**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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Index

**PROGENICS PHARMACEUTICALS,      INC.**

**INDEX**

|                       |                                                                                                                                                                            | **Page                No.** |
|----------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------|
| **Part                I**  | **FINANCIAL                INFORMATION**                                                                                                                                        |                        |
| Item                1.     | Consolidated                Financial Statements                (unaudited)                                                                                                     | 3                           |
|                       | Condensed                Consolidated Balance Sheets at September 30, 2006 and                December 31, 2005                                                                 | 3                           |
|                       | Condensed                Consolidated Statements of Operations for the Three and Nine Months                ended                September 30, 2006 and 2005                    | 4                           |
|                       | Condensed                Consolidated Statement of Stockholders’ Equity and                Comprehensive Loss for the Nine Months ended September 30,                2006 | 5                           |
|                       | Condensed                Consolidated Statements of Cash Flows for the Nine Months ended September                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                                                       | 16                          |
| Item                3.     | Quantitative                and Qualitative Disclosures about Market                Risk                                                                                        | 33                          |
| Item                4.     | Controls                and Procedures                                                                                                                                          | 34                          |
|                       |                                                                                                                                                                            |                        |
| **PART                II** | **OTHER                INFORMATION**                                                                                                                                            |                        |
| Item                1A.    | Risk                Factors                                                                                                                                                     | 34                          |
| Item                6.     | Exhibits                                                                                                                                                                        | 36                          |
|                       | Signatures                                                                                                                                                                      |                        |
|                       | Certifications                                                                                                                                                                  |                        |

----

Index

**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)**

|                                                                                                                                                           |   | **September                30,****2006** |     | **December                31,** **2005** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------|----------|-----------------------------------------------|--------|
| **ASSETS:**                                                                                                                                                    |   |                                     |     |                                          |   |
| Current                assets:                                                                                                                                 |   |                                     |     |                                          |   |
| Cash                and cash equivalents                                                                                                                       |   | $                                        | 14,432   |                                          | $      | 67,072 |   |
| Marketable                securities                                                                                                                           |   |                                     | 115,105  |                                          |   | 98,983 |   |
| Accounts                receivable                                                                                                                             |   |                                     | 2,986    |                                          |   | 3,287 |   |
| Other                current assets                                                                                                                            |   |                                     | 2,569    |                                          |   | 2,561 |   |
| Total                current assets                                                                                                                            |   |                                     | 135,092  |                                          |   | 171,903 |   |
| Marketable                securities                                                                                                                           |   |                                     | 18,976   |                                          |   | 7,035 |   |
| Fixed                assets, at cost, net of accumulated depreciation and                amortization                                                          |   |                                     | 9,559    |                                          |   | 4,156 |   |
| Investment                in joint venture                                                                                                                     |   |                                     |     |                                          |   | 371 |   |
| Restricted                cash                                                                                                                                 |   |                                     | 543      |                                          |   | 538 |   |
| Total                assets                                                                                                                                    |   | $                                        | 164,170  |                                          | $      | 184,003 |   |
|                                                                                                                                                           |   |                                     |     |                                          |   |  |   |
| **LIABILITIES                AND STOCKHOLDERS’ EQUITY:**                                                                                                 |   |                                     |     |                                          |   |  |   |
| Current                liabilities:                                                                                                                            |   |                                     |     |                                          |   |  |   |
| Accounts                payable and accrued expenses                                                                                                           |   | $                                        | 11,392   |                                          | $      | 10,238 |   |
| Deferred                revenue - current                                                                                                                      |   |                                     | 27,796   |                                          |   | 23,580 |   |
| Due                to joint venture                                                                                                                            |   |                                     |     |                                          |   | 194 |   |
| Other                current liabilities                                                                                                                       |   |                                     |     |                                          |   | 790 |   |
| Total                current liabilities                                                                                                                       |   |                                     | 39,188   |                                          |   | 34,802 |   |
| Deferred                revenue - long term                                                                                                                    |   |                                     | 17,738   |                                          |   | 36,420 |   |
| Deferred                lease liability                                                                                                                        |   |                                     | 100      |                                          |   | 49 |   |
| Total                liabilities                                                                                                                               |   |                                     | 57,026   |                                          |   | 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 - 25,979,256 in 2006 and 25,229,240 in 2005 |   |                                     | 34       |                                          |   | 33 |   |
| Additional                paid-in capital                                                                                                                      |   |                                     | 316,027  |                                          |   | 306,085 |   |
| Unearned                compensation                                                                                                                           |   |                                     |     |                                          |   | (4,498 | ) |
| Accumulated                deficit                                                                                                                             |   |                                     | (208,646 | )                                             |   | (188,740 | ) |
| Accumulated                other comprehensive (loss)                                                                                                          |   |                                     | (271     | )                                             |   | (148 | ) |
| Total                stockholders’ equity                                                                                                                |   |                                     | 107,144  |                                          |   | 112,732 |   |
| Total                liabilities and stockholders’ equity                                                                                                |   | $                                        | 164,170  |                                          | $      | 184,003 |   |

