware13-3379479(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification Number)777 Old Saw Mill River RoadTarrytown, NY 10591(Address of principal executive offices, including zip code)Registrant's telephone number, including area code: (914) 789-2800Securities registered pursuant to Section 12(b) of the Act:Title of each className of each exchange on which registeredCommon Stock, par value $0.0013 per shareThe NASDAQ Stock Market LLCSecurities registered pursuant to Section 12(g) of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 duringthe preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for thepast 90 days. Yes ☒ No ☐Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required tobe submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that theregistrant was required to submit and post such files). Yes ☒ No ☐Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the bestof registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. Seedefinition of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Act:Large accelerated filer ☐Accelerated filer ☒Non-accelerated filer ☐ (Do not check if a smaller reporting company)Smaller reporting company ☐Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒The aggregate market value of the voting and non-voting stock held by non-affiliates of the registrant on June 30, 2015, based upon the closing price of theCommon Stock on The NASDAQ Stock Market LLC on that date of $7.46 per share, was $245,713,772 (1) .(1)Calculated by excluding all shares that may be deemed to be beneficially owned by executive officers, directors and five percent stockholders of the registrant, withoutconceding that any such person is an "affiliate" of the registrant for purposes of the federal securities laws.As of March 7, 2016, a total of 69,946,317 shares of Common Stock, par value $.0013 per share, were outstanding.DOCUMENTS INCORPORATED BY REFERENCESpecified portions of the registrant's definitive proxy statement to be filed in connection with solicitation of proxies for its 2016 Annual Meeting of Shareholdersare hereby incorporated by reference into Part III of this Form 10-K where such portions are referenced. TABLE OF CONTENTSPART I 1Item 1.Business2Item 1A.Risk Factors18Item 1B.Unresolved Staff Comments36Item 2.Properties36Item 3.Legal Proceedings37Item 4.Not Applicable38PART II 39Item 5.Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities39Item 6.Selected Financial Data40Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)41Item 7A.Quantitative and Qualitative Disclosures about Market Risk56Item 8.Financial Statements and Supplementary Data57Item 9.Changes in and Disagreements With Accountants on Accounting and Financial Disclosure57Item 9A.Controls and Procedures57Item 9B.Other Information59PART III 60Item 10.Directors, Executive Officers and Corporate Governance60Item 11.Executive Compensation60Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters60Item 13.Certain Relationships and Related Transactions, and Director Independence60Item 14.Principal Accounting Fees and Services60PART IV 61Item 15.Exhibits, Financial Statement Schedules61INDEX TO CONSOLIDATED FINANCIAL STATEMENTSF-1SIGNATURESS-1EXHIBIT INDEXE-1Table of Contents PART IThis document and other public statements we make may contain statements that do not relate strictly to historical fact, any of which may be forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Statements contained in this communication that refer toProgenics' estimated or anticipated future results or other non-historical facts are forward-looking statements that reflect Progenics' current perception of existingtrends and information as of the date of this communication. Forward looking statements generally will be accompanied by words such as "anticipate," "believe,""plan," "could," "should," "estimate," "expect," "forecast," "outlook," "guidance," "intend," "may," "might," "will," "possible," "potential," "predict," "project," orother similar words, phrases or expressions. Such statements are predictions only, and are subject to risks and uncertainties that could cause actual events orresults to differ materially. Forward-looking statements involve known and unknown risks and uncertainties which may cause our actual results, performance orachievements to be materially different from those expressed or implied by forward-looking statements. While it is not possible to identify or predict all suchmatters, these differences between forward-looking statements and our actual results, performance or achievement may result from, among other things, theinherent uncertainty of the timing and success of, and expense associated with, research, development, regulatory approval and commercialization of our productsand product candidates, including the risks that clinical trials will not commence or proceed as planned; products which appear to be promising in early trials willnot demonstrate efficacy or safety in larger-scale trials; clinical trial data on our products and product candidates will be unfavorable; our products will notreceive marketing approval from regulators or, if approved, do not gain sufficient market acceptance to justify development and commercialization costs; the salesof RELISTOR ® and other products by our partners and the revenue and income generated for Progenics thereby may not meet expectations; competing productscurrently on the market or in development might reduce the commercial potential of our products; we, our collaborators or others might identify side effects afterthe product is on the market; or efficacy or safety concerns regarding marketed products, whether or not originating from subsequent testing or other activities byus, governmental regulators, other entities or organizations or otherwise, and whether or not scientifically justified, may lead to product recalls, withdrawals ofmarketing approval, reformulation of the product, additional pre-clinical testing or clinical trials, changes in labeling of the product, the need for additionalmarketing applications, declining sales or other adverse events.We are also subject to risks and uncertainties associated with the actions of our corporate, academic and other collaborators and government regulatoryagencies, including risks from market forces and trends; potential product liability; intellectual property, litigation and other dispute resolution, environmentaland other risks; the risk that we may not be able to obtain sufficient capital, recruit and retain employees, enter into favorable collaborations, acquisitions ortransactions or other relationships or that existing or future relationships or transactions may not proceed as planned; the risk that current and pending patentprotection for our products may be invalid, unenforceable or challenged, or fail to provide adequate market exclusivity, or that our rights to in-licensedintellectual property may be terminated for our failure to satisfy performance milestones; the risk of difficulties in, and regulatory compliance relating to,manufacturing products; and the uncertainty of our future profitability.Risks and uncertainties to which Progenics is subject also include general economic conditions, including interest and currency exchange-ratefluctuations and the availability of capital; changes in generally accepted accounting principles; the impact of legislation and regulatory compliance; the highlyregulated nature of our business, including government cost-containment initiatives and restrictions on third-party payments for our products; trade buyingpatterns; the competitive climate of our industry; and other factors set forth in this document and other reports filed with the U.S. Securities and ExchangeCommission ("SEC"). In particular, we cannot assure you that RELISTOR will be commercially successful or be approved in the future in other formulations,indications or jurisdictions, that any of our other programs will result in a commercial product or that we will be able to successfully complete our integration ofEXINI Diagnostics AB ("EXINI") and to develop and commercialize its products.We do not have a policy of updating or revising forward-looking statements and, except as expressly required by law, Progenics disclaims any intent orobligation to update or revise any statements as a result of new information or future events or developments. It should not be assumed that our silence over timemeans that actual events are bearing out as expressed or implied in forward-looking statements.Available InformationWe file annual, quarterly and current reports, proxy statements and other documents with the SEC under the Securities Exchange Act of 1934. The SECmaintains an Internet website that contains reports, proxy and information statements and other information regarding issuers, including Progenics, which fileelectronically with the SEC. You may obtain documents that we file with the SEC at http://www.sec.gov , and read and copy them at the SEC's Public ReferenceRoom at 100 F Street NE, Washington, DC 20549. You may obtain information on operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. We also make available free of charge our annual, quarterly and current reports and proxy materials on http://www.progenics.com .1Table of ContentsAdditional information concerning Progenics and its business may be available in press releases or other public announcements and quarterly and currentreports and documents filed with the SEC. Information on or accessed through our website is not included in Progenics' SEC filings.In this document, RELISTOR ® , a registered trademark, refers to methylnaltrexone – the active ingredient of RELISTOR – as it has been and is beingdeveloped and commercialized by or in collaboration with Salix Pharmaceuticals, Inc., a subsidiary of Valeant Pharmaceuticals International, Inc. ("Valeant").Subcutaneous RELISTOR has received regulatory marketing approval for specific indications, and references to RELISTOR do not imply that any other form orpossible use of the drug has received approval. RELISTOR's approved U.S. label and full U.S. prescribing information is available at www.RELISTOR.com. Otherapproved labels for RELISTOR apply in ex-U.S. markets. AZEDRA ® is a trademark of our Molecular Insight Pharmaceuticals, Inc. ("Molecular Insight")subsidiary.Item 1.  BusinessProgenics Pharmaceuticals, Inc., a Delaware corporation incorporated in 1986, develops innovative medicines and other products for targeting andtreating cancer, with a pipeline that includes several product candidates in later-stage clinical development. These products in development include therapeuticagents designed to precisely target cancer (AZEDRA, 1095 and PSMA ADC), and imaging agents (1404 and PyL) intended to enable clinicians and patients toaccurately visualize and manage their disease. In late 2015 Progenics acquired EXINI Diagnostics AB, in order to obtain know-how and expertise for thedevelopment of imaging analysis tools and solutions. As a result of that transaction, Progenics also acquired the EXINI Bone BSI bone scan index product. EXINIBone BSI, which is approved for use in Europe, Japan and the U.S. (though not yet available in the U.S.), is an analytical tool enabling health care professionals toquantify the results of bone scan images.PRODUCTS IN DEVELOPMENT Description Status AZEDRA ® Treatment of malignant and/or recurrentpheochromocytoma and paraganglioma Completed enrollment in pivotal Phase 2b clinical trialunder Special Protocol Assessment ("SPA")1404 Technetium-99m labeled PSMA targeted SPECT/CTimaging agent for prostate cancer Phase 3 pivotal trial initiated1404 Index Analytical tool for analysis and indexing of 1404 imagesfor prostate cancer In developmentPyL Fluorinated PSMA-targeted PET imaging agent forprostate cancer Clinical proof-of-concept study completed by JohnsHopkins University; Phase 1 trial design in processPyL Index Analytical tool for analysis and indexing of PyL imagesfor prostate cancer In development1095 Treatment of metastatic prostate cancer Phase 1Trial design in processPSMA ADC Treatment of metastatic castration resistant prostatecancer Phase 2 testing in chemotherapy-experienced andchemotherapy-naïve patients completedEXINI Bone BSI Analytical tool for analysis of Bone Scan Index frombone scintigraphy images Currently sold in Europe and Japan; planning for U.S.commercialization in process2Table of Contents  PARTNERED PRODUCTS Indication Status RELISTOR ® -Subcutaneous injection Treatment of opioid-induced constipation ("OIC") inadvanced-illness patients receiving palliative care whenlaxative therapy has not been sufficient and treatment ofOIC in patients with non-cancer pain Sold in the U.S., E.U., Canada, Australia andelsewhere; licensed to ValeantRELISTOR ® -Oral Tablets Treatment of OIC Phase 3 testing completed; New Drug Application(NDA) submitted. FDA has assigned a PrescriptionDrug User Fee Act action date of April 19, 2016PRO 140 HIV treatment Phase 3 study ongoingOur principal clinical-stage product candidates in oncology are:·AZEDRA , a radiotherapeutic product candidate in development as a treatment for malignant and/or recurrent pheochromocytoma andparaganglioma, rare tumors found in the adrenal glands and outside of the adrenal glands, respectively. AZEDRA has been granted BreakthroughTherapy and Orphan Drug designations, as well as Fast Track status in the U.S. Under a SPA agreement with the U.S. Food and Drug Administration(FDA), a Phase 2 registrational study is being conducted in patients with malignant and/or recurrent pheochromocytoma and paraganglioma; there iscurrently no FDA-approved therapy for the treatment of these ultra-orphan diseases.·1404 (trofolastat) , a technetium-99m labeled small molecule which binds PSMA and is used as an imaging agent to diagnose and detect localizedprostate cancer as well as soft tissue and bone metastases. We have completed a global multi-centered Phase 2 study assessing the diagnosticaccuracy of 1404 imaging in men with high-risk prostate cancer and recently initiated a multi-center, open-label Phase 3 trial to determine thesensitivity and specificity of 1404 to correctly identify whether or not patients have clinically significant prostate cancer (generally, Gleason score>3+4).·PyL (also known as [18F]DCFPyL) is a clinical-stage, fluorinated PSMA-targeted Positron Emission Topography (PET) imaging agent for prostatecancer that was discovered and developed at the Center for Translational Molecular Imaging at the Johns Hopkins University School of Medicine. Aproof-of-concept study published in the April 2015 issue of the Journal of Molecular Imaging and Biology showed that the uptake of PyL is high insites of putative metastatic lesions and primary tumors, suggesting the potential for high sensitivity in detecting prostate cancer.·1095 , a PSMA-targeted Iodine-131 labeled small radiopharmaceutical molecule that is designed to deliver a dose of radiation directly to prostatecancer cells with minimal impact on the surrounding healthy tissues. In collaboration with Memorial Sloan-Kettering Cancer Center, we plan tosubmit an Investigational New Drug ("IND") application in the U.S. and initiate a Phase 1 clinical study.·PSMA ADC , a fully human monoclonal antibody-drug conjugate designed to deliver a chemotherapeutic agent to cancer. A Phase 2, multicenterclinical trial to assess the safety, tolerability and anti-tumor activity of PSMA ADC has been completed in both the chemotherapy refractory andchemotherapy naïve patients with metastatic castration-resistant prostate cancer ("mCRPC").See Clinical Trial Activities , below, for additional information concerning these studies and those for RELISTOR.We continue to consider opportunities for strategic collaborations, out-licenses and other arrangements with biopharmaceutical companies involvingproprietary research, development, clinical and commercialization programs, and may in the future also in-license or acquire additional oncology compoundsand/or programs. 3Table of ContentsPARTNERED PRODUCTS·RELISTOR , the first approved treatment for OIC that addresses its underlying mechanism, decreases the constipating side effects induced by opioidpain medications such as morphine and codeine without diminishing their ability to relieve pain. RELISTOR subcutaneous injection is approved forsale in the U.S., E.U., Canada, Australia and elsewhere in single-use vials and pre-filled syringes, which are designed to ease preparation andadministration for patients and caregivers. Under our License Agreement Valeant is responsible for developing and commercializing RELISTOR,including completing clinical development necessary to support regulatory marketing approvals for potential new formulations of the drug (such asan oral formulation of methylnaltrexone, the active ingredient in RELISTOR). RELISTOR was originally approved in 2008 for OIC in patients withadvanced illness and in September 2014, received approval from the FDA for the treatment of OIC in patients taking opioids for chronic non-cancerpain.RELISTOR net sales (losses) and related royalty income (loss) during the years 2013-2015 are set forth below. 2015 RELISTOR net sales androyalty income reported by Valeant were $43.8 million and $6.6 million, respectively. Valeant reported sales deductions in excess of gross salesresulting in a royalty loss from net RELISTOR losses during the fourth quarter of 2014, leading us to recognize an accrued royalty loss liability owedto Valeant of $0.7 million. Our recognition of royalty income (loss) for financial reporting purposes is explained in Management's Discussion andAnalysis of Financial Condition and Results of Operations (MD&A) and our financial statements included elsewhere in this document. Royalties arebased on net sales reported by our commercialization collaborators. FirstQuarter SecondQuarter ThirdQuarter FourthQuarter FullYear (in thousands) 2015: Net Sales $900 $11,900 $8,000 $23,000 $43,800Royalty Income 140 1,773 1,208 3,452 6,5732014: Net Sales (Losses) $4,800 $9,100 $10,800 $ (4,400) $20,300Royalty Income (Loss) 723 1,353 1,617 (657) 3,0362013: Net Sales $7,700 $7,900 $4,800 $19,000 $39,400Royalty Income 1,155 1,174 719 2,847 5,895·PRO 140 is a fully humanized IgG4 monoclonal antibody directed against CCR5, a molecular portal that HIV uses to enter T-cells. PRO 140 blocksthe predominant HIV subtype (R5) entry into T-cells by masking this required co-receptor, CCR5. PRO 140 has been the subject of seven clinicaltrials, each demonstrating efficacy by significantly reducing or controlling HIV viral load in human test subjects. PRO 140 has been designated a"fast track" product candidate by the FDA. PRO 140 is currently partnered with CytoDyn which announced in October 2015 that it had begun dosingin a Phase 3 study.Clinical Trial ActivitiesFor purposes of this report, in general Phase 1 trials are initial evaluations of safety in humans which study mechanism of action and metabolism; Phase 2trials evaluate safety, dosing and activity or efficacy, and continue safety evaluation; and Phase 3 trials involve larger scale evaluations of safety, efficacy anddosing.4Table of ContentsProgenics' practice is and has been to announce commencement and results of all of its significant clinical trials in press releases, medical and scientificmeetings and other venues. The following is a summary of current clinical trial activities involving our principal product candidates and RELISTOR.AZEDRA. In 2006, prior to its acquisition by Progenics, Molecular Insight commenced a Phase 1 study with AZEDRA in 11 patients withpheochromocytoma / paraganglioma and metastatic carcinoid tumors to assess the safety, radiation dosimetry, and distribution metabolism of a single imagingdose of this compound. Following completion of this study, two dose-finding studies were conducted to determine a maximum tolerated therapeutic dose, and toassess safety, dosimetry and preliminary efficacy of AZEDRA in 21 patients with pheochromocytoma / paraganglioma and 15 with high-risk neuroblastoma,respectively.Molecular Insight subsequently commenced a Phase 2 study of AZEDRA under the 2009 FDA SPA regarding the design of this intended registrationalPhase 2 trial to evaluate the efficacy and safety of the administration of two therapeutic doses of the compound in patients with metastatic and/or recurrentpheochromocytoma or paraganglioma. The primary efficacy endpoint of this U.S. study was to determine the clinical benefit of AZEDRA based on theproportion of study participants with a reduction of all antihypertensive medication by at least 50% for at least six months. Of the 41 patients who were dosedwith a therapeutic dose by Molecular Insight prior to the trial suspension in late 2010 due to lack of funding, 13 patients had achieved the primary endpoint ofthe study. Of the 44 patients who have received any dose of AZEDRA, including an imaging dose, 45.5% of patients reported serious adverse events ("SAEs"),the most common of which were hematologic (11.4%) treatment-related events. Other commonly reported SAEs included constipation, dyspnea andmyelodysplastic syndrome (each at 4.5%). One case of constipation (2.3%), one case of dyspnea (2.3%) and both cases of myelodysplastic syndrome (4.5%)were designated as treatment related.After acquiring Molecular Insight, Progenics resumed the Phase 2 study in December 2014 with the goal of completing the study as specified under theSPA. In July 2015, the FDA designated AZEDRA as a Breakthrough Therapy for the treatment of patients with iobenguane-avid metastatic or recurrentpheochromocytoma and paraganglioma. In December 2015, we announced that we had completed enrollment in the Phase 2 registrational study. We expect toreport top-line data between December 2016 and March 2017.1404. Prior to being acquired by Progenics, Molecular Insight conducted four Phase 1 studies with 1404 to establish proof-of-concept and dosimetry,and to assess a simplified kit preparation as compared to multi-step preparation. It commenced a Phase 2 safety and efficacy study in 2012 to assess thediagnostic accuracy of the compound imaging in men with high-risk prostate cancer scheduled for radical prostatectomy (RP) and extended pelvic lymph nodedissection compared to histopathology. The primary objective of this Phase 2 international multi-center, multi-reader, open-label trial was to assess clinicalsafety as well as the compound's ability to detect prostate cancer within the prostate gland. Patient enrollment has been completed with 105 participants dosed at20 centers in the U.S. and Europe. In the Phase 2 trial, SPECT/CT imaging with 1404 showed 94% sensitivity in detecting and imaging cancer in the prostategland of high-risk patients prior to prostatectomy. "Sensitivity" refers to the ability of 1404 to correctly detect and image prostate cancer. In addition, 1404 wasmore sensitive than MRI in detecting primary prostate cancer (94% vs. 86%) and was a good predictor of lymph node involvement at prostatectomy (area underthe curve (AUC) of 0.77 (0.65-0.89% CI)). Uptake of 1404 in the lobes of the prostate gland showed a significant correlation with Gleason score (p<0.0001). Anadditional Phase 1 study in 14 patients to assess safety and diagnostic accuracy of 1404 whole body and pelvic SPECT/CT imaging and pelvic MRI in normalhealthy men without current evidence of prostate cancer has been completed. Overall, there have to date been no treatment related adverse events (AEs) reportedin these studies, other than one mild injection site reaction.5Table of ContentsIn January 2016, we announced that a Phase 3 clinical trial for 1404 had been initiated and enrollment commenced. This Phase 3 clinical trial isexpected to enroll approximately 450 patients with biopsy-proven low-grade prostate cancer who are candidates for active surveillance but have planned toundergo radical prostatectomy (RP). The multicenter, multi-reader, open-label study will evaluate the specificity and sensitivity of 1404 to identify clinicallysignificant prostate cancer. Histopathology of the tumor tissue will be used as the truth standard. An interim analysis will be performed after approximately one-third of the patients have been treated and will include an analysis for futility and also evaluate the need for a sample size re-estimation.PyL. In July 2015, Progenics and the Johns Hopkins University entered into an exclusive worldwide licensing agreement for [18F]DCFPyL ("PyL"),pursuant to which Progenics obtained exclusive, worldwide (excluding Australia and New Zealand) rights to develop and commercialize PyL in PET imagingapplications. PyL is a clinical-stage fluorinated prostate specific membrane antigen ("PSMA")-targeted PET imaging agent for prostate cancer. PyL, when usedin conjunction with high-resolution PET imaging, has shown potential for use in identifying prostate cancer.Preclinical and clinical studies of PyL have been conducted by investigators in the U.S. and Europe, including the Johns Hopkins University.Preclinical in vitro and in vivo studies have demonstrated that PyL binds to PSMA with high affinity and uptake of PyL is specific to prostate tumor tissues. AFirst-in-human study conducted at the Johns Hopkins University using this tracer in patients with prostate cancer has shown that PET imaging with PyL isfeasible and generally well tolerated, with a dose of radiation typical for diagnostic radiotracers for PET. In that study, physiologic accumulation of PyLcorresponded to the distribution of PSMA-expressing organs and excretion. Accumulation in primary tumor and metastatic lesions was very high which maypermit the prospective detection of residual tumor following definitive local therapy (surgery or radiation) as well as regional or distant metastases with highsensitivity and specificity. Progenics plans to initiate a Phase 2 study in 2016 to assess the safety and efficacy of PyL in the detection of prostate cancer.1095. There have been no clinical studies conducted to assess the safety and efficacy of 1095 in prostate cancer patients. However, clinical experienceusing 1095 in patients with mCRPC has been published by the University Hospital Heidelberg, Germany. Under a compassionate-use protocol at this Germanhospital, 28 patients with late stage, hormone- and chemotherapy- refractory prostate cancer, were administered a single therapeutic dose of MIP-1095. Overall,the 1095 therapeutic treatments were reported to be well-tolerated. Myelosuppression was the primary and most significant side effect and was observed in mostof the patients varying in degree from mild to moderate. The changes in hematological parameters were reported to be not related to the activity administered. Insome patients, evidence of transient non-hematological side effects, such as slight to moderate xerostomia and mucositis, were noted. Preliminary efficacy wasdemonstrated by PSA reduction, a general observation of a reduction in bone pain and improved quality of life, and radiographic reductions in disease burden asevidenced by reduction in lesion size, extent and number of lesions as seen on the diagnostic scans. Based on these encouraging data, Progenics plans to initiatea Phase 1study, in collaboration with Memorial Sloan Kettering Cancer Center to evaluate the safety, tolerability, and efficacy of 1095 as a therapeutic agent forthe treatment of mCRPC.PSMA ADC.   To date, one Phase 1 and one Phase 2 study of PSMA ADC have been completed. An investigator-initiated Phase 2 study has also beencompleted.The Phase 2, open-label, multicenter study of PSMA ADC was designed to assess the anti-tumor activity and tolerability of PSMA ADC in two groupsof patients with mCRPC. The chemotherapy-experienced group (patients who had undergone chemotherapy with an agent such as docetaxel or cabazitaxel priorto the study) was comprised of 84 patients. The chemotherapy-naïve group (patients who had not previously undergone chemotherapy) was comprised of 35patients. Both groups were required to have received and progressed on antiandrogen treatments such as abiraterone acetate and/or enzalutamide prior to thestudy (once these agents were commercially available for use).In this Phase 2 study, PSMA ADC at a dosage of 2.3 mg/kg was administered as an intravenous infusion once every three weeks for up to eight doses.Some patients in the chemotherapy-experienced group may also have received PSMA ADC at a dosage of 2.5 mg/kg if it was well tolerated. The anti-tumoreffect of PSMA ADC was assessed by pharmacodynamic parameters that included serum PSA, CTCs, and tumor measurements of target and non-target lesions.Safety was monitored by physical examination, collection of AEs, laboratory testing, measurement of antibodies to PSMA ADC, electrocardiogram (ECG), andmeasurement of biomarkers.6Table of ContentsResults showed that radiologic response rates for patients with decreases in tumor size or stable disease was 74% in chemotherapy-naïve patients and 61%in chemotherapy-experienced patients. Decreases in serum PSA of ≥30% over the study were seen in 19% of chemotherapy-experienced patients and 29% ofchemotherapy-naïve patients. Decreases of ≥50% occurred in 6% of chemotherapy-experienced patients and 21% of chemotherapy-naïve patients. CTC decreasesof ≥30% over were seen in 81% of chemotherapy-experienced patients and 92% of chemotherapy-naïve patients. Responses of ≥50% occurred in 75% ofchemotherapy-experienced patients and 85% of chemotherapy-naïve patients.Overall survival was 91.7% in the chemotherapy-experienced group and 97.1% in the chemotherapy-naïve group. Adverse events (AEs) associatedwith PSMA ADC observed in this phase 2 study through March 2015 have been consistent with those observed in the phase 1 study noted below; the mostcommon treatment-related grade 3 or higher AEs in this study have been fatigue (15.3% at 2.3 mg/kg and 20.6% at 2.5 mg/kg), neutropenia (grade 4: 11.8% at2.3 mg/kg and 8.8% at 2.5 mg/kg), peripheral neuropathy (grade 3 or higher: 8.2% at 2.3 mg/kg and 5.9% at 2.5 mg/kg), decreased electrolytes (12.9% at 2.3mg/kg and 20.6% at 2.5 mg/kg) and anemia (7.1% at 2.3 mg/kg and 8.8% at 2.5 mg/kg). Thirty-one patients reported serious adverse events (SAEs) whichincluded pancreatitis, sepsis/septic shock, abdominal pain, anemia, asthenia, atrial fibrillation, bacteremia, bone pain, chronic obstructive pulmonary disease,clostridium difficile sepsis, constipation, deep vein thrombosis, dehydration, diabetic ketoacidosis, diarrhea, dyspnea, electrocardiogram QT prolonged, fall,fatigue, febrile neutropenia, gastrointestinal inflammation, hematuria, ileus, lobar pneumonia, metabolic acidosis, metabolic encephalopathy, muscularweakness, myalgia, myocardial infarction, nausea, non-cardiac chest pain, orthostatic hypotension, pleural effusion, pneumonia primary atypical, sinustachycardia, supraventricular tachycardia, vertigo and vomiting. Also reported were treatment-related SAEs including increases in blood creatine phosphokinase,lactic acid, gamma-glutamyltransferase, International Normalized Ratio (INR), lipase and decreases in blood leukocytes, neutrophils, calcium, potassium,sodium and phosphate.There were 2 cases of drug-related sepsis in the 2.5 mg/kg dosing group that were deemed at least possibly related to PSMA ADC. Both of thesepatients subsequently died. The first, a patient hospitalized ten days following his first dose of study drug (2.5 mg/kg) with febrile neutropenia and E. colipositive blood cultures, progressed despite treatment to septic shock and died; both the investigator and Progenics considered this patient's septic shock asprobably related to PSMA ADC. The second patient developed a rash and fever and was hospitalized for neutropenic fever, where further assessment revealedStrep Viridans bacteria (suspected to be from a tunnel catheter) in blood. Approximately two weeks after receiving study drug (also 2.5 mg/kg), this patient wasintubated due to hypoxia and respiratory failure, and died three days after being removed from a ventilator. The investigator considered sepsis as unlikelyrelated, bacteremia as probably related, and febrile neutropenia as definitely related to PSMA ADC; Progenics assessed sepsis as probably related, bacteremia asunlikely related, and febrile neutropenia as definitely related to PSMA ADC.There was an additional case of drug-related sepsis that was deemed related to PSMA ADC in a subject in the 2.3 mg/kg group. This patient later dieddue to progression of his prostate cancer, which was not related to PSMA ADC. This patient was hospitalized with febrile neutropenia and sepsis 13 daysfollowing his first dose of study drug. He was treated with antibiotics, filgrastim, normal saline and sequential compression devices. He was transferred 3 dayslater to hospice care for progression of prostate cancer and died 11 days later. The febrile neutropenia and sepsis were considered related to PSMA ADC by theinvestigator. The death due to disease progression was not considered related to PSMA ADC.The initial 12-week clinical trial period of the phase 1 study had evaluated up to four intravenous doses of PSMA ADC administered at three-weekintervals. Following completion of the four doses, patients were offered, at their physicians' discretion, the option to continue treatment with PSMA ADC for upto an additional 39 weeks. The anti-tumor effect of the compound as measured by changes in PSA levels and number of CTCs was observed in the study acrossdoses ranging from 1.8 mg/kg to 2.8 mg/kg, and durable responses were seen in some of these heavily pre-treated patients. PSMA ADC was generally welltolerated in patients at doses up to and including 2.5 mg/kg. Dose limiting toxicities, primarily neutropenia, were seen at 2.8 mg/kg. The most commonlyreported AEs were anorexia and fatigue. Five patients experienced SAEs, two of which resulted in death. One patient dosed at 1.8 mg/kg died from multi-organfailure due to acute pancreatitis: while no data suggested this event was drug-related, a possible relationship could not be definitively ruled out. A second patientdied 11 days after receiving study drug at 2.8 mg/kg: septic shock was cited as the cause of death. The investigator considered septic shock as probably relatedand febrile neutropenia as definitely related to PSMA ADC.7Table of ContentsRELISTOR. In 2011 Progenics and its licensee completed a Phase 3 U.S. trial to evaluate the efficacy and safety of oral methylnaltrexone for thetreatment of opioid-induced constipation in patients with chronic, non-cancer pain. This 804-patient trial assessed a once-daily oral methylnaltrexone dose of150, 300 or 450 mg compared to placebo for 12 weeks: patients received one daily dose during the first four weeks and dosing on an as needed basis for theremaining eight weeks. Both the 300 and 450 mg treatment arms demonstrated statistically significant results for the primary endpoint of percentage of dosesresulting in any rescue-free bowel movements (RFBMs) per patient within four hours of administration over four weeks of dosing, when compared to theplacebo treatment arm, with 27.4% for the 450 mg group (p<0.0001) and 24.6% for the 300 mg group (p-value=0.004). Efficacy was also seen in both the 300and 450 mg treatment groups for other endpoints, including change in weekly RFBMs from baseline over the first four weeks and one assessing response(responder/non-responder) to study drug during weeks one to four, where "responder" was defined as having three or more RFBMs per week, with an increase ofat least one RFBM per week over baseline, for at least three out of the first four weeks. Overall, efficacy of oral methylnaltrexone in this study was comparableto that reported in clinical studies of subcutaneous methylnaltrexone in patients with chronic, non-cancer pain, and the overall observed safety profile seen inpatients treated with oral methylnaltrexone was comparable to placebo. Valeant's NDA for oral methylnaltrexone in the U.S. has been accepted for review by theFDA. The FDA has assigned a Prescription Drug User Fee Act action date of April 19, 2016.The Phase 3 trial was undertaken after review and analysis of results from clinical trials initiated by Progenics' former collaboration partner, WyethPharmaceuticals, and Progenics utilizing formulations of oral methylnaltrexone in patients with chronic, non-cancer pain receiving opioid treatment.In one of these trials of the oral formulation utilized in the Phase 3 trial described above, 48% of the 25 patients receiving methylnaltrexone tabletslaxated within four hours of treatment. In this study, there were no drug related SAEs reported, and the most frequent AEs were nausea and headache (10.8%each); others were vomiting (4.6%), abdominal pain and muscle spasms (3.1% each). Based on the data from this study and other information regarding oralmethylnaltrexone, Progenics concluded that the methylnaltrexone tablet was active and generally well tolerated and that its safety, pharmacokinetics and activityprofiles were comparable to that of subcutaneous methylnaltrexone, and decided to commence the phase 3 trial described above.EXINI AcquisitionOn November 20, 2015 we concluded a public tender offer (the "Offer") conducted pursuant to Swedish law to acquire EXINI Diagnostics, AB, a leaderin the development of advanced imaging analysis tools and solutions for medical decision support. Under the terms of the Offer, Progenics offered to pay a totalaggregate purchase price for all of the equity of EXINI of approximately $7 million funded from cash on hand. The acquisition was approved by the board ofdirectors of Progenics, and unanimously recommended by the board of directors of EXINI to its shareholders. As of the end of the offer acceptance period on thatdate, the Offer had been accepted by shareholders representing a total of 17,794,850 shares, corresponding to 96.81 percent of the total shares in EXINI. EXINIwas delisted and ceased to be publicly traded effective as of the close of trading on December 4, 2015 and Progenics has commenced an administrative process inSweden to acquire the remaining outstanding EXINI shares.The acquisition of EXINI complements Progenics's strategy to support its imaging and therapeutic agents with sophisticated analytical tools and othertechnologies that help physicians and patients visualize, understand, target and treat cancer. EXINI has demonstrated experience in the successful development andcommercialization of technology for medical image analysis and machine learning, which will provide Progenics with in-house development capabilities in theseareas that it can apply to its own pipeline, including its prostate cancer imaging agents 1404 and PyL.EXINI's primary product, EXINI Bone BSI, employs an artificial intelligence-based approach to apply techniques of statistical analysis and patternrecognition to quantify the information produced by bone scintigraphy (bone scan) images used to view cancer present in the skeleton. EXINI Bone BSI uses theBone Scan Index developed by Memorial Sloan Kettering Cancer Center to measure the extent of bone metastases. The Bone Scan Index is a standardizedmethodology for classifying "hotspots" appearing on bone scan images as possible metastases, and then computing bone tumor involvement by taking into account(i) the area of the metastasis, (ii) the area of the anatomical region on which the metastasis is located and (iii) a formula for the regional proportion of total skeletalmass in the affected area. When all such potential metastases viewed in the hotspots on the bone scan are added together, the resulting Bone Scan Index numberreflects the apparent percentage of total skeletal mass taken up by the tumors. The EXINI Bone BSI tool "reads" bone scans and produces a standard, automatedBone Scan Index quantification.8Table of ContentsEXINI Bone BSI is currently approved for use in Japan, Europe and the United States (but not yet available for sale in the United States). To date, EXINIhas engaged in only limited efforts to commercialize its EXINI Bone BSI analytical tool in Europe and has licensed it to FUJIFILM in Japan. Planning forcommercialization in the U.S. is currently in process.Research and Development ExpensesResearch and development is essential to our business. During each of the years ended December 31, 2015, 2014 and 2013, we incurred research anddevelopment costs of $28.2 million, $28.6 million and $34.6 million, respectively. For additional information relating to our research and development expenses,see Management's Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations – Research and Development Expenses .License and Other AgreementsFollowing is a summary of certain agreements relating to our business.OncologyWe acquired Molecular Insight in January 2013 by purchasing all of its outstanding capital stock for 4,452,593 shares of Progenics common stock in aprivate transaction. Under the agreement, we also agreed to pay to the former stockholders potential milestones, in cash or Progenics stock at our option, of up to$23 million contingent upon achieving specified commercialization events and up to $70 million contingent upon achieving specified sales targets relating to theacquired company's products and the timing of these payments, if any is highly uncertain. In addition to utilizing its own proprietary technology, Molecular Insighthas a number of agreements with owners of intellectual property which we use or believe may be useful in the research, development and commercialization ofproduct candidates, including:• A 2012 co-exclusive license agreement with the University of Zurich and the Paul Scherrer Institute for worldwide sublicensable rights to certainintellectual property related to production methodologies relevant to 1404. Under this agreement, we maintain related patent rights and are obligated to pay lowsingle-digit royalties on products using the licensed technology, license maintenance fees creditable against royalties, an annual fee for an option to expand thelicense's field of use, and clinical and regulatory milestone payments aggregating approximately $1.1 million. The agreement may be terminated by the licensorsupon certain material defaults by, and automatically terminates upon certain bankruptcy events relating to Molecular Insight, and may be terminated by us on priorwritten notice.• A 2012 out-license agreement with FUJIFILM RI Pharma Co., Ltd. for the development and commercialization of 1404 in Japan, with an upfrontpayment and the right to receive potential future milestone and royalty payments.• A 2000 exclusive license agreement with The University of Western Ontario for worldwide sublicensable rights to certain intellectual propertyrelated to production methodologies relevant to AZEDRA. Under this agreement, we maintain related patent rights and are obligated to pay low single-digitroyalties on products using the licensed technology, minimum annual royalties creditable against royalties and clinical and regulatory milestone paymentsaggregating approximately $0.3 million. The agreement, which either party may terminate upon certain bankruptcy events or material defaults, continues throughthe last to expire of the related patent rights.On August 4, 2015, we announced an exclusive worldwide licensing agreement for [18F]DCFPyL ("PyL"), a clinical-stage prostate specific membraneantigen (PSMA)-targeted imaging agent for prostate cancer, from Johns Hopkins University. PyL, when used in conjunction with high-resolution PET imaging, hasshown potential for use in identifying prostate cancer and sites of distant metastasis. Progenics intends to focus the development of PyL with high resolution PETimaging to detect and localize recurrent disease in patients who have experienced a biochemical relapse. Under this agreement, we are obligated to pay milestonepayments, low single-digit royalties, patent costs and minimum annual royalties which are creditable against royalties, aggregating approximately $2.8 million.9Table of ContentsOur PSMA Development Company LLC subsidiary has a collaboration agreement with Seattle Genetics, Inc. ("SGI") under which SGI has granted us anexclusive worldwide license to its proprietary antibody-drug conjugate (ADC) technology. We have the right to use this technology, which is based in part ontechnology licensed by SGI from third parties, to link chemotherapeutic agents to our monoclonal antibodies that target prostate specific membrane antigenutilizing technology licensed to us, through Cytogen Corporation, from Sloan-Kettering Institute for Cancer Research. We are responsible for research, productdevelopment, manufacturing and commercialization of all products, and are obligated to make maintenance and milestone payments and to pay royalties to SGIand its licensors, as applicable, on a percentage of net sales. The SGI agreement terminates at the later of (i) the tenth anniversary of the first commercial sale ofeach licensed product in each country or (ii) the latest date of expiration of patents underlying the licensed products. We may terminate the agreement uponadvance written notice; SGI may terminate if we fail to cure a breach of an SGI in-license after written notice; and either party may terminate after written noticeupon an uncured breach or in the event of the other party's bankruptcy.PSMA Development Company LLC also has a worldwide exclusive licensing agreement with Abgenix (now Amgen Fremont, Inc.) to use its XenoMouse® technology for generating fully human antibodies to PSMA. We are obligated to make development and commercialization milestone payments with respect toproducts incorporating an antibody generated utilizing that technology, along with royalties based upon net sales of such products. Abgenix may terminate thisagreement for cause, after an opportunity to cure, upon 30 days' prior written notice; we have the right to terminate upon 30 days prior written notice. Theagreement continues until the later of the expiration of specified patents or seven years from the first commercial sale of eligible products.RELISTORUnder our License Agreement, Valeant is responsible for developing and commercializing RELISTOR worldwide, including completing clinicaldevelopment necessary to support regulatory marketing approvals for potential new indications and formulations, and marketing and selling the product. Valeant ismarketing RELISTOR directly through its specialty sales force in the U.S., and outside the U.S. directly through distribution and marketing partners. Under ourAgreement with Valeant, we recognized in the third quarter of 2014 a $40 million development milestone for the chronic non-cancer pain indication approval, andremain eligible to receive (i) a development milestone of up to $50 million upon U.S. marketing approval of an oral formulation of RELISTOR, and (ii) up to $200million of commercialization milestone payments upon achievement of specified U.S. sales targets, ranging from $10 million when calendar-year U.S. net salesfirst exceed $100 million, to $75 million when such sales first exceed $1 billion. We also receive royalties of 15% of calendar-year worldwide net sales by Valeantand its affiliates up to $100 million, and are eligible to receive (i) 17% on the next $400 million of such sales, and 19% on such sales over $500 million, and (ii)60% of any upfront, milestone, reimbursement or other revenue (net of costs of goods sold, as defined, and territory-specific research and development expensereimbursement) Valeant receives from sublicensees outside the U.S. In the event that marketing approval for the oral formulation is subject to a Black BoxWarning or Risk Evaluation and Mitigation Strategy (REMS), payment of a substantial portion of specified milestone amounts would be deferred, and be subject toachievement of the first commercialization milestone. On September 8, 2015, the FDA accepted for review Valeant's New Drug Application for RELISTOR tabletsfor the treatment of OIC in adult patients with chronic non-cancer pain, and assigned a Prescription Drug User Fee Act (PDUFA) action date of April 19, 2016.The License Agreement may be terminated by either party upon an uncured material breach or specified bankruptcy events. In addition, Valeant mayterminate the License Agreement for unresolved safety or efficacy issues or at its discretion upon specified prior notice at any time, subject to our one-time right topostpone such termination for a specified period of time if we have not successfully transitioned the development and commercialization of the drug despite goodfaith and diligent efforts. See Risk Factors.10Table of ContentsWe have licensed to Valeant our exclusive rights to develop and commercialize methylnaltrexone, the active ingredient of RELISTOR, which we in-licensed from the University of Chicago. Our agreement with Chicago provides for an exclusive license to intellectual property in exchange for development andpotential commercialization obligations, low single-digit royalties on commercial sales of resulting products and single-digit percentages of milestone andsublicensing revenues, and shared patent policing responsibilities. The Chicago agreement, as amended in connection with our RELISTOR collaborations,including substantially all of Progenics' payment obligations thereunder, expires by its terms upon the expiration of the last to expire of the patents licensedthereunder, the last-to-expire of which expires in 2017.Patents and Proprietary TechnologyProtection of our intellectual property rights is important to our business. We seek U.S. patent protection for many of our inventions, and generally filepatent applications in Canada, Japan, European countries that are party to the European Patent Convention and other countries on a selective basis in order toprotect inventions we consider to be important to the development of business in those areas. Generally, patents issued in the U.S. are effective for either (i) 20years from the earliest asserted filing date, if the application was filed on or after June 8, 1995, or (ii) the longer of 17 years from the date of issue or 20 years fromthe earliest asserted filing date, if the application was filed prior to that date.In certain instances, the U.S. patent term can be extended up to a maximum of five years to recapture a portion of the term during which FDA regulatoryreview was being conducted. The duration of foreign patents varies in accordance with the provisions of applicable local law, although most countries provide forpatent terms of 20 years from the earliest asserted filing date and allow patent extensions similar to those permitted in the U.S.Patents may not enable us to preclude competitors from commercializing drugs in direct competition with our products, and consequently may notprovide us with any meaningful competitive advantage. See Risk Factors. We also rely on trade secrets, proprietary know-how and continuing technologicalinnovation to develop and maintain a competitive position in our product areas. We require our employees, consultants and corporate partners who have access toour proprietary information to sign confidentiality agreements.Information with respect to our current patent portfolio is set forth below.The original patents surrounding the AZEDRA program were licensed by Molecular Insight from the University of Western Ontario ("UWO"). The patentfamily directed to processes for making polymer precursors, as well as processes for making the final product, expire in 2018 in the U.S. and Canada. Otherlicensed patent families from UWO relate to alternative approaches for preparing AZEDRA, which if implemented would expire in 2024 worldwide. Progenics haspending applications worldwide directed to manufacturing improvements and the resulting compositions which, if issued, would expire in 2035.Owned and in-licensed properties relating to 1404 have expiration ranges of 2020 to 2030; we view as most significant the composition-of-matter patenton the compound, as well as technetium-99 labeled forms, which expire in 2029 and 2030 in the U.S.; 2029 in the rest of the world. Patent applications directed tomethods of use are pending worldwide, which if issued would expire in 2034.The PyL patent family was licensed from Johns Hopkins University. Patent protection for the compound, radiolabeled forms of the compound, as well asmethods of use expire in 2030 in the U.S. Corresponding family members are pending or issued worldwide, all expiring in 2029.11Table of ContentsCompany-owned properties relating to MIP-1095 have expiration ranges of 2027 to 2031 in the U.S. We view as most significant the composition-of-matter patent on this compound, as well as radiolabeled forms, which expires in 2027 in the U.S., as well as Europe. Additional U.S. patents are directed to stablecompositions and radiolabeling processes, and expire in 2030 and 2031, respectively.The intellectual property directed to PSMA ADC comprises co-owned and in-licensed properties. Composition-of-matter patents have expirations of 2022and 2023 in the U.S and a pending U.S. application which would expire in 2026, if issued. An allowed U.S. application directed to methods of use will expire in2029. Corresponding foreign counterparts to the U.S. composition-of-matter patents in Europe and certain other markets will expire 2022 and 2026, along with amethod of use patent which expires in 2029. We view all of these patents as significant.With regard to our RELISTOR-related intellectual property, the composition-of-matter patent for the active ingredient of RELISTOR, methylnaltrexone,was invented in the 1970's and has expired. The University of Chicago, as well as Progenics and its collaborators, have extended the methylnaltrexone patent estatewith additional patents and pending patent applications covering various inventions relating to the product. Valeant has listed in the FDA Orange Book six U.S.patents relating to subcutaneous RELISTOR, which have expiration dates ranging from 2017 to 2030, and two patents (expiring in 2024 and 2027) with HealthCanada. Issued U.S. patents provide protection for the oral methylnaltrexone product until 2031.We are aware of intellectual property rights held by third parties that relate to products or technologies we are developing. For example, we are aware ofothers investigating and developing technologies and drug candidates directed toward PSMA or related compounds as well as methylnaltrexone and otherperipheral opioid antagonists, and of patents and applications held or filed by others in those areas. The validity of issued patents, patentability of claimedinventions in pending applications and applicability of any of them to our programs are uncertain and subject to change, and patent rights asserted against us couldadversely affect our ability to commercialize or collaborate with others on specific products.Research, development and commercialization of a biopharmaceutical product often require choosing between alternative development and optimizationroutes at various stages in the development process. Preferred routes depend upon current – and may be affected by subsequent – discoveries and test results andcannot be identified with certainty at the outset. There are numerous third-party patents in fields in which we work, and we may need to obtain license underpatents of others in order to pursue a preferred development route of one or more of our product candidates. The need to obtain a license would decrease theultimate value and profitability of an affected product. If we cannot negotiate such a license, we might have to pursue a less desirable development route orterminate the entire program altogether.Government RegulationProgenics and its product candidates are subject to comprehensive regulation by the U.S. FDA and comparable authorities in other countries.Pharmaceutical regulation currently is a topic of substantial interest in lawmaking and regulatory bodies in the U.S. and internationally, and numerous proposalsexist for changes in FDA and non-U.S. regulation of pre-clinical and clinical testing, approval, safety, effectiveness, manufacturing, storage, recordkeeping,labeling, marketing, export, advertising, promotion and other aspects of biologics, small molecule drugs and medical devices, many of which, if adopted, couldsignificantly alter our business and the current