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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                            ------------------------

                                   FORM 10-K

(MARK ONE)

<TABLE>
<C>        <S>
   /X/     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
           SECURITIES
           EXCHANGE ACT OF 1934
</TABLE>

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

                                       OR

<TABLE>
<C>        <S>
   / /     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
           SECURITIES
           EXCHANGE ACT OF 1934
</TABLE>

        FOR THE TRANSITION PERIOD FROM ______________ TO ______________

                         COMMISSION FILE NUMBER 0-21863

                            ------------------------

                               EPIX MEDICAL, INC.

             (Exact name of Registrant as Specified in its Charter)

<TABLE>
<S>                                       <C>
                DELAWARE                               04-3030815
    (State or other jurisdiction of       (I.R.S. Employer Identification No.)
     incorporation or organization)
            71 ROGERS STREET                             02142
        CAMBRIDGE, MASSACHUSETTS                       (Zip Code)
(Address of principal executive offices)
</TABLE>

       Registrant's telephone number, including area code: (617) 250-6000

        SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
          SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

                     COMMON STOCK, $.01 PAR VALUE PER SHARE

                                (Title of Class)

                            ------------------------

    Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/  No / /

    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /

    The aggregate market value, based upon the average bid and asked price of
the shares as reported by the Nasdaq National Market, of voting stock held by
non-affiliates (without admitting that any person whose shares are not included
in such calculation is an affiliate) at March 14, 2000 was $224,334,586.

    As of March 14, 2000, 11,729,913 shares of the registrant's Common Stock,
$.01 par value per share, were issued and outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE

    Portions of the registrant's definitive Proxy Statement for its 2000 Annual
Meeting of Stockholders are incorporated by reference into Part III of this
Report on Form 10-K.

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                                     PART I

ITEM 1. BUSINESS

GENERAL

    We are engaged in the development of targeted contrast agents to both
improve the capability and expand the use of magnetic resonance imaging ("MRI")
as a diagnostic tool for a variety of diseases. We were incorporated in Delaware
in 1988 and commenced operations in 1992.

OVERVIEW

    We are engaged in the development of targeted contrast agents to both
improve the capability and expand the use of MRI as a tool for diagnosing human
disease. Our principal product under development, AngioMARK (MS-325), is an
injectable intravascular contrast agent designed for multiple cardiovascular
imaging applications, including peripheral vascular disease and coronary artery
disease. We believe that AngioMARK will significantly enhance the quality of MR
images and provide physicians with a clinically superior, non-invasive (i.e., no
more invasive than a peripheral intravenous injection ("I.V.")) and
cost-effective method for diagnosing cardiovascular disease. We also believe
that AngioMARK will simplify the diagnostic pathway for a number of
cardiovascular diseases and in many cases replace highly invasive (i.e., more
invasive than a peripheral I.V. up to and including a surgical procedure) and
expensive X-ray angiography, which is currently considered the definitive
diagnostic exam for assessing cardiovascular disease. We are also investigating
additional imaging applications for AngioMARK, including breast cancer detection
and myocardial perfusion imaging.

    As a major component of our corporate strategy, we have sought to enter into
alliances with leaders in the pharmaceutical, diagnostic imaging and MRI
equipment industries to facilitate the development, manufacture, marketing, sale
and distribution of our products. To date, we have formed key alliances with
Mallinckrodt Inc. ("Mallinckrodt") for the development, manufacture and
worldwide (excluding Japan) sale of AngioMARK and Daiichi Radioisotope
Laboratories ("Daiichi") for the sale of AngioMARK in Japan. We have also formed
collaborations with the three major MRI scanner manufacturers, General Electric
Medical Systems, Philips Medical Systems and Siemens Medical Systems, to develop
advanced imaging techniques designed to facilitate the use of AngioMARK-enhanced
MRI. In addition, we have entered into drug discovery collaborations with Dyax
Corp. ("Dyax") and NeoGenesis Pharmaceuticals. Finally, we and Pfizer Inc.
("Pfizer") recently announced positive results from a collaboration intended to
evaluate the potential use of AngioMARK-enhanced MRI in diagnosing and
monitoring female sexual arousal dysfunction. We entered into these alliances,
and will seek to enter into future strategic alliances with industry leaders, in
order to obtain access to resources and infrastructure to leverage our
strengths.

    We have completed two Phase I clinical trials to date; the first was
completed in February 1997, and the second in February 1998. In June 1998, we
completed a Phase II clinical trial designed to test the safety and preliminary
efficacy of AngioMARK-enhanced MR angiography for the evaluation of peripheral
vascular disease. In June 1999, we initiated a Phase III clinical trial to
determine the efficacy of AngioMARK-enhanced MR angiography for the detection of
aortoiliac occlusive disease. Evaluation for aortoiliac occlusive disease is a
critical component of two common procedures: abdominal aortography, particularly
for the identification of abdominal aortic aneurysm, and leg arteriography, also
known as peripheral run-off, for the detection of atherosclerosis. The trial, a
multi-center, comparative, two-arm study, is designed to compare the diagnostic
accuracy of AngioMARK-enhanced MR angiography with that of X-ray angiography. We
are also currently conducting a Phase II feasibility trial to test the safety
and feasibility of AngioMARK-enhanced MR angiography for the evaluation of
coronary artery disease, and recently completed enrollment for an additional
Phase II feasibility trial to test the safety and preliminary efficacy of
AngioMARK for detecting breast cancer.

                                       1
<PAGE>
    The use of MRI has grown steadily over the past 10 years due to reduced cost
and improved imaging capabilities and now provides an effective diagnostic
modality for a broad range of applications. MRI manufacturers have improved the
hardware and software of their systems, reducing the time per procedure
dramatically while significantly enhancing image resolution. While MRI is
currently used extensively to image many organs and tissues in the body, its use
in imaging the arteries and veins has been limited. Prior attempts to develop
contrast agents to facilitate the clinical utility of MRI, particularly for
coronary arteries, have had limited success. Unlike most currently available MRI
contrast agents, which are non-specific, AngioMARK is a targeted intravascular
contrast agent designed to bind to albumin, the most common blood protein.
Because of its affinity for albumin, AngioMARK remains at high concentrations in
the bloodstream throughout the MRI exam and, consequently, provides the image
acquisition time and signal strength needed to obtain a high contrast, high
resolution image of the cardiovascular system. Like most currently available MRI
contrast agents, AngioMARK is designed to be excreted safely through the kidneys
over time. We believe that the advantages of AngioMARK, coupled with the reduced
cost and improved imaging capabilities of MRI, will lead to significantly
expanded use of MRI to diagnose cardiovascular and other diseases.

CARDIOVASCULAR DISEASE BACKGROUND

    The human cardiovascular system consists of the heart and a vast series of
arteries and veins that carry blood throughout the body. Cardiovascular disease,
a broad class of diseases affecting the heart and vasculature, is the number one
cause of death in the United States, with over 950,000 fatalities each year. 1
out of every 2.4 deaths in the United States is attributed to cardiovascular
disease. It is estimated that over 58 million Americans suffer from some form of
this disease.

    Atherosclerosis is one of the most common forms of cardiovascular disease.
This condition refers to the accumulation of fatty plaques in the inner lining
of blood vessels, resulting in a thickening or hardening of affected vessels. As
the disease progresses, the arteries can become weakened or increasingly
narrowed, thereby reducing blood flow to vital organs (e.g., the heart and
brain). Recent research in cardiovascular disease has begun to highlight the
systemic nature of plaque buildup. Because major risk factors tend to affect all
vascular regions, clinical manifestations of cardiovascular disease tend to
coexist in many patients. Therefore, patients diagnosed with cardiovascular
disease in one vascular region are at high risk of having

                                       2
<PAGE>
similar disease in another vascular region. Depending on the artery in which
disease occurs, this condition can have very serious consequences.

<TABLE>
<S>                           <C>
Aorta:                        The aorta is the main blood vessel that carries blood from
                              the heart to the rest of the body. Degenerative changes in
                              the vessel wall often result in the enlargement or bulging
                              of the lower part of this vessel, known as abdominal aortic
                              aneurysm. Individuals with this condition are at serious
                              risk that the aneurysm will rupture, causing
                              life-threatening bleeding. There are an estimated 200,000
                              cases of abdominal aortic aneurysm diagnosed each year in
                              the United States. Because this condition can be
                              asymptomatic for many years, many physicians have begun to
                              consider the merits and cost-effectiveness of routine
                              screening programs for this disease.

Extremities:                  Atherosclerotic blockages in the major arteries of the
                              pelvis and legs- the iliac, femoral, popliteal and tibial
                              arteries--can lead to ischemia (lack of oxygen) or
                              infarction (death of tissue) in these areas. Complications
                              from atherosclerotic disease in these vessels include pain,
                              limitations in mobility, and amputation of the extremities.
                              Each year approximately 100,000 amputations are performed in
                              the United States primarily due to some form of
                              cardiovascular disease.

Coronary Arteries:            The coronary arteries are responsible for supplying blood to
                              the heart muscle (myocardium). When these arteries are
                              narrowed or clogged due to atherosclerotic buildup, the
                              result can be chest pain (angina pectoris) or heart attack
                              (myocardial infarction). This condition, known as coronary
                              artery disease, is estimated to afflict 7 million Americans.
                              Coronary artery disease is primarily responsible for the
                              nearly 500,000 heart attack deaths each year, making it the
                              number one cause of death in the United States.

Renal Arteries:               The renal arteries are the vessels which carry blood to the
                              kidneys. Blockage of these arteries can result in renal
                              failure, and is estimated to account for up to 10% of all
                              cases of hypertension, a condition which afflicts
                              approximately 50 million individuals in the United States.
                              Early diagnosis can be extremely helpful for patients with
                              renovascular hypertension because it can be treated with
                              various revascularization procedures; however, X-ray
                              angiography, the current definitive diagnosis for this
                              condition, carries elevated risk for patients with renal
                              impairment.

Cerebrovascular               Individuals with atherosclerotic lesions in the carotid and
Vessels:                      intracranial arteries can be at serious risk of complete
                              vessel blockage. Blocked arteries can prevent areas of the
                              brain from receiving the necessary blood supply, leading to
                              stroke. A significant portion of the 600,000 strokes each
                              year in the United States are a result of atherosclerotic
                              disease in the vessels of the head and neck.
</TABLE>

DIAGNOSING CARDIOVASCULAR DISEASE

    Cardiovascular disease is currently diagnosed using a number of different
imaging technologies ("modalities"), including ultrasound, nuclear medicine,
computed tomography ("CT"), X-ray angiography, and MRI. These modalities can be
separated into two broad categories according to the types of structures they
are designed to image: angiographic imaging and cardiac imaging.

                                       3
<PAGE>
    - Angiography refers to the imaging of arteries. While ultrasound, CT and,
      more recently, MRI are sometimes used to detect disease in the certain
      vessels, X-ray angiography represents the current reference standard
      ("gold standard") for diagnosing cardiovascular disease. Invented in the
      1920's, an X-ray angiogram is an invasive procedure performed in a
      surgical setting that requires the insertion of a catheter through a
      puncture of the femoral artery in the patient's groin. Once the catheter
      is placed in the relevant artery, toxic X-ray contrast dye is injected
      into the bloodstream and a 2-dimensional image is acquired of that
      vascular region. A coronary X-ray angiogram typically costs between $2,000
      and $6,000, while a peripheral (i.e., non-coronary artery) angiogram
      typically costs between $1,000 and $3,000. These procedures carry
      significant risk of complications, particularly for imaging the coronary
      arteries, where patients are at risk of renal failure and even death.
      While peripheral X-ray angiograms have slightly lower morbidity rates
      compared to coronary X-ray angiograms, there is a risk of significant
      complications, including limb loss and renal failure. In addition, X-ray
      angiography does not always provide sufficient information for clinical
      decision-making, particularly in the coronary arteries. While this
      procedure identifies the location of arterial blockages, in many cases it
      cannot conclusively determine their impact on blood flow. Therefore, for
      many blockages, additional studies must be performed to enable the
      physician to make a definitive diagnosis. Finally, a significant portion
      of those patients undergoing diagnostic X-ray angiography do not require
      invasive therapy such as percutaneous transluminal coronary angioplasty
      ("PTCA") or coronary artery bypass graft ("CABG"). It is estimated that
      40% of all coronary angiography patients are diagnosed with conditions
      that do not warrant invasive therapy. Based on available procedure data,
      we estimate that over 4.5 million X-ray angiograms were performed in the
      United States in 1998, of which approximately 2.1 million were coronary
      angiograms.

    - Cardiac imaging comprises those imaging modalities designed to give
      functional information about the heart muscle itself, rather than vessels
      supplying blood to the heart. The two primary cardiac imaging techniques
      are stress echocardiograms and nuclear stress perfusion studies. Stress
      echocardiograms use transthoracic ultrasound to measure motion of the
      walls of the heart under physical or pharmacological stress. In most
      cases, a lack of blood flow to a particular area of the heart will be
      reflected in atypical motion of the heart wall. These tests are
      non-invasive and typically cost between $300 and $900. A stress
      echocardiogram, however, is often inconclusive and provides no information
      on the degree of blockage in the coronary arteries. Nuclear stress
      perfusion studies, which measure the flow of blood to cardiac tissue, can
      be used either as the critical diagnostic test prior to X-ray angiography
      or to confirm the impact on blood flow of an intermediate blockage
      identified through X-ray angiography. These tests are non-invasive, use
      small quantities of ionizing radiation and typically cost between $600 and
      $1,400. A patient is injected with a radiopharmaceutical and then a gamma
      camera is used to detect uptake of the agent in the heart muscle. A
      deficiency in blood flow to particular regions of the heart is shown on
      the resultant images. While the test can identify the effects of coronary
      artery disease, it also fails to provide information on degree of blockage
      in the coronary arteries. It is estimated that more than 1.6 million
      stress echocardiograms and 3.8 million nuclear stress perfusion studies
      were conducted in the United States in 1998.

    As the foregoing suggests, the diagnosis of cardiovascular disease is
complex, requiring several different imaging modalities. Non-invasive modalities
like nuclear medicine and stress echocardiography can give functional
information about the heart, but often cannot identify the exact cause of heart
dysfunction. X-ray angiography, on the other hand, cannot always determine how
blockages in the arteries affect function, particularly in the heart., and is
itself an invasive procedure. we therefore believe that there is significant
clinical need for a highly accurate non-invasive exam which provides more
comprehensive diagnostic information about the cardiovascular system.

                                       4
<PAGE>
MAGNETIC RESONANCE IMAGING BACKGROUND

    In an MRI exam, images are obtained by placing a portion of the patient's
body in a magnetic field and applying safe, low-energy radio waves. The
different organs and tissues in the body respond uniquely to the electromagnetic
field within the MRI scanner and these responses can be captured and converted
into a three-dimensional image. MRI can provide high contrast, high resolution
images of anatomy deep inside the body.

    The use of MRI, which was developed in the 1970s, has grown steadily over
the past decade due to declining costs, increased clinical effectiveness,
reduced exam times and more comprehensive coverage by third-party payors. As an
example, a standard MRI brain exam, which in 1985 required 60 minutes and cost
approximately $1,500, now takes only 30 minutes, costs less than half as much
and can identify tumors that are over 50% smaller than those detectable in 1985.
The installed base of MRI scanners in the United States has grown from fewer
than 400 scanners in 1985 to over 5,000 in 1998, during which year there were
over 11.9 million MRI exams performed.

    Underlying the economic and clinical advancement of MRI is the consistent
and rapid technological progress achieved by MRI equipment manufacturers such as
General Electric, Philips and Siemens. Over the past 10 years, MRI equipment
manufacturers have achieved significant improvements in both MRI hardware and
software while reducing the price of a new machine by more than 35%. The primary
hardware components in an MRI scanner are the magnet, gradients, radio frequency
coils and computer processors and memory. Since 1985, gradients have quadrupled
in speed and power, and enhancements in radio frequency coils have improved the
signal-to-noise ratio, one measure of image quality, by over 100%. Improvements
in computer processors, memory and software, including new techniques to improve
scanning, image processing and motion compensation, have been even more
dramatic.

    Images obtained in certain applications of MRI can be enhanced through the
use of contrast agents. Contrast agents are injected into a vein in the
patient's arm prior to a scan and are designed to amplify the contrast between
various tissues, organs and anatomic structures. Currently available MRI
contrast agents are primarily non-specific gadolinium compounds which diffuse
very rapidly throughout the body following injection. While they are effective
at enhancing images of certain tissue types, primarily in the brain and spine,
they have demonstrated limited efficacy for most vascular applications. The use
of non-specific contrast agents has grown by more than 60% in the last five
years; it is estimated that these agents are currently used in 35% to 40% of all
MRI exams.

    MRI has been established as the imaging modality of choice for a broad range
of applications, including brain tumors, knee injuries and many spinal
disorders. Nevertheless, MRI has been used sparingly as an imaging modality for
the cardiovascular system due to its limited ability to provide sufficient
contrast between blood vessels and the surrounding tissue. Further, MRI exams
using the existing non-specific contrast agents are limited by the rapid
diffusion of these agents out of the vascular system, which reduces the time
during which an image can be acquired. Consequently, many experts believe MRI
contrast agents which remain in the vasculature for extended periods of time
will be necessary to obtain sufficient contrast for widespread clinical use of
MRI to image the vascular system.

OUR APPROACH TO CARDIOVASCULAR MRI

    Our principal product under development, AngioMARK, is an injectable
intravascular contrast agent intended to enhance the quality of MR images and
provide physicians with a superior method for diagnosing cardiovascular disease.
Unlike most currently available MRI contrast agents, which are non-specific and
therefore leak out of the vasculature, AngioMARK binds to albumin, the most
common blood protein. Because of its affinity for albumin, AngioMARK remains at
high concentrations in the bloodstream throughout the MRI exam and,
consequently, provides the image acquisition time and signal strength needed to
obtain a high contrast, high resolution image of the cardiovascular system.
These

                                       5
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images are intended to provide sufficient anatomical detail for definitive
diagnosis and surgical planning. We estimate that an MRI exam with AngioMARK
will cost approximately between $500 and $1,000.

    We believe that AngioMARK-enhanced MR angiography has the potential to
replace a significant portion of the estimated 4.5 million X-ray angiograms
performed each year in the United States. Whereas X-ray angiography is an
invasive, expensive procedure that captures only 2-dimensional data over a
limited vascular region, AngioMARK-enhanced MR angiography is a non-invasive,
relatively inexpensive exam with the ability to capture 3-dimensional images of
the vasculature over the entire body. We believe that the possibility of a
whole-body MR angiography exam with a single injection of AngioMARK is
particularly well suited for the diagnosis of cardiovascular disease, given the
systemic nature of this condition. In addition, we expect that a significant
patient population in whom cardiovascular disease is suspected but for whom
X-ray angiography is contraindicated (e.g., patients with renal impairment who
are at increased risk of renal failure or allergic reactions due to the X-ray
contrast dye) will be likely candidates for AngioMARK-enhanced MR angiography.

    We believe the unique properties of AngioMARK will find clinical utility
beyond its angiographic applications. We envision a time, for example, when
AngioMARK, coupled with anticipated advances in software and hardware for MRI
equipment, will enable physicians to use MRI to perform a non-invasive,
integrated cardiac exam for the diagnosis of coronary artery disease. Such a
procedure would be designed to provide information on coronary artery anatomy,
including location of arterial blockages, as well as cardiac perfusion and
cardiac function data, in one sitting early in the diagnostic work-up. Because
the procedure is intended to provide physicians with more comprehensive
diagnostic information at an earlier stage of the diagnostic work-up, physicians
would be able to make a more informed diagnosis, and therefore arrange for
appropriate patient treatment, sooner than would otherwise be possible, thereby
potentially achieving better patient outcomes at a lower cost. Of the
6.75 million patients in the United States who enter the diagnostic pathway for
coronary artery disease each year, we estimate that over half (3.44 million)
would be candidates for such an integrated cardiac exam. Under the current
diagnostic regime, these patients would typically receive stress echocardiograms
and/or nuclear stress perfusion studies; approximately 40% would then receive
diagnostic X-ray angiograms.

    In addition to the suspected coronary artery disease patients, we believe
that patients who have undergone an intervention for this condition, either
through a PTCA or a CABG, could benefit from AngioMARK-enhanced MR angiography.
After either a PTCA or a CABG, optimal patient management would include
follow-up exams to determine the re-forming of blockages ("restenosis") as well
as proper functioning of grafts. However, while it is estimated that more than
600,000 PTCAs and 600,000 CABGs are performed each year in the United States,
only a small proportion of the patients undergoing these procedures received
follow-up coronary X-ray angiography ("relooks"). We estimate that there are
currently over 2.1 million patients who have undergone a PTCA and over
2.7 million patients who have undergone a CABG and who are potential candidates
for a periodic relook. Due to the risk, discomfort and expense associated with
coronary X-ray angiography, follow-up imaging currently is limited, which can
lead to increased patient management costs and poorer outcomes due to
undiagnosed restenosis and other complications. We believe that the availability
of AngioMARK may lead to an increase in follow-up exams using MRI. We further
believe that AngioMARK could enable non-invasive cardiologists to visualize the
coronary arteries of the estimated 300,000 patients who are treated with
thrombolytic therapy (streptokinase and Tissue Plasminogen Activator) each year.

    Because of its potential for high-resolution imaging of the vasculature,
AngioMARK is being investigated for possible use in several applications
involving microvessels. We believe, for example, that AngioMARK could assist
physicians in diagnosing breast cancer in the estimated 2 million women who have
sub-optimal mammograms each year. Due to our strong signal especially at low
(0.5T and below) magnetic fields, we believe AngioMARK has the potential to
perform high-resolution breast imaging procedures on less expensive, more
patient-friendly low-field MRI scanners. We recently completed enrollment for a
Phase II feasibility study designed to evaluate the safety and efficacy of
AngioMARK-

                                       6
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enhanced MRI in identifying malignant breast lesions in women with breast
abnormalities. We have also undertaken a Phase II feasibility trial, in
conjunction with Pfizer Inc., to assess the potential utility of
AngioMARK-enhanced MRI in diagnosing female sexual arousal dysfunction by
monitoring pelvic blood volume in women. It is estimated that up to 40% of all
women in the United States suffer from some sort of sexual dysfunction.