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

----

Index

**PROGENICS      PHARMACEUTICALS, INC.**

**CONDENSEDCONSOLIDATED      STATEMENTS OF OPERATIONS**

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

**(Unaudited)**

|                                                                |   | **For                the three months ended** |   | **For                the nine months ended** |   |
|---------------------------------------------------------------------|--------|-----------------------------------------------|--------|----------------------------------------------|--------|
|                                                                |   | **September                30,**              |   | **September                30,**             |   |
|                                                                |   | **2006**                                      |   | **2005**                                     |   | **2006** |   | **2005** |   |
| Revenues:                                                           |   |                                          |   |                                         |   |   |   |   |   |
| Contract                research and development from collaborator  |   | $                                             | 14,527 |                                         |   |   |   | $ | 40,060 |   |   |   |   |
| Contract                research and development from joint venture |   |                                          |   |                                         | $      | 211 |   |   |   |   | $ | 781 |   |
| Research                grants and contracts                        |   |                                          | 3,316  |                                         |   | 2,548 |   |   | 7,842 |   |   | 6,618 |   |
| Product                sales                                        |   |                                          | 5      |                                         |   | 15 |   |   | 70 |   |   | 39 |   |
| Total                revenues                                       |   |                                          | 17,848 |                                         |   | 2,774 |   |   | 47,972 |   |   | 7,438 |   |
|                                                                |   |                                          |   |                                         |   |   |   |   |   |   |   |   |   |
| Expenses:                                                           |   |                                          |   |                                         |   |   |   |   |   |   |   |   |   |
| Research                and development                             |   |                                          | 15,751 |                                         |   | 9,952 |   |   | 56,288 |   |   | 32,517 |   |
| General                and administrative                           |   |                                          | 6,610  |                                         |   | 3,344 |   |   | 16,138 |   |   | 9,386 |   |
| Loss                in joint venture                                |   |                                          |   |                                         |   | 384 |   |   | 121 |   |   | 1,928 |   |
| Depreciation                and amortization                        |   |                                          | 381    |                                         |   | 417 |   |   | 1,106 |   |   | 1,369 |   |
| Total                expenses                                       |   |                                          | 22,742 |                                         |   | 14,097 |   |   | 73,653 |   |   | 45,200 |   |
|                                                                |   |                                          |   |                                         |   |   |   |   |   |   |   |   |   |
| Operating                loss                                       |   |                                          | (4,894 | )                                            |   | (11,323 | ) |   | (25,681 | ) |   | (37,762 | ) |
|                                                                |   |                                          |   |                                         |   |   |   |   |   |   |   |   |   |
| Other                income:                                        |   |                                          |   |                                         |   |   |   |   |   |   |   |   |   |
| Interest                income                                      |   |                                          | 1,959  |                                         |   | 580 |   |   | 5,775 |   |   | 1,030 |   |
|                                                                |   |                                          |   |                                         |   |   |   |   |   |   |   |   |   |
| Net                loss                                             |   | $                                             | (2,935 | )                                            | $      | (10,743 | ) | $ | (19,906 | ) | $ | (36,732 | ) |
|                                                                |   |                                          |   |                                         |   |   |   |   |   |   |   |   |   |
| Net                loss per share - basic and diluted               |   | $                                             | (0.11  | )                                            | $      | (0.49 | ) | $ | (0.78 | ) | $ | (1.87 | ) |
| Weighted                average shares - basic and diluted          |   |                                          | 25,783 |                                         |   | 21,744 |   |   | 25,570 |   |   | 19,643 |   |

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

----

Index

**PROGENICS      PHARMACEUTICALS, INC.**

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

**FOR      THE NINE MONTHS ENDED SEPTEMBER 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                                                 |   |              |   |       |   |                           |   |                                 | 8,654   |                               |   |                              |   |                                      |     |   |   |   |   |   | 8,654 |   |   |   |   |
| Issuance                of restricted stock, net of forfeitures                                                                     |   |              | 208    |       |   |                           |   |                                 |    |                               |   |                              |   |                                      |     |   |   |   |   |   |   |   |   |   |   |
| Sale                of common stock under employee stock purchase plans and exercise                of stock                options |   |              | 542    |       |   | 1                              |   |                                 | 5,308   |                               |   |                              |   |                                      |     |   |   |   |   |   | 5,309 |   |   |   |   |
| Issuance                of compensatory stock options to non-employees                                                              |   |              |   |       |   |                           |   |                                 | 478     |                               |   |                              |   |                                      |     |   |   |   |   |   | 478 |   |   |   |   |
| Elimination                of unearned compensation upon adoption of SFAS No. 123(R)                                                |   |              |   |       |   |                           |   |                                 | (4,498  | )                                  |   | 4,498                             |   |                                      |     |   |   |   |   |   |   |   |   |   |   |
| Net                loss                                                                                                             |   |              |   |       |   |                           |   |                                 |    |                               |   |                              |   |                                      | (19,906  | ) |   |   |   |   | (19,906 | ) | $ | (19,906 | ) |
| Change                in unrealized loss on marketable securities                                                                   |   |              |   |       |   |                           |   |                                 |    |                               |   |                              |   |                                      |     |   |   | (123 | ) |   | (123 | ) |   | (123 | ) |
|  **Balance                at September 30, 2006**                                                                              |   |              | 25,979 |       | $      | 34                             |   | $                                    | 316,027 |                               | $      | ¾                            |   | $                                         | (208,646 | ) | $ | (271 | ) | $ | 107,144 |   | $ | (20,029 | ) |

