**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10-Q**

**000-23143**

**PROGENICS      PHARMACEUTICALS, INC.**

| **DELAWARE**                                                                                | **13-3379479**                                                    |
|---------------------------------------------------------------------------------------------|-------------------------------------------------------------------|
| (State                or other jurisdiction ofincorporation                or organization) | (I.R.S.                EmployerIdentification                No.) |

**777      Old Saw Mill River Road**

**Tarrytown,      New York 10591**

**(914)      789-2800**

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**PROGENICS PHARMACEUTICALS,      INC.**

**INDEX**

|                       |                                                                                                                                                                      | **Page                No.** |
|----------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------|
| **Part                I**  | **FINANCIAL                INFORMATION**                                                                                                                                  |                        |
| Item                1.     | Consolidated                Financial Statements                (unaudited)                                                                                               | 3                           |
|                       | Condensed                Consolidated Balance Sheets at June 30, 2006 and                December 31, 2005                                                                | 3                           |
|                       | Condensed                Consolidated Statements of Operations for the Three and Six Months                ended                June 30, 2006 and 2005                    | 4                           |
|                       | Condensed                Consolidated Statement of Stockholders’ Equity and                Comprehensive Loss for the Six Months ended June 30,                2006 | 5                           |
|                       | Condensed                Consolidated Statements of Cash Flows for the Six Months ended June                30,                2006 and 2005                              | 6                           |
|                       | Notes                to Condensed Consolidated Financial                Statements                                                                                        | 7                           |
| Item                2.     | Management’s                Discussion and Analysis of Financial Condition                and Results of Operations                                                 | 15                          |
| Item                3.     | Quantitative                and Qualitative Disclosures about Market                Risk                                                                                  | 32                          |
| Item                4.     | Controls                and Procedures                                                                                                                                    | 32                          |
|                       |                                                                                                                                                                      |                        |
| **PART                II** | **OTHER                INFORMATION**                                                                                                                                      |                        |
| Item                1A.    | Risk                Factors                                                                                                                                               | 32                          |
| Item                4.     | Submission                of Matters to a Vote of Security                Holders                                                                                         | 34                          |
| Item                6.     | Exhibits                                                                                                                                                                  | 34                          |
|                       | Signatures                                                                                                                                                                | 35                          |
|                       | Certifications                                                                                                                                                            |                        |

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Table          of Contents

**PART      I — FINANCIAL INFORMATION**

**Item      1. Consolidated Financial Statements **

**PROGENICS  PHARMACEUTICALS,      INC.**

**CONDENSED      CONSOLIDATED BALANCE SHEETS**
 

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

**(Unaudited)**

|                                                                                                                                                           |   | **June                30,****2006** |     | **December                31,** **2005** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|----------|-----------------------------------------------|--------|
| **ASSETS:**                                                                                                                                                    |   |                                |     |                                          |   |
| Current                assets:                                                                                                                                 |   |                                |     |                                          |   |
| Cash                and cash equivalents                                                                                                                       |   | $                                   | 18,287   |                                          | $      | 67,072 |   |
| Marketable                securities                                                                                                                           |   |                                | 135,507  |                                          |   | 98,983 |   |
| Accounts                receivable                                                                                                                             |   |                                | 1,618    |                                          |   | 3,287 |   |
| Other                current assets                                                                                                                            |   |                                | 2,785    |                                          |   | 2,561 |   |
| Total                current assets                                                                                                                            |   |                                | 158,197  |                                          |   | 171,903 |   |
| Marketable                securities                                                                                                                           |   |                                | 1,500    |                                          |   | 7,035 |   |
| Fixed                assets, at cost, net of accumulated depreciation and                amortization                                                          |   |                                | 6,434    |                                          |   | 4,156 |   |
| Investment                in joint venture                                                                                                                     |   |                                |     |                                          |   | 371 |   |
| Restricted                cash                                                                                                                                 |   |                                | 541      |                                          |   | 538 |   |
| Total                assets                                                                                                                                    |   | $                                   | 166,672  |                                          | $      | 184,003 |   |
|                                                                                                                                                           |   |                                |     |                                          |   |  |   |
| **LIABILITIES                AND STOCKHOLDERS’ EQUITY:**                                                                                                 |   |                                |     |                                          |   |  |   |
| Current                liabilities:                                                                                                                            |   |                                |     |                                          |   |  |   |
| Accounts                payable and accrued expenses                                                                                                           |   | $                                   | 11,574   |                                          | $      | 10,238 |   |
| Deferred                revenue - current                                                                                                                      |   |                                | 26,851   |                                          |   | 23,580 |   |
| Due                to joint venture                                                                                                                            |   |                                |     |                                          |   | 194 |   |
| Other                current liabilities                                                                                                                       |   |                                | 213      |                                          |   | 790 |   |
| Total                current liabilities                                                                                                                       |   |                                | 38,638   |                                          |   | 34,802 |   |
| Deferred                revenue - long term                                                                                                                    |   |                                | 23,786   |                                          |   | 36,420 |   |
| Deferred                lease liability                                                                                                                        |   |                                | 77       |                                          |   | 49 |   |
| Total                liabilities                                                                                                                               |   |                                | 62,501   |                                          |   | 71,271 |   |
| Commitments                and contingencies                                                                                                                   |   |                                |     |                                          |   |  |   |
| Stockholders’                equity:                                                                                                                     |   |                                |     |                                          |   |  |   |
| Preferred                stock, $.001 par value, 20,000,000 shares authorized; none issued                and                outstanding                       |   |                                |     |                                          |   |  |   |
| Common                stock, $.0013 par value, 40,000,000 shares authorized; issued and                outstanding - 25,638,148 in 2006 and 25,229,240 in 2005 |   |                                | 33       |                                          |   | 33 |   |
| Additional                paid-in capital                                                                                                                      |   |                                | 310,193  |                                          |   | 306,085 |   |
| Unearned                compensation                                                                                                                           |   |                                |     |                                          |   | (4,498 | ) |
| Accumulated                deficit                                                                                                                             |   |                                | (205,711 | )                                             |   | (188,740 | ) |
| Accumulated                other comprehensive (loss)                                                                                                          |   |                                | (344     | )                                             |   | (148 | ) |
| Total                stockholders’ equity                                                                                                                |   |                                | 104,171  |                                          |   | 112,732 |   |
| Total                liabilities and stockholders’ equity                                                                                                |   | $                                   | 166,672  |                                          | $      | 184,003 |   |