TECHNOLOGY

BACKGROUND

    Our products under development are based upon our proprietary biophysics
technology platform. Our product candidates are small molecule chelates (soluble
metal-organic complexes) containing a magnetically active metal element which
elicit a strong MRI signal and are designed to be safely excreted from the body.
We have developed significant expertise in the design, synthesis and
characterization of metal-containing complexes for in vivo use. While the
contrast agents primarily used in MRI today are non-targeted in the sense that
they diffuse indiscriminately throughout the tissues of the body, we believe
that our proprietary technology platform will enable us to design contrast
agents capable of targeting specific tissues or organs by binding to particular
proteins. Our proprietary biophysics technology platform consists of two key
elements:

RECEPTOR-INDUCED MAGNETIC ENHANCEMENT

    Receptor-induced magnetic enhancement ("RIME") technology, which was
developed by Dr. Randall Lauffer, our founder and Chief Scientific Officer,
while at Massachusetts General Hospital ("MGH"), allows targeting of a contrast
agent to particular tissue and fluid types in the body while simultaneously
multiplying the signal enhancing effect of the agent. We now exclusively license
this technology under patents held by MGH. RIME technology involves the design
of metal complexes that bind to particular proteins and receptor molecules in
the body. This binding causes increased concentration and retention of the
contrast agent in the specific tissues and fluids that contain the targeted
receptor molecules. Moreover, the binding of agent to receptor reduces the rate
at which the agent rotates, or tumbles, in solution. This relaxation in tumbling
rate leads to a complex magnetic effect whereby the agent's signal-enhancing
characteristics are substantially increased, resulting in a stronger signal
during MR scans.

ENZYME SENSING TECHNOLOGY

    We developed enzyme sensing technology, an extension of the RIME technology
which potentially allows MRI to probe biological events on the molecular level
for the first time, thereby increasing the sensitivity of MRI. We are developing
small molecule contrast agents that become active in the presence of certain
enzymes. In the presence of these enzymes, such an agent would bind to a target
receptor and express its full RIME signal enhancement capabilities. Because the
presence of elevated levels of particular enzymes occur only in certain
biological situations, enzyme sensing technology would allow MRI to scan for
specific biological events currently undetectable with MRI.

OUR PRODUCT & DEVELOPMENT PROGRAMS

ANGIOMARK

    Our lead product candidate, AngioMARK, is a targeted intravascular contrast
agent intended for use with MRI. AngioMARK is a gadolinium-based small molecule
chelate which is engineered with our proprietary RIME technology and designed to
bind to albumin, the most common blood protein. In AngioMARK images using
standard MRI techniques, the blood gives off a strong magnetic signal and
appears bright against the dark background of surrounding tissue. Because of its
affinity for albumin, AngioMARK remains at high concentrations in the
bloodstream throughout the MRI exam and therefore provides the image acquisition
time and signal strength needed to obtain a high contrast, high resolution

                                       7
<PAGE>
image of the cardiovascular system. Like most currently available non-specific
contrast agents, AngioMARK is designed to be excreted safely through the kidneys
over time.

    While AngioMARK is based on our proprietary technology platform, its
chemical composition is similar to several currently available MRI contrast
agents, which have established a strong safety record and are known to cause few
side effects. Due to the increased magnetic signal elicited by AngioMARK, we
expect it to be used at a similar or lower dose than these contrast agents. As a
result of these factors, we believe that AngioMARK will have a safety profile
comparable to currently available MRI contrast agents.

    We have completed two Phase I clinical trials to date; the first was
completed in February 1997, and the second in February 1998. No clinically
significant adverse events were reported for these Phase I trials.

    In June 1998, we completed a Phase II clinical trial to test the safety and
preliminary efficacy of AngioMARK for the evaluation of peripheral vascular
disease in the carotid, iliac and femoral arteries. This Phase II trial was
conducted at multiple clinical sites and involved the blinded administration of
AngioMARK at several dosing levels in a total of 81 patients. In the trial,
AngioMARK-enhanced MR angiography was compared to conventional X-ray
angiography, the current reference standard, to determine the location and
degree of stenotic lesions. The results for identification of stenoses,
combining all doses, indicate that AngioMARK demonstrated 82% accuracy, 80%
sensitivity and 82% relative to X-ray angiography. The 95% confidence intervals
for accuracy, sensitivity and specificity were 73-90%, 68-92% and 70-95%,
respectively. The study also demonstrated that the accuracy for determining the
location of stenoses for carotid, iliac and femoral arteries was 100%, 72% and
86%, respectively. In this study, AngioMARK was well tolerated by patients at
all dose levels, with no serious side effects reported. In June 1999, we
initiated a Phase III clinical trial to determine the efficacy of
AngioMARK-enhanced MR angiography for the detection of aortoiliac occlusive
disease. Evaluation for aortoiliac occlusive disease is a critical component of
two common procedures: abdominal aortography, particularly for the
identification of abdominal aortic aneurysm, and leg arteriography, also known
as peripheral run-off, for the detection of atherosclerosis.

    In September 1997, we commenced a Phase II feasibility trial to test the
safety and feasibility of AngioMARK for the evaluation of coronary artery
disease. This trial is being conducted at multiple sites and involves the
administration of AngioMARK to approximately 105 patients. As with the Phase II
peripheral vascular disease trial, AngioMARK-enhanced MR angiography is being
compared to X-ray angiography, the current reference standard, to determine the
location and degree of stenotic lesions. Clinical use of MR angiography for
imaging the coronary arteries is particularly difficult at present due to the
problem of cardiac motion--motion resulting from both the beating of the heart
and respiration. We have joined with several leading MRI manufacturers, academic
centers and other research organizations to develop hardware and software
solutions to the problem of cardiac motion.

    In January 1998, we commenced a Phase II feasibility trial to test the
safety and preliminary efficacy of AngioMARK-enhanced MRI for detecting
malignant breast lesions in women with breast abnormalities. We believe that,
based on the physical properties of AngioMARK and preclinical studies, AngioMARK
has potential utility as part of a non-invasive imaging procedure that would
assist physicians in identifying breast cancer in patients who are at high risk
or who have had indeterminate mammograms. Another potential application for
AngioMARK-enhanced MRI involves the precise determination of tumor size and
location in cases of malignant breast cancer. Due to its strong signal
especially at low (0.5T and below) magnetic fields, we believe AngioMARK has the
potential to perform high-resolution breast imaging procedures on
less-expensive, more patient-friendly low-field MRI scanners. We completed
enrollment for this trial in March 2000.

OTHER RESEARCH AND DEVELOPMENT PROGRAMS

    We are currently developing novel contrast agents for imaging thrombosis,
commonly referred to as "blood clots." These clots can occur in the legs, pelvis
and arms, where they are referred to as deep vein

                                       8
<PAGE>
thrombosis ("DVT"), and can migrate to the lungs where they are referred to as
pulmonary emboli ("PE"). It is estimated that blood clots are responsible for
over 400,000 deaths each year in the United States. We are seeking to develop a
targeted contrast agent that would enable MRI to illuminate blood clots. We
believe that our proprietary technology platform could also enable MRI to
differentiate old and new clot formation. Such a product could potentially
change the diagnostic work-up for many of the conditions associated with
thromboembolic disease, including PE and DVT. EPIX has entered into a strategic
alliance with Dyax to develop novel contrast imaging agents for the diagnosis of
severe blood clots in the lungs and legs. See "--Strategic Alliances." We
believe that the use of this new approach could lead to better medical outcomes
due to earlier definitive diagnosis. Early diagnosis is especially important for
clots in the thigh, pelvis and vena cava because of their increased likelihood
of migrating to the lungs once inside the pulmonary vasculature. Ultimately,
these clots can be fatal. We believe that such contrast agents could eliminate
the need for the CT, ultrasound and nuclear medicine studies currently used to
identify thrombotic disease, and could potentially provide a non-invasive but
clinically equivalent alternative to pulmonary angiography. In November 1999, we
announced that our prototype clot imaging agent, EP-862, had been shown in
preclinical testing to detect sub-millimeter blood clots.

BUSINESS STRATEGY

    Our objective is to become a worldwide leader in MRI contrast agents by
pursuing a strategy based on commercializing AngioMARK and developing new
applications for our proprietary technology platform. Our key business
objectives are to:

    - Establish the safety and clinical utility of AngioMARK for multiple
      vascular imaging indications. In June 1999, EPIX initiated a Phase III
      clinical trial to determine the efficacy of AngioMARK-enhanced MR
      angiography for the detection of aortoiliac occlusive disease. We continue
      to enroll patients in our Phase II feasibility trial to assess the safety
      and preliminary efficacy of AngioMARK-enhanced MR angiography for the
      evaluation of coronary artery disease. In each of these clinical trials,
      we compare AngioMARK-enhanced MR angiography to X-ray angiography, the
      current reference standard for these indications. In addition, in
      March 2000, we completed enrollment in a Phase II feasibility trial to
      test the safety and preliminary efficacy of AngioMARK-enhanced MRI for
      detecting breast cancer. We intend to conduct additional clinical trials
      for other indications in the future.

    - Achieve market acceptance of AngioMARK. EPIX intends to collect
      pharmacoeconomic and clinical data that demonstrates that
      AngioMARK-enhanced MRI is superior to the traditional diagnostic pathway.
      Through its strategic partners' extensive worldwide marketing and sales
      networks, we intend to present this data to both physicians and
      third-party payors. We believe that third-party payors will promote the
      use of AngioMARK because of its potential for substantial clinical
      benefits and cost savings. We also intend to further the market acceptance
      of AngioMARK-enhanced MRI by coordinating its development efforts with the
      development efforts of leaders in the MRI equipment industry. Toward this
      end, we have entered into collaboration agreements with General Electric
      Medical Systems, Philips Medical Systems, and most recently Siemens
      Medical Systems. The primary objective of these collaborations is to
      develop technologies and protocols that improve and expand the use of MRI
      for cardiovascular imaging.

    - Develop new targeted MRI contrast agents. We are currently developing
      thrombosis-specific MRI contrast agents based on our proprietary
      technology platform. In November 1999, we announced that our prototype
      clot imaging agent, EP-862, had been shown in preclinical testing to
      detect sub-millimeter blood clots.

    - Maximize the value of strategic alliances. At the end of March 2000, we
      had established collaborations with Mallinckrodt, Daiichi, Dyax,
      NeoGenesis, General Electric Medical Systems, Philips Medical Systems,
      Siemens Medical Systems, and Pfizer. We entered into these alliances, and
      will

                                       9
<PAGE>
      seek to enter into future strategic alliances with pharmaceutical, imaging
      agent and MRI equipment industry leaders, in order to obtain access to
      resources and infrastructure to leverage our strengths. See "--Strategic
      Alliances."

Strategic Alliances

    Our strategy includes entering into alliances with leaders in the
pharmaceutical, diagnostic imaging and MRI equipment industries to facilitate
the development, manufacture, marketing, sale and distribution of its products.
To date, we have formed strategic alliances with Mallinckrodt, Daiichi, Dyax,
NeoGenesis, General Electric Medical Systems, Philips Medical Systems, Siemens
Medical Systems, and Pfizer.

MALLINCKRODT

    In August 1996, we entered into a collaboration agreement with Mallinckrodt
pursuant to which we granted Mallinckrodt an exclusive license to develop and
commercialize AngioMARK worldwide, excluding Japan. The agreement also provides
for potential collaboration and cost sharing arrangements in connection with
future MRI vascular agent programs, whether developed by us or Mallinckrodt or
in-licensed by either party. The operations of the collaboration are supervised
by a joint steering committee comprised of an equal number of representatives of
both parties. We have primary responsibility for conducting Phase I and Phase II
clinical trials and for manufacturing AngioMARK for such trials. Mallinckrodt
has assumed primary responsibility for development and manufacturing in
connection with the Phase III clinical trial. Mallinckrodt will also be
responsible for the marketing and distribution of AngioMARK worldwide, excluding
Japan. The agreement imposes certain development due diligence obligations on
both of the parties and certain marketing due diligence obligations on
Mallinckrodt.

    We will generally share equally with Mallinckrodt in the worldwide,
excluding Japan, development and manufacturing scale-up and product launch costs
of AngioMARK as well as any future MRI vascular agents which may be covered by
the agreement. The parties' current obligations with respect to AngioMARK
development costs are limited to a specified amount. Under the arrangement, we
and Mallinckrodt will share equally in future operating profits, if any.

    The agreement provides that Mallinckrodt may not independently develop,
market or sell any MRI vascular agent worldwide except Japan other than those
that are part of the collaboration without the approval of the joint
EPIX-Mallinckrodt steering committee.

    In September 1998, Mallinckrodt agreed to increase its financial commitment
to the original EPIX-Mallinckrodt collaboration. The amended agreement provides
us and Mallinckrodt with the opportunity to broaden the scope of their clinical
program for AngioMARK and commits additional resources for the research and
development of novel MR imaging technologies.

    In November 1999, we announced that we had entered into a $9.5 million loan
agreement with Mallinckrodt pursuant to the exercise of a loan provision in our
collaboration agreement. Proceeds from the note are intended to fund our share
of clinical trial and development expenses for AngioMARK. The note bears
interest at Prime Rate, is secured by our intellectual property, and is due upon
certain events as stated in the agreement.

DAIICHI

    In March 1996, we entered into a development and license agreement with
Daiichi pursuant to which we granted Daiichi an exclusive license to develop and
commercialize AngioMARK in Japan. Under this arrangement, Daiichi will assume
primary responsibility for clinical development, regulatory approval, marketing
and distribution of AngioMARK in Japan. We retained the right and obligation to
manufacture AngioMARK for development activities and commercial sale under the
agreement. However, Daiichi may,

                                       10
<PAGE>
under certain circumstances, elect to formulate AngioMARK purchased from us into
a final product. The agreement imposes certain development due diligence
obligations on both parties and marketing due diligence obligations on Daiichi.
The agreement may be terminated by Daiichi upon 30 days prior written notice if
Daiichi determines in its reasonable opinion that AngioMARK lacks clinical
efficacy, presents serious side effects or otherwise exhibits unacceptable
properties. In connection with this strategic alliance, we received an up-front
fee from Daiichi in the amount of $3.0 million and earned a $900,000 milestone
payment in June 1997. Daiichi will be required to make future payments to us up
to an aggregate amount of $2.4 million upon the achievement of certain AngioMARK
development milestones. Daiichi also made a $5.0 million equity investment in us
and will be required to make royalty payments to us on net sales of AngioMARK in
Japan.

DYAX

    We formed a strategic alliance with Dyax to develop novel contrast imaging
agents for the diagnosis of severe blood clots in the lungs and legs. Together
with Dyax, we sought to jointly identify and develop compounds that specifically
target PE and DVT for use as IN VIVO MRI and nuclear medicine imaging agents for
the diagnosis of these disorders.

    Under the terms of the agreement, we agreed to use Dyax's proprietary phage
display technology to identify peptides that specifically bind to PE and DVT. We
funded the phage display screening program and provided expertise in MRI
contrast technology for development of MR-specific imaging agents. Dyax assumed
primary responsibility for developing agents for use in nuclear medicine. Dyax
will receive royalties on sales of MRI products, and we will receive royalties
on sales of nuclear medicine products resulting from this collaboration. The
discovery phase of this collaboration was formally completed in 1999 with the
identification of several peptide candidates.

NEOGENESIS

    In October 1998, we announced the initiation of a collaboration with
NeoGenesis for the discovery of novel compounds for use in diagnostic imaging.
Under the terms of this agreement, we received access to NeoGenesis' proprietary
combinatorial chemistry libraries. By rapidly screening these libraries with
NeoGenesis' mass-coded drug discovery platform, we sought to identify potential
candidates for our drug discovery programs. This collaboration was successfully
completed in 1999.

GENERAL ELECTRIC MEDICAL SYSTEMS

    In January 1998, we announced the formation of a collaboration with General
Electric Medical Systems to accelerate the development of cardiovascular MRI. In
particular, the collaboration focuses on reducing the effects of cardiac motion
on MR images, providing user-friendly computer tools as a means of visualizing
arteries and veins in 3-dimensional space, and optimizing MRI sequences for
intravascular MRI contrast agents, including AngioMARK. Under the terms of this
non-exclusive agreement, research is performed at several centers in addition to
our facilities, including General Electric's corporate research facility in
Schenectady, NY; General Electric Medical Research in Milwaukee, WI; the
National Institute of Health and several academic centers.

PHILIPS MEDICAL SYSTEMS

    We agreed in November 1998 to collaborate with Philips Medical Systems in
advancing the development of contrast-based cardiovascular MRI technologies.
Under the terms of this non-exclusive collaboration agreement, we and Philips
Medical Systems will combine our resources to optimize imaging technology and
improve 3-dimensional visualization of arteries and veins in patients undergoing
MR angiography. Research and development is to be carried out at several
international Philips research centers and as well as at our facilities.

                                       11
<PAGE>
SIEMENS MEDICAL SYSTEMS

    In September 1999, we announced a non-exclusive collaboration with Siemens
Medical Systems to optimize MR imaging technology and improve visualization of
arteries and veins in patients undergoing MR angiography. The collaboration will
also focus on expanding the use of MRI in diagnosing cardiovascular disease and
providing user-friendly tools for easy visualization of the cardiovascular
system in three-dimensional space. Research and development will be carried out
at our facilities and at Siemens' Iselin, NJ facilities.

PFIZER

    In September 1998, we entered into an agreement with Pfizer to explore the
efficacy of AngioMARK-enhanced MRI in the diagnosis and monitoring of female
sexual arousal dysfunction.

COMPETITION

    The healthcare industry is characterized by extensive research efforts and
rapid technological change, and there are many companies that are working to
develop products similar to ours. There are currently no FDA-approved targeted
vascular contrast agents for use with MRI. However, there are a number of
non-specific MRI agents approved for marketing in the United States and in
certain foreign markets that are likely to compete with AngioMARK if approved
for MR angiography. Magnevist(R) by Schering-AG, Dotarem(R) by Guerbet, S.A.,
Omniscan(R) by Nycomed Imaging ASA ("Nycomed"), and ProHance(R) by Bracco S.p.A.
are all such products. We are aware of three agents under development, Nycomed's
NC100150 and Schering AG's Gadomer-17 and SHU555C, that are being evaluated for
use in MR angiography. There can be no assurance that our competitors will not
succeed in the future in developing products that are more effective than any
that are being developed by us. We believe that our ability to compete within
the MRI contrast agent market is dependent on a number of factors, including the
success and timeliness with which we complete FDA trials, the breadth of
applications, if any, for which our products receive approval, and the
effectiveness, cost, safety and ease of use of our products in comparison to the
products of our competitors. Our success will also be based on physician
acceptance of MRI as a primary imaging modality for certain cardiovascular and
other applications.

    We have many competitors, including pharmaceutical, biotechnology and
chemical companies. A number of competitors, including two of our strategic
partners, are actively developing and marketing products that, if
commercialized, would compete with our product candidates. Many of these
competitors have substantially greater capital and other resources than us and
may represent significant competition for us. Such companies may succeed in
developing technologies and products that are more effective or less costly than
any of those that may be developed by us, and such companies may be more
successful than us in developing, manufacturing and marketing products.
Furthermore, there are several well-established medical imaging modalities that
currently compete, and will continue to compete, with MRI, including X-ray
angiography, CT, nuclear medicine and ultrasound. Other companies are actively
developing the capabilities of the competing modalities to enhance their
effectiveness in cardiovascular system imaging. There can be no assurance that
we will be able to compete successfully in the future or that developments by
others will not render AngioMARK or our future product candidates obsolete or
non-competitive or that our collaborators or customers will not choose to use
competing technologies or products.

PATENTS AND PROPRIETARY RIGHTS

    We consider the protection of our proprietary technologies to be material to
our business prospects. We pursue a comprehensive patent program in the United
States and in other countries where we believe that significant market
opportunities exist.

    We own or have exclusively licensed patents and patent applications on the
critical aspects of our core technology as well as many specific applications of
this technology. We have exclusively licensed two

                                       12
<PAGE>
patents in the United States broadly covering RIME technology, albumin binding
with metal chelates, and liver targeting metal chelates, have been issued a
patent in Europe similar to those United States patents, and have received
notice of allowance for a similar patent application in Japan. These two United
States patents were involved in an interference proceeding with an application
owned by Mallinckrodt, but the interference was terminated in our favor. Our
Japanese patent application has been opposed by several parties. The sole issue
in these proceedings is whether the Japanese Patent Office should have granted
and/or allowed patents to us. The Japanese Patent Office has issued a final
rejection of the Japanese patent application. A Notice of Appeal was filed in
the Japanese Patent Office on May 9, 1999, but the case has not yet been
assigned to an Examiner.

    In addition, third parties have sought, in an Italian court, a declaration
of non-infringement of our European patent. Those third parties seek transborder
application of a non-infringement declaration in those European countries where
our European patent is in force. The third parties also seek to invalidate the
Italian portion of the patent. The complaint was filed on February 23, 1999 in
the Court of Milan, Italy. There is no potential liability, other than court
costs, to us in this suit. This case is in the early pretrial stage. The parties
had previously sued the General Hospital Corporation (hereinafter "the
Hospital"), the assignee of the patent, in Italy seeking to invalidate the
Italian portion of the same patent. The complaint was filed on October 20, 1998
in the Court of Milan, Italy. The sole issue in this case is whether the Italian
portion of the patent is valid. This case was consolidated with the second
Italian action, discussed above. The same parties have also sued the Hospital in
the United Kingdom (Patents Court, London) seeking a declaration of invalidity
of the UK portion of the Hospital's patent. The appeals court in the United
Kingdom has affirmed a stay of the proceedings pending the final outcome of the
Opposition Proceedings in the European Patent Office. There is no potential
liability to us, except court and legal costs in this case. The European Patent
Office has issued a preliminary opinion confirming the validity of the European
patent opposed by three parties in the Opposition Proceedings and has
tentatively scheduled expedited oral arguments for April 27, 2000. In addition,
we and the Hospital have commenced two patent infringement actions in Europe. In
these actions, in France and Germany, we and the Hospital seek to enforce the
European patent against the same parties seeking non-infringement and invalidity
judgments. We, together with the Hospital, seek both injunctive relief and
damages in these actions. In Germany, the case is stayed pending a decision on
jurisdiction in Italy. In France, the case is in the early pretrial stage. These
oppositions, appeals relating thereto and the European proceedings, will likely
take several years to finally resolve.