regulatory structure described below. See Risk Factors.FDA Regulation. FDA approval, which involves review of scientific, clinical and commercial data, manufacturing processes and facilities, is requiredbefore a product candidate may be marketed in the U.S. This process is costly, time consuming and subject to unanticipated delays, and a drug candidate may failto progress at any point.12Table of ContentsNone of our product candidates other than RELISTOR has received marketing approval from the FDA or any other regulatory authority. The processrequired by the FDA before product candidates may be approved for marketing in the U.S. generally involves: ·pre-clinical laboratory and animal tests; ·submission to and favorable review by the FDA of an investigational new drug application before clinical trials may begin; ·adequate and well-controlled human clinical trials to establish the safety and efficacy of the product for its intended indication (animal and othernonclinical studies also are typically conducted during each phase of human clinical trials); ·submission to the FDA of a marketing application; and ·FDA review of the marketing application in order to determine, among other things, whether the product is safe and effective for its intended uses.Pre-clinical tests include laboratory evaluation of product chemistry and animal studies to gain preliminary information about a compound'spharmacology and toxicology and to identify safety problems that would preclude testing in humans. Since product candidates must generally be manufacturedaccording to current Good Manufacturing Practices (cGMP), pre-clinical safety tests must be conducted by laboratories that comply with FDA good laboratorypractices regulations. Pre-clinical testing is preceded by initial research related to specific molecular targets, synthesis of new chemical entities, assay developmentand screening for identification and optimization of lead compound(s).Results of pre-clinical tests are submitted to the FDA as part of an IND which must become effective before clinical trials may commence. The INDsubmission must include, among other things, a description of the sponsor's investigational plan; protocols for each planned study; chemistry, manufacturing andcontrol information; pharmacology and toxicology information and a summary of previous human experience with the investigational drug. Unless the FDAobjects to, makes comments or raises questions concerning an IND, it becomes effective 30 days following submission, and initial clinical studies may begin.Companies often obtain affirmative FDA approval, however, before beginning such studies.Clinical trials involve the administration of the investigational new drug to healthy volunteers or to individuals under the supervision of a qualifiedprincipal investigator. Clinical trials must be conducted in accordance with the FDA's Good Clinical Practice requirements under protocols submitted to the FDAthat detail, among other things, the objectives of the study, parameters used to monitor safety and effectiveness criteria to be evaluated. Each clinical study must beconducted under the auspices of an Institutional Review Board, which considers, among other things, ethical factors, safety of human subjects, possible liability ofthe institution and informed consent disclosure which must be made to participants in the trial.Clinical trials are typically conducted in three sequential phases, which may overlap. During Phase 1, when the drug is initially administered to humansubjects, the product is tested for safety, dosage tolerance, absorption, metabolism, distribution and excretion. Phase 2 involves studies in a limited population toevaluate preliminarily the efficacy of the product for specific, targeted indications, determine dosage tolerance and optimal dosage and identify possible adverseeffects and safety risks.When a product candidate is found in Phase 2 evaluation to have an effect and an acceptable safety profile, Phase 3 trials are undertaken in order tofurther evaluate clinical efficacy and test for safety within an expanded population. Safety studies are conducted in accordance with the FDA's InternationalConference on Harmonization Guidelines. Phase 2 results do not guarantee a similar outcome in Phase 3 trials. The FDA may suspend clinical trials at any point inthis process if it concludes that clinical subjects are being exposed to an unacceptable health risk.A New Drug Application, or NDA, is an application to the FDA to market a new drug. A Biologic License Application, or BLA, is an application tomarket a biological product. The new drug or biological product may not be marketed in the U.S. until the FDA has approved the NDA or issued a biologic license.The NDA must contain, among other things, information on chemistry, manufacturing and controls; non-clinical pharmacology and toxicology; humanpharmacokinetics and bioavailability; and clinical data. The BLA must contain, among other things, data derived from nonclinical laboratory and clinical studieswhich demonstrate that the product meets prescribed standards of safety, purity and potency, and a full description of manufacturing methods. Supplemental NDAs(sNDAs) are submitted to obtain regulatory approval for additional indications for a previously approved drug, and are reviewed by the FDA in a similar manner.13Table of ContentsThe results of the pre-clinical studies and clinical studies, the chemistry and manufacturing data, and the proposed labeling, among other things, aresubmitted to the FDA in the form of an NDA or BLA. The FDA may refuse to accept the application for filing if certain administrative and content criteria are notsatisfied, and even after accepting the application for review, the FDA may require additional testing or information before approval of the application, in eithercase based upon changes in applicable law or FDA policy during the period of product development and FDA regulatory review. The applicant's analysis of theresults of clinical studies is subject to review and interpretation by the FDA, which may differ from the applicant's analysis, and in any event, the FDA must denyan NDA or BLA if applicable regulatory requirements are not ultimately satisfied. If regulatory approval of a product is granted, such approval may be madesubject to various conditions, including post-marketing testing and surveillance to monitor the safety of the product, or may entail limitations on the indicated usesfor which it may be marketed. Product approvals may also be withdrawn if compliance with regulatory standards is not maintained or if problems occur followinginitial marketing.Orphan Drug, Fast Track and Breakthrough Therapy DesignationsOther FDA regulations and policies relating to drug approval have implications for certain of our current or future product candidates, particularlyAZEDRA. Designation as an Orphan Drug is available under U.S., E.U. and other laws for drug candidates intended to treat rare diseases or conditions, and whichif approved are granted a period of market exclusivity, subject to various conditions. Orphan Drug designation does not shorten or otherwise convey any advantagein the regulatory approval process. Under the Orphan Drug Act, the FDA may designate a product as an Orphan Drug if it is intended to treat a rare disease orcondition, generally defined as a patient population of fewer than 200,000 in the United States. AZEDRA is designated as an Orphan Drug. In the United States, Orphan Drug designation entitles a party to certain financial incentives such as opportunities for grant funding towards clinical trialcosts, tax advantages and user-fee waivers. In addition, if a product receives the first FDA approval for the indication for which it has orphan designation, theproduct is entitled to Orphan Drug exclusivity, which means the FDA may not approve any other application to market the same drug for the same indication for aperiod of seven years, except in limited circumstances, such as a showing of clinical superiority over the product with orphan exclusivity or where themanufacturer is unable to assure sufficient product quantity.In cases where the extent and scope of patent protection for a product is limited, the exclusivity period resulting from Orphan Drug designation may beimportant in helping products maintain a competitive position. Even if a product obtains Orphan Drug exclusivity, however, that exclusivity may not effectivelyprotect the product from competition because different drugs with different active moieties may be approved for the same condition. Even after an Orphan Drug isapproved, the FDA may subsequently approve the same drug with the same active moiety for the same condition if the FDA concludes that the later drug is safer,more effective or makes a major contribution to patient care.The FDA is also authorized to designate certain products for expedited review if they are intended to address an unmet medical need in the treatment of aserious or life-threatening disease or condition. These mechanisms for expedited review include fast track designation, breakthrough therapy designation andpriority review designation. AZEDRA has received both fast track and breakthrough therapy designations.The FDA may designate a product for fast track review if it is intended, whether alone or in combination with one or more other drugs, for the treatmentof a serious or life-threatening disease or condition, and it demonstrates the potential to address unmet medical needs for such a disease or condition. For fast trackproducts, sponsors may have greater interactions with the FDA and the FDA may initiate review of sections of a fast track product's NDA before the application iscomplete. This rolling review may be available if the FDA determines, after preliminary evaluation of clinical data submitted by the sponsor, that a fast trackproduct may be effective. The sponsor must also provide, and the FDA must approve, a schedule for the submission of the remaining information and the sponsormust pay applicable user fees. However, the FDA's time period goal for reviewing a fast track application does not begin until the last section of the NDA issubmitted. In addition, the fast track designation may be withdrawn by the FDA if the FDA believes that the designation is no longer supported by data emergingin the clinical trial process.14Table of ContentsIn 2012, as part of the Food and Drug Administration Safety and Improvement Act, a new regulatory scheme was established allowing expedited reviewof products designated as "breakthrough therapies." A product may be designated as a breakthrough therapy if it is intended, either alone or in combination withone or more other drugs, to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the product may demonstratesubstantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinicaldevelopment. The FDA may take certain actions with respect to breakthrough therapies, including holding meetings with the sponsor throughout the developmentprocess; providing timely advice to the product sponsor regarding development and approval; involving more senior staff in the review process; assigning a cross-disciplinary project lead for the review team; and taking other steps to design the clinical trials in an efficient manner.Finally, the FDA may designate a product for priority review if it is a drug that treats a serious condition and, if approved, would provide a significantimprovement in safety or effectiveness. The FDA determines, on a case-by-case basis, whether the proposed drug represents a significant improvement whencompared with other available therapies. Significant improvement may be illustrated by evidence of increased effectiveness in the treatment of a condition,elimination or substantial reduction of a treatment-limiting drug reaction, documented enhancement of patient compliance that may lead to improvement in seriousoutcomes, and evidence of safety and effectiveness in a new subpopulation. A priority designation is intended to direct overall attention and resources to theevaluation of such applications, and to shorten the FDA's goal for taking action on a marketing application from ten months to six months.Both before and after approval is obtained, a product, its manufacturer and the sponsor of the marketing application for the product are subject tocomprehensive regulatory oversight. Violations of existing or newly-adopted regulatory requirements at any stage, including the pre-clinical and clinical testingprocess, the approval process, or thereafter, may result in various adverse consequences, including FDA delay in approving or refusal to approve a product,withdrawal of an approved product from the market or the imposition of criminal penalties against the manufacturer or sponsor. Later discovery of previouslyunknown problems may result in restrictions on the product, manufacturer or sponsor, including withdrawal of the product from the market.Regulation Outside the U.S. Whether or not FDA approval has been obtained, approval of a pharmaceutical product by comparable governmentregulatory authorities abroad must be obtained prior to marketing the product there. The approval procedure varies from country to country, and the time requiredmay be longer or shorter than that required for FDA approval. The requirements for regulatory approval by governmental agencies in other countries prior tocommercialization of products there can be rigorous, costly and uncertain, and approvals may not be granted on a timely basis or at all.In E.U. countries, Canada, Australia and Japan, regulatory requirements and approval processes are similar in principle to those in the U.S. Regulatoryapproval in Japan requires that clinical trials of new drugs be conducted in Japanese patients. Depending on the type of drug for which approval is sought, there arecurrently two potential tracks for marketing approval in the E.U. countries: mutual recognition and the centralized procedure. These review mechanisms mayultimately lead to approval in all E.U. countries, but each method grants all participating countries some decision-making authority in product approval. Thecentralized procedure, which is mandatory for biotechnology derived products, results in a recommendation in all member states, while the E.U. mutual recognitionprocess involves country-by-country approval.In other countries, regulatory requirements may require additional pre-clinical or clinical testing regardless of whether FDA or European approval hasbeen obtained. This is the case in Japan, where trials are required to involve patient populations which we and our other collaborators have not examined in detail.If a product is manufactured in the U.S., it is also subject to FDA and other U.S. export provisions. In most countries outside the U.S., coverage, pricing andreimbursement approvals are also required, which may affect the profitability of the affected product.15Table of ContentsOther Regulation. In addition to regulations enforced by the FDA, we are also subject to regulation under the U.S. Occupational Safety and Health Act,Environmental Protection Act, Toxic Substances Control Act, Resource Conservation and Recovery Act and various other current and potential future U.S. federal,state or local regulations. In addition, Molecular Insight's research is dependent on maintenance of licenses from various authorities permitting the acquisition, useand storage of quantities of radioactive isotopes that are critical for its manufacture and testing of research products. Biopharmaceutical research and developmentgenerally involves the controlled use of hazardous materials, chemicals, viruses and various radioactive compounds. Even strict compliance with safety proceduresfor storing, handling, using and disposing of such materials prescribed by applicable regulations cannot completely eliminate the risk of accidental contaminationsor injury from these materials, which may result in liability for resulting legal and regulatory violations as well as damages.ManufacturingUnder our License Agreement, Valeant is responsible for the manufacture and supply, at its expense, of all active pharmaceutical ingredient ("API") andfinished and packaged products for its RELISTOR commercialization efforts, including contracting with contract manufacturing organizations ("CMOs") forsupply of RELISTOR API and subcutaneous and oral finished drug product.As to our other product candidates, the manufacture of biopharmaceuticals and radiopharmaceuticals is relatively complex and requires significant capitalexpenditures. As part of our ongoing efforts to manage our development costs and timely execute on our development plans, we rely on third parties for clinicalmanufacturing. We have engaged third-party CMOs to manufacture API and finished drug products for clinical trial supplies of AZEDRA, and are engaged in theprocess of putting in place sufficient manufacturing capacity to deliver commercial supplies in advance of the anticipated approval of AZEDRA. We have alsopartnered with third-parties to produce clinical trial supplies of 1404, PyL, 1095 and PSMA ADC, and may in the future undertake such efforts with respect toother assets and programs. As a result, we depend significantly on the availability of high quality CMO services. If we are unable to arrange for satisfactory CMOservices, we would need to undertake such responsibilities on our own, resulting in our having to incur additional expenses and potentially delaying thedevelopment of our product candidates. See Risk Factors .Sales and MarketingWe currently have no marketing, sales or distribution capabilities. In order to participate in the commercialization of any of our drugs, we must developthese capabilities on our own or in collaboration with third parties. We may also choose to hire professional detailing and sales organizations or other third partysales personnel instead of developing our own staff. We intend to establish our own sales and marketing capabilities if and when we obtain regulatory approval ofAZEDRA. In North America and Western Europe, patients in the markets for our drug candidates generally receive care from medical specialists in the areas ofurology and oncology. We expect to utilize a specialized AZEDRA sales force in North America which can address a majority of key prescribers and support thesuccessful commercialization of an Orphan Drug. We may also utilize a specialized sales force in North America for the sales and marketing of other drugcandidates that we may successfully develop.In circumstances or markets where a more favorable return may be realized, we may market products for which we obtain regulatory approvals throughco-marketing, co-promotion, licensing or distribution arrangements with third-party collaborators. See Risk Factors .16Table of ContentsCompetitionCompetition in the biopharmaceutical industry is intense and characterized by ongoing research and development and technological change. We facecompetition from many for-profit companies and major universities and research institutions in the U.S. and abroad. We face competition from companiesmarketing existing products or developing new products for diseases targeted by our technologies. Many of our competitors have substantially greater resources,experience in conducting pre-clinical studies and clinical trials and obtaining regulatory approvals for their products, operating experience, research anddevelopment and marketing capabilities and production capabilities than we do. Our products and product candidates under development may not competesuccessfully with existing products or products under development by other companies, universities and other institutions. Drug manufacturers that are first in themarket with a therapeutic for a specific indication generally obtain and maintain a significant competitive advantage over later entrants and therefore, the speedwith which industry participants move to develop products, complete clinical trials, approve processes and commercialize products is an important competitivefactor.RELISTOR was the first FDA-approved product for any indication involving OIC. We are, however, aware of other approved and marketed products, aswell as candidates in pre-clinical or clinical development, that target the side effects of opioid pain therapy. In September 2014, the FDA approved MOVANTIK™(naloxegol), an oral peripheral mu-opioid receptor antagonist for patients with OIC developed by a Nektar Therapeutics-AstraZeneca PLC collaboration, whichalso has a related combination product in early stage development. MOVANTIK was made available to patients in 2015. In December 2014, AstraZeneca wasgranted a Marketing Authorization by the European Commission for MOVENTIG ® (naloxegol) for the treatment of OIC in adult patients who have had aninadequate response to laxative(s). Cubist Pharmaceuticals, a subsidiary of Merck & Co., Inc., markets ENTEREG ® (alvimopan) for the treatment ofpostoperative ileus, and has completed Phase 3 testing of a compound for OIC in chronic-pain patients. Sucampo Pharmaceuticals, Inc., in collaboration withTakeda Pharmaceutical Company Limited, markets AMITIZA ® (lubiprostone), a selective chloride channel activator, for chronic idiopathic (non-opioid related)constipation, and in April 2013 received FDA approval of this drug for opioid-induced constipation. Shionogi & Co. has conducted Phase 3 testing fornaldemedine, another mu-opioid receptor antagonist, for patients with OIC. Theravance, Inc. has completed Phase 2 clinical testing of an oral peripheral mu-opioidantagonist. In Europe, Mundipharma International Limited markets TARGIN ® (oxycodone/naloxone), a combination of an opioid and a systemic opioidantagonist. Other prescription, as well as over-the-counter (OTC), constipation products are also prescribed first line for OIC.As to our oncology pipeline, radiation and surgery are two traditional forms of treatment for prostate cancer. If the disease spreads, hormone (androgen)suppression therapy is often used to slow the cancer's progression, but this form of treatment can eventually become ineffective. We are aware of severalcompetitors who are developing or have received approval for alternative treatments for castration-resistant prostate cancer, some of which are directed againstPSMA, including Johnson & Johnson subsidiary Janssen Biotech, Inc.'s ZYTIGA ® (abiraterone acetate), approved in 2011 for use in combination with prednisoneas a second-line (after chemotherapy with docetaxel) for metastatic castration-resistant prostate cancer treatment, and later for use with prednisone for metastaticcastration-resistant disease before the use of chemotherapy; Medivation, Inc.'s XTANDI ® (enzalutamide), approved in August 2012 for patients with metastaticcastration-resistant prostate cancer previously treated with docetaxel, and later for treatment of patients with metastatic castration-resistant prostate cancer beforeuse of chemotherapy; and Bayer HealthCare Pharmaceuticals Inc.'s ALPHARADIN ® (radium-223 dichloride) (marketed as XOFIGO ® ), approved in 2013 fortreatment of patients with castration-resistant prostate cancer, symptomatic bone metastases and no known visceral metastatic disease. A competitive product to1404 is PROSTASCINT ® , which Aytu Bioscience Inc. acquired from Jazz Pharmaceuticals in 2015 and which is approved for detection of metastatic prostatecancer or relapsed or high-risk prostate cancer patients.There are currently no approved anticancer treatments in the U.S. for malignant pheochromocytoma/paraganglioma.A significant amount of research in the biopharmaceutical field is carried out at academic and government institutions. An element of our research anddevelopment strategy has been to in-license technology and product candidates from academic and government institutions. These institutions are sensitive to thecommercial value of their findings and pursue patent protection and negotiate licensing arrangements to collect royalties for use of technology they develop. Theymay also market competitive commercial products on their own or in collaboration with competitors and compete with us in recruiting highly qualified scientificpersonnel, which may result in increased costs or decreased availability of technology or product candidates from these institutions to other industry participants.17Table of ContentsCompetition with respect to our technologies and products is based on, among other things, product efficacy, safety, reliability, method of administration,availability, price and clinical benefit relative to cost; timing and scope of regulatory approval; sales, marketing and manufacturing capabilities; collaboratorcapabilities; insurance and other reimbursement coverage; and patent protection. Competitive position in our industry also depends on a participant's ability toattract and retain qualified personnel, obtain patent protection or otherwise develop proprietary products or processes, and secure sufficient capital resources for thetypically substantial period between technological conception and commercial sales.Product LiabilityThe testing, manufacturing and marketing of our product candidates and products involves an inherent risk of product liability attributable to unwantedand potentially serious health effects. To the extent we elect to test, manufacture or market product candidates and products independently, we bear the risk ofproduct liability directly. We maintain product liability insurance coverage in amounts and pursuant to terms and conditions customary for our industry, scale andthe nature of our activities. Where local statutory requirements exceed the limits of our existing insurance or local policies of insurance are required, we maintainadditional clinical trial liability insurance to meet these requirements. This insurance is subject to deductibles and coverage limitations. The availability and cost ofmaintaining insurance may change over time.Human ResourcesAt December 31, 2015, we had 66 full-time employees, 11 of whom hold Ph.D. degrees and 2 of whom hold M.D. degrees. At that date, 44 employeeswere engaged in research and development, medical, regulatory affairs and manufacturing related activities and 22 were engaged in finance, legal, administration,sales and business development. We consider our relations with our employees to be good. None of our employees is covered by a collective bargainingagreement.Item 1A.  Risk FactorsProduct Development-related RisksDrug development is a long and inherently uncertain process with a high risk of failure at every stage of development.Drug development is a highly uncertain scientific and medical endeavor, and failure can unexpectedly occur at any stage of clinical development.Typically, there is a high rate of attrition for product candidates in preclinical and clinical trials due to scientific feasibility, safety, efficacy, changing standards ofmedical care and other variables. The risk of failure increases for our product candidates that are based on new technologies, as well as technologies with which wehave limited prior experience, such as those originally developed by Molecular Insight. Pre-clinical studies and clinical trials are long, expensive and highlyuncertain processes that can take many years. It will take us, or our collaborators, several years to complete clinical trials and the time required for completingtesting and obtaining approvals is uncertain. The start or end of a clinical trial is often delayed or halted due to changing regulatory requirements, manufacturingchallenges, required clinical trial administrative actions, slower than anticipated patient enrollment, changing standards of care, availability or prevalence of use ofa comparator drug or required prior therapy, clinical outcomes, or our and our partners' financial constraints. The FDA and other U.S. and foreign regulatoryagencies have substantial discretion, at any phase of development, to terminate clinical trials, require additional clinical development or other testing, delay orwithhold registration and marketing approval and mandate product withdrawals, including recalls. Results attained in early human clinical trials may not beindicative of results in later clinical trials. In addition, many of our investigational or experimental drugs are at an early stage of development, and successfulcommercialization of early stage product candidates requires significant research, development, testing and approvals by regulators, and additional investment. Ourproducts in the research or pre-clinical development stage may not yield results that would permit or justify clinical testing. Our failure to demonstrate adequatelythe safety and efficacy of a product under development would delay or prevent marketing approval, which could adversely affect our operating results andcredibility. The failure of one or more of our product candidates could have a material adverse effect on our business, financial condition and results of operations.18Table of ContentsThe future of our business and operations depends on the success of our RELISTOR collaborations and our oncology research and developmentprograms.Our business and operations entail a variety of serious risks and uncertainties and are inherently risky. The research and development programs on whichwe focus involve novel approaches to human therapeutics. Our principal product candidates are in clinical development, and in some respects involve technologieswith which we have limited prior experience. We are subject to the risks of failure inherent in the development of product candidates based on new technologies.There is little precedent for the successful commercialization of products based on our technologies, and there are a number of technological challenges that wemust overcome to complete most of our development efforts. We may not be able successfully to develop further any of our product candidates. We and ourRELISTOR and other collaborators must successfully complete clinical trials and obtain regulatory approvals for potential commercial products. Once approved, ifat all, commercial product sales are subject to general and industry-specific local and international economic, regulatory, technological and policy developmentsand trends. The oncology space in which we operate presents numerous significant risks and uncertainties that may be expected to increase to the extent it becomesmore competitive or less favored in the commercial healthcare marketplace.The long-term success of our acquisitions of Molecular Insight and EXINI will be subject to all of the risks and uncertainties described in these riskfactors. In addition, the estimated fair values of Molecular Insight assets and liabilities reflected in our financial statements do not, given their uniqueness andattendant uncertainties, reflect actual transactions or quoted prices and may not correlate to any future values or results. Such information should not be interpretedor relied upon as indicative of any future value or results. Our failure to manage successfully any of our product candidates, technologies or programs could havean adverse impact on our business, and on the price of our stock.If we or our collaborators do not obtain regulatory approval for our product candidates on a timely basis, or at all, or if the terms of any approval imposesignificant restrictions or limitations on use, our business, results of operations and financial condition will be adversely affected. Setbacks in clinicaldevelopment programs could have a material adverse effect on our business.Regulatory approvals are necessary to market product candidates and require demonstration of a product's safety and efficacy through extensive pre-clinical and clinical trials. We or our collaborators may not obtain regulatory approval for product candidates on a timely basis, or at all, and the terms of anyapproval (which in some countries includes pricing approval) may impose significant restrictions, limitations on use or other commercially unattractive conditions.The process of obtaining FDA and foreign regulatory approvals often takes many years and can vary substantially based upon the type, complexity and novelty ofthe products involved. We have had only limited experience in filing and pursuing applications and other submissions necessary to gain marketing approvals.Products under development may never obtain marketing approval from the FDA or other regulatory authorities necessary for commercialization.We, our collaborators or regulators may also amend, suspend or terminate clinical trials if we or they believe that the participating patients are beingexposed to unacceptable health risks, and after reviewing trial results, we or our collaborators may abandon projects which we previously believed to be promisingfor commercial or other reasons unrelated to patient risks. During this process, we may find, for example, that results of pre-clinical studies are inconclusive or notindicative of results in human clinical trials, clinical investigators or contract research organizations do not comply with protocols or applicable regulatoryrequirements, or that product candidates do not have the desired efficacy or have undesirable side effects or other characteristics that preclude marketing approvalor limit their potential commercial use if approved. In such circumstances, the entire development program for that product candidate could be adversely affected,resulting in delays in trials or regulatory filings for further marketing approval and a possible need to reconfigure our clinical trial programs to conduct additionaltrials or abandon the program involved. Conducting additional clinical trials or making significant revisions to a clinical development plan would lead to delays inregulatory filings. If clinical trials indicate, or regulatory bodies are concerned about, actual or possible serious problems with the safety or efficacy of a productcandidate, such as the concerns expressed during consideration of the oral RELISTOR development program, we or our collaborators may stop or significantlyslow development or commercialization of affected products. As a result of such concerns, the development programs for oral RELISTOR may be significantlydelayed or terminated altogether.19Table of ContentsIf the results of any future RELISTOR trials are not satisfactory or we or our collaborators encounter problems enrolling patients, clinical trial supplyissues, setbacks in developing drug formulations, including raw material-supply, manufacturing, stability or other difficulties, or issues complying with protocolsor applicable regulatory requirements, the entire development program for RELISTOR could be adversely affected in a material manner. Such scenarios could alsobefall our other clinical-stage product candidates. If any of our collaborators breach or terminate its agreement with us or otherwise fail to conduct successfully andin a timely manner the collaborative activities for which they are responsible, the preclinical or clinical development or commercialization of the affected productcandidate or research program could be delayed or terminated. We generally do not control the amount and timing of resources that our collaborators devote to ourprograms or product candidates. We also do not know whether current or future collaboration partners, if any, might pursue alternative technologies or developalternative products either on their own or in collaboration with others, including our competitors, as a means for developing treatments for the diseases orconditions targeted by our collaborative arrangements. Setbacks of these types could have a material adverse effect on our business, results of operations andfinancial condition.We or our collaborators must design and conduct successful clinical trials for our product candidates to obtain regulatory approval. We rely on thirdparties for conduct of clinical trials, which reduces our control over them and may expose us to conflicts of interest. Clinical trial results may beunfavorable or inconclusive, and often take longer than expected.We have limited experience in conducting clinical trials, and we rely on or obtain the assistance of others to design, conduct, supervise or monitor someor all aspects of some of our clinical trials, including our ongoing Phase 2 trial of PSMA ADC, Phase 3 trial of 1404 and the resumed AZEDRA Phase 2b trial. Wehave less control over the timing and other aspects of clinical trials for which we rely on third parties, such as CROs, clinical data management organizations,medical institutions or clinical investigators, than if we conducted them entirely on our own. These third parties may also have relationships with other entities,some of which may be our competitors. In all events, we are responsible for ensuring that each of our clinical trials is conducted in accordance with the generalinvestigational plan and protocols for the trial. The FDA requires us to comply with good clinical practices for conducting and recording and reporting the resultsof clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity and confidentiality of trial participants are protected.Our reliance on third parties that we do not control does not relieve us of these responsibilities and requirements.To obtain regulatory approval of drug candidates, we must demonstrate through preclinical studies and clinical trials that they are safe and effective.Adverse or inconclusive clinical trial results concerning any of our drug candidates, or trials which regulators find deficient in scope, design or one or more othermaterial respects, could require additional trials, resulting in increased costs, significant delays in submissions of approval applications, approvals in narrowerindications than originally sought, or denials of approval, none of which we can predict. As a result, any projections that we publicly announce of commencementand duration of clinical trials are not certain. We have experienced clinical trial delays in the past as a result of slower than anticipated enrollment and such delaysmay recur. Delays can be caused by, among other things, deaths or other adverse medical events; regulatory or patent issues; interim or final results of ongoingclinical trials; failure to enroll clinical sites as expected; competition for enrollment from other clinical trials; scheduling conflicts with participating clinicians andinstitutions; disagreements, disputes or other matters arising from collaborations; our inability to obtain necessary funding; or manufacturing problems.Under our license agreement, Valeant generally has responsibility for conducting RELISTOR clinical trials, including all trials outside of the U.S. Inaddition, certain clinical trials for our product candidates may be conducted by government-sponsored agencies, and consequently will be dependent ongovernmental participation and funding. These arrangements expose us to the same considerations we face when contracting with third parties for our own trials.20Table of ContentsEven if our product candidates obtain marketing approval, our ability to generate revenue will be diminished if our products are not accepted in themarketplace or we or our collaboration partners fail to obtain acceptable prices or an adequate level of reimbursement for products from third-partypayers or government agencies.The commercial success of our products will depend upon their acceptance by the medical community and third-party payers as clinically useful, costeffective and safe. Market acceptance of approved products, such as RELISTOR for patients with advanced illnesses and for those with chronic, non-cancer pain,is affected by a wide range of factors, including the timing of regulatory approvals, product launches and the presence of generic, over-the-counter or othercompetitors; the pricing of the product and relative prices of competing products; product development efforts for new indications; the availability ofreimbursement for the product; our ability to obtain sufficient commercial quantities of the product; success in arranging for necessary sublicense or distributionrelationships; and general and industry-specific local and international economic pressures. If health care providers believe that patients can be managedadequately with alternative, currently available therapies, they may not prescribe our products, especially if the alternative therapies are viewed as more effective,as having a better safety or tolerability profile, as being more convenient to the patient or health care providers or as being less expensive. Third-party insurancecoverage may not be available to patients for any products we develop, alone or with collaborators. For pharmaceuticals administered in an institutional setting, theability of the institution to be adequately reimbursed from government and health administration authorities, private health insurers and other third-party payerscould also play a significant role in demand for our products. Significant uncertainty exists as to the reimbursement status of newly-approved pharmaceuticals.Government and other third-party payers increasingly are attempting to contain healthcare costs by limiting both coverage and the level of reimbursement for newdrugs and by refusing, in some cases, to provide coverage for uses of approved products for indications for which the FDA has not granted labeling approval. Inmost foreign markets, pricing and profitability of prescription pharmaceuticals are subject to government control. In the U.S., we expect that there will continue tobe a number of federal and state proposals to implement similar government control and that the emphasis on managed care in the U.S. will continue to putpressure on the pricing of pharmaceutical products. Cost control initiatives could decrease the price that our collaborators receive for any products in the future andadversely affect the ability of our collaborators to commercialize our products and our realization of royalties from commercialization. If any of our products donot achieve market acceptance, we will likely lose our entire investment in that product.RELISTOR-related RisksWe are dependent on Valeant to develop and commercialize RELISTOR, exposing us to significant risks.We rely on Valeant to complete development and obtain regulatory approvals for RELISTOR worldwide. At present, our revenue is almost exclusivelyderived from royalty and milestone payments from our RELISTOR collaboration with Valeant, which can result in significant fluctuation in our revenue fromperiod to period, and our past revenue is therefore not necessarily indicative of our future revenue. We are and will be dependent upon Valeant and any otherbusiness partners with which we may collaborate in the future to perform and fund development, including clinical testing of RELISTOR, making relatedregulatory filings and manufacturing and marketing products, including for new indications and in new formulations, in their respective territories. Revenue fromthe sale of RELISTOR depends entirely upon the efforts of Valeant and its sublicensees, which have significant discretion in determining the efforts and resourcesthey apply to sales of RELISTOR. Valeant may not be effective in obtaining approvals for new indications or formulations, marketing existing or future productsor arranging for necessary sublicense or distribution relationships. Our business relationships with Valeant and other partners may not be scientifically, clinically orcommercially successful. For example, Valeant has a variety of marketed products and its own corporate objectives, which may not be consistent with our bestinterests, and may change its strategic focus or pursue alternative technologies in a manner that results in reduced or delayed revenue to us. Valeant may also havecommercial and financial interests that are not fully aligned with ours in a given territory or territories - which may make it more difficult for us to fully realize thevalue of RELISTOR, particularly in markets outside the U.S. We may have future disagreements with Valeant, which has significantly greater financial andmanagerial resources which it could draw upon in the event of a dispute. Such disagreements could lead to lengthy and expensive litigation or other dispute-resolution proceedings as well as extensive financial and operational consequences to us and have a material adverse effect on our business, results of operationsand financial condition. In addition, independent actions may be taken by Valeant concerning product development, marketing strategies, manufacturing andsupply issues, and rights relating to intellectual property.21Table of ContentsUnder our agreements with Valeant relating to RELISTOR, we rely on Valeant to, among other things, effectively commercialize the product and managepricing, sales and marketing practices and inventory levels in the distribution channel. Assessing and reporting on these and other activities and metrics inconnection with RELISTOR has become increasingly difficult as a result of financial reporting and internal control issues that have surfaced both at Valeant and itspredecessor as our RELISTOR licensee, Salix. Our already limited visibility into the internal operations of Valeant and reliance on Valeant to accurately reportinformation concerning the commercialization of RELISTOR has been further obscured by certain recent events at Valeant. On February 22, 2016 Valeantannounced that it believed that approximately $58 million of net revenues previously recognized in the second half of 2014 should not have been recognized duringthat period, and that it expected to delay the filing of its Annual Report on Form 10-K. Valeant further announced that it continued to work with its independentadvisors in its ongoing assessment of the impact on financial reporting and internal controls of the accounting issues it had discovered, including with respect to itsrelationship with Philidor Rx Services, LLC, a specialty pharmacy. Furthermore, prior to its acquisition by Valeant, Salix disclosed in January of 2015, inconnection with an internal review of issues related to its management's prior characterizations of wholesaler inventory levels, that Salix's previously issuedaudited consolidated financial statements for the year ended December 31, 2013 and the first nine months of 2014, and the disclosures and related communicationsfor each of those periods, required correction of certain errors and should no longer be relied upon. Valeant continues its efforts to assess and manage the potentialramifications relating to Salix's restatement of its historical financial results and Valeant's internal control over financial reporting.The RELISTOR development program continues to be subject to risk.Future developments in the commercialization of RELISTOR may result in Valeant or any other business partner with which we may collaborate in thefuture taking independent actions concerning product development, marketing strategies or other matters, including termination of its efforts to develop andcommercialize the drug.Although the FDA has accepted for review Valeant's New Drug Application for RELISTOR tablets for the treatment of OIC in adult patients with chronicnon-cancer pain and assigned a PDUFA action date of April 19, 2016, there can be no assurances that we and our partners will be able to successfully obtainapproval to market oral RELISTOR in the U.S. or any other jurisdiction. In addition, our and our partners' ability to optimally commercialize either oral orsubcutaneous RELISTOR in a given jurisdiction may be impacted by applicable labeling and other regulatory requirements. Valeant has previously disclosed inregulatory filings that additional information and additional guidance from the FDA could result in the termination of its oral RELISTOR development program.As noted in our risk factors on regulation and regulatory approvals, if clinical trials indicate, or regulatory bodies are concerned about, actual or possible seriousproblems with the safety or efficacy of a product candidate, we or our collaborators may stop or significantly slow development or commercialization of affectedproducts. As a result of such concerns, the development program for oral RELISTOR may in the future be significantly delayed or terminated altogether. In suchan event, we could be faced with either further developing and commercializing the drug on our own or with one or more substitute collaborators, either of whichpaths would subject us to the development, commercialization, collaboration and/or financing risks discussed in these risk factors. Any such significant actionadverse to development and commercialization of RELISTOR could have a material adverse impact on our business and on the price of our stock.Certain RELISTOR-related patents are subject to generic challenge.In October 2015 Progenics received notifications of Paragraph IV certifications with respect to certain patents for RELISTOR subcutaneous injection,which are listed in the FDA's Approved Drug Products with Therapeutic Equivalence Evaluations, or the Orange Book. The certifications accompanied the filingby Actavis Inc. and Mylan Pharmaceuticals, Inc. of Abbreviated New Drug Applications (ANDAs) challenging such patents for RELISTOR subcutaneousinjection.22Table of ContentsProgenics and its licensee for RELISTOR, Valeant, have timely filed suit and commenced litigation against Actavis and Mylan. FDA approval of theANDA has been automatically stayed until the earlier of (i) 30 months from receipt of the notice or (ii) a District Court decision finding that the identified patentsare invalid, unenforceable or not infringed. In addition to the above described ANDA notifications, in October 2015 Progenics also received notices of opposition to three European patents (EP1615646, EP 2368554 and EP 2368553) relating to methylnaltrexone. The oppositions were filed separately by each of Actavis Group PTC ehf and Fresenius KabiDeutschland GmbH.Although Progenics and Valeant are cooperating to defend against both the ANDA challenges and the European oppositions, and intend to vigorouslyenforce RELISTOR intellectual property rights, such litigation is inherently subject to significant risks and uncertainties, and there can be no assurance that theoutcome of these litigations will be favorable to Progenics or Valeant. An unfavorable outcome in these cases could result in the rapid genericization ofRELISTOR products, or could result in the shortening of available patent life. Any such outcome could have a material impact on our financial performance andstock price.Pursuant to the RELISTOR license agreement between Progenics and Valeant, Valeant has the first right to enforce the intellectual property rights at issueand is responsible for the costs of such enforcement. At the same time, supporting the conduct of the litigations in the U.S. and in Europe will continue to requiresignificant management focus and internal resources of Progenics.Operational and Regulatory RisksWe are subject to extensive regulation, which can be costly and time consuming, may not lead to marketing approval for our product candidates, and cansubject us to unanticipated limitations, restrictions, delays and fines.Our business, products and product candidates are subject to comprehensive regulation by the FDA and comparable authorities in other countries, andinclude the recently enacted Sunshine Act under the Patient Protection and Affordable Care Act. These agencies and other entities regulate the pre-clinical andclinical testing, safety, effectiveness, approval, manufacture, labeling, marketing, export, storage, recordkeeping, advertising, promotion and other aspects of ourproducts and product candidates. We cannot guarantee that approvals of product candidates, processes or facilities will be granted on a timely basis, or at all. If weexperience delays or failures in obtaining approvals, commercialization of our product candidates will be slowed or stopped.Even if we obtain regulatory approval for a product candidate, the approval may include significant limitations on indicated uses for which the productcould be marketed or other significant marketing restrictions, such as a REMS. For example, while subcutaneous RELISTOR is approved for OIC both in patientswith advanced illness and for those with chronic, non-cancer pain, other formulations of and/or indications for RELISTOR may be subject to those or other suchlimitations and restrictions. Approvals for product candidates other than RELISTOR, if approved at all, may also be so limited or restricted.If we or our collaborators violate regulatory requirements at any stage, whether before or after marketing approval is obtained, we or they may be subjectto forced removal of a product from the market, product seizure, civil and criminal penalties and other adverse consequences. Under our license agreement withValeant, we are dependent on Valeant for compliance with these regulatory requirements as they apply to RELISTOR. Valeant's subsidiary Salix disclosed that inFebruary 2013 it received a subpoena from the U.S. Attorney's Office for the Southern District of New York requesting documents regarding its sales andpromotional practices for RELISTOR and certain of its other products, that it is continuing to respond to the subpoena and intends to cooperate fully with thesubpoena and related government investigation, which has and will continue to increase its legal expenses and might require management time and attention, andthat at the time of its disclosure it cannot predict or determine the timing or outcome of the inquiry or its impact on Valeant's financial condition or results ofoperations.23Table of ContentsOur products may face regulatory, legal or commercial challenges even after approval.Even if a product receives regulatory approval: ·It might not obtain labeling claims necessary to make the product commercially viable (in general, labeling claims define the medical conditions forwhich a drug product may be marketed, and are therefore very important to the commercial success of a product), or may be required to carry Boxed orother warnings that adversely affect its commercial success. ·Approval may be limited to uses of the product for treatment or prevention of diseases or conditions that are relatively less financially advantageous tous than approval of greater or different scope or subject to an FDA-imposed REMS that imposes limits on the distribution or use of the product. ·Side effects (including different or aggravated effects such as SAEs encountered in our 1095 and PSMA ADC programs) identified after the product ison the market might hurt sales or result in mandatory safety labeling changes, additional pre-clinical testing or clinical trials, imposition of a REMS,product recalls or withdrawals from the market. ·Efficacy or safety concerns (including those arising from SAEs heretofore or hereafter encountered in our PSMA ADC program) regarding a marketedproduct, or manufacturing or other problems, may lead to a recall, withdrawal of marketing approval, reformulation of the product, additional pre-clinical testing or clinical trials, changes in labeling, imposition of a REMS, the need for additional marketing applications, declining sales or otheradverse events. These potential consequences may occur whether or not the concerns originate from subsequent testing or other activities by us,governmental regulators, other entities or organizations or otherwise, and whether or not they are scientifically justified. If products lose previouslyreceived marketing and other approvals, our business, results of operations and financial condition would be materially adversely affected.We or our collaborators will be subject to ongoing FDA obligations and continuous regulatory review, and might be required to undertake post-marketingtrials to verify the product's efficacy or safety or other regulatory obligations.Our and/or our collaborators' relationships with customers and third-party payers are or may become subject to applicable anti-kickback, fraud andabuse and other healthcare laws and regulations, which could expose us or them to criminal sanctions, civil penalties, program exclusion, contractualdamages, reputational harm