**The      accompanying notes are an integral part of these condensed financial      statements.**

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Table          of Contents

**PROGENICS      PHARMACEUTICALS, INC.**

**CONDENSED      CONSOLIDATED STATEMENTS OF OPERATIONS**
 

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

**(Unaudited)**

|                                                                                                    |   | **For                the three months ended** |    | **For                the six months ended** |   |
|---------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------|---------|---------------------------------------------|--------|
|                                                                                                    |   | **June                30,**                   |    | **June                30,**                 |   |
|                                                                                                    |   | **2006**                                      |    | **2005**                                    |   | **2006** |   | **2005** |   |
| Revenues:                                                                                               |   |                                          |    |                                        |   |   |   |   |  |
|       Contract                research and development from collaborator  |   | $                                             | 17,044  |                                        |   |   |   | $ | 25,533 |   |   |   |  |
|       Contract                research and development from joint venture |   |                                          |    |                                        | $      | 129 |   |   |   |   | $ | 569 |   |
|   Research                grants and                contracts                                 |   |                                          | 2,064   |                                        |   | 1,925 |   |   | 4,526 |   |   | 4,070 |   |
|   Product                sales                                                                |   |                                          | 14      |                                        |   | 21 |   |   | 65 |   |   | 25 |   |
| Total                revenues                                                                           |   |                                          | 19,122  |                                        |   | 2,075 |   |   | 30,124 |   |   | 4,664 |   |
|                                                                                                    |   |                                          |    |                                        |   |  |   |   |   |   |   |  |   |
| Expenses:                                                                                               |   |                                          |    |                                        |   |  |   |   |   |   |   |  |   |
| Research                and development                                                                 |   |                                          | 29,978  |                                        |   | 10,466 |   |   | 40,537 |   |   | 22,565 |   |
| General                and administrative                                                               |   |                                          | 5,016   |                                        |   | 2,900 |   |   | 9,528 |   |   | 6,042 |   |
| Loss                in joint venture                                                                    |   |                                          |    |                                        |   | 1,339 |   |   | 121 |   |   | 1,544 |   |
| Depreciation                and amortization                                                            |   |                                          | 362     |                                        |   | 470 |   |   | 725 |   |   | 953 |   |
| Total                expenses                                                                           |   |                                          | 35,356  |                                        |   | 15,175 |   |   | 50,911 |   |   | 31,104 |   |
|                                                                                                    |   |                                          |    |                                        |   |  |   |   |   |   |   |  |   |
| Operating                loss                                                                           |   |                                          | (16,234 | )                                           |   | (13,100 | ) |   | (20,787 | ) |   | (26,440 | ) |
|                                                                                                    |   |                                          |    |                                        |   |   |   |   |   |   |   |   |   |
| Other                income:                                                                            |   |                                          |    |                                        |   |  |   |   |   |   |   |  |   |
| Interest                income                                                                          |   |                                          | 1,906   |                                        |   | 305 |   |   | 3,816 |   |   | 451 |   |
|                                                                                                    |   |                                          |    |                                        |   |  |   |   |   |   |   |  |   |
| Net                loss                                                                                 |   | $                                             | (14,328 | )                                           | $      | (12,795 | ) | $ | (16,971 | ) | $ | (25,989 | ) |
|                                                                                                    |   |                                          |    |                                        |   |  |   |   |   |   |   |  |   |
| Net                loss per share - basic and diluted                                                   |   | $                                             | (0.56   | )                                           | $      | (0.65 | ) | $ | (0.67 | ) | $ | (1.40 | ) |
| Weighted-average                shares - basic and diluted                                              |   |                                          | 25,569  |                                        |   | 19,716 |   |   | 25,462 |   |   | 18,575 |   |

**The      accompanying notes are an integral part of these condensed financial      statements.**

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Table          of Contents

**PROGENICS      PHARMACEUTICALS, INC.**

**CONDENSED      CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE      LOSS**

**FOR      THE SIX MONTHS ENDED JUNE 30, 2006**

**(amounts      in thousands)**

**(Unaudited)**

|                                                                                                                       |   | Common Stock |   | Additional |   |                           |   |                                 |    | Accumulated                Other   |   | Total                             |   |                                      |     |
|----------------------------------------------------------------------------------------------------------------------------|--------|-------------------|--------|------------|--------|--------------------------------|--------|--------------------------------------|---------|------------------------------------|--------|-----------------------------------|--------|-------------------------------------------|----------|
|                                                                                                                       |   | Shares            |   | Amount     |   | Paid-In                Capital |   | Unearned                Compensation |    | Accumulated                Deficit |   | Comprehensive                Loss |   | Stockholders’                Equity |     | Comprehensive                Loss |   |
| **Balance                at December 31, 2005**                                                                            |   |              | 25,229 |       | $      | 33                             |   | $                                    | 306,085 |                               | $      | (4,498                            | )      | $                                         | (188,740 | ) | $ | (148 | ) | $ | 112,732 |   |   |   |   |
| Compensation                expense for vesting of share- based payment                arrangements                   |   |              |   |       |   |                           |   |                                 | 4,401   |                               |   |                              |   |                                      |     |   |   |   |   |   | 4,401 |   |   |   |   |
| Issuance                of restricted stock, net of forfeitures                                                            |   |              | 17     |       |   |                           |   |                                 |    |                               |   |                              |   |                                      |     |   |   |   |   |   |   |   |   |   |   |
| Sale                of common stock under employee stock  purchase plans and exercise of                stock options |   |              | 392    |       |   |                           |   |                                 | 3,859   |                               |   |                              |   |                                      |     |   |   |   |   |   | 3,859 |   |   |   |   |
| Issuance                of compensatory stock options to non-employees                                                     |   |              |   |       |   |                           |   |                                 | 346     |                               |   |                              |   |                                      |     |   |   |   |   |   | 346 |   |   |   |   |
| Elimination                of unearned compensation upon adoption of SFAS No. 123(R)                                       |   |              |   |       |   |                           |   |                                 | (4,498  | )                                  |   | 4,498                             |   |                                      |     |   |   |   |   |   |   |   |   |   |   |
| Net                (loss)                                                                                                  |   |              |   |       |   |                           |   |                                 |    |                               |   |                              |   |                                      | (16,971  | ) |   |   |   |   | (16,971 | ) | $ | (16,971 | ) |
| Change                in unrealized loss on marketable securities                                                          |   |              |   |       |   |                           |   |                                 |    |                               |   |                              |   |                                      |     |   |   | (196 | ) |   | (196 | ) |   | (196 | ) |
| **Balance                at June 30, 2006**                                                                                |   |              | 25,638 |       | $      | 33                             |   | $                                    | 310,193 |                               | $      | ¾                            |   | $                                         | (205,711 | ) | $ | (                344 | ) | $ | 104,171 |   | $ | (17,167 | ) |