    While we believe that we will prevail in these proceedings, there can be no
assurance as to the scope of the claims that will be maintained, if any, or the
ultimate benefit, if any, of those claims to us in protecting our products.

    We have exclusively licensed five additional patents in the United States.
These patents have counterpart patent applications pending in Japan and Europe.
We have also received an additional United States patent covering novel metal
chelates and have a counterpart parent application pending in Japan. Finally, we
have patent applications pending in the United States, Japan and Europe covering
various aspects of our RIME technology. We have received a patent in the United
States covering the process by which AngioMARK is manufactured (U.S. Patent
Number 5,919,967; granted July 6, 1999; expires April 11, 2017). Our patent
protection for AngioMARK currently extends to 2006 in the United States and
Europe. If the currently pending patent applications issue, this protection will
be extended until 2015. Protection for the manufacturing process in the United
States is already extended until 2017, and will be extended until 2016 in Europe
and Japan if the currently pending patent applications issue. In addition,
during 1999 and early 2000 we filed four new patent applications for additional
products and processes involving compounds, compositions, and methods for
imaging.

    An issued patent grants to the owner the right to exclude others from
practicing inventions claimed therein. In the United States, a patent filed
before June 8, 1995 is enforceable for 17 years from the date of issuance or
20 years from the deemed date of filing the underlying patent applications,
whichever is longer.

                                       13
<PAGE>
Patents based on applications filed from June 8, 1995 expire 20 years from the
deemed date. The General Agreement on Tariffs and Trade provides that patents
whose applications were filed on or after June 8, 1995 are effective for
20 years from filing. This new rule is generally regarded as unfavorable to
pharmaceutical companies, where the time period between patent filing and
commercialization of the patented product may be extended many years because of
the lengthy development cycle and regulatory process.

    The patent positions of pharmaceutical and biopharmaceutical firms involve
complex legal and factual questions. There can be no assurance that our issued
patents, or any patents that may be issued in the future, will effectively
protect our technology or provide a competitive advantage. There can be no
assurance that any of our patents or patent applications will not be challenged,
invalidated or circumvented in the future.

    Our commercial success will also depend on our ability to operate without
infringing upon the patents of others in the United States and abroad. If any
third-party patents are upheld as valid and enforceable in any judicial or
administrative proceeding, we could be prevented from practicing the subject
matter claimed in such patents, or would be required to obtain licenses from the
patent owners of each such patent, or to redesign our products or processes, to
avoid infringement. There can be no assurance that such licenses would be
available or, if available, would be available on terms acceptable to us or that
we would be successful in any attempt to redesign our products or processes to
avoid infringement. Accordingly, an adverse determination in a judicial or
administrative proceeding or failure to obtain necessary licenses could prevent
us from manufacturing and selling our products, which would have a material
adverse effect on our business, financial condition and results of operations.

    There are pending or issued patents, held by parties not affiliated with us,
relating to technologies used by us in the development or use of certain of our
product candidates. In particular, we are aware of certain patents in the United
States, Japan and elsewhere owned by or licensed to one party that relate to MRI
contrast agents and which may cover certain of our MRI product candidates,
including AngioMARK. Mallinckrodt, one of our strategic partners, has rights
from this third party under those patents which we and Mallinckrodt believe will
permit Mallinckrodt to manufacture, market and sell AngioMARK and other products
developed pursuant to the collaboration agreement between us and Mallinckrodt if
AngioMARK and those other products were to be held to fall within the claims of
those third-party patents. If the agreement with Mallinckrodt is terminated by
either party and were AngioMARK and those other products to be held to fall
within the claims of those third-party patents, we would be required to enter
into a strategic alliance with another party having a license from this third
party or obtain a license from this third party directly or from others licensed
by this third party in order to manufacture, market and sell AngioMARK and other
chelate-based MRI contrast agents. However, there can be no assurance that we
would be able to consummate a strategic alliance with a party having this
third-party license or obtain a license from this third party or another third
party on commercially reasonable terms, if at all. One of the Japanese patents
of this third party will expire in 2007. We have filed an appeal in the Japanese
Patent Office requesting that this patent be declared invalid. This appeal will
likely take several years to finally resolve. While we believe that we will
prevail in this proceeding, there can be no assurance as to the scope of the
claims that the third party will maintain. The remaining patent rights of this
third party in Japan will expire in 2002, before such time as we presently
anticipate that Daiichi will have sales of AngioMARK in Japan and, therefore, we
believe that the existence of such patents in Japan is unlikely to have a
material adverse effect on us. However, in the event that we do not prevail in
our appeal to the Japanese Patent Office or Daiichi commercializes AngioMARK in
Japan before 2002, we may be required to obtain an appropriate license or take
other measures to avoid infringement of the third-party patents, including
delaying the commencement of product sales. There can be no assurance that our
current or future activities will not be challenged, that additional patents
will not be issued containing claims materially constraining our proposed
activities, that we will not be required to obtain licenses from third parties,
or that we will not become involved in costly, time-consuming litigation
regarding patents in the

                                       14
<PAGE>
field of contrast agents, including actions brought to challenge or invalidate
our own patent rights. At the same time, we are aware of certain products under
development and/or on sale by the third party referred to above and others which
we believe may infringe certain of our exclusively licensed patents. We have
commenced and/or expect to commence litigation in various European countries
against other third parties for infringing our European patent. These
litigations will likely take several years to finally resolve. We are pursuing
license or cross-license arrangements with or, if necessary and appropriate, are
continuing infringement proceedings against, these parties. While we believe
that we will prevail in these litigations, there can be no assurance as to the
outcome or the scope of any injunctive or monetary relief we may recover. We
also intend to pursue license or cross-license arrangements with or, if
necessary and appropriate, infringement proceedings against, these parties upon
their seeking final regulatory approval for the marketing and sale of any such
products.

    Many of our competitors are continuing to actively pursue patent protection
for activities and discoveries similar to ours. There can be no assurance that
these competitors, many of which have substantially greater resources than us
and have made substantial investments in competing technologies, will not in the
future seek to assert that our products or chemical processes infringe their
existing patents and/or will not seek new patents that claim to cover aspects of
our technology. Furthermore, patent applications in the United States are
maintained in secrecy until patents issue, and patent applications in foreign
countries are maintained in secrecy for a specified period after filing.
Publication of discoveries in the scientific or patent literature tends to lag
behind actual discoveries and the filing of related patent applications. In
addition, patents issued and patent applications filed relating to
biopharmaceuticals are numerous. Therefore, there can be no assurance that we
are aware of all competitive patents, either pending or issued, that relate to
products or processes used or proposed to be used by us.

    We and MGH have entered into a license agreement pursuant to which MGH has
granted us an exclusive worldwide license to the patents and patent
applications, which relate to our only product candidate, AngioMARK. The MGH
license imposed certain due diligence obligations with respect to the
development of products covered by the license, all of which have been fulfilled
to date. The MGH license requires us to pay royalties on our net sales of
AngioMARK. We must also pay MGH a percentage of all royalties received from our
sublicensees. Accordingly, we will be required to make payments to MGH on
profits generated under the Mallinckrodt collaboration, if any, and on royalties
received from Daiichi under our license agreement, if any. Our failure to comply
with these requirements could result in the conversion of the license from being
exclusive to non-exclusive in nature or termination of the license agreement
itself. Any such event would have a material adverse effect on our business,
financial condition and results of operations.

    The pharmaceutical and biotechnology industries have been characterized by
extensive litigation regarding patents and other intellectual property rights.
Litigation may be necessary to enforce any patents issued to us and/or determine
the scope and validity of others' proprietary rights. We may have to participate
in interference proceedings declared by the United States Patent and Trademark
Office or by foreign agencies to determine the priority of inventions. Any
involvement in litigation surrounding these issues could result in extensive
costs to us as well as be a significant distraction for management. Such costs
could have a material adverse effect on our business, financial condition and
results of operations.

    We also rely upon trade secrets, technical know-how, and continuing
technological innovation to develop and maintain our competitive position. We
typically require our employees, consultants, and advisors to execute
confidentiality and assignment of invention agreements in connection with their
employment, consulting or advisory relationships with us. These agreements
require disclosure and assignment to us of ideas, developments, discoveries and
inventions made by employees, consultants and advisors. There can be no
assurance, however, that these agreements will not be breached or that we will
have adequate remedies for any breach. Furthermore, no assurance can be given
that competitors will not independently develop substantially equivalent
proprietary information and techniques or otherwise gain

                                       15
<PAGE>
access to our proprietary technology, or that we can meaningfully protect our
rights in unpatented proprietary technology.

    We intend to vigorously protect and defend our intellectual property. Costly
and time-consuming litigation brought by us may be necessary to enforce our
issued patents, to protect our trade secrets or know-how owned by us, or to
determine the enforceability, scope, and validity of the proprietary rights of
others.

MANUFACTURING

    We currently manufacture, as part of our ongoing development efforts, small
non-GMP (good manufacturing practices as promulgated by the FDA) batches of
AngioMARK in our laboratories located in Cambridge, Massachusetts. AngioMARK for
use in preclinical and Phase I and II clinical trials has been manufactured in
accordance with GMP by outside contractors. As part of its strategic alliance
with the Company, Mallinckrodt will serve as primary manufacturer for AngioMARK
thereafter worldwide except for Japan and, possibly, for Japan. If Mallinckrodt
is unable to produce AngioMARK in adequate amounts and at a reasonable cost or
to comply with any applicable regulations, including GMP, it could have a
material adverse effect on the our business, financial condition and results of
operations. Furthermore, should Mallinckrodt fail to fulfill its manufacturing
responsibilities satisfactorily, we could be forced to find an alternative
manufacturer. There can be no assurance that we would be able to find such an
alternative manufacturer. In the event we were forced to develop our own
FDA-approved full-scale manufacturing capability, it would require significant
expenditures of capital and management attention and resources and could require
us to obtain a license from a third party, and would result in a delay in the
approval or commercialization of AngioMARK. There can be no assurance that we
would be able to obtain such a license on commercially reasonable terms, if at
all. We currently procure the raw materials for the various components of
AngioMARK from a broad variety of vendors and, wherever possible, maintain
relationships with multiple vendors for each component. There are a number of
components of AngioMARK for which the largest suppliers may have significant
control over the market price due to controlling market shares. If any one of
our suppliers decided to increase prices significantly or reduce quantities of
any component of AngioMARK available for sale to us, it could have a material
adverse effect on our ability to commercialize AngioMARK and on our business,
financial condition and results of operations. See "--Strategic Alliances."

GOVERNMENT REGULATION

    The manufacture and commercial distribution of our product candidates are
subject to extensive governmental regulation in the United States and other
countries. Pharmaceuticals, including contrast-imaging agents for use with MRI,
are regulated in the United States by the FDA under the Food, Drug and Cosmetic
Act ("FD&C Act") and require FDA approval prior to commercial distribution.
Pursuant to the FD&C Act, pharmaceutical manufacturers and distributors must be
registered with the FDA and are subject to ongoing FDA regulation, including
periodic FDA inspection of their facilities and review of their operating
procedures. Noncompliance with applicable requirements can result in failure to
receive approval, withdrawal of approval, total or partial suspension of
production, fines, injunctions, civil penalties, recalls or seizure of products
and criminal prosecution, each of which would have a material adverse effect on
our business, financial conditions and results of operations.

    In order to undertake clinical trials and market pharmaceutical products for
diagnostic or therapeutic use in humans, the procedures and safety standards
established by the FDA and comparable agencies in foreign countries must be
followed. In the United States, a company seeking approval to market a new
pharmaceutical must obtain FDA approval of a new drug application ("NDA").
Before an NDA may be filed, however, a certain procedure is typically followed.
This includes: (i) performance of preclinical laboratory and animal studies;
(ii) submission to the FDA of an application for an investigational new drug
application ("IND"), which must become effective before human clinical trials
may commence;

                                       16
<PAGE>
(iii) completion of adequate and well-controlled human clinical trials to
establish the safety and efficacy of the pharmaceutical for its intended use;
(iv) submission to the FDA of an NDA; and (v) approval of the NDA by the FDA
prior to any commercial sale or shipment of the agent. In November 1997, the
Food and Drug Administration Modernization Act of 1997 was passed and signed
into law (the "Act"). The Act, most of which became effective in February 1998,
promises, among other things, to streamline the approval process for drugs and
enable patients with serious diseases to more easily access experimental
products. The effect, if any, of the Act on the Company, AngioMARK and our other
product candidates is not known at this time.

    Preclinical studies include laboratory evaluation of product chemistry and
animal studies to assess the potential safety and efficacy of the product and
its formulation. The results of the preclinical studies are submitted to the FDA
as part of an IND, and unless the FDA objects, the IND will become effective
30 days following its receipt by the FDA. Clinical trials are conducted in
accordance with protocols that detail the objectives of the study, the
parameters to be used to monitor safety and the efficacy criteria to be
evaluated. Each protocol together with information about the clinical
investigators who will perform the studies and the institutions at which the
trials will be performed are submitted to the FDA as part of the IND. Government
Regulation (continued)

    An independent institutional review board ("IRB") at each institution at
which the trial will be conducted will also be asked by the principal
investigator at that institution to approve, according to FDA regulations
governing IRBs, the trials that will be performed at that institution. The IRB
will consider, among other things, ethical factors, the protection of human
subjects and the possible liability of the institution.

    Clinical trials under the IND are typically conducted in three sequential
phases, but the phases may overlap. In Phase I, the initial introduction of the
pharmaceutical into humans, the pharmaceutical is tested for safety, dosage
tolerance, metabolism, distribution, excretion and clinical pharmacology in
healthy adult subjects. Imaging agents may also be subject to a Phase IB trial
under which an agent's imaging characteristics in humans are first evaluated.
Phase II involves a detailed evaluation of the safety and efficacy of the agent
in a range of doses in patients with the disease or condition being studied.
Phase III clinical trials typically consist of evaluation of safety and efficacy
in a larger patient population and at more institutions.

    We have completed two Phase I clinical trials to date; the first was
completed in February 1997, and the second in February 1998. No clinically
significant adverse events were reported for these Phase I trials. In
June 1998, we completed a Phase II clinical trial to test the safety and
preliminary efficacy of AngioMARK-enhanced MRA for the evaluation of PVD. In
June 1999, we initiated a Phase III clinical trial to determine the efficacy of
AngioMARK-enhanced MRA for the detection of AIOD.

    Phase II trials to assess the safety and feasibility of AngioMARK-enhanced
MR imaging in the diagnosis of CAD and breast cancer, respectively, are
currently ongoing. The process of completing clinical testing and obtaining FDA
approval for a new product is likely to take a number of years. When the study
for a particular indication as described in the IND is complete, and assuming
that the results support the safety and efficacy of the product for that
indication, the Company intends to submit an NDA to the FDA. The NDA approval
process can be expensive, uncertain and lengthy. Although the FDA is supposed to
complete its review of an NDA within 180 days of the date that it is filed, the
review time is often significantly extended by the FDA, which may require more
information or clarification of information already provided in the NDA. During
the review period, an FDA advisory committee likely will be asked to review and
evaluate the application and provide recommendations to the FDA about approval
of the pharmaceutical. In addition, the FDA will inspect the facility at which
the pharmaceutical is manufactured to ensure compliance with GMP and other
applicable regulations. Failure of the third-party manufacturers to comply or
come into compliance with GMP requirements could significantly delay FDA
approval of the NDA. The FDA may grant an unconditional approval of an agent for
a particular indication or may grant

                                       17
<PAGE>
approval conditioned on further post-marketing testing and/or surveillance
programs to monitor the agent's efficacy and side effects. Results of these
post-marketing programs may prevent or limit the further marketing of the agent.
In addition, further studies and a supplement to the initially approved NDA will
be required to gain approval for the use of an approved product in indications
other than those for which the NDA was approved initially.

    While we, because of our agreement with Mallinckrodt, do not currently
intend to manufacture any of our products ourselves once they are approved, we
may choose to do so in the future. Should we decide to manufacture our products,
we would be required to obtain a license from a third party having rights to
patents which may cover certain of our contrast agents. There can be no
assurance that we would be able to obtain such a license from the third party.
Furthermore, our manufacturing facilities would be subject to inspection and
approval by the FDA before we could begin commercial distribution of product
from our own manufacturing facilities. See "Business--Patents and Proprietary
Rights."

    After an NDA is approved, we would continue to be subject to pervasive and
continuing regulation by the FDA, including record keeping requirements,
reporting of adverse experience from the use of the agent and other requirements
imposed by the FDA. FDA regulations also require FDA approval of an NDA
supplement for certain changes if they affect the safety and efficacy of the
pharmaceutical, including, but not limited to, new indications for use, labeling
changes, the use of a different facility to manufacture, process or package the
product, changes in manufacturing methods or quality control systems and changes
in specifications for the product. Failure by us to receive approval of an NDA
supplement could have a material adverse effect on our business, financial
condition and results of operations.

    The advertising of most FDA-regulated products is subject to FDA and Federal
Trade Commission jurisdiction, but the FDA has sole jurisdiction over
advertisements for prescription drugs. We are and may be subject to regulation
under state and Federal law regarding occupational safety, laboratory practices,
handling of chemicals, environmental protection and hazardous substance control.
We also will be subject to other present and possible future local, state,
federal and foreign regulation. Failure to comply with regulatory requirements
could have a material adverse effect on our business, financial condition and
results of operations.

    Approval and marketing of pharmaceutical products outside of the United
States are subject to regulatory requirements that vary widely from country to
country. In the European Union ("EU"), the general trend has been towards
coordination of common standards for clinical testing of new agents, leading to
changes in various requirements imposed by each EU country. The level of
regulation in the EU and other foreign jurisdictions varies widely. The time
required to obtain regulatory approval from comparable regulatory agencies in
each foreign country may be longer or shorter than that required for FDA
approval. In addition, in certain foreign markets we may be subject to
governmentally mandated prices for our products.

    Regulations regarding the approval, manufacture and sale of our product
candidates are subject to change. We cannot predict what impact, if any, such
changes might have on our business, financial condition or results of
operations.

    Our research, development and manufacturing processes require the use of
hazardous substances and testing on certain laboratory animals. As a result, we
are also subject to federal, state, and local laws, regulations and policies
governing the use, generation, manufacture, storage, air emission, effluent
discharge, handling and disposal of certain materials and waste as well as the
use of and care of laboratory animals. These laws and regulations are all
subject to change. We cannot predict what impact, if any, such changes might
have on our business, financial condition or results of operations.

                                       18
<PAGE>
REIMBURSEMENT

    We expect that sales volumes and prices of our products will be dependent in
large measure on the availability of reimbursement from third-party payors and
that individuals seldom would be willing or able to pay directly for all the
costs associated with procedures which in the future may incorporate the use of
our products. We expect that our products will be purchased by hospitals,
clinics, doctors and other users that bill various third-party payors, such as
Medicare, Medicaid and other government insurance programs, and private payors
including indemnity insurers, Blue Cross Blue Shield plans and managed care
organizations ("MCOs") such as health maintenance organizations. Most of these
third-party payors provide coverage for MRI for some indications when it is
medically necessary, but the amount that a third-party payor will pay for MRI
may not include a separate payment for a contrast imaging agent that is used
with MRI. Reimbursement rates vary depending on the procedure performed, the
third-party payor, the type of insurance plan and other factors. For example,
Medicare pays hospitals a prospectively determined amount for an in-patient stay
based on a Medicare beneficiary's discharge diagnosis related group ("DRG").
This payment includes payment for any procedure, including MRI that is performed
while a beneficiary is in the hospital. No additional payment is made for
contrast agents used during the procedure. Other third-party payors may pay a
hospital an additional amount for an MRI procedure performed on an in-patient
according to another methodology such as a fee schedule or a percentage of
charge. Such payment may or may not include a payment for a contrast imaging
agent. In the outpatient setting, Medicare and other third-party payors may pay
for all, some portion of, or none of the cost of contrast agents used with MRI.

    Third-party payors carefully review and increasingly challenge the prices
charged for procedures and medical products. In the past few years, the amounts
paid for radiology procedures in particular have come under careful scrutiny and
have been subject to decreasing reimbursement rates. In addition, an increasing
percentage of insured individuals are receiving their medical care through MCOs
which monitor and often require preapproval of the services that a member will
receive. Many MCOs are paying their providers on a capitated basis which puts
the providers at financial risk for the services provided to their patients by
paying them a predetermined payment per member per month. The percentage of
individuals, including Medicare beneficiaries, covered by MCOs is expected to
grow in the United States over the next decade. We believe that the managed care
approach to healthcare and the growth in capitated arrangements and other
arrangements under which the providers are at financial risk for the services
that are provided to their patients will facilitate the market acceptance of our
products, as we believe that the use of our products will significantly lower
the overall costs and improve the effectiveness of managing patient populations.
There can be no assurance, however, that our products will be available, will
lower costs of care for any patients or that providers will choose to utilize
them even if they do, or if reimbursement will be available.

    In foreign markets, reimbursement is obtained from a variety of sources,
including governmental authorities, private health insurance plans and labor
unions. In most foreign countries, there are also private insurance systems that
may offer payments for alternative therapies. Although not as prevalent as in
the United States, health maintenance organizations are emerging in certain
European countries. We may need to seek international reimbursement approvals,
although there can be no assurance that any such approvals will be obtained in a
timely manner or at all. Failure to receive international reimbursement
approvals could have a material adverse effect on market acceptance of our
product candidates in the international markets in which such approvals are
sought.

    We believe that reimbursement in the future will be subject to increased
restrictions such as those described above, both in the United States and in
foreign markets. We believe that the overall escalating cost of medical products
and services has led to, and will continue to lead to, increased pressures on
the health care industry, both foreign and domestic, to reduce the cost of
products and services, including products offered by the Company. There can be
no assurance, in either the United States or foreign

                                       19
<PAGE>
markets, that third party reimbursement and coverage will be available or
adequate, that current reimbursement amounts will not be decreased in the future
or that future legislation, regulation, or reimbursement policies of third-party
payors will not otherwise adversely affect the demand for our product candidates
or our ability to sell our product candidates on a profitable basis,
particularly if MRI exams enhanced with our contrast agents are more expensive
than competing vascular imaging techniques that are equally effective. The
unavailability or inadequacy of third-party payor coverage or reimbursement
could have a material adverse effect on our business, financial condition and
results of operations.