and diminished profits and future earnings.Health care providers, physicians and third-party payers play a primary role in the recommendation and prescription of any product candidates for whichwe obtain marketing approval. Our or our collaborators' future arrangements with third-party payers and customers will or already do require us and them tocomply with broadly applicable fraud and abuse and other health care laws and regulations that may constrain the business or financial arrangements andrelationships through which we or our collaborators market, sell and distribute our products that obtain marketing approval. Efforts to ensure that businessarrangements comply with applicable health care laws and regulations involve substantial costs. It is possible that governmental authorities will conclude that ouror our collaborators' business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or otherhealthcare laws and regulations. If such operations are found to be in violation of any of these laws or other applicable governmental regulations, we or thecollaborator may be subject to significant civil, criminal and administrative penalties, damages, fines, exclusion from government funded healthcare programs,such as Medicare and Medicaid, and the curtailment or restructuring of related operations. If physicians or other providers or entities involved with our productsare found to be not in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from governmentfunded healthcare programs, which may adversely affect us.24Table of ContentsIf we or our collaborators are unable to obtain sufficient quantities of the raw and bulk materials needed to make our product candidates or RELISTOR,development of our product candidates or commercialization of our approved product could be slowed or stopped.Valeant may not be able to fulfill manufacturing obligations for RELISTOR, a key raw material for which grows in Tasmania, either on their own orthrough third-party suppliers. A delay or disruption of supplies of RELISTOR would have a material adverse effect on the RELISTOR franchise, and therefore onour business as a whole. Our existing arrangements with suppliers for our other product candidates may result in the supply of insufficient quantities of our productcandidates needed to accomplish our clinical development programs, and we may not have the right and in any event do not currently have the capability tomanufacture these products if our suppliers are unable or unwilling to do so. We currently arrange for supplies of critical raw materials used in production of ourproduct candidates from single sources. We do not have long-term contracts with any of these suppliers. Any delay or disruption in the availability of raw materialswould slow or stop product development and commercialization of the relevant product.Manufacturing resources could limit or adversely affect our ability to commercialize products.We or our collaborators may engage third parties to manufacture our approved product and product candidates. We or our collaborators may not be ableto obtain adequate supplies from third-party manufacturers in a timely fashion for development or commercialization purposes, and commercial quantities ofproducts may not be available from contract manufacturers at acceptable costs. Under our license agreement with Valeant, Valeant is responsible for obtainingsupplies of RELISTOR, including contracting with contract manufacturing organizations for supply of RELISTOR active pharmaceutical ingredient andsubcutaneous and oral finished drug product. These arrangements may not be on terms that are advantageous and, as a result of our royalty and other interests inRELISTOR's commercial success, will subject us to risks that the counterparties may not perform optimally in terms of quality or reliability. In engaging thirdparties for these activities, we do not control many aspects of the manufacturing process, including compliance with current cGMP and other regulatoryrequirements. In order to commercialize our product candidates successfully, we or our collaborators need to be able to manufacture or arrange for the manufactureof products in commercial quantities, in compliance with regulatory requirements, at acceptable costs and in a timely manner. Manufacture of our productcandidates can be complex, difficult to accomplish even in small quantities, difficult to scale-up for large-scale production and subject to delays, inefficiencies andlow yields of quality products. The cost of manufacturing some of our product candidates may make them prohibitively expensive. If adequate supplies of any ofour product candidates or related materials are not available on a timely basis or at all, our clinical trials could be seriously delayed, since these materials are timeconsuming to manufacture and cannot be readily obtained from third-party sources. We continue to be dependent on a limited number of highly specializedmanufacturing and development partners, including single source manufacturers for certain of our product candidates. If we were to lose one or more of these keyrelationships, it could materially adversely affect our business. Establishing new manufacturing relationships, or creating our own manufacturing capability, wouldrequire significant time, capital and management effort, and the transfer of product-related technology and know-how from one manufacturer to another is aninherently complex and uncertain process.Failure of any manufacturer of RELISTOR or our various product candidates to comply with applicable regulatory requirements could subject us topenalties and have a material adverse effect on supplies of our product or products candidates.Third-party manufacturers are required to comply with cGMP or similar regulatory requirements outside of the U.S. If manufacturers of our product orproduct candidates cannot successfully manufacture material that conforms to the strict regulatory requirements of the FDA and any applicable foreign regulatoryauthority, they may not be able to supply us with our product or product candidates. If these facilities are not approved for commercial manufacture, we may needto find alternative manufacturing facilities, which could result in delays of several years in obtaining approval for a product candidate. We do not control themanufacturing operations and are completely dependent on our third-party manufacturing partners or contractors for compliance with the applicable regulatoryrequirements for the manufacture of RELISTOR and our product candidates. Manufacturers are subject to ongoing periodic unannounced inspections by the FDAand corresponding state and foreign agencies for compliance with cGMP and similar regulatory requirements. Failure of any manufacturer of RELISTOR or any ofour product candidates to comply with applicable cGMP or other regulatory requirements could result in sanctions being imposed on our collaborators or us,including fines, injunctions, civil penalties, delays, suspensions or withdrawals of approvals, operating restrictions, interruptions in supply and criminalprosecutions, any of which could significantly and adversely affect supplies of RELISTOR or such product candidate and have a material adverse impact on ourbusiness, financial condition and results of operations.25Table of ContentsThe validity, enforceability and commercial value of our patents and other intellectual property rights are highly uncertain.We own or have direct or sub-licenses to a number of issued patents. We must obtain, maintain and enforce patent and other rights to protect ourintellectual property. The patent position of biotechnology and pharmaceutical firms is highly uncertain and involves many complex legal and technical issues.There are many laws, regulations and judicial decisions that dictate and otherwise influence the manner in which patent applications are filed and prosecuted and inwhich patents are granted and enforced, all of which are subject to change from time to time. There is no clear policy involving the breadth of claims allowed, orthe degree of protection afforded, under patents in this area. In addition, we are aware of others who have patent applications or patents containing claims similar toor overlapping those in our patents and patent applications. Accordingly, patent applications owned by or licensed to us may not result in patents being issued.Even if we own or license a relevant issued patent, we may not be able to preclude competitors from commercializing drugs that may compete directly with one ormore of our products or product candidates, in which event such rights may not provide us with any meaningful competitive advantage. In the absence or uponsuccessful challenge of patent protection, drugs may be subject to generic competition, which could adversely affect pricing and sales volumes of the affectedproducts.It is generally difficult to determine the relative strength or scope of a biotechnology or pharmaceutical patent position in absolute terms at any giventime. The issuance of a patent is not conclusive as to its validity or enforceability, which can be challenged in litigation or via administrative proceedings. Thelicense agreements from which we derive or out-license intellectual property provide for various royalty, milestone and other payment, commercialization,sublicensing, patent prosecution and enforcement, insurance, indemnification and other obligations and rights, and are subject to certain reservations of rights.While we generally have the right to defend and enforce patents licensed to or by us, either in the first instance or if the licensor or licensee chooses not to do so,we must usually bear the cost of doing so. Under our license agreement with Valeant, Valeant generally has the first right to control the defense and enforcement ofour RELISTOR patents. We may incur substantial costs in seeking to uphold the validity of patents or to prevent infringement. If the outcome of a dispute orcontest is adverse to us, third parties may be able to use our patented invention without payment to us. Third parties may also avoid our patents through designinnovation.Patents have a limited life and expire by law.In addition to uncertainties as to scope, validity, enforceability and changes in law, patents by law have limited lives. Upon expiration of patentprotection, our drug candidates and/or products may be subject to generic competition, which could adversely affect pricing and sales volumes of the affectedproducts. The original patents surrounding the AZEDRA program were licensed by Molecular Insight from the University of Western Ontario ("UWO"). The patentfamily directed to processes for making polymer precursors, as well as processes for making the final product expire in 2018 in the U.S. and Canada. Otherlicensed patent families from UWO relate to alternative approaches for preparing AZEDRA, which if implemented would expire in 2024, worldwide. Progenicshas pending applications worldwide directed to manufacturing improvements and the resulting compositions which, if issued, would expire in 2035.Owned and in-licensed properties relating to the 1404 product candidate have expiration ranges of 2020 to 2030; we view as most significant thecomposition-of-matter patent on the compound, as well as technetium-99 labeled forms, which expires in 2029 and 2030 in the U.S.; 2029 in the rest of the world.Patent applications directed to methods of use are pending worldwide, which if issued would expire in 2034.26Table of ContentsPatent protection for the PyL compound, radiolabeled form of the compound, as well as methods of use expire in 2030 in the U.S. Corresponding familymembers are pending or issued worldwide, all with expirations of 2029.Company-owned properties relating to MIP-1095 have expiration ranges of 2027 to 2031 in the U.S. We view as most significant the composition-of-matter patent on this compound, as well as radiolabeled forms, which expires in 2027 in the U.S., as well as Europe. Additional U.S. patents are directed to stablecompositions and radiolabeling processes, and expire in 2030 and 2031, respectively.With respect to PSMA ADC, currently issued composition-of-matter patents comprising co-owned and in-licensed properties have expiration ranges of2022 to 2023 in the U.S. and a pending U.S. application which would expire in 2026, if issued. An allowed U.S. application directed to methods of use will expirein 2029. Corresponding foreign counterparts to the U.S. composition-of-matter patents will expire 2022 and 2026, along with a method of use patent which expiresin 2029. We view all of these patents as significant.With regard to our RELISTOR-related intellectual property, the composition-of-matter patent for the active ingredient of RELISTOR, methylnaltrexone,was invented in the 1970's and has expired. The University, as well as Progenics and its collaborators, have extended the methylnaltrexone patent estate withadditional patents and pending patent applications covering various inventions relating to the product. Valeant has listed in the FDA Orange Book six U.S. patentsrelating to subcutaneous RELISTOR, which have expiration dates ranging from 2017 to 2030, and two patents (expiring in 2024 and 2027) with HealthCanada. Issued U.S. patents provide protection for the oral methylnaltrexone product until 2031.We depend on intellectual property licensed from third parties and unpatented technology, trade secrets and confidential information. If we lose any ofthese rights, including by failing to achieve milestone requirements or to satisfy other conditions, or if they or data embodying or relevant to them arecompromised by disruptions or breaches of information or data security, our business, results of operations and financial condition could be harmed.Most of our product candidates, including RELISTOR, incorporate intellectual property licensed from third parties. For example, PSMA ADC utilizestechnology licensed to us from Sloan-Kettering Institute for Cancer Research, through Cytogen Corporation, and from SGI. We could lose the right to patents andother intellectual property licensed to us if the related license agreement is terminated due to a breach by us or otherwise. Our ability, and that of our collaborationpartners, to commercialize products incorporating licensed intellectual property would be impaired if the related license agreements were terminated. In addition,we are required to make substantial cash payments, achieve milestones and satisfy other conditions, including filing for and obtaining marketing approvals andintroducing products, to maintain rights under our intellectual property licenses. Due to the nature of these agreements and the uncertainties of research anddevelopment, we may not be able to achieve milestones or satisfy conditions to which we have contractually committed, and as a result may be unable to maintainour rights under these licenses. If we do not comply with our license agreements, the licensors may terminate them, which could result in our losing our rights to,and therefore being unable to commercialize, related products.We also rely on unpatented technology, trade secrets and confidential information. Third parties may independently develop substantially equivalentinformation and techniques or otherwise gain access to our technology or disclose our technology, and we may be unable to effectively protect our rights inunpatented technology, trade secrets and confidential information. We require each of our employees, consultants and advisors to execute a confidentialityagreement at the commencement of an employment or consulting relationship with us. These agreements may, however, not provide effective protection in theevent of unauthorized use or disclosure of confidential information. Any loss of trade secret protection or other unpatented technology rights could harm ourbusiness, results of operations and financial condition.27Table of ContentsProgenics and other businesses and organizations worldwide, and in particular technology-intensive activities such as biotechnology research anddevelopment, are increasingly dependent on critical, complex and interdependent information technology systems, including Internet-based systems, to facilitate orperform basic research and development functions, business processes, internal and external communications, and other critical functions. Progenics relies on suchsystems for most aspects of its business. The size and complexity of computer, communications and other electronic networked data generation, storage andtransfer systems make them potentially vulnerable to breakdown, malicious intrusion, computer viruses and data security breaches by unauthorized third parties,employees or others. Such events may permit unauthorized persons to access, misappropriate and/or destroy sensitive data and result in the impairment ordisruption of important business processes, loss of trade secrets or other proprietary intellectual property or public exposure of personal information (includingsensitive personal information) of employees, business partners, clinical trial patients, customers and others. Any of the foregoing could have a material adverseeffect on our business, prospects, operating results and financial condition.If we do not achieve milestones or satisfy conditions regarding some of our product candidates, we may not maintain our rights under related licenses.We are required to make substantial cash payments, achieve milestones and satisfy other conditions, including filing for and obtaining marketingapprovals and introducing products, to maintain rights under certain intellectual property licenses. Due to the nature of these agreements and the uncertainties ofresearch and development, we may not be able to achieve milestones or satisfy conditions to which we have contractually committed, and as a result may be unableto maintain our rights under these licenses. If we do not comply with our license agreements, the licensors may terminate them, which could result in our losing ourrights to, and therefore being unable to commercialize, related products.If we infringe third-party patent or other intellectual property rights, we may need to alter or terminate a product development program.There may be patent or other intellectual property rights belonging to others that require us to alter our products, pay licensing fees or cease certainactivities. If our products infringe patent or other intellectual property rights of others, the owners of those rights could bring legal actions against us claimingdamages and seeking to enjoin manufacturing and marketing of the affected products. If these legal actions are successful, in addition to any potential liability fordamages, we could be required to obtain a license in order to continue to manufacture or market the affected products. We may not prevail in any action broughtagainst us, and any license required under any rights that we infringe may not be available on acceptable terms or at all. We are aware of intellectual property rightsheld by third parties that relate to products or technologies we are developing. For example, we are aware of other groups investigating PSMA or relatedcompounds, monoclonal antibodies directed at PSMA and targets relevant to PSMA ADC, and methylnaltrexone and other peripheral opioid antagonists, and ofpatents held, and patent applications filed, by these groups in those areas. While the validity of these issued patents, the patentability of these pending patentapplications and the applicability of any of them to our products and programs are uncertain, if asserted against us, any related patent or other intellectual propertyrights could adversely affect our ability to commercialize our products.Research, development and commercialization of a biopharmaceutical product often require choosing between alternative development and optimizationroutes at various stages in the development process. Preferred routes may depend on subsequent discoveries and test results and cannot be predicted with certaintyat the outset. There are numerous third-party patents in our field, and we may need to obtain a license under a patent in order to pursue the preferred developmentroute of one or more of our products or product candidates. The need to obtain a license would decrease the ultimate profitability of the applicable product. If wecannot negotiate a license, we might have to pursue a less desirable development route or terminate the program altogether.28Table of ContentsWe are dependent upon third parties for a variety of functions. These arrangements may not provide us with the benefits we expect.We rely on third parties to perform a variety of functions. We are party to numerous agreements which place substantial responsibility on clinical researchorganizations, consultants and other service providers for the development of our approved product and our product candidates. We also rely on medical andacademic institutions to perform aspects of our clinical trials of product candidates. In addition, an element of our research and development strategy has been toin-license technology and product candidates from academic and government institutions in order to minimize investments in early research. We have entered intoagreements under which we are now dependent on Valeant for the commercialization and development of RELISTOR. We may not be able to maintain ourexisting relationships, or establish new ones for RELISTOR or other product candidates on beneficial terms. We may not be able to enter new arrangementswithout undue delays or expenditures, and these arrangements may not allow us to compete successfully. Moreover, if third parties do not successfully carry outtheir contractual duties, meet expected deadlines or conduct clinical trials in accordance with regulatory requirements or applicable protocols, our productcandidates may not be approved for marketing and commercialization or such approval may be delayed. If that occurs, we or our collaborators will not be able, ormay be delayed in our efforts, to commercialize our product candidates.If we are unable to negotiate suitable collaboration agreements, our cash burn rate could increase and our rate of product development could decrease.Our ability to generate revenue in the near term depends on the timing of achievement, if any, of certain payment triggering events under our existingcollaboration agreements and our ability to enter into additional collaboration agreements with third parties. We may not be successful in negotiating additionalcollaboration arrangements with pharmaceutical and biotechnology companies to develop and commercialize product candidates and technologies. If we do notenter into new collaboration arrangements, we would have to devote more of our resources to clinical product development and product launch activities and toseeking additional sources of capital to fund those activities. If we were not successful in seeking such capital, our cash burn rate would increase or we would needto take steps to reduce our rate of product development. Our ability to enter into new collaborations may be dependent on many factors, such as the results ofclinical trials, competitive factors and the fit of our programs with the risk tolerance of a potential collaborator, including in relation to regulatory issues, the patentportfolio, the clinical pipeline, the stage of the available data, overall corporate goals and financial position. If we are not able to generate revenue under ourcollaborations when and in accordance with our expectations or the expectations of industry analysts, this failure could harm our business and have an immediateadverse effect on the trading price of our common stock.We lack sales and marketing infrastructure and related staff, which will require significant investment to establish and in the meantime may make usdependent on third parties for their expertise in this area.We have no established sales, marketing or distribution infrastructure. If we receive marketing approval for a pharmaceutical product, significantinvestment, time and managerial resources would be required to build the commercial infrastructure required to market, sell and support it without a third-partypartner. Should we choose to commercialize a product directly, we may not be successful in developing an effective commercial infrastructure or in achievingsufficient market acceptance. Alternatively, we may choose to market and sell products through distribution, co-marketing, co-promotion or licensing arrangementswith third parties. We may also consider contracting with a third-party professional pharmaceutical detailing and sales organization to perform the marketingfunction for one or more products. To the extent that we enter into distribution, co-marketing, co-promotion, detailing or licensing arrangements for the marketingand sale of product candidates, any revenues we receive will depend primarily on the efforts of third parties. We will not control the amount and timing ofmarketing resources these third parties devote to our products.We are involved in various legal proceedings that are uncertain, costly and time-consuming and could have a material adverse impact on our business,financial condition and results of operations and could cause the market value of our common stock to decline .From time to time we are involved in legal proceedings and disputes and may be involved in litigation in the future. These proceedings are complex andextended and occupy the resources of our management and employees. These proceedings are also costly to prosecute and defend and may involve substantialawards or damages payable by us if not found in our favor. We may also be required to pay substantial amounts or grant certain rights on unfavorable terms inorder to settle such proceedings. Defending against or settling such claims and any unfavorable legal decisions, settlements or orders could have a material adverseeffect on our business, financial condition and results of operations and could cause the market value of our common stock to decline. For more informationregarding legal proceedings, see Item 3 and note 10 in the notes to the consolidated financial statements in Item 15 of this Form 10-K.29Table of ContentsIn particular, the pharmaceutical and medical device industries historically have generated substantial litigation concerning the manufacture, use and saleof products and we expect this litigation activity to continue. As a result, we expect that patents related to our products will be routinely challenged, and our patentsmay not be upheld. In order to protect or enforce patent rights, we may initiate litigation against third parties. If we are not successful in defending an attack on ourpatents and maintaining exclusive rights to market one or more of our products still under patent protection, we could lose a significant portion of sales in a veryshort period. We may also become subject to infringement claims by third parties and may have to defend against charges that we violated patents or theproprietary rights of third parties. If we infringe the intellectual property rights of others, we could lose our right to develop, manufacture or sell products, or couldbe required to pay monetary damages or royalties to license proprietary rights from third parties.In addition, in the U.S., it has become increasingly common for patent infringement actions to prompt claims that antitrust laws have been violated duringthe prosecution of the patent or during litigation involving the defense of that patent. Such claims by direct and indirect purchasers and other payers are typicallyfiled as class actions. The relief sought may include treble damages and restitution claims. Similarly, antitrust claims may be brought by government entities orprivate parties following settlement of patent litigation, alleging that such settlements are anti-competitive and in violation of antitrust laws. In the U.S. andEurope, regulatory authorities have continued to challenge as anti-competitive so-called "reverse payment" settlements between branded and generic drugmanufacturers. We may also be subject to other antitrust litigation involving competition claims unrelated to patent infringement and prosecution. A successfulantitrust claim by a private party or government entity against us could have a material adverse effect on our business, financial condition and results of operationsand could cause the market value of our common stock to decline.We are exposed to product liability claims, and in the future may not be able to obtain insurance against claims at a reasonable cost or at all.Our business exposes us to product liability risks, which are inherent in the testing, manufacturing, marketing and sale of pharmaceutical products. Wemay not be able to avoid product liability exposure. If a product liability claim is successfully brought against us, our financial position may be adversely affected.Under our license agreement with Valeant, we are responsible for product liability claims arising out of clinical trials that were conducted under our supervision.We are indemnified by Valeant under our license agreement with Valeant for product liability exposure arising from its supply, marketing and sales of RELISTOR,and maintain our own product liability insurance coverage in amounts and pursuant to terms and conditions customary for our industry, scale and the nature of ouractivities (subject to a deductible and an annual aggregate limitation), and other clinical trial or other insurance as required by contract and local laws. In October2009, we released our former collaborator, Wyeth Pharmaceuticals, from its indemnification responsibility for product liability exposure arising from its marketingand sales of RELISTOR. Product liability insurance for the biopharmaceutical industry is generally expensive, when available at all, and may not be available to usat a reasonable cost in the future. Our current insurance coverage and indemnification arrangements may not be adequate to cover claims brought against us, andare in any event subject to the insuring or indemnifying entity discharging its obligations to us.We handle hazardous materials and must comply with environmental laws and regulations, which can be expensive and restrict how we do business. If weare involved in a hazardous waste spill or other accident, we could be liable for damages, penalties or other forms of censure.Our research and development work and manufacturing processes involve the use of hazardous, controlled and radioactive materials. We are subject tofederal, state and local laws and regulations governing the use, manufacture, storage, handling and disposal of these materials. Despite procedures that weimplement for handling and disposing of these materials, we cannot eliminate the risk of accidental contamination or injury. In the event of a hazardous waste spillor other accident, we could be liable for damages, penalties or other forms of censure. We may be required to incur significant costs to comply with environmentallaws and regulations in the future.30Table of ContentsIf we lose key management and scientific personnel on whom we depend, our business could suffer.We are dependent upon our key management and scientific personnel, the loss of whom could require us to identify and engage qualified replacements,and could cause our management and operations to suffer in the interim. Competition for qualified employees among companies in the biopharmaceutical industryis intense. Future success in our industry depends in significant part on the ability to attract, retain and motivate highly skilled employees, which we may not besuccessful in doing.Health care reform measures could adversely affect our operating results and our ability to obtain marketing approval of and to commercialize ourproduct candidates.In the U.S. and some foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes regarding the health caresystem that could prevent or delay marketing approval of our product candidates, restrict or regulate post-approval activities and affect our ability to profitably sellany product candidates for which we obtain marketing approval. Legislative and regulatory proposals have been made to expand post-approval requirements andrestrict sales and promotional activities for pharmaceutical products. In addition, increased scrutiny by the U.S. Congress of the FDA's approval process maysignificantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post-marketing testing and other requirements. In theU.S., federal legislation has changed the way Medicare covers and pays for pharmaceutical products. Cost reduction initiatives and other provisions of legislationhave decreased coverage and reimbursement. Though such legislation applies only to drug benefits for Medicare beneficiaries, private payers often followMedicare coverage policy and payment limitations in setting their own reimbursement rates. More recent legislation is intended to broaden access to healthinsurance, further reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for healthcare and health insurance industries, and impose new taxes and fees on the health industry and additional health policy reforms. New laws impose significantannual fees on companies that manufacture or import branded prescription drug products, and contain substantial new compliance provisions, which in each casemay affect our business practices with health care practitioners. Subject to federal and state agencies issuing regulations or guidance, it appears likely that new lawswill continue to pressure pharmaceutical pricing, especially under the Medicare program, and may also increase regulatory burdens and operating costs. We cannotbe sure whether additional legislative changes will be enacted, whether the FDA regulations, guidance or interpretations will be changed or what the impact of suchchanges on the marketing approvals of our product candidates, if any, may be.Our and/or our collaborators' relationships with customers and third-party payers will be subject to applicable anti-kickback, fraud and abuse and otherhealthcare laws and regulations, which could expose us or them to criminal sanctions, civil penalties, program exclusion, contractual damages,reputational harm and diminished profits and future earnings.Health care providers, physicians and third-party payers play a primary role in the recommendation and prescription of any product candidates for whichwe obtain marketing approval. Our or our collaborators' future arrangements with third-party payers and customers may expose us or them to broadly applicablefraud and abuse and other health care laws and regulations that may constrain the business or financial arrangements and relationships through which we or ourcollaborators market, sell and distribute our products that obtain marketing approval. Efforts to ensure that business arrangements comply with applicable healthcare laws and regulations involve substantial costs. It is possible that governmental authorities will conclude that our or our collaborators' business practices maynot comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If such operationsare found to be in violation of any of these laws or other applicable governmental regulations, we or the collaborator may be subject to significant civil, criminaland administrative penalties, damages, fines, exclusion from government funded healthcare programs, such as Medicare and Medicaid, and the curtailment orrestructuring of related operations. If physicians or other providers or entities involved with our products are found to be not in compliance with applicable laws,they may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs, which may adversely affectus.31Table of ContentsOur future depends on the proper management of our current and future business operations, including those of Molecular Insight and EXINI, and theirassociated expenses.Our business strategy requires us to manage our business to provide for the continued development and potential commercialization of our proprietary andpartnered product candidates. Our strategy also calls for us to undertake increased research and development activities and to manage an increasing number ofrelationships with partners and other third parties, while simultaneously managing the capital necessary to support this strategy. These tasks are significantlyincreased as a result of our acquisition of Molecular Insight. If we are unable to manage effectively our current operations and any growth we may experience, ourbusiness, financial condition and results of operations may be adversely affected. If we are unable to effectively manage our expenses, we may find it necessary toreduce our personnel-related costs through reductions in our workforce, which could harm our operations, employee morale and impair our ability to retain andrecruit talent. Furthermore, if adequate funds are not available, we may be required to obtain funds through arrangements with partners or other sources that mayrequire us to relinquish rights to certain of our technologies, products or future economic rights that we would not otherwise relinquish or require us to enter intoother financing arrangements on unfavorable terms.Risks associated with our operations outside of the United States could adversely affect our business.Although we currently conduct nearly all of our business in the United States, we are developing internationally and therefore have an increased exposureto foreign legal requirements, economic and political conditions and fluctuations in foreign currency exchange rates. We expect that we will continue to seekglobal opportunities for our products and to develop our business outside the U.S. in the future. Such opportunities and development will inherently subject us to anumber of risks and uncertainties, including:·changes in international regulatory and compliance requirements that could restrict our ability to develop, market and sell our products;·political and economic instability;·diminished protection of intellectual property in some countries outside of the U.S.;·trade protection measures and import or export licensing requirements;·difficulty in staffing and managing international operations;·differing labor regulations and business practices;·potentially negative consequences from changes in or interpretations of tax laws;·changes in international medical reimbursement policies and programs;·financial risks such as longer payment cycles, difficulty collecting accounts receivable and exposure to fluctuations in foreign currency exchangerates; and·regulatory and compliance risks that relate to maintaining accurate information and control over sales and distributors' and service providers'activities that may fall within the purview of the FCPA or similar foreign laws such as the UK Bribery Act.Any of these factors may, individually or as a group, have a material adverse effect on our business and results of operations. These or other similar riskscould adversely affect our revenue and profitability. As we develop internationally, our exposure to these factors will increase.32Table of ContentsCompetitive RisksCompeting products in development may adversely affect acceptance of our products.We are aware of a number of products and product candidates described in this Annual Report under Business – Competition which compete or maypotentially compete with RELISTOR. Any of these approved products or product candidates, or others which may be developed in the future, may achieve asignificant competitive advantage relative to RELISTOR, and, in any event, the existing or future marketing and sales capabilities of these competitors may impairValeant's and/or other collaborators' ability to compete effectively in the market.We are also aware of competitors, including those described under Business – Competition , which are developing alternative treatments for diseasetargets to which our research and development programs are directed, any of which – or others which may be developed in the future – may achieve a significantcompetitive advantage relative to any product we may develop.Marketplace acceptance depends in part on competition in our industry, which is intense, and competing products in development may adversely affectacceptance of our products.The extent to which any of our products achieves market acceptance will depend on competitive factors. Competition in the biopharmaceutical industry isintense and characterized by ongoing research and development and technological change. We face competition from many for-profit companies and majoruniversities and research institutions in the U.S. and abroad. We face competition from companies marketing existing products or developing new products fordiseases and conditions targeted by our technologies. We are aware of a number of products and product candidates, including those described in this AnnualReport under Business – Competition , which compete or may potentially compete with RELISTOR, PSMA ADC or our other product candidates. For instance,there are product candidates in pre-clinical or clinical development that target the side effects of opioid pain therapy, and a marketed product for the treatment ofpost-operative ileus could compete with RELISTOR. We are aware of several competitors, including those described under Business – Competition , which havereceived approval for or are developing alternative treatments or diagnostics for castration-resistant prostate cancer, some of which are directed against PSMA.Any of these competing approved products or product candidates, or others which may be developed in the future, may achieve a significant competitive advantagerelative to RELISTOR, PSMA ADC, 1404, AZEDRA, MIP-1095 or other product candidates.Competition with respect to our technologies and products is based on, among other things, product efficacy, safety, reliability, method of administration,availability, price and clinical benefit relative to cost; timing and scope of regulatory approval; sales, marketing and manufacturing capabilities; collaboratorcapabilities; insurance and other reimbursement coverage; and patent protection. Competitive disadvantages in any of these factors could materially harm ourbusiness and financial condition. Many of our competitors have substantially greater research and development capabilities and experience and greatermanufacturing, marketing, financial and managerial resources than we do. These competitors may develop products that are superior to those we are developingand render our products or technologies non-competitive or obsolete. Our products and product candidates under development may not compete successfully withexisting products or product candidates under development by other companies, universities and other institutions. Drug manufacturers that are first in the marketwith a therapeutic for a specific indication generally obtain and maintain a significant competitive advantage over later entrants and therefore, the speed with whichindustry participants move to develop products, complete clinical trials, approve processes and commercialize products is an important competitive factor. If ourproduct candidates receive marketing approval but cannot compete effectively in the marketplace, our operating results and financial position would suffer. 33Table of ContentsFinancial RisksDeveloping product candidates requires us to obtain additional financing from time to time. Our access to capital funding is uncertain.We incur significant costs to develop our product candidates. We do not have committed external sources of funding for these projects. We fund ouroperations to a significant extent from capital-raising. We may do so via equity securities issuances in public offerings, such as our first quarter 2014 $37.5 millionunderwritten public offering of 8.75 million shares of common stock, or through our three-year facility with an investment bank pursuant to which we may sellfrom time to time up to $50 million of our stock in at-the-market transactions. We may also fund operations through collaboration, license, royalty financing,private placement or other agreements with one or more pharmaceutical or other companies, debt financings or the receipt of milestone and other payments for out-licensed products. To the extent we raise additional capital by issuing equity securities, existing stockholders could experience substantial dilution, and if we issuesecurities other than common stock, new investors could have rights superior to existing stockholders. Any debt financing that we may obtain may involveoperating covenants that restrict our business and significant repayment obligations. To the extent we raise additional funds through new collaboration andlicensing arrangements, we may be required to relinquish some rights to technologies or product candidates, or grant licenses on terms that are not favorable to us.We cannot predict with certainty when we will need additional funds, how much we will need, the form a financing may take or whether additional fundswill be available at all. The variability of conditions in global financial and credit markets may exacerbate the difficulty of timing capital raising or other financing,as a result of which we may seek to consummate such transactions substantially in advance of immediate need. Our need for future funding will depend onnumerous factors, including the advancement of existing product development projects and the availability of new projects; the achievement of events, most ofwhich are out of our control and depend entirely on the efforts of others, triggering milestone payments to us; the progress and success of clinical trials and pre-clinical activities (including studies and manufacturing) involving product candidates, whether conducted by collaborators or us; the progress of research programscarried out by us; changes in the breadth of our research and development programs; the progress of research and development efforts of collaborators; our abilityto acquire or license necessary, useful or otherwise attractive technologies; competing technological and market developments; the costs and timing of obtaining,enforcing and defending patent and other intellectual property rights; the costs and timing of regulatory filings and approvals; our ability to manage Progenics'growth or contraction; and unforeseen litigation. These factors may be more important with respect to product candidates and programs that involve technologieswith which we have limited prior experience, such as those originally developed by Molecular Insight. Insufficient funds may require us to delay, scale back oreliminate some or all of our research and development programs, cause us to lose rights under existing licenses or to relinquish greater or all rights to productcandidates at an earlier stage of development or on less favorable terms than we would otherwise choose and may adversely affect our ability to operate as a goingconcern. We may not be able at a given necessary time to obtain additional funding on acceptable terms, or at all. Our inability to raise additional capital on termsreasonably acceptable to us would seriously jeopardize our business.We have a history of operating losses.Progenics has incurred substantial losses throughout its history. A large portion of our revenue has historically consisted of upfront and milestone fromlicensing transactions. We have reported operating losses for 2015 and 2013 and while we reported operating income for 2014, as a result of a milestone paymentfrom Valeant, the timing and amount of any similar transactions in the future is highly unpredictable and uncertain. Without upfront or other such payments, weoperate at a loss, due in large part to the significant research and development expenditures required to identify and validate new product candidates and pursue ourdevelopment efforts. Moreover, we have derived no significant revenue from product sales and have only in the last several years derived revenue from royalties.We may not achieve significant product sales or royalty revenue for a number of years, if ever. We expect to incur net operating losses and negative cash flow fromoperations in the future, which could increase significantly if we expand our clinical trial programs and other product development efforts. Our ability to achieveand sustain profitability is dependent in part on obtaining regulatory approval for and then commercializing our product candidates, either alone or with others. Wemay not be able to develop and commercialize products beyond subcutaneous RELISTOR for OIC in patients with advanced illness and for those with chronic,non-cancer pain. Our operations may not be profitable even if any of our other product candidates under development are commercialized.34Table of ContentsOur ability to use net operating losses to offset future taxable income is subject to certain limitations.We currently have significant net operating losses (NOLs) that may be used to offset future taxable income. The U.S. Internal Revenue Code limits theamount of taxable income that may be offset annually by NOL carryforwards after a change in control (generally greater than 50% change in ownership) of a losscorporation, and our use of NOL carryforwards may be further limited as a result of any future equity transactions that result in an additional change of control.Progenics' stock price has a history of volatility and may be affected by selling pressure, including in the event of substantial sales of Progenics stock byformer Molecular Insight stockholders. You should consider an investment in Progenics stock as risky and invest only if you can withstand a significantloss.Our stock price has a history of significant volatility. It has varied between a high of $11.15 and a low of $4.86 in 2015 and between a high of $7.62 and alow of $3.10 in 2014. Factors that may have a significant impact on the market price of our common stock include the results of clinical trials and pre-clinicalstudies undertaken by us or others; delays, terminations or other changes in development programs; developments in marketing approval efforts; developments incollaborator or other business relationships, particularly regarding RELISTOR, PSMA ADC or other significant products or programs; technological innovation orproduct announcements by us, our collaborators or our competitors; patent or other proprietary rights developments; governmental regulation; changes inreimbursement policies or health care legislation; safety and efficacy concerns about products developed by us, our collaborators or our competitors; our ability tofund ongoing operations; fluctuations in our operating results; general market conditions; and the reporting of or commentary on such matters by the press andothers. At times, our stock price has been volatile even in the absence of significant news or developments. The stock prices of biotechnology companies andsecurities markets generally have been subject to dramatic price swings in recent years, and financial and market conditions during that period have resulted inwidespread pressures on securities of issuers throughout the world economy.Our stockholders may be diluted, and the price of our common stock may decrease, as a result of future issuances of securities, exercises of outstandingstock options, or sales of outstanding securities.We expect to issue additional common stock in public offerings, private placements and/or through our January 2014 Sales Agreement with an investmentbank, pursuant to which we may sell from time to time up to $50 million of our stock, and to issue options to purchase common stock for compensation purposes.We may issue preferred stock, restricted stock units or securities convertible into or exercisable or exchangeable for our common stock. All such issuances woulddilute existing investors and could lower the price of our common stock. Sales of substantial numbers of outstanding shares of common stock, such as sales byformer Molecular Insight stockholders of unregistered shares received in the acquisition, could also cause a decline in the market price of our stock. We requiresubstantial external funding to finance our research and development programs and may seek such funding through the issuance and sale of our common stock,which we have done in follow-on primary offerings in late 2012, mid-2013 and February 2014. We have a shelf registration statement which may be used to issueup to approximately an additional $110 million of common stock and other securities before any underwriter discounts, commissions and offering expenses. Wealso have in place registration statements covering shares issuable pursuant to our equity compensation plans, and sales of our securities under them could causethe market price of our stock to decline. Sales by existing stockholders or holders of options or other rights may adversely affect the market price of our commonstock.35Table of ContentsOther RisksOur principal stockholders are able to exert significant influence over matters submitted to stockholders for approval.At 2015 year-end, our directors and executive officers together beneficially owned or controlled approximately 5 percent of our outstanding commonshares, including shares currently issuable upon option exercises, and our five largest other stockholders approximately 52.8 percent. Should these parties choose toact alone or together, they could exert significant influence in determining the outcome of corporate actions requiring stockholder approval and otherwise controlour business. This control could, among other things, have the effect of delaying or preventing a change in control of the Company, adversely affecting our stockprice.Anti-takeover provisions may make removal of our Board and/or management more difficult, discouraging hostile bids for control that may be beneficialto our stockholders.Our Board is authorized, without further stockholder action, to issue from time to time shares of preferred stock in one or more designated series orclasses. The issuance of preferred stock, as well as provisions in some outstanding stock options that provide for acceleration of vesting upon a change of control,and Section 203 and other provisions of the Delaware General Corporation Law could make a takeover or the removal of our Board or management more difficult;discourage hostile bids for control in which stockholders may receive a premium for their shares; and otherwise dilute the rights of common stockholders anddepress the market price of our stock.Item 1B.  Unresolved Staff CommentsThere were no unresolved SEC staff comments regarding our periodic or current reports under the Exchange Act as of December 31, 2015. Item 2.  PropertiesAt December 31, 2015, we occupied approximately 72,900 square feet of laboratory and office space in Tarrytown, New York, pursuant to leaseagreements expiring in December 2020 (subject to an early termination right) under which we pay rent and facilities charges including utilities, taxes and operatingexpenses.On December 31, 2015, in connection with its decision to relocate its headquarters, the Company entered into a lease (the "Lease") for approximately26,000 square feet of office space located in New York City. The Company intends to use the leased premises as its headquarters. The term of the Lease willcommence on or about the earlier to occur of: (a) the later of (i) the parties entry into the Lease, (ii) the receipt of all necessary approvals or (iii) the date thelandlord delivers possession of the built-out leased premises to the Company, or (b) the date the Company first occupies the leased premises. The Company expectsthe Lease term to commence in the second half of 2016. The Lease term expires on September 30, 2030, and we have an option to renew the term for an additionalfive years. The Lease contains customary default provisions that could result in the early termination of the Lease in the event the Company defaults under theterms and conditions of the Lease.The Company's EXINI subsidiary leases approximately 4,000 square feet of office space in Lund, Sweden. The lease term expires on December 31, 2018,with an option to renew the term for an additional three years.36Table of ContentsItem 3.   