**The      accompanying notes are an integral part of these condensed financial      statements.**

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Table          of Contents

**PROGENICS      PHARMACEUTICALS, INC.**

**CONDENSEDCONSOLIDATED      STATEMENTS OF CASH FLOWS**

**(amounts      in thousands)**

**(Unaudited)**

|                                                                                                                                                     |   | **Six                Months Ended June 30,** |     |
|----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|----------|
|                                                                                                                                                     |   | **2006**                                     |     | **2005** |   |
| Cash                flows from operating activities:                                                                                                     |   |                                         |     |   |   |
| Net                loss                                                                                                                                  |   | $                                            | (16,971  | ) | $ | (25,989 | ) |
| Adjustments                to reconcile net loss to net cash used in operating                activities:                                                |   |                                         |     |   |   |  |   |
| Depreciation                and amortization                                                                                                             |   |                                         | 725      |   |   | 953 |   |
| Amortization                of discounts, net of premiums, on marketable securities                                                                      |   |                                         | 55       |   |   | 130 |   |
| Amortization                of unearned compensation                                                                                                     |   |                                         |     |   |   | 428 |   |
| Noncash                expenses incurred in connection with vesting of share-based compensation                awards                                    |   |                                         | 4,401    |   |   | 12 |   |
| Noncash                expenses incurred in connection with issuance of compensatory stock                options to non-employees                       |   |                                         | 346      |   |   | 149 |   |
| Expense                of purchased technology (see Note 8b)                                                                                             |   |                                         | 13,209   |   |   |   |   |
| Loss                in joint venture                                                                                                                     |   |                                         | 121      |   |   | 1,544 |   |
| Adjustment                to loss in joint venture                                                                                                       |   |                                         |     |   |   | 658 |   |
| Write-off                of fixed assets                                                                                                                 |   |                                         | 2        |   |   |   |   |
| Changes                in assets and liabilities, net of effects of purchase of PSMA                LLC:                                                 |   |                                         |     |   |   |  |   |
| Decrease                (increase) in accounts receivable                                                                                                |   |                                         | 1,669    |   |   | (885 | ) |
| Increase                in amount due from joint venture                                                                                                 |   |                                         |     |   |   | (1,068 | ) |
| (Increase)                decrease in other current assets and other assets                                                                              |   |                                         | (224     | ) |   | 333 |   |
| Increase                in accounts payable and accrued expenses                                                                                         |   |                                         | 1,255    |   |   | 284 |   |
| (Decrease)                increase in amount due to joint venture                                                                                        |   |                                         | (194     | ) |   | 1,100 |   |
| Decrease                (increase) in investment in joint venture                                                                                        |   |                                         | 250      |   |   | (2,700 | ) |
| (Decrease)                in deferred revenue                                                                                                            |   |                                         | (9,363   | ) |   |   |   |
| (Decrease)                in other current liabilities                                                                                                   |   |                                         | (577     | ) |   |   |   |
| Increase                (decrease) in deferred lease liability                                                                                           |   |                                         | 28       |   |   | (4 | ) |
| Net                cash used in operating activities                                                                                                     |   |                                         | (5,268   | ) |   | (25,055 | ) |
| Cash                flows from investing activities:                                                                                                     |   |                                         |     |   |   |  |   |
| Capital                expenditures                                                                                                                      |   |                                         | (3,005   | ) |   | (391 | ) |
| Sales                of marketable securities                                                                                                            |   |                                         | 171,570  |   |   | 26,941 |   |
| Purchase                of marketable securities                                                                                                         |   |                                         | (202,810 | ) |   | (43,254 | ) |
| Acquisition                of PSMA LLC, net of cash acquired (see Note 8b)                                                                               |   |                                         | (13,128  | ) |   |   |   |
|                           Increase in restricted cash                                                  |   |                                         | (3       | ) |   |   |   |
| Net                cash (used in) investing activities                                                                                                   |   |                                         | (47,376  | ) |   | (16,704 | ) |
| Cash                flows from financing activities:                                                                                                     |   |                                         |     |   |   |  |   |
| Proceeds                from public offerings of common stock                                                                                            |   |                                         |     |   |   | 60,000 |   |
| Expenses                associated with public offerings of common stock                                                                                 |   |                                         |     |   |   | (2,173 | ) |
| Proceeds                from the exercise of stock options and sale of common stock under                the                Employee Stock Purchase Plan |   |                                         | 3,859    |   |   | 5,047 |   |
| Net                cash provided by financing activities                                                                                                 |   |                                         | 3,859    |   |   | 62,874 |   |
| Net                (decrease) increase in cash and cash equivalents                                                                                      |   |                                         | (48,785  | ) |   | 21,115 |   |
| Cash                and cash equivalents at beginning of period                                                                                          |   |                                         | 67,072   |   |   | 5,227 |   |
| Cash                and cash equivalents at end of period                                                                                                |   | $                                            | 18,287   |   | $ | 26,342 |   |
| Supplemental                disclosure of noncash investing activity:                                                                                    |   |                                         |     |   |   |   |   |
|                   Fair value of assets, including purchased technology, acquired from                PSMA LLC (see Note 8b)               |   | $                                            | 13,674   |   |   |   |   |
|                  Cash paid for acquisition of PSMA LLC                                                                                              |   |                                         | (13,459  | ) |   |   |   |
|                  Liabilities assumed from PSMA LLC                                                                                                  |   | $                                            | 215      |   |   |   |   |

**The      accompanying notes are an integral part of these condensed financial      statements.**

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Table          of Contents

**PROGENICS        PHARMACEUTICALS, INC.**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS **

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

**1**
**.**
 **Interim      Financial Statements**

** **

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Table          of Contents

**PROGENICS      PHARMACEUTICALS, INC.**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued**

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

**2.      Share-Based Payment Arrangements**

|                                                                                                                                                                     |   | **Three                    Months****Ended                    June 30,****2005** | ** ** | **Six                    Months Ended June 30, 2005** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------|------------|-------------------------------------------------------|--------|
| Net                    loss, as reported                                                                                                                                 |   | $                                                                                | (12,795    | )                                                     | $      | (25,989 | ) |
| Add:                    Stock-based employee compensation expense included in reported                    net                    loss                                    |   |                                                                             | 235        |                                                  |   | 440 |   |
| Deduct:                    Total Stock-based employee compensation expense determined under                    fair                    value based method for all awards |   |                                                                             | (1,904     | )                                                     |   | (3,717 | ) |
| Pro                    forma net loss                                                                                                                                    |   | $                                                                                | (14,464    | )                                                     | $      | (29,266 | ) |
|                                                                                                                                                                     |   |                                                                             |       |                                                  |   |   |   |
| Net                    loss per share amounts, basic and diluted:                                                                                                        |   |                                                                             |       |                                                  |   |   |   |
| As                    reported                                                                                                                                           |   | $                                                                                | (0.65      | )                                                     | $      | (1.40 | ) |
| Pro                    forma                                                                                                                                             |   | $                                                                                | (0.73      | )                                                     | $      | (1.58 | ) |

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Table          of Contents

**PROGENICS        PHARMACEUTICALS, INC.**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued**

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

|                                    |   | **For                the Six Months Ended****June                30,** |   |
|-----------------------------------------|--------|------------------------------------------------------------------------|--------|
|                                    |   | **2006**                                                               |   | **2005** |   |
|                                    |   |                                                                   |   |   |   |
| Expected                volatility      |   |                                                                   | 92     | % |   | 97 | % |
| Expected                dividends       |   |                                                                   | zero   |   |   | zero |   |
| Expected                term (in years) |   |                                                                   | 6.5    |   |   | 6.5 |   |
| Risk-free                rate           |   |                                                                   | 5.06   | % |   | 3.68 | % |

| **Options**                                   |   | **Shares                (000)** |   | **Weighted                Average Exercise Price** |   | **Weighted****Average                Remaining Contractual Term (Yr.)** |   | **Aggregate                Intrinsic Value** |   |
|-----------------------------------------------|--------|---------------------------------|--------|----------------------------------------------------|--------|-------------------------------------------------------------------------|--------|----------------------------------------------|--------|
|                                          |   |                            |   |                                               |   |                                                                    |   |                                         |   |
| Outstanding                at January 1, 2006 |   |                            | 4,099  |                                               | $      | 14.60                                                                   |   |                                         |   |   |   |   |   |
| Granted                                       |   |                            | 263    |                                               |   | 25.42                                                                   |   |                                         |   |   |   |   |   |
| Exercised                                     |   |                            | (221   | )                                                  |   | 8.27                                                                    |   |                                         |   |   |   |   |   |
| Forfeited                or expired           |   |                            | (53    | )                                                  |   | 16.29                                                                   |   |                                         |   |   |   |   |   |
| Outstanding                at June 30, 2006   |   |                            | 4,088  |                                               | $      | 15.62                                                                   |   |                                         | 5.78   |   | $ | 36,801 |   |
| Exercisable                at June 30, 2006   |   |                            | 2,859  |                                               | $      | 13.91                                                                   |   |                                         | 4.76   |   | $ | 30,688 |   |

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Table          of Contents

**PROGENICS      PHARMACEUTICALS, INC.**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued**

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

| **Nonvested                Shares**         |   | **Shares                (000)** |   | **Weighted                Average Grant-Date****Fair                Value** |   |
|---------------------------------------------|--------|---------------------------------|--------|-----------------------------------------------------------------------------|--------|
|                                        |   |                            |   |                                                                        |   |
| Nonvested                at January 1, 2006 |   |                            | 242    |                                                                        | $      | 19.47 |   |
| Granted                                     |   |                            | 22     |                                                                        |   | 27.94 |   |
| Vested                                      |   |                            | (78    | )                                                                           |   | 20.32 |   |
| Forfeited                                   |   |                            | (5     | )                                                                           |   | 20.26 |   |
| Nonvested                at June 30, 2006   |   |                            | 181    |                                                                        | $      | 20.11 |   |

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Table          of Contents

**PROGENICS      PHARMACEUTICALS, INC.**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued**

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

|                               |   | **For                the Six Months Ended****June                30,** |                    |
|------------------------------------|--------|------------------------------------------------------------------------|-------------------------|
|                               |   | **2006**                                                               |                    | **2005** |   |
|                               |   |                                                                   |                    |   |   |
| Expected                volatility |   |                                                                   | 38                      | % |   | 44 | % |
| Expected                dividends  |   |                                                                   | zero                    |   |   | zero |   |
| Expected                term       |   |                                                                   | 6                months |   |   | 6                months |   |
| Risk-free                rate      |   |                                                                   | 4.05                    | % |   | 2.53 | % |

| **Qualified                Plan**   |   | **Non-Qualified                Plan** |                           |
|-------------------------------------|--------|---------------------------------------|--------------------------------|
| **Shares                Purchased** |   | **Price                Range**        |                           | **Weighted****Average                Grant-Date Fair Value** |   | **Shares                Purchased** |   | **Price                Range** |   | **Weighted****Average                Grant-Date Fair Value** |   |
|                                |   |                                  |                           |   |   |   |   |   |   |   |   |
| 58                                  |   | $                                     | 18.21                - $ 25.84 |   | $ | 3.04 |   |   | 13 |   | $ | 18.21                - $25.84 |   | $ | 3.07 |   |

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Table          of Contents

**PROGENICS      PHARMACEUTICALS, INC.**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued**

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

**3.      Summary of Significant Accounting Policies**

**Basis      of Consolidation**

**4.       Accounts Receivable**

|                                          |   | **June                30,****2006** |   | **December                31,****2005** |   |
|-----------------------------------------------|--------|-------------------------------------|--------|-----------------------------------------|--------|
| National                Institutes of Health  |   | $                                   | 1,493  |                                    | $      | 3,265 |   |
| Wyeth                                         |   |                                | 118    |                                    |   |   |   |
| Other                                         |   |                                | 7      |                                    |   | 22 |   |
|                     Total |   | $                                   | 1,618  |                                    | $      | 3,287 |   |

** 5**
**.  Accounts      Payable and Accrued Expenses**

|                                                       |   | **June                30,****2006** |                  | **December                31,****2005** |   |
|------------------------------------------------------------|--------|-------------------------------------|-----------------------|-----------------------------------------|--------|
| Accounts                payable                            |   | $                                   | 577                   |                                    | $      | 880 |   |
| Accrued                consulting and clinical trial costs |   |                                | 6,968                 |                                    |   | 6,721 |   |
| Accrued                payroll and related costs           |   |                                | 1,321                 |                                    |   | 1,144 |   |
| Legal                and professional fees                 |   |                                | 1,                251 |                                    |   | 1,255 |   |
| Other                                                      |   |                                | 1,457                 |                                    |   | 238 |   |
|                     Total              |   | $                                   | 11,574                |                                    | $      | 10,238 |   |

| **6.  ** | **Revenue                Recognition - Contract Research and Development from                Collaborator** |
|--------------------|-------------------------------------------------------------------------------------------------------------|

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Table          of Contents

**PROGENICS      PHARMACEUTICALS, INC.**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued**

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

**7.**
**Net      Loss Per Share**

|                                            |   | **Net                Loss (Numerator)** |    | **Shares                (Denominator)** |   | **Per                Share Amount** |   |
|-------------------------------------------------|--------|-----------------------------------------|---------|-----------------------------------------|--------|-------------------------------------|--------|
| Three                months ended June 30, 2006 |   |                                    |    |                                    |   |                                |   |
| **Basic                and Diluted**            |   | $                                       | (14,328 | )                                       |   | 25,569                              |   | $ | (0.56 | ) |
| Six                months ended June 30, 2006   |   |                                    |    |                                    |   |                                |   |   |   |   |
| **Basic                and Diluted**            |   | $                                       | (16,971 | )                                       |   | 25,462                              |   | $ | (0.67 | ) |
|                                            |   |                                    |    |                                    |   |                                |   |   |   |   |
| Three                months ended June 30, 2005 |   |                                    |         |                                    |   |                                     |   |   |  |   |
| **Basic                and Diluted**            |   | $                                       | (12,795 | )                                       |   | 19,716                              |   | $ | (0.65 | ) |
| Six                months ended June 30, 2005   |   |                                    |         |                                    |   |                                     |   |   |  |   |
| **Basic                and Diluted**            |   | $                                       | (25,989 | )                                       |   | 18,575                              |   | $ | (1.40 | ) |

|                                          |   | **Three                Months Ended June 30,** |   |
|-----------------------------------------------|--------|------------------------------------------------|--------|
|                                          |   | **2006**                                       |   | **2005** |   |
|                                          |   | **Wtd.                Avg. Number**            |   | **Wtd.                Avg. Exercise Price** |   | **Wtd.                Avg. Number** |   | **Wtd.                Avg. Exercise Price** |   |
| Stock                options                  |   |                                           | 4,487  |   | $ | 14.62 |   |   | 4,549 |   | $ | 12.80 |   |
| Restricted                stock               |   |                                           | 253    |   |   |   |   |   | 151 |   |   |  |   |
|                     Total |   |                                           | 4,740  |   |   |   |   |   | 4,700 |   |   |  |   |

|                                          |   | **Six                Months Ended June 30,** |   |
|-----------------------------------------------|--------|----------------------------------------------|--------|
|                                          |   | **2006**                                     |   | **2005** |   |
|                                          |   | **Wtd.                Avg. Number**          |   | **Wtd.                Avg. Exercise Price** |   | **Wtd.                Avg. Number** |   | **Wtd.                Avg. Exercise Price** |   |
| Stock                options                  |   |                                         | 4,507  |   | $ | 14.27 |   |   | 4,677 |   | $ | 12.78 |   |
| Restricted                stock               |   |                                         | 248    |   |   |  |   |   | 163 |   |   |  |   |
|                     Total |   |                                         | 4,755  |   |   |  |   |   | 4,840 |   |   |  |   |

**8.**
**PSMA      Development Company LLC**

**a. Introduction**

----

Table          of Contents

**PROGENICS      PHARMACEUTICALS, INC.**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued**

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

**b.      Acquisition of Cytogen’s Membership Interest**

** **

**9.**
**Comprehensive      Loss**

|                                                                         |   | **Three                Months Ended June 30,** |    | **Six                Months Ended June 30,** |   |
|------------------------------------------------------------------------------|--------|------------------------------------------------|---------|----------------------------------------------|--------|
|                                                                         |   | **2006**                                       |    | **2005**                                     |   | **2006** |   | **2005** |   |
| Net                loss                                                      |   | $                                              | (14,328 | )                                            | $      | (12,795 | ) | $ | (16,971 | ) | $ | (25,989 | ) |
| Change                in net unrealized (loss) gain on marketable securities |   |                                           | (55     | )                                            |   | 48 |   |   | (196 | ) |   | 48 |   |
|                     Comprehensive loss                   |   | $                                              | (14,383 | )                                            | $      | (12,747 | ) | $ | (17,167 | ) | $ | (25,941 | ) |

**10.**
**Commitments      and Contingencies**

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Table          of Contents

**Item      2. Management’s Discussion and Analysis of Financial Condition      and Results of Operations**

**Special      Note Regarding Forward-Looking Statements**

**Overview**

***General***

*Collaboration      with Wyeth Pharmaceuticals*
** **
*“Treatment      of Cancer” *
*Joint      Venture with Cytogen Corporation*

----

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***Collaboration      with Wyeth Pharmaceuticals.***

***Treatment      of HIV Infection.***

----

Table          of Contents

***Treatment      of Cancer.***

***Joint      Venture with Cytogen Corporation***
** **

** **

**Results      of Operations  **
**(amounts      in thousands)**

***Three      Months Ended June 30, 2005 and 2006***

**Revenues:**

----

Table          of Contents

**Expenses:**

----

Table          of Contents

|                                                     | **Three                Months Ended****June                30,** | **Dollar**                     | **Percentage**                |                             |
|----------------------------------------------------------|------------------------------------------------------------------|--------------------------------|-------------------------------|----------------------------------|
| **Category**                                             | **2005**                                                         | **2006**                       | **Variance**                  | ** Variance**               | **Explanation** |
| Salaries                and benefits (cash)              | $                 3,068                                     | $                3,973         | $                905          |   29                %  | Compensation                increases and an increase in average headcount from 112 to 128 for                the                three month periods ended June 30, 2005 and 2006, respectively, in                the                research and development, manufacturing and medical departments,                including                the hiring of our Vice President, Quality in July 2005.  |
| Share-based                compensation (non-cash)       | 21                                                               | 1,288                          | 1,267                         | 6,033                            | Increase                due to the adoption of SFAS No. 123(R) on January 1, 2006, which                requires                the recognition of non-cash compensation expense related to share-based                payments from stock options, restricted stock and the Employee Stock                Purchase Plans (see “Critical Accounting Policies − Share-Based Payment                Arrangements” below).  |
| Clinical                trial costs                      | 2,557                                                            | 2,292                          | (265)                         | (10)                             | Decrease                primarily related to decrease in methylnaltrexone ($325) due to completion                of the methylnaltrexone phase 3 trials (301 and 302 and their extension                studies) in the second half of 2005 and in the first quarter of 2006                .In                addition, there was a decrease in GMK ($86), due to achievement of                full                enrollment in the fourth quarter of 2005 offset by the completion                of the                trial by more patients in 2006 than in 2005. The decrease was, partially                offset by an increase in HIV ($146), resulting from an increase in                the PRO                140 trial activity in the 2006 period.  |
| Laboratory                supplies                       | 791                                                              | 1,143                          | 352                           | 45                               | Increase                in methylnaltrexone ($26) due to the purchase of methylnaltrexone                in the                2006 period but not in the 2005 period, increase in HIV ($99), due                to                preparation of materials for the phase 1b PRO 140 clinical trial                and an                increase in basic research in 2006 for GMK ($45) and other projects                ($182).  |
| Contract                manufacturing and subcontractors | 1,078                                                            | 4,911                          | 3,833                         | 356                              | Increases                in methylnaltrexone ($2,442) related to future clinical trials under                our                collaboration agreement with Wyeth, HIV ($862), GMK ($504) and other                projects ($25). These expenses are related to the conduct of clinical                trials, including testing, analysis, formulation and toxicology services                and vary as the timing and level of such services are                required.  |
| Consultants                                              | 857                                                              | 1,522                          | 665                           | 78                               | Increases                in methylnaltrexone ($786), GMK ($2) and other projects ($24), partially                offset by a decrease in HIV ($147). These expenses are related to                monitoring and conduct of clinical trials, including analysis of                data from                completed clinical trials and vary as the timing and level of such                services are required.  |
| License                fees                              | 1,076                                                            | 152                            | (924)                         | (86)                             | Decrease                primarily related to contractual payments to licensors, including                milestone payments, related to our programs in HIV ($1,020), partially                offset by increases in such payments related to methylnaltrexone                ($3) and                GMK ($93).  |
| Other                                                    | 1,018                                                            | 14,697                         | 13,679                        | 1,344                            | Increase                primarily due to $13,209 of expense related to the acquisition of                Cytogen’s 50% interest in PSMA LLC, and an increase in rent ($283) and                other operating expenses ($187) in the 2006 period over those in                the 2005                period. |
| Total                                                    | $                 10,466                                    |                  $ 29,978 |  $                19,512 |   186                % |   |

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|                                               | **Three                Months Ended ****June                30,** | **Dollar**             | **Percentage**         |                                        |
|----------------------------------------------------|------------------------------------------------------------------------|------------------------|------------------------|---------------------------------------------|
| **Category**                                       | **2005**                                                               | **2006**               | **Variance**           | **Variance**                                | **Explanation** |
| Salaries                and benefits (cash)        | $                985                                                   | $                1,493 | $                508   | 52                %                         | Increase                due to compensation increases and an increase in average headcount                from 24                to 31 in the general and administrative departments for the three                month                periods ended June 30, 2005 and 2006, respectively, including the                hiring                of our General Counsel in June 2005 and the departure of one senior                executive in April 2005. |
| Share-based                compensation (non-cash) | 0                                                                      | 1,240                  | 1,240                  | N/A                                         | Increase                due to the adoption of SFAS No. 123(R) on January 1, 2006, which                requires                the recognition of non-cash compensation expense related to share-                based                payments from stock options, restricted stock and the Employee Stock                Purchase Plans (see “Critical Accounting Policies − Share-Based Payment                Arrangements” below). |
| Consulting                and professional fees    | 1,028                                                                  | 1,124                  | 96                     | 9                                           | Increase                due primarily to increases in audit fees, including audit fees for                internal controls over financial reporting ($74), recruiting ($137),                partially offset by a decrease in legal and patent fees ($71), consultants                ($34) and other ($10).   |
| Operating                expenses                  | 717                                                                    | 999                    | 282                    | 39                                          | Increase                due primarily to an increase in insurance costs ($53), rent ($150),                computer supplies and software ($43) and other fees and expenses                ($115),                partially offset by a decrease in Director compensation expense ($79)                due                to vesting of restricted stock awards in 2005 but not in                2006.  |
| Other                                              | 170                                                                    | 160                    | (10)                   | (6)                                         | Decrease                primarily related to decreased investor relations costs ($83) and                other                ($4), partially offset by an increase in corporate taxes ($77). |
| Total                                              | $                2,900                                                 | $                5,016 | $                2,116 |     73                % |   |

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**Other      income:**

**Net      loss:**

***Six      Months Ended June 30, 2005 and 2006***

**Revenues:**

**Expenses:**

----

Table          of Contents

|                                                     | **Six                Months Ended****June                30,** | **Dollar**                     | **Percentage**                |                            |
|----------------------------------------------------------|----------------------------------------------------------------|--------------------------------|-------------------------------|---------------------------------|
| **Category**                                             | **2005**                                                       | **2006**                       |  **Variance**            | ** Variance**              | **Explanation** |
| Salaries                and benefits (cash)              | $                 6,447                                   | $                7,805         | $                1,358   |   21                % | Compensation                increases and an increase in average headcount from 112 to 126 for                the six                month periods ended June 30, 2005 and 2006, respectively, in the                research                and development, manufacturing and medical departments, including                the                hiring of our Vice President, Quality in July 2005.  |
| Share-based                compensation (non-cash)       | 149                                                            | 2,481                          | 2,332                         | 1,565                           | Increase                due to the adoption of SFAS No. 123(R) on January 1, 2006, which                requires                the recognition of non-cash compensation expense related to share-based                payments from stock options, restricted stock and the Employee Stock                Purchase Plans (see “Critical Accounting Policies − Share-Based Payment                Arrangements” below).  |
| Clinical                trial costs                      | 6,057                                                          | 3,899                          | (2,158)                       | (36)                            | Decrease                primarily related to methylnaltrexone ($2,442) due to completion                of the                methylnaltrexone phase 3 trials (301 and 302 and their extension                studies)                in the second half of 2005 and in the first quarter of 2006. That                decrease                was partially offset by increases in GMK ($32), due to increased                enrollment in the 2006 period, and HIV ($252), resulting from an                increase                in the PRO 140 trial activity and a decline in PRO 542 activity in                the                2006 period.  |
| Laboratory                supplies                       | 3,417                                                          | 2,070                          | (1,347)                       | (39)                            | Decrease                in methylnaltrexone ($1,846) due to the purchase of more methylnaltrexone                in the 2005 period than in the 2006 period, partially offset by increases                in HIV ($180), due to preparation of materials for the phase 1b PRO                140                clinical trial and an increase in basic research in 2006 for GMK                ($51) and                other projects ($268).  |
| Contract                manufacturing and subcontractors | 1,982                                                          | 6,046                          | 4,064                         | 205                             | Increase                in methylnaltrexone ($2,314) related to future clinical trials under                our                collaboration with Wyeth, HIV ($1,218) and GMK ($535), partially                offset by                decrease in other projects ($3). These expenses are related to the                conduct                of clinical trials, including testing, analysis, formulation and                toxicology services and vary as the timing and level of such services                are                required.  |
| Consultants                                              | 1,298                                                          | 2,094                          | 796                           | 61                              | Increases                in methylnaltrexone ($872), GMK ($47) and other ($19), partially                offset by                a decrease in HIV ($142). These expenses are related to monitoring                and                conduct of clinical trials, including analysis of data from completed                clinical trials and vary as the timing and level of such services                are                required.  |
| License                fees                              | 1,185                                                          | 428                            | (757)                         | (64)                            | Decrease                primarily related to contractual payments to licensors, including                milestone payments, related to our programs in HIV ($1,106), partially                offset by increases in such payments related to methylnaltrexone                ($263)                and GMK ($86).  |
| Other                                                    | 2,030                                                          | 15,714                         | 13,684                        | 674                             | Increase                primarily due to $13,209 of expense related to our acquisition of                Cytogen’s 50% interest in PSMA LLC and an increase in rent ($310), travel                ($108) and other operating expenses ($154) in the 2006 period, partially                offset by decreased insurance costs ($97) in the 2006 period over                those in                the 2005 period. |
| Total                                                    | $                 22,565                                  |                  $ 40,537 |  $                17,972 |   80                % |   |

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|                                               | **Six                Months Ended ****June                30,** | **Dollar**             | **Percentage**         |                                        |
|----------------------------------------------------|----------------------------------------------------------------------|------------------------|------------------------|---------------------------------------------|
| **Category**                                       | **2005**                                                             | **2006**               | **Variance**           | **Variance**                                | **Explanation** |
| Salaries                and benefits (cash)        | $                2,297                                               | $                2,958 | $                661   | 29                %                         | Increase                due to compensation increases and an increase in average headcount                from 24                to 28 in the general and administrative departments for the six month                periods ended June 30, 2005 and 2006, respectively, including the                hiring                of our General Counsel in June 2005 and the departure of one senior                executive in April 2005, partially offset by a bonus to one executive                officer.  |
| Share-based                compensation (non-cash) | 12                                                                   | 2,270                  | 2,258                  | 18,817                                      | Increase                due to the adoption of SFAS No. 123(R) on January 1, 2006, which                requires                the recognition of non-cash compensation expense related to share-                based                payments from stock options, restricted stock and the Employee Stock                Purchase Plans (see “Critical Accounting Policies − Share-Based Payment                Arrangements” below). |
| Consulting                and professional fees    | 2,130                                                                | 2,232                  | 102                    | 5                                           | Increase                due primarily to increases in audit fees, including audit fees for                internal controls over financial reporting ($194) and recruiting                ($194),                partially offset by a decrease in legal and patent fees ($283) and                other                ($3).   |
| Operating                expenses                  | 1,351                                                                | 1,769                  | 418                    | 31                                          | Increase                due primarily to an increase in insurance costs ($190), rent ($166),                computer supplies and software ($60) and other ($97), partially offset                by                a decrease in Director compensation expense ($95) due to vesting                of                restricted stock awards in 2005 but not in 2006.  |
| Other                                              | 252                                                                  | 299                    | 47                     | 19                                          | Increase                due primarily to an increase in corporate taxes ($136) and other                ($1),                partially offset by decreased investor relations costs ($90). |
| Total                                              | $                6,042                                               | $                9,528 | $                3,486 |     58                % |   |

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**Other      income:**

**Net      loss:**

**Liquidity      and Capital Resources**

**,      **

| ·   | $4.2                million of non-cash expenses related to the vesting of our share-based                payment awards, including stock options, restricted stock and Employee                Stock Purchase Plan, as we adopted SFAS No. 123(R) on January 1,                2006, and                the issuance of stock options to non-employee consultants; and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $13.2                million of expense in connection with the purchase of PSMA LLC in                April 2006. |
|--------------------|------------------------------------------------------------------------------------------------------------------------|

| ·   | a                decrease of $9.3 million in deferred revenue due to our recognition                of                revenue in the 2006 period from the $60 million upfront payment we                received from Wyeth in December 2005; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a                decrease of $2.1 million in loss in joint venture, including the                adjustment to loss in joint venture in the 2005 period. Through December                31, 2005, we reduced our revenue from the joint venture and our loss                in                the joint venture by the amount we received from PSMA-related grant                funding up to a cap of $3.0 million. Beginning in the second quarter                of                2006, PSMA LLC became our wholly-owned subsidiary and, accordingly,                we no                longer recognize loss in joint venture. In addition, during the quarter                ended March 31, 2006, research and development costs for the joint                venture                decreased from those in the comparable period in 2005 since the Members                had not approved a work plan and budget for PSMA LLC for 2006. Prior                to                our acquisition of PSMA LLC, we accounted for PSMA LLC by using the                equity                method and recorded 50% of PSMA LLC’s net loss as our loss in joint                venture; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a                decrease of $3.0 million in investment in joint venture since no                capital                contributions were made to PSMA LLC in the 2006 period and we acquired                the                net assets of PSMA LLC; and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | an                increase of $2.6 million in trade accounts receivable, mostly for                reimbursement of our second quarter 2006 expenses under our grants                and                contract with the NIH; and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | an                increase of $1.0 million in accounts payable and accrued                expenses. |
|--------------------|-----------------------------------------------------------------------------------------------------|

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|                                          |   | **Six                Months Ended June 30,** |   |
|-----------------------------------------------|--------|----------------------------------------------|--------|
|                                          |   | **2005**                                     |   | **2006** |   |
|                                          |   | (in                millions)                 |   |
| Methylnaltrexone                              |   | $                                            | 13.3   |   | $ | 14.7 |   |
| HIV                                           |   |                                         | 5.2    |   |   | 7.6 |   |
| Cancer                                        |   |                                         | 3.3    |   |   | 16.9 |   |
| Other                programs                 |   |                                         | 0.8    |   |   | 1.3 |   |
|                     Total |   | $                                            | 22.6   |   | $ | 40.5 |   |

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Table          of Contents

**Contractual      Obligations**

|                                                    |   |                             |                  | **Payments                due by June 30,** |   |
|---------------------------------------------------------|--------|----------------------------------|-----------------------|---------------------------------------------|--------|
|                                                    |   | **Total**                        |                  | **2007**                                    |   | **2008-2009** |   | **2010-2011** |   | **Thereafter** |   |
|                                                    |   | **(in                millions)** |                  |
| Operating                leases                         |   | $                                | 7.8                   |                                        | $      | 1.9 |   | $ | 4.0 |   | $ | 1.2 |   | $ | 0.7 |   |
| License                and collaboration agreements (1) |   |                             | 93.8                  |                                        |   | 2.7 |   |   | 4.5 |   |   | 3.7 |   |   | 82.9 |   |
|                     Total           |   | $                                | 101                .6 |                                        | $      | 4.6 |   | $ | 8.5 |   | $ | 4.9 |   | $ | 83.6 |   |

| (1)   | Assumes                attainment of milestones covered under each agreement, including                those by                PSMA LLC. The timing of the achievement of the related milestones                is                highly uncertain, and accordingly the actual timing of payments,                if any,                is likely to vary, perhaps significantly, relative to the timing                contemplated by this table. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Off-Balance      Sheet Arrangements and Guarantees**

**Critical      Accounting Policies**

----

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*Revenue      Recognition*

----

Table          of Contents

*Share-Based      Payment Arrangements*

----

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| ·   | We                use the closing price of our common stock on the date of grant, as                quoted                on the NASDAQ exchange, as the exercise price. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Historical                volatilities are based upon daily quoted market prices of our common                stock                on the NASDAQ exchange over a period equal to the expected term of                the                related equity instruments. We rely only on historical volatility                since                future volatility is expected to be consistent with historical; historical                volatility is calculated using a simple average calculation; historical                data is available for the length of the option’s expected term and a                sufficient number of price observations are used consistently. Since                our                stock options are not traded on a public market, we do not use implied                volatility. For the six months ended June 30, 2005 and 2006, the                volatility of our common stock has been high, in excess of 90%, which                is                common for entities in the biotechnology industry that do not have                commercial products. A higher volatility input to the Black-Scholes                model                increases the resulting compensation expense. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table          of Contents

| ·   | The                expected term of options granted represents the period of time that                options granted are expected to be outstanding. Our expected term                has been                calculated based upon the simplified method as detailed in Staff                Accounting Bulletin No. 107 (“SAB 107”). Accordingly, we are using an                expected term of 6.5 years based upon the vesting period of the                outstanding options of four or five years and a contractual term                of ten                years. We plan to refine our estimate of expected term in the future                as we                obtain more historical data. A shorter expected term would result                in a                lower compensation expense. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We                have never paid dividends and do not expect to pay dividends in the                future. Therefore, our dividend rate is                zero. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                risk-free rate for periods within the expected term of the options                is                based on the U.S. Treasury yield curve in effect at the time of                grant. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Clinical      Trial Expenses*

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Table          of Contents

**        Item 3. Quantitative and Qualitative Disclosures about      Market Risk**

**                    Item 4. **
**Controlsand      Procedures**

**PART      II —OTHER INFORMATION**

**Item      1A. Risk Factors**

**We      have a history of operating losses, and we may never be      profitable.**

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**We      are likely to need additional financing, but our access to capital funding      is      uncertain.**

**Our      stock price has a history of volatility. You should consider an investment      in      our stock as risky and invest only if you can withstand a significant      loss.**

| · | the                results of clinical trials and preclinical studies involving our                products                or those of our competitors; |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | changes                in the status of any of our drug development programs, including                delays in                clinical trials or program                terminations; |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | developments                regarding our efforts to achieve marketing approval for our                products; |
|--------|------------------------------------------------------------------------------------------------------------------|

| · | developments                in our relationship with Wyeth regarding the development and                commercialization of                methylnaltrexone; |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | announcements                of technological innovations or new commercial products by us, our                collaborators or our competitors; |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------|

| · | developments                in our relationships with other collaborative                partners; |
|--------|----------------------------------------------------------------------------------------------------|

| · | developments                in patent or other proprietary                rights; |
|--------|-----------------------------------------------------------------------------------|

| · | governmental                regulation; |
|--------|-----------------------------------------|

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| · | changes                in reimbursement policies or health care                legislation; |
|--------|---------------------------------------------------------------------------------------------|

| · | public                concern as to the safety and efficacy of products developed by us,                our                collaborators or our competitors; |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | our                ability to fund on-going                operations; |
|--------|------------------------------------------------------------------------|

| · | fluctuations                in our operating results; and |
|--------|-----------------------------------------------------------|

| · | general                market conditions. |
|--------|-------------------------------------------|

**Our      principal stockholders are able to exert significant influence over matters      submitted to stockholders for approval.**

**            **

**       **
**Item      4. Submission of Matters to a Vote of Security      Holders**

|                                                                              |   |                         |   |                             |   |         |   |                                                |
|-----------------------------------------------------------------------------------|--------|------------------------------|--------|----------------------------------|--------|--------------|--------|-----------------------------------------------------|
| (i)                **Election                of Directors**                       |   |                         |   |                             |   |         |   |                                                |
| **Nominee**                                                                       |   | **Votes                For** |   | **Votes                Against** |   | **Withheld** |   | **Abstentions/****Broker                Non-Votes** |
| Paul                J. Maddon, M.D., Ph.D.                                        |   | 19,554,274                   |   | 0                                |   | 129,470      |   | 0                                                   |
| Charles                A. Baker                                                   |   | 19,569,882                   |   | 0                                |   | 113,862      |   | 0                                                   |
| Kurt                W. Briner                                                     |   | 19,657,811                   |   | 0                                |   | 25,933       |   | 0                                                   |
| Mark                F. Dalton                                                     |   | 19,569,436                   |   | 0                                |   | 114,308      |   | 0                                                   |
| Stephen                P. Goff, Ph.D.                                             |   | 15,032,316                   |   | 0                                |   | 4,651,428    |   | 0                                                   |
| Paul                F. Jacobson                                                   |   | 19,569,832                   |   | 0                                |   | 113,912      |   | 0                                                   |
| David                A. Scheinberg, M.D., Ph.D.                                   |   | 19,555,971                   |   | 0                                |   | 127,773      |   | 0                                                   |
|                                                                              |   |                         |   |                             |   |         |   |                                                |
| (ii)                **Ratification                of PricewaterhouseCoopers LLP** |   | 19,657,597                   |   | 22,319                           |   | 0            |   | 3,827                                               |

**               Item      6. Exhibits**

|   | (a) | Exhibits |
|--------|-----|----------|

| 2.1        | Membership                  Interest Purchase Agreement dated April 20, 2006 by and between                  Progenics                  Pharmaceuticals, Inc. and Cytogen Corporation.                                                                                                                                                                                                                                    |
|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  10.1 |  Amended              and Restated PSMA/PSMP License Agreement dated April 20, 2006 by and              among              Progenics Pharmaceuticals, Inc., Cytogen Corporation and PSMA Development              Company LLC (confidential treatment has been requested as to certain              portions, which portions have been omitted and filed separately with              the              Commission).  |
| 31.1       | Certification                of Paul J. Maddon, M.D., Ph.D., Chairman and Chief Executive Officer                of                the Registrant, pursuant to Rule 13a-14(a) and Rule 15d-14(a) under                the                Securities Exchange Act of 1934, as amended                                                                                                                                      |
| 31.2       | Certification                of Robert A. McKinney, Chief Financial Officer and Senior Vice President,                Finance & Operations (Principal Financial and Accounting Officer) of                the Registrant, pursuant to Rule 13a-14(a) and Rule 15d-14(a) under                the                Securities Exchange Act of 1934, as amended                                                           |
| 32         | Certification                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section                906 of                the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                            |

----

**SIGNATURES**

|                                | **PROGENICS                PHARMACEUTICALS, INC.** |
|-------------------------------------|----------------------------------------------------|
| Date:                August 8, 2006 | By:                                                | **/s/                Robert A. McKinney** |
|                                |                                               | Robert                A. McKinneyChief                Financial Officer(Duly                authorized officer of the Registrant and Principal Financial and                Accounting Officer) |