PRODUCT LIABILITY INSURANCE

    The clinical and commercial development of pharmaceuticals, including
contrast agents such as those being developed by us, may entail exposure to
product liability claims. While we have never been subject to any liability
claims stemming from the manufacture of or preclinical or clinical trials of our
products, there can be no assurance that we will not face such claims in the
future. While we currently have product liability insurance coverage for the
clinical research use of our product candidates, there can be no assurance that
such coverage limits will be adequate nor that a successful product liability
lawsuit would not have a material adverse effect on us. We do not have product
liability insurance coverage for the commercial sale of our products but intend
to obtain such coverage if and when our products are commercialized. If and when
AngioMARK or our other product candidates are approved for marketing by the FDA,
or similar foreign regulatory bodies, there can be no assurance that sufficient
product liability insurance will be available on terms acceptable to us or at
all.

EMPLOYEES

    As of December 31, 1999 we employed 81 persons on a full-time basis, of
which 65 were involved in research and development and 16 in administration and
general management. Twenty-seven of our employees hold Ph.D. or M.D. degrees. We
believe that our relations are good with all of our employees. None of our
employees are a party to a collective bargaining agreement.

RESEARCH AND DEVELOPMENT

    During the years ended December 31, 1999, 1998, and 1997, we incurred
research and development expenses of $14,667,370, $13,349,337 and $8,899,197,
respectively.

ITEM 2. PROPERTIES

    We lease a total of 17,050 square feet of space at 71 Rogers Street and
adjacent locations, and 13,310 square feet at 161 First Street, all in
Cambridge, Massachusetts. The current lease at 71 Rogers Street and adjacent
locations runs until December 31, 2002, and we have an option to extend the
lease for an additional three or five years. During 1999, we extended our lease
at 161 First Street through December 31, 2002. We believe that our current
facilities and currently available space are adequate to meet our requirements
for the foreseeable future.

ITEM 3. LEGAL PROCEEDINGS

    We are not a party to any material legal proceedings that would have a
negative impact on the financial statements.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    None.

                                       20
<PAGE>
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT

    The following table sets forth certain information regarding the executive
officers and key employees of the Company as of December 31, 1999:

<TABLE>
<CAPTION>
            NAME                AGE                              POSITION
            ----              --------                           --------
<S>                           <C>        <C>
Michael D. Webb.............        41   Chief Executive Officer and Secretary

Stephen C. Knight, M.D......        39   President and Chief Operating Officer

James E. Smith, Ph.D........        56   Executive Vice President, Research & Development

Randall B. Lauffer, Ph.D....        42   Chief Scientific Officer

E. Kent Yucel, M.D..........        43   Senior Vice President and Chief Medical Officer

Susan M. Flint..............        48   Vice President, Regulatory Affairs and Clinical
                                         Operations

Pamela E. Carey.............        41   Director of Finance and Treasurer
</TABLE>

    Michael D. Webb joined us in December 1994 from Ciba-Corning
Diagnostics, Inc., where he was most recently Senior Vice President, Worldwide
Marketing and Strategic Planning. During his tenure at Ciba from April 1989 to
December 1994, Mr. Webb's achievements included the development and
commercialization of the ACS:180\R immunodiagnostics system. From 1984 to 1989,
Mr. Webb was a senior consultant at Booz, Allen & Hamilton, Inc., specializing
in healthcare and life sciences. Mr. Webb holds a MM in marketing and finance
from the J.L. Kellogg Graduate School of Management at Northwestern University.

    Dr. Stephen C. Knight joined us in July 1996 and most recently served as
Chief Financial Officer and Senior Vice President, Finance and Business
Development, before being promoted to President and Chief Operating Officer in
November 1999. From April 1991 to June 1996, Dr. Knight was a senior consultant
with Arthur D. Little specializing in biotechnology, pharmaceuticals and
valuation. Dr. Knight was also a consultant at APM, Inc., a consulting company.
Prior to 1990, Dr. Knight performed research at AT&T Bell Laboratories, the
National Institute of Neurological and Communicative Diseases and Stroke, and
Yale University. He serves on the board of directors of Pharmos, Inc.
Dr. Knight holds an M.D. from the Yale University School of Medicine and a MPPM
from the Yale School of Organization and Management.

    Dr. James E. Smith has over 20 years experience in the in vivo diagnostics
industry. Prior to joining EPIX in February 1996, Dr. Smith worked for 16 years
at Du Pont Merck Pharmaceutical Company, where his experience included research
and development, regulatory, QA/QC and manufacturing for the radio-
pharmaceutical division, most recently as Senior Director of Radiopharmaceutical
Research and Development. Dr. Smith has published and lectured on
radio-pharmaceutical research and development. Dr. Smith received his Ph.D. in
inorganic chemistry from the University of Washington.

    Dr. Randall B. Lauffer founded EPIX Medical, Inc. in November 1988 and
served as Chief Executive Officer until December 1994 and as Chairman until
October 1996. From November 1983 to March 1992, Dr. Lauffer was a member of the
faculty of Harvard Medical School, serving most recently as Assistant Professor
of Radiology from 1987 to 1992. During this time he was also Director of the NMR
Contrast Media Laboratory at MGH as well as an NIH Postdoctoral Fellow and an
NIH New Investigator. Dr. Lauffer is the primary inventor of our core technology
and is the originator of several types of MRI technology, including
hepatobiliary (liver-enhancing) agents, vascular agents, tissue blood flow
agents, and strategies to increase the magnetic efficiency of MRI agents in the
body. He has written over 50 scientific publications and two books, and has been
named on several U.S. patents. Dr. Lauffer holds a Ph.D. in inorganic chemistry
from Cornell University.

                                       21
<PAGE>
    Dr. E. Kent Yucel joined us in June 1996. From March 1993 to July 1996, he
was Chief of Vascular and Interventional Radiology and Director of MRI at Boston
Medical Center and Professor of Radiology at Boston University Medical School.
From July 1988 to February 1993 he served as Assistant Professor of Radiology at
MGH and Harvard Medical School. Dr. Yucel was Principal Investigator for a Phase
III vascular imaging trial of ProHance(R), the nonspecific MRI agent now sold by
Bracco. Dr. Yucel is the editor and co-author of Magnetic Resonance Angiography
(McGraw-Hill, 1995). Dr. Yucel received his M.D. from Harvard Medical School.

    Ms. Susan M. Flint joined us in April 1995. She is a Regulatory Affairs
specialist with over twenty years of experience in regulatory submissions and
clinical trials. She was a regulatory affairs/clinical research consultant to
various companies, including EPIX, from April 1993 to April 1995. Ms. Flint
previously held the position of Director of Clinical Trials at Advanced
Magnetics, Inc. from February 1989 to March 1993 and Director of Regulatory
Affairs at Du Pont Pharmaceutical Company from June 1975 to January 1989. She
has filed a number of applications for INDs and ten NDAs, along with several
medical device applications. Ms. Flint is certified by the Regulatory Affairs
Professional Society. She received her M.S. in pharmacology from Northeastern
University.

    Ms. Pamela E. Carey joined us in June 1998 from private practice where she
served as a consultant to several life science and technology companies. From
July 1992 to March 1994, she was Director of Finance at Intellution, Inc. and
from February 1989 to June 1992, she was Corporate Controller at Genetics
Institute, Inc. Ms. Carey also served as Corporate Controller of ISI
Systems, Inc. from June 1987 to January 1989 and as Audit Manager at Arthur
Young & Company from 1980 to 1987. Ms. Carey is a certified public accountant
and holds a B.S. degree in accounting from Canisius College.

                                       22
<PAGE>
                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

    Our Common Stock commenced trading on the Nasdaq Stock Market on
January 30, 1997 under the symbol "EPIX", and is listed on Nasdaq's National
Market. The following table sets forth, for the periods indicated, the range of
the high and low bids for our Common Stock:

<TABLE>
<CAPTION>
                                                                HIGH       LOW
                                                              --------   --------
<S>                                                           <C>        <C>
1998
First Quarter...............................................   $15.00     $11.88
Second Quarter..............................................    13.44       9.50
Third Quarter...............................................    11.00       4.88
Fourth Quarter..............................................    10.38       6.13
1999
First Quarter...............................................   $11.44     $ 8.00
Second Quarter..............................................     8.87       5.00
Third Quarter...............................................     7.37       4.12
Fourth Quarter..............................................    11.50       6.12
2000
First Quarter (through March 14, 2000)......................   $26.75     $ 8.87
</TABLE>

    The above quotations reflect inter-dealer prices without retail mark-up,
mark-down or commission and may not necessarily represent actual transactions.

    On March 14, 2000 the last reported bid for the Common Stock was $17.50 per
share. As of March 14, 2000 there were approximately 96 holders of record of our
Common Stock and approximately 1,000 beneficial holders. To date we have neither
declared nor paid any cash dividends on shares of our Common Stock and do not
anticipate doing so for the foreseeable future.

                                       23
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA

    The following selected financial data are derived from our audited financial
statements and should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations," the Financial
Statements, related Notes and other financial information included herein.

<TABLE>
<CAPTION>
                                                         YEAR ENDED                           NINE MONTHS
                                  ---------------------------------------------------------      ENDED
                                  DECEMBER 31,   DECEMBER 31,   DECEMBER 31,   DECEMBER 31,   DECEMBER 31,
                                      1999           1998           1997           1996         1995 (1)
                                  ------------   ------------   ------------   ------------   ------------
                                                   (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                               <C>            <C>            <C>            <C>            <C>
STATEMENT OF OPERATIONS DATA:

Revenues........................     $ 1,144        $ 1,781        $ 4,228        $10,010       $   900
Operating income (loss).........     (17,935)       (15,825)        (7,462)           269        (4,770)
Net income (loss)...............     (16,983)       (13,998)        (6,112)           268        (4,893)

Earnings (loss) per share:
Basic...........................     $ (1.47)       $ (1.23)       $ (0.73)       $  0.12       $ (3.27)
Diluted.........................     $ (1.47)       $ (1.23)       $ (0.73)       $  0.03       $ (3.27)

Weighted average common shares
  outstanding:
Basic...........................      11,556         11,354          8,333          1,561         1,498
Diluted.........................      11,556         11,354          8,333          7,732         1,498
</TABLE>

<TABLE>
<CAPTION>
                                                                     DECEMBER 31,
                                                 ----------------------------------------------------
                                                   1999       1998       1997       1996       1995
                                                 --------   --------   --------   --------   --------
<S>                                              <C>        <C>        <C>        <C>        <C>
BALANCE SHEET DATA:
Cash, cash equivalents and short-term
  investments..................................  $14,140    $29,101    $42,813    $10,664    $   150
Working capital (deficit)......................   10,514     25,593     39,673      8,299     (1,327)
Total assets...................................   17,886     32,903     44,775     12,575      1,211
Long-term liabilities..........................    2,281      1,374        279        176        342
Redeemable convertible preferred stock.........                                    17,204      3,956
Total stockholders' equity (deficit)...........   10,764     27,503     41,046     (7,240)    (7,336)
</TABLE>

------------------------

(1) In 1995, we changed our fiscal year end from March 31 to December 31.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
  OF OPERATIONS

OVERVIEW

    Since commencing operations in 1992, we have been engaged principally in the
research and development of our product candidates as well as seeking various
regulatory clearances and patent protection. We have had no revenues from
product sales and have incurred losses since inception through December 31, 1999
aggregating approximately $45.4 million. We have received revenues in connection
with various licensing and collaboration agreements. In August 1996, we entered
into a strategic alliance with Mallinckrodt pursuant to which we received
$6.0 million in up-front license fees. The agreement provided for an additional
$2.0 million milestone payment, which was received in July 1997. In March 1996,
we entered into a strategic alliance with Daiichi. Under this agreement, we
received $3.0 million in license fees and $5.0 million from the sale of shares
of our preferred stock, and were entitled to receive up to $3.3 million in
future payments based upon our achievement of certain product development
milestones. We received $900,000 of such milestone payments in July 1997.

    We expect continued operating losses for the next several years as we incur
expenses to support research, development and efforts to obtain regulatory
approvals.

                                       24
<PAGE>
    Our initial product candidate, AngioMARK, is currently our only product
candidate undergoing human clinical trials. We filed an IND application for
AngioMARK in July 1996. We initiated a Phase I clinical trial in 1996 and a
Phase I dose escalation study in 1997, both of which have been completed. We
completed a Phase II clinical trial in June 1998 to test the safety and
preliminary efficacy of AngioMARK-enhanced MRA for the evaluation of PVD and are
currently conducting a Phase II feasibility trial to test the safety and
feasibility of AngioMARK-enhanced MRA for the evaluation of CAD. In addition, in
January 1998, we initiated a Phase II clinical trial to test the safety and
feasibility of AngioMARK for detecting breast cancer. Enrollment in this trial
was completed in March 2000. In June 1999, we initiated a Phase III clinical
trial to determine the efficacy of AngioMARK-enhanced MRA for the detection of
AIOD.

    We anticipate fluctuation in our quarterly results of operations due to
several factors, including: the timing of fees and milestone payments received
from strategic partners; the formation of new strategic alliances by us; the
timing of expenditures in connection with research and development activities;
the timing of product introductions and associated launch, marketing and sales
activities; and the timing and extent of product acceptance for different
indications and geographical areas of the world.

RESULTS OF OPERATIONS

COMPARISON OF YEAR ENDED DECEMBER 31, 1999 AND YEAR ENDED DECEMBER 31, 1998

Revenues

    Revenues for the year ended December 31, 1999 and 1998 totaled $1.1 million
and $1.8 million, respectively, and were derived from work performed in
connection with product development contracts. The decrease in revenues was due
to the timing of cost-sharing reimbursements, based on development costs
incurred by us and our partners.

Research and Development Expenses

    Research and development expenses for the year ended December 31, 1999 were
$14.7 million as compared to $13.3 million for 1998. The increased expenses
resulted from higher manufacturing costs of material to be provided to our
Japanese partner, Daiichi, and increased personnel and related costs associated
with advancing AngioMARK through clinical trials.

General and Administrative Expenses

    General and administrative expenses for the year ended December 31, 1999
were $4.4 million as compared to $4.3 million for 1998. The slight increase was
due to higher legal costs associated with ongoing patent activities and was
partially offset by lower compensation expense and recruiting costs.

Interest Income and Expense

    Interest income for the year ended December 31, 1999 was $1.2 million as
compared to $1.9 million for 1998. The $700,000 decrease was primarily due to
lower average levels of invested cash, cash equivalents and marketable
securities during 1999. Interest expense for the year ended December 31, 1999
was $222,000 as compared to $61,000 in 1998. The increase in interest expense
was attributable to a higher average note payable balance outstanding during
1999.

COMPARISON OF YEAR ENDED DECEMBER 31, 1998 AND YEAR ENDED DECEMBER 31, 1997

Revenues

    For the year ended December 31, 1998, revenues totaled $1.8 million and were
derived from work performed in connection with product development contracts.
Revenues for the year ended December 31, 1997 totaled $4.2 million and included
milestone payments of $2.0 million received from Mallinckrodt and

                                       25
<PAGE>
$900,000 received from Daiichi pursuant to collaboration agreements covering our
lead product, AngioMARK. Revenues in 1997 also included $1.3 million for work
performed in connection with product development contracts.

Research and Development Expenses

    Research and development expenses for the year ended December 31, 1998 were
$13.3 million as compared to $8.9 million for 1997. The increase resulted from
higher costs associated with advancing AngioMARK through clinical trials and the
addition of personnel and resources to support research in the area of thrombus
imaging and further development of our core technology.

General and Administrative Expenses

    General and administrative expenses for the year ended December 31, 1998
were $4.3 million as compared to $2.8 million for 1997. The increase was
partially due to additional marketing activities, which included the hiring of
personnel and development of marketing communication programs. Also contributing
to the increase were higher legal costs related to ongoing patent activities and
the hiring of additional support personnel.

Interest Income and Expense

    Interest income for the year ended December 31, 1998 was $1.9 million as
compared to $1.4 million for 1997. The $500,000 increase was primarily due to
higher average levels of invested cash during 1998. Interest expense for the
year ended December 31, 1998 was $61,000 as compared to $62,000 in 1997.
Interest expense was unchanged due to the timing of the note payable proceeds,
which were received in December 1998.

Year 2000

    In prior years, we discussed the nature and progress of our plans to become
Year 2000 ready. In late 1999, we completed our remediation and testing of
systems. As a result of those planning and implementation efforts, we
experienced no significant disruptions in mission critical information
technology and non-information technology systems and believe those systems
successfully responded to the Year 2000 date change. We expensed approximately
$25,000 during 1999 in connection with remediating our systems. We are not aware
of any material problems resulting from Year 2000 issues, either with our
products or services of third parties. We will continue to monitor our mission
critical computer applications and those of our suppliers and vendors throughout
the Year 2000 to ensure that any latent Year 2000 matters that arise are
addressed promptly.

Liquidity and Capital Resources

    We have financed our operations from inception through December 31, 1999
primarily with $14.3 million in net proceeds from our initial public offering
completed in February 1997, $22.9 million from a follow-on public offering of
common stock in November 1997, $18.4 million from private sales of equity
securities, $18.0 million received from third parties in connection with
collaboration and license arrangements, $2.6 million of equipment lease
financing and $5.0 million in interest income. From inception through
December 31, 1999, we have incurred $70.6 million of costs attributable to
operating activities, including $52.2 million related to the research and
development of technology and new product candidates, including AngioMARK.

    Our principal sources of liquidity consist of cash, cash equivalents and
marketable securities, which totaled $14.1 million at December 31, 1999, as
compared to $29.1 million at December 31, 1998.

    In October 1999, we entered into a Non-Negotiable Promissory Note and
Security Agreement (the "Loan") with Mallinckrodt pursuant to which we are
eligible to borrow up to $9.5 million from Mallinckrodt, on a quarterly basis,
to cover our share of AngioMARK development costs. The Loan bears interest,
adjustable on a quarterly basis, at the Prime Rate published in the Wall Street
Journal. The Loan

                                       26
<PAGE>
is repayable in full on the earliest to occur of (i) October 1, 2002,
(ii) thirty days after the date of the First Commercial Sale of Licensed Product
in the Territory (as such terms are defined in our Strategic Collaboration
Agreement with Mallinckrodt dated August 30, 1996, as amended (the "Strategic
Collaboration Agreement")) and (iii) thirty days after the first date upon which
we could reasonably repay all outstanding principal and interest on the Loan
without creating any reasonably foreseeable risk that we would be otherwise
entitled to receive a loan from Mallinckrodt under the existing terms of the
Strategic Collaboration Agreement within six months of the date of any such
repayment. The Loan is secured by a first priority security interest in all of
our intellectual property. Although the possibility exists that the loan will
become repayable within the next twelve months pursuant to repayment provision
(iii) above, the conditions required to be met by such provision require our
speculation concerning both the probability and success of certain future
financial transactions. Due to our current uncertainty that such future
transactions will occur or will occur such as to cause repayment provision
(iii) above to apply, we have classified the Loan as a long-term obligation. We
received $1,583,557 pursuant to the Loan during November 1999 to cover our share
of third quarter 1999 AngioMARK development costs.

    We are eligible to receive additional payments of $2.4 million from Daiichi
upon the attainment of certain future AngioMARK development milestones. Daiichi
is responsible for funding development of AngioMARK in Japan. Under our
agreement with Mallinckrodt, we and Mallinckrodt generally will share equally in
future development costs of AngioMARK up to a specified maximum amount.

    During the year ended December 31, 1999, we used approximately
$15.7 million of cash for operating activities, exclusive of license fee
revenues. We expect that our cash needs for operations will increase
significantly in future periods due to planned clinical trials and other
expenses associated with the development of AngioMARK and new research and
development programs.

    We estimate that existing cash, cash equivalents and marketable securities,
and the Loan from Mallinckrodt will be sufficient to fund our operations through
the first quarter of 2001. We believe that we will need to raise additional
funds for research, development and other expenses, through equity or debt
financing, strategic alliances or otherwise, prior to commercialization of any
of our product candidates. There can be no assurance that additional financing
will be available on terms acceptable to us, or at all. Our future liquidity and
capital requirements will depend on numerous factors, including the following:
the progress and scope of clinical trials; the timing and costs of filing future
regulatory submissions; the timing and costs required to receive both United
States and foreign governmental approvals; the cost of filing, prosecuting,
defending and enforcing patent claims and other intellectual property rights;
the extent to which our products gain market acceptance; the timing and costs of
product introductions; the extent of our ongoing research and development
programs; the costs of training physicians to become proficient with the use of
our products; and, if necessary, once regulatory approvals are received, the
costs of developing marketing and distribution capabilities.

    Because of anticipated spending to support development of AngioMARK and new
research programs, we do not expect positive cash flow from operating activities
for any future quarterly or annual period prior to commercialization of
AngioMARK. We anticipate continued investments in fixed assets, including
equipment and facilities expansion to support new and continuing research and
development programs. We have in place a lease agreement that will enable us to
utilize our current principal scientific facilities through December 31, 2002,
and we have an option to extend the lease for an additional three or five years.
We also have a lease for nearby office space, which expires in December 2002.

    We have incurred tax losses to date and therefore have not paid significant
federal or state income taxes since inception. At December 31, 1999, we had loss
carryforwards of approximately $42.7 million available to offset future taxable
income. These amounts expire at various times through 2014. As a result of
ownership changes resulting from sales of equity securities, our ability to use
the loss carryforwards is subject to limitations as defined in Sections 382 and
383 of the Internal Revenue Code of 1986, as amended (the "Code"). We currently
estimate that the annual limitation on our use of net operating losses

                                       27
<PAGE>
through May 31, 1996 will be approximately $900,000. Pursuant to Sections 382
and 383 of the Code, the change in ownership resulting from public equity
offerings in 1997 and any other future ownership changes may further limit
utilization of losses and credits in any one year. We also are eligible for
research and development tax credits that can be carried forward to offset
federal taxable income. The annual limitation and the timing of attaining
profitability may result in the expiration of net operating loss and tax credit
carryforwards before utilization.

We do not believe that inflation has had a material impact on our operations.