Legal ProceedingsProgenics is a party to a proceeding brought by a former employee on November 2, 2010 in the U.S. District Court for the Southern District of New York,complaining that Progenics had violated the anti-retaliation provisions of the federal Sarbanes-Oxley law by terminating the former employee. The formeremployee seeks reinstatement of his employment, compensatory damages and certain costs and fees associated with the litigation. In July 2013, the federal DistrictCourt hearing the case issued an order denying our motion for summary judgment dismissing the former employee's complaint. The case went to trial in July 2015and on July 31, 2015 the jury awarded the former employee approximately $1.66 million in compensatory damages (held in escrow by the District Court asrestricted cash and recorded in other current assets) primarily consisting of salary the former employee would have received during the period from his terminationto the date of the verdict. We have accrued an amount in connection with this matter which we believe is probable and estimable. Certain ancillary matters in thecase, including the former employee's claims for additional compensation, pre-judgment interest and the awarding of attorneys' fees, remain subject to dispute.Given that there are matters yet to be decided and an estimate of the additional exposure, if any, has yet to be determined there is a reasonable possibility thatadditional losses may be incurred. Progenics has moved for a new trial or, in the alternative, for remittitur and continues to assess the verdict and its options in thecase, including a potential appeal.In July 2015, Progenics was named as a defendant in a complaint brought by Lonza Sales AG ("Lonza") in the U.S. District Court for the District ofDelaware arising from a multi-product license agreement entered into by Progenics and Lonza in April 2010. The complaint alleged that Progenics breached themulti-product license agreement and misappropriated trade secrets in connection with Progenics' sale of certain assets relating to the PRO 140 product to a thirdparty, and sought unspecified damages and injunctive relief. On November 3, 2015, the District Court of Delaware denied Progenics' motion to dismiss the case.On November 17, 2015, Progenics answered Lonza's complaint and brought certain counterclaims against Lonza. On February 9, 2016, Progenics and Lonzaagreed to settle and release their respective claims and to dismiss the litigation and, on February 19, 2016, the case was dismissed by the United States DistrictCourt for the District of Delaware. Other than the granting of the mutual releases, no consideration or damages were paid by either party to the other in connectionwith the settlement of the litigation.On October 7, 2015 Progenics, Valeant and Wyeth LLC received notification of a Paragraph IV certification for certain patents for RELISTOR ®(methylnaltrexone bromide) subcutaneous injection, which are listed in the FDA's Approved Drug Products with Therapeutic Equivalence Evaluations, or theOrange Book. The certification resulted from the filing by Mylan Pharmaceuticals, Inc. of an Abbreviated New Drug Application ("ANDA") with the FDA,challenging such patents for RELISTOR subcutaneous injection and seeking to obtain approval to market a generic version of RELISTOR subcutaneous injectionbefore some or all of these patents expire.On October 28, 2015, Progenics, Valeant and Wyeth LLC (Valeant's predecessor as licensee of RELISTOR) received a second notification of a ParagraphIV certification with respect to the same patents for RELISTOR subcutaneous injection from Actavis LLC as a result of Actavis LLC's filing of an ANDA with theFDA, also challenging these patents and seeking to obtain approval to market a generic version of RELISTOR subcutaneous injection before some or all of thesepatents expire.In accordance with the Drug Price Competition and Patent Term Restoration Act (commonly referred to as the Hatch-Waxman Act), Progenics andValeant timely commenced litigation against each of these ANDA filers in order to obtain an automatic stay of FDA approval of the ANDA until the earlier of (i)30 months from receipt of the notice or (ii) a District Court decision finding that the identified patents are invalid, unenforceable or not infringed.In addition to the above described ANDA notifications, in October 2015 Progenics received notices of opposition to three European patents relating tomethylnaltrexone. The oppositions were filed separately by each of Actavis Group PTC ehf. and Fresenius Kabi Deutschland GmbH.Each of the above-described proceedings is in its early stages and Progenics and Valeant continue to cooperate closely to vigorously defend and enforceRELISTOR intellectual property rights. Pursuant to the RELISTOR license agreement between Progenics and Valeant, Valeant has the first right to enforce theintellectual property rights at issue and is responsible for the costs of such enforcement.37Table of ContentsProgenics and its affiliates are or may be from time to time involved in various other disputes, governmental and/or regulatory inspections, inquires,investigations and proceedings that could result in litigation, and other litigation matters that arise from time to time. The process of resolving matters throughlitigation or other means is inherently uncertain and it is possible that an unfavorable resolution of these matters will adversely affect the Company, its results ofoperations, financial condition and cash flows.Item 4.   Not Applicable38Table of ContentsPART IIItem 5.   Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesPrice Range of Common StockOur common stock is quoted on The NASDAQ Stock Market LLC under the symbol PGNX. The following table sets forth, for the periods indicated, thehigh and low sales price per share of the common stock, as reported on NASDAQ. High Low 2015:Fourth quarter $8.37 $5.20 Third quarter 11.15 5.38 Second quarter 9.27 4.86 First quarter 7.84 5.35 2014:Fourth quarter $7.62 $4.26 Third quarter 5.72 4.02 Second quarter 4.65 3.10 First quarter 7.45 3.75On March 7, 2016, the last sale price for our common stock, as reported by The NASDAQ Stock Market LLC, was $4.90. There were approximately 69  holders of record of our common stock as of that date.Comparative Stock Performance GraphThe graph below compares, for the past five years, the cumulative stockholder return on our common stock with the cumulative stockholder return of (i)the NASDAQ U.S. Benchmark (TR) Index and (ii) the ICB: 4577 Pharmaceuticals (Subsector) Index, assuming an investment in each of $100 on December 31,2010. 39Table of ContentsDividendsProgenics has never paid any dividends, and we currently anticipate that all earnings, if any, will be retained for development of our business and nodividends will be declared in the foreseeable future. Item 6.  Selected Financial DataThe selected financial data presented below as of December 31, 2015 and 2014 and for each of the three years in the period ended December 31, 2015 arederived from our audited financial statements, included elsewhere herein. The selected financial data presented below with respect to the balance sheet data as ofDecember 31, 2013, 2012 and 2011 and for each of the two years in the period ended December 31, 2012 are derived from our audited financial statements notincluded herein. The data set forth below should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results ofOperations and the Financial Statements and related Notes included elsewhere herein. Years Ended December 31, 2015 2014 2013 2012 2011 (in thousands, except per share data)Consolidated Statement of Operations Data: Revenues: Collaboration revenue $1,955 $41,196 $1,595 $8,525 $76,764Royalty income 6,608 3,101 5,923 4,963 3,046Research grants - - 275 488 4,810Other revenues 113 80 69 72 176Total revenues 8,676 44,377 7,862 14,048 84,796Expenses: Research and development 28,196 28,592 34,582 33,001 53,538General and administrative 18,184 15,489 15,541 16,538 20,942Intangible impairment charges - 2,676 919 - -Change in contingent consideration liability 1,600 1,500 (200) - -Total expenses 47,980 48,257 50,842 49,539 74,480Other operating income - 7,250 - - -Operating (loss) income (39,304) 3,370 (42,980) (35,491) 10,316Other income: Interest income 52 51 46 60 65Total other income 52 51 46 60 65 (Loss) income before provision for income taxes (39,252) 3,421 (42,934) (35,431) 10,381Income tax benefit 133 989 362 - -Net (loss) income (39,119) 4,410 (42,572) (35,431) 10,381Net loss attributable to noncontrolling interests (7) - - - -Net (loss) income attributable to Progenics $(39,112) $4,410 $(42,572) $(35,431) $10,381Per share amounts on net (loss) income attributable to Progenics: Basic $(0.56) $0.06 $(0.76) $(1.02) $0.31Diluted $(0.56) $0.06 $(0.76) $(1.02) $0.31 December 31, 2015 2014 2013 2012 2011 (in thousands)Consolidated Balance Sheet Data: Cash and cash equivalents $74,103 $119,302 $65,860 $58,838 $70,105Auction rate securities - - 2,208 3,240 3,332Working capital 73,556 115,241 64,055 58,805 65,890Total assets 131,251 161,037 114,541 76,308 80,110Deferred revenue - current - - - 838 204Deferred revenue - long term - - - - 162Other liabilities - long term 30,861 29,443 28,935 1,078 1,497Total stockholders' equity 90,661 124,909 78,979 66,568 71,801 40Table of ContentsItem 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)OverviewGeneral . As discussed in Business , above, we develop innovative medicines and other products for targeting and treating cancer, with a pipeline thatincludes several product candidates in later-stage clinical development. These products in development include therapeutic agents designed to precisely targetcancer (AZEDRA, 1095 and PSMA ADC), and imaging agents (1404 and PyL) intended to enable clinicians and patients to accurately visualize and manage theirdisease. In addition, as part of its acquisition of EXINI Diagnostics AB in late 2015, Progenics acquired the EXINI Bone BSI bone scan index product, which isapproved for use in Europe, Japan and the U.S. (though not yet available in the U.S.). EXINI Bone BSI is an analytical tool enabling health care professionals toquantify the results of bone scan images and planning for its commercialization in the U.S. is in process.On November 12, 2015 we acquired 92.45% of EXINI through a public tender offer to the shareholders of EXINI in an all cash transaction. Theacquisition was accounted for using the acquisition method of accounting, under which the acquired company's assets and liabilities were recorded at theirestimated respective fair values as of the acquisition date in our consolidated financial statements. The difference between the estimated fair value of theacquisition consideration and fair value of the identifiable net assets represents potential future economic benefits arising from combining the companies, and hasbeen recorded as goodwill. Through an extended acceptance period Progenics acquired an additional 4.36% of the outstanding shares of EXINI, and holds a totalof 96.81% of such shares at December 31, 2015. The results of operations of the acquired company's business from November 12, 2015, the acquisition date, theestimated fair market values of the assets acquired and liabilities assumed, and goodwill are included in our consolidated financial statements since the date of theacquisition and are included in the discussion and analysis below. A portion of EXINI's results of operations from November 12, 2015 through December 31, 2015,has been allocated to the noncontrolling interests in EXINI.Our 2013 acquisition of the privately-held Molecular Insight included the issuance of Progenics common stock in a private transaction not taxable toProgenics, and Progenics' agreement to pay potential milestones, in cash or Progenics stock at its option, of up to $23 million, contingent upon achieving specifiedcommercialization events and up to $70 million contingent upon achieving specified sales targets relating to the acquired company's products. The acquisition wasaccounted for using the acquisition method of accounting, under which the acquired company's assets and liabilities were recorded at their estimated respective fairvalues as of the acquisition date in our consolidated financial statements. The difference between the estimated fair value of the acquisition consideration and fairvalue of the identifiable net assets represents potential future economic benefits arising from combining the companies, and has been recorded as goodwill. Theresults of operations of the acquired company's business from January 18, 2013, the closing date of the acquisition, the estimated fair market values of the assetsacquired and liabilities assumed, and goodwill are included in our consolidated financial statements since the date of the acquisition and are included in thediscussion and analysis below.We have licensed RELISTOR to Valeant Pharmaceuticals, and have partnered other internally-developed or acquired compounds and technologies withthird parties. We continue to consider opportunities for strategic collaborations, out-licenses and other arrangements with biopharmaceutical companies involvingproprietary research, development and clinical programs, and may in the future also in-license or acquire additional oncology compounds and/or programs.Our current principal sources of revenue from operations are royalty, development and commercial milestones and sublicense revenue-sharing paymentsfrom Valeant's RELISTOR operations. Royalty and milestone payments from RELISTOR depend on success in development and commercialization, which isdependent on many factors, such as Valeant's efforts, decisions by the FDA and other regulatory bodies, competition from drugs for the same or similarindications, and the outcome of clinical and other testing of RELISTOR. In the fourth quarter of 2015, we received a $1.5 million milestone payment as a result ofCytoDyn dosing of the first patient in its Phase 3 clinical trial for PRO 140. In the third quarter of 2014, Progenics and Ono Pharmaceutical Co., Ltd. ("Ono"), itsformer licensee of RELISTOR in Japan, settled all claims between them relating to an arbitration commenced by Progenics in 2013, the parties' October 2008License Agreement, and the former licensee's development and commercialization of the drug. In connection therewith, the parties exchanged mutual releases andthe former licensee paid Progenics $7.25 million, which had been recorded as other operating income in 2014.41Table of ContentsWe fund our operations to a significant extent from capital-raising. During 2013, we completed an underwritten public offering of 9.8 million shares ofcommon stock at a public offering price of $4.40 per share, resulting in net proceeds of approximately $40.1 million, and in early 2014 sold an additional 8.75million shares at $4.60 per share, for net proceeds of approximately $37.5 million.Most of our expenditures are for research and development activities. During 2015, expenses for Oncology, primarily related to AZEDRA, 1404, PSMAADC and 1095, were $26.8 million compared to $27.3 million in 2014 and $32.9 million in 2013. Expenses for RELISTOR and other programs in 2015 were $1.4million, compared to $1.3 million in 2014 and $1.7 million in 2013. We expect to incur operating losses for the foreseeable future. At December 31, 2015, we held$74.1 million in cash and cash equivalents, a decrease of $45.2 million from $119.3 million at 2014 year-end. We expect that this amount will be sufficient to fundoperations as currently anticipated beyond one year.If we do not realize sufficient royalty or milestone revenue from RELISTOR, or are unable to enter into favorable collaboration, license, asset sale, capitalraising or other financing transactions, we will have to reduce, delay or eliminate spending on certain programs, and/or take other economic measures.RELISTOR has been approved by regulatory authorities in the U.S., countries in the E.U., Canada, Australia and elsewhere since 2008 for treatment ofOIC in advanced-illness patients receiving palliative care when laxative therapy has not been sufficient and in the U.S. since 2014 for the treatment of OIC inpatients with non-cancer pain. Effective May 28, 2015, the European Commission approved RELISTOR Subcutaneous Injection for the treatment of OIC whenresponse to laxative therapy has not been sufficient in adult patients, aged 18 years and older. The decision is applicable to all 28 European Union member statesplus Iceland and Norway and granted RELISTOR an additional one year of marketing protection. Valeant is responsible for further developing andcommercializing RELISTOR, including completing clinical development necessary to support regulatory marketing approvals for potential new indications andformulations of the drug, such as oral methylnaltrexone. Under our Agreement with Valeant, we received a development milestone of $40 million upon U.S.marketing approval for subcutaneous RELISTOR in non-cancer pain patients in 2014 and are eligible to receive (i) a development milestone of up to $50 millionupon U.S. marketing approval of an oral formulation of RELISTOR, (ii) up to $200 million of commercialization milestone payments upon achievement ofspecified U.S. sales targets, (iii) royalties ranging from 15 to 19 percent of net sales by Valeant and its affiliates, and (iv) 60% of any upfront, milestone,reimbursement or other revenue (net of costs of goods sold, as defined, and territory-specific research and development expense reimbursement) Valeant receivesfrom sublicensees outside the U.S. In the event marketing approval of the oral formulations of the drug is subject to a Black Box Warning or REMS, payment of asubstantial portion of the milestone amount would be deferred, and subject to achievement of the first commercialization milestone (payable on annual U.S. salesfirst exceeding $100 million). On September 8, 2015, the FDA accepted for review Valeant's New Drug Application for RELISTOR tablets for the treatment ofOIC in adult patients with chronic non-cancer pain, and assigned a PDUFA action date of April 19, 2016.In January 2016, Valeant entered into a distribution agreement with Swedish Orphan Biovitrum AB (publ), also known as Sobi, for RELISTOR inWestern Europe, Russia, Greece. Valeant has also licensed RELISTOR to Link Medical Products Pty Limited for distribution in Australia, New Zealand, SouthAfrica and certain other markets in Asia, and also entered into an agreement with Lupin Limited for the distribution of RELISTOR in Canada.42Table of ContentsResults of Operations (amounts in thousands unless otherwise noted) 2015 2014 2013 2015 vs. 2014 2014 vs. 2013 Percent Change Revenues $8,676 $44,377 $7,862 (80)% 464%Expenses (47,980) (48,257) (50,842) 1% 5%Other operating income - 7,250 - (100)% 100%Operating (loss) income (39,304) 3,370 (42,980) (1,266)% 108%Other income 52 51 46 2% 11%Income tax benefit 133 989 362 (87)% 173%Net (loss) income (39,119) 4,410 (42,572) (987)% 110%Net loss attributable to noncontrolling interests (7) - - (100)% N/ANet (loss) income attributable to Progenics $(39,112) $4,410 $(42,572) (987)% 110%Revenues (amounts in thousands unless otherwise noted):Sources of revenue during the years indicated below were earned under license agreements with Valeant and other collaborators, and to a small extentresearch grants from the National Institutes of Health ("NIH") and sales of research reagents.Sources of Revenue 2015 2014 2013 2015 vs. 2014 2014 vs. 2013 Percent Change Collaboration revenue $1,955 $41,196 $1,595 (95)% 2,483%Royalty income 6,608 3,101 5,923 113% (48)%Research grants - - 275 N/A (100)%Other revenues 113 80 69 41% 16%Total $8,676 $44,377 $7,862 (80)% 464%43Table of ContentsCollaboration revenue. During 2015, we recognized revenue from partnering arrangements, primarily resulting from a $1,500 milestone from CytoDynas a result of dosing of the first patient in Phase 3 clinical trial of PRO 140, and reimbursement payments from other partnering arrangements.During 2014, we recognized revenue from milestone partnering arrangements, primarily resulting from the $40,000 milestone from Valeant for theapproval of subcutaneous RELISTOR for treatment of OIC in non-cancer pain patients and $157 in reimbursement payments, and a $1,000 milestone paymentfrom FUJIFILM RI Pharma in the first quarter of 2014 and $37 in reimbursement payments.During 2013, we recognized revenue from upfront and reimbursement payments from partnering arrangements consisting of (i) $676 from amortization ofupfront payments for partnering the Company's PRO 140 and C. difficile programs, (ii) $420 from amortization of upfront payment and expense reimbursement forlicensing 1404 in Japan, (iii) $295 from amortization of upfront payment and expense reimbursement for licensing RELISTOR, and (iv) a $189 upfront paymentfrom another licensee.Royalty income. During the periods presented below we recognized royalty income primarily based on the below net sales of RELISTOR reported byValeant. RELISTOR Net Sales Years Ended December 31, 2015 2014 2013U.S. $40,700 $16,200 $35,000Ex-U.S. 3,100 4,100 4,400Global $43,800 $20,300 $39,400Valeant reported sales deductions in excess of gross sales resulting in royalty loss from net RELISTOR losses during the fourth quarter of 2014, leadingus to recognize an accrued royalty loss liability owed to Valeant of $0.7 million.Prior to its acquisition by Valeant, Salix made a series of disclosures concerning elevated inventory levels of certain of its products held by wholesalecustomers. We believe that Valeant continues to address inventory levels, and we are working diligently to improve our visibility into and better understand futuresales and royalties.Research grants. During the year ended December 31, 2013, we recognized $275 as revenue from federal government grants from the NIH to supportresearch and development programs. We do not expect to recognize revenues from the NIH in the foreseeable future.Other revenues , primarily from orders for research reagents, changed as shown in the Sources of Revenue table above.44Table of ContentsExpenses (amounts in thousands unless otherwise noted):Research and Development Expenses include salaries and benefit costs for personnel, clinical trial costs, supplies, product contract manufacturing costsfor clinical trials, consulting expenses, license fees, royalty payments and other expenses. Research and development expenses decreased to $28,196 in 2015 from$28,592 in 2014 and from $34,582 in 2013. Portions of our expenses during 2013 were funded through grants from the NIH (see Revenues- Research Grants ).The changes in research and development expense, by category of expense, are as follows: 2015 2014 2013 2015 vs. 2014 2014 vs. 2013 Percent change Salaries and benefits $8,235 $9,003 $12,481 9% 28%2015 vs. 2014 Salaries and benefits decreased primarily due to a decline in average headcount.2014 vs. 2013 Salaries and benefits decreased primarily due to a decline in average headcount, and reflecting approximately $1.5 million restructuringcharges recorded in 2013. 2015 2014 2013 2015 vs. 2014 2014 vs. 2013 Percent change Share-based compensation $1,099 $1,843 $2,012 40% 8%2015 vs. 2014 Share-based compensation decreased primarily due to cancellation of awards and a decrease in the number of options granted, partiallyoffset by higher grant-date fair value of the options granted in 2015 compared to the prior year.2014 vs. 2013 Share-based compensation decreased primarily due to lower stock expenses and the previous discontinuation of new restricted stockawards. 2015 2014 2013 2015 vs. 2014 2014 vs. 2013 Percent change Clinical trial costs $5,859 $6,510 $8,862 10% 27%45Table of Contents2015 vs. 2014 Clinical trial costs decreased due to lower expenses for Oncology ($754), primarily related to PSMA ADC, resulting from completion ofPhase 2 trial, partially offset by higher AZEDRA and 1404-related expenses.2014 vs. 2013 Clinical trial costs decreased primarily due to lower expenses for Oncology ($2,337), primarily related to 1404 and PSMA ADC,partially offset by higher expenses for AZEDRA. 2015 2014 2013 2015 vs. 2014 2014 vs. 2013   Percent change Laboratory and manufacturing supplies and equipment $167 $193 $632 13% 69%2015 vs. 2014 Laboratory and manufacturing supplies and equipment decreased due to lower expenses in Oncology ($96), partially offset by higherexpenses for other programs ($70).2014 vs. 2013 Laboratory and manufacturing supplies and equipment decreased due to lower expenses for RELISTOR and other programs ($327) andOncology ($112). 2015 2014 2013 2015 vs. 2014 2014 vs. 2013   Percent change Product contract manufacturing $5,940 $5,191 $2,042 (14)% (154)%2015 vs. 2014 Contract manufacturing increased primarily due to higher expenses for Oncology ($747), resulting from higher AZEDRA-relatedexpenses, partially offset by lower 1404-related expenses.2014 vs. 2013 Contract manufacturing increased due to higher expenses for Oncology ($3,163), primarily related to AZEDRA, 1404 and PSMA ADC,partially offset by lower expenses for RELISTOR and other programs.Expenses in this category primarily relate to the manufacture by third parties of clinical drug materials, testing, analysis, formulation and toxicologyservices, and vary as the timing and level of such services are required. 2015 2014 2013 2015 vs. 2014 2014 vs. 2013 Percent change Consultants $1,477 $887 $905 (67)% 2%2015 vs. 2014 Consultants expense increased primarily due to higher expenses for Oncology ($454) and other programs ($136).2014 vs. 2013 Consultants expense decreased primarily due to lower expenses for Oncology ($66), partially offset by higher expenses for RELISTORand other programs ($48).46Table of ContentsExpenses in this category relate to monitoring ongoing clinical trials and reviewing data from completed trials including the preparation of filings andvary as the timing and level of such services are required. 2015 2014 2013 2015 vs. 2014 2014 vs. 2013 Percent change License fees $388 $498 $567 22% 12%2015 vs. 2014 License fees decreased primarily due to lower expenses for RELISTOR ($150), partially offset by higher expenses for Oncology ($41).2014 vs. 2013 License fees decreased primarily due to lower expenses for Oncology, partially offset by a license payment related to the $40,000subcutaneous RELISTOR for non-cancer pain milestone. 2015 2014 2013 2015 vs. 2014 2014 vs. 2013 Percent change Royalty expense $688 $357 $624 (93)% 43%2015 vs. 2014 The increase in royalty expense was primarily due to higher net sales of RELISTOR in 2015.2014 vs. 2013 The decrease in royalty expense was primarily due to lower net sales of RELISTOR in 2014. 2015 2014 2013 2015 vs. 2014 2014 vs. 2013 Percent change Other operating expenses $4,343 $4,110 $6,457 (6)% 36%2015 vs. 2014 Other operating expenses increased primarily due to higher facility related costs.2014 vs. 2013 Other operating expenses decreased from 2013 primarily due to lower expenses for rent.47Table of ContentsGeneral and Administrative Expenses increased to $18,184 in 2015 from $15,489 in 2014 and decreased slightly to $15,489 in 2014 from $15,541 in2013, as follows: 2015 2014 2013 2015 vs. 2014 2014 vs. 2013 Percent change Salaries and benefits $4,684 $4,398 $4,821 (7)% 9%2015 vs. 2014 Salaries and benefits increased primarily due to new executive positions in finance and human resources departments.2014 vs. 2013 Salaries and benefits decreased primarily due to a decline in average headcount. 2015 2014 2013 2015 vs. 2014 2014 vs. 2013 Percent change Share-based compensation $1,849 $1,680 $1,534 (10)% (10)%2015 vs. 2014 Share-based compensation increased primarily due to higher grant-date fair value of options granted and an increase in the number ofoptions granted, partially offset by higher cancellations of awards compared to the prior year.2014 vs. 2013 Share-based compensation increased primarily due to higher stock option expenses. 2015 2014 2013 2015 vs. 2014 2014 vs. 2013 Percent change Consulting, legal and professional fees $7,032 $5,060 $3,922 (39)% (29)%2015 vs. 2014 Consulting, legal and professional fees increased due to higher legal expenses ($1,145), primarily related to the action brought by a formeremployee, audit fees ($182), fees associated with the EXINI due diligence ($364), consulting ($295) and legal patent ($96) expenses partially offset bylower tax accounting ($89) and other fees ($21).2014 vs. 2013 Consulting, legal and professional fees increased due to higher legal expenses ($1,873) and other fees ($93), partially offset by lowerconsulting ($539), legal patent ($227) and audit and compliance expenses ($62).48Table of Contents 2015 2014 2013 2015 vs. 2014 2014 vs. 2013 Percent change Other operating expenses $4,054 $3,806 $4,325 (7)% 12%2015 vs. 2014 Other operating expenses increased primarily due to higher expenses for travel ($81) and higher facility related pass-through cost ($73).2014 vs. 2013 Other operating expenses decreased due to lower expenses for computer software ($120), recruiting ($102), rent ($58), taxes ($30), travel($17) and other operating expenses ($192). 2015 2014 2013 2015 vs. 2014 2014 vs. 2013 Percent change Depreciation and amortization $565 $545 $939 (4)% 42%2015 vs. 2014 Depreciation and amortization expense increased primarily due to amortization of finite-lived intangible assets resulting from the fourthquarter 2015 acquisition of EXINI, partially offset by a decrease due to lower asset balances for computers and machinery and equipment.2014 vs. 2013 Depreciation and amortization expense decreased primarily due to lower machinery and equipment fixed asset balances.Intangible Impairment Charges decreased in 2015 from 2014 and increased in 2014 from 2013, as follows: 2015 2014 2013 2015 vs. 2014 2014 vs. 2013 Percent change Intangible impairment charges (non-cash) $- $2,676 $919 100% (191)%2015 vs. 2014 There were no intangible impairment charges recognized in 2015.2014 vs. 2013 As of December 31, 2014 indefinite-lived intangible assets decreased by $2,679, from $31,379 to $28,700, of which a $2,660 impairmentof the indefinite-lived ONALTA and MIP-1095 assets and a $16 impairment of the finite-lived ONALTA asset balance were incurred due to our reviewof these intangible assets, with the corresponding impairment charges recorded in the Consolidated Statements of Operations. As of December 31, 2013indefinite-lived intangible assets decreased by $919, from $32,298 to $31,379, resulting from our annual impairment testing, with the correspondingexpense recorded in the general and administrative expenses in the Consolidated Statements of Operations. This impairment was the result of change inthe estimated timing of beginning cash inflows from 2014 to 2018 and an increase in discount rate from 15% to 18% for the ONALTA intangible asset.49Table of ContentsChange in Contingent Consideration Liability increased in 2015 from 2014 and in 2014 from 2013, as follows: 2015 2014 2013 2015 vs. 2014 2014 vs. 2013 Percent change Change in contingent consideration liability (non-cash) $1,600 $1,500 $ (200) (7)% (850)%2015 vs. 2014 The review of the contingent consideration liability fair value resulted in a $1,600 increase, from $17,200 to $18,800, resulting primarilyfrom a decrease in the discount period, a 0.2% increase in the risk-free rate and a 5% increase in asset volatility. Changes in the contingent considerationliability are recorded as non-cash expense in the Consolidated Statements of Operations.2014 vs. 2013 The review of the contingent consideration liability fair value resulted in a $1,500 increase, from $15,700 to $17,200, which has beenrecorded as non-cash expense in the Consolidated Statements of Operations. The increase in contingent consideration liability was primarily due to higherprobability of success for 1404, partially offset by decrease due to lower projected revenues for MIP-1095.Significant changes in estimates and assumptions underlying the estimated fair value of the contingent consideration liability would result in asignificantly higher or lower fair value with a corresponding non-cash charge or credit to expenses.Other operating income (amounts in thousands unless otherwise noted): 2015 2014 2013 2015 vs. 2014 2014 vs. 2013 Percent change Other operating income $- $7,250 $- (100)% 100%2014 Other operating income consists of a third quarter 2014 payment received in connection with settlement of arbitration with our former licensee forRELISTOR in Japan.Other income (amounts in thousands unless otherwise noted): 2015 2014 2013 2015 vs. 2014 2014 vs. 2013 Percent change Interest income $52 $51 $46 2% 11%50Table of Contents2015 vs. 2014 Interest income increased due to slightly higher average balances in 2015 than in 2014.2014 vs. 2013 Interest income increased primarily due to higher average balances in 2014 than in 2013, partially offset by decreases due to loweraverage interest rates in 2014 than in 2013.Interest income, as reported, is primarily the result of investment income earned on money market funds.Income Taxes (amounts in thousands unless otherwise noted):For 2015, 2014 and 2013, income tax benefits of $133, $989 and $362, respectively, resulted from the change in the difference between carrying amountsof in-process research and development assets for financial reporting purposes and the amounts used for income tax purposes. For the year ended December 31,2014, our book income was $4,410, resulting primarily from $40,000 in milestone revenue from Valeant and a $7,250 payment received in the settlement ofarbitration with our former licensee for RELISTOR in Japan, however there was no provision for income taxes for 2014, due to taxable losses resulting primarilyfrom the utilization of a portion of our deferred tax assets.Net (Loss) Income (amounts in thousands unless otherwise noted):Our 2015 net loss was $39,119 compared to 2014 net income of $4,410 and a net loss of $42,572 for 2013.Liquidity and Capital Resources (amounts in thousands unless otherwise noted):We have to date funded operations principally through proceeds received from private placements of equity securities, public offerings of common stock,payments from license agreements representing up-front payments, development milestones, royalties, and proceeds from the exercise of outstanding stock options.In 2015, we received a $1,500 milestone payment under our 2012 license agreement with CytoDyn Inc. for PRO 140, as a result of CytoDyn dosing thefirst patient in its Phase 3 clinical trial.In 2014, prior to Salix's acquisition by Valeant, we received a $40,000 milestone payment from Salix, for the approval of subcutaneous RELISTOR fornon-cancer pain patients, a $1,000 milestone payment from our Japanese partner in the 1404 program and a $7,250 payment upon settlement of arbitration with ourformer licensee for RELISTOR in Japan.In 2013, we received a $5,000 upfront payment from partnering of the C. difficile program. We are eligible to receive future milestone and royaltypayments. The 2013 receipt resulted in the reversal in 2013 of deferred tax assets and liabilities established in 2012 to reflect the net tax effects of temporarydifferences between the carrying amounts of certain assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.At December 31, 2015, we held $74,103 in cash and cash equivalents, a decrease of $45,199 from $119,302 at December 31, 2014. We expect that thisamount will be sufficient to fund operations as currently anticipated beyond one year. In addition, at December 31, 2013, our investment in auction rate securitiesclassified as long-term assets on the Consolidated Balance Sheets amounted to $2,208, which was redeemed at par in the fourth quarter of 2014.51Table of ContentsIf we do not realize sufficient royalty or other revenue from RELISTOR or other collaboration, license, asset sale, capital raising or other financingtransactions, we will have to reduce, delay or eliminate spending on certain programs, and/or take other economic measures.Cash used in operating activities was $40,137 and $36,107 for 2015 and 2013, respectively, due to excess of expenditures on our research anddevelopment programs and general and administrative costs over cash received from collaborators. Cash provided by operating activities for 2014 was $13,726,due to the receipt of a $40,000 Salix milestone payment, partially offset by expenditures on our research and development programs and general and administrativecosts. See Risk Factors .During the first quarter of 2014, we established a $150 million replacement shelf registration statement which we used for our February 2014underwritten public offering of 8.75 million shares of common stock at a public offering price of $4.60 per share, resulting in net proceeds of approximately$37,459. We may utilize this shelf registration for the issuance of up to approximately $110,000 of additional common stock and other securities, including up to$50,000 of our common stock under an agreement with an investment bank providing for at-the-market sales through the bank. In 2013, we completed anunderwritten public offering under our 2011 shelf registration statement of 9.8 million shares of common stock at a public offering price of $4.40 per share(including the underwriters' overallotment option), resulting in net proceeds of approximately $40,078.Sources of Cash (amounts in thousands unless otherwise noted)Operating Activities. In addition to the $1,500 milestone payment mentioned above, during 2015 we received $3,592 under our collaborations, primarilyconsisting of $3,325 in royalties and reimbursements from Valeant, $203 in reimbursement payments relating to 1404, and $64 in royalties from our ONALTAout-license. In addition to the $7,250 settlement payment mentioned above, during 2014 we received $47,773 under our collaborations, consisting of (i) $40,000milestone payment from Salix for the chronic non-cancer pain indication, (ii) $6,691 in royalties and reimbursements from Salix, (iii) $1,000 in milestone paymentand $37 in reimbursement payments relating to 1404 and (iv) $45 from out-licenses of other assets. During 2013 we received $9,686 under our collaborations,consisting of (i) $5,125 in upfront and reimbursement payments from partnering of the C. difficile program, (ii) $3,952 in royalties and reimbursements from Salix,(iii) payments totaling $224 from out-licenses of other assets, and (iv) $385 in reimbursement payments relating to 1404.We have in the past partially funded research programs through awards from the NIH, which we do not expect to receive in the foreseeable future. In2013 we received $287 from all of our NIH awards.Changes in Accounts receivable and Accounts payable for 2015, 2014 and 2013 resulted from the timing of receipts from Valeant, Fuji, other partneringtransactions, and, principally in prior periods, NIH and Ono, and the timing of payments made to trade vendors in the normal course of business.We have no committed external sources of funding or capital other than agreements under which collaborators and licensees have contractual obligationsto make payments to us. Other than revenues from RELISTOR, we expect no significant product revenues in the immediate or near-term future, as it will takesignificant time to bring any of our current product candidates to the commercial marketing stage.Investing Activities. During 2014 and 2013, net cash provided by investing activities included $2,400 and $1,100, respectively, in proceeds fromredemption of auction rate securities. In addition, during 2015, 2014 and 2013, we received cash of $48, $143 and $174, respectively, from the sale of fixed assets.52Table of ContentsFinancing Activities. During 2014 and 2013, net cash provided by financing activities included $37,459 and $40,078, respectively, in net proceeds fromthe issuance of common stock. In addition, during 2015, 2014 and 2013, we received cash of $1,737, $428 and $71, respectively, from exercise of stock options.The amount of cash we receive from these sources fluctuates commensurate with changes in the common stock price on and after the grant date.Unless we obtain regulatory approval for additional product candidates and/or enter into agreements with corporate collaborators with respect to otherproprietary assets, we will be required to fund our operations through sales of common stock or other securities or royalty or other financing agreements. Adequateadditional funding may not be available to us on acceptable terms or at all. Our inability to raise additional capital on terms reasonably acceptable to us mayseriously jeopardize the future success of our business.Uses of Cash (amounts in thousands unless otherwise noted)Operating Activities. The majority of our cash has been used to advance our research and development programs, including conducting clinical trials,pursuing regulatory approvals for product candidates, filing and prosecuting patent applications and defending patent claims. For various reasons, including theearly stage of certain of our programs, the timing and results of our clinical trials, our dependence in certain instances on third parties, many of which are outside ofour control, we cannot estimate the total remaining costs to be incurred and timing to complete all our research and development programs.We will require additional funding to continue our research and product development programs, conduct clinical trials, pursue regulatory approvals forour product candidates, file and prosecute patent applications and enforce or defend patent claims, if any, fund other operating expenses, and fund possible productin-licensing and acquisitions.Investing Activities. During 2015, we used cash of $6,202, net of cash acquired of $7, to acquire EXINI. During the past three years, we have spent $370,$714 and $137, respectively, on capital expenditures.Financing Activities. During 2015, we used cash of $292 to purchase noncontrolling interests during the extended acceptance period following theacquisition date of EXINI.Contractual ObligationsOur funding requirements, both for the next 12 months and beyond, will include required payments under operating leases and fixed and contingentpayments under licensing, collaboration and other agreements. The following table summarizes our contractual obligations as of December 31, 2015 for futurepayments under these agreements: Payments due by Period Total Less than oneyear 1 to 3 years 3 to 5 years Greater than 5years (in millions) Operating leases $40.2 $2.0 $7.7 $7.9 $22.6 License, collaboration and other agreements: Fixed payments 1.4 0.2 0.5 0.2 0.5 Contingent payments (1) 107.6 - 2.6 11.3 93.7 Total $149.2 $2.2 $10.8 $19.4 $116.8 _______________(1)Based on assumed achievement of milestones covered under each agreement, the timing and payment of which is highly uncertain.53Table of ContentsWe periodically assess the scientific progress and merits of each of our programs to determine if continued research and development is commercially andeconomically viable. Certain of our programs have been terminated due to the lack of scientific progress and prospects for ultimate commercialization. Because ofthe uncertainties associated with research and development in these programs, the duration and completion costs of our research and development projects aredifficult to estimate and are subject to considerable variation. Our inability to complete research and development projects in a timely manner or failure to enterinto collaborative agreements could significantly increase capital requirements and adversely affect our liquidity.Our cash requirements may vary materially from those now planned because of results of research and development and product testing, changes inexisting relationships or new relationships with licensees, licensors or other collaborators, changes in the focus and direction of our research and developmentprograms, competitive and technological advances, the cost of filing, prosecuting, defending and enforcing patent claims, the regulatory approval process,manufacturing and marketing and other costs associated with the commercialization of products following receipt of regulatory approvals and other factors.The above discussion contains forward-looking statements based on our current operating plan and the assumptions on which it relies. There could bedeviations from that plan that would consume our assets earlier than planned.Off-Balance Sheet Arrangements and GuaranteesWe have no obligations under off-balance sheet arrangements and do not guarantee the obligations of any other unconsolidated entity.Critical Accounting PoliciesWe prepare our financial statements in conformity with accounting principles generally accepted in the U.S. Our significant accounting policies aredisclosed in Note 2 to our financial statements included in this Report. The selection and application of these accounting principles and methods requires us tomake estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as certain financial statement disclosures. Weevaluate these estimates on an ongoing basis. We base these estimates on historical experience and on various other assumptions that we believe reasonable underthe circumstances. The results of these evaluations form the basis for making judgments about the carrying values of assets and liabilities that are not otherwisereadily apparent. While we believe that the estimates and assumptions we use in preparing the financial statements are appropriate, they are subject to a number offactors and uncertainties regarding their ultimate outcome and, therefore, actual results could differ from these estimates.The critical accounting policies we use and the estimates we make are described below. These are policies and estimates that we believe are the mostimportant in portraying our financial condition and results of operations, and that require our most difficult, subjective or complex judgments, often as a result ofthe need to make estimates about the effect of matters that are inherently uncertain. We have discussed the development, selection and disclosure of these criticalaccounting policies and estimates with the Audit Committee of our Board of Directors.Revenue Recognition. We recognize revenue from all sources based on the provisions of the SEC's Staff Accounting Bulletin (SAB) No. 104 (SAB 104)and ASC 605 Revenue Recognition.54Table of ContentsThe FASB's ASC 605 Revenue Recognition specifies how to separate deliverables in multiple-deliverable arrangements, and how to measure and allocatearrangement consideration to one or more units of accounting, and provides that the delivered item(s) are separate units of accounting, if (i) the delivered item(s)have value to a collaborator on a stand-alone basis, and (ii), if the arrangement includes a general right of return relative to the delivered item, delivery orperformance of the undelivered item(s) is considered probable and substantially in our control.Royalty revenue or loss is recognized based upon net sales of related licensed products, and is recognized in the period the sales (losses) occur, providedthat the royalty amounts are fixed or determinable, collection of the related receivable is reasonably assured and we have no remaining performance obligationsunder the arrangement providing for the royalty. Royalty loss is recognized based upon reported sales deductions in excess of gross sales resulting in net losses andare recognized in the period net losses occur. Royalty loss is classified in royalty income in the consolidated statements of operations and the related accruedroyalty loss liability is classified in accounts payable and accrued expenses in the consolidated balance sheets.Share-Based Payment Arrangements. Our share-based compensation of employees includes non-qualified stock options and restricted stock, which arecompensatory under ASC 718 Compensation – Stock Compensation. We account for share-based compensation to non-employees, including non-qualified stockoptions and restricted stock, in accordance with ASC 505 Equity.The fair value of each non-qualified stock option award is estimated on the date of grant using the Black-Scholes option pricing model. The modelrequires input assumptions with respect to (i) expected volatility of our common stock, which is based upon the daily quoted market prices on The NASDAQ StockMarket LLC over a period equal to the expected term, (ii) the period of time over which employees, officers, directors and non-employee consultants are expectedto hold their options prior to exercise, (iii) expected dividend yield (zero in our case due to never having paid dividends and not expecting to pay dividends in thefuture), and (iv) risk-free interest rates for periods within the expected term of the options, which are based on the U.S. Treasury yield curve in effect at the time ofgrant.Historical volatilities are based upon daily quoted market prices of our common stock on The NASDAQ Stock Market LLC over a period equal to theexpected term of the related equity instruments. We rely only on historical volatility since we believe it is generally viewed as providing the most reliableindication of future volatility. In estimating expected future volatility, we assume it will be consistent with historical; we calculate historical volatility using asimple average calculation; we use available historical data for the length of the option's expected term, and we consistently use a sufficient number of priceobservations. Since our stock options are not traded on a public market, we do not use implied volatility.The expected term of options granted represents the period of time that options granted are expected to be outstanding based upon historical data relatedto exercise and post-termination cancellation activity. The expected term of stock options granted to our Chief Executive Officer ("CEO") and non-employeedirectors, consultants and officers are calculated separately from stock options granted to other employees.We apply a forfeiture rate to the number of unvested awards in each reporting period in order to estimate the number of awards that are expected to vest.Estimated forfeiture rates are based upon historical data on vesting behavior of employees. We adjust the total amount of compensation cost recognized for eachaward, in the period in which each award vests, to reflect the actual forfeitures related to that award. Changes in our estimated forfeiture rate will result in changesin the rate at which compensation cost for an award is recognized over its vesting period.Changes in the assumptions used to compute the fair value of the option awards are likely to affect their fair value and the amount of compensationexpense recognized in future periods. A higher volatility, longer expected term and higher risk-free rate increases the resulting compensation expense recognized infuture periods as compared to prior periods. Conversely, a lower volatility, shorter expected term and lower risk-free rate decreases such expense recognized infuture periods as compared to prior periods.55Table of ContentsClinical Trial and Other Research and Development Expenses. Clinical trial expenses, which are included in research and development expenses,represent obligations resulting from contracts with various clinical investigators and clinical research organizations in connection with conducting clinical trials forour product candidates. Such costs are expensed as incurred, and are generally based on the total number of patients in the trial, the rate at which the patients enterthe trial and the period over which the clinical investigators and clinical research organizations provide services. We believe that this method best aligns the effortsexpended on a clinical trial with the expenses we record. We adjust our rate of clinical expense recognition if actual results differ from our estimates. In addition toclinical trial expenses, we estimate the amounts of other research and development expenses, for which invoices have not been received at the end of a period,based upon communication with third parties that have provided services or goods during the period. Such estimates are subject to change as additional informationbecomes available.Fair Value Measurements. During 2014, all of the $2,208 million (net of $192 million unrealized loss) auction rate securities remaining at December 31,2013 were redeemed at par. Our available-for-sale investment portfolio consists of money market funds and is recorded at fair value in the accompanyingConsolidated Balance Sheets in accordance with ASC 320 Investments – Debt and Equity Securities.In–Process Research and Development, Intangible Assets-Technology and Goodwill. In connection with the acquisitions of Molecular Insight andEXINI, we have established a policy for accounting for intangible assets, under which in process research and development (IPR&D), intangible assets-technologyand goodwill are initially measured at fair value and capitalized as an intangible asset. An impairment test for indefinite-lived intangibles is performed annually inthe fourth quarter, unless impairment indicators require an earlier evaluation. Finite-lived intangible assets are evaluated only when impairment indicators arepresent. IPR&D will be amortized upon and subject to commercialization of the underlying candidates and intangible assets-technology is amortized over therelevant estimated useful life.Contingent Consideration Liability. The estimated fair value of the contingent consideration liability, initially measured and recorded on the acquisitiondate, is considered to be a Level 3 instrument and is reviewed quarterly, or whenever events or circumstances occur that indicate a change in fair value. Thecontingent consideration liability is recorded at fair value at the end of each period.Legal Proceedings. From time to time, we may be a party to legal proceedings in the course of our business. The outcome of any such proceedings,regardless of the merits, is inherently uncertain. The assessment of whether a loss is probable or reasonably possible, and whether the loss or a range of loss isestimable, often involves a series of complex judgments about future events. The Company records accruals for contingencies to the extent that the occurrence ofthe contingency is probable and the amount of liability is reasonably estimable. If the reasonable estimate of liability is within a range of amounts and someamount within the range appears to be a better estimate than any other, then the Company records that amount as an accrual. If no amount within the range is areasonable estimate, then the Company records the lowest amount as an accrual. Loss contingencies that are assessed as remote are not reported in the financialstatements, or in the notes to the consolidated financial statements.Item 7A.  Quantitative and Qualitative Disclosures About Market RiskOur primary investment objective is to preserve principal. Our money market funds have interest rates that are variable and totaled $62,855 million atDecember 31, 2015. As a result, we do not believe that these investment balances have a material exposure to interest-rate risk.56Table of ContentsItem 8.  Financial Statements and Supplementary DataSee page F-1, Index to Consolidated Financial Statements.Item 9.  Changes in and Disagreements With Accountants on Accounting and Financial DisclosureNone.Item 9A.  