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

----

Index

**PROGENICSPHARMACEUTICALS,      INC.**

**CONDENSED      CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(amounts      in thousands)**

**(Unaudited)**

|                                                                                                                                                     |   | **Nine                months ended September 30,** |     |
|----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------|----------|
|                                                                                                                                                     |   | **2006**                                           |     | **2005** |   |
| Cash                flows from operating activities:                                                                                                     |   |                                               |     |   |   |
| Net                loss                                                                                                                                  |   | $                                                  | (19,906  | ) | $ | (36,732 | ) |
| Adjustments                to reconcile net loss to net cash used in operating                activities:                                                |   |                                               |     |   |   |   |   |
| Depreciation                and amortization                                                                                                             |   |                                               | 1,106    |   |   | 1,369 |   |
| Amortization                of discounts, net of premiums, on marketable securities                                                                      |   |                                               | 27       |   |   | 188 |   |
| Amortization                of unearned compensation                                                                                                     |   |                                               |     |   |   | 750 |   |
| Noncash                expenses incurred in connection with vesting of share-based payment                arrangements                                   |   |                                               | 8,654    |   |   | 203 |   |
| Noncash                expenses incurred in connection with issuance of compensatory stock                options to non-employees                       |   |                                               | 478      |   |   | 306 |   |
| Expense                of purchased technology (see Note 8b)                                                                                             |   |                                               | 13,209   |   |   |   |   |
| Loss                in joint venture                                                                                                                     |   |                                               | 121      |   |   | 1,928 |   |
| Adjustment                to loss in joint venture                                                                                                       |   |                                               |     |   |   | 951 |   |
| Write-off                of fixed assets                                                                                                                 |   |                                               | 2        |   |   |   |   |
| Changes                in assets and liabilities, net of effects of purchase of PSMA                LLC:                                                 |   |                                               |     |   |   |   |   |
| Decrease                (increase) in accounts receivable                                                                                                |   |                                               | 301      |   |   | (690 | ) |
| Decrease                in amount due from joint venture                                                                                                 |   |                                               |     |   |   | 189 |   |
| (Increase)                decrease in other current assets and other assets                                                                              |   |                                               | (8       | ) |   | 389 |   |
| Increase                in accounts payable and accrued expenses                                                                                         |   |                                               | 1,073    |   |   | 1,140 |   |
| (Decrease)                increase in amount due to joint venture                                                                                        |   |                                               | (194     | ) |   | 48 |   |
| Decrease                (increase) in investment in joint venture                                                                                        |   |                                               | 250      |   |   | (3,450 | ) |
| (Decrease)                in deferred revenue                                                                                                            |   |                                               | (14,466  | ) |   |   |   |
| (Decrease)                in other current liabilities                                                                                                   |   |                                               | (790     | ) |   |   |   |
| Increase                in deferred lease liability                                                                                                      |   |                                               | 51       |   |   | 2 |   |
| Net                cash used in operating activities                                                                                                     |   |                                               | (10,092  | ) |   | (33,409 | ) |
| Cash                flows from investing activities:                                                                                                     |   |                                               |     |   |   |   |   |
| Capital                expenditures                                                                                                                      |   |                                               | (6,511   | ) |   | (761 | ) |
| Sales                of marketable securities                                                                                                            |   |                                               | 236,212  |   |   | 49,527 |   |
| Purchase                of marketable securities                                                                                                         |   |                                               | (264,425 | ) |   | (110,608 | ) |
| Acquisition                of PSMA LLC, net of cash acquired (see Note 8b)                                                                               |   |                                               | (13,128  | ) |   |   |   |
| Increase                in restricted cash                                                                                                               |   |                                               | (5       | ) |   | (1 | ) |
| Net                cash used in investing activities                                                                                                     |   |                                               | (47,857  | ) |   | (61,843 | ) |
| Cash                flows from financing activities:                                                                                                     |   |                                               |     |   |   |   |   |
| Proceeds                from public offerings of common stock                                                                                            |   |                                               |     |   |   | 126,323 |   |
| Expenses                associated with public offerings of common stock                                                                                 |   |                                               |     |   |   | (4,767 | ) |
| Proceeds                from the exercise of stock options and sale of common stock under                the                Employee Stock Purchase Plan |   |                                               | 5,309    |   |   | 9,540 |   |
| Net                cash provided by financing activities                                                                                                 |   |                                               | 5,309    |   |   | 131,096 |   |
| Net                (decrease) increase in cash and cash equivalents                                                                                      |   |                                               | (52,640  | ) |   | 35,844 |   |
| Cash                and cash equivalents at beginning of period                                                                                          |   |                                               | 67,072   |   |   | 5,227 |   |
| Cash                and cash equivalents at end of period                                                                                                |   | $                                                  | 14,432   |   | $ | 41,071 |   |
| 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.**

----

Index

**PROGENICS              PHARMACEUTICALS, INC.**

**NOTES              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS **

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

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

** **

----

Index

**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****September                30,****2005** |    | **Nine                Months Ended September 30, 2005** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------|---------|---------------------------------------------------------|--------|
| Net                loss, as reported                                                                                                                         |   | $                                                                             | (10,743 | )                                                       | $      | (36,732 | ) |
| Add:                Stock-based employee compensation expense included in reported net                loss                                                   |   |                                                                          | 513     |                                                    |   | 953 |   |
| Deduct:                Total share-based employee compensation expense determined under                fair                value based method for all awards |   |                                                                          | (2,761  | )                                                       |   | (6,478 | ) |
| Pro                forma net loss                                                                                                                            |   | $                                                                             | (12,991 | )                                                       | $      | (42,257 | ) |
|                                                                                                                                                         |   |                                                                          |    |                                                    |   |   |   |
| Net                loss per share amounts, basic and diluted:                                                                                                |   |                                                                          |    |                                                    |   |   |   |
|     As                reported                                                                                                           |   | $                                                                             | (0.49   | )                                                       | $      | (1.87 | ) |
|     Pro                forma                                                                                                             |   | $                                                                             | (0.60   | )                                                       | $      | (2.15 | ) |

----

Index

**PROGENICS              PHARMACEUTICALS, INC.**

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

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

|                                    |   | **For                the Nine Months Ended****September                30,** |   |
|-----------------------------------------|--------|------------------------------------------------------------------------------|--------|
|                                    |   | **2006**                                                                     |   | **2005** |   |
|                                    |   |                                                                         |   |   |   |
| Expected                volatility      |   |                                                                         | 88%    |   |   | 96% |   |
| Expected                dividends       |   |                                                                         | zero   |   |   | zero |   |
| Expected                term (in years) |   |                                                                         | 6.5    |   |   | 6.5 |   |
| Risk-free                rate           |   |                                                                         | 4.74%  |   |   | 3.45% |   |

| **Options**                                      |   | **Shares** |   | **Weighted                Average Exercise Price** |   | **Weighted****Average                Remaining Contractual Term (Yr.)** |   | **Aggregate                Intrinsic Value** |   |
|--------------------------------------------------|--------|------------|--------|----------------------------------------------------|--------|-------------------------------------------------------------------------|--------|----------------------------------------------|--------|
|                                             |   |       |   |                                               |   |                                                                    |   |                                         |   |
| Outstanding                at January 1, 2006    |   |       | 4,099  |                                               | $      | 14.60                                                                   |   |                                         |   |   |   |   |   |
| Granted                                          |   |       | 779    |                                               |   | 24.49                                                                   |   |                                         |   |   |   |   |   |
| Exercised                                        |   |       | (254   | )                                                  |   | 8.23                                                                    |   |                                         |   |   |   |   |   |
| Forfeited                or expired              |   |       | (99    | )                                                  |   | 19.02                                                                   |   |                                         |   |   |   |   |   |
| Outstanding                at September 30, 2006 |   |       | 4,525  |                                               | $      | 16.57                                                                   |   |                                         | 6.00   |   | $ | 34,082 |   |
| Exercisable                at September 30, 2006 |   |       | 3,022  |                                               | $      | 14.28                                                                   |   |                                         | 4.77   |   | $ | 29,557 |   |

----

Index

**PROGENICS              PHARMACEUTICALS, INC.**

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

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

| **Nonvested                Shares**            |   | **Shares** |   | **Weighted                Average Grant-Date****Fair                Value** |   |
|------------------------------------------------|--------|------------|--------|-----------------------------------------------------------------------------|--------|
|                                           |   |       |   |                                                                        |   |
| Nonvested                at January 1, 2006    |   |       | 242    |                                                                        | $      | 19.47 |   |
| Granted                                        |   |       | 221    |                                                                        |   | 24.63 |   |
| Vested                                         |   |       | (77)   |                                                                        |   | 20.32 |   |
| Forfeited                                      |   |       | (13)   |                                                                        |   | 21.26 |   |
| Nonvested                at September 30, 2006 |   |       | 373    |                                                                        | $      | 22.29 |   |

----

Index

**PROGENICS              PHARMACEUTICALS, INC.**

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

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

|                               |   | **For                the Nine Months Ended****September                30,** |                    |
|------------------------------------|--------|------------------------------------------------------------------------------|-------------------------|
|                               |   | **2006**                                                                     |                    | **2005** |   |
|                               |   |                                                                         |                    |   |   |
| Expected                volatility |   |                                                                         | 43%                     |   |   | 29% |   |
| Expected                dividends  |   |                                                                         | zero                    |   |   | zero |   |
| Expected                term       |   |                                                                         | 6                months |   |   | 6                months |   |
| Risk-free                rate      |   |                                                                         | 4.47%                   |   |   | 2.93% |   |

| **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** |   |
|                                |   |                                  |                          |   |   |   |   |   |   |   |   |
| 95                                  |   | $                                     | 17.80                - $25.84 |   | $ | 3.41 |   |   | 21 |   | $ | 18.61                - $25.84 |   | $ | 3.36 |   |

----

Index

**PROGENICS              PHARMACEUTICALS, INC.**

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

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

**3.      Basis of Consolidation**

**4.      Accounts Receivable**

|                                            |   | **September                  30,****2006** |   | **December                  31,****2005** |    |
|-------------------------------------------------|--------|--------------------------------------------|--------|-------------------------------------------|---------|
| National                  Institutes of Health  |   | $                                          | 2,040  |                                      |  $ | 3,265 |   |
| Wyeth                                           |   |                                       | 946    |                                      |    |   |   |
| Other                                           |   |                                       |   |                                      |    | 22 |   |
|                       Total |   |  $                                    | 2,986  |                                      | $       | 3,287 |   |

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

|                                                       |   | **September                30,****2006** |   | **December                31,****2005** |   |
|------------------------------------------------------------|--------|------------------------------------------|--------|-----------------------------------------|--------|
| Accounts                payable                            |   | $                                        | 1,758  |                                    | $      | 880 |   |
| Accrued                consulting and clinical trial costs |   |                                     | 5,965  |                                    |   | 6,721 |   |
| Accrued                payroll and related costs           |   |                                     | 1,892  |                                    |   | 1,144 |   |
| Legal                and professional fees                 |   |                                     | 1,652  |                                    |   | 1,255 |   |
| Other                                                      |   |                                     | 125    |                                    |   | 238 |   |
|                     Total              |   | $                                        | 11,392 |                                    | $      | 10,238 |   |

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

----

Index

**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 September 30, 2006 |   |                                    |    |                                    |   |                                |   |
| **Basic                and Diluted**                 |   | $                                       | (2,935  | )                                       |   | 25,783                              |   | $ | (0.11 | ) |
| Nine                months ended September 30, 2006  |   |                                    |    |                                    |   |                                |   |   |   |   |
| **Basic                and Diluted**                 |   | $                                       | (19,906 | )                                       |   | 25,570                              |   | $ | (0.78 | ) |
|                                                 |   |                                    |    |                                    |   |                                |   |   |   |   |
| Three                months ended September 30, 2005 |   |                                    |         |                                    |   |                                     |   |   |  |   |
| **Basic                and Diluted**                 |   | $                                       | (10,743 | )                                       |   | 21,744                              |   | $ | (0.49 | ) |
| Nine                months ended September 30, 2005  |   |                                    |    |                                    |   |                                |   |   |   |   |
| **Basic                and Diluted**                 |   | $                                       | (36,732 | )                                       |   | 19,643                              |   | $ | (1.87 | ) |

|                                          |   | **Three                Months Ended September 30,** |   |
|-----------------------------------------------|--------|-----------------------------------------------------|--------|
|                                          |   | **2006**                                            |   | **2005** |   |
|                                          |   | **Wtd.                Avg. Number**                 |   | **Wtd.                Avg. Exercise Price** |   | **Wtd.                Avg. Number** |   | **Wtd.                Avg. Exercise Price** |   |
| Stock                options                  |   |                                                | 4,856  |   | $ | 15.74 |   |   | 4,668 |   | $ | 13.52 |   |
| Restricted                stock               |   |                                                | 369    |   |   |   |   |   | 296 |   |   |   |   |
|                     Total |   |                                                | 5,225  |   |   |   |   |   | 4,964 |   |   |   |   |

|                                          |   | **Nine                Months Ended September 30,** |   |
|-----------------------------------------------|--------|----------------------------------------------------|--------|
|                                          |   | **2006**                                           |   | **2005** |   |
|                                          |   | **Wtd.                Avg. Number**                |   | **Wtd.                Avg. Exercise**** Price** |   | **Wtd.                Avg. Number** |   | **Wtd.                Avg. Exercise****Price** |   |
| Stock                options                  |   |                                               | 4,625  |   | $ | 14.79 |   |   | 4,674 |   | $ | 13.03 |   |
| Restricted                stock               |   |                                               | 286    |   |   |  |   |   | 210 |   |   |  |   |
|                     Total |   |                                               | 4,911  |   |   |  |   |   | 4,884 |   |   |  |   |

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

**a. Introduction**

----

Index

**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 September 30,** |   | **Nine                Months Ended September 30,** |   |
|------------------------------------------------------------------------------|--------|-----------------------------------------------------|--------|----------------------------------------------------|--------|
|                                                                         |   | **2006**                                            |   | **2005**                                           |   | **2006** |   | **2005** |   |
| Net                loss                                                      |   | $                                                   | (2,935 | )                                                  | $      | (10,743 | ) | $ | (19,906 | ) | $ | (36,732 | ) |
| Change                in net unrealized gain (loss) on marketable securities |   |                                                | 73     |                                               |   | (39 | ) |   | (123 | ) |   | 9 |   |
|                     Comprehensive loss                   |   | $                                                   | (2,862 | )                                                  | $      | (10,782 | ) | $ | (20,029 | ) | $ | (36,723 | ) |

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

----

Index

**PROGENICS              PHARMACEUTICALS, INC.**

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

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

**11.       Impact of Recently Issued Accounting Standards**

*Accounting      for Uncertainty in Income Taxes—an Interpretation of FASB Statement      109*

----

Index

**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” *
*PSMA      LLC *

----

Index

***Collaboration      with Wyeth Pharmaceuticals.***

----

Index

***Treatment      of HIV Infection.***

***Treatment      of Cancer.***

***PSMA      LLC***
** **

** **

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

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

**Revenues:**

----

Index

**Expenses:**

----

Index

|                                                     | **Three                Months Ended****September                30,** | **Dollar**                     | **Percentage**               |               |
|----------------------------------------------------------|-----------------------------------------------------------------------|--------------------------------|------------------------------|--------------------|
| **Category**                                             | **2005**                                                              | **2006**                       | **Variance**                 | ** Variance** | **Explanation** |
| Salaries                and benefits (cash)              | $                 3,295                                          | $                4,345         | $                1,050       |  32 %    | Compensation                increases and an increase in average headcount from 116 to 136 for                the                three month periods ended September 30, 2005 and 2006, respectively,                in                the research and development, manufacturing and medical                departments.  |
| Share-based                compensation (non-cash)       | 351                                                                   | 1,655                          | 1,304                        | 372                | 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                payment arrangements (see “Critical Accounting Policies − Share-Based                Payment Arrangements” below).  |
| Clinical                trial costs                      | 2,183                                                                 | 1,896                          | (287)                        | (13)               | Decrease                primarily related to decreased costs for methylnaltrexone ($179)                due to                completion of the methylnaltrexone phase 3 trials (301 and 302 and                the                extension studies) in the second half of 2005 and first quarter of                2006.                In addition, there was a decrease related to GMK ($260), due to                achievement of full enrollment in our phase 3 trial during the fourth                quarter of 2005, which resulted in more patients having completed                the full                course of treatment during 2005 than remained to be treated in 2006.                The                decrease was partially offset by an increase in the HIV program ($152),                resulting from an increase in the PRO 140 trial activity in the 2006                period.  |
| Laboratory                supplies                       | 920                                                                   | 2,191                          | 1,271                        | 138                | Increase                for methylnaltrexone ($1,250) due to purchases of methylnaltrexone                drug in                the 2006 period but not in the 2005 period, and an increase in basic                research in 2006 for Cancer ($79) and other projects ($72). The increases                were partially offset by a decrease in HIV ($130), due to preparation                of                materials for PRO 140 clinical trials in 2005 but not in                2006.  |
| Contract                manufacturing and subcontractors | 1,361                                                                 | 2,605                          | 1,244                        | 91                 | Increases                related to HIV ($565), Cancer ($664) and other projects ($54), partially                offset by a decrease in methylnaltrexone-related costs ($39). 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. The decrease in methylnaltrexone                was                due to completion of the methylnaltrexone phase 3 trials (301 and                302 and                the extension studies) in the second half of 2005 and first quarter                of                2006.  |
| Consultants                                              | 917                                                                   | 1,628                          | 711                          | 78                 | Increase                related to methylnaltrexone ($737), partially offset by decreases                in                Cancer ($6), HIV ($11) and other project costs ($9). These expenses                are                related to the 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                              | 15                                                                    | 100                            | 85                           | 567                | Increase                primarily related to contractual payments to licensors in our programs                in                Cancer ($95), partially offset by a decrease in such payments related                to                HIV ($10).  |
| Other                                                    | 910                                                                   | 1,331                          | 421                          | 46                 | Increase                primarily due to an increase in rent ($89) and other operating expenses                ($332) in the 2006 period over that in the 2005 period. |
| Total                                                    | $                 9,952                                          |                  $ 15,751 |  $                5,799 | 58 %          |   |

----

Index

|                                               | **Three                Months Ended ****September                30,** | **Dollar**             | **Percentage**         |                |
|----------------------------------------------------|-----------------------------------------------------------------------------|------------------------|------------------------|---------------------|
| **Category**                                       | **2005**                                                                    | **2006**               | **Variance**           | **Variance**        | **Explanation** |
| Salaries                and benefits (cash)        | $                1,109                                                      | $                1,556 | $                447   | 40                % | Increase                due to compensation increases and an increase in average headcount                from 25                to 34 in the general and administrative departments for the three                month                periods ended September 30, 2005 and 2006, respectively.   |
| Share-based                compensation (non-cash) | 319                                                                         | 2,731                  | 2,412                  | 756                 | 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                payment arrangements (see “Critical Accounting Policies − Share-Based                Payment Arrangements” below).  |
| Consulting                and professional fees    | 1,098                                                                       | 1,461                  | 363                    | 33                  | Increase                due primarily to increases in recruiting ($42) and legal and patent                fees                ($479), partially offset by decreases in consultants ($145) and audit                fees, including audit fees for internal controls over financial reporting                ($13).  |
| Operating                expenses                  | 728                                                                         | 823                    | 95                     | 13                  | Increase                due primarily to an increase in rent ($37), computer supplies and                software                ($4), travel and meals ($20) and other fees and expenses ($101),                partially                offset by a decrease in insurance costs ($67).  |
| Other                                              | 90                                                                          | 39                     | (51)                   | (57)                | Decrease                primarily related to decreased investor relations costs ($30) and                corporate taxes ($33), partially offset by an increase in other                miscellaneous costs ($12). |
| Total                                              | $                3,344                                                      | $                6,610 | $                3,266 | 98                % |   |

**Other      income:**

----

Index

**Net      loss:**

***Nine      Months Ended September 30, 2005 and 2006***

**Revenues:**

**Expenses:**

----

Index

|                                                     | **Nine                Months Ended****September                30,** | **Dollar**                     | **Percentage**                |               |
|----------------------------------------------------------|----------------------------------------------------------------------|--------------------------------|-------------------------------|--------------------|
| **Category**                                             | **2005**                                                             | **2006**                       | **Variance**                  | ** Variance** | **Explanation** |
| Salaries                and benefits (cash)              | $                 9,693                                         | $                12,497        | $                2,804        | 29  %    | Compensation                increases and an increase in average headcount from 114 to 129 for                the                nine month periods ended September 30, 2005 and 2006, respectively,                in the                research and development, manufacturing and medical departments.                  |
| Share-based                compensation (non-cash)       | 698                                                                  | 4,134                          | 3,436                         | 492                | 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                payment arrangements (see “Critical Accounting Policies − Share-Based                Payment Arrangements” below).  |
| Clinical                trial costs                      | 8,240                                                                | 5,851                          | (2,389)                       | (29)               | Decrease                primarily related to methylnaltrexone ($2,571) due to completion                of the                methylnaltrexone phase 3 trials (301 and 302 and the extension studies)                in                the second half of 2005 and first quarter of 2006 and GMK ($222),                due to                achievement of full enrollment in our phase 3 trial during the fourth                quarter of 2005, which resulted in more patients having completed                the full                course of treatment during 2005 than remained to be treated in 2006.                The                decreases were partially offset by an increase in HIV-related costs                ($404), resulting from an increase in the PRO 140 trial activity                and a                decline in PRO 542 activity in the 2006 period.  |
| Laboratory                supplies                       | 4,337                                                                | 4,257                          | (80)                          | (2)                | Decrease                in methylnaltrexone ($596) due to the purchase of more methylnaltrexone                drug in the 2005 period than in the 2006 period, partially offset                by                increases in HIV-related costs ($51), due to preparation of materials                for                the phase 1b PRO 140 clinical trial and an increase in basic research                in                2006 for Cancer ($125) and other projects ($340).  |
| Contract                manufacturing and subcontractors | 3,344                                                                | 8,581                          | 5,237                         | 157                | Increase                in methylnaltrexone ($2,204) related to clinical trials under our                collaboration with Wyeth, HIV ($1,784), Cancer ($1,199) and other                projects                ($50). 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                                              | 2,066                                                                | 3,397                          | 1,331                         | 64                 | Increases                in methylnaltrexone ($1,303), Cancer ($42) and other ($140), partially                offset by a decrease in HIV ($154). These expenses are related to                the                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                              | 1,200                                                                | 528                            | (672)                         | (56)               | Decrease                primarily related to contractual payments to licensors related to                our                programs in HIV ($1,116), partially offset by increases in such payments                related to methylnaltrexone ($263) and Cancer ($181).  |
| Other                                                    | 2,939                                                                | 17,043                         | 14,104                        | 480                | 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 ($399), travel                ($210) and other operating expenses ($312) in the 2006 period, partially                offset by decreased insurance costs ($26) in the 2006 period over                those in                the 2005 period. |
| Total                                                    | $                 32,517                                        |                  $ 56,288 |  $                23,771 | 73  %    |   |

----

Index

|                                               | **Nine                Months Ended ****September                30,** | **Dollar**              | **Percentage**         |                |
|----------------------------------------------------|----------------------------------------------------------------------------|-------------------------|------------------------|---------------------|
| **Category**                                       | **2005**                                                                   | **2006**                | **Variance**           | **Variance**        | **Explanation** |
| Salaries                and benefits (cash)        | $                3,177                                                     | $                4,516  | $                1,339 | 42                % | Increase                due to compensation increases and an increase in average headcount                from 24                to 30 in the general and administrative departments for the nine                month                periods ended September 30, 2005 and 2006, respectively.  |
| Share-based                compensation (non-cash) | 561                                                                        | 4,999                   | 4,438                  | 791                 | 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                payment arrangements (see “Critical Accounting Policies − Share-Based                Payment Arrangements” below).  |
| Consulting                and professional fees    | 3,233                                                                      | 3,693                   | 460                    | 14                  | Increase                due primarily to increases in audit fees, including audit fees for                internal controls over financial reporting ($181), recruiting fees                ($240)                and legal and patent fees ($209), which were partially offset by                decreases                in consultants ($161) and other miscellaneous costs ($9).  |
| Operating                expenses                  | 2,074                                                                      | 2,591                   | 517                    | 25                  | Increase                due primarily to an increase in insurance costs ($122), rent ($203),                computer supplies and software ($64) and other ($218), partially                offset by                a decrease in Director compensation expense ($90) due to vesting                of                restricted stock awards in 2005 but not in 2006.  |
| Other                                              | 341                                                                        | 339                     | (2)                    | (1)                 | Decrease                due primarily to decreased investor relations costs ($120), partially                offset by an increase in corporate taxes ($104) and other miscellaneous                costs ($14). |
| Total                                              | $                9,386                                                     | $                16,138 | $                6,752 | 72                % |   |

----

Index

**Other      income:**

**Net      loss:**

**Liquidity      and Capital Resources**

**,      **

| ·   | $7.9                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 $14.5 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 $2.8 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 $3.7 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; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Index

| ·   | a                decrease of $1.0 million in trade accounts receivable, for reimbursement                of our third quarter 2006 expenses under our grants and contract                with the                NIH and from Wyeth; and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a                decrease of $1.4 million in other current assets and other current                liabilities. |
|--------------------|-----------------------------------------------------------------------------------------------------------------|

----

Index

|                          |   | **Nine                Months Ended**** September                30,** |   |
|-------------------------------|--------|----------------------------------------------------------------------------|--------|
|                          |   | **2005**                                                                   |   | **2006** |   |
|                          |   | (in                millions)                                               |   |
| Methylnaltrexone              |   | $                                                                          | 18.7   |   | $ | 23.2 |   |
| HIV                           |   |                                                                       | 7.8    |   |   | 11.3 |   |
| Cancer                        |   |                                                                       | 4.9    |   |   | 19.3 |   |
| Other                programs |   |                                                                       | 1.1    |   |   | 2.5 |   |
| Total                         |   | $                                                                          | 32.5   |   | $ | 56.3 |   |

**Contractual      Obligations**

----

Index

|                                                    |   |                             |   | **Payments                due by September 30,** |   |
|---------------------------------------------------------|--------|----------------------------------|--------|--------------------------------------------------|--------|
|                                                    |   | **Total**                        |   | **2007**                                         |   | **2008-2009** |   | **2010-2011** |   | **Thereafter** |   |
|                                                    |   | **(in                millions)** |   |
| Operating                leases                         |   | $                                | 7.3    |                                             | $      | 1.9 |   | $ | 4.0 |   | $ | 0.8 |   | $ | 0.6 |   |
| License                and collaboration agreements (1) |   |                             | 93.4   |                                             |   | 2.8 |   |   | 4.5 |   |   | 3.2 |   |   | 82.9 |   |
| Total                                                   |   | $                                | 100.7  |                                             | $      | 4.7 |   | $ | 8.5 |   | $ | 4.0 |   | $ | 83.5 |   |

| (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**

----

Index

*Revenue      Recognition*

----

Index

*Share-Based      Payment Arrangements*

----

Index

| ·   | 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 nine months ended September 30, 2005 and 2006,                the                volatility of our common stock has been high, 96% and 88%,, respectively,                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. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Index

| ·   | 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*

----

Index

** Impact      of Recently Issued Accounting Standards**

*Accounting      for Uncertainty in Income Taxes—an Interpretation of FASB Statement      109*

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

----

Index

**                    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.**

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

----

Index

**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; |
|--------|-----------------------------------------|

| · | 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. |
|--------|-------------------------------------------|

----

Index

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

**            **

**       **

**               Item      6. Exhibits**

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

| 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                                                                                                                                                                                                   |

----

Index

**SIGNATURES**

|                                  | **PROGENICS                PHARMACEUTICALS, INC.** |
|---------------------------------------|----------------------------------------------------|
| Date:                November 9, 2006 | By:                                                | **/s/                Robert A. McKinney** |
|                                  |                                               | Robert                A. McKinneyChief                Financial Officer(Duly                authorized officer of the Registrant and Principal Financial and                Accounting Officer) |