    The discussion included in this section as well as elsewhere in the Annual
report on Form 10-K may contain forward-looking statements based on our current
expectations. Such statements are subject to risks and uncertainties which could
cause actual results to differ from those projected. See "Factors Regarding
Forward Looking Statements" attached hereto as Exhibit 99.1 and incorporated by
reference into this Form 10-K. Readers are cautioned not to place undue reliance
on the forward looking statements which speak only as the date hereof. We
undertake no obligation to publicly release the result of any revisions to these
forward-looking statements which may be made to reflect events or circumstances
occurring after the date hereof or to reflect the occurrence of unanticipated
events.

    In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivatives and Hedging Activities" ("SFAS No. 133"), as amended
by SFAS No. 137, which establishes accounting and reporting standards for
derivative instruments, including derivative instruments embedded in other
contracts, (collectively referred to as derivatives) and for hedging activities.
SFAS No. 133 is effective for all fiscal quarters of fiscal years beginning
after June 15, 2000. We are presently analyzing the impact, if any, that the
adoption of SFAS No. 133 will have on our financial condition or results of
operations.

    In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin (SAB) No. 101 "Revenue Recognition in Financial Statements."
The SAB formalizes positions the staff has expressed in speeches and comment
letters. SAB 101 is effective no later than the first fiscal quarter of the
fiscal year beginning after December 15, 1999. While we are presently analyzing
the effect on our financial condition or results of operations, we do not
anticipate SAB 101 will have a material impact.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    INTEREST RATES.  We invest our cash in a variety of financial instruments,
including bank time deposits, and taxable and tax-advantaged variable rate and
fixed rate obligations of corporations, municipalities, and local, state and
national governmental entities and agencies. These investments are denominated
in U.S. dollars.

    Interest income on our investments is recorded as "Interest income." We
account for our investment instruments in accordance with Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" ("SFAS"). All of the cash equivalents and short-term
investments are treated as available-for-sale under SFAS 115.

    Investments in both fixed rate and floating rate interest earning
instruments carry a degree of interest rate risk. Fixed rate securities may have
their fair market value adversely impacted due to a rise in interest rates,
while floating rate securities may produce less income than expected if interest
rates fall. Due in part to these factors, our future investment income may fall
short of expectations due to changes in interest rates or we may suffer losses
in principal if forced to sell securities that have seen a decline in market
value due to changes in interest rates. A hypothetical 10% increase or decrease
in interest rates, however, would not have a material adverse effect on our
financial condition. Our investment securities are held for purposes other than
trading. While certain of the investment securities had maturities in excess of
one year, we may liquidate such securities within one year. The weighted-average
interest rate on investment

                                       28
<PAGE>
securities at December 31, 1999 was 6.3%. The fair market value of securities
held at December 31, 1999 was $13,709,980.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

    Financial Statements and supplementary data appear at pages F-1 through F-24
of this report on Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
  FINANCIAL DISCLOSURES

    None.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

    (A) DIRECTORS.  The information required under this item is incorporated
herein by reference to the section entitled "Election of Directors" in our
definitive Proxy Statement for our 2000 Annual Meeting of Stockholders (the
"2000 Proxy Statement") to be filed with the Commission not later than
April 30, 2000.

    (B) EXECUTIVE OFFICERS.  See Item 4A. of Part I above.

ITEM 11. EXECUTIVE COMPENSATION

    The information required under this item is incorporated herein by reference
to the section entitled "Executive Compensation" in the 2000 Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    The information required under this item is incorporated herein by reference
to the section entitled "Security Ownership of Certain Beneficial Owners And
Management" in the 2000 Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    The information required under this item is incorporated herein by reference
to the section entitled "Certain Transactions" in the 2000 Proxy Statement.

                                       29
<PAGE>
                                    PART IV

ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

a.  Documents filed as part of this Report:

1.  Financial Statements:

<TABLE>
            <S>                                                           <C>
            Index to Financial Statements:                                   F-1
              Report of Independent Auditors............................     F-2
              Financial Statements:
                Balance Sheets..........................................     F-3
                Statements of Operations................................     F-4
                Statements of Redeemable, Convertible
                  Preferred Stock and Stockholders' Equity..............     F-5
                Statements of Cash Flows................................     F-9
                Notes to Financial Statements...........................    F-10
</TABLE>

2.  Financial Statement Schedules

       All schedules are omitted because they are not applicable or the

    required information is shown in the financial statements or notes

    thereto.

b.  Reports on Form 8-K filed in the fourth quarter of 1999:

    Form 8-K filed October 28, 1999:

       Item 5. Other Events--Issuance of Non-negotiable Promissory Note and
       Security Agreement to Mallinckrodt, Inc.

    Form 8-K filed November 3, 1999:

       Item 5. Other Events--Promotion of Stephen C. Knight, M.D. to President
       and Chief Operating Officer

c.  Exhibits

<TABLE>
<S>                       <C>
 3.1                      Restated Certificate of Incorporation of the Company. Filed
                          as Exhibit 4.1 to the Company's Registration Statement on
                          Form S-8 (File No. 333-30531) and incorporated herein by
                          reference.
 3.2                      Form of Amended and Restated By-Laws of the Company. Filed
                          as Exhibit 4.2 to the Company's Registration Statement on
                          Form S-8 (File No. >333-30531) and incorporated herein by
                          reference.
 4.1                      Specimen certificate for shares of Common Stock of the
                          Company. Filed as Exhibit 4.1 to the Company's Registration
                          Statement on Form S-1 (File No. 333-17581) and incorporated
                          herein by reference.
10.1+                     Agency Agreement between the Company and Sumitomo
                          Corporation dated March 13, 1992. Filed as Exhibit 10.1 to
                          the Company's Registration Statement on Form S-1 (File
                          No. 333-17581) and incorporated herein by reference.
10.2+                     Amendment to the Agency Agreement between the Company and
                          Sumitomo Corporation dated June 26, 1992. Filed as
                          Exhibit 10.2 to the Company's Registration Statement on
                          Form S-1 (File No. 333-17581) and incorporated herein by
                          reference.
</TABLE>

                                       30
<PAGE>
<TABLE>
<S>                       <C>
10.3                      Short Form Lease from Trustees of the Cambridge East Trust
                          to the Company dated July 1, 1992. Filed as Exhibit 10.3 to
                          the Company's Registration Statement on Form S-1 (File
                          No. 333-17581) and incorporated herein by reference.
10.4                      Form of Warrant to Purchase Shares of Series A Convertible
                          Preferred Stock dated December 21, 1992. Filed as
                          Exhibit 10.4 to the Company's Registration Statement on
                          Form S-1 (File No. 333-17581) and incorporated herein by
                          reference.
10.5                      Dominion Ventures Master Lease Agreement No. 8050 dated
                          December 21, 1992. Filed as Exhibit 10.5 to the Company's
                          Registration Statement on Form S-1 (File No. 333-17581) and
                          incorporated herein by reference.
10.6                      First Amendment to Master Lease Agreement No. 8050 dated
                          May 14, 1993. Filed as Exhibit 10.6 to the Company's
                          Registration Statement on Form S-1 (File No. 333-17581) and
                          incorporated herein by reference.
10.7                      Second Amendment to Master Lease Agreement No. 8050 dated
                          August 5, 1993. Filed as Exhibit 10.7 to the Company's
                          Registration Statement on Form S-1 (File No. 333-17581) and
                          incorporated herein by reference.
10.8                      First Amendment Lease From Trustees of the Cambridge Trust
                          to the Company dated October 20, 1993. Filed as
                          Exhibit 10.8 to the Company's Registration Statement on
                          Form S-1 (File No. 333-17581) and incorporated herein by
                          reference.
10.9                      Warrant to Purchase Shares of Series B Convertible Preferred
                          Stock dated June 6, 1994. Filed as Exhibit 10.9 to the
                          Company's Registration Statement on Form S-1 (File
                          No. 333-17581) and incorporated herein by reference.
10.10                     Second Amendment to Master Lease Agreement No. 8050 dated
                          June 6, 1994. Filed as Exhibit 10.10 to the Company's
                          Registration Statement on Form S-1 (File No. 333-17581) and
                          incorporated herein by reference.
10.11+                    Amendment Agreement to the Agency Agreement between the
                          Company and Sumitomo Corporation dated September 15, 1994.
                          Filed as Exhibit 10.11 to the Company's Registration
                          Statement on Form S-1 (File No. 333-17581) and incorporated
                          herein by reference.
10.12                     Second Amendment Lease From Trustees of the Cambridge East
                          Trust to the Company dated September 17, 1994. Filed as
                          Exhibit 10.12 to the Company's Registration Statement on
                          Form S-1 (File No. 333-17581) and incorporated herein by
                          reference.
10.13                     Convertible Promissory Note Purchase Agreement by and among
                          the Company and certain purchasers named therein dated
                          May 26, 1995. Filed as Exhibit 10.13 to the Company's
                          Registration Statement on Form S-1 (File No. 333-17581) and
                          incorporated herein by reference.
10.14+                    Amended and Restated License Agreement between the Company
                          and The General Hospital Corporation dated July 10, 1995.
                          Filed as Exhibit 10.14 to the Company's Registration
                          Statement on Form S-1 (File No. 333-17581) and incorporated
                          herein by reference.
10.15                     Warrant to Purchase Shares of Series C Convertible Preferred
                          Stock dated August 2, 1995. Filed as Exhibit 10.15 to the
                          Company's Registration Statement on Form S-1 (File
                          No. 333-17581) and incorporated herein by reference.
10.16                     Third Amendment to the Master Lease Agreement No. 8050 dated
                          August 2, 1995. Filed as Exhibit 10.16 to the Company's
                          Registration Statement on Form S-1 (File No. 333-17581) and
                          incorporated herein by reference.
10.17                     Amendment No. 1 to Convertible Promissory Note Purchase
                          Agreement by and among the Company and certain purchasers
                          named therein dated January 19, 1996. Filed as
                          Exhibit 10.17 to the Company's Registration Statement on
                          Form S-1 (File No. 333-17581) and incorporated herein by
                          reference.
</TABLE>

                                       31
<PAGE>
<TABLE>
<S>                       <C>
10.18+                    Extension Agreement to Agency Agreement between the Company
                          and Sumitomo Corporation dated March 5, 1996. Filed as
                          Exhibit 10.18 to the Company's Registration Statement on
                          Form S-1 (File No. 333-17581) and incorporated herein by
                          reference.
10.19+                    Development and License Agreement dated March 29, 1996 by
                          and among the Company and Daiichi Radioisotope
                          Laboratories, Ltd. Filed as Exhibit 10.19 to the Company's
                          Registration Statement on Form S-1 (File No. 333-17581) and
                          incorporated herein by reference.
10.20                     Third Amendment Lease From Trustees of the Cambridge East
                          Trust to the Company dated May 1, 1996. Filed as
                          Exhibit 10.20 to the Company's Registration Statement on
                          Form S-1 (File No. 333-17581) and incorporated herein by
                          reference.
10.21                     Series D Convertible Preferred Stock Purchase Agreement by
                          and among the Company and certain purchasers named therein
                          dated May 29, 1996. Filed as Exhibit 10.21 to the Company's
                          Registration Statement on Form S-1 (File No. 333-17581) and
                          incorporated herein by reference.
10.22                     Third Amended and Restated Stockholders' Rights Agreement by
                          and among the Company and certain of its stockholders named
                          therein dated May 29, 1996. Filed as Exhibit 10.22 to the
                          Company's Registration Statement on Form S-1 (File
                          No. 333-17581) and incorporated herein by reference.
10.23                     Form of Warrant to Purchase Shares of Series D Preferred
                          Stock dated May 29, 1996. Filed as Exhibit 10.23 to the
                          Company's Registration Statement on Form S-1 (File
                          No. 333-17581) and incorporated herein by reference.
10.24                     Amendment No. 1 to Third Amended and Restated Stockholders'
                          Rights Agreement dated May 31, 1996. Filed as Exhibit 10.24
                          to the Company's Registration Statement on Form S-1 (File
                          No. 333-17581) and incorporated herein by reference.
10.25                     Series E Convertible Preferred Stock Purchase Agreement
                          dated May 31, 1996 between the Company and Daiichi
                          Radioisotope Laboratories, Ltd. Filed as Exhibit 10.25 to
                          the Company's Registration Statement on Form S-1 (File
                          No. 333-17581) and incorporated herein by reference.
10.26+                    Strategic Collaboration Agreement between the Company and
                          Mallinckrodt Medical, Inc. and Mallinckrodt Group Inc. dated
                          August 30, 1996. Filed as Exhibit 10.26 to the Company's
                          Registration Statement on Form S-1 (File No. 333-17581) and
                          incorporated herein by reference.
10.27                     Amendment No. 2 to Third Amended and Restated Stockholders'
                          Rights Agreement dated December 6, 1996. Filed as
                          Exhibit 10.27 to the Company's Registration Statement on
                          Form S-1 (File No. 333-17581) and incorporated herein by
                          reference.
10.28#                    Amended and Restated 1992 Equity Incentive Plan. Filed as
                          Exhibit 99.1 to the Company's Registration Statement on
                          Form S-8 (File No. 333-30531) and incorporated herein by
                          reference.
10.29#                    Form of Incentive Stock Option Certificate. Filed as
                          Exhibit 10.29 to the Company's Registration Statement on
                          Form S-1 (File No. 333-17581) and incorporated herein by
                          reference.
10.30                     Form of Nonstatutory Stock Option Certificate. Filed as
                          Exhibit 10.30 to the Company's Registration Statement on
                          Form S-1 (File No. 333-17581) and incorporated herein by
                          reference.
10.31#                    1996 Director Stock Option Plan. Filed as Exhibit 10.31 to
                          the Company's Registration Statement on Form S-1 (File
                          No. 333-17581) and incorporated herein by reference.
10.32#                    1996 Employee Stock Purchase Plan. Filed as Exhibit 10.32 to
                          the Company's Registration Statement on Form S-1 (File
                          No. 333-17581) and incorporated herein by reference.
</TABLE>

                                       32
<PAGE>
<TABLE>
<S>                       <C>
10.33                     Form of Consulting and Confidentiality Agreement between the
                          Company and certain consultants of the Company. Filed as
                          Exhibit 10.33 to the Company's Registration Statement on
                          Form S-1 (File No. 333-17581) and incorporated herein by
                          reference.
10.34                     Form of Invention and Non-Disclosure Agreement between the
                          Company and certain employees of the Company. Filed as
                          Exhibit 10.34 to the Company's Registration Statement on
                          Form S-1 (File No. 333-17581) and incorporated herein by
                          reference.
10.35                     Form of Non-Competition and Non-Solicitation Agreement
                          between the Company and certain employees of the Company.
                          Filed as Exhibit 10.35 to the Company's Registration
                          Statement on Form S-1 (File No. 333-17581) and incorporated
                          herein by reference.
10.36                     Form of Common Stock Purchase Agreement. Filed as
                          Exhibit 10.36 to the Company's Registration Statement on
                          Form S-1 (File No. 333-17581) and incorporated herein by
                          reference.
10.37                     Form of Stock Purchase and Right of First Refusal Agreement.
                          Filed as Exhibit 10.37 to the Company's Registration
                          Statement on Form S-1 (File No. 333-17581) and incorporated
                          herein by reference.
10.38                     Collaboration Agreement effective as of June 20, 1997
                          between Dyax Corp. and the Company. Filed as Exhibit 10.1 to
                          the Company's quarterly report on Form 10-Q for the period
                          ended September 30, 1997 (File No. 000-21863) and
                          incorporated herein by reference.
10.39                     Short Form Lease from Trustees of the Cambridge Trust to the
                          Company with a commencement date of January 1, 1998. Filed
                          as Exhibit 10.39 to the Company's Registration Statement on
                          Form S-1 (File No. 333-38399) and incorporated herein by
                          reference.
10.40                     Sublease dated as of October 31, 1997 between the Company
                          and SatCon Technology Corporation. Filed as Exhibit 10.40 to
                          the Company's annual report on Form 10-K for the period
                          ended December 31, 1998 (File No. 000-21863) and
                          incorporated herein by reference.
10.41                     First Amendment to Sublease dated as of July 15, 1998
                          between the Company and SatCon Technology Corporation. Filed
                          as Exhibit 10.41 to the Company's annual report on
                          Form 10-K for the period ended December 31, 1998 (File
                          No. 000-21863) and incorporated herein by reference.
10.42++                   Amendment No. 1 dated as of September 10, 1998 to the
                          Strategic Collaboration Agreement between the Company and
                          Mallinckrodt Medical, Inc. and Mallinckrodt Group Inc. dated
                          August 30, 1996. Filed as Exhibit 10.42 to the Company's
                          annual report on Form 10-K for the period ended
                          December 31, 1998 (File No. 000-21863) and incorporated
                          herein by reference.
10.43                     Promissory Note dated December 21, 1998 between the Company
                          and Finova Technology Finance, Inc. Filed as Exhibit 10.43
                          to the Company's annual report on Form 10-K for the period
                          ended December 31, 1998 (File No. 000-21863) and
                          incorporated herein by reference.
10.44                     First Amendment dated February 8, 1999 to the Short Form
                          Lease dated as of July 7, 1998 with a commencement date as
                          of January 1, 1998 between the Company and the Trustees of
                          The Cambridge East Trust. Filed as Exhibit 10.1 to the
                          Company's quarterly report on Form 10-Q for the period ended
                          March 31, 1999 (File No. 000-21863) and incorporated herein
                          by reference.
10.45                     Sublease extension election for an additional three years,
                          beginning January 1, 2000 and ending December 31, 2002
                          pursuant to Article 5 of the First Amendment to Sublease
                          dated as of July 15, 1998 between the Company and SatCon
                          Technology Corporation. Filed as Exhibit 10.1 to the
                          Company's quarterly report on Form 10-Q for the period ended
                          June 30, 1999 (File No. 000-21863) and incorporated herein
                          by reference.
</TABLE>

                                       33
<PAGE>
<TABLE>
<S>                       <C>
10.46++                   Amendment No. 2 dated as of July 9, 1999 to the Strategic
                          Collaboration Agreement between the Company and Mallinckrodt
                          Medical, Inc. and Mallinckrodt Group, Inc. dated August 30,
                          1996 and amended pursuant to Amendment No. 1 as of
                          September 10, 1998. Filed herewith.
10.47                     Non-Negotiable Promissory Note dated October 8, 1999 between
                          the Company and Mallinckrodt Inc. Filed herewith.
10.48                     Security Agreement dated October 8, 1999 between the Company
                          and Mallinckrodt Inc. Filed herewith.
23.1                      Consent of Ernst & Young LLP. Filed herewith.
24.1                      Power of Attorney. Contained on signature page hereto.
27.1                      Financial Data Schedule. Filed herewith.
99.1                      Important Factors Regarding Forward-Looking Statements.
                          Filed herewith.
</TABLE>

------------------------

+   Certain confidential material contained in the document has been omitted and
    filed separately with the Securities and Exchange Commission pursuant to
    Rule 406 of the Securities Act of 1933, as amended.

#  Identifies a management contract or compensatory plan or agreement in which
    an executive officer or director of the Company participates.

++  Certain confidential material contained in the document has been omitted and
    filed separately with the Securities and Exchange Commission pursuant to
    Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

                                       34
<PAGE>
                               EPIX MEDICAL, INC.

                         INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S>                                                           <C>
Report of Independent Auditors..............................     F-2
Financial Statements........................................
Balance Sheets..............................................     F-3
Statements of Operations....................................     F-4
Statements of Redeemable, Convertible Preferred Stock and
  Stockholders' Equity......................................     F-5
Statements of Cash Flows....................................     F-9
Notes to Financial Statements...............................    F-10
</TABLE>

                                      F-1
<PAGE>
                         REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholders EPIX Medical, Inc.

    We have audited the accompanying balance sheets of EPIX Medical, Inc. as of
December 31, 1999 and 1998, and the related statements of operations,
redeemable, convertible preferred stock and stockholders' equity, and cash flows
for each of the three years in the period ended December 31, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

    We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

    In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of EPIX Medical, Inc. at
December 31, 1999 and 1998, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1999, in conformity
with accounting principles generally accepted in the United States.

                                          /s/ Ernst & Young LLP

Boston, Massachusetts
February 5, 2000

                                      F-2
<PAGE>
                               EPIX MEDICAL, INC.

                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                              DECEMBER 31,   DECEMBER 31,
                                                                  1999           1998
                                                              ------------   ------------
<S>                                                           <C>            <C>
Assets
Current assets:
Cash and cash equivalents...................................  $   430,124    $   369,454
Available-for-sale marketable securities....................   13,709,980     28,731,747
Prepaid expenses and other current assets...................    1,214,929        517,701
                                                              -----------    -----------
Total current assets........................................   15,355,033     29,618,902
Property and equipment, net.................................    2,058,282      2,861,277
Notes receivable from officer...............................      356,159        335,888
Other assets................................................      116,109         87,152
                                                              -----------    -----------
Total assets................................................  $17,885,583    $32,903,219
                                                              ===========    ===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses.......................  $ 3,753,836    $ 2,681,137
Contract advances...........................................      308,955        611,038
Current portion of capital lease obligations................      379,911        384,976
Current portion of note payable.............................      397,864        349,009
                                                              -----------    -----------
Total current liabilities...................................    4,840,566      4,026,160
Capital lease obligations, less current portion.............      323,748        602,407
Note payable, less current portion..........................      373,783        771,647
Loan payable to strategic partner...........................    1,583,557             --
Stockholders' equity:
Common stock, $.01 par value, 15,000,000 shares authorized;
  11,680,315 and 11,458,401 shares issued and outstanding at
  December 31, 1999 and 1998, respectively..................      116,803        114,584
Additional paid-in capital..................................   56,520,680     55,839,411
Loans to stock option holders...............................     (387,430)      (123,119)
Accumulated deficit.........................................  (45,398,477)   (28,415,324)
Other comprehensive income (loss)...........................      (87,647)        87,453
                                                              -----------    -----------
Total stockholders' equity..................................   10,763,929     27,503,005
                                                              -----------    -----------
Total liabilities and stockholders' equity..................  $17,885,583    $32,903,219
                                                              ===========    ===========
</TABLE>

                            See accompanying notes.

                                      F-3
<PAGE>
                               EPIX MEDICAL, INC.