Controls and ProceduresEvaluation of Disclosure Controls and ProceduresWe maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports isrecorded, processed, summarized and reported within the timelines specified in the SEC's rules and forms, and that such information is accumulated andcommunicated to our management, including our CEO and Chief Financial Officer ("CFO"), as appropriate, to allow timely decisions regarding requireddisclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how welldesigned and operated, can only provide reasonable assurance of achieving the desired control objectives, and in reaching a reasonable level of assurance,management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. We have a DisclosureCommittee consisting of members of our senior management which monitors and implements our policy of disclosing material information concerning theCompany in accordance with applicable law.As required by SEC Rule 13a-15(e), we carried out an evaluation, under the supervision and with the participation of our management, including ourCEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Basedon the foregoing, our CEO and CFO concluded that our current disclosure controls and procedures, as designed and implemented, were effective at the reasonableassurance level.Changes in Internal Control over Financial ReportingThere have been no changes in our internal control over financial reporting, as such term is defined in the Exchange Act Rules 13a-15(f) and 15d-15(f)during our fiscal quarter ended December 31, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financialreporting.57Table of ContentsManagement's Report on Internal Control Over Financial Reporting Internal control over financial reporting is a process designed by, or under the supervision of, our CEO and CFO and effected by our Board, managementand other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles. Our management is responsible for establishing and maintaining adequate internal control overfinancial reporting which includes policies and procedures that:· Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of assets; · Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles, and that receipts and expenditures are being made only in accordance with authorization of management and directors;and · Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a materialeffect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance withthe policies or procedures may deteriorate.Management has used the framework set forth in the report entitled Internal Control – Integrated Framework issued by the Committee of SponsoringOrganizations of the Treadway Commission (2013 framework), known as COSO, to evaluate the effectiveness of our internal control over financial reporting.Management has concluded that our internal control over financial reporting was effective as of December 31, 2015.On November 12, 2015, we became a majority owner of EXINI Diagnostics AB, which is included in our 2015 consolidated financial statements andconstituted $1.1 million and $0.7 million of total and net assets, respectively, as of December 31, 2015 and $0.01 million and ($0.2) million of revenues and net(loss), respectively, for the year then ended. As the acquisition occurred during 2015, management excluded the EXINI business from its assessment of internalcontrol over financial reporting.The effectiveness of our internal control over financial reporting has been audited by Ernst & Young LLP, an independent registered public accountingfirm, as of December 31, 2015 as stated in their report which is provided below.58Table of ContentsReport of Independent Registered Public Accounting FirmThe Board of Directors and Stockholders of Progenics Pharmaceuticals, Inc.We have audited Progenics Pharmaceuticals, Inc.'s internal control over financial reporting as of December 31, 2015, based on criteria established in InternalControl—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). Progenics Pharmaceuticals, Inc.'s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of theeffectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control Over Financial Reporting. Ourresponsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that weplan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in thecircumstances. We believe that our audit provides a reasonable basis for our opinion.A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financialreporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance withthe policies or procedures may deteriorate.As indicated in the accompanying Management's Report on Internal Control Over Financial Reporting, management's assessment of and conclusion on theeffectiveness of internal control over financial reporting did not include the internal controls of EXINI Diagnostics AB, which is included in the 2015 consolidatedfinancial statements of Progenics Pharmaceuticals, Inc. and constituted $1.1 million and $0.7 million of total and net assets, respectively, as of December 31, 2015and $0.01 million and ($0.2) million of revenues and net (loss), respectively, for the year then ended. Our audit of internal control over financial reporting ofProgenics Pharmaceuticals, Inc. also did not include an evaluation of the internal control over financial reporting of EXINI Diagnostics AB.In our opinion, Progenics Pharmaceuticals, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015,based on   the COSO criteria .We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet ofProgenics Pharmaceuticals, Inc. as of December 31, 2015 and 2014 and the related consolidated statements of operation, comprehensive (loss) income,stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2015 of Progenics Pharmaceuticals, Inc. and our report datedMarch 11, 2016 expressed an unqualified opinion thereon./s/ Ernst & Young LLPHartford, ConnecticutMarch 11, 2016 Item 9B.  Other InformationNone.59Table of ContentsPART IIIThe information required by the Form 10-K Items listed in the following table will be included under the respective headings specified for such Items inour definitive proxy statement for our 2016 Annual Meeting of Stockholders to be filed with the SEC no later than 120 days after December 31, 2015, which proxystatement is incorporated herein by reference:Item of Form 10-KLocation in 2016 Proxy Statement Item 10.  Directors, Executive Officers and Corporate GovernanceElection of Directors.Executive and Other Officers.Corporate Governance.Code of Business Ethics and Conduct.*Section 16(a) Beneficial Ownership Reporting and Compliance.* The full text of our Code of Business Ethics and Conduct is available on ourwebsite ( www .progenics.com ). Item 11.  Executive CompensationExecutive Compensation .Compensation Committee Report.Compensation Committee Interlocks and Insider Participation. Item 12.  Security Ownership of Certain Beneficial Owners andManagement and Related Stockholder MattersEquity Compensation Plan Information.Security Ownership of Certain Beneficial Owners and Management . Item 13.  Certain Relationships and Related Transactions, and DirectorIndependenceCertain Relationships and Related Transactions.Affirmative Determinations Regarding Director Independence and Other Matters. Item 14.  Principal Accounting Fees and ServicesFees Billed for Services Rendered by our Independent Registered PublicAccounting Firm.Pre-approval of Audit and Non-Audit Services by the Audit Committee.60Table of ContentsPART IV Item 15.  Exhibits, Financial Statement SchedulesThe following documents or the portions thereof indicated are filed as a part of this Annual Report.(a)Documents filed as part of this Annual Report:(1) Consolidated Financial Statements of Progenics Pharmaceuticals, Inc.:Report of Independent Registered Public Accounting FirmConsolidated Balance Sheets at December 31, 2015 and 2014Consolidated Statements of Operations for the years ended December 31, 2015, 2014 and 2013Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, 2015, 2014 and 2013Consolidated Statements of Stockholders' Equity for the years ended December 31, 2015, 2014 and 2013Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013Notes to Consolidated Financial Statements(2)Financial Statement SchedulesSchedule II – Valuation and Qualifying AccountsFinancial statement schedules referred to in Item 12-01 of Regulation S-X and not listed above are inapplicable and therefore have been omitted.(3)Item 601 ExhibitsExhibits required to be filed by Item 601 of Regulation S-K are listed in the Exhibit Index immediately following the signature page of thisReport and incorporated herein by reference.61Table of Contents PROGENICS PHARMACEUTICALS, INC.INDEX TO CONSOLIDATED FINANCIAL STATEMENTS PageReport of Independent Registered Public Accounting FirmF-2Financial Statements: Consolidated Balance Sheets at December 31, 2015 and 2014F-3Consolidated Statements of Operations for the years ended December 31, 2015, 2014 and 2013F-4Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, 2015, 2014 and 2013F-5Consolidated Statements of Stockholders' Equity for the years ended December 31, 2015, 2014 and 2013F-6Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013F-7Notes to Consolidated Financial StatementsF-8F-1Table of ContentsReport of Independent Registered Public Accounting FirmThe Board of Directors and Stockholders of Progenics Pharmaceuticals, Inc.We have audited the accompanying consolidated balance sheets of Progenics Pharmaceuticals, Inc. as of December 31, 2015 and 2014 and the related consolidatedstatements of operations, comprehensive (loss) income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2015.Our audits also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and schedule are the responsibility of theCompany's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that weplan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining,on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basisfor our opinion.In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Progenics Pharmaceuticals,Inc. at December 31, 2015 and 2014 and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31,2015, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relationto the basic financial statements taken as a whole, presents fairly in all material respects information set forth therein.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Progenics Pharmaceuticals, Inc.'sinternal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control-Integrated Framework issued by the Committeeof Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 11, 2016 expressed an unqualified opinion thereon. /s/ Ernst & Young LLPHartford, ConnecticutMarch 11, 2016F-2Table of ContentsPROGENICS PHARMACEUTICALS, INC.CONSOLIDATED BALANCE SHEETS(amounts in thousands, except for par value and share amounts) December 31, 2015 2014 Assets Current assets: Cash and cash equivalents $74,103 $119,302 Accounts receivable, net 3,543 109 Other current assets 5,639 2,515 Total current assets 83,285 121,926 Fixed assets, net 2,407 2,552 Intangible assets, net 30,793 28,700 Goodwill 13,074 7,702 Other assets 1,692 157 Total assets $131,251 $161,037 Liabilities and Stockholders' Equity Current liabilities: Accounts payable and accrued expenses $9,544 $6,570 Other current liabilities 185 115 Total current liabilities 9,729 6,685 Contingent consideration liability 18,800 17,200 Deferred tax liability 11,199 11,332 Other liabilities 862 911 Total liabilities 40,590 36,128 Commitments and contingencies (Note 10) Stockholders' equity: Preferred stock, $.001 par value; 20,000,000 shares authorized; issued and outstanding – none - - Common stock, $.0013 par value; shares authorized - 160,000,000 in 2015 and 2014; issued - 70,146,317 in 2015 and69,832,949 in 2014 91 91 Additional paid-in capital 594,511 589,826 Accumulated deficit (501,379) (462,267)Accumulated other comprehensive loss (26) - Treasury stock, at cost (200,000 shares in 2015 and 2014) (2,741) (2,741)Total Progenics stockholders' equity 90,456 124,909 Noncontrolling interests 205 - Total stockholders' equity 90,661 124,909 Total liabilities and stockholders' equity $131,251 $161,037 The accompanying notes are an integral part of the financial statements.F-3Table of ContentsPROGENICS PHARMACEUTICALS, INC.CONSOLIDATED STATEMENTS OF OPERATIONS(amounts in thousands, except net (loss) income per share) Years Ended December 31, 2015 2014 2013 Revenues: Collaboration revenue $1,955 $41,196 $1,595 Royalty income 6,608 3,101 5,923 Research grants - - 275 Other revenues 113 80 69 Total revenues 8,676 44,377 7,862 Expenses: Research and development 28,196 28,592 34,582 General and administrative 18,184 15,489 15,541 Intangible impairment charges - 2,676 919 Change in contingent consideration liability 1,600 1,500 (200)Total expenses 47,980 48,257 50,842 Other operating income - 7,250 - Operating (loss) income (39,304) 3,370 (42,980) Other income: Interest income 52 51 46 Total other income 52 51 46 (Loss) income before income tax benefit (39,252) 3,421 (42,934) Income tax benefit 133 989 362 Net (loss) income (39,119) 4,410 (42,572)Net loss attributable to noncontrolling interests (7) - - Net (loss) income attributable to Progenics $(39,112) $4,410 $(42,572) Net (loss) income per share attributable to Progenics - basic $(0.56) $0.06 $(0.76)Weighted-average shares - basic 69,716 68,185 55,798 Net (loss) income per share attributable to Progenics - diluted $(0.56) $0.06 $(0.76)Weighted-average shares - diluted 69,716 68,243 55,798 The accompanying notes are an integral part of the financial statements.F-4Table of ContentsPROGENICS PHARMACEUTICALS, INC.CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME(amounts in thousands) Years Ended December 31, 2015 2014 2013 Net (loss) income $(39,119) $4,410 $(42,572)Other comprehensive (loss) income: Foreign currency translation adjustments (26) - - Net change in unrealized loss on auction rate securities - 192 68 Total other comprehensive (loss) income (26) 192 68 Comprehensive (loss) income (39,145) 4,602 (42,504)Comprehensive loss attributable to noncontrolling interests (7) - - Comprehensive (loss) income attributable to Progenics $(39,138) $4,602 $(42,504) The accompanying notes are an integral part of the financial statements.F-5Table of ContentsPROGENICS PHARMACEUTICALS, INC.CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITYFor the Years Ended December 31, 2015, 2014 and 2013 (amounts in thousands)  Common Stock Treasury Stock Shares Amount AdditionalPaid-InCapital AccumulatedDeficit AccumulatedOtherComprehensive(Loss) Income Shares Amount NoncontrollingInterests Total Balance at December 31, 2012 46,765 $61 $493,613 $(424,105) $(260) (200) $(2,741) $- $66,568 Net loss - - - (42,572) - - - - (42,572)Other comprehensive income - - - - 68 - - - 68 Compensation expenses for share-based paymentarrangements - - 3,546 - - - - - 3,546 Acquisition of subsidiary, net of issuance costs 4,472 6 11,214 - - - - - 11,220 Sale of common stock in public offering, net ofunderwriting discounts and commissions ($2,581)and offering expenses ($351) 9,775 12 40,066 - - - - - 40,078 Forfeitures of restricted stock (1) - - - - - - - - Exercise of stock options 14 - 71 - - - - - 71 Balance at December 31, 2013 61,025 79 548,510 (466,677) (192) (200) (2,741) - 78,979 Net income - - - 4,410 - - - - 4,410 Other comprehensive income - - - - 192 - - - 192 Compensation expenses for share-based paymentarrangements - - 3,523 - - - - - 3,523 Sale of common stock in public offering, net ofunderwriting discounts and commissions ($2,415)and offering expenses ($376) 8,750 12 37,447 - - - - - 37,459 Acquisition of subsidiary escrow shares returned (19) - (82) - - - - - (82)Exercise of stock options 77 - 428 - - - - - 428 Balance at December 31, 2014 69,833 91 589,826 (462,267) - (200) (2,741) - 124,909 Net loss - - - (39,112) - - - (7) (39,119)Acquisition of subsidiary - - - - - - - 504 504 Purchase of noncontrolling interests - - - - - - - (292) (292)Other comprehensive loss - - - - (26) - - - (26)Compensation expenses for share-based paymentarrangements - - 2,948 - - - - - 2,948 Exercise of stock options 313 - 1,737 - - - - - 1,737 Balance at December 31, 2015 70,146 $91 $594,511 $(501,379) $(26) (200) $(2,741) $205 $90,661 The accompanying notes are an integral part of the financial statements.F-6Table of Contents PROGENICS PHARMACEUTICALS, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(amounts in thousands) Years Ended December 31, 2015 2014 2013 Cash flows from operating activities: Net (loss) income $(39,119) $4,410 $(42,572)Adjustments to reconcile net (loss) income to net cash (used in) provided by operatingactivities: Depreciation and amortization 565 545 939 (Gains) losses on sales of fixed assets (2) (110) 204 Intangible impairment charge - 2,676 919 Deferred income tax (133) (989) (362)Change in contingent consideration liability 1,600 1,500 (200)Expenses for share-based compensation awards 2,948 3,523 3,546 Acquisition of subsidiary escrow shares returned - (82) - Changes in assets and liabilities: (Increase) decrease in accounts receivable (3,415) 2,770 4,114 (Increase) decrease in other current assets (3,058) (572) 336 (Increase) decrease in deferred tax and other assets (1,535) - 2,044 Increase (decrease) in accounts payable and accrued expenses 2,152 58 (1,956)(Decrease) in deferred revenue – current - - (886)(Decrease) in deferred tax and other current liabilities (60) - (2,069)(Decrease) in other liabilities (80) (3) (164)Net cash (used in) provided by operating activities (40,137) 13,726 (36,107)Cash flows from investing activities: Acquisition of subsidiary, net of cash acquired (6,202) - - Cash acquired in acquisition of subsidiary - - 1,888 Capital expenditures (370) (714) (137)Proceeds from sales of fixed assets 48 143 174 Proceeds from redemption of auction rate securities - 2,400 1,100 Net cash (used in) provided by investing activities (6,524) 1,829 3,025 Cash flows from financing activities: Purchase of noncontrolling interests (292) - - Equity issuance costs in connection with acquisition of subsidiary - - (45)Proceeds from public offering of common stock, net of underwriting discounts and commissionsand offering expenses - 37,459 40,078 Proceeds from the exercise of stock options 1,737 428 71 Net cash provided by financing activities 1,445 37,887 40,104 Effect of exchange rate changes on cash 17 - - Net (decrease) increase in cash and cash equivalents (45,199) 53,442 7,022 Cash and cash equivalents at beginning of period 119,302 65,860 58,838 Cash and cash equivalents at end of period $74,103 $119,302 $65,860 Supplemental disclosure of cash flow information: Contingent consideration liability $$15,700 Stock acquisition consideration $$11,265 The accompanying notes are an integral part of the financial statements. F-7Table of ContentsPROGENICS PHARMACEUTICALS, INC .NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(amounts in thousands, except per share amounts or as otherwise noted)1. Organization and BusinessProgenics Pharmaceuticals, Inc. ("Progenics," "we" or "us") develops innovative medicines and other products for targeting and treating cancer, with apipeline that includes several product candidates in later-stage clinical development. These products in development include therapeutic agents designed toprecisely target cancer (AZEDRA ® , 1095 and PSMA ADC), and imaging agents (1404 and PyL) intended to enable clinicians and patients to accurately visualizeand manage their disease. In addition, as part of its acquisition of EXINI Diagnostics AB ("EXINI") in late 2015, Progenics acquired the EXINI Bone BSI bonescan index product, which is approved for use in Europe, Japan and the U.S. (though not yet available in the U.S.). EXINI Bone BSI is an analytical tool thatemploys an artificial intelligence-based approach to apply techniques of statistical analysis and pattern recognition to quantify the information produced by bonescintigraphy (bone scan) images used to view cancer present in the skeleton. The EXINI Bone BSI tool "reads" bone scans and produces a standard, automatedBone Scan Index quantification.We licensed our first commercial drug, RELISTOR ® (methylnaltrexone bromide) subcutaneous injection for the treatment of opioid induced constipation("OIC"), to Salix Pharmaceuticals, Inc.(a wholly-owned subsidiary of Valeant Pharmaceuticals International, Inc. ("Valeant")). In June 2015, a New DrugApplication for oral RELISTOR (methylnaltrexone bromide) Tablets was submitted by Valeant to the U.S. Food and Drug Administration ("FDA") for thetreatment of OIC in adult patients with chronic non-cancer pain. In September 2015, the FDA assigned this New Drug Application for oral RELISTOR aPrescription Drug User Fee Act action date of April 19, 2016. In September 2014 RELISTOR received an expanded approval from the U.S. Food and DrugAdministration for the treatment of OIC in patients taking opioids for chronic non-cancer pain. We have partnered other internally-developed or acquiredcompounds and technologies with third parties. We continue to consider opportunities for strategic collaborations, out-licenses and other arrangements withbiopharmaceutical companies involving proprietary research, development and clinical programs, and may in the future also in-license or acquire additionaloncology compounds and/or programs.Our current principal sources of revenue from operations are royalty, development and commercial milestones and sublicense revenue-sharing paymentsfrom Valeant's RELISTOR operations. Royalty and milestone payments from RELISTOR depend on success in development and commercialization, which isdependent on many factors, such as Valeant's efforts, decisions by the FDA and other regulatory bodies, competition from drugs for the same or similarindications, and the outcome of clinical and other testing of RELISTOR. In 2014, we recognized a $40 million milestone payment from Valeant related to marketapproval for subcutaneous RELISTOR.We have historically funded our operations to a significant extent from capital-raising. During 2014, we raised $37.5 million in an underwritten publicoffering of 8.75 million shares of common stock at a public offering price of $4.60 per share, and entered into an agreement with an investment bank under whichwe may sell from time to time up to $50 million of our stock. During 2013, we completed an underwritten public offering of 9.8 million shares of common stock ata public offering price of $4.40 per share, resulting in net proceeds of approximately $40.1 million.Progenics commenced principal operations in 1988, became publicly traded in 1997 and throughout has been engaged primarily in research anddevelopment efforts, establishing corporate collaborations and related activities. Certain of our intellectual property rights are held by wholly owned subsidiaries.All of our U.S. operations are conducted at our facilities in Tarrytown, New York, and our international operations are conducted at our facilities in Lund, Sweden.We operate under a single research and development segment.Funding and Financial Matters. At December 31, 2015, we held $74.1 million in cash and cash equivalents, a decrease of $45.2 million from $119.3million at December 31, 2014. We expect that this amount will be sufficient to fund operations as currently anticipated beyond one year. We expect to requireadditional funding in the future, the availability of which is never guaranteed and may be uncertain. We expect that we may continue to incur operating losses forthe foreseeable future. F-8Table of ContentsPROGENICS PHARMACEUTICALS, INC .NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued(amounts in thousands, except per share amounts or as otherwise noted)2. Summary of Significant Accounting Policies Basis of PresentationThe consolidated financial statements have been prepared on the basis of accounting principles generally accepted in the U.S. ("GAAP"). The preparationof financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financialstatements and the accompanying notes. On an ongoing basis, the Company evaluates its estimates, including but not limited to those related to collectability ofreceivables, intangible assets and contingencies. As additional information becomes available or actual amounts become determinable, the recorded estimates arerevised and reflected in the operating results. Actual results could differ from those estimates. Certain expense amounts have been combined in prior periods'financial statements to conform to the current year presentation.ConsolidationThe consolidated financial statements include the accounts of Progenics and its wholly-owned and controlled subsidiaries as of and for the years endedDecember 31, 2015, 2014 and 2013. Consolidation of a subsidiary begins when Progenics obtains control over the subsidiary and ceases when Progenics losescontrol of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed during the year are included in the consolidated financialstatements from the date Progenics gains control until the date Progenics ceases to control the subsidiary. Profit or loss and each component of OtherComprehensive Income are attributed to the equity holders of Progenics and to the noncontrolling interests. All significant intercompany balances and transactionshave been eliminated in consolidation. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.Revenue RecognitionWe recognize revenue from all sources based on the provisions of the SEC's Staff Accounting Bulletin (SAB) No. 104 (SAB 104) and ASC 605 RevenueRecognition. Under ASC 605, delivered items are separate units of accounting, provided (i) the delivered items have value to a collaborator on a stand-alone basis,and (ii) if the arrangement includes a general right of return relative to the delivered item, delivery or performance of the undelivered items is considered probableand substantially in our control. A separate update to ASC 605 provides guidance on the criteria that should be met when determining whether the milestonemethod of revenue recognition is appropriate.If we are involved in a steering or other committee as part of a multiple-deliverable arrangement, we assess whether our involvement constitutes aperformance obligation or a right to participate. For those committees that are deemed obligations, we will evaluate our participation along with other obligationsin the arrangement and will attribute revenue to our participation through the period of our committee responsibilities. We recognize revenue for payments that arecontingent upon performance solely by our collaborator immediately upon the achievement of the defined event if we have no related performance obligations.Reimbursement of costs is recognized as revenue provided the provisions of ASC 605 are met, the amounts are determinable and collection of the relatedreceivable is reasonably assured.Amounts received prior to satisfying the above revenue recognition criteria are recorded as deferred revenue. Amounts not expected to be recognizedwithin one year of the balance sheet date are classified as long-term.Royalty revenue is recognized in the period the sales occur, provided the royalty amounts are fixed or determinable, collection of the related receivable isreasonably assured and we have no remaining performance obligations under the arrangement providing for the royalty. Royalty loss is recognized based uponreported sales deductions in excess of gross sales resulting in net sales (losses) and is recognized in the period net sales (losses) occur. Royalty loss is classified inroyalty income in the consolidated statements of operations and the related accrued royalty loss liability is classified in accounts payable and accrued expenses inthe consolidated balance sheets.During the past three years, we also recognized revenue from sales of research reagents and during 2013 from government research grants, awarded to usby the National Institutes of Health (NIH), which we used in proprietary research programs. NIH grant revenue is recognized as efforts are expended and as relatedprogram costs are incurred. We performed work under the NIH grants on a best-effort basis.F-9Table of ContentsPROGENICS PHARMACEUTICALS, INC .NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued(amounts in thousands, except per share amounts or as otherwise noted)In January 2016, Valeant entered into a distribution agreement with Swedish Orphan Biovitrum AB (publ), also known as Sobi, for RELISTOR inWestern Europe, Russia, Greece.During the fourth quarter of 2015 we recognized $1.5 million milestone revenue under our agreement with CytoDyn Inc. as a result of CytoDyn dosing ofthe first patient in its Phase 3 clinical trial of PRO 140. We are eligible for future milestone and royalty payments.During 2014 we recognized $40.0 million milestone revenue from Valeant upon U.S. marketing approval for subcutaneous RELISTOR in non-cancerpain patients and $1.0 million milestone revenue from FUJIFILM RI Pharma ("Fuji") upon execution of the first contract by Fuji with an investigation site for aPhase 1 trial of 1404 in Japan.During the third quarter of 2014, Valeant entered into an agreement with Lupin Limited for distribution of RELISTOR in Canada. To date, we did notrecognize any revenue related to this agreement, since terms of the Valeant and Progenics negotiations were not fixed and determinable.Research and Development ExpensesResearch and development expenses include costs directly attributable to the conduct of research and development programs, including the cost ofsalaries, payroll taxes, employee benefits, materials, supplies, maintenance of research equipment, costs related to research collaboration and licensing agreements,the purchase of in-process research and development, the cost of services provided by outside contractors, including services related to our clinical trials, the fullcost of manufacturing drug for use in research, pre-clinical development and clinical trials. All costs associated with research and development are expensed asincurred.At each period end, we evaluate the accrued expense balance related to these activities based upon information received from the suppliers and estimatedprogress towards completion of the research or development objectives to ensure that the balance is reasonably stated. Such estimates are subject to change asadditional information becomes available.Use of EstimatesSignificant estimates include useful lives of fixed assets, the periods over which certain revenues and expenses will be recognized, including collaborationrevenue recognized from non-refundable up-front licensing payments and expense recognition of certain clinical trial costs which are included in research anddevelopment expenses, the amount of non-cash compensation costs related to share-based payments to employees and non-employees and the periods over whichthose costs are expensed, the likelihood of realization of deferred tax assets and the assumptions used in the valuations of in-process research and development andcontingent consideration liability. F-10Table of ContentsPROGENICS PHARMACEUTICALS, INC .NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued(amounts in thousands, except per share amounts or as otherwise noted)PatentsAs a result of research and development efforts conducted by us, we have applied, or are applying, for a number of patents to protect proprietaryinventions. All costs associated with patents are expensed as incurred.Net (Loss) Income Per ShareWe prepare earnings per share (EPS) data in accordance with ASC 260 Earnings Per Share. Basic net (loss) income per share amounts have beencomputed by dividing net (loss) income attributable to Progenics by the weighted-average number of common shares outstanding during the period. For 2015 and2013, we reported net losses and, therefore, potential common shares, amounts of unrecognized compensation expense and windfall tax benefits have beenexcluded from diluted net loss per share since they would be anti-dilutive. For 2014, we reported net income, and the computation of diluted earnings per share isbased upon the weighted-average number of our common shares and dilutive effect, determined using the treasury stock method, of potential common sharesoutstanding including amounts of unrecognized compensation expense. In periods where shares to be issued upon the assumed conversion of the contingentconsideration liability have an anti-dilutive effect on the calculation of diluted earnings per share, these shares are excluded from the calculation.Concentrations of Credit RiskFinancial instruments which potentially subject Progenics to concentrations of risk consist principally of cash, cash equivalents, auction rate securities andreceivables. We invest our excess cash in money market funds. We have established guidelines that relate to credit quality, diversification and maturity and thatlimit exposure to any one issue of securities. We hold no collateral for these financial instruments.Cash and Cash EquivalentsWe consider all highly liquid investments which have maturities of three months or less, when acquired, to be cash equivalents. The carrying amountreported in the balance sheet for cash and cash equivalents approximates its fair value. Cash and cash equivalents subject us to concentrations of credit risk. AtDecember 31, 2015 and 2014, we have invested approximately $62,855 and $112,808, respectively, in cash equivalents in the form of money market funds withone major investment company and held approximately $11,248 and $6,494, respectively, in three commercial banks.Accounts ReceivableWe estimate the level of accounts receivable which ultimately will be uncollectable based on a review of specific receivable balances, industry experienceand the current economic environment. We reserve for affected accounts receivable an allowance for doubtful accounts, which at December 31, 2015 and 2014 was$10 and $10, respectively.Auction Rate SecuritiesIn accordance with ASC 320 Investments – Debt and Equity Securities, investments are classified as available-for-sale. Available-for-sale securities arecarried at fair value, with the unrealized gains and losses reported in comprehensive income (loss). The amortized cost of debt securities is adjusted foramortization of premiums and accretion of discounts to maturity. Such amortization is included in interest income or expense. Realized gains and losses anddeclines in value judged to be other-than-temporary, if any, on available-for-sale securities are included in other income or expense. In computing realized gainsand losses, we compute the cost of its investments on a specific identification basis. Such cost includes the direct costs to acquire the securities, adjusted for theamortization of any discount or premium. The fair value of auction rate securities has been estimated based on a three-level hierarchy for fair value measurements.Interest and dividends on securities classified as available-for-sale are included in interest income.F-11Table of ContentsPROGENICS PHARMACEUTICALS, INC .NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued(amounts in thousands, except per share amounts or as otherwise noted)During the fourth quarter of 2014, all of the $2,208 auction rate securities remaining at December 31, 2013 were redeemed at par. Valuation of securitiesis subject to uncertainties that are difficult to predict, such as changes to credit ratings of the securities and/or the underlying assets supporting them, default ratesapplicable to the underlying assets, underlying collateral value, discount rates, counterparty risk, ongoing strength and quality of market credit and liquidity andgeneral economic and market conditions. The valuation of the auction rate securities we held was based on an internal analysis of timing of expected futuresuccessful auctions, collateralization of underlying assets of the security and credit quality of the security. Due to the settlement of auction rate securities at par inthe fourth quarter of 2014, the temporary impairment amount decreased $192.In-Process Research and Development, Other Identified Intangible Assets and GoodwillThe fair values of in-process research and development ("IPR&D") and other identified intangible assets acquired in business combinations arecapitalized. The Company utilizes the "income method", which applies a probability weighting that considers the risk of development and commercialization to theestimated future net cash flows that are derived from projected sales revenues and estimated costs or "replacement costs", whichever is greater. These projectionsare based on factors such as relevant market size, patent protection, historical pricing of similar products and expected industry trends. The estimated future netcash flows are then discounted to the present value using an appropriate discount rate. This analysis is performed for each IPR&D project and other identifiedintangible assets, independently. IPR&D assets are treated as indefinite-lived intangible assets until completion or abandonment of the projects, at which time theassets are amortized over the remaining useful life or written off, as appropriate. Other identified intangible assets are amortized over the relevant estimated usefullife. The IPR&D assets are tested at least annually or when a triggering event occurs that could indicate a potential impairment and any impairment loss isrecognized in the Consolidated Statements of Operations.Goodwill represents excess consideration in a business combination over the fair value of identifiable net assets acquired. Goodwill is not amortized, butis subject to impairment testing at least annually or when a triggering event occurs that could indicate a potential impairment. The Company determines whethergoodwill may be impaired by comparing the fair value of the reporting unit (the Company has determined that it has only one reporting unit for this purpose),calculated as the product of shares outstanding and the share price as of the end of a period, to its carrying value (for this purpose, the Company's totalstockholders' equity). No goodwill impairment has been recognized as of December 31, 2015 or 2014.Fair Value MeasurementsIn accordance with ASC 820 Fair Value Measurements and Disclosures, we use a three-level hierarchy for fair value measurements of certain assets andliabilities for financial reporting purposes that distinguishes between market participant assumptions developed from market data obtained from outside sources(observable inputs) and our own assumptions about market participant assumptions developed from the best information available to us in the circumstances(unobservable inputs). We assign hierarchy levels to assets constituting our available-for-sale portfolio and to our contingent consideration liability arising from theMolecular Insight Pharmaceuticals, Inc. ("Molecular Insight") acquisition based on our assessment of the transparency and reliability of the inputs used in thevaluation. ASC 820 defines the three hierarchy levels as:· Level 1 - Valuations based on unadjusted quoted market prices in active markets for identical securities. · Level 2 - Valuations based on observable inputs other than Level 1 prices, such as quoted prices for similar assets at the measurement date, quotedprices in markets that are not active or other inputs that are observable, either directly or indirectly. · Level 3 - Valuations based on unobservable inputs that are significant to the overall fair value measurement, which as noted above involve managementjudgment.F-12Table of ContentsPROGENICS PHARMACEUTICALS, INC .NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued(amounts in thousands, except per share amounts or as otherwise noted)Recurring Fair Value MeasurementsWe believe the carrying amounts of the Company's cash equivalents, accounts receivable, other current assets, other assets and accounts payable andaccrued expenses approximated their fair values as of December 31, 2015 and 2014.The fair value of the contingent consideration liability, consisting of future potential milestone payments related to the Molecular Insight acquisition was$18.8 million and $17.2 million as of December 31, 2015 and 2014, respectively. The fair value of the contingent consideration liability is categorized as a Level 3instrument, as displayed in Note 4. The Company records the contingent consideration liability at fair value with changes in estimated fair values recorded in theConsolidated Statements of Operations. During 2015, we reassessed the fair value of the contingent consideration and recorded a $1.6 million increase, primarilydue to decrease in discount period and an increase in the risk-free rate. The December 31, 2015 contingent consideration of $18.8 million results from probabilityadjusted discounted cash flows and Monte Carlo simulation models which include estimates of significant milestone payments to former Molecular Insightstockholders under the acquisition agreement ranging from 2019 to 2025 and risk adjusted discount rates of 10% and 3.5% for the milestone-based and net salestargets, respectively. During 2014, we reassessed the fair value of the contingent consideration and recorded a $1.5 million increase primarily due to higherprobability of success for 1404, partially offset by a decrease due to lower projected revenues for MIP-1095.Nonrecurring Fair Value MeasurementsThe Company's non-financial assets, such as intangible assets and property and equipment, are measured and recorded at fair value on the acquisitiondate, and if indicators of impairment exist, we assess recoverability by measuring the amount of any impairment by comparing the carrying value of the asset to itsthen-current estimated fair value (for intangible assets) or to market prices for similar assets (for property and equipment). If the carrying value is not recoverablewe record an impairment charge in the Consolidated Statements of Operations. No impairments occurred for the year ended December 31, 2015. The companyreassessed the value of the indefinite lived intangible assets and recorded a non-cash charge to earnings of $2,676 and $919 in 2014 and 2013, respectively. Theseimpairments were the result of changes in the Level 3 assumptions as follows: the timing of beginning cash inflows from 2021 to 2024 and a decrease in discountrate from 20% to 13.5% for the MIP-1095 intangible asset, in addition to the third quarter 2014 and fourth quarter 2013 impairments of the ONALTA TMindefinite-lived and finite-lived intangible assets, resulting from decreased probabilities of success. In connection with the second quarter 2013 amendment of theCompany's Tarrytown lease, we recognized impairment losses of $347 on leasehold improvements and machinery and equipment removed from service, which areincluded in research and development expenses in our accompanying Consolidated Statements of Operations for the year ended December 31, 2013.Other current assets are comprised of prepaid expenses, interest and other receivables of $5,639 and $2,515 at December 31, 2015 and 2014, respectively,which are expected to be settled within one year. Restricted cash, included in other assets, of $1,692 at December 31, 2015 and $157 at December 31, 2014represents collateral for letters of credit securing lease obligations. We believe the carrying value of these assets approximates fair value and are considered Level 1assets.Fixed AssetsLeasehold improvements, furniture and fixtures, and equipment are stated at cost. Furniture, fixtures and equipment are depreciated on a straight-linebasis over their estimated useful lives. Leasehold improvements are amortized on a straight-line basis over the life of the lease or of the improvement, whichever isshorter. Costs of construction of long-lived assets are capitalized but are not depreciated until the assets are placed in service.F-13Table of ContentsPROGENICS PHARMACEUTICALS, INC .NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued(amounts in thousands, except per share amounts or as otherwise noted)Expenditures for maintenance and repairs which do not materially extend the useful lives of the assets are charged to expense as incurred. The cost andaccumulated depreciation of assets retired or sold are removed from the respective accounts and any gain or loss is recognized in operations. The estimated usefullives of fixed assets are as follows:Computer equipment3 yearsMachinery and equipment5-7 yearsFurniture and fixtures5 yearsLeasehold improvementsEarlier of life of improvement or lease Deferred Lease Liability and IncentiveOur lease agreements include fixed escalations of minimum annual lease payments and we recognize rental expense on a straight-line basis over the leaseterms and record the difference between rent expense and current rental payments as deferred lease liability. Deferred lease incentive includes a constructionallowance from our landlord which is amortized as a reduction to rental expense on a straight-line basis over the lease term. As of December 31, 2015 and 2014,the Consolidated Balance Sheets include the following: 2015 2014Other current liabilities: Deferred lease incentive $115 $115 Other liabilities: Deferred lease liability $402 $336Deferred lease incentive 460 575Income TaxesWe account for income taxes in accordance with the provisions of ASC 740 Income Taxes, which requires that we recognize deferred tax liabilities andassets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assetsand liabilities are determined on the basis of the difference between the tax basis of assets and liabilities and their respective financial reporting amounts(temporary differences) at enacted tax rates in effect for the years in which the temporary differences are expected to reverse. A valuation allowance is establishedfor deferred tax assets for which realization is uncertain.F-14Table of ContentsPROGENICS PHARMACEUTICALS, INC .NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued(amounts in thousands, except per share amounts or as otherwise noted)In accordance with ASC 718 Compensation – Stock Compensation and ASC 505 Equity, we have made a policy decision related to intra-period taxallocation, to account for utilization of windfall tax benefits based on provisions in the tax law that identify the sequence in which amounts of tax benefits are usedfor tax purposes (i.e., tax law ordering).Uncertain tax positions are accounted for in accordance with ASC 740 Income Taxes, which prescribes a comprehensive model for the manner in which acompany should recognize, measure, present and disclose in its financial statements all material uncertain tax positions that we have taken or expect to take on atax return. ASC 740 applies to income taxes and is not intended to be applied by analogy to other taxes, such as sales taxes, value-add taxes, or property taxes. Wereview our nexus in various tax jurisdictions and our tax positions related to all open tax years for events that could change the status of our ASC 740 liability, ifany, or require an additional liability to be recorded. Such events may be the resolution of issues raised by a taxing authority, expiration of the statute of limitationsfor a prior open tax year or new transactions for which a tax position may be deemed to be uncertain. Those positions, for which management's assessment is thatthere is more than a 50 percent probability of sustaining the position upon challenge by a taxing authority based upon its technical merits, are subjected to themeasurement criteria of ASC 740. We record the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement witha taxing authority having full knowledge of all relevant information. Any ASC 740 liabilities for which we expect to make cash payments within the next twelvemonths are classified as "short term." In the event that we conclude that we are subject to interest and/or penalties arising from uncertain tax positions, we willrecord interest and penalties as a component of income taxes (see Note 13).Risks and UncertaintiesWe have to date relied principally on external funding, collaborations with Valeant, Fuji and others, out-licensing and asset sale arrangements, royalty andproduct revenue to finance our operations. There can be no assurance that our research and development will be successfully completed, that any productsdeveloped will obtain necessary marketing approval by regulatory authorities or that any approved products will be commercially viable. In addition, we operate inan environment of rapid change in technology, and we are dependent upon satisfactory relationships with our partners and the continued services of our currentemployees, consultants and subcontractors. We are also dependent upon Valeant and Fuji fulfilling their manufacturing obligations, either on their own or throughthird-party suppliers. For 2015, 2014 and 2013, the primary sources of our revenues were royalty and milestone payments. There can be no assurance that suchrevenues will continue. Substantially all of our accounts receivable at December 31, 2015 and 2014 were from the above-named sources.Foreign Currency TranslationOur international subsidiaries generally consider their local currency to be their functional currency. Assets and liabilities of these internationalsubsidiaries are translated into U.S. dollars at year-end exchange rates and revenues and expenses are translated at average exchange rates during the year. Foreigncurrency translation adjustments for the year are included in other comprehensive income or loss in the consolidated statements of comprehensive (loss) income,and the cumulative effect is included in the stockholders' equity section of the consolidated balance sheets. Realized gains and losses from currency exchangetransactions are recorded in operating expenses in the consolidated statements of operations and were not material to our consolidated results of operations in 2015,2014 or 2013.F-15Table of ContentsPROGENICS PHARMACEUTICALS, INC .NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued(amounts in thousands, except per share amounts or as otherwise noted)Comprehensive Income (Loss)Comprehensive income (loss) represents the change in net assets of a business enterprise during a period from transactions and other events andcircumstances from non-owner sources. Our comprehensive (loss) income includes net (loss) income adjusted for the changes in foreign currency translationadjustment and net change in unrealized loss on auction rate securities. The disclosures required by ASC 220 Comprehensive Income for 2015, 2014 and 2013have been included in the Consolidated Statements of Comprehensive (Loss) Income. There was no income tax expense/benefit allocated to any component ofOther Comprehensive (Loss) Income (see Note 13).Legal ProceedingsFrom time to time, we may be a party to legal proceedings in the course of our business. The outcome of any such proceedings, regardless of the merits, isinherently uncertain. The assessment of whether a loss is probable or reasonably possible, and whether the loss or a range of loss is estimable, often involves aseries of complex judgments about future events. The Company records accruals for contingencies to the extent that the occurrence of the contingency is probableand the amount of liability is reasonably estimable. If the reasonable estimate of liability is within a range of amounts and some amount within the range appears tobe a better estimate than any other, then the Company records that amount as an accrual. If no amount within the range is a reasonable estimate, then the Companyrecords the lowest amount as an accrual. Loss contingencies that are assessed as remote are not reported in the financial statements, or in the notes to theconsolidated financial statements.Impact of Recently Issued and Adopted Accounting StandardsIn February 2016, the FASB issued ASU 2016-02 ("ASU 2016-02"), Leases (Topic 842) , which requires lessees to recognize leases on their balancesheets, and leaves lessor accounting largely unchanged. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018 and interimperiods within those fiscal years. Early application is permitted for all entities. ASU 2016-02 requires a modified retrospective approach for all leases existing at, orentered into after, the date of initial application, with an option to elect to use certain transition relief. We are currently evaluating the impact of this new standardon our consolidated financial statements.In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities . The standard requiresequity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fairvalue with changes in fair value recognized in net income, and separate presentation of financial assets and financial liabilities by measurement category and formof financial asset. Additionally, the standard eliminates the requirement to disclose the methods and significant assumptions used to estimate the fair value offinancial instruments. The amendment is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Other than anamendment relating to presenting in comprehensive income the portion of the total change in the fair value of a liability resulting from a change in instrument-specific credit risk (if the entity has elected to measure the liability at fair value), early adoption is not permitted. We are evaluating the impact that this guidancewill have on our consolidated financial statements.In November 2015, the FASB issued ASU No. 2015-17 ("ASU 2015-17"), Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes .The standard requires that deferred tax assets and liabilities be classified as noncurrent on the balance sheet rather than being separated into current andnoncurrent. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption is permitted and thestandard may be applied either retrospectively or on a prospective basis to all deferred tax assets and liabilities. We early adopted ASU 2015-17 during fiscal year2015 on a prospective basis. Accordingly, we have classified all deferred taxes as noncurrent on our December 31, 2015 Consolidated Balance Sheet.F-16Table of ContentsPROGENICS PHARMACEUTICALS, INC .NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued(amounts in thousands, except per share amounts or as otherwise noted)In September 2015, the FASB issued ASU No. 2015-16 ("ASU 2015-16"), Business Combinations (Topic 805): Simplifying the Accounting forMeasurement-Period Adjustments . This amendment requires the acquirer in a business combination to recognize in the reporting period in which adjustmentamounts are determined any adjustments to provisional amounts that are identified during the measurement period, calculated as if the accounting had beencompleted at the acquisition date. Prior to the issuance of ASU 2015-16, an acquirer was required to restate prior period financial statements as of the acquisitiondate for adjustments to provisional amounts. The amendments in ASU 2015-16 are to be applied prospectively upon adoption. We do not expect the adoption ofASU 2015-16 to have a material effect on our consolidated financial position, results of operations or cash flows.In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) , which provides a single model for revenuearising from contracts with customers and supersedes current revenue recognition guidance. This ASU provides that an entity should recognize revenue to depicttransfers of promised goods or services to customers in amounts reflecting the consideration to which the entity expects to be entitled in the transaction by: (1)identifying the contract; (2) identifying the contract's performance obligations; (3) determining the transaction price; (4) allocating the transaction price to theperformance obligations; and (5) recognizing revenue when or as the entity satisfies the performance obligations. The ASU will be effective for annual reportingperiods beginning after December 15, 2016, including interim periods. In August 2015, the FASB issued an ASU deferring the effective date by one year, forinterim and annual reporting periods beginning after December 15, 2017. Early adoption will be permitted for annual reporting periods beginning afterDecember 15, 2016 and interim periods therein. The guidance permits companies to apply the requirements either retrospectively to all prior periods presented orin the year of adoption through a cumulative adjustment. We are evaluating which transition approach to use and the impact of this ASU on our consolidatedfinancial statements.In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern . This ASUwill explicitly require management to assess an entity's ability to continue as a going concern, and to provide related footnote disclosure in certain circumstances.The new standard will be effective in the first annual period ending after December 15, 2016, unless we adopt it earlier. The adoption of this ASU is not expectedto have a material impact on our consolidated financial statements and consolidated notes to these statements.3. Acquisitions, Goodwill and Acquired Intangible AssetsAcquisition of EXINIOn November 12, 2015, we acquired 92.45% of the outstanding shares of EXINI, a leader in the development of advanced imaging analysis tools andsolutions for medical decision support, through a public tender offer to the shareholders of EXINI. EXINI's operations are included in the Consolidated FinancialStatements beginning November 12, 2015, the date we acquired control. Through the end of the extended acceptance period of November 20, 2015, we haveacquired additional outstanding shares and as of December 31, 2015 we own 96.81% of the voting shares of EXINI. We have commenced a judicial process inSweden for acquiring the remaining shares and EXINI was delisted and ceased to be publicly traded effective as of the close of trading on December 4, 2015.EXINI, headquartered in Lund, Sweden, is expected to complement Progenics's strategy to support its imaging and therapeutic agents with sophisticatedanalytical tools and other technologies that help physicians and patients visualize, understand, target and treat cancer. The acquisition provides us with in-housedevelopment capabilities in these areas that we can apply to our own pipeline, including our prostate cancer imaging agents 1404 and PyL.During the year ended December 31, 2015, the Company incurred $391 in transaction costs related to the acquisition, which primarily consisted of legal,accounting and valuation-related expenses. The transaction costs were recorded in general and administrative expenses in the accompanying consolidatedstatements of operations. EXINI's business contributed $76 of revenues and $210 of net loss for the period from November 12, 2015 to December 31, 2015.F-17Table of ContentsPROGENICS PHARMACEUTICALS, INC .NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued(amounts in thousands, except per share amounts or as otherwise noted)Purchase Price Allocation : We have accounted for the EXINI acquisition as a business combination by allocating the consideration we paid to the fairvalues of the assets acquired, liabilities assumed and noncontrolling interests at the effective date of the acquisition. Acquired intangible assets, including goodwill,are not deductible for tax purposes.The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date. Amount Cash and cash equivalents $7 Accounts receivable 18 Other current assets 108 Fixed assets 22 Accounts payable and accrued expenses (807)Other current liabilities (127)Intangible assets – technology 2,120 Total identifiable net assets 1,341 Noncontrolling interests (504)Goodwill 5,372 Total consideration transferred $6,209 The replacement cost method, a variation of the cost approach, was applied to assess the value of the technology asset acquired by Progenics. Theprinciple behind this method is that the value represents the current cost of a similar new asset having the nearest equivalent utility as the asset being valued. Itgenerally represents the maximum amount that a prudent investor will pay for a comparable asset. The cost approach provides a systematic framework forestimating the value of tangible or intangible assets based on the economic principle of substitution, and that no prudent investor will purchase an existing asset formore than it will cost to create a comparable asset. Under this approach, value is estimated by developing the cost to either replace or reproduce (replicate) theasset of similar utility.Our approach to valuing the acquired technology asset was to determine the total employee cost and effort required to replicate the technology asset in thestate it existed at the acquisition date. In determining the total all-inclusive, fully-burdened employee cost to replicate the technology asset, we determined that itwould take approximately four years of five senior employees working full-time to recreate the technology asset of similar utility. We then took the present value,discounted at 3.5%, of the total fully-burdened annual cost of these senior employees (including annual salary, bonuses, and benefits) to arrive at a total employeecost to recreate the technology asset acquired of $2,120. Based on our assessment of the acquired technology functionality, rate of technological change in theindustry and in our Company, as well as our experience with similar technology assets, we expect the remaining useful life for this acquired asset to beapproximately 10 years.The noncontrolling interests were calculated based on the quoted share price of EXINI as of the acquisition date times the quantity of shares thatconstituted the noncontrolling interests.F-18Table of ContentsPROGENICS PHARMACEUTICALS, INC .NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued(amounts in thousands, except per share amounts or as otherwise noted)Goodwill and Acquired Intangible AssetsIn connection with the 2015 acquisition of EXINI and the 2013 acquisition of Molecular Insight, intangible assets and goodwill were initially measured atthe acquisition date at estimated fair value and capitalized.Third and fourth quarter 2014 reviews of our Molecular Insight intangible assets resulted in $2,660 impairments of the indefinite-lived balance and a $16impairment of the finite-lived balance, with the corresponding impairment charges recorded in the Consolidated Statements of Operations.The following table summarizes the activity related to goodwill and intangible assets: Goodwill IPR&D Finite-livedintangibleassets Balance at January 1, 2014 $7, 702 $31,360 $19 Amortization expense - - (3)Impairment - (2,660) (16)Balance at December 31, 2014 $7,702 $28,700 - Increase related to EXINI acquisition 5,372 - 2,120 Amortization expense - - (27)Impairment - - - Balance at December 31, 2015 $13,074 $28,700 $2,093 The following table reflects the components of the finite-lived intangible assets as of December 31, 2015: GrossAmount AccumulatedAmortization NetCarryingValue Finite lived intangible assets $2,120 $27 $2,093 Total $2,120 $27 $2,093 The weighted-average remaining life of the finite-lived intangible assets was approximately ten years at December 31, 2015.F-19Table of ContentsPROGENICS PHARMACEUTICALS, INC .NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued(amounts in thousands, except per share amounts or as otherwise noted)Amortization expense was calculated on a straight-line basis over the estimated useful life of the asset and was $27 and $3 for the year ended December31, 2015 and 2014, respectively.4. Fair Value MeasurementsThe change in the fair value of our auction rate securities was recorded as a component of other comprehensive (loss) income in accordance with ASC320 Investments – Debt and Equity Securities in 2013. We also record the contingent consideration liability resulting from the Molecular Insight acquisition at fairvalue in accordance with ASC 820-10-50.The following tables present our money market funds, included in cash and cash equivalents, and contingent consideration liability measured at fair valueon a recurring basis as of the dates indicated, classified by valuation hierarchy: Fair Value Measurements at December 31, 2015 Balance atDecember 31,2015 QuotedPrices inActiveMarkets forIdenticalAssets(Level 1) Significant OtherObservable Inputs(Level 2) SignificantUnobservableInputs(Level 3)Assets: Money market funds $62,855 $62,855 $- $-Total Assets $62,855 $62,855 $- $- Liability: Contingent consideration $18,800 $- $- $18,800Total Liability $18,800 $- $- $18,800 Fair Value Measurements at December 31, 2014 Balance atDecember 31,2014 QuotedPrices inActiveMarkets forIdenticalAssets(Level 1) Significant OtherObservable Inputs(Level 2) SignificantUnobservableInputs(Level 3)Assets: Money market funds $112,808 $112,808 $- $-Total Assets $112,808 $112,808 $- $- Liability: Contingent consideration $17,200 $- $- $17,200Total Liability $17,200 $- $- $17,200F-20Table of ContentsPROGENICS PHARMACEUTICALS, INC .NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued(amounts in thousands, except per share amounts or as otherwise noted)The estimated fair value of the contingent consideration liability of $18,800 as of December 31, 2015, represents future potential milestone payments toformer Molecular Insight stockholders. The Company considers this liability a Level 3 instrument (one with significant unobservable inputs) in the fair valuehierarchy. The estimated fair value was determined based on probability adjusted discounted cash flow and Monte Carlo simulation models that includedsignificant estimates and assumptions pertaining to commercialization events and sales targets. The most significant unobservable inputs were the probabilities ofachieving regulatory approval of the development projects and subsequent commercial success, and discount rates.Significant changes in any of the probabilities of success would result in a significantly higher or lower fair value measurement, respectively. Significantchanges in the probabilities as to the periods in which milestones will be achieved would result in a significantly lower or higher fair value measurement,respectively. The Company records the contingent consideration liability at fair value with changes in estimated fair values recorded in change in contingentconsideration liability in the Consolidated Statements of Operations.The following tables present quantitative information pertaining to the December 31, 2015 and 2014 fair value measurements of the Level 3 inputs. The2015 increase in the contingent consideration liability of $1,600 resulted primarily from a decrease in the discount period, a 0.2% increase in the risk-free rate anda 5% increase in asset volatility which affects the probability adjusted cash flow. Fair Value asofDecember 31,2015 Valuation Technique Unobservable Input Range(WeightedAverage) Contingent consideration liability: AZEDRA commercialization $2,500 Probability adjusted discounted cashflow model Probability of success 40% Period of milestone expectedachievement 2018 Discount rate 10% 1404 commercialization $4,200 Probability adjusted discounted cashflow model Probability of success 59% Period of milestone expectedachievement 2019 Discount rate 10% MIP-1095 commercialization $500 Probability adjusted discounted cashflow model Probability of success 19% Period of milestone expectedachievement 2023 Discount rate 10% Net sales targets $11,600 Monte-Carlo simulation Probability of success 19% - 59%(37.4%) Period of milestone expectedachievement 2019 – 2025 Discount rates (1) 12% / 3.5% F-21Table of ContentsPROGENICS PHARMACEUTICALS, INC .NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued(amounts in thousands, except per share amounts or as otherwise noted) Fair Value asofDecember 31,2014 Valuation Technique Unobservable Input Range(WeightedAverage) Contingent consideration liability: AZEDRA commercialization $2,300 Probability adjusted discounted cashflow model Probability of success 40% Period of milestone expectedachievement 2018 Discount rate 10% 1404 commercialization $3,800 Probability adjusted discounted cashflow model Probability of success 59% Period of milestone expectedachievement 2019 Discount rate 10% MIP-1095 commercialization $400 Probability adjusted discounted cashflow model Probability of success 19% Period of milestone expectedachievement 2023 Discount rate 10% Net sales targets $10,700 Monte-Carlo simulation Probability of success 19% - 59%(37.4%) Period of milestone expectedachievement 2019 - 2026 Discount rate (1) 12% / 3.5% (1) At December 31, 2015 and 2014, net sales targets contingent consideration liability was derived from a model under a risk neutral framework resulting in the application of 12% and 3.5%discount rates to estimated cash flows.For those financial instruments with significant Level 3 inputs, the following table summarizes the activities for the periods indicated: Liability – ContingentConsiderationFair Value MeasurementsUsing SignificantUnobservable Inputs(Level 3)Description 2015 2014Balance at beginning of period $17,200 $15,700Fair value adjustment to contingent consideration included in net (loss)income 1,600 1,500Balance at end of period $18,800 $17,200Changes in unrealized gains or losses for the period included in earnings (orchanges in net assets) for liabilities held at the end of the reporting period $1,600 $1,500F-22Table of ContentsPROGENICS PHARMACEUTICALS, INC .NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued(amounts in thousands, except per share amounts or as otherwise noted)5. Accounts ReceivableOur accounts receivable represent amounts due to Progenics from collaborators, royalties and the sales of research reagents, and as of December 31, 2015and 2014, consisted of the following: 2015 2014 Collaborators $63 $14 Royalties 3,463 40 Other 27 65 3,553 119 Less, allowance for doubtful accounts (10) (10)Total $3,543 $109 6. Fixed AssetsFixed assets as of December 31, 2015 and 2014 consisted of the following: 2015 2014 Computer equipment $1,727 $1,784 Machinery and equipment 5,706 5,238 Furniture and fixtures 131 116 Leasehold improvements 5,027 5,027 Other 87 208 12,678 12,373 Less, accumulated depreciation and amortization (10,271) (9,821)Total $2,407 $2,552 F-23Table of ContentsPROGENICS PHARMACEUTICALS, INC .NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued(amounts in thousands, except per share amounts or as otherwise noted)At December 31, 2015 and 2014, $1.5 million and $1.8 million, respectively, of leasehold improvements, net were being amortized over periods of 6.4-10.8 years, under leases with terms through December 31, 2020.7. Accounts Payable and Accrued ExpensesAccounts payable and accrued expenses as of December 31, 2015 and 2014, consisted of the following: 2015 2014Accrued consulting and clinical trial costs $2,960 $2,662Accrued payroll and related costs 1,845 1,722Legal and professional fees 3,605 1,063Accounts payable and other 452 1,040Other 682 83Total $9,544 $6,570 8. RestructuringWe incurred a $0.4 million headcount reduction restructuring obligation in the first quarter of 2014, which was fully paid as of the end of the third quarter2014. A first quarter 2013 headcount reduction resulted in a $1.5 million restructuring obligation paid that year. During the second quarter of 2013, we incurredother exit and contract termination costs, including in connection with termination of a Molecular facilities lease ($0.9 million) and amendment and consolidationof the Company's facilities lease ($0.5 million).Activity in the restructuring accrual, which is included in accounts payable and accrued expenses in our Consolidated Balance Sheets, and in research anddevelopment and general and administrative expenses in the Consolidated Statements of Operations, is specified below. Severance andRelated Benefits Other ExitCosts ContractTerminationCosts TotalRestructuringAccrual Balance at December 31, 2012 $813 $- $- $813 Additions, net 1,492 15 1,359 2,866 Payments (2,305) (15) (1,359) (3,679)Balance at December 31, 2013 - - - - Additions, net 359 - - 359 Payments (359) - - (359)Balance at December 31, 2014 and 2015 $- $- $- $- F-24Table of ContentsPROGENICS PHARMACEUTICALS, INC .NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued(amounts in thousands, except per share amounts or as otherwise noted)9. Stockholders' EquityWe are authorized to issue 160.0 million shares of Common Stock, par value $.0013, and 20.0 million shares of preferred stock, par value $.001. TheBoard of Directors has the authority to issue common and preferred shares, in series, with rights and privileges as determined by the Board of Directors. In the firstquarter of 2014 we raised $37,459 in an underwritten public offering of 8,750 shares of common stock, and entered into an agreement with an investment bankunder which we may sell from time to time up to $50,000 of our stock. In July 2013 we completed a public offering of 9,775 shares of common stock, with netproceeds of approximately $40,078.10. Commitments and Contingenciesa. Operating LeasesAt December 31, 2015, we leased laboratory and office space in Tarrytown, New York, pursuant to lease agreements expiring in December 2020 (subjectto an early termination right), and additional office space in Lund, Sweden.On December 31, 2015, in connection with its decision to relocate its headquarters, the Company entered into a lease for office space located in NewYork City expiring on September 30, 2030. The Company intends to use the leased premises as its headquarters and expects the lease term to commence in thesecond half of 2016. Rental payments are recognized as rent expense on a straight-line basis over the term of the lease. In addition to rents due under these agreements, we areobligated to pay additional facilities charges, including utilities, taxes and operating expenses.As of December 31, 2015, future minimum annual payments under all operating lease agreements are as follows:Years ending December 31, MinimumAnnual Payments2016 $2,0242017 3,8252018 3,9072019 3,9012020 3,987Thereafter 22,567Total $40,211Rental expense totaled approximately $1,864, $1,864 and $3,548 for 2015, 2014 and 2013, respectively. For 2015, 2014 and 2013, amounts paid exceededrent expense by $49, $3 and $164, respectively, due to the recognition of lease incentives. Additional facility charges, including utilities, taxes and operatingexpenses, for 2015, 2014 and 2013 were approximately $2,456, $2,117 and $2,330, respectively.F-25Table of ContentsPROGENICS PHARMACEUTICALS, INC .NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued(amounts in thousands, except per share amounts or as otherwise noted)b. Licensing, Service and Supply AgreementsProgenics and its subsidiaries have entered into intellectual property-based license and service agreements in connection with product developmentprograms, and have incurred milestone, license and sublicense fees and supply costs, included in research and development expenses, totaling approximately $388,$498 and $567 during the last three years, respectively. Paid frominception/acquisitionto December 31,2015 Future (1)Commitments TermsSeattle Genetics, Inc. $4,601 $13,800 Milestone and periodic maintenance payments to use ADCtechnology to link chemotherapeutic agents to monoclonalantibodies that target prostate specific membrane antigen.ADC technology is based in part on technology licensed bySGI from third parties. Amgen Fremont, Inc. (formerly Abgenix) 1,350 5,750 Milestones and royalties to use XenoMouse ® technologyfor generating fully human antibodies to PSMA LLC'sPSMA antigen. Former member of PSMA LLC 353 52,188 Annual minimum royalty payments and milestones to usetechnology related to PSMA. University of Zurich and the Paul Scherrer Institute 270 1,070 Annual maintenance and license fee payments, milestonesand royalties in respect of licensed technology related to1404. University of Western Ontario 27 274 Annual minimum royalty, administration and milestonepayments in respect of licensed technology related toAZEDRA. Johns Hopkins University Technology 150 2,760 Annual minimum royalty payments and milestones to usetechnology related to PyL. (1) Amounts based on known contractual obligations as specified in the respective license agreements, which are dependent on the achievement or occurrence of future milestones or events andexclude amounts for royalties which are dependent on future sales and are unknown.In addition, we are planning to out-license or terminate non-germane Molecular Insight licenses and service agreements, as to which we have paid $251through December 31, 2015, and have future commitments of $14,375, subject to occurrence of future milestones or events.F-26Table of ContentsPROGENICS PHARMACEUTICALS, INC .NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued(amounts in thousands, except per share amounts or as otherwise noted)c. Consulting AgreementsAs part of our research and development efforts, we have from time to time entered into consulting agreements with external scientific specialists. Theseagreements contain various terms and provisions, including fees to be paid by us and royalties, in the event of future sales, and milestone payments, uponachievement of defined events, payable by us. Certain of these scientists are advisors to Progenics, and some have purchased our Common Stock or received stockoptions which are subject to vesting provisions. We have recognized expenses with regard to the consulting agreements of $54, $67 and $39 for 2015, 2014 and2013, respectively. Those expenses include the fair value of stock options granted during 2013, of approximately $6, $17 and $7 for 2015, 2014 and 2013,respectively. Such amounts of fair value are included in research and development expense for each year presented (see Note 11).d. Related Party AgreementIn December 2012, Progenics entered into a financial advisory agreement with MTS Health Partners, L.P., of which the Company's Board Chair is aSenior Managing Director and partner, whereby, in 2013, MTS received monthly retainers totaling $55 during the term of the agreement and $300 for MTS'services in connection with the Molecular Insight acquisition. This agreement was terminated in June 2013.e. Legal ProceedingsProgenics is a party to a proceeding brought by a former employee on November 2, 2010 in the U.S. District Court for the Southern District of New York,complaining that Progenics had violated the anti-retaliation provisions of the federal Sarbanes-Oxley law by terminating the former employee. The formeremployee seeks reinstatement of his employment, compensatory damages and certain costs and fees associated with the litigation. In July 2013, the federal DistrictCourt hearing the case issued an order denying our motion for summary judgment dismissing the former employee's complaint. The case went to trial in July 2015and on July 31, 2015 the jury awarded the former employee approximately $1.66 million in compensatory damages (held in escrow by the District Court asrestricted cash and recorded in other current assets) primarily consisting of salary the former employee would have received during the period from his terminationto the date of the verdict. We have accrued an amount in connection with this matter which we believe is probable and estimable. Certain ancillary matters in thecase, including the former employee's claims for additional compensation, pre-judgment interest and the awarding of attorneys' fees, remain subject to dispute.Given that there are matters yet to be decided and an estimate of the additional exposure, if any, has yet to be determined there is a reasonable possibility thatadditional losses may be incurred. Progenics has moved for a new trial or, in the alternative, for remittitur and continues to assess the verdict and its options in thecase, including a potential appeal.In July 2015, Progenics was named as a defendant in a complaint brought by Lonza Sales AG ("Lonza") in the U.S. District Court for the District ofDelaware arising from a multi-product license agreement entered into by Progenics and Lonza in April 2010. The complaint alleged that Progenics breached themulti-product license agreement and misappropriated trade secrets in connection with Progenics' sale of certain assets relating to the PRO 140 product to a thirdparty, and sought unspecified damages and injunctive relief. On November 3, 2015, the District Court of Delaware denied Progenics' motion to dismiss the case.On November 17, 2015, Progenics answered Lonza's complaint and brought certain counterclaims against Lonza. On February 9, 2016, Progenics and Lonzaagreed to settle and release their respective claims and to dismiss the litigation and, on February 19, 2016, the case was dismissed by the United States DistrictCourt for the District of Delaware. Other than the granting of the mutual releases, no consideration or damages were paid by either party to the other in connectionwith the settlement of the litigation.On October 7, 2015 Progenics, Valeant and Wyeth LLC received notification of a Paragraph IV certification for certain patents for RELISTOR ®(methylnaltrexone bromide) subcutaneous injection, which are listed in the FDA's Approved Drug Products with Therapeutic Equivalence Evaluations, or theOrange Book. The certification resulted from the filing by Mylan Pharmaceuticals, Inc. of an Abbreviated New Drug Application ("ANDA") with the FDA,challenging such patents for RELISTOR subcutaneous injection and seeking to obtain approval to market a generic version of RELISTOR subcutaneous injectionbefore some or all of these patents expire.F-27Table of ContentsPROGENICS PHARMACEUTICALS, INC .NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued(amounts in thousands, except per share amounts or as otherwise noted)On October 28, 2015, Progenics, Valeant and Wyeth LLC (Valeant's predecessor as licensee of RELISTOR) received a second notification of a ParagraphIV certification with respect to the same patents for RELISTOR subcutaneous injection from Actavis LLC as a result of Actavis LLC's filing of an ANDA with theFDA, also challenging these patents and seeking to obtain approval to market a generic version of RELISTOR subcutaneous injection before some or all of thesepatents expire.In accordance with the Drug Price Competition and Patent Term Restoration Act (commonly referred to as the Hatch-Waxman Act), Progenics andValeant timely commenced litigation against each of these ANDA filers in order to obtain an automatic stay of FDA approval of the ANDA until the earlier of (i)30 months from receipt of the notice or (ii) a District Court decision finding that the identified patents are invalid, unenforceable or not infringed.In addition to the above described ANDA notifications, in October 2015 Progenics received notices of opposition to three European patents relating tomethylnaltrexone. The oppositions were filed separately by each of Actavis Group PTC ehf. and Fresenius Kabi Deutschland GmbH.Each of the above-described proceedings is in its early stages and Progenics and Valeant continue to cooperate closely to vigorously defend and enforceRELISTOR intellectual property rights. Pursuant to the RELISTOR license agreement between Progenics and Valeant, Valeant has the first right to enforce theintellectual property rights at issue and is responsible for the costs of such enforcement.Progenics and its affiliates are or may be from time to time involved in various other disputes, governmental and/or regulatory inspections, inquires,investigations and proceedings that could result in litigation, and other litigation matters that arise from time to time. The process of resolving matters throughlitigation or other means is inherently uncertain and it is possible that an unfavorable resolution of these matters will adversely affect the Company, its results ofoperations, financial condition and cash flows.In the third quarter of 2014, Progenics and Ono, its former licensee of RELISTOR in Japan, settled all claims between them relating to an arbitrationcommenced by Progenics in 2013, the parties' October 2008 License Agreement and the former licensee's development and commercialization of the drug. Inconnection therewith, the parties exchanged mutual releases and the former licensee paid Progenics $7.25 million, which was recorded as other operating income.11. Share-Based Payment ArrangementsOur share-based compensation to employees includes non-qualified stock options, restricted stock and shares issued under our Purchase Plans, which arecompensatory under ASC 718 Compensation – Stock Compensation. We account for share-based compensation to non-employees, including non-qualified stockoptions and restricted stock, in accordance with ASC 505 Equity.Compensation cost for share-based awards will be recognized in our financial statements over the related requisite service periods usually the vestingperiods for awards with a service condition. We have made an accounting policy decision to use the straight-line method of attribution of compensation expense,under which the grant date fair value of share-based awards will be recognized on a straight-line basis over the total requisite service period for the total award.F-28Table of ContentsPROGENICS PHARMACEUTICALS, INC .NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued(amounts in thousands, except per share amounts or as otherwise noted)We have adopted two stock incentive plans, the 1996 Amended Stock Incentive Plan (terminated in 2006) and the 2005 Stock Incentive Plan. Under thesePlans as amended, up to 5,000 and 11,450 shares of common stock, respectively, have been reserved for the issuance of awards to employees, consultants, directorsand other individuals who render services to Progenics (collectively, Awardees). The Plans contain anti-dilution provisions in the event of a stock split, stockdividend or other capital adjustment as defined. Each Plan provides for the Board or Committee to grant to Awardees stock options, stock appreciation rights,restricted stock, performance awards or phantom stock, as defined (collectively, Awards). The Committee is also authorized to determine the term and vesting ofeach Award and the Committee may in its discretion accelerate the vesting of an Award at any time. Stock options granted under the Plans generally vest pro rataover three to five years and have terms of ten years. Restricted stock issued under either Plan generally vested annually over three to five years, unless specifiedotherwise by the Committee. The exercise price of outstanding non-qualified stock options is usually equal to the fair value of our common stock on the date ofgrant. The exercise price of non-qualified stock options granted from the 2005 Plan and incentive stock options (ISO) granted from the Plans may not be lowerthan the fair value of our common stock on the dates of grant. At December 31, 2015, 2014 and 2013, all outstanding stock options were non-qualified options. The2005 Plan will terminate on March 25, 2024; options granted before termination of the Plans will continue under the respective Plans until exercised, cancelled orexpired.We apply a forfeiture rate to the number of unvested awards in each reporting period in order to estimate the number of awards that are expected to vest.Estimated forfeiture rates are based upon historical data on vesting behavior of employees. We adjust the total amount of compensation cost recognized for eachaward, in the period in which each award vests, to reflect the actual forfeitures related to that award. Changes in our estimated forfeiture rate will result in changesin the rate at which compensation cost for an award is recognized over its vesting period.Under ASC 718 Compensation – Stock Compensation, the fair value of each non-qualified stock option award is estimated on the date of grant using theBlack-Scholes option pricing model, which requires input assumptions noted in the following table. Ranges of assumptions for inputs are disclosed where the valueof such assumptions varied during the related period. Historical volatilities are based upon daily quoted market prices of our common stock on The NASDAQStock Market LLC over a period equal to the expected term of the related equity instruments. We rely only on historical volatility since it provides the mostreliable indication of future volatility. Future volatility is expected to be consistent with historical; historical volatility is calculated using a simple averagecalculation; historical data is available for the length of the option's expected term and a sufficient number of price observations are used consistently. Since ourstock options are not traded on a public market, we do not use implied volatility. For 2015, 2014 and 2013 our expected term was calculated based upon historicaldata related to exercise and post-termination cancellation activity; accordingly, for grants issued to employees and directors and officers, we are using expectedterms of 5.3 and 7.4 years, 5.3 and 7.5 years and 5.3 and 7.4 years, respectively. The expected term for options granted to non-employees was also calculatedseparately from stock options granted to employees and directors and officers and was ten years, which is the contractual term of those options. We have neverpaid dividends and do not expect to pay dividends in the future. Therefore, our dividend rate is zero. The risk-free rate for periods within the expected term of theoptions is based on the U.S. Treasury yield curve in effect at the time of grant. The following table presents assumptions used in computing the fair value of optiongrants during 2015, 2014 and 2013: 2015 2014 2013 Expected volatility 74 % – 84% 74 % – 84% 73 % – 90%Expected dividends Zero Zero ZeroExpected term (years) 5.3 – 7.4 5.3 – 7.5 5.3 – 10Weighted average expected term (years) 6.04 5.93 5.96Risk-free rate 1.64 % – 2.35% 1.64 % – 2.42% 0.76 % – 2.83%F-29Table of ContentsPROGENICS PHARMACEUTICALS, INC .NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued(amounts in thousands, except per share amounts or as otherwise noted)A summary of option activity under the Plans as of December 31, 2015 and changes during the year then ended is presented below:Options Shares WeightedAverageExercise Price WeightedAverageRemainingContractualTerm (Yr.) AggregateIntrinsic Value Outstanding at January 1, 2015 5,418 $9.96 Granted 1,127 6.88 Exercised (313) 5.54 Forfeited (433) 5.76 Expired (665) 16.63 Outstanding at December 31, 2015 5,134 $9.05 5.69 $2,424Exercisable at December 31, 2015 3,896 $9.97 4.70 $1,765 The weighted average grant-date fair value of options granted under the Plans during 2015, 2014 and 2013 was $5.02, $3.41 and $3.74, respectively. Thetotal intrinsic value of options exercised during 2015, 2014 and 2013 was $465, $102 and $11, respectively.The options granted under the Plans, described above, include non-qualified stock options granted to our former CEO on July 3, 2006. For the 2006award, the requisite service period is the shortest of the explicit or implied service periods and the explicit service period for this award is nine years and 11 monthsfrom the grant date. At December 31, 2015, the estimated requisite service period for the 2006 award was 0.5 years. For 2015, 2014 and 2013, the totalcompensation expense recognized for the performance-based options was $0.1 million, $0.1 million and $0.1 million, respectively.The total compensation expense of shares, granted to both employees and non-employees, under all of our share-based payment arrangements that wasrecognized in operations during 2015, 2014 and 2013 was: 2015 2014 2013Recognized as: Research and Development $1,099 $1,843 $2,012General and Administrative 1,849 1,680 1,534Total $2,948 $3,523 $3,546F-30Table of ContentsPROGENICS PHARMACEUTICALS, INC .NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued(amounts in thousands, except per share amounts or as otherwise noted)No tax benefit was recognized related to such compensation cost because of the Company's net operating losses and the related deferred tax assets werefully offset by valuation allowance. Accordingly, no amounts related to windfall tax benefits have been reported in cash flows from operations or cash flows fromfinancing activities for the periods presented.As of December 31, 2015, there was $4.1 million of total unrecognized compensation costs related to non-vested stock options under the 1996 and 2005Plans. Those costs are expected to be recognized over a weighted average period of 3 years. Cash received from exercises under all share-based paymentarrangements for 2015 was $1.7 million. We issue new shares of our common stock upon share option exercises. 12. Employee Savings PlanThe terms of the amended and restated Progenics Pharmaceuticals 401(k) Plan (the Amended Plan), among other things, allow eligible employees toparticipate in the Amended Plan by electing to contribute to the Amended Plan a percentage of their compensation to be set aside to pay their future retirementbenefits. We matched 50% of employee contributions equal to 1%-10% of compensation during the year ended December 31, 2015 and 50% of employeecontributions equal to 5%-8% of compensation during the two years ended December 31, 2014, made by eligible employees to the Amended Plan (the MatchingContribution). In addition, we may also make a discretionary contribution each year on behalf of all participants who are non-highly compensated employees. Wemade Matching Contributions of approximately $327, $276 and $330 to the Amended Plan for 2015, 2014 and 2013, respectively. No discretionary contributionswere made during those years.13. Income TaxesWe account for income taxes using the liability method in accordance with ASC 740 Income Taxes. Deferred income taxes reflect the net tax effects oftemporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.There is no provision or benefit for federal or state income taxes for 2015, 2014 and 2013, other than $133, $989 and $362 income tax benefit in 2015,2014 and 2013, respectively, resulting from the change in the temporary difference between carrying amounts of in-process research and development assets forfinancial reporting purposes and the amounts used for income tax purposes. We have completed calculations through July 15, 2014, under Internal Revenue CodeSection 382, the results of which indicate that past ownership changes will limit annual utilization of NOLs in the future. Ownership changes subsequent to July15, 2014, may further limit the future utilization of net operating loss and tax credit carry-forwards as defined by the federal and state tax codes.F-31Table of ContentsPROGENICS PHARMACEUTICALS, INC .NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued(amounts in thousands, except per share amounts or as otherwise noted)Deferred tax assets and liabilities as of December 31, 2015 and 2014, consisted of the following: 2015 2014 Deferred tax assets: Depreciation and amortization $2,215 $5,770 R&E tax credit carry-forwards 19,284 18,612 NYS investment tax credit carry-forwards 1,087 1,090 AMT credit carry-forwards 211 211 Net operating loss carry-forwards 226,639 205,792 Capitalized research and development expenditures 15,149 20,280 Stock compensation 12,250 13,848 Other items 2,562 - Total gross deferred tax assets 279,397 265,603 Less: Valuation allowance (279,397) (265,603)Deferred tax assets - - Deferred tax liability (11,199) (11,332)Net deferred tax liability $(11,199) $(11,332)We maintain a full valuation allowance on deferred tax assets considering our history of taxable losses and the uncertainty regarding our ability togenerate sufficient taxable income in the future to utilize these deferred tax assets. For 2015, 2014 and 2013, we incurred net losses for tax purposes. Werecognized a full tax valuation against deferred tax assets at December 31, 2015 and 2014. In 2015 and 2014 we recognized deferred income tax liabilities of$11,199 and $11,332, respectively, to reflect the net tax effects of temporary differences between the carrying amounts of in process research and developmentassets for financial reporting purposes and the amounts used for income tax purposes.F-32Table of ContentsPROGENICS PHARMACEUTICALS, INC .NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued(amounts in thousands, except per share amounts or as otherwise noted)The following is a reconciliation of income taxes computed at the Federal statutory income tax rate to the actual effective income tax provision during2015, 2014 and 2013: 2015 2014 2013 U.S. Federal statutory rate 34.0% 34.0% 34.0%State income taxes, net of Federal benefit 4.8 8.0 5.4Foreign rate differential (0.1) - -Research and experimental tax credit 1.7 (16.0) 3.8Effect of federal and state tax rate changes (4.8) 1.6 (8.7)Permanent differences (1.4) 15.1 0.1Stock option shortfalls (6.1) 38.1 (3.8)New York NOL adjustment 3.8 - -Change in valuation allowance (31.6) (109.6) (30.0)Income tax benefit 0.3% (28.8)% 0.8% As of December 31, 2015, we had available, for tax return purposes, unused federal NOLs of approximately $606.4 million, which will expire in variousyears from 2018 to 2035, $18.2 million of which were generated from deductions post January 1, 2006 that, when realized, will reduce taxes payable and willincrease paid-in-capital and are not reflected in our deferred tax assets above. Additionally, $11.0 million of the valuation allowance relates to NOLs attributable toexcess tax deductions for equity compensation pre January 1, 2006. When realized this will also be reflected as an increase to paid-in-capital. Also, we hadavailable, for tax return purposes, unused state NOLs of approximately $554.8 million, which will expire in various years from 2030 to 2035.We have reviewed our nexus in various tax jurisdictions and our tax positions related to all open tax years for events that could change the status of ourASC 740 Income Taxes liability, if any, or require an additional liability to be recorded. We have not, as of yet, conducted a study of our research and experimentalcredit carry-forwards. Such a study might result in an adjustment to our research and experimental credit carry-forwards, but until a study is completed and anyadjustment is known, no amounts are being presented as an uncertain tax position under ASC 740-10 except for uncertain tax positions acquired in connection withthe Molecular Insight acquisition. A full valuation allowance has been provided against the Company's research and experimental credits and, if an adjustment isrequired, this adjustment would be offset by an adjustment to the valuation allowance. Thus, there would be no impact to the statements of operations andcomprehensive loss if an adjustment was required.As of December 31, 2015, we are subject to federal, foreign and state income tax. Open tax years relate to years in which unused net operating losseswere generated or, if used, for which the statute of limitation for examination by taxing authorities has not expired. Our open tax years extend back to 1997. Noamounts of interest or penalties were recognized in our Consolidated Statements of Operations or Consolidated Balance Sheets as of and for the years endedDecember 31, 2015, 2014 and 2013.F-33Table of ContentsPROGENICS PHARMACEUTICALS, INC .NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued(amounts in thousands, except per share amounts or as otherwise noted)Our research and experimental (R&E) tax credit carry-forwards of approximately $20.0 million at December 31, 2015 expire in various years from 2018to 2035.As of December 31, 2015 and 2014, we have not recognized any liability for uncertain tax positions, because of our full valuation allowance. We willrecognize interest and penalties related to these positions, should such costs be assessed. The recognition of unrecognized tax benefits would not affect oureffective tax rate because the tax benefit would be offset by an increase in our valuation allowance.The following is a tabular reconciliation of the total amounts of unrecognized tax benefits for the years ended December 31, 2015 and 2014. 2015 2014 Beginning uncertain tax benefits $2,661 $2,661Current year - increases - -Current year - decreases - -Settlements - -Expired statuses - -Ending uncertain tax benefits $2,661 $2,66114. Net (Loss) Income Per ShareOur basic net (loss) income per share amounts have been computed by dividing net (loss) income attributable to Progenics by the weighted-averagenumber of common shares outstanding during the period. For 2015 and 2013, we reported net losses and, therefore, potential common shares were not includedsince such inclusion would have been anti-dilutive. As a result, basic and diluted EPS are the same for the 2015 and 2013 periods. For 2014, we reported netincome, and the computation of diluted earnings per share is based upon the weighted-average number of our common shares and dilutive effect, determined usingthe treasury stock method. In applying the treasury stock method for the calculation of diluted EPS, amounts of unrecognized compensation expense and windfalltax benefits are required to be included in the assumed proceeds in the denominator of the diluted EPS calculation unless they are anti-dilutive. In periods whereshares to be issued upon the assumed conversion of the contingent consideration liability have an anti-dilutive effect on the calculation of diluted earnings pershare, these shares are excluded from the calculation. We have made an accounting policy decision to calculate windfall tax benefits/shortfalls, for purposes ofdiluted EPS calculation, excluding the impact of deferred tax assets. This policy decision will apply when we have net income and windfall tax benefits/shortfallsare realizable.F-34Table of ContentsPROGENICS PHARMACEUTICALS, INC .NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued(amounts in thousands, except per share amounts or as otherwise noted)The calculations of net (loss) income per share, basic and diluted, are as follows: Net (Loss)IncomeAttributable toProgenics (Numerator) Weighted AverageCommon Shares (Denominator) Per Share Amount 2015: Basic and diluted $(39,112) 69,716 $(0.56)2014: Basic $4,410 68,185 $0.06 Dilutive effect of contingent consideration liability - - Dilutive effect of stock options - 58 Diluted $4,410 68,243 $0.06 2013: Basic and diluted $(42,572) 55,798 $(0.76) During 2015, 2014 and 2013, anti-dilutive common shares excluded from diluted per share amounts consist of the following: 2015 2014 2013 Weighted Average Number Weighted Average Exercise Price Weighted Average Number Weighted Average Exercise Price Weighted Average Number Weighted Average Exercise PriceOptions 6,381 $9.70 5,036 $10.56 5,969 $11.54Contingent consideration liability 2,827 3,457 3,544 Total 9,208 8,493 9,513 F-35Table of ContentsPROGENICS PHARMACEUTICALS, INC .NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued(amounts in thousands, except per share amounts or as otherwise noted)15. Unaudited Quarterly Results (unaudited)Summarized quarterly financial data during 2015 and 2014 are as follows: 2015 Quarter Ended March 31 June 30 September 30 December 31 Revenues (1) $248 $1,937 $1,396 $5,095 Net loss (10,254) (11,697) (10,014) (7,154)Net loss attributable to noncontrolling interests - - - (7)Net loss attributable to Progenics (10,254) (11,697) (10,014) (7,147)Net loss per share attributable to Progenics - basic (0.15) (0.17) (0.14) (0.10)Net loss per share attributable to Progenics - diluted (0.15) (0.17) (0.14) (0.10) 2014 Quarter Ended March 31 June 30 September 30 December 31 Revenues (losses) (2) $1,815 $1,477 $41,656 $ (571)Net (loss) income (9,313) (11,073) 36,975 (12,179)Net (loss) income per share - basic (0.15) (0.17) 0.53 (0.18)Net (loss) income per share - diluted (0.15) (0.17) 0.51 (0.18)_______________(1)Revenues in the fourth quarter of 2015 include $1.5 million milestone revenue from CytoDyn.(2)Revenues in the first and third quarters of 2014 include $1.0 million milestone revenue from Fuji and $40.0 million milestone revenue from Valeant, respectively. Valeant reportedsales deductions in excess of gross sales resulting in a royalty loss from net RELISTOR losses during the fourth quarter of 2014, leading us to recognize an accrued royalty lossliability owed to Valeant.F-36Table of ContentsSCHEDULE II – VALUATION AND QUALIFYING ACCOUNTSAllowance for Doubtful AccountsYear ended December31, BeginningBalance AdditionsCharged toGeneral andAdministrativeExpenses DeductionsAccountsWritten OffDuring Period EndingBalance(in thousands) 2015 $10 $- $- $102014 $7 $3 $- $10F-37Table of ContentsSIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized. PROGENICS PHARMACEUTICALS, INC. By:/s/ MARK R. BAKER Mark R. Baker Chief Executive Officer and Director(Principal Executive Officer)Date: March 11, 2016Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of theregistrant in the capacities and on the dates indicated.Signature CapacityDate /s/ PETER J. CROWLEY ChairmanMarch 11, 2016Peter J. Crowley /s/ PAUL J. MADDON Vice ChairmanMarch 11, 2016Paul J. Maddon, M.D., Ph.D. /s/ MARK R. BAKER Chief Executive Officer and Director (Principal Executive Officer)March 11, 2016Mark R. Baker /s/ KAREN J. FERRANTE DirectorMarch 11, 2016Karen J. Ferrante, M.D. /s/ MICHAEL D. KISHBAUCH DirectorMarch 11, 2016Michael D. Kishbauch /s/ DAVID A. SCHEINBERG DirectorMarch 11, 2016David A. Scheinberg, M.D., Ph.D. /s/ NICOLE S. WILLIAMS DirectorMarch 11, 2016Nicole S. Williams /s/ PATRICK FABBIO Senior Vice President and Chief Financial Officer (Principal Financial andAccounting Officer)March 11, 2016Patrick Fabbio S-1Table of Contents EXHIBIT INDEX Exhibit Number * Description3.1(1) Amended and Restated Certificate of Incorporation of the Registrant.3.2(2) Amended and Restated By-laws of the Registrant.4.1(3) Specimen Certificate for Common Stock, $0.0013 par value per share, of the Registrant.10.5(4) ‡ Amended and Restated 1996 Stock Incentive Plan10.6.3(5) ‡ Amended 2005 Stock Incentive Plan10.6.4(6) ‡ Form of Non-Qualified Stock Option Award Agreement10.6.5(6) ‡ Form of Restricted Stock Award Agreement10.7(7) ‡ Form of Indemnification Agreement10.8.2(8) ‡ Retirement Agreement, dated as of March 14, 2012, between the Registrant and Dr. Paul J. Maddon10.21.1(9) Amended and Restated Agreement of Lease, dated October 28, 2009, between BMR-Landmark at Eastview LLC and the Registrant.10.25(10) † Option and License Agreement, dated May 8, 1985, by and between the University of Chicago and UR Labs, Inc., as amended by (i)Amendment to Option and License Agreement, dated September 17, 1987, by and between the University of Chicago and UR Labs, Inc. and(ii) Second Amendment to Option and License Agreement, dated March 3, 1989, by and among the University of Chicago, ARCHDevelopment Corporation and UR Labs, Inc.10.26(11) Membership Interest Purchase Agreement, dated April 20, 2006, between the Registrant Inc. and Cytogen Corporation.10.27(11) † Amended and Restated PSMA/PSMP License Agreement, dated April 20, 2006, by and among the Registrant, Cytogen Corporation andPSMA Development Company LLC.10.34(12) † Collaboration Agreement, effective June 14, 2005, by and between Seattle Genetics, Inc. and PSMA Development Company, LLC.10.37(13) † License Agreement dated as of February 3, 2011, by and between Salix Pharmaceuticals, Inc., the Registrant, Progenics PharmaceuticalsNevada, Inc. and Excelsior Life Sciences Ireland Limited.10.37.1(13) † 2010 Agreement Related to Progenics' MNTX In-License, dated February 3, 2011, by and among the University of Chicago, acting on behalfof itself and ARCH Development Corporation, the Registrant, Progenics Pharmaceuticals Nevada, Inc. and Salix Pharmaceuticals, Inc.10.38(14) † Stock Purchase and Sale Agreement, dated January 16, 2013, by and between Molecular Insight Pharmaceuticals, Inc., its Stockholders, theRegistrant, and Highland Capital Management, L.P., as Stockholders Representative.10.39(14) † License Agreement, dated September 1, 2012, by and between FUJIFILM RI Pharma Co., Ltd. and Molecular Insight Pharmaceuticals, Inc.10.40(15) † License Agreement, dated May 4, 2012, between Molecular Insight Pharmaceuticals, Inc., the University of Zurich and the Paul ScherrerInstitute.10.41(16) License Agreement, dated as of December 15, 2000, between Molecular Insight Pharmaceuticals, Inc. and The Board of Governors of theUniversity of Western Ontario.10.43(17) Controlled Equity Offering SM Sales Agreement dated as of January 23, 2014, by and between the Registrant and Cantor Fitzgerald & Co.10.44(18) ‡ Agreement, dated September 19, 2014, between the Registrant and Dr. Hagop Youssoufian.10.45(12) † Collaboration Agreement, effective February 21, 2001, by and between Abgenix, Inc. and PSMA Development Company, LLC.10.46 (19) † Lease, dated December 31, 2015, between Progenics Pharmaceuticals, Inc. and WTC TOWER 1 LLC.10.47 License Agreement, dated as of 30 July, 2015 between the Registrant and The Johns Hopkins University.10.48 Employment Offer Letter Agreement between the Registrant and Sheldon Hirt.10.49 Employment Offer Letter Agreement between the Registrant and Patrick Fabbio.12.1 Statement re computation of ratio of earnings (loss) to combined fixed charges and preferred stock dividends.21.1 Subsidiaries of the Registrant. E-1Table of Contents 23.1 Consent of Ernst & Young LLP.31.1 Certification of Mark R. Baker, Chief Executive Officer of the Registrant pursuant to 13a-14(a) and Rule 15d-14(a) under the SecuritiesExchange Act of 1934, as amended.31.2 Certification of Patrick Fabbio, Senior Vice President and Chief Financial Officer of the Registrant pursuant to 13a-14(a) and Rule 15d-14(a)under the Securities Exchange Act of 1934, as amended.32.1 Certification of Mark R. Baker, Chief Executive Officer of the Registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002.32.2 Certification of Patrick Fabbio, Senior Vice President and Chief Financial Officer of the Registrant pursuant to 18 U.S.C. Section 1350, asadopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.101 Interactive Data File101.INS XBRL Instance Document101.SCH XBRL Taxonomy Extension Schema101.CAL XBRL Taxonomy Extension Calculation Linkbase101.LAB XBRL Taxonomy Extension Label Linkbase101.PRE XBRL Taxonomy Extension Presentation Linkbase101.DEF XBRL Taxonomy Extension Definition Document * Exhibits footnoted as previously filed have been filed as an exhibit to the document of the Registrant or other registrant referenced in the footnote below,and are incorporated by reference herein. (1) Previously filed in Current Report on Form 8-K filed on June 13, 2013.(2) Previously filed in Current Report on Form 8-K filed on March 16, 2012.(3) Previously filed in Registration Statement on Form S-1, Commission File No. 333-13627.(4) Previously filed in Registration Statement on Form S-8, Commission File No. 333-120508.(5) Previously filed in Current Report on Form 8-K filed on June 18, 2014.(6) Previously filed in Current Report on Form 8-K filed on July 8, 2008.(7) Previously filed in Quarterly Report on Form 10-Q for the quarter ended March 31, 2007.(8) Previously filed in Quarterly Report on Form 10-Q for the quarter ended March 31, 2012.(9) Previously filed in Current Report on Form 8-K filed on November 28, 2012.(10) Previously filed in Annual Report on Form 10-K for the year ended December 31, 2005.(11) Previously filed in Quarterly Report on Form 10-Q for the quarter ended June 30, 2006(12) Previously filed in Amendment No. 2 to Annual Report on Form 10-K/A for the year ended December 31, 2009.(13) Previously filed in Quarterly Report on Form 10-Q for the quarter ended March 31, 2011.(14) Previously filed in Quarterly Report on Form 10-Q for the quarter ended March 31, 2013.(15) Previously filed in Annual Report on Form 10-K for the year ended December 31, 2013.(16) Previously filed in Registration Statement on Form S-1, Commission File No. 333-129570 filed by Molecular Insight Pharmaceuticals, Inc.(17) Previously filed in Registration Statement on Form S-3, Commission File No. 333-193521.(18) Previously filed in Quarterly Report on Form 10-Q for the quarter ended September 30, 2014.(19) Previously filed in Current Report on Form 8-K filed on January 5, 2016. † Confidential treatment granted as to certain portions omitted and filed separately with the Commission.‡ Management contract or compensatory plan or arrangement. E-2Exhibit 12.1 Progenics Pharmaceuticals, Inc.Ratio of (Loss) Earnings to Combined Fixed Charges and Preferred Stock Dividends(in thousands) Years Ended December 31, 2015 2014 2013 2012 2011 Determination of (loss) earnings: (Loss) income from operations $(39,119) $4,410 $(42,934) $(35,431) $10,381 Add: Fixed charges 373 373 710 410 695 (Loss) earnings, as adjusted $(38,746) $4,783 $(42,224) $(35,021) $11,076 Fixed charges: Estimate of interest within rental expense 373 373 710 410 695 Fixed charges $373 $373 $710 $410 $695 Preferred stock dividends $- $- $- $- $- Ratio of (loss) earnings to fixed charges and preferred stockdividends * 13 * * 16 Coverage deficiency amount for total fixed charges and preferredstock dividends (1) $39,119 $- $42,934 $35,431 $- (1)For the years ended 2012, 2013 and 2015, the Company's coverage ratio is less than one-to-one and it must generate additional earnings of these specified amounts to achieve acoverage ratio of 1:1. Exhibit 21.1Progenics Pharmaceuticals, Inc.SubsidiariesName Jurisdiction of Incorporation Excelsior Life Sciences Ireland Limited IrelandMolecular Insight Pharmaceuticals, Inc. DelawareMolecular Insight Limited* England and WalesProgenics Life Sciences Limited England and WalesProgenics Pharmaceuticals Nevada, Inc. NevadaPSMA Development Company LLC DelawareEXINI Diagnostics AB Sweden * Subsidiary of Molecular Insight Pharmaceuticals, Inc. Exhibit 23.1Consent of Independent Registered Public Accounting FirmWe consent to the incorporation by reference in the following Registration Statements:(1)Registration Statement (Form S-3 No. 333-193521) of Progenics Pharmaceuticals, Inc.,(2)Registration Statements (Form S-8 Nos. 333-197071, 333-183511, 333-176204, 333-160389, 333-143670 and 333-124910) pertaining tothe 2005 Stock Incentive Plan of Progenics Pharmaceuticals, Inc., and(3)Registration Statements (Form S-8 Nos. 333-120508 and 333-52277) pertaining to its Amended and Restated 1996 Stock Incentive Planof Progenics Pharmaceuticals, Inc.;of our reports dated March 11, 2016, with respect to the consolidated financial statements and schedules of Progenics Pharmaceuticals, Inc. and theeffectiveness of internal control over financial reporting of Progenics Pharmaceuticals, Inc. included in this Annual Report (Form 10-K) of ProgenicsPharmaceuticals, Inc. for the year ended December 31, 2015. /s/ Ernst & Young LLPHartford, ConnecticutMarch 11, 2016Exhibit 31.1CERTIFICATION PURSUANT TO RULE 13a-14(a) AND RULE 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDEDI, Mark R. Baker, certify that: 1.I have reviewed this annual report on Form 10-K of Progenics Pharmaceuticals, Inc.; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,to ensure that material information relating to the registrant is made known to us by others within the registrant, particularly during theperiod in which this report is being prepared; b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; c)evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d)disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's mostrecent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likelyto materially affect, the registrant's internal control over financial reporting; and 5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant's independent registered public accounting firm and the audit committee of the registrant's board of directors (or persons performing theequivalent function): a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internalcontrol over financial reporting. /s/ Mark R. BakerDate: March 11, 2016Mark R. Baker Chief Executive Officer(Principal Executive Officer)Exhibit 31.2CERTIFICATION PURSUANT TO RULE 13a-14(a) AND RULE 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDEDI, Patrick Fabbio, certify that: 1.I have reviewed this annual report on Form 10-K of Progenics Pharmaceuticals, Inc.; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,to ensure that material information relating to the registrant is made known to us by others within the registrant, particularly during theperiod in which this report is being prepared; b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; c)evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d)disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's mostrecent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likelyto materially affect, the registrant's internal control over financial reporting; and 5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant's independent registered public accounting firm and the audit committee of the registrant's board of directors (or persons performing theequivalent function): a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internalcontrol over financial reporting. /s/ Patrick FabbioDate: March 11, 2016Partrick Fabbio Chief Financial Officer (Principal Financial and Accounting Officer)Exhibit 32.1CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION  906 OF THE SARBANES-OXLEY ACT OF 2002The undersigned Chief Executive Officer of Progenics Pharmaceuticals, Inc. (the "Company") does hereby certify as follows:This annual report on Form 10-K of the Company for the period ended December 31, 2015 and filed with the Securities and Exchange Commission on thedate hereof (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained inthe Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Mark R. BakerDate: March 11, 2016Mark R. Baker Chief Executive Officer(Principal Executive Officer)A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signaturethat appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Progenics Pharmaceuticals, Inc. andwill be retained by Progenics Pharmaceuticals, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.Exhibit 32.2CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION  906 OF THE SARBANES-OXLEY ACT OF 2002The undersigned Chief Financial Officer of Progenics Pharmaceuticals, Inc. (the "Company") does hereby certify as follows:This annual report on Form 10-K of the Company for the period ended December 31, 2015 and filed with the Securities and Exchange Commission on thedate hereof (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained inthe Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Patrick FabbioDate: March 11, 2016Patrick Fabbio Chief Financial Officer (Principal Financial and Accounting Officer)A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signaturethat appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Progenics Pharmaceuticals, Inc. andwill be retained by Progenics Pharmaceuticals, Inc. and furnished to the Securities and Exchange Commission or its staff upon requestExhibit 10.47Exhibit 10.47EXCLUSIVE LICENSE AGREEMENTTHIS LICENSE AGREEMENT (the "Agreement") is entered into by and between THE JOHNS HOPKINS UNIVERSITY, a Maryland corporationhaving an address at 3400 N. Charles Street, Baltimore, Maryland, 21218-2695 ("JHU") and PROGENICS PHARMACEUTICALS, INC. ("LICENSEE"), aDelaware corporation having an address at 777Old Saw Mill River Road, Tarrytown, NY 10591 and is effective on the 30th day of July, 2015 ("EFFECTIVE DATE"), but if none stated, then on the date ofthe last signature affixed.RECITALSA valuable invention or inventions listed and described in Exhibit A ("INVENTION") was/were developed during the course of research conducted bythe inventors listed on Exhibit A (all hereinafter, "INVENTORS"). JHU has acquired through assignment all rights, title and interest of said INVENTORS insaid valuable INVENTION and the related PATENT RIGHTS. JHU desires that the invention be perfected and marketed as soon as possible so that resultingproducts may be available for public use and benefit.JHU and LICENSEE understand and accept that the availability of LICENSED PRODUCTS and LICENSED SERVICES at affordable prices to poorsegments of the world's populations is an important objective of the parties.LICENSEE desires to obtain certain rights in such inventions as herein provided, and to commercially develop, manufacture, use and distribute productsand processes based upon or embodying said valuable inventions.JHU is willing to grant such a license to LICENSEE, under the terms and conditions set forth in this AGREEMENT.In consideration of the mutual covenants herein contained and other good and valuable consideration, receipt of which is hereby acknowledged, theparties agree as follows:1.  DEFINITIONSAll references to particular Exhibits, Articles or Paragraphs shall mean the Exhibits to, and Paragraphs and Articles of, this Agreement, unlessotherwise specified. Any reference herein to any defined term shall include both the singular and the plural, whether or not both forms are included in thereference. For the purposes of this Agreement and the Exhibits hereto, the following words and phrases shall have the following meanings:1.1 "ASIA COUNTRY" shall mean each of China, Japan, India and Hong Kong.1.2 "AFFILIATED COMPANY" shall mean any corporation, company, partnership, joint venture or other entity, which controls, is controlledby or is under common control with LICENSEE. For purposes of this Paragraph control shall mean the direct or indirect ownership of at least fifty percent(50%) of the outstanding voting stock or other ownership interest therein.11.3 "EFFECTIVE DATE" of this License Agreement shall mean the date stated above at the beginning of this Agreement, but if none is stated,then it shall mean the last date that this Agreement was signed by JHU and LICENSEE.1.4 "EXCLUSIVE LICENSE" means that, subject to specific limitations in this Agreement, and subject to rights retained by the United StatesGovernment, if any, JHU grants to LICENSEE all of JHU's rights under the LICENSED PATENT(S) in the LICENSED FIELD of USE in the LICENSEDTERRITORY. Exclusive refers to PATENT RIGHTS only. KNOW HOW, data and other materials licensed are provided on a non-exclusive basis only.1.5 "FIRST COMMERCIAL SALE" shall mean the first transfer by a LICENSEE, AFFILIATED COMPANY or SUBLICENSEE of aLICENSED PRODUCT or LICENSED SERVICE for value, but shall not include a transfer of materials for the purpose of use in a clinical trial, where theconsideration received is intended to cover the manufacturing cost of the materials, or "compassionate use" or similar transfers where the consideration receivedis intended to cover the manufacturing cost of the materials.1.6 "JHU REF. NUMBER" shall mean the JHU Technology Transfer Office case number or numbers, shown on Exhibit A, to which theTECHNOLOGY licensed hereunder pertains. It is used for JHU reference only. The TECHNOLOGY licensed herein is described in this Agreement, and maynot include all the technology that may be a part of the JHU reference number.1.6 "JHU INDEMNITEES" means JHU, The Johns Hopkins Hospital, The Johns Hopkins Health System Corporation, and their affiliated entities,their present and former trustees, officers, INVENTORS, agents, faculty, employees and students.1.7 "KNOW HOW" licensed herein means information, including but not limited to data, test results, research methodology and published mattercreated by INVENTORS, listed in Exhibit E, and supplied by JHU to the LICENSEE on or before or after the EFFECTIVE DATE of this Agreement. Provided,however, that although JHU may supply additional KNOW HOW after the EFFECTIVE DATE, JHU shall have no obligation to do so unless specifically andclearly stated in this Agreement. In the event that additional KNOW HOW is added, the parties shall amend Exhibit E accordingly.1.8 "LICENSED FIELD of USE" shall be as described on EXHIBIT A.1.9 "LICENSED PATENT" means the JHU Patent Applications and issued Patents listed on Exhibit A, and any foreign patent applicationcorresponding thereto, and any divisional, continuation, or reexamination application, and each patent that issues or reissues from any of these patentapplications and all re-examinations or extensions thereof. "LICENSED PATENT" includes any continuation-in-part (CIP) patent application or patent only tothe extent that the practice of the claims of such continuation-in-part would infringe claims of the patents or patent applications in the Field and the Territorylicensed hereunder.1.10 "LICENSED PRODUCT" shall mean any process or method, material, compositions, precursors, drug, or other product, created or developedusing TECHNOLOGY, or for which the development, manufacture, use or sale, if done by a third party without rights2under the LICENSED PATENT(S), would constitute an infringement of a VALID CLAIM of PATENT RIGHTS (infringement shall include, but is not limitedto, direct, contributory, or inducement to infringe).1.11 "LICENSED SERVICE" includes any service or services, including any drug discovery or screening, or the manufacture of any product or theuse of any product or composition, performed by LICENSEE, AFFILIATED COMPANIES or SUBLICENSEES for any third party using or incorporating theTECHNOLOGY, or which, if done by a third party without rights under the LICENSED PATENT(S), would constitute an infringement of a VALID CLAIM ofPATENT RIGHTS (infringement shall include, but is not limited to, direct, contributory, or inducement to infringe).1.12 "LICENSED TERRITORY" shall be that territory described on EXHIBIT A.1.13 "MAJOR MARKET COUNTRY" is defined in Section 9(d) of EXHIBIT A.1.14 "NET REVENUES" whether they be NET SALES REVENUES OR NET SERVICE REVENUES shall include everything of value receivedby LICENSEE, AFFILIATED COMPANIES and SUBLICENSEE(S) for the sale, license, lease or other transfer of LICENSED PRODUCTS, or theperformance of LICENSED SERVICES. Consideration includes but is not limited to currency, equity, intangible rights, services and other things of valueprovided or received as part of the transaction for LICENSED PRODUCTS or LICENSED SERVICES, the fair value of which must be included to determineNET REVENUES. NET REVENUES shall be calculated by LICENSEE in good faith and may be calculated using the accrual or cash method, but suchcalculation must be consistent from month to month and year to year, and must be the same method used by LICENSEE for all similar transactions, or if none,the same method used generally by LICENSEE in reporting its business activity for United States federal tax purposes.NET REVENUES may exclude the following items, but only to the extent that they are included in gross revenue, and are separately billed topurchaser, and paid or remitted by LICENSEE, AFFILIATED COMPANIES or SUBLICENSEES to third parties:(i) import, export, excise and sales taxes, custom duties, and shipping charges;(ii) customary discounts and rebates;(iii) reasonable credits or refunds for claims or returns;(iv) costs of packing, insurance covering damage during shipping, storage and transportation from the place of manufacture to thecustomer's premises or point of installation;(v) any other reductions or specifically identified amounts included in the gross selling price permitted or required by Generally AcceptedAccounting Principles (GAAP) as in effect from time to time in the United States with respect to the determination of net salesrevenues.3NET REVENUES, whether they be NET SALES REVENUES OR NET SERVICE REVENUES, of any COMBINATION PRODUCT (as defined below) for the purpose of calculating royalties due under this Agreement shall be determined as follows: the NET REVENUES of the COMBINATION PRODUCT (prior to application of the following adjustment) shall be multiplied by the fraction A/(A+B), where A is the net selling price of a LICENSEDPRODUCT or LICENSED SERVICE without the additional active ingredient or components or services in the COMBTNATION PRODUCT, if sold separately,and B is the net selling price of any other active ingredients, components or services in the combination if sold separately. All net selling prices of the elementsof such end-user product or service shall be calculated as the average net selling price of the said elements during the applicable accounting period for which theNET SALES are being calculated. In the event that no separate sale of either such above-designated LICENSED PRODUCT or LICENSED SERVICE(containing only such LICENSED PRODUCT or LICENSED SERVICE and no other active ingredients or components or service(s)) or any one or more of theactive ingredients included in such COMBINATION PRODUCT are made during the accounting period in which the sale was made, or if the net selling pricefor an active ingredient cannot be determined for an accounting period, NET REVENUES allocable to the LICENSED PRODUCT or LICENSED SERVICEshall be determined by mutual agreement reached in good faith by the parties prior to the end of the accounting period in question based on an equitable methodof determining same that takes into account all relevant factors (including the relative contribution of each active ingredient, component or service in thecombination, and relative value to the end user of each such active ingredient, component or service). "COMBINATION PRODUCT" shall mean aLICENSED PRODUCT or LICENSED SERVICE that includes at least one additional active ingredient or components or key service(s) that is not covered by aLICENSED PATENT.For the avoidance of doubt, NET REVENUES shall not include SUBLICENSING INCOME.1.15 "NET SALES REVENUES" shall mean NET REVENUES derived from the sale of LICENSED PRODUCTS, where a sale includes anylicense of use, lease, sale or other transfer of rights to the LICENSED PRODUCT.1.16 "NET SERVICE REVENUES" shall mean NET REVENUES derived from the sale or performance of LICENSED SERVICES.1.17 "PATENT   COSTS"  are all costs of prosecuting and maintaining any LICENSED PATENT, including reasonable attorneys' fees orcosts paid or incurred, and expenses paid or incurred for filing, maintenance, annuities, translation, cost of defending or protecting a patent from infringement,or other costs directly related to the PATENT prosecution and protection.1.18 "PATENT RIGHTS" are those rights granted to LICENSEE under LICENSED PATENT(S).1.19 "SUBLICENSE" shall mean an agreement between LICENSEE and a third party, other than an AFFILIATED COMPANY, granting suchthird party any present or future rights in the TECHNOLOGY licensed hereunder.41.20 "SUBLICENSEE" shall mean any person or entity other than an AFFILIATED COMPANY to which LICENSEE has granted aSUBLICENSE under this Agreement.1.21 "SUBLICENSING INCOME" includes everything of value received by LICENSEE in consideration for any SUBLICENSE whichincludes rights to any TECHNOLOGY licensed herein. It is the total amount received as adjusted pursuant to Section11.3 of EXHIBIT A hereto, whether or not) the SUBLICENSE includes intellectual property inaddition to the licensed TECHNOLOGY, and includes the SUBLICENSE fee, milestone payments, stock or other forms of equity, and the fair value of anyservices or other compensation received. Payment remitted to JHU by LICENSEE shall be calculated by LICENSEE in good faith.The following may be excluded from the gross amount received for the SUBLICENSEwhen calculating SUBLICENSING INCOME:(i) The reasonable cost of services to be performed thereafter by LICENSEE for or on behalf of the SUBLICENSEE, if, but only if thoseservices are specifically described and the cost itemized and stated separately in the SUBLICENSE. Payments on the achievement ofresults shall be deemed to be milestone payments and are included in SUBLICENSING INCOME.(ii) Reimbursement of the amount paid for fees incurred by LICENSEE, such as patent costs, or fees paid to governmental agencies, whichare incurred after the date of the SUBLICENSE and are actually paid to third parties by LICENSEE.(iii)Royalty payments to LICENSEE based on SUBLICENSEE's NET REVENUES, where royalties are provided and will be paid to JHUon SUBLICENSEE's NET REVENUES pursuant to this Agreement.(iv)The amount of any Milestone payment made to JHU under this Agreement as a result of activity of LICENSEE orSUBLICENSEE, which results in a Milestone payment by SUBLICENSEE to LICENSEE under the SUBLICENSE. Thedifference between the Milestone payment to be paid to JHU and the milestone payment paid to LICENSEE bySUBLICENSEE shall be considered SUBLICENSING INCOME. For clarification, if SUBLICENSEE makes a payment toLICENSEE as a Milestone, and LICENSEE is obligated to make a Milestone payment to JHU under this Agreement for thatsame Milestone, that Milestone payment amount paid to JHU shall be deducted from the Milestone amount paid under theSUBLICENSE, and the remainder shall be the SUBLICENSING INCOME.(v) The amount received for technology of third parties acquired by LICENSEE and included in the SUBLICENSE, if said amount is separately stated in the SUBLICENSE.5(vi) Reimbursement from SUBLICENSEE of costs and expenses actually paid by LICENSEE for the development of any LICENSEDPRODUCT or LICENSED SERVICE,-including any costs and expenses incurred prior to the date of the SUBLICENSE, providedthat such reimbursements are clearly delineated in writing in such SUBLICENSE.If the SUBLICENSE includes the right or obligation of the SUBLICENSEE to purchase equity in LICENSEE at a cost greater than the then current fair marketvalue of the equity (as determined by LICENSEE in good faith), the difference between the fair market value and the amount paid shall be SUBLICENSINGINCOME.1.22 "TECHNOLOGY" means the LICENSED PATENT(S), data, KNOW HOW, manufacturing techniques, and any other information or material provided by JHU to LICENSEE. TECHNOLOGY may or may not be confidential in nature.1.23 "VALID CLAIM" means (a) a claim of an issued patent that has not expired or been abandoned, or been revoked, held invalid or unenforceableby a patent office, court or other governmental agency of competent jurisdiction in a final and non-appealable judgment (or judgment from which no appeal wastaken within the allowable time period) or (b) patent application that (i) has been filed with a good faith belief that claims are reasonable, (ii) has not lapsed, inthe case of a provisional patent application, (iii) and has not been cancelled, withdrawn or abandoned without the possibility of revival; and (iv) has been pendingfor less than or equal to seven (7) years from the earliest priority date claimed for such application and for which there has been reasonably consistent activity onthe part of JHU to advance to issuance of a patent.2.        GRANT2.1 Grant.   Subject to the terms and conditions of this Agreement, JHU grants LICENSEE an EXCLUSIVE LICENSE under the LICENSEDPATENT(S) and a nonexclusive right under other TECHNOLOGY in the LICENSED FIELD(S) of USE to utilize the TECHNOLOGY to make, have made, use, import, offer to sell and sell LICENSED PRODUCTS and perform LICENSED SERVICES in the LICENSED TERRITORY. This Grant shall apply to the LICENSEE and any AFFILIATED COMPANY, except that any AFFILIATED COMPANY shall not have the right to sublicense otherswithout JHU approval, such approval not to be unreasonably withheld. If any AFFILIATED COMPANY exercises rights under this Agreement, suchAFFILIATED COMPANY shall be bound by all terms and conditions of this Agreement, including but not limited to indemnity and insurance provisions androyalty payments. In addition, LICENSEE shall remain fully liable to JHU for all acts and obligations of such AFFILIATED COMPANY such that acts of theAFFILIATED COMPANY shall be considered acts of the LICENSEE.2.2 Retained Rights.2.2.1 JHU Rights.  JHU retains the right, on behalf of itself, the INVENTORS and all other non-profit academic or research institutions towhom JHU extends rights, to practice a LICENSED PATENT and use TECHNOLOGY solely for any non-commercial non- profit research or other non-commercial non-profit purpose, including, but not limited to non-6commercial sponsored research and collaborations solely with non-commercial entities. JHU shall have the right to publish any information included in theTECHNOLOGY or a LICENSED PATENT. In order to balance this right with LICENSEE's exclusive rights under this Agreement, INVENTORS willsubmit any and all proposed disclosures related to the TECHNOLOGY or a LICENSED PATENT in the LICENSED FIELD OF USE to LICENSEE for itsreview at least thirty (30) days prior to the scheduled disclosure of the results to any third party (including, without limitation, to any journal for review).LICENSEE will complete its review within thirty (30) days of receipt of the submitted documents. LICENSEE may request that INVENTORS delete from thedocuments any reference to LICENSEE's Confidential Information. If, during its thirty (30) day review period, LICENSEE notifies JHU and/or INVENTORSthat it desires to file patent applications on any inventions disclosed in the documents, INVENTORS will defer publication/disclosure for up to sixty (60)additional days from the date of submission of the document to LICENSEE.2.2.2 Government Rights. This Agreement is subject to Title 35 Sections 200-204 of the United States Code as implemented in 37 CFR Part 401, as may be amended from time to time. Among other things, these provisions provide theUnited States Government with certain nonexclusive rights in a LICENSED PATENT if federal funds were used to develop the TECHNOLOGY. They alsoimpose the obligation that LICENSED PRODUCTS sold or produced in the United States be "manufactured substantially in the United States". LICENSEEwill ensure all required obligations of these provisions are met.2.3 Specific Exclusions. JHU does not:2.3.1 commit to LICENSEE to bring suit against third parties for infringement, except as described in Article 9; or2.3.2 agree to furnish to LICENSEE any technology or technological information other than the TECHNOLOGY; or2.3.3 agree to provide LICENSEE with any know how, invention, data, results or other assistance in the future unless specifically andclearly identified in this Agreement.2.4 Global Access for Essential Medicines.    This Agreement is subject to the provisions of Exhibit D: GLOBAL ACCESS FOR ESSENTIALMEDICINES.3.        SUBLICENSING3.1 Permitted Sublicensing.  LICENSEE may grant sublicenses in the LICENSED FIELD of USE in the LICENSED TERRITORY.3.2 Royalty on Sales.  LICENSEE shall be responsible to pay to JHU royalties due JHU on sales of LICENSED PRODUCTS or LICENSEDSERVICES by a SUBLICENSEE, to the same extent as if LICENSEE made those sales directly, and whether or not SUBLICENSEE remits required royaltypayments to LICENSEE.73.3 Required Sublicensing. LICENSEE will use commercially reasonable efforts to diligently develop markets for, and develop, manufacture, andsell LICENSED PRODUCTS and LICENSED SERVICES in each MAJOR MARKET COUNTRY and ASIA COUNTRY, as per the terms and conditions ofSection 4.2 and Exhibit A, Diligence Milestones. Within two (2) years of the EFFECTIVE DATE, LICENSEE shall submit to JHU a detailedcommercialization plan for entering into each MAJOR MARKET COUNTRY AND ASIA COUNTRY. LICENSEE and JHU shall negotiate suchcommercialization plan in good faith and such agreed commercialization plan shall be added to this LICENSE AGREEMENT by amendment. Within four (4)years of the EFFECTIVE DATE, LICENSEE shall achieve dosing of the first patient outside the United States in a Confirmatory Phase II Clinical Trial orforeign equivalent. Should LICENSEE be unable or unwilling to commercialize a potential LICENSED PRODUCT in a particular MAJOR MARKETCOUNTRY OR ASIA COUNTRY (an "Unmarketed Country") per such agreed ex-US commercialization plan, or following the fifth anniversary of theEFFECTIVE DATE, whichever is later, LICENSEE will, at JHU's request, consider and negotiate in good faith a SUBLICENSE with any such potentialSUBLICENSEE. Should LICENSEE elect not to consider and negotiate in good faith such sublicense in such Unmarketed Country, LICENSEE agrees toterminate rights in such Unmarketed Country under this Agreement per the terms of Paragraph 11.2 (Termination by LICENSEE).3.4SUBLICENSE Requirements. Any SUBLICENSE:(i)is subject to this Agreement; (ii) will not permit a SUBLICENSEE to further sublicense;(iii) will, as a condition of validity, expressly include the provisions of Articles 7, 8, 10.3 and 12.2 for the benefit of JHU;(iv) will, if this Agreement is terminated, require the transfer to JHU of all obligations, including the payment of royalties specified in the SUBLICENSE, without setoff for debts or obligations of LICENSEE to SUBLICENSEE; and(v) will not be valid against JHU as to terms, conditions, obligations or limitations that are inconsistent with this Agreement and thesesublicensing requirements.3.5 Notice and Copy of SUBLICENSE; Termination. LICENSEE will notify JHU and within 30 days of execution will submit to JHU anunredacted copy of each SUBLICENSE, the terms of which will not be considered confidential as to JHU, but which terms JHU will treat as LICENSEEconfidential information. If JHU terminates this Agreement, JHU=shall grant to such SUBLICENSEE license rights and terms equivalent to the sublicenserights and terms which LICENSEE shall have granted to such SUBLICENSEE, provided that (i) SUBLICENSEE is not in material breach of its sublicense and(ii) such sublicense terms and conditions are consistent with the terms and conditions of this Agreement.3.6 Sharing of SUBLICENSING INCOME. LICENSEE will share with and pay toJHU a portion of SUBLICENSING INCOME as stated on EXHIBIT A.84.  DILIGENCE REPORTING AND DEVELOPMENT4.1 Federal Funding. It is the requirement of federal law, and the obligation of JHU and LICENSEE that inventions created with federal funding bediligently developed into useful products and services.4.2 Milestones.  LICENSEE will use commercially reasonable efforts to diligently develop markets for and develop, manufacture, and sell LICENSED PRODUCTS and LICENSED SERVICES in the United States and those other portions of the Territory where Company LICENSEE deems itcommercially prudent, subject to the terms and conditions of Section 3.3. In addition, LICENSEE will use commercially reasonable efforts to meet themilestones and target dates, if any, shown in EXHIBIT A, and notify JHU in writing within 30 days after each milestone is met.4.3 Diligence Report.  By March 1   of each year, LICENSEE will submit a written annual report to JHU covering the preceding calendar year.Reports may be submitted electronically to an email address provided on request by JHU. The report will follow the Diligence Report Guidelines stated onEXHIBIT C and shall include information sufficient to enable JHU to satisfy reporting requirements of the U.S. Government and for JHU to ascertain progressby LICENSEE toward meeting this Agreement's diligence requirements. Each report will include LICENSEE's most recent annual report filed with the UnitedStates Securities and Exchange Commission, if applicable, and describe, where relevant:(i)progress by LICENSEE, AFFILIATED COMPANIES or SUBLICENSEE(S) toward commercialization of LICENSED PRODUCTS or LICENSED SERVICES, including work completed, key scientific discoveries, summary of work-in-progress, current schedule of anticipated events or milestones, market plans (if any) for introduction of LICENSED PRODUCTS orLICENSED SERVICES, and significant corporate transactions involving LICENSED PRODUCTS or LICENSED SERVICES;(ii) (notice of all FDA or other governmental filings and/or approvals regarding any LICENSED PRODUCTS or LICENSEDSERVICE made or obtained by LICENSEE, AFFILIATED COMPANY or SUBLICENSEE, the patents or patentapplications licensed under this Agreement upon which such product or service is based, and the commercial name of suchproduct or service;(iii) a Certificate of Insurance or other evidence of insurance, as required by this Agreement, or a statement of why such insurance is notcurrently required;(iv) identification of all AFFILIATED COMPANIES and SUBLICENSEE(S) which have exercised rights to the TECHNOLOGY, or astatement that no AFFILIATED COMPANY or SUBLICENSEE has exercised such rights;9(v) description of any diligence milestones achieved, and identification of any milestones expected to be achieved in the next year;(vi) description of any SUBLICENSE(s) entered during the year, with a copy of the SUBLICENSE if not previously provided.(vii) Notification of any change of control or name change or other significant change related to this Agreement or LICENSEE that would berelevant to the TECHNOLOGY licensed hereunder.5. FEES, ROYALTIES AND OTHER PAYMENTS5.1 License  Fee.  LICENSEE shall pay to JHU a noncreditable, nonrefundable license fee as described in EXHIBIT A, within 30 days of theEFFECTIVE DATE, or at such time as stated on Exhibit A.5.2 PATENT COSTS. Within 30 days of receipt of an invoice from JHU showing unreimbursed PATENT COSTS incurred on or after theEFFECTIVE DATE, LICENSEE will reimburse JHU the amount stated. EXHIBIT A may include unreimbursed PATENT COSTS incurred prior to theEFFECTIVE DATE, and if so, LICENSEE will reimburse JHU the amount stated in EXHIBIT A at such time or in such manner as stated in EXHIBIT A.5.3 Minimum Annual Royalty.  LICENSEE will pay JHU a yearly Minimum Annual Royalty (MAR) as described in Exhibit A, which will bepaid in advance within 30 days after the anniversary of the EFFECTIVE DATE in each calendar year and which will apply to that calendar year. MinimumAnnual Royalty payments are nonrefundable. Milestone payments and earned royalty payments due on NET REVENUES occurring in the year to which theMAR pertains may be offset against the Minimum Annual Royalty paid for that year, but only for that year, without carry forward or back.5.4 Milestone Payments. LICENSEE will pay JHU Milestone payments as stated on Exhibit A. Within 30 days of achieving a Milestone,LICENSEE will report the achievement to JHU, and pay to JHU the Milestone payment required. Milestones achieved should be included in the Annual Report,even if previously reported.5.5 Earned Royalty.5.5.1 LICENSEE will pay JHU earned royalties, as described on Exhibit A, which shall be paid quarterly unless a different paymentschedule is specifically stated. LICENSEE may deduct from the earned royalty the amount of any Minimum Annual Royalty paid for the year in which thequarter occurs, until all of the MAR has been deducted from payments due for that year, after which any earned royalty in excess of the MAR shall be paid toJHU.5.5.2 Should LICENSEE be required to pay royalties on any intellectual property rights not licensed hereunder ("Other Royalties") thatwould be infringed or violated by making, using or selling a particular LICENSED PRODUCT or LICENSED SERVICE, LICENSEE shall be entitled tocredit fifty percent (50%) of such Other Royalties against the10running royalty due to JHU, provided that the royalties due to JHU hereunder shall not be reduced below fifty percent (50%) of those that would otherwise bedue to JHU for that LICENSED PRODUCT or LICENSED SERVICE.5.6 Duration of Royalty Payments. Royalties shall be paid as described herein for each LICENSED PRODUCT manufactured or produced or each LICENSED SERVICE performed in the LICENSED TERRITORY for a minimum period, on a country-by-country basis, of ten (10) years from date ofFIRST COMMERCIAL SALE of that particular LICENSED PRODUCT or LICENSED SERVICE or the life of the last to expire patent included within thePATENT RIGHTS, whichever is last to occur. Products manufactured during the life of the PATENT RIGHTS shall carry the full royalty when sold. Royalties on products manufactured and sold within the minimum ten (10) year period, but for which PATENT RIGHTS are not pending or have expired, shallbe reduced by 50%.5.7 Payment for all activities performed under this Agreement. If LICENSED PRODUCTS are made, used, imported, or offered for sale beforethe date this Agreement terminates, and those LICENSED PRODUCTS are sold after the termination date, LICENSEE will pay JHU the full earned royaltybased on the Net Sales of those LICENSED PRODUCTS. In addition, use of the TECHNOLOGY by LICENSEE shall be deemed to be use which is licensedunder this Agreement, regardless of where performed, whether or not specific PATENT RIGHTS exist in the location of the activity for which activity a royaltyor other payment is due under this Agreement.5.8 Obligation to Pay Royalties and other payments. Payments required herein must be paid on the dates or upon the conditions stated,notwithstanding any claims by either LICENSEE or third party challenging the validity of the PATENT RIGHTS. Payments once made are not refundableeven if the PATENT RIGHTS are later determined to be invalid or not applicable to the particular product or service.5.9 Currency. For Revenue in currencies other than U.S. Dollars, LICENSEE will calculate the royalty in U.S. Dollars quarterly, using theappropriate foreign exchange rate for the currency as quoted by United States Federal Reserve Bank, for the last business day of each calendar quarter, to applyto payments earned by activities during that quarter. LICENSEE will make royalty payments to JHU in U.S. Dollars.5.10 Non-U.S. Taxes.  If non-U.S. taxes are due on royalty or other payments, such taxes shall be deemed to be in addition to the payment, andLICENSEE will pay all non-U.S. taxes related to royalty and any other payments under this Agreement. These tax payments are not deductible from anypayments due to JHU. JHU will cooperate with LICENSEE to receive a refund of such taxes to the extent available, and such refund shall be retained byLICENSEE.5.11 No requirement of invoice.  All payments are due on the due date without invoice or demand for payment by or from JHU.5.12 Interest. Payments are considered due on the dates and at the times described in this Agreement, and if not so stated, within 30 days of the dateof the event requiring the payment. Payment is made when received by JHU. Payments not received within 30 days of the11 due date shall, beginning on the due date, bear interest at the rate of 6% per annum, whether or not JHU has made a demand for such payment or interest.Acceptance of late payments without interest will not act as a waiver of this provision.5.13 Payments and Obligations.  All payments and obligations which come due shall be and remain due, and the existence of a dispute shall notsuspend any duties under this License Agreement.5.14 Invoicing by JHU.   JHU may submit all invoices for any payments due in electronic form via e-mail sent to the e-mail address supplied byLICENSEE from time to time. An invoice directed to the last email address provided by LICENSEE to JHU shall be deemed received by LICENSEE when sentby JHU.5.15 Method of Payment.  All payments under this Agreement shall be made in U.S. Dollars by either check or wire transfer.5.16 Payment Information.All check payments from LICENSEE to JHU shall be sent to: Attention: Executive DirectorJohns Hopkins Technology VenturesThe Johns Hopkins University100 N. Charles Street5th FloorBaltimore, MD 21201Attn: [A28277]or such other addresses which JHU may designate in writing from time to time. Checks are to be made payable to the "Johns Hopkins University". Wiretransfers may be made through:ACH Info: [*] FED WIRE: [*]12 FED WIRE: [ *]LICENSEE shall be responsible for any and all costs associated with wire transfers.6.  ROYALTY REPORTS AND ACCOUNTING6.1 Quarterly Earned Royalty Payment and Report.  Beginning with the FIRST COMMERCIAL SALE of a LICENSED PRODUCT orLICENSED SERVICE, LICENSEE will thereafter submit to JHU a written report 30 days after the end of each calendar quarter (even if there are no sales duringthat quarter), along with payment of any earned royalty due. This report will be in the form of Exhibit B and will state the number, description, and aggregateNET REVENUES of LICENSED PRODUCTS and LICENSED SERVICES during the completed calendar quarter. Such reports must be filed and paymentsmade during any claim against or challenge to the scope or validity of the PATENT RIGHTS.6.2 No Refund.   In the event that a validity or non-infringement challenge of a LICENSED PATENT is successful, LICENSEE will have no right torecoup any royalties paid before or during the challenge period.6.3 Termination or Expiration Report.  LICENSEE will pay to JHU all applicable royalties and submit to JHU a written report within 90 days afterthe license expires or terminates. LICENSEE will continue to submit earned royalty payments and reports to JHU after the license terminates, until allLICENSED PRODUCTS made or imported under the license have been sold, and thereafter until the time for paying earned royalties has expired.6.4 Accounting.       LICENSEE will maintain records showing manufacture, importation, sale, and use of LICENSED PRODUCTS orperformance of LICENSED SERVICES and the revenue received for seven (7) years from the date of sale of that LICENSED PRODUCT or LICENSEDSERVICE. Records will include general-ledger records13showing cash receipts and expenses, and records that include: production records, customers, invoices, serial numbers, and related information in sufficientdetail to enable JHU to determine the royalties payable under this Agreement.6.5 Audit  by JHU.  LICENSEE will allow JHU or its designee to examine LICENSEE's records at reasonable times and frequency at JHU'sexpense, to verify payments made by LICENSEE under this Agreement. If the audit reveals an under reporting of earned royalties due JHU of 5% or more forthe period being audited, LICENSEE will pay the additional royalties due, and reimburse JHU the reasonable audit costs incurred.7.        WARRANTIES, EXCLUSIONS AND NEGATION7.1 JHU  Warranty.  JHU represents that the Inventors listed have provided an invention disclosure to the JHU Office of Technology Transfer(JHTT), that the Inventors have assigned such rights as they have in the Inventions to JHU, and that JHU, as assignee of the Inventions, has filed the patentapplications referred to in this Agreement. To the best of JHU's knowledge, information and belief, the LICENSED PATENT(S) accurately list the inventors ofthat patent right and JHU has received no claims of a third party to rights in the Licensed Patents other than as may be specifically stated in this Agreement. JHU does not warrant against presently unknown claims of third parties that may arise after this Agreement.7.2 Negation   of  Warranties.  JHU PROVIDES LICENSEE THE RIGHTS GRANTED IN THIS AGREEMENT AS IS AND WITH ALLFAULTS. JHU MAKES NO OTHER REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED.AMONG OTHER THINGS, JHU DISCLAIMS ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY, OR FITNESS FOR APARTICULAR PURPOSE.7.3 No Representation of LICENSED PATENT. LICENSEE also acknowledges that JHU does not represent or warrant:(i) the validity or scope of any LICENSED PATENT, or(ii)that the exploitation of LICENSED PATENT or TECHNOLOGY will be successful, or(iii)that there are no third party claims or prior filed patents that would affect ownership ofthe TECHNOLOGY or freedom to operate.7.4 No other Promises or Warranties . Other than the obligations specifically stated in this Agreement, JHU makes no promises, express orimplied, regarding the TECHNOLOGY. LICENSEE agrees that no representation or statement by any JHU employee shall be deemed to be a statement orrepresentation by JHU, and that LICENSEE was not induced to enter this Agreement based upon any statement or representation of JHU, or any employee ofJHU. JHU is not responsible for any publications, experiments or results reported by any JHU employee, now or in the future, including any of theINVENTORS and it is the sole responsibility of LICENSEE to evaluate the TECHNOLOGY and the accuracy of any data or results.148.  INDEMNITY AND INSURANCE8.1 Application.   LICENSEE shall have exclusive control over the LICENSED PRODUCTS and LICENSED SERVICES provided by LICENSEE,and the risks and costs associated therewith. Therefore, LICENSEE will protect JHU INDEMNITEES from exposure to damages which arise from the actionsof LICENSEE.8.2 Indemnification.        LICENSEE, AFFILIATED COMPANY and/or SUBLICENSEE agree that each shall be responsible for injuries or lossesto third parties arising from or related to their own acts or omissions, or caused by or arising from LICENSED PRODUCTS or LICENSED SERVICES, orallegedly arising as a consequence of the exercise by LICENSEE, AFFILIATED COMPANY or SUBLICENSEE of any rights granted in this Agreement. Tothat end, LICENSEE, AFFILIATED COMPANY and SUBLICENSEE shall protect JHU INDEMNITEES from any third-party claims arising therefrom,including defending any action brought against JHU INDEMNITEES, with counsel reasonably acceptable to JHU, and indemnifying JHU INDEMNITEES asagainst any judgments, fees, expenses, or other costs arising from or incidental to any such lawsuit, claim, demand or other action, whether or not any JHUIndemnitee, is named as a party defendant in any such lawsuit and whether or not the JHU INDEMNITEES are alleged to be negligent or otherwise responsiblefor any injuries to persons or property. Exercise of the rights granted in this Agreement, by an AFFILIATED COMPANY or an agent or a SUBLICENSEE or athird party on behalf of or for the account of LICENSEE, shall be considered LICENSEE's practice of said inventions for purposes of this Paragraph.8.3 Exclusions.8.3.1 No indemnification will be provided for claims arising from the practice by a JHU Indemnitee of the PATENT RIGHTS, KNOW HOWor other TECHNOLOGY or exercise of rights retained by JHU under this Agreement.8.3.2 No indemnification will be provided for a claim against a JHU Indemnitee for injuries allegedly to the extent caused by negligent useor administration by a JHU Indemnitee of a LICENSED PRODUCT or LICENSED SERVICE, but any products liability or similar claim based upon aLICENSED PRODUCT or LICENSED SERVICE, made by or provided by LICENSEE or any AFFILIATED COMPANY or SUBLICENSEE will otherwise becovered by this indemnification requirement.8.4 Survival  after termination.    The obligation of LICENSEE to defend and indemnify as set out in this Paragraph shall survive the terminationof this Agreement, shall continue even after assignment of rights and responsibilities to an AFFILIATED COMPANY or SUBLICENSEE, and shall not belimited by any other limitation of liability elsewhere in this Agreement.8.5 Rights and obligations of JHU.   JHU shall provide LICENSEE with prompt notice of any claims covered by LICENSEE's obligation toindemnify, and will provide reasonable cooperation to LICENSEE in LICENSEE's investigation and defense of such claims. JHU shall have the right toparticipate in such defense with counsel of its choice and at JHU's own expense. JHU shall have the right to approve the settlement of any claim hereunder that15imposes any liability or obligation on JHU, or affects the PATENT RIGHTS, other than the payment of money damages paid by the LICENSEE.8.6 Insurance. Prior to initial human testing or FIRST COMMERCIAL SALE of any LICENSED PRODUCT or LICENSED SERVICE,LICENSEE will establish and maintain Comprehensive General Liability Insurance, including Product Liability Insurance, with a reputable and financiallysecure insurance carrier acceptable to JHU to cover any liability of LICENSEE and JHU to third parties related to any LICENSED PRODUCT or LICENSEDSERVICE, or otherwise arising from the activities of LICENSEE, any AFFILIATED COMPANY or SUBLICENSEE. The LICENSEE or the acquired insurance will provide minimum limits of liability of $5,000,000 per claim and will include all JHU INDEMNITEES as additional insureds. LICENSEE willfurnish a Certificate of Insurance or other evidence of compliance upon reasonable request. All insurance of LICENSEE will be primary coverage; otherinsurance of JHU and JHU INDEMNITEES will be excess and noncontributory.9. PATENT PROSECUTION, MAINTENANCE, & INFRINGEMENT9.1 Prosecution & Maintenance.9.1.1 Filing  and  Prosecution.  JHU, at LICENSEE's expense, shall file, prosecute and maintain all patents and patent applicationsspecified under PATENT RIGHTS. Title to all such patents and patent applications shall reside in JHU. JHU shall have final decision authority over all patentprosecution and maintenance matters. JHU shall (a) request its patent counsel to timely copy LICENSEE on all official actions and written correspondence withany patent office, including drafts of responses, (b) allow LICENSEE an opportunity to comment and advise JHU, and (c) consider in good faith comments andadvice of LICENSEE and reasonably incorporate such comments into the filings and responses.9.1.2 Responsibility of LICENSEE. LICENSEE shall be responsible for exercising its right to comment and advise JHU with respect topatent prosecution and maintenance matters, including assuring timely review of patents drafted or filed, timely filing as necessary and payment of requiredcosts.9.1.3 Election  not to file in certain jurisdictions.  By concurrent written notification to JHU and its patent counsel at least thirty (30) daysin advance (or later at JHU's discretion) of any filing or response deadline, or fee due date, LICENSEE may elect not to have a patent application filed in anyparticular country or not to pay expenses associated with prosecuting or maintaining any patent application or patent, provided that LICENSEE pays for all costsincurred up to JHU's receipt of such notification. Failure to provide such notification will be considered by JHU to be LICENSEE's authorization to proceed atLICENSEE's expense. Upon such notification, JHU may file, prosecute, and/or maintain such patent applications or patent at its own expense and for its own benefit, and any rights or license granted hereunder held by LICENSEE, AFFILIATED COMPANIES or SUBLICENSEE(S) relating to the PATENTRIGHTS which comprise the subject of such patent applications or patent and/or apply to the particular country, shall terminate, and thereafter reside solely inJHU.169.1.4 Orange Book Listings.    At least fifteen (15) business days prior to expiration of the time period under 21 C.F.R. 314.53 forsubmitting patent information pertaining to LICENSED PATENT with respect to a LICENSED PRODUCT or LICENSED SERVICE, LICENSEE shall submitto JHU any such draft submission, including any forms such as Form FDA 3542, Form FDA 3542a or any equivalent thereof, for JHU's review and comment.LICENSEE shall consider in good faith any comments made by JHU. In the event that the parties' respective patent counsel, after good faith discussions, cannotagree with respect to any decision to be made under this Paragraph then LICENSEE shall make such decision.9.1.5 Application for Patent Term Extension.  The parties shall cooperate in obtaining patent term extensions. At least fifteen (15) businessdays prior to the expiration of any statutory or other regulatory time period in the Territory for submitting an application for patent term extension pertaining toany of the PATENT RIGHTS included in the LICENSED PATENT rights, including applications for interim extension and SPC in the U.S. or in a foreigncountry in the Territory, LICENSEE shall submit to JHU a draft application therefor for JHU's review and comment. LICENSEE shall consider in good faithany comments made by JHU pursuant to this Paragraph. In the event that the parties cannot agree with respect to any decision to be made under this Paragraph,including the patent to apply for extension, then LICENSEE shall make such decision.9.2 Notification of Infringement by third party.  Each party will notify the other promptly in writing when any infringement by any third party isuncovered or suspected.9.3 Suit for Infringement.9.3.1 LICENSEE shall have the first right to enforce the PATENT RIGHTS against any infringement or alleged infringement thereof, andshall at all times keep JHU informed as to the status thereof. This right to sue for infringement shall not be used in an arbitrary or capricious manner. BeforeLICENSEE commences an action with respect to any infringement of such patents, LICENSEE shall give careful consideration to the views of JHU and topotential effects on the public interest in making its decision whether or not to sue. Thereafter, LICENSEE may, at its own expense and discretion, institute suitagainst any such infringer or alleged infringer and control and defend such suit in a manner consistent with the terms and provisions hereof. JHU agrees to benamed as nominal third party plaintiff if necessary to the commencement of any such suit and to cooperate fully with LICENSEE in connection therewith.9.3.2 No settlement, consent judgment or other voluntary final disposition of the suit may be concluded without the prior written consent ofJHU, which consent shall not be unreasonably withheld. JHU shall reasonably cooperate in any such litigation at LICENSEE's expense.9.3.3 If LICENSEE elects not to enforce any patent within the PATENT RIGHTS, it shall so notify JHU promptly in writing and JHU may,in its sole judgment and at its own expense, take steps to enforce any patent and control, settle, and defend such suit in a manner consistent with the terms andprovisions hereof, and recover, for its own account, any damages, awards or settlements resulting therefrom.179.4 Patent Invalidity Suit.  LICENSEE shall have the first right (but not the obligation) to defend at LICENSEE's expense a declaratory judgmentor other action brought by a third party naming LICENSEE or JHU as a defendant and alleging invalidity of any of the PATENT RIGHTS in which case JHUshall cooperate fully with LICENSEE. If LICENSEE opts not to defend, JHU in its discretion may elect to take over the sole defense of the action at its ownexpense, in which case LICENSEE shall cooperate fully with JHU in connection with any such action.9.5 Recovery. LICENSEE shall pay to JHU fifteen percent (15%) of any monetary award, settlement or recovery, net of all reasonable attorneys'fees and out-of-pocket costs and expenses paid to third parties by LICENSEE in connection with each suit or settlement. If the cost and expenses exceed therecovery no additional amount shall be paid to JHU.10.  HANDLING AND RESOLUTION OF DISPUTES.10.1 Governing Law. This Agreement shall be construed, and legal relations between the parties hereto shall be determined, in accordance with thelaws of the State of Delaware applicable to contracts executed and wholly to be performed within the State of Delaware without giving effect to the principles ofconflicts of laws. Any disputes between the parties to this Agreement including the applicability or validity of any PATENT RIGHTS, shall be brought in thestate or federal courts located in Wilmington, Delaware. Both parties agree to waive their right to a jury trial and to consent to jurisdiction in such courts.10.2 Resolution.  The parties shall attempt to resolve all disputes through informal means. This may include mediation, arbitration, or any otherprocedures upon which the parties agree. Each party agrees that, prior to resorting to litigation, it will confer with other party to determine whether otherprocedures that are less expensive or less time consuming can be adopted to resolve the dispute.10.3 Challenges to PATENT RIGHTS, Scope and Applicability - requirements during and after challenge of PATENT RIGHTS byLICENSEE. LICENSEE shall ensure that the terms of this Paragraph 10.3 and its sub-paragraphs are included in any SUBLICENSE. If LICENSEE,AFFILIATED COMPANY or SUBLICENSEE brings formal legal action before a court or governmental authority of competent jurisdiction against JHUchallenging the validity or scope of the PATENT RIGHTS, or applicability of the PATENT RIGHTS to a LICENSED PRODUCT or LICENSED SERVICE thefollowing shall apply.10.3.1 Actions by a SUBLICENSEE shall be attributed to LICENSEE only if the action was taken at the direction of or written consent ofLICENSEE. In all other cases, the provisions of this Paragraph 10.3 shall not apply to SUBLICENSEE, notwithstanding the terms hereof.10.3.2 If such action determines that at least one claim of a patent challenged by LICENSEE, AFFILIATE or SUBLICENSEE is valid and, ifapplicable, but for this Agreement, infringed by a LICENSED PRODUCT or LICENSED SERVICE, the party challenging will thereafter, except as to PATENTCOSTS, pay twice the payment amount which would otherwise be required to be paid under the original LICENSE or SUBLICENSE. For clarity, this shall18apply to MAR's, Milestones, Sublicensing fees, royalty rates and other payments, except incurred PATENT COSTS which will be paid as otherwise agreed.10.3.3 If such action determines that at least one claim of a patent challenged by LICENSEE, AFFILIATED COMPANY or SUBLICENSEEis valid and, if applicable, but for this Agreement, infringed by a LICENSED PRODUCT or LICENSED SERVICE, the LICENSEE, AFFILIATEDCOMPANY or SUBLICENSEE challenging will pay all reasonable attorneys' fees and litigation costs, including expert witness fees and exhibit preparationcosts incurred by JHU in defending the challenge.10.3.4 During the course of such challenge, all payments otherwise required by this Agreement shall be paid as and when due, to the sameextent as if there were no challenge to the PATENT RIGHTS, and LICENSEE, AFFILIATED COMPANY or SUBLICENSEE will have no right to recoup anypayments, including royalties, which become due before or during the challenge.10.3.5 LICENSEE, AFFILIATED COMPANY or SUBLICENSEE shall not pay royalties into any escrow or other similar account, but shallmake all payments to JHU as due and when due, unless LICENSEE or SUBLICENSEE has prior to the payment becoming due, voluntarily and completelyterminated this Agreement. Timely and complete payment and full compliance by LICENSEE, AFFILIATED COMPANY and SUBLICENSEE with all termsof this Agreement shall be a condition precedent to bringing and maintaining the legal action challenging the PATENT RIGHTS.10.3.6 No less than three months prior to bringing an action seeking to invalidate or limit a LICENSED PATENT, LICENSEE, AFFILIATEDCOMPANY or SUBLICENSEE will provide written notice of the expected challenge to JHU which shall include a clear statement of the factual and legal basisfor the challenge, and an identification of all prior art and other matter believed to invalidate any claim of the LICENSED PATENT or which supports the claim that the LICENSED PATENT does not apply to the LICENSED PRODUCT or LICENSED SERVICE.11.  TERM AND TERMINATION11.1 Term. The term of this Agreement shall commence on the EFFECTIVE DATE and shall continue, in each country in the LICENSEDTERRITORY, until the date of expiration of the last to expire patent included within PATENT RIGHTS in that country or if no patents issue then for a termoften (10) years from the FIRST COMMERCIAL SALE in such country of this Agreement. Following expiration of this Agreement, on a country-by-countrybasis, all non- exclusive license grants hereunder shall be fully-paid up, sublicensable, assignable, irrevocable and perpetual; provided that LICENSEE and anysublicensee or assignee shall remain bound by the terms and conditions of Sections 7, 8.1-8.5, 12.2, 12.3, 12.4, 12.5 and 12.7 of this Agreement with respect tosuch non-exclusive licenses.11.2 Termination by LICENSEE.   LICENSEE may terminate this Agreement in whole or in part by giving JHU written notice at least 90 days in advance of the proposed effective date of termination selected by LICENSEE. LICENSEE shall pay all sums due under19this Agreement, including Minimum Annual Royalties, earned royalties, Milestone payments or PATENT COSTS which are incurred or are or become dueprior to the effective date of termination. In addition, LICENSEE shall also be obligated to pay any PATENT COSTS which are required to be incurred topreserve the patent prior to the effective date of termination, and any other costs which JHU has incurred or will incur prior to the termination date which underthis Agreement are required to be reimbursed by LICENSEE. Termination is not effective and payments shall continue to accrue and become due until allamounts due to JHU shall have been paid.11.3Termination by JHU. JHU may terminate this Agreement if LICENSEE:(i) is delinquent on any report, payment or other obligation;(ii) is not using commercially reasonable efforts to diligently develop and commercialize LICENSED PRODUCT in accordance withParagraph 4.2;(iii) misses a milestone that has a required date for completion described inExhibit A;(iv) is in material breach of any provision of this Agreement or of any related agreement including a related sponsored research agreement;(v) provides any false report; or(vi) voluntarily or involuntarily enters bankruptcy or receivership proceedings. Termination under this Paragraph will take effect 30 days after written notice by JHU unlessLICENSEE cures the default within that 30-day period. If LICENSEE has had no prior defaults, and LICENSEE is diligently and in good faith attempting tocure the default, LICENSEE may request, and JHU shall grant an additional 60 days to cure the default.11.4 Failure to meet a required diligence milestone. If this Agreement provides for diligence milestones which must be accomplished by specifieddates or within specified periods of time, LICENSEE may cure any default for failure to meet a required diligence milestone in accordance with this subsection.(i) LICENSEE must be using commercially reasonable efforts to diligently pursue the milestone;(ii) LICENSEE can cure such default, by paying $1 0,000 within the 30-day cure period, which will automatically extend the milestonedate (and the full amount of the original milestone payment) and any subsequent milestones relying upon the meeting of themissed milestone for an additional six (6) months.(iii) Such a cure may be made no more than twice as to any one milestone.12.     MISCELLANEOUS PROVISIONS.2012.1 PATENT MARKING.  LICENSEE agrees that all LICENSED PRODUCT(S) sold by LICENSEE, AFFILIATED COMPANIES andSUBLICENSEE(S) of LICENSEE will be marked with the number of the applicable patent(s) licensed hereunder in accordance with each country's patent laws.12.2 Use of Name. LICENSEE, AFFILIATED COMPANIES and SUBLICENSEE(S) shall not use the name of The Johns Hopkins University orThe Johns Hopkins Health System or any of its constituent parts, such as the Johns Hopkins Hospital, Johns Hopkins Medicine or any contraction thereof or thename of Inventors in any advertising, promotional literature, Web sites, electronic media applications, sales literature, fundraising documents, or press releasesand other print or electronic communications without prior written consent from an authorized representative of JHU. LICENSEE, AFFILIATED COMPANIESand SUBLICENSEE(S) shall allow at least seven (7) business days' notice of any proposed public disclosure for JHU's review and comment or to providewritten consent. Such request shall be made through JHTT.12.3 No Partnership. Nothing in this Agreement shall be construed to create any agency, employment, partnership, joint venture or similarrelationship between the parties other than that of a licensor/licensee. Neither party shall have any right or authority whatsoever to incur any liability orobligation (express or implied) or otherwise act in any manner in the name or on the behalf of the other, or to make any promise, warranty or representationbinding on the other.12.4 Notice of Claim.  Each party shall give the other or its representative immediate notice of any suit or action filed, or prompt notice of anyclaim made, against them arising out of the performance of this Agreement or arising out of the practice of the inventions licensed hereunder.12.5 ASSIGNMENT.12.5.1 Permitted Assignment by LICENSEE. Subject to this Paragraph 12.5, LICENSEE may assign this Agreement as part of a sale,merger or other transfer with respect to the line of business of LICENSEE to which this Agreement relates, regardless of whether such a sale occurs through anasset sale, stock sale, merger or other combination if the sale or merger is of LICENSEE's entire business related to the PATENT RIGHTS. Any other attemptto assign this Agreement by LICENSEE is null and void in the absence of JHU's written permission.12.5.2 Conditions of Assignment.  Prior to any assignment, the following conditions must be met:(i)LICENSEE must give JHU 30 days prior written notice of the assignment, including the new assignee's contact information; and(ii) the new assignee must agree in writing to JHU to be bound by thisAgreement.12.5.3 Assignment Payment to JHU.  Where the assignment is the result of complete sale or merger of LICENSEE, then LICENSEE (or itsassignee) shall pay to JHU an assignment fee described in Exhibit A. For the avoidance of doubt, all assignees of LICENSEE21shall be subject to the terms and conditions of this Agreement (including with respect to royalty and milestone payments) as if the assignee was "LICENSEE"hereunder.12.5.4 After the Assignment. Upon a permitted complete assignment of this Agreement, LICENSEE will be released from further obligationsunder this Agreement, except for those sections that survive termination, and the term "LICENSEE" in this Agreement will thereafter mean the assignee.12.6 Notice.  Except for those communications which specifically under this Agreement may be sent via e-mail or other electroniccommunication (such as notification of PATENT COSTS incurred and due, and other routine communications), all notices, requests or communications requiredor permitted to be given by either party hereunder shall be given by registered mail or certified mail, return receipt requested, or sent by overnight courier, suchas Federal Express, to the other party at its respective address set forth below or to such other address as one party shall give notice of to the other from time totime hereunder. Notices shall be deemed effective when received.If to LICENSEE: Progenics Pharmaceuticals, Inc.777 Old Saw Mill River RoadTarrytown, NY 10591Attn: PresidentIf to JHU: Executive DirectorJohns Hopkins Technology Ventures100 N. Charles Street, 5th FloorBaltimore, MD 21201Communications requiring a prompt response should also be sent via email to Neil Veloso, [*] and to Steve Kousouris, [*].12.7 Compliance with  All Laws.  In all activities undertaken pursuant to this Agreement, both JHU and LICENSEE covenant and agree thateach will in all material respects comply with such Federal, state and local laws and statutes, as may be in effect at the time of performance and all valid rules,regulations and orders thereof regulating such activities.12.8 Successors and Assigns.  Other than as specifically stated herein, neither this Agreement nor any of the rights or obligations created herein,except for the right to receive any remuneration hereunder, may be assigned by either party, in whole or in part, without the prior written consent of the otherparty. This Agreement shall bind and inure to the benefit of the successors and permitted assigns of the parties hereto.12.9 No Waivers; Severability.  No waiver of any breach of this Agreement shall constitute a waiver of any other breach of the same or otherprovision of this Agreement, and no waiver shall be effective unless made in writing and signed by the party waiving. Any provision hereof prohibited by orunenforceable under any applicable law of any jurisdiction shall as to such jurisdiction be deemed ineffective and deleted herefrom without affecting any other22provision of this Agreement. It is the desire of the parties hereto that this Agreement be enforced to the maximum extent permitted by law, and should anyprovision contained herein be held by any governmental agency or court of competent jurisdiction to be void, illegal and unenforceable, the parties shallnegotiate in good faith for a substitute term or provision which carries out the original intent of the parties.12.10 Entire Agreement; Amendment. LICENSEE and JHU acknowledge that they have read this entire Agreement and that this Agreement, including the attached Exhibits, constitutes the entire understanding and contract between the parties hereto and supersedes any and all prior or contemporaneousoral or written communications with respect to the subject matter hereof, all of which communications are merged herein. It is expressly understood and agreedthat: (i) there being no expectations to the contrary between the parties hereto, no usage of trade, verbal agreement or another regular practice or method dealingwithin any industry or between the parties hereto shall be used to modify, interpret, supplement or alter in any manner the express terms of this Agreement; and(ii) this Agreement shall not be modified, amended or in any way altered except by an instrument in writing signed by both of the parties hereto.12.11 Binding Agreement. Exchange of this Agreement in draft or final form between the parties shall not be considered a binding offer, and thisAgreement shall not be deemed final or binding on either party until the final Agreement has been signed by both parties.12.12 Delays or Omissions. Except as expressly provided herein, no delay or omission to exercise any right, power or remedy accruing to any partyhereto, shall impair any such right, power or remedy to such party nor shall it be construed to be a waiver of any such breach or default, or an acquiescencetherein, or in any similar breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consentor approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of anyprovisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies eitherunder this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.12.13 Survival. All representations, warranties, covenants and agreements made herein and which by their express terms or by implication are to beperformed or continue to apply after the execution and/or termination hereof, or are prospective in nature, shall survive such execution and/or termination, asthe case may be. In addition, the following shall explicitly and specifically survive any termination or expiration:(i) LICENSEE's obligation to make payments to JHU, accrued or accruable during the term of this Agreement, including earned royalties,sublicensing payments, reimbursement of PATENT COSTS, late payments and interest;(ii) any claim of LICENSEE or JHU, accrued or to accrue, because of any breach or default by the other party; and(iii) the provisions of Articles 7 and 8.2312.14 No Third Party Beneficiaries.  Nothing in this Agreement shall be construed as giving any person, firm, corporation or other entity,other than the parties hereto and their successors and permitted assigns, any right, remedy or claim under or in respect of this Agreement or anyprovision hereof.12.15 Headings.  Article and Paragraph headings are for convenient reference and not a part of this Agreement. All Exhibits areincorporated herein by this reference.12.16 Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which whentaken together shall be deemed but one instrument.IN WITNESS WHEREOF, this Agreement shall take effect as of the EFFECTIVE DATE when it has been executed below by the dulyauthorized representatives of the parties.THE JOHNS HOPKINS UNIVERSITY PROGENICS PHARMACEUTICALS, INC. /s/ Neil Veloso /s/ Mark BakerNeil Veloso Mark Baker Executive DirectorChief Executive OfficerJohns Hopkins TechnologyTransfer Progenics Pharmaceuticals7/29/15 7/27/15 (Date)(Date)This Agreement Includes the following and all terms stated therein:Exhibit A: License Deal Sheet.Exhibit B: Quarterly Sales & Royalty Report Form.Exhibit C: Diligence and Annual Report Guidelines.Exhibit D: Global Access for Essential Medicines.Exhibit E: KNOW-HOW24EXHIBIT ALICENSE DEAL SHEETPATENTS, FEES, ROYALTIES,SUBLICENSING PAYMENTSAND OTHER TERMS SPECIFIC TO THE LICENSE 1.Patents and Inventors: The patents and patent applications listed below and claiming priority from and including USProvisional Applications [*] and [*], and PCT application [*], entitled "PSMA-binding agents and uses thereof;" JHUREF Patent/application serial no. Country Inventor C10446[*][*] [*][*] [*][*] [*][*] [*][*] [*][*] [*][*] [*][*] [*][*] [*][*] [*][*] [*][*] [*][*] 2.Unreimbursed Patent Costs : As of July 17, 2015, unreimbursed PATENT COSTS incurred prior to the EFFECTIVE DATE("Past Patent Expenses") are approximately $135,572. Company will reimburse JHU for such Past Patent Expenses in twelve(12) equal quarterly installments. With respect to PATENT COSTS incurred on or after the EFFECTIVE DATE, Companyshall reimburse JHU within thirty (30) days of receipt of an invoice from JHU.3. Licensed Field of Use : Use of DCFPyL for PET imaging applications.4.Right of First Negotiation for Additional Fields of Use: In the event that JHU desires to grant a license of all or any part ofthe PATENT RIGHTS to a third party for any field of use outside the LICENSED FIELD of USE, JHU shall first offer suchlicense for such25field of use to LICENSEE. LICENSEE shall have ninety (90) days to determine whether to accept and acquire such licensewhereupon LICENSEE shall notify JHU of its determination. In the event that LICENSEE elects not to acquire the license,JHU shall be free to grant the license to a third party. In the event that LICENSEE elects to acquire such license, the partiesagree to negotiate in good faith the terms of such license which terms shall not differ materially from those contained herein.In the event that the parties do not enter into a written agreement for such license within ninety (90) days, JHU shall be freeto grant the license to a third party. 5.License Fee : The license fee due under Paragraph 5.1 is one hundred fifty thousand dollars ($150,000).6.LICENSED TERRITORY : Worldwide, excluding the countries of Australia and New Zealand.7.Minimum Annual Royalties. The minimum annual royalties pursuant to the Agreement are:Anniversary of the EFFECTIVEDATEAmount1US$ nil2US$ nil3US$ nil4US$ 10,0005US$ 20,0006US$ 30,0007+US$ 50,0008. Royalties. The earned royalty rate payable under Paragraph 5.5 is 3%.9.Milestone payments. Upon the completion of diligence milestones by LICENSEE, an AFFILIATED COMPANY orSUBLICENSEE per Paragraph 5.4, LICENSEE shall remit payment to JHU as indicated below. In the event that a Phase Iand/or Phase II clinical trial is conducted at JHU, LICENSEE is excused from making the accrued related milestone paymentto JHU until the milestone for the Phase III clinical trial is met. Under such circumstance, LICENSEE agrees that it will paythe accrued Phase I and Phase II milestone payments when it submits Phase III milestone payment to JHU. Milestones shall by payable only once, regardless of the number of LICENSED PRODUCTS or LICENSED SERVICES advanced throughdevelopment.a.Seventy Five Thousand Dollars ($75,000) upon the first Successful Completion of a Phase II ClinicalTrial with the US FDA (or foreign equivalent) at a site other than JHU;b.One Hundred Seventy Five Thousand Dollars ($175,000) upon Successful Completion of a Phase IIIClinical Trial with the US FDA (or foreign equivalent), plus the milestone in (a) if not already paid due tothe trial being conducted at JHU.26c.One million dollars ($1,000,000) upon FIRST COMMERCIAL SALE of a Licensed Product or LicensedService in the United States after all regulatory approvals required for marketing to the general public in theUnited States have been obtained.d.One million dollars ($1,000,000) upon FIRST COMMERCIAL SALE of a Licensed Product or LicensedService in France, Germany, Italy, Spain or the United Kingdom (each a "Major Market Country") after allregulatory approvals required for marketing to the general public in such country have been obtained.For the purposes of this Section, "Successful Completion" shall mean achievement of the primary endpoint(s) for such trialwith the intent that LICENSEE may then proceed to the next phase of clinical trial or subsequent step in the regulatoryapproval process, as appropriate.10.Diligence Milestones: Per Section 4.2 of the Agreement, LICENSEE will use commercially reasonable efforts to meet themilestones and target dates below and notify JHU in writing within 30 days after each milestone is met.a.LICENSEE shall submit to JHU a detailed research and development plan for 18F-DCFPyL (3-{1-Carboxy-5-[(6-[18F] fluoro-pyridine-3-carbonyl)- amino]-pentyl}-ureido)-pentanedioic acid referred to as[18F]DCFPyL), including an anticipated time line for reaching key development milestones prior to theEFFECTIVE DATE of this Agreement.b.LICENSEE shall submit to JHU a detailed commercialization plan for entering into the Major MarketCountries and the Asia Countries within two (2) years of the EFFECTIVE DATE.c.Dosing of the first patient in a Confirmatory Phase II Clinical Trial within two (2) years of the EFFECTIVEDATE, where "Confirmatory Phase II Clinical Trial" means at least 35 patients intending to serve as supportfor a subsequent Phase III study.d. Establishment of the commercial manufacturing process for 18F-DCFPyLwithin three (3) years of the EFFECTIVE DATE.e.Dosing of the first patient outside of the United States in a Confirmatory Phase II Clinical Trial or foreignequivalent within four (4) years of the EFFECTIVE DATE.f.Dosing of the first patient in a Phase III Clinical Trial within four and one half (4 1/2) years of theEFFECTIVE DATE.11. Sharing of SUBLICENSING INCOME.2711.1If the SUBLICENSE is granted on or before the two (2) year anniversary of this Agreement, and if at that time,LICENSEE has invested less than $4,000,000 in developing LICENSED PRODUCTS or LICENSED SERVICESwhich are the subject of the SUBLICENSE, LICENSEE shall pay to JHU 35% of all SUBLICENSING INCOME.11.2If the SUBLICENSE is granted more than two (2) years after the date of this Agreement or after LICENSEE hasinvested $4,000,000, LICENSEE shall pay to JHU 20% of all SUBLICENSING INCOME.11.3Multiple technologies included in SUBLICENSE. Where multiple technologies or licenses in addition to thelicensed TECHNOLOGY are included on one SUBLICENSE, where the amount attributed to each is notspecifically stated in the SUBLICENSE, the amount attributable to each shall be deemed to apply equally to eachtechnology or license that is included in the SUBLICENSE. Where reasonable to do so, LICENSEE may requestanother application of the SUBLICENSING INCOME, by providing a written request and analysis to JHTT of thebasis for LICENSEE's request, but in no circumstance shall less than 10% of the SUBLICENSING INCOME beapplied to the TECHNOLOGY licensed by this Agreement.12.Assignment Payment to JHU (See Paragraph 12.5.3). Where the assignment is the result of complete sale or merger ofLICENSEE, then LICENSEE (or its assignee) shall pay to JHU an assignment fee of ten thousand dollars ($1   0,000 USD).For the avoidance of doubt, all assignees of LICENSEE shall be subject to the terms and conditions of this Agreement(including with respect to royalty and milestone payments) as if the assignee was "LICENSEE" hereunder.28EXHIBIT BQUARTERLY SALES & ROYALTY REPORTFOR LICENSE AGREEMENT BETWEENPROGENICS PHARMACEUTICALS, INC.ANDTHE JOHNS HOPKINS UNIVERSITYDATED JHU ReferenceNumber(s) , PERIOD:From To TOTAL ROYALTIES DUE FORTHIS PERIOD $ PRODUCTIDPRODUCTNAME*JHUREF. NO.1stCOMMERCIALSALE DATETOTAL NETREVENUES(SALES/SERVICES)ROYALTYRATEAMOUNTDUE *Please provide the JHU Reference Number or Patent Reference (C10446)This report format is to be used to report quarterly royalty statements to JHU. It should be placed on LICENSEEletterhead and accompany any royalty payments due for the reporting period. After the first sale on which royaltiesaccrue, this report shall be submitted even if no sales are reported.29EXHIBIT CDILIGENCE AND ANNUALREPORT GUIDELINESFOR LICENSE AGREEMENT BETWEENPROGENICS PHARMACEUTICALS, INC.ANDTHE JOHNS HOPKINS UNIVERSITYDATED JHU ReferenceNumber(s) , PERIOD:From To COPY OF LICENSEE's MOST RECENT ANNUAL REPORT FILED WITH THE UNITED STATES SECURITIES ANDEXCHANGE COMMISSION, IS APPLICABLE, IS ATTACHED.A. Progress by LICENSEE, AFFILIATED COMPANIES or SUBLICENSEE(S) toward commercialization of LICENSEDPRODUCTS or LICENSED SERVICES, including work completed, key scientific discoveries, summary of work-in-progress, currentschedule of anticipated events or milestones, market plans (if any) for introductio of LICENSED PRODUCTS or LICENSEDSERVICES, and significant corporate transactions involving LICENSED PRODUCTS or LICENSED SERVICES:B. Notice of all FDA or other governmental filings and/or approvals regarding any LICENSED PRODUCT or LICENSEDSERVICE made or obtained by LICENSEE, AFFILIATED COMPANY or SUBLICENSEE, the patents or patent applicationslicensed under this Agreement upon which such product or service is based, and the commercial name of such product or service:C. A Certificate of Insurance or other evidence of insurance is required and is attached. is not required. Reason: D. AFFILIATED COMPANIES and SUBLICENSEES which have exercised rights to theTECHNOLOGY: NONE List attached with description of rights exercised.E. Diligence and other milestones achieved:30F. Diligence and other milestones expected to be achieved this year:G. SUBLICENSE(s) entered during the year: NONEIdentification of SUBLICENSEE's (copy of the SUBLICENSE attached, if not previously provided):H. Change of control or name change or other significant change related to this Agreement or LICENSEE that would be relevant tothe TECHNOLOGY licensed hereunder: NONEDetails: I.If equity/member units received under this license, current capitalization table is required and is attached.31EXHIBIT DGLOBAL ACCESS FOR ESSENTIAL MEDICINESThe following terms, conditions, rights and duties shall be deemed to be a part of the License Agreement and shall beincluded therein, and shall be in addition to any terms in the Agreement.1. DEFINITIONS1.1GAVI COUNTRY shall mean any country listed as eligible to receive support from the GAVI Alliance (formerlyknown as the Global Alliance for Vaccines and Immunization), as such list may be updated from to time by theGAVI Alliance.1.2HUMANITARIAN PURPOSES shall mean practice of PATENT RIGHTS in the prevention or treatment ofdisease in humans by or on behalf of any Qualified Humanitarian Organization (including, for clarity, practice ofPATENT RIGHTS by contractors, manufactures or distributors acting for or on behalf of such QualifiedHumanitarian Organizations on a fee-for-service, fee-for-product or charitable basis): (a) to manufacture LICENSEDPRODUCTS anywhere in the world for the sole and express purposes of distribution and use of such LICENSEDPRODUCTS in one or more GAVI Countries, and (b) to sell or otherwise distribute LICENSED PRODUCTS foruse solely in one or more GAVI Countries; provided, however, that sales and distribution of LICENSEDPRODUCTS shall not be deemed made for Humanitarian Purposes unless products are distributed at locally-affordable prices.1.3 NON-GAVI COUNTRY shall mean any country that is not a GAVI Country.1.4QUALIFIED HUMANITARIAN ORGANIZATION shall mean any governmentalagency, non-governmentalagency or other not-for-profit organization that has as one of its bona fide missions to address the public health needsof underserved populations on a not-for-profit basis. For clarity, Qualified Humanitarian Organizations do notinclude non-governmental agencies and non- for-profit organizations that are funded or established for the benefit ofany for- profit entity.2. Retained Rights.2.1HUMANITARIAN PURPOSES. Subject to the prior written approval of LICENSEE, in its good faith solediscretion, JHU may license the TECHNOLOGY,including LICENSED PATENT(S), to a QUALIFIEDHUMANITARIAN ORGANIZATION for HUMANITARIAN PURPOSES, provided that any such license shall benon-exclusive and shall expressly prohibit the distribution or use of any LICENSED PRODUCT or LICENSEDSERVICE in any NON GA VI country. Prior to negotiating such license, JHU will notify LICENSEE, who shallhave the first right to directly negotiate a license with such organization if LICENSEE chooses.32 3. Sublicensing.3.1Without obligation, the Parties will endeavor to cooperate such that essential medicines which may be developedunder this License can be made available in economically disadvantaged nations. If LICENSEE chooses to provideLICENSED PRODUCTS or LICENSED SERVICES in a GAVI COUNTRY, JHU agrees to consider reasonablerequests of LICENSEE for a commensurate reduction of royalty and sublicensing fees in circumstances whereLICENSEE demonstrates to the satisfaction of JHU that LICENSED PRODUCTS or LICENSED SERVICES are orwill be made available in such nations at reduced cost.33Exhibit EKNOW-HOWKNOW-HOW consists of two broad but diverse areas:(a) the efficient synthesis of [ 18 F]DCFPyL. Johns Hopkins will provide knowledge with respect to generation of theprecursor and other intermediates to the final, radiolabeled adduct. They will also provide advice on alternative routes to precursorand other intermediates that have been attempted or are theoretical, as needed. That will include, for example, adaptation of thesynthesis to an automated system as might be used for a commercial product. Johns Hopkins will share synthetic details sufficient toproduce the Chemistry Manufacturing and Controls portion of an IND application. (b) clinical implementation with a view to completion of a phase II trial. Johns Hopkins will share clinicalexpertise and protocols detailing a recommended path forward to test [ 18 F]DCFPyL in patients with prostate cancer. Protocolsinvolve recommendations for whichsites to involve for enrollment, overall study design, determining inclusion and exclusioncriteria for subjects to enroll, methods by which to assess disease status, for example, response vs. progression, safety and PETimaging technique. Johns Hopkins will also provide advice regarding interpretation of or added depth to published materialsrelated to the development of [ 18 F]DCFPyL for human administration. 34Exhibit 10.48  Progenics Pharmaceuticals, Inc.777 Old Saw Mill River RoadTarrytown, New York 10591Fax: (914) 789-2817(914) 789-2800www.progenics.com   April 27, 2015[*]Re:  Offer of EmploymentDear Sheldon:This letter is to confirm our offer to you for the position of Executive Vice President and General Counsel reporting to Mark Baker, CEO with ProgenicsPharmaceuticals, Inc. This position includes the following compensation and benefits package:Salary : $15,625.00 semi-monthly ($375,000 per year). Payday is the 15 th and the last day of each month.Equity Participation : You may be granted an option to purchase 125,000 shares of Progenics' Common Stock. This grant is subject to approval by theCompensation Committee of the Company's Board of Directors at its next meeting. The exercise price of the option will be the closing price per share ofProgenics' Common Stock on the day the option is granted. The option will expire ten years from the date of grant and will be subject to the terms of theCompany's Stock Incentive Plan. You will receive an option agreement setting forth the specific terms of your option grant.Annual Bonus Plan : You will be eligible to participate in the Company Bonus Plan. Bonuses are based on Corporate and Individual Goal achievement. Yourannual target bonus is 40%.Benefits : Participation in Progenics' Medical, Dental, Vision, 401(k), and other benefit plans that are available for all professional employees. The Companycurrently matches 50% of employee's 401(k) contributions between 1% and 10% of compensation.You will accrue 20 days of Paid Time Off (PTO) per year, prorated your first year from your start date.Tuition Reimbursement : Reimbursement for tuition for all pre-approved course work at accredited institutions as described in the Company's Employee ResourceGuide.Performance & Salary Reviews : Your performance will be assessed under our normal performance management cycle. You will receive a performance and salaryreview at the end of each calendar year beginning 2015. Immigration Law : The Immigration Reform and Control Act of 1986 (IRCA) requires that Progenics, like all employers, verify the employment authorization ofevery employee hired in order to determine if the individual is legally authorized to work in the United States . The verification process requires that all newemployees complete and sign an Employment Eligibility Verification Form (Form I-9) certifying United States citizenship or authorization to work in the UnitedStates. It also requires that employers examine specific documents that the employee must provide within two days of starting work or within twenty days if proofis presented that request has been made to the appropriate agency for the necessary documents.   Progenics Pharmaceuticals, Inc.777 Old Saw Mill River RoadTarrytown, New York 10591Fax: (914) 789-2817(914) 789-2800www.progenics.com As we have explained, the above offer is contingent on your successful completion of full background verification, verification of your previous income, and thesigning of the enclosed statements of basic information about which all new employees ought to be aware. This offer does not constitute a contract ofemployment. Please confirm your acceptance of this offer by signing and dating this letter and returning it to the Senior Manager, Human Resources, markedPersonal & Confidential. I look forward to your joining Progenics on or before July 6, 2015.Very truly yours,/s/ Mark R. Baker Mark R. BakerChief Executive OfficerProgenics Pharmaceuticals, Inc. I confirm my acceptance of employment with Progenics Pharmaceuticals, Inc. subject to the terms and conditions of employment as set forth herein. /s/ Sheldon Hirt May 23, 2015 Sheldon Hirt Date   Progenics Pharmaceuticals, Inc.777 Old Saw Mill River RoadTarrytown, New York 10591Fax: (914) 789-2817(914) 789-2800www.progenics.com Employment Information for New EmployeesAttached are the following documents which describe important conditions of employment with Progenics Pharmaceuticals, Inc. It is important that you carefullyreview each document and initial, sign and witness in the spaces provided. The original documents are to be returned to Human Resources.-Employee Invention Assignment and Confidentiality Agreement-Employee Non-Competition and Non-Solicitation Agreement  Progenics Pharmaceuticals, Inc.777 Old Saw Mill River RoadTarrytown, New York 10591Fax: (914) 789-2817(914) 789-2800www.progenics.com EMPLOYEE INVENTION ASSIGNMENT AND CONFIDENTIALITY AGREEMENT Name: Sheldon HirtEmployment Date: On or before July 6, 2015In consideration of my employment, continued employment and the salary/wages paid to me by Progenics Pharmaceuticals, Inc. or any of its parent,subsidiary or affiliate companies (all hereafter collectively called " P rogenics ") and other good and valuable consideration, I understand and agree to thefollowing provisions for the protection of Progenics' property rights and for the protection of the rights of others who have entrusted Progenics with confidentialproprietary information:1. Disclosure to Progenics . I agree to disclose fully and promptly to Progenics all proprietary rights (the expression "proprietary rights" means allintellectual and physical work product having actual or potential value to Progenics including inventions, whether or not patentable and whether or not tested orreduced to practice, discoveries, ideas, conceptions, developments, designs, works of authorship, trade secrets, know-how and tangible expressions, whether or notcopyrightable, and whether or not relating to human pharmaceutical research and development, molecular biology, virology, immunology, biochemistry, dataprocessing, computer software systems, programs or procedures) developed, conceived, reduced to practice or learned by me solely or jointly with others, at anytime during the term of my employment and for a period of two years thereafter, and which proprietary rights relate to the actual or anticipated business activitiesof Progenics, result from, or are suggested by, work which I do for Progenics, are funded in whole or in part by Progenics, or result from any use of premises,equipment or property (tangible or intangible) owned, leased, licensed or contracted for by Progenics. I agree to make and maintain written records of theaforesaid proprietary rights and to submit promptly the same, and supplemental oral disclosure, to my superiors at Progenics.2. Ownership of Proprietary Rights . I acknowledge and agree that Progenics shall own, and I agree to assign and hereby do assign to Progenics, theentire right, title and interest in and to all proprietary rights embraced by Paragraph 1 above. I further agree to execute all papers, and otherwise to provide allrequested assistance, at Progenics' expense, during and subsequent to my employment, to enable Progenics or its nominees to perfect and enforce its proprietaryrights including, without limitation, obtaining such patents, copyrights and other legal protection as it may desire, in any country.3. Confidentiality . I agree to preserve in confidence and not to use, to publish, or to otherwise disclose to, either during or subsequent to myemployment, without the prior written permission of Progenics, all confidential proprietary rights or any knowledge, information or materials about the products,services, know-how, research and development, customers, business plans of Progenics or any confidential information about financial matters, marketing, pricing,compensation or any other confidential information of Progenics, its customers, or others from whom Progenics has received information under obligations ofconfidence (collectively, " Confidential Information ").  Progenics Pharmaceuticals, Inc.777 Old Saw Mill River RoadTarrytown, New York 10591Fax: (914) 789-2817(914) 789-2800www.progenics.com Notwithstanding the foregoing paragraph, any restriction on your use, publication or disclosure of Confidential Information shall not apply to any information: (a)that is in or subsequently enters the public domain through no fault of yours or any person affiliated with you in any manner; (b) that you have received orsubsequently receive from a third party under no duty of confidentiality to Progenics; and (c) solely with respect to disclosure of such information, that you arerequired to disclose pursuant to an order of a court of competent jurisdiction or another government agency having appropriate authority, provided that in suchevent you promptly notify Progenies of such requirement, and cooperate in all respects with Progenies in any effort to contest or limit the scope of the disclosure. The provisions of the foregoing clause (c) shall apply only for the purposes of each particular order where disclosure is required.4. Termination of Employment . In the event of the termination of my employment at Progenics, whether or not such termination is voluntary, I willdeliver promptly to my superior at Progenics all documents which relate to the business activities of Progenics, and all materials and things which belong to orhave been entrusted by others to Progenics including, without limitation, all physical embodiments of any proprietary rights of Progenics.5. Confidential Information of Others . I agree not to disclose to Progenics, or to use in my work at Progenics any confidential information belonging toothers, or any prior inventions made by me which Progenics is not entitled to learn of or use. I represent that the inventions identified in the _______ pages Iattach hereto constitute all of the unpatented inventions which I have made prior to my employment at Progenics, which inventions shall be excluded from thisagreement. (It is only necessary to list the title of such inventions and the purpose thereof.) If there are no such unpatented inventions, employee initials here:________.6. Prior Agreements . I represent that I have attached hereto a copy of any agreement (such as a prior employment agreement) which affects my ability tocomply with the terms of this agreement. If there is no such agreement, employee initials here: ______.7. Miscellaneous. This agreement shall be binding on my executors, administrators, heirs, legal representatives or assigns, and may not be modifiedexcept in writing with the approval of an officer of Progenics. If any provision of this agreement is determined to be illegal or unenforceable, because of theduration thereof or the area or scope covered, I hereby request any court making such determination to reduce the duration, area and/or scope so that in its reducedform such covenant shall be enforceable and I agree that in such event all remaining provisions shall remain in full force and effect.8. Governing Law . The validity, interpretation and performance of this Agreement shall be governed according to the laws of the State of New Yorkapplicable to agreements made and to be performed entirely in that state, without reference to any conflict of laws rules or principles. /s/ Sheldon Hirt Date: May 23, 2015 Sheldon Hirt 2   Progenics Pharmaceuticals, Inc.777 Old Saw Mill River RoadTarrytown, New York 10591Fax: (914) 789-2817(914) 789-2800www.progenics.com EMPLOYEE NON-COMPETITION AND NON-SOLICITATION AGREEMENTName: Sheldon HirtEmployment Date: On or before July 6, 2015In consideration of my employment, continued employment and the salary/wages paid to me by Progenics Pharmaceuticals, Inc. or any of its parent,subsidiary or affiliate companies (all hereafter collectively called " Progenics ") and other good and valuable consideration, I understand and agree to the followingprovisions for the protection of Progenics:1. Non-Competition . In the event of the termination of my employment at Progenics, to the extent that such termination is voluntary, I will not for aperiod of one (1) year accept a consulting engagement or employment with a company or other entity engaged in the development, production, marketing or sale ofproducts or services that directly compete or, upon commercialization, would directly compete with products of the Company being developed (so long as suchdevelopment has not been abandoned), marketed or sold at the time of termination, without written permission from Progenics. Such permission will not beunreasonably withheld in those instances where such employment does not involve risk of use or disclosure of any Confidential Information which I may acquireduring the course of my employment with Progenics. As used herein, the term "Confidential Information" refers to all confidential proprietary rights or anyknowledge, information or materials about the products, services, know-how, research and development, customers, business plans of Progenics or anyconfidential information about financial matters, marketing, pricing, compensation or any other confidential information of Progenics, its customers, or others fromwhom Progenics has received information under obligations of confidence.2. Non-Solicitation . During the term of my employment and for a period of two (2) years thereafter I will not solicit or attempt to induce, directly orindirectly, any employee of Progenics to accept a consulting engagement or employment.3. Miscellaneous . This agreement shall be binding on my executors, administrators, heirs, legal representatives or assigns, and may not be modifiedexcept in writing with the approval of an officer of Progenics. If any provision of this agreement is determined to be illegal or unenforceable, because of theduration thereof or the area or scope covered, I hereby request any court making such determination to reduce the duration, area and/or scope so that in its reducedform such covenant shall be enforceable and I agree that in such event all remaining provisions shall remain in full force and effect.4. Governing Law . The validity, interpretation and performance of this Agreement shall be governed according to the laws of the State of New Yorkapplicable to agreements made and to be performed entirely in that state, without reference to any conflict of laws rules or principles. /s/ Sheldon Hirt Date: May 23, 2015 Sheldon HirtExhibit 10.49   Progenics Pharmaceuticals, Inc.777 Old Saw Mill River RoadTarrytown, New York 10591Fax: (914) 789-2817(914) 789-2800www.progenics.com  November 12, 2015[*]Re:  Offer of EmploymentDear Patrick:This letter is to confirm our offer to you for the position of Senior Vice President and CFO, reporting to Mark Baker, Chief Executive Officer of ProgenicsPharmaceuticals, Inc. This position includes the following compensation and benefits package:Starting Salary and Payday : $14,583.34 semi-monthly ($350,000 per year). Payday is the 15 th and the last day of each month.Equity Participation : You may be granted an option to purchase 125,000 shares of Progenics' Common Stock. This grant is subject to approval by theCompensation Committee of the Company's Board of Directors at its next meeting. The exercise price of the option will be the closing price per share ofProgenics' Common Stock on the day the option is granted. The option will expire ten years from the date of grant and will be subject to the terms of theCompany's Stock Incentive Plan. You will receive an option agreement setting forth the specific terms of your option grant.Annual Bonus Plan: You will be eligible to participate in the Company Bonus Plan. Bonuses are based on corporate and Individual Goal achievement. Yourannual target bonus is 35%.Benefits : Participation in Progenics' Medical, Dental, Vision, 401(k), and other benefit plans that are available for all professional employees. The Companycurrently matches 50% of employee's 401(k) contributions between 1% and 10% of compensation.You will accrue 20 days of Paid Time Off (PTO) per year, prorated your first year from your start date.Tuition Reimbursement : Reimbursement for tuition for all pre-approved course work at accredited institutions as described in the Company's Employee ResourceGuide.Performance and Salary Reviews : Your performance will be assessed under our normal performance management cycle. You will receive a performance andsalary review at the end of each calendar year.Immigration Law : The Immigration Reform and Control Act of 1986 (IRCA) requires that Progenics, like all employers, verify the employment authorization ofevery employee hired in order to determine if the individual is legally authorized to work in the United States . The verification process requires that all newemployees complete and sign an Employment Eligibility Verification Form (Form I-9) certifying United States citizenship or authorization to work in the UnitedStates. It also requires that employers examine specific documents that the employee must provide within two days of starting work or within twenty days if proofis presented that request has been made to the appropriate agency for the necessary documents.  Progenics Pharmaceuticals, Inc.777 Old Saw Mill River RoadTarrytown, New York 10591Fax: (914) 789-2817(914) 789-2800www.progenics.com As we have explained, the above offer is contingent on your successful completion of full background verification, verification of your previous income, and thesigning of the enclosed statements of basic information about which all new employees ought to be aware. This offer does not constitute a contract ofemployment. Please confirm your acceptance of this offer by signing and dating this letter and returning it to the Senior Manager, Human Resources, markedPersonal & Confidential. I look forward to your joining Progenics on or before November 16, 2015.Very truly yours,/s/ Mark R. BakerMark R. BakerChief Executive OfficerProgenics Pharmaceuticals, Inc. I confirm my acceptance of employment with Progenics Pharmaceuticals, Inc. subject to the terms and conditions of employment as set forth herein. /s/ Patrick Fabbio November 12, 2015 Patrick Fabbio Date   Progenics Pharmaceuticals, Inc.777 Old Saw Mill River RoadTarrytown, New York 10591Fax: (914) 789-2817(914) 789-2800www.progenics.com Employment Information for New EmployeesAttached are the following documents which describe important conditions of employment with Progenics Pharmaceuticals, Inc. It is important that you carefullyreview each document and initial, sign and witness in the spaces provided. The original documents are to be returned to Human Resources.-Employee Invention Assignment and Confidentiality Agreement-Employee Non-Competition and Non-Solicitation Agreement  Progenics Pharmaceuticals, Inc.777 Old Saw Mill River RoadTarrytown, New York 10591Fax: (914) 789-2817(914) 789-2800www.progenics.com EMPLOYEE INVENTION ASSIGNMENT AND CONFIDENTIALITY AGREEMENT Name: Patrick FabbioEmployment Date: On or before November 16, 2015In consideration of my employment, continued employment and the salary/wages paid to me by Progenics Pharmaceuticals, Inc. or any of its parent,subsidiary or affiliate companies (all hereafter collectively called " Progenics ") and other good and valuable consideration, I understand and agree to the followingprovisions for the protection of Progenics' property rights and for the protection of the rights of others who have entrusted Progenics with confidential proprietaryinformation:1. Disclosure to Progenics . I agree to disclose fully and promptly to Progenics all proprietary rights (the expression "proprietary rights" means allintellectual and physical work product having actual or potential value to Progenics including inventions, whether or not patentable and whether or not tested orreduced to practice, discoveries, ideas, conceptions, developments, designs, works of authorship, trade secrets, know-how and tangible expressions, whether or notcopyrightable, and whether or not relating to human pharmaceutical research and development, molecular biology, virology, immunology, biochemistry, dataprocessing, computer software systems, programs or procedures) developed, conceived, reduced to practice or learned by me solely or jointly with others, at anytime during the term of my employment and for a period of two years thereafter, and which proprietary rights relate to the actual or anticipated business activitiesof Progenics, result from, or are suggested by, work which I do for Progenics, are funded in whole or in part by Progenics, or result from any use of premises,equipment or property (tangible or intangible) owned, leased, licensed or contracted for by Progenics. I agree to make and maintain written records of theaforesaid proprietary rights and to submit promptly the same, and supplemental oral disclosure, to my superiors at Progenics.2. Ownership of Proprietary Rights . I acknowledge and agree that Progenics shall own, and I agree to assign and hereby do assign to Progenics, theentire right, title and interest in and to all proprietary rights embraced by Paragraph 1 above. I further agree to execute all papers, and otherwise to provide allrequested assistance, at Progenics' expense, during and subsequent to my employment, to enable Progenics or its nominees to perfect and enforce its proprietaryrights including, without limitation, obtaining such patents, copyrights and other legal protection as it may desire, in any country.3. Confidentiality . I agree to preserve in confidence and not to use, to publish, or to otherwise disclose to, either during or subsequent to myemployment, without the prior written permission of Progenics, all confidential proprietary rights or any knowledge, information or materials about the products,services, know-how, research and development, customers, business plans of Progenics or any confidential information about financial matters, marketing, pricing,compensation or any other confidential information of Progenics, its customers, or others from whom Progenics has received information under obligations ofconfidence (collectively, " Confidential Information ").  Progenics Pharmaceuticals, Inc.777 Old Saw Mill River RoadTarrytown, New York 10591Fax: (914) 789-2817(914) 789-2800www.progenics.com Notwithstanding the foregoing paragraph, any restriction on your use, publication or disclosure of Confidential Information shall not apply to any information: (a)that is in or subsequently enters the public domain through no fault of yours or any person affiliated with you in any manner; (b) that you have received orsubsequently receive from a third party under no duty of confidentiality to Progenics; and (c) solely with respect to disclosure of such information, that you arerequired to disclose pursuant to an order of a court of competent jurisdiction or another government agency having appropriate authority, provided that in suchevent you promptly notify Progenies of such requirement, and cooperate in all respects with Progenies in any effort to contest or limit the scope of the disclosure. The provisions of the foregoing clause (c) shall apply only for the purposes of each particular order where disclosure is required.4. Termination of Employment . In the event of the termination of my employment at Progenics, whether or not such termination is voluntary, I willdeliver promptly to my superior at Progenics all documents which relate to the business activities of Progenics, and all materials and things which belong to orhave been entrusted by others to Progenics including, without limitation, all physical embodiments of any proprietary rights of Progenics.5. Confidential Information of Others . I agree not to disclose to Progenics, or to use in my work at Progenics any confidential information belonging toothers, or any prior inventions made by me which Progenics is not entitled to learn of or use. I represent that the inventions identified in the /s/ N/A pages Iattach hereto constitute all of the unpatented inventions which I have made prior to my employment at Progenics, which inventions shall be excluded from thisagreement. (It is only necessary to list the title of such inventions and the purpose thereof.) If there are no such unpatented inventions, employee initials here: /s/PF .6. Prior Agreements . I represent that I have attached hereto a copy of any agreement (such as a prior employment agreement) which affects my ability tocomply with the terms of this agreement. If there is no such agreement, employee initials here: /s/ PF .7. Miscellaneous. This agreement shall be binding on my executors, administrators, heirs, legal representatives or assigns, and may not be modifiedexcept in writing with the approval of an officer of Progenics. If any provision of this agreement is determined to be illegal or unenforceable, because of theduration thereof or the area or scope covered, I hereby request any court making such determination to reduce the duration, area and/or scope so that in its reducedform such covenant shall be enforceable and I agree that in such event all remaining provisions shall remain in full force and effect.8. Governing Law . The validity, interpretation and performance of this Agreement shall be governed according to the laws of the State of New Yorkapplicable to agreements made and to be performed entirely in that state, without reference to any conflict of laws rules or principles./s/ Patrick Fabbio Date: November 12, 2015 Patrick Fabbio 2   Progenics Pharmaceuticals, Inc.777 Old Saw Mill River RoadTarrytown, New York 10591Fax: (914) 789-2817(914) 789-2800www.progenics.com EMPLOYEE NON-COMPETITION AND NON-SOLICITATION AGREEMENTName: Patrick FabbioEmployment Date: On or before November 16, 2015In consideration of my employment, continued employment and the salary/wages paid to me by Progenics Pharmaceuticals, Inc. or any of its parent,subsidiary or affiliate companies (all hereafter collectively called " Progenics ") and other good and valuable consideration, I understand and agree to the followingprovisions for the protection of Progenics:1. Non-Competition . In the event of the termination of my employment at Progenics, to the extent that such termination is voluntary, I will not for aperiod of one (1) year accept a consulting engagement or employment with a company or other entity engaged in the development, production, marketing or sale ofproducts or services that directly compete or, upon commercialization, would directly compete with products of the Company being developed (so long as suchdevelopment has not been abandoned), marketed or sold at the time of termination, without written permission from Progenics. Such permission will not beunreasonably withheld in those instances where such employment does not involve risk of use or disclosure of any Confidential Information which I may acquireduring the course of my employment with Progenics. As used herein, the term "Confidential Information" refers to all confidential proprietary rights or anyknowledge, information or materials about the products, services, know-how, research and development, customers, business plans of Progenics or anyconfidential information about financial matters, marketing, pricing, compensation or any other confidential information of Progenics, its customers, or others fromwhom Progenics has received information under obligations of confidence.2. Non-Solicitation . During the term of my employment and for a period of two (2) years thereafter I will not solicit or attempt to induce, directly orindirectly, any employee of Progenics to accept a consulting engagement or employment.3. Miscellaneous . This agreement shall be binding on my executors, administrators, heirs, legal representatives or assigns, and may not be modifiedexcept in writing with the approval of an officer of Progenics. If any provision of this agreement is determined to be illegal or unenforceable, because of theduration thereof or the area or scope covered, I hereby request any court making such determination to reduce the duration, area and/or scope so that in its reducedform such covenant shall be enforceable and I agree that in such event all remaining provisions shall remain in full force and effect.4. Governing Law . The validity, interpretation and performance of this Agreement shall be governed according to the laws of the State of New Yorkapplicable to agreements made and to be performed entirely in that state, without reference to any conflict of laws rules or principles. /s/ Patrick Fabbio Date: November 12, 2015 Patrick Fabbio

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