                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                YEAR ENDED DECEMBER 31,
                                                       -----------------------------------------
                                                           1999           1998          1997
                                                       ------------   ------------   -----------
<S>                                                    <C>            <C>            <C>
Revenues.............................................  $  1,144,056   $  1,780,985   $ 4,227,526
Operating expenses:
  Research and development...........................    14,667,370     13,349,337     8,899,197
  General and administrative.........................     4,411,194      4,256,557     2,790,222
                                                       ------------   ------------   -----------
Total operating expenses.............................    19,078,564     17,605,894    11,689,419
                                                       ------------   ------------   -----------
Operating loss.......................................   (17,934,508)   (15,824,909)   (7,461,893)
Interest income......................................     1,173,136      1,887,812     1,411,803
Interest expense.....................................      (221,781)       (61,132)      (62,003)
                                                       ------------   ------------   -----------
Net loss.............................................  $(16,983,153)  $(13,998,229)  $(6,112,093)
                                                       ============   ============   ===========
Weighted average shares:
  Basic and Diluted..................................    11,555,964     11,354,200     8,333,294
                                                       ============   ============   ===========
Loss per common share:
  Basic and Diluted..................................  $      (1.47)  $      (1.23)  $     (0.73)
                                                       ============   ============   ===========
</TABLE>

                            See accompanying notes.

                                      F-4
<PAGE>
                               EPIX MEDICAL, INC.

             STATEMENTS OF REDEEMABLE, CONVERTIBLE PREFERRED STOCK

                       AND STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>

                          REDEEMABLE,
                          CONVERTIBLE                  CONVERTIBLE
                           PREFERRED                    PREFERRED                    COMMON                ADDITIONAL
                             STOCK                        STOCK                      STOCK                   PAID IN
                            SHARES         AMOUNT        SHARES        AMOUNT        SHARES      AMOUNT      CAPITAL
                          -----------   ------------   -----------   -----------   ----------   --------   -----------
<S>                       <C>           <C>            <C>           <C>           <C>          <C>        <C>
Balance at December 31,
  1996..................   6,644,385    $ 17,203,807       93,691    $ 1,037,664    1,564,451   $ 15,644   $   112,960
Issuance of common stock
  Upon exercise of
  Options...............                                                               99,394        994        65,753
Issuance of common stock
  Upon Initial Public
  Offering, net of
  Offering costs of
  $1,831,436 in February
  1997..................                                                            2,300,000     23,000    14,245,564
Conversion of preferred
  Stock to common Stock
  upon initial Public
  offering in February
  1997..................  (6,644,385)    (17,203,807)     (93,691)    (1,037,664)   4,750,278     47,503    18,092,909
Issuance of compensatory
  Stock option grants...                                                                                         3,393
Issuance of common stock
  Upon Follow-on Public
  Offering, net Of
  offering costs of
  $1,819,447 in November
  1997..................                                                            2,467,500     24,675    22,830,879
Issuance of common stock
  Upon Conversion of
  Warrants..............                                                               36,641        367          (367)
Net loss................
                          ----------    ------------   ----------    -----------   ----------   --------   -----------

Balance at December 31,
  1997..................           0               0            0              0   11,218,264    112,183    55,351,091
Issuance of common stock
  upon exercise of
  Options...............                                                              221,793      2,218       249,922
Issuance of common stock
  under employee stock
  purchase plan.........                                                               18,344        183       151,992
Issuance of compensatory
  stock option loan.....
Compensatory stock
  option loan expense...                                                                                        86,406
Net loss................
Available-for-sale
  Marketable securities
    unrealized gain.....

Comprehensive loss......
                          ----------    ------------   ----------    -----------   ----------   --------   -----------

Balance at December 31,
  1998..................           0    $          0            0    $         0   11,458,401   $114,584   $55,839,411

<CAPTION>
                          ACCRETION OF
                           DIVIDENDS
                               ON
                           REDEEMABLE
                          CONVERTIBLE
                           PREFERRED
                             STOCK
                          ------------
<S>                       <C>
Balance at December 31,
  1996..................   $(101,059)
Issuance of common stock
  Upon exercise of
  Options...............
Issuance of common stock
  Upon Initial Public
  Offering, net of
  Offering costs of
  $1,831,436 in February
  1997..................
Conversion of preferred
  Stock to common Stock
  upon initial Public
  offering in February
  1997..................     101,059
Issuance of compensatory
  Stock option grants...
Issuance of common stock
  Upon Follow-on Public
  Offering, net Of
  offering costs of
  $1,819,447 in November
  1997..................
Issuance of common stock
  Upon Conversion of
  Warrants..............
Net loss................
                           ---------
Balance at December 31,
  1997..................           0
Issuance of common stock
  upon exercise of
  Options...............
Issuance of common stock
  under employee stock
  purchase plan.........
Issuance of compensatory
  stock option loan.....
Compensatory stock
  option loan expense...
Net loss................
Available-for-sale
  Marketable securities
    unrealized gain.....
Comprehensive loss......
                           ---------
Balance at December 31,
  1998..................   $       0
</TABLE>

                                      F-5
<PAGE>
                               EPIX MEDICAL, INC.

             STATEMENTS OF REDEEMABLE, CONVERTIBLE PREFERRED STOCK

                       AND STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
                                                                         ACCUMULATED
                                                            LOANS TO        OTHER                           TOTAL
                                                              STOCK     COMPREHENSIVE                   STOCKHOLDERS'
                                                             OPTION         INCOME         DEFICIT         EQUITY
                                                             HOLDERS        (LOSS)       ACCUMULATED      (DEFICIT)
                                                            ---------   --------------   ------------   -------------
<S>                                                         <C>         <C>              <C>            <C>
Balance at December 31, 1996..............................                               $(8,305,002)   $ (7,239,793)
Issuance of common stock Upon exercise of options.........                                                    66,747
Issuance of common stock upon Initial Public Offering, net
  of offering Costs of $1,831,436 In February 1997........                                                14,268,564
Conversion of preferred stock to common stock Upon initial
  public Offering in February 1997........................                                                17,203,807
Issuance of compensatory stock option grants..............                                                     3,393
Issuance of common stock upon Follow-on Public Offering,
  net of offering costs of $1,819,447 in November 1997....                                                22,855,554
Issuance of common stock upon Conversion of warrants......
Net loss..................................................                                (6,112,093)     (6,112,093)
                                                                                         ------------   ------------
Balance at December 31, 1997..............................                               (14,417,095)     41,046,179

Issuance of common stock upon exercise of options.........                                                   252,140
Issuance of common stock under employee stock purchase
  plan....................................................                                                   152,175
Issuance of compensatory stock option loan................   (123,119)                                      (123,119)
Compensatory stock option loan expense....................                                                    86,406
Net loss..................................................                               (13,998,229)    (13,998,229)
Available-for-sale marketable securities unrealized
  gain....................................................                  87,453                            87,453
                                                                                                        ------------

Comprehensive loss........................................                                               (13,910,776)
                                                            ---------      -------       ------------   ------------

Balance at December 31, 1998..............................  $(123,119)     $87,453       $(28,415,324)  $ 27,503,005
</TABLE>

See accompanying notes.

                                      F-6
<PAGE>
                               EPIX MEDICAL, INC.

             STATEMENTS OF REDEEMABLE, CONVERTIBLE PREFERRED STOCK

                       AND STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>

                              REDEEMABLE
                              CONVERTIBLE              CONVERTIBLE
                               PREFERRED                PREFERRED                                           ADDITIONAL
                                 STOCK                    STOCK                  COMMON STOCK                 PAID IN
                                SHARES       AMOUNT      SHARES       AMOUNT        SHARES        AMOUNT      CAPITAL
                              -----------   --------   -----------   --------   --------------   --------   -----------
<S>                           <C>           <C>        <C>           <C>        <C>              <C>        <C>
Issuance of common stock
  upon exercise of
  options...................                                                         142,037        1,420       119,388
Issuance of common stock
  under employee stock
  purchase plan.............                                                          24,323          243       116,659
Issuance of compensatory
  stock option plan.........                                                          55,554          556       249,438
Issuance of compensatory
  stock option loan.........
Compensatory stock option
  loan expense..............                                                                                     98,956
Disqualifying disposal of
  compensatory stock
  option....................                                                                                     96,828
Interest income on
  compensatory stock option
  loans.....................

Net loss....................

Available-for-sale
  marketable securities
  unrealized loss...........
Comprehensive loss..........
                                  --           --          --           --        ----------     --------   -----------
Balance at December 31,
  1999......................       0           $0           0           $0        11,680,315     $116,803   $56,520,680
                                  ==           ==          ==           ==        ==========     ========   ===========

<CAPTION>
                              ACCRETION OF
                               DIVIDENDS
                                   ON
                               REDEEMABLE
                              CONVERTIBLE
                               PREFERRED
                                 STOCK
                              ------------
<S>                           <C>
Issuance of common stock
  upon exercise of
  options...................
Issuance of common stock
  under employee stock
  purchase plan.............
Issuance of compensatory
  stock option plan.........
Issuance of compensatory
  stock option loan.........
Compensatory stock option
  loan expense..............
Disqualifying disposal of
  compensatory stock
  option....................
Interest income on
  compensatory stock option
  loans.....................
Net loss....................
Available-for-sale
  marketable securities
  unrealized loss...........
Comprehensive loss..........
                                   --
Balance at December 31,
  1999......................       $0
                                   ==
</TABLE>

                                      F-7
<PAGE>
                               EPIX MEDICAL, INC.

             STATEMENTS OF REDEEMABLE, CONVERTIBLE PREFERRED STOCK

                       AND STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
                                                                         ACCUMULATED
                                                            LOANS TO        OTHER                           TOTAL
                                                              STOCK     COMPREHENSIVE                   STOCKHOLDERS'
                                                             OPTION         INCOME       ACCUMULATED       EQUITY
                                                             HOLDERS        (LOSS)         DEFICIT        (DEFICIT)
                                                            ---------   --------------   ------------   -------------
<S>                                                         <C>         <C>              <C>            <C>
Issuance of common stock upon exercise of options.........                                                   120,808
Issuance of common stock under employee stock purchase
  plan....................................................                                                   116,902
Issuance of compensatory stock option plan................                                                   249,994
Issuance of compensatory stock option loan................  $(249,994)                                      (249,994)
Compensatory stock option loan expense....................                                                    98,956
Disqualifying disposal of compensatory stock option.......                                                    96,828
Interest income on compensatory stock option loans........    (14,317)                                       (14,317)

Net loss..................................................                               (16,983,153)    (16,983,153)

Available-for-sale marketable securities unrealized
  loss....................................................                 (175,100)                        (175,100)
                                                            ---------     ---------      ------------   ------------
Comprehensive loss........................................                                               (17,158,253)
                                                                                                        ------------
Balance at December 31, 1999..............................  $(387,430)    $ (87,647)     $(45,398,477)  $ 10,763,929
                                                            =========     =========      ============   ============
</TABLE>

                                      F-8
<PAGE>
                               EPIX MEDICAL, INC.

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                               YEAR ENDED DECEMBER 31,
                                                     -------------------------------------------
                                                         1999           1998           1997
                                                     ------------   ------------   -------------
<S>                                                  <C>            <C>            <C>
Operating activities:
Net loss...........................................  $(16,983,153)  $(13,998,229)  $  (6,112,093)
Adjustments to reconcile net loss to cash used in
  operating activities:
Depreciation and amortization......................       996,461        778,221         580,852
Stock compensation expense.........................       195,784         86,406              --
Loss on sale of fixed assets.......................        18,071             --              --
Changes in operating assets and liabilities:
Prepaid expenses, other current assets, note
  receivable from officer and other assets.........      (746,456)      (232,249)        207,818
Accounts payable and accrued expenses..............     1,072,699        345,002         110,422
Contract advances..................................      (302,083)      (183,308)        794,346
                                                     ------------   ------------   -------------
Net cash used in operating activities..............   (15,748,677)   (13,204,157)     (4,418,655)

Investing activities:
Purchases of fixed assets..........................      (101,778)    (1,568,473)       (388,760)
Proceeds from sale of fixed assets.................        45,000             --              --
Purchases of marketable securities.................  (164,384,194)  (410,500,904)   (359,397,388)
Sales or redemptions of marketable securities......   179,230,860    423,213,550     326,036,634
                                                     ------------   ------------   -------------
Net cash provided by (used in) investing
  activities.......................................    14,789,888     11,144,173     (33,749,514)
                                                     ------------   ------------   -------------

Financing activities:
Repayment of capital lease obligations.............      (438,483)      (428,068)       (238,323)
Issuance of note payable...........................            --      1,120,656              --
Issuance of loan payable to strategic partner......     1,583,557             --              --
Repayment of note payable..........................      (349,009)            --              --
Proceeds from Employee Stock Purchase Plan.........       116,902        152,175              --
Proceeds from sale of common stock, net............            --             --      37,124,118
Proceeds from stock options and warrants...........       106,492        129,018          70,139
                                                     ------------   ------------   -------------
Net cash provided by financing activities..........     1,019,459        973,781      36,955,934
                                                     ------------   ------------   -------------
Net increase (decrease) in cash and cash
  equivalents......................................        60,670     (1,086,203)     (1,212,235)
Cash and cash equivalents at beginning of period...       369,454      1,455,657       2,667,892
                                                     ------------   ------------   -------------
Cash and cash equivalents at end of period.........  $    430,124   $    369,454   $   1,455,657
                                                     ============   ============   =============
Supplemental disclosure of noncash investing and
  financing activities:

Capital lease obligations incurred in connection
  with acquisition of fixed assets.................  $    154,759   $    816,740   $     452,193
                                                     ============   ============   =============
Issuance of stock option loan for exercise of stock
  options and related interest.....................  $    264,311   $    123,119              --
                                                     ============   ============   =============
Supplemental cash flow information:
Cash paid for interest.............................  $    221,781   $     61,131   $      37,984
                                                     ============   ============   =============
</TABLE>

                            See accompanying notes.

                                      F-9
<PAGE>
                               EPIX MEDICAL, INC.

                         NOTES TO FINANCIAL STATEMENTS

                               DECEMBER 31, 1999

1. BUSINESS

    EPIX Medical, Inc. ("EPIX" or the "Company") was formed on November 29, 1988
as a Delaware corporation and commenced operations in 1992. The Company is
developing targeted contrast agents both to improve the capability and expand
the use of magnetic resonance imaging ("MRI") as a tool for diagnosing human
disease. The Company's principal product under development, AngioMARK (MS-325),
is an injectable vascular contrast agent designed for multiple vascular imaging
indications, including peripheral vascular disease ("PVD") and coronary artery
disease ("CAD").

    The Company completed a Phase II clinical trial in June 1998 to test the
safety and preliminary efficacy of AngioMARK-enhanced MR angiography ("MRA") for
the evaluation of PVD and is currently conducting a Phase II feasibility trial
to test the safety and feasibility of AngioMARK-enhanced MRA for the evaluation
of CAD. The Company began an additional Phase II clinical trial to test the
safety and feasibility of AngioMARK for detecting breast cancer in
January 1998. Enrollment for this clinical trial was completed in March 2000.

    In June 1999, the Company initiated a Phase III clinical trial to determine
the efficacy of AngioMARK-enhanced MRA for the detection of Aortoiliac Occlusive
Disease ("AIOD"), a sub-category of PVD. The Company considers this event as an
important milestone and believes that the progression from Phase II to Phase III
for PVD during 1999 warrants the transition from a development stage enterprise,
as defined by Financial Standards No. 7, "Accounting and Reporting by
Development Stage Enterprises" ("SFAS 7") issued by the Financial Accounting
Standard Board ("FASB"), to an established operating enterprise. Consequently,
cumulative amounts and other additional disclosures required by SFAS 7 have not
been provided.

    SIGNIFICANT REVENUES

    For the year ended December 31, 1999, one source represented 100% of
revenues. For the year ended December 31, 1998, one source represented 80% of
revenues and one source represented 20% of revenues. For the year ended
December 31, 1997, one source represented 73% of revenues and one source
represented 27% of revenues.

2. SIGNIFICANT ACCOUNTING POLICIES

    CASH AND CASH EQUIVALENTS

    The Company considers all investments with original maturities of three
months or less when purchased to be cash equivalents. Cash equivalents consist
of money market accounts and short-term investments.

    PROPERTY AND EQUIPMENT

    Property and Equipment are recorded at historical cost. Depreciation on
laboratory equipment and furniture, fixtures and other equipment is determined
using the straight-line method over the estimated useful lives of the related
assets, ranging from 3 to 5 years. Leasehold improvements are amortized using
the straight-line method over the shorter of the asset life or the remaining
life of the lease. Expenditures for maintenance and repairs are charged to
expense; betterments are capitalized.

                                      F-10
<PAGE>
                               EPIX MEDICAL, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    CAPITAL LEASE OBLIGATIONS

    Assets and liabilities relating to capital leases are recorded at the
present value of the future minimum rental payments using interest rates
appropriate at the inception of the lease.

    INCOME TAXES

    The Company provides for income taxes under Statement of Financial
Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes." Under this
method, deferred taxes are recognized using the liability method, whereby tax
rates are applied to cumulative temporary differences between carrying amounts
of assets and liabilities for financial reporting purposes and the amounts used
for income tax purposes are based on when and how they are expected to affect
the tax return. A valuation allowance is provided to the extent that there is
uncertainty as to the Company's ability to generate taxable income in the future
to realize the benefit from its net deferred tax asset.

    FAIR VALUE OF FINANCIAL INSTRUMENTS

    At December 31, 1999 and 1998, the Company's financial instruments consist
of cash and cash equivalents, available-for-sale marketable securities, notes
receivable from an officer, accounts payable and accrued expenses and two notes
payable.

    The fair value of cash and cash equivalents and accounts payable and accrued
expenses approximate cost due to their short-term maturities. The fair value of
the available-for-sale marketable securities, notes receivable, note payable,
loan payable and capital lease obligation are discussed in Notes 3, 13, 6, 7,
and 8 respectively.

    CONCENTRATIONS OF CREDIT RISK

    Financial instruments that potentially subject the Company to concentrations
of credit risk consist primarily of available-for-sale marketable securities.
The Company restricts investments of available-for-sale marketable securities to
the United States Federal Government and financial institutions with investment
grade credit ratings.

    REVENUE RECOGNITION

    Revenues from non-refundable license fees are recognized upon execution of
the underlying license agreement. Option, license and milestone payments under
collaborative agreements are recorded as earned based upon the provisions of
each agreement. Payments received for which revenue has not been earned are
recorded as contract advances.

    USE OF ESTIMATES

    The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

                                      F-11
<PAGE>
                               EPIX MEDICAL, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    TECHNOLOGY, LICENSE AND PATENT COSTS

    Costs associated with technology, licenses and patents are expensed as
incurred.

    STOCK-BASED COMPENSATION

    The Company has elected to follow Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" ("APB 25") in accounting for
its stock-based compensation plans, rather than the alternative fair value
accounting method provided for under SFAS No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"). The Company has provided the required disclosures
pursuant to SFAS 123.

    EARNINGS (LOSS) PER SHARE

    The Company computes net income (loss) per share in accordance with the
provisions of SFAS No. 128, "Earnings per Share." Net income per share is based
upon the weighted-average number of common shares outstanding and excludes the
effect of dilutive potential common stock issuable upon exercise of stock
options. Net income per share, assuming dilution, includes the effect of
dilutive potential common stock issuable upon exercise of stock options using
the treasury stock method.

    COMPREHENSIVE INCOME

    The Company reports and presents comprehensive income and its components in
accordance with the provisions of SFAS No. 130, "Reporting Comprehensive
Income." SFAS 130 establishes standards for reporting and display of
comprehensive income and its components in a financial statement that is
displayed with the same prominence as other financial statements for periods
beginning after December 15, 1997. Comprehensive income, as defined, includes
all changes in equity (net assets) during a period from non-owner sources.
Examples of items to be included in comprehensive income which are excluded from
net income include cumulative translations adjustments resulting from
consolidation of foreign subsidiaries' financial statements and unrealized gains
and losses on available-for-sale securities. Reclassifications of financial
statements for earlier periods for comparative purposes is required. The Company
adopted SFAS 130 in 1998 and reported unrealized gains (losses) on
available-for-sale marketable securities in other comprehensive income at
December 31, 1999 and 1998, of ($87,647) and $87,453, respectively.

    RECENT ACCOUNTING PRONOUNCEMENTS

    During 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). SFAS 133, as amended by
SFAS 137, requires companies to record derivatives on the balance sheet as
assets or liabilities, measured at fair value. Gains or losses resulting from
changes in the values of those derivatives would be accounted for depending on
the use of the derivative and whether it qualifies for hedge accounting.
SFAS 133 is effective beginning June 15, 2000. The adoption of SFAS 133 is not
expected to have a material impact on the financial position or results of
operations of the Company.

    In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin (SAB) No. 101 "Revenue Recognition in Financial Statements."
The SAB formalizes positions the staff has expressed in speeches and comment
letters. SAB 101 is effective no later than the first fiscal quarter of the

                                      F-12
<PAGE>
                               EPIX MEDICAL, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
fiscal year beginning after December 15, 1999. We are presently analyzing the
impact, if any, that the adherence of SAB 101 will have on our financial
condition or results of operations.

3. AVAILABLE-FOR-SALE MARKETABLE SECURITIES

    The estimated fair value of these financial instruments is determined based
on broker quotes or quoted market prices or rates for the same or similar
instruments, and the related carrying amounts are as follows:

<TABLE>
<CAPTION>
                                                   FAIR VALUE                     COST
                                            -------------------------   -------------------------
                                                  DECEMBER 31,                DECEMBER 31,
                                            -------------------------   -------------------------
                                               1999          1998          1999          1998
                                            -----------   -----------   -----------   -----------
<S>                                         <C>           <C>           <C>           <C>
Federal agency obligations................  $ 4,791,456   $12,011,729   $ 4,829,189   $11,985,231
U.S. Treasury obligations.................    2,955,288     2,045,322     2,984,960     2,030,630
Bank obligations..........................           --     6,082,364            --     6,081,140
Corporate Obligations.....................    5,963,236     8,592,332     5,983,478     8,547,294
                                            -----------   -----------   -----------   -----------
                                            $13,709,980   $28,731,747   $13,797,627   $28,644,295
                                            ===========   ===========   ===========   ===========
</TABLE>

    Maturities of marketable securities classified as available-for-sale by
contractual maturity are shown below:

<TABLE>
<CAPTION>
                                                           DECEMBER 31,
                                                     -------------------------
                                                        1999          1998
                                                     -----------   -----------
<S>                                                  <C>           <C>
Marketable securities available-for-sale:
Due within one year................................  $ 5,727,824   $19,424,490
Due after one year through two years...............    7,982,156     9,307,257
                                                     -----------   -----------
                                                     $13,709,980   $28,731,747
                                                     ===========   ===========
</TABLE>

4. PROPERTY AND EQUIPMENT

    Property and equipment consist of the following:

<TABLE>
<CAPTION>
                                                            DECEMBER 31,
                                                       -----------------------
                                                          1999         1998
                                                       ----------   ----------
<S>                                                    <C>          <C>
Laboratory equipment.................................  $1,766,075   $2,766,857
Leasehold improvements...............................   2,045,702    2,094,027
Furniture, fixtures and other equipment..............     656,995      871,783
                                                       ----------   ----------
                                                        4,468,772    5,732,667
Less accumulated depreciation and amortization.......  (2,410,490)  (2,871,390)
                                                       ----------   ----------
                                                       $2,058,282   $2,861,277
                                                       ==========   ==========
</TABLE>

                                      F-13
<PAGE>
                               EPIX MEDICAL, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

    Accounts payable and accrued expenses consist of the following:

<TABLE>
<CAPTION>
                                                            DECEMBER 31,
                                                       -----------------------
                                                          1999         1998
                                                       ----------   ----------
<S>                                                    <C>          <C>
Accounts payable.....................................  $1,773,212   $  779,678
Accrued development expenses.........................     635,890      827,733
Accrued legal expense................................     181,337      158,603
Accrued compensation.................................     595,437      602,402
Other accrued expenses...............................     567,960      312,721
                                                       ----------   ----------
                                                       $3,753,836   $2,681,137
                                                       ==========   ==========
</TABLE>

6. NOTE PAYABLE

    In December 1998, the Company borrowed $1,120,656 in the form of a 34-month
note payable that bears annual interest at 13.17% and is due in 2001. The
proceeds from this note payable were used to finance certain leasehold
improvements at both of the Company's facilities.

    Maturities for the two years succeeding December 31, 1999 are $397,864 in
2000 and $373,783 in 2001.

7. LOAN PAYABLE TO STRATEGIC PARTNER

    In October 1999, the Company entered into a Non-Negotiable Promissory Note
and Security Agreement (the "Loan") with Mallinckrodt, Inc. ("Mallinckrodt"),
pursuant to which the Company is eligible to borrow up to $9.5 million from
Mallinckrodt, on a quarterly basis, to cover EPIX's share of AngioMARK
development costs. The Loan bears interest, adjustable on a quarterly basis, at
the Prime Rate published in the Wall Street Journal. The Loan is repayable in
full on the earliest to occur of (i) October 1, 2002, (ii) thirty days after the
date of the First Commercial Sale of Licensed Product in the Territory (as such
terms are defined in the Company's Strategic Collaboration Agreement with
Mallinckrodt dated August 30, 1996, as amended (the "Strategic Collaboration
Agreement")) and (iii) thirty days after the first date upon which the Company
could reasonably repay all outstanding principal and interest on the Loan
without creating any reasonably foreseeable risk that the Company would be
otherwise entitled to receive a loan from Mallinckrodt under the existing terms
of the Strategic Collaboration Agreement within six months of the date of any
such repayment. The Loan is secured by a first priority security interest in all
of the Company's intellectual property. Although the possibility exists that the
loan will become repayable within the next twelve months pursuant to repayment
provision (iii) above, the conditions required to be met by such provision
require our speculation concerning both the probability and success of certain
future financial transactions. Due to our current uncertainty that such future
transactions will occur or will occur such as to cause repayment provision
(iii) above to apply, we have classified the Loan as a long-term obligation. The
Company received $1,583,557 pursuant to the Loan during November 1999 to cover
EPIX's share of third quarter 1999 AngioMARK development costs.

8. LEASES

    The Company has entered into a number of capital leases for equipment,
including sale and leaseback transactions involving certain equipment. Assets
under capital leases, the majority of which are laboratory

                                      F-14
<PAGE>
                               EPIX MEDICAL, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

8. LEASES (CONTINUED)
equipment, totaled $1,375,691 and $2,651,715 at December 31, 1999 and 1998,
respectively. During the years ended December 31, 1999, 1998, and 1997, the
Company incurred amortization expense relating to assets under capital leases of
$427,740, $433,548 and $261,010, respectively. Accumulated amortization relating
to assets under capital leases was $710,020 and $1,687,995 at December 31, 1999
and 1998, respectively.

    In addition, the Company leases office space under operating lease
arrangements. The leases for the two principal facilities expire in
December 2002.

    Future minimum commitments under leases with non-cancelable terms of one or
more years are as follows at December 31, 1999:

<TABLE>
<CAPTION>
                                                         CAPITAL    OPERATING
                                                         LEASES       LEASES
                                                        ---------   ----------
<S>                                                     <C>         <C>
2000..................................................  $ 422,802   $  837,493
2001..................................................    275,763      854,545
2002..................................................     66,166      845,161
2003..................................................         --       40,951
2004..................................................         --       11,162
                                                        ---------   ----------
Total minimum lease payments..........................    764,731   $2,589,312
                                                                    ==========
Less amounts representing interest....................     61,072
                                                        ---------
Present value minimum lease payments..................    703,659
Less amounts due within one year......................   (379,911)
                                                        ---------
                                                        $ 323,748
                                                        =========
</TABLE>

    Rent expense amounted to approximately $598,694, $546,866 and $266,644 for
1999, 1998, and 1997, respectively.

9. STOCKHOLDERS' EQUITY

CAPITAL STOCK

    During 1997, the Company completed an initial public offering of 2,300,000
shares of its Common Stock at a price of $7.00 per share and a follow-on public
offering of 2,467,500 shares of Common Stock at a price of $10.00 per share. The
net proceeds, after underwriter discounts and offering expenses, aggregated
approximately $37.1 million, which the Company is using for research and
development and funding of clinical trials in support of regulatory approvals
and for general corporate purposes.

    In February 1997, pursuant to the completion of its initial public offering,
all of the Preferred Stock issued and outstanding as of that date converted into
4,750,278 shares of Common Stock. Each share of Series A Preferred Stock
converted into 3.4 shares of Common Stock. All other shares of Preferred Stock
converted into .67 shares of Common Stock. The former holders of the Preferred
Stock had certain voting and redemption rights and liquidation preferences,
which were relinquished upon conversion. Immediately following conversion, all
currently outstanding shares of Preferred Stock were canceled, retired and

                                      F-15
<PAGE>
                               EPIX MEDICAL, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

9. STOCKHOLDERS' EQUITY (CONTINUED)
eliminated from the Company's authorized shares of capital stock and the number
of authorized shares of Preferred Stock was decreased to 1,000,000 shares.

WARRANTS

    In connection with a lease agreement, the Company issued warrants to
purchase shares of Series A, Series B and Series C Preferred Stock. In
October 1997, the holders of the Series A, B and C Warrants (the Warrants)
elected to surrender the Warrants and receive Common Stock equivalent to the
difference between the deemed fair market value of the Common Stock (ranging
from $11.81-$12.15/share) and the exercise price of the Warrants (ranging from
$2.27 to $6.81/share) multiplied by the outstanding Warrants (53,031). The
resulting difference converted into 36,641 shares of Common Stock, which were
issued in exchange for the Warrants.

    In connection with the issuance of Bridge Notes and the sale of Series D
preferred stock, the Company issued warrants to purchase 40,000 shares of
Series D preferred stock. Effective with the initial public offering and the
conversion of Series D preferred stock into Common Stock, the holders of the
warrants are entitled to convert the warrants to an aggregate of 26,665 shares
of common stock at a cost equal to $4.50 per common share. These warrants, which
expire in May 2006, were still outstanding as of December 31, 1999.

EQUITY PLANS

    EQUITY INCENTIVE PLAN

    The Company has in place the 1992 Equity Incentive Plan, which provides
stock awards to purchase shares of Common Stock to be granted to employees and
consultants under incentive and non-statutory stock option agreements. In
September 1999, the Board of Directors voted, subject to shareholder approval,
to amend the 1992 Equity Incentive Plan (as amended, "the Equity Plan") to
increase the aggregate number of shares of Common Stock available thereunder by
an additional 550,000 shares. Additionally, in June 1999, May 1998, June 1997
and December 1996, the Company amended the Equity Plan to, among other things,
increase the number of shares reserved for issuance pursuant to future grants.
The Equity Plan provides for the grant of stock options (incentive and
non-statutory), stock appreciation rights, performance shares, restricted stock
or stock units for the purchase of an aggregate of 3,149,901 shares of Common
Stock, subject to adjustment for stock-splits and similar capital changes.
Awards under the Equity Plan can be granted to officers, employees and other
individuals as determined by the committee of the Board of Directors, which
administers the Equity Plan. The Compensation Committee selects the participants
and establishes the terms and conditions of each option or other equity right
granted under the Equity Plan, including the exercise price, the number of
shares subject to options or

                                      F-16
<PAGE>
                               EPIX MEDICAL, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

9. STOCKHOLDERS' EQUITY (CONTINUED)
other equity rights and the time at which such options become exercisable. Stock
option information relating to the Equity Incentive Plan is as follows:

<TABLE>
<CAPTION>
                                                                                                      EXERCISABLE
                                                                                                  -------------------
                                                                           WEIGHTED                          WEIGHTED
                                                        OPTION PRICE       AVERAGE    AVAILABLE    NUMBER    AVERAGE
                                        OPTIONS          RANGE PER         EXERCISE      FOR         OF      EXERCISE
                                      OUTSTANDING          SHARE            PRICE       GRANT     OPTIONS     PRICE
                                      -----------   --------------------   --------   ---------   --------   --------
<S>                                   <C>           <C>                    <C>        <C>         <C>        <C>
December 31, 1997...................   1,666,714    $0.42--$13.50           $4.33      161,219    562,704     $2.04
Granted.............................     328,344    $5.38--$13.88           $9.68
Exercised...........................    (221,793)   $0.42--$ 8.75           $1.14
Canceled............................     (35,673)   $0.45--$13.88           $9.87
                                       ---------

December 31, 1998...................   1,737,592    $0.42--$13.88           $5.64      118,548    559,631     $3.04
Granted.............................     881,322    $4.50--$11.125          $5.84
Exercised...........................    (197,591)   $0.42--$ 9.94           $1.88
Canceled............................     (41,361)   $4.50--$13.88           $8.81
                                       ---------

December 31, 1999...................   2,379,962    $0.42--$13.88           $5.97       78,587    703,485     $4.28
                                       =========
</TABLE>

    1996 DIRECTORS STOCK OPTION PLAN

    In December 1996, the Board of Directors and stockholders of the Company
adopted the Company's 1996 Director Stock Option Plan (the "Director Plan"). In
May 1998, the Company amended the Director Plan to increase the number of shares
for issuance pursuant to grants and to increase the number of shares granted
upon election or reelection. All of the directors who are not employees of the
Company (the "Eligible Directors") are currently eligible to participate in the
Director Plan. At December 31, 1999, there are 100,000 shares of Common Stock
reserved for issuance under the Director Plan. Upon the election or reelection
of an Eligible Director, such director is automatically granted an option to
purchase 15,000 shares of Common Stock (the "Option"). Each Option becomes
exercisable with respect to 5,000 shares on each anniversary date of grant for a
period of three years, provided that the option holder is still a director of
the Company at the opening of business on such date. The Options have a term of
ten years. The exercise price for the Options is equal to fair value at the date
of grant. The exercise price may be paid in

                                      F-17
<PAGE>
                               EPIX MEDICAL, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

9. STOCKHOLDERS' EQUITY (CONTINUED)
cash or shares of Common Stock or combination of both. Stock option information
relating to the Director Plan is as follows:

<TABLE>
<CAPTION>
                                                                     WEIGHTED
                                                 OPTION PRICE        AVERAGE     AVAILABLE   EXERCISABLE      WEIGHTED
                                  OPTIONS          RANGE PER         EXERCISE       FOR       NUMBER OF       AVERAGE
                                OUTSTANDING          SHARE            PRICE        GRANT       OPTIONS     EXERCISE PRICE
                                -----------   -------------------   ----------   ---------   -----------   --------------
<S>                             <C>           <C>                   <C>          <C>         <C>           <C>
December 31, 1997.............      6,666            $8.50            $ 8.50      60,000
Granted.......................     38,334        $8.50--$13.25        $12.40
Exercised.....................
Canceled......................
                                   ------
December 31, 1998.............     45,000        $8.50--$13.25        $11.80      55,000       15,000          $12.83
Granted.......................     15,000            $7.00            $ 7.00
Exercised.....................
Canceled......................
                                   ------
December 31, 1999.............     60,000        $7.00--$13.25        $10.60      40,000       28,666          $12.42
                                   ======
</TABLE>

    COMBINED OPTION PLAN

    The following table summarizes information about options outstanding at
December 31, 1999:

<TABLE>
<CAPTION>
                         OPTIONS OUTSTANDING
---------------------------------------------------------------------          EXERCISABLE
                                          WEIGHTED                      -------------------------
                           OPTIONS         AVERAGE                         OPTIONS       WEIGHTED
                        OUTSTANDING AT    REMAINING       WEIGHTED      EXERCISABLE AT   AVERAGE
  RANGE OF EXERCISE      DECEMBER 31,    CONTRACTUAL      AVERAGE        DECEMBER 31,    EXERCISE
       PRICES                1999           LIFE       EXERCISE PRICE        1999         PRICE
---------------------   --------------   -----------   --------------   --------------   --------
<S>                     <C>              <C>           <C>              <C>              <C>
 $0.42--$0.83               306,371          5.13          $ 0.62           255,408       $ 0.59
 $2.25--$4.50               299,556          6.44          $ 4.31           209,352       $ 4.39
 $4.88--$8.50             1,092,954          9.04          $ 5.50           115,023       $ 6.06
 $8.75--$8.75               358,261          7.62          $ 8.75            46,982       $ 8.75
 $8.88--$13.88              382,820          8.41          $11.01           105,386       $11.28
                          ---------                                        --------
 $0.42--$13.88            2,439,962          7.92          $ 6.08           732,151       $ 4.60
                          =========                                        ========
</TABLE>

    1996 EMPLOYEE STOCK PURCHASE PLAN

    In December 1996, the Company adopted the Company's 1996 Employee Stock
Purchase Plan (the "Purchase Plan") under which employees may purchase shares of
Common Stock at a discount from fair market value at specified dates. Employees
first purchased shares under the Purchase Plan in 1998. There are 66,666 shares
of Common Stock reserved for issuance under the Purchase Plan. Employees
purchased 24,323 shares in 1999 at an average price of $4.81 and 18,344 shares
in 1998 for an average price of $8.30. At December 31, 1999, 23,999 common
shares remained available for issuance under the Purchase Plan. The Purchase
Plan is intended to qualify as an employee stock purchase plan within the
meaning of Section 423 of the code. Rights to purchase Common Stock under the
Purchase Plan are granted at the discretion of the Compensation Committee, which
determines the frequency and duration of individual

                                      F-18
<PAGE>
                               EPIX MEDICAL, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

9. STOCKHOLDERS' EQUITY (CONTINUED)
offerings under the Purchase Plan and the dates when stock may be purchased.
Eligible employees participate voluntarily and may withdraw from any offering at
any time before stock is purchased. Participation terminates automatically upon
termination of employment. The purchase price per share of Common Stock in an
offering is 85% of the lesser of its fair market value at the beginning of the
offering period or on the applicable exercise date and are paid through payroll
deductions. The Purchase Plan terminates in December 2006.

    FAS 123 PRO FORMA INFORMATION

    The pro forma information required by FAS 123 is presented below and has
been determined as if the Company accounted for its stock-based awards under the
fair value method per FAS 123. The fair value of the Company's stock-based
awards to employees was estimated using the Black-Scholes option-pricing model.
The fair value of the Company's stock-based awards to employees was estimated
assuming no expected dividends and the following weighted average assumptions:

<TABLE>
<CAPTION>
                                                     OPTIONS   YEAR ENDED         ESPP
                                          ----------------------------------------------------
                                          ------------------------------   -------------------
                                            1999       1998       1997       1999       1998       1997
                                          --------   --------   --------   --------   --------   --------
<S>                                       <C>        <C>        <C>        <C>        <C>        <C>
Weighted-average life (Years)...........    4.96       4.75       3.75       0.50       0.50         --
Weighted-average contractual life
  (Years)...............................    7.92       7.83       8.27         --         --         --
Expected stock price volatility.........    0.81       0.74       0.60       0.81       0.74         --
Risk-free interest rate.................    5.50%      6.00%      6.00%      5.50%      6.00%        --
</TABLE>

    The following is a summary of weighted average grant date values generated
by the application of the Black-Scholes model:

<TABLE>
<CAPTION>
                                                         WEIGHTED AVERAGE GRANT DATE
                                                                    VALUE
                                                    --------------------------------------
                                                           YEAR ENDED DECEMBER 31,
                                                    --------------------------------------
                                                      1999           1998           1997
                                                    --------       --------       --------
<S>                                                 <C>            <C>            <C>
Stock option plans................................   $3.70          $5.73          $3.83
ESPP..............................................   $2.80          $4.06             --
</TABLE>

    As required under FAS 123, the following pro forma net loss and loss per
share presentation reflects the amortization of the option grant fair value and
expense. For purposes of this disclosure, the estimated fair value of the
options is amortized to expense over the options' vesting periods. The Company's
pro forma information follows:

<TABLE>
<CAPTION>
                                                YEAR ENDED DECEMBER 31,
                                       -----------------------------------------
                                           1999           1998          1997
                                       ------------   ------------   -----------
<S>                                    <C>            <C>            <C>
Pro forma net income (loss)..........  $(18,386,545)  $(15,160,591)  $(6,684,788)
Pro forma diluted earnings per
  share..............................  $      (1.59)  $      (1.34)  $     (0.80)
</TABLE>

    The effects on pro forma disclosures of applying FAS 123 are not likely to
be representative of the effects on pro forma disclosures of future years.
Because FAS 123 is applicable only to options granted subsequent to April 1,
1995, the pro forma effect will not be fully reflected until 2000.

                                      F-19
<PAGE>
                               EPIX MEDICAL, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

10. EARNINGS (LOSS) PER SHARE

    The following table sets forth the computation of basic and diluted earnings
(loss) per share:

<TABLE>
<CAPTION>
                                                YEAR ENDED DECEMBER 31,
                                       -----------------------------------------
                                           1999           1998          1997
                                       ------------   ------------   -----------
<S>                                    <C>            <C>            <C>
Numerator:
Net loss.............................  $(16,983,153)  $(13,998,229)  $(6,112,093)

Denominator:
Weighted average shares..............    11,555,964     11,354,200     8,333,294

Basic loss per share.................  $      (1.47)  $      (1.23)  $     (0.73)
Diluted loss per share...............  $      (1.47)  $      (1.23)  $     (0.73)
</TABLE>

11. INCOME TAXES

    The Company has reported losses since inception and, due to the degree of
uncertainty related to the ultimate use of the loss carryforwards, fully
reserved this tax benefit. The Company has the following total deferred tax
assets as of December 31, 1999 and 1998:

<TABLE>
<CAPTION>
                                                          DECEMBER 31,
                                                   ---------------------------
                                                       1999           1998
                                                   ------------   ------------
<S>                                                <C>            <C>
Deferred tax assets:
Net operating loss carryforwards.................  $ 17,045,000   $ 10,519,000
Research and development tax credits.............     2,260,000        725,000
Book over tax depreciation and amortization......       941,000        750,000
Other............................................       154,000        148,000
                                                   ------------   ------------
Total deferred tax assets........................    20,400,000     12,142,000
Valuation allowances.............................   (20,400,000)   (12,142,000)
                                                   ------------   ------------
Deferred income taxes, net.......................  $          0   $          0
                                                   ============   ============
</TABLE>

    As of December 31, 1999, the Company has net operating loss carryforwards
for income tax purposes of approximately $42.7 million, which expire through the
year 2019 and 2004, for Federal and State, respectively. The valuation allowance
increased by $8,258,000 during the twelve months ended December 31, 1999, due
primarily to the additional allowance for the net operating losses and research
and development tax credits incurred. The tax net operating loss carryforwards
differ from the accumulated deficit principally due to temporary differences in
the recognition of certain revenue and expense items for financial and tax
reporting purposes.

    As a result of ownership changes resulting from sales of equity securities,
the Company's ability to use the loss carryforwards is subject to limitations as
defined in Sections 382 and 383 of the Internal Revenue Code of 1986, as amended
(the "Code"). The Company currently estimates that the annual limitation on its
use of net operating losses through May 31, 1996 will be approximately $900,000.
Pursuant to Sections 382 and 383 of the Code, the change in ownership resulting
from public equity offerings in 1997 and any other future ownership changes may
further limit utilization of losses and credits in any one year. The Company is
also eligible for research and development tax credits which can be carried
forward to offset

                                      F-20
<PAGE>
                               EPIX MEDICAL, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

11. INCOME TAXES (CONTINUED)
federal taxable income. The annual limitation and the timing of attaining
profitability may result in the expiration of net operating loss and tax credit
carryforwards before utilization.

    The reconciliation of income tax computed at the U.S. federal statutory rate
to income tax expense is as follows:

<TABLE>
<CAPTION>
                                                  YEARS ENDED DECEMBER 31     YEARS ENDED DECEMBER 31
                                                 -------------------------   -------------------------
                                                    1998          1998          1999          1998
                                                 -----------   -----------   -----------   -----------
<S>                                              <C>           <C>           <C>           <C>
Tax at U.S. statutory rate.....................  $(5,774,000)  $(4,760,000)    (34.00)%      (34.00)%
State taxes, net of federal benefit............   (1,020,000)     (840,000)     (6.00)%       (6.00)%
Non-deductible items...........................       55,000        20,000       0.03%         0.02%
Tax credits....................................   (1,519,000)     (407,000)     (8.90)%       (2.90)%
Change in Valuation Allowance..................    8,258,000     5,987,000      48.87%        42.88%
                                                 -----------   -----------    ------        ------
                                                 $         0   $         0       0.00%         0.00%
                                                 ===========   ===========    ======        ======
</TABLE>

12. DEFINED CONTRIBUTION PLAN

    The Company offers a defined contribution 401(k) plan which covers
substantially all employees. The plan permits participants to make contributions
from 1% to 15% of their compensation. The Company matches up to 3% of employees'
contributions. During 1999, the Company's match amounted to $134,355.

13. RELATED-PARTY TRANSACTIONS

    During 1995 and 1996 the Company received promissory notes from one employee
who is also an executive officer and director. These transactions are summarized
below:

<TABLE>
<CAPTION>
                                                             SHARES OF COMPANY COMMON
                                                  INTEREST      STOCK PROVIDED AS
DATE OF NOTE                  TERM      AMOUNT      RATE            COLLATERAL
------------                --------   --------   --------   ------------------------
<S>                         <C>        <C>        <C>        <C>
June 26, 1995.............  10 years   $ 50,000     7.31%             14,814
April 5, 1996.............  10 years     50,000     6.51              14,814
May 31, 1996..............  10 years    180,000     6.83              44,444
</TABLE>

    The notes are subject to certain acceleration clauses. In May 1996, the
Company also repurchased from the same officer of the Company, 66,666 shares of
Common Stock at a price per share of $4.05.

    During 1998, the Company received a promissory note from an employee
pursuant to an employee stock option financing program available to all
employees. The proceeds from this loan were used to exercise certain stock
options by the employee. The difference between the exercise price and the fair
market value of the stock was recorded as stock compensation expense during
1998. The loan amount plus

                                      F-21
<PAGE>
                               EPIX MEDICAL, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

13. RELATED-PARTY TRANSACTIONS (CONTINUED)
accrued interest was recorded as a loan to stock option holder in the financial
statements. This transaction is summarized below:

<TABLE>
<CAPTION>
                                                             SHARES OF COMPANY COMMON
                                                  INTEREST      STOCK PROVIDED AS
DATE OF NOTE                 TERM       AMOUNT      RATE            COLLATERAL
------------              ----------   --------   --------   ------------------------
<S>                       <C>          <C>        <C>        <C>
April 2, 1998...........  21 months    $118,068     5.70%             17,402
</TABLE>

    The note is subject to certain acceleration clauses. Subsequent to
December 31, 1999, the note receivable plus accrued interest was repaid in full.

    During June 1999, the Company received a promissory note with 25% recourse
from an executive officer of the Company pursuant to an employee stock option
financing program available to all employees of the Company. The promissory note
is secured by shares of common stock of the Company equal in value, at the time
of the transaction, to approximately 150% of the amount of the promissory note.
The proceeds from the loan were used to exercise stock options held by the
executive officer. The difference between the exercise price and the fair market
value of the stock, less 25% related to the recourse stipulation, was recorded
as stock compensation expense during the second quarter of 1999. The loan amount
plus accrued interest was recorded as a loan to stock option holders in the
financial statements. This transaction is summarized below:

<TABLE>
<CAPTION>
                                                             SHARES OF COMPANY COMMON
                                                  INTEREST      STOCK PROVIDED AS
DATE OF NOTE                 TERM       AMOUNT      RATE            COLLATERAL
------------              ----------   --------   --------   ------------------------
<S>                       <C>          <C>        <C>        <C>
June 3, 1999............  60 months    $249,993     5.25%             55,554
</TABLE>

    The cost of the three notes receivable approximates fair market value.

14. SIGNIFICANT AGREEMENTS

    In September 1999, the Company and Seimens Medical Systems announced a
non-exclusive collaboration to optimize MR imaging technology and improve
visualization of arteries and veins in patients undergoing MRA. The
collaboration also will focus on expanding the use of MRI in diagnosing
cardiovascular disease and providing user-friendly tools for easy visualization
of the cardiovascular system in three-dimensional space. Research and
development will be carried out at EPIX and at Siemens' Iselin, NJ facilities.

    In November 1998, the Company and Philips Medical Systems agreed to
collaborate in advancing the development of contrast-based cardiovascular MRI
technologies. Under the terms of this non-exclusive collaboration agreement, the
companies will combine their resources to optimize imaging technology and
improve three-dimensional visualization of arteries and veins in patients
undergoing MR angiography. Research and development is to be carried out at
several international Philips research centers and as well as EPIX facilities.

    In October 1998, the Company and NeoGenesis Pharmaceuticals, Inc.
("NeoGenesis") announced the initiation of collaboration for the discovery of
novel compounds for use in diagnostic imaging. Under the terms of this
agreement, the Company received access to NeoGenesis' proprietary combinatorial
chemistry libraries. By rapidly screening these libraries with NeoGenesis'
mass-coded drug discovery

                                      F-22
<PAGE>
                               EPIX MEDICAL, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

14. SIGNIFICANT AGREEMENTS (CONTINUED)
platform, the Company sought to identify potential candidates for its drug
discovery programs. This collaboration was successfully completed in 1999.

    In September 1998, the Company and Pfizer, Inc. ("Pfizer") entered into an
agreement to explore the efficacy of AngioMARK-enhanced MRI in the diagnosis and
monitoring of female sexual arousal dysfunction.

    In January 1998, the Company and General Electric Medical Systems announced
the formation of a collaboration to accelerate the development of cardiovascular
MRI. In particular, the collaboration focuses on reducing the effects of cardiac
motion on MR images, providing user-friendly computer tools as a means of
visualizing arteries and veins in 3-dimensional space, and optimizing MRI
sequences for intravascular MRI contrast agents, including AngioMARK. Under the
terms of this non-exclusive agreement, research is performed at several centers,
including the Company's facilities, General Electric Medical System's corporate
research facility in Schenectady, NY; General Electric Medical Research in
Milwaukee, WI; the National Institute of Health, and several academic centers.

    In June 1997, the Company and Dyax Corp. ("Dyax") formed a strategic
alliance to develop novel contrast imaging agents for the diagnosis of severe
blood clots in the lungs and legs. The companies jointly sought to identify and
develop compounds that specifically target PE and DVT for use as IN VIVO MRI and
nuclear medicine imaging agents for the diagnosis of these disorders. The
Company partially funded the program and provided expertise in MRI contrast
technology for development of MRI-specific imaging agents. Dyax assumed primary
responsibility for developing agents for use in nuclear medicine. Dyax will
receive royalties on sales of MRI products, and the Company will receive
royalties on sales of nuclear medicine products resulting from this
collaboration. The discovery phase of this collaboration was formally completed
in 1999 with the identification of several peptide candidates.

    In December 1996, the Company and the Japanese Manufacturer and Distributor
agreed to restructure the existing agreement. In connection with the
restructuring, the parties terminated further collaboration efforts and the
Japanese Manufacturer and Distributor relinquished its exclusive rights in Japan
to the liver MRI agent in exchange for a non-exclusive technology license and a
$250,000 payment from the Company. The Company is entitled to receive royalties
based upon specified percentage of future revenues, if any, from the sale of
liver MRI contrast agents by the Japanese Manufacturer and Distributor.

    In August 1996, the Company entered into a strategic collaboration agreement
with Mallinckrodt Inc. ("Mallinckrodt"), a U.S. pharmaceutical company,
involving research, development and marketing of AngioMARK and future MRI
vascular contrast agents developed or in-licensed by either party. Under the
terms of the agreement, each party is obligated to fund a portion of the
development cost of AngioMARK up to a specified maximum amount. Mallinckrodt
will have the right to manufacture AngioMARK and to market the product worldwide
except Japan. During 1996, the Company received a $6.0 million license fee
payment upon execution of the agreement and in 1997 received a $2.0 million
milestone payment. Under the agreement, the Company will share in future
operating profits from the sale of products covered under the agreement. In
September 1998, Mallinckrodt exercised its option to expand the original
EPIX-Mallinckrodt collaboration. The new agreement provides the Company and
Mallinckrodt with the opportunity to broaden the scope of their clinical program
for AngioMARK and commits additional resources for the research and development
of novel MR imaging technologies. In October 1999, the Company entered into a
Non-Negotiable Promissory Note and Security Agreement (the "Loan") with

                                      F-23
<PAGE>
                               EPIX MEDICAL, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

14. SIGNIFICANT AGREEMENTS (CONTINUED)
Mallinckrodt pursuant to which the Company is eligible to borrow up to
$9.5 million from Mallinckrodt, on a quarterly basis, to cover EPIX's share of
AngioMARK development costs. The Loan bears interest, adjustable on a quarterly
basis, at the Prime Rate published in the Wall Street Journal. The Loan shall be
repayable in full upon the earliest occurrence of one of three events--See
Note 7 for a description of the three events.

    In March 1996, the Company entered into marketing, development and license
agreements with Daiichi Radioisotope Laboratories Ltd., a Japanese
pharmaceutical company ("Daiichi") covering the Company's vascular MRI contrast
agent. During 1996, the Company received a license fee of $3.0 million (net of
withholding tax) upon execution of the agreement and proceeds from the issuance
of 868,329 shares of Series E Preferred Stock at price of $5.76 per share. A
further $900,000 was received from Daiichi in 1997. In addition, the Company is
entitled to receive future milestone payments of up to $2.4 million (net of
withholding tax) The agreements also provide for the Company to supply product
to Daiichi and to receive royalties for sales made by Daiichi in Japan.

    In March 1992, the Company entered into a $3.5 million development and
license agreement with a Japanese manufacturer and distributor ("Japanese
Manufacturer and Distributor") of medical products. Under the terms of the
agreement, the Company received funding for research and development through the
sale of Preferred Stock and license rights to the Company's liver MRI contrast
agent product candidate. In March of 1992, the Japanese Manufacturer and
Distributor purchased an equity interest in the Company in accordance with the
agreement by acquiring 26,768 shares of Series A Preferred Stock for $11.21 per
share. As of December 31, 1999, the Company had received an aggregate of
$2.7 million in revenues (net of withholding tax) under this agreement.

    Also in March 1992, the Company entered into an Agency Agreement with
Sumitomo Corp. ("Sumitomo") to assist the Company in entering into collaboration
and licensing arrangements with other companies in Japan for the development,
manufacture, distribution and sale of the Company's future products. At that
time, Sumitomo purchased 66,923 shares of the Company's Series A Preferred
Stock, $.01 par value, for $11.21 per share. In October 1995, Sumitomo assigned
the Agency Agreement and its shares to Summit Pharmaceutical International
Corporation ("Agent"). Under the terms of the amended Agency Agreement, which
expired in March 1997, the Company is required to pay the Agent certain
commissions and fees, based on a stipulated percentage of amounts received by
the Company as license fees, milestone payments or capital investments under
arrangements made pursuant to the Agency Agreement.

    The Company has a license agreement with Massachusetts General Hospital
("MGH") for the exclusive license of a number of patents and patent applications
on which the Company's research and development efforts are significantly based.
In exchange, the Company will remit royalties based on a specified percentage of
revenues. Under this agreement, the Company is required to pay for all patent
application costs related to the licensed technology. On July 10, 1995, the
Company issued and sold to the MGH 83,723 shares of the Company's Common Stock
for $1,256 as consideration for certain modifications to the license. The
Company expensed the difference between proceeds received and fair value of the
common stock at the time of issuance, approximately $68,000.

                                      F-24
<PAGE>
                                   SIGNATURES

    Pursuant to the requirements of Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, we have duly caused this report to be signed on
our behalf by the undersigned, thereto duly authorized.

<TABLE>
<S>                                                    <C>  <C>
                                                       EPIX MEDICAL, INC.

                                                       By:             /s/ MICHAEL D. WEBB
                                                            -----------------------------------------
                                                                         Michael D. Webb
                                                                     CHIEF EXECUTIVE OFFICER
</TABLE>

    We the undersigned officer and directors of EPIX Medical, Inc., hereby
severally constitute Michael D. Webb, Pamela E. Carey, and William T. Whelan,
and each of them singly, our true and lawful attorneys, with full power to them
and each of them to sign for use, in our names and in the capacity indicated
below, any and all amendments to this annual report on this Form 10-K for the
fiscal year ended December 31, 1999, and to file the same, with exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that each said attorneys-in-fact
may cause to be done by virtue hereof.

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

<TABLE>
<CAPTION>
                        NAME                                      TITLE                    DATE
                        ----                                      -----                    ----
<C>                                                    <S>                          <C>
                 /s/ MICHAEL D. WEBB                   Chief Executive Officer and
     -------------------------------------------         Director (Principal          March 17, 2000
                   Michael D. Webb                       Executive Officer)

                                                       Director of Finance and
                 /s/ PAMELA E. CAREY                     Treasurer (Principal
     -------------------------------------------         Financial and Accounting     March 17, 2000
                   Pamela E. Carey                       Officer)

           /s/ CHRISTOPHER F. O. GABRIELI
     -------------------------------------------       Chairman of the Board and      March 17, 2000
             Christopher F. O. Gabrieli                  Director

         /s/ STANLEY T. CROOKE, M.D., PH.D.
     -------------------------------------------       Director                       March 17, 2000
           Stanley T. Crooke, M.D., Ph.D.

              /s/ LUKE B. EVNIN, PH.D.
     -------------------------------------------       Director                       March 17, 2000
                Luke B. Evnin, Ph.D.

            /s/ RANDALL B. LAUFFER, PH.D.
     -------------------------------------------       Director                       March 17, 2000
              Randall B. Lauffer, Ph.D.
</TABLE>
<PAGE>
                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                            DESCRIPTION
-------                                           -----------
<S>                       <C>
 3.1                      Restated Certificate of Incorporation of the Company. Filed
                          as Exhibit 4.1 to the Company's Registration Statement on
                          Form S-8 (File No. 333-30531) and incorporated herein by
                          reference.
 3.2                      Form of Amended and Restated By-Laws of the Company. Filed
                          as Exhibit 4.2 to the Company's Registration Statement on
                          Form S-8 (File No. 333-30531) and incorporated herein by
                          reference.
 4.1                      Specimen certificate for shares of Common Stock of the
                          Company. Filed as Exhibit 4.1 to the Company's Registration
                          Statement on Form S-1 (File No. 333-17581) and incorporated
                          herein by reference.
10.1+                     Agency Agreement between the Company and Sumitomo
                          Corporation dated March 13, 1992. Filed as Exhibit 10.1 to
                          the Company's Registration Statement on Form S-1 (File
                          No. 333-17581) and incorporated herein by reference.
10.2+                     Amendment to the Agency Agreement between the Company and
                          Sumitomo Corporation dated June 26, 1992. Filed as
                          Exhibit 10.2 to the Company's Registration Statement on
                          Form S-1 (File No. 333-17581) and incorporated herein by
                          reference.
10.3                      Short Form Lease from Trustees of the Cambridge East Trust
                          to the Company dated July 1, 1992. Filed as Exhibit 10.3 to
                          the Company's Registration Statement on Form S-1 (File
                          No. 333-17581) and incorporated herein by reference.
10.4                      Form of Warrant to Purchase Shares of Series A Convertible
                          Preferred Stock dated December 21, 1992. Filed as
                          Exhibit 10.4 to the Company's Registration Statement on
                          Form S-1 (File No. 333-17581) and incorporated herein by
                          reference.
10.5                      Dominion Ventures Master Lease Agreement No. 8050 dated
                          December 21, 1992. Filed as Exhibit 10.5 to the Company's
                          Registration Statement on Form S-1 (File No. 333-17581) and
                          incorporated herein by reference.
10.6                      First Amendment to Master Lease Agreement No. 8050 dated
                          May 14, 1993. Filed as Exhibit 10.6 to the Company's
                          Registration Statement on Form S-1 (File No. 333-17581) and
                          incorporated herein by reference.
10.7                      Second Amendment to Master Lease Agreement No. 8050 dated
                          August 5, 1993. Filed as Exhibit 10.7 to the Company's
                          Registration Statement on Form S-1 (File No. 333-17581) and
                          incorporated herein by reference.
10.8                      First Amendment Lease From Trustees of the Cambridge Trust
                          to the Company dated October 20, 1993. Filed as
                          Exhibit 10.8 to the Company's Registration Statement on
                          Form S-1 (File No. 333-17581) and incorporated herein by
                          reference.
10.9                      Warrant to Purchase Shares of Series B Convertible Preferred
                          Stock dated June 6, 1994. Filed as Exhibit 10.9 to the
                          Company's Registration Statement on Form S-1 (File
                          No. 333-17581) and incorporated herein by reference.
10.10                     Second Amendment to Master Lease Agreement No. 8050 dated
                          June 6, 1994. Filed as Exhibit 10.10 to the Company's
                          Registration Statement on Form S-1 (File No. 333-17581) and
                          incorporated herein by reference.
10.11+                    Amendment Agreement to the Agency Agreement between the
                          Company and Sumitomo Corporation dated September 15, 1994.
                          Filed as Exhibit 10.11 to the Company's Registration
                          Statement on Form S-1 (File No. 333-17581) and incorporated
                          herein by reference.
10.12                     Second Amendment Lease From Trustees of the Cambridge East
                          Trust to the Company dated September 17, 1994. Filed as
                          Exhibit 10.12 to the Company's Registration Statement on
                          Form S-1 (File No. 333-17581) and incorporated herein by
                          reference.
10.13                     Convertible Promissory Note Purchase Agreement by and among
                          the Company and certain purchasers named therein dated
                          May 26, 1995. Filed as Exhibit 10.13 to the Company's
                          Registration Statement on Form S-1 (File No. 333-17581) and
                          incorporated herein by reference.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                            DESCRIPTION
-------                                           -----------
<S>                       <C>
10.14+                    Amended and Restated License Agreement between the Company
                          and The General Hospital Corporation dated July 10, 1995.
                          Filed as Exhibit 10.14 to the Company's Registration
                          Statement on Form S-1 (File No. 333-17581) and incorporated
                          herein by reference.
10.15                     Warrant to Purchase Shares of Series C Convertible Preferred
                          Stock dated August 2, 1995. Filed as Exhibit 10.15 to the
                          Company's Registration Statement on Form S-1 (File
                          No. 333-17581) and incorporated herein by reference.
10.16                     Third Amendment to the Master Lease Agreement No. 8050 dated
                          August 2, 1995. Filed as Exhibit 10.16 to the Company's
                          Registration Statement on Form S-1 (File No. 333-17581) and
                          incorporated herein by reference.
10.17                     Amendment No. 1 to Convertible Promissory Note Purchase
                          Agreement by and among the Company and certain purchasers
                          named therein dated January 19, 1996. Filed as
                          Exhibit 10.17 to the Company's Registration Statement on
                          Form S-1 (File No. 333-17581) and incorporated herein by
                          reference.
10.18+                    Extension Agreement to Agency Agreement between the Company
                          and Sumitomo Corporation dated March 5, 1996. Filed as
                          Exhibit 10.18 to the Company's Registration Statement on
                          Form S-1 (File No. 333-17581) and incorporated herein by
                          reference.
10.19+                    Development and License Agreement dated March 29, 1996 by
                          and among the Company and Daiichi Radioisotope
                          Laboratories, Ltd. Filed as Exhibit 10.19 to the Company's
                          Registration Statement on Form S-1 (File No. 333-17581) and
                          incorporated herein by reference.
10.20                     Third Amendment Lease From Trustees of the Cambridge East
                          Trust to the Company dated May 1, 1996. Filed as
                          Exhibit 10.20 to the Company's Registration Statement on
                          Form S-1 (File No. 333-17581) and incorporated herein by
                          reference.
10.21                     Series D Convertible Preferred Stock Purchase Agreement by
                          and among the Company and certain purchasers named therein
                          dated May 29, 1996. Filed as Exhibit 10.21 to the Company's
                          Registration Statement on Form S-1 (File No. 333-17581) and
                          incorporated herein by reference.
10.22                     Third Amended and Restated Stockholders' Rights Agreement by
                          and among the Company and certain of its stockholders named
                          therein dated May 29, 1996. Filed as Exhibit 10.22 to the
                          Company's Registration Statement on Form S-1 (File
                          No. 333-17581) and incorporated herein by reference.
10.23                     Form of Warrant to Purchase Shares of Series D Preferred
                          Stock dated May 29, 1996. Filed as Exhibit 10.23 to the
                          Company's Registration Statement on Form S-1 (File
                          No. 333-17581) and incorporated herein by reference.
10.24                     Amendment No. 1 to Third Amended and Restated Stockholders'
                          Rights Agreement dated May 31, 1996. Filed as Exhibit 10.24
                          to the Company's Registration Statement on Form S-1 (File
                          No. 333-17581) and incorporated herein by reference.
10.25                     Series E Convertible Preferred Stock Purchase Agreement
                          dated May 31, 1996 between the Company and Daiichi
                          Radioisotope Laboratories, Ltd. Filed as Exhibit 10.25 to
                          the Company's Registration Statement on Form S-1 (File
                          No. 333-17581) and incorporated herein by reference.
10.26+                    Strategic Collaboration Agreement between the Company and
                          Mallinckrodt Medical, Inc. and Mallinckrodt Group Inc. dated
                          August 30, 1996. Filed as Exhibit 10.26 to the Company's
                          Registration Statement on Form S-1 (File No. 333-17581) and
                          incorporated herein by reference.
10.27                     Amendment No. 2 to Third Amended and Restated Stockholders'
                          Rights Agreement dated December 6, 1996. Filed as
                          Exhibit 10.27 to the Company's Registration Statement on
                          Form S-1 (File No. 333-17581) and incorporated herein by
                          reference.
10.28#                    Amended and Restated 1992 Equity Incentive Plan. Filed as
                          Exhibit 99.1 to the Company's Registration Statement on
                          Form S-8 (File No. 333-30531) and incorporated herein by
                          reference.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                            DESCRIPTION
-------                                           -----------
<S>                       <C>
10.29#                    Form of Incentive Stock Option Certificate. Filed as
                          Exhibit 10.29 to the Company's Registration Statement on
                          Form S-1 (File No. 333-17581) and incorporated herein by
                          reference.
10.30                     Form of Nonstatutory Stock Option Certificate. Filed as
                          Exhibit 10.30 to the Company's Registration Statement on
                          Form S-1 (File No. 333-17581) and incorporated herein by
                          reference.
10.31#                    1996 Director Stock Option Plan. Filed as Exhibit 10.31 to
                          the Company's Registration Statement on Form S-1 (File
                          No. 333-17581) and incorporated herein by reference.
10.32#                    1996 Employee Stock Purchase Plan. Filed as Exhibit 10.32 to
                          the Company's Registration Statement on Form S-1 (File
                          No. 333-17581) and incorporated herein by reference.
10.33                     Form of Consulting and Confidentiality Agreement between the
                          Company and certain consultants of the Company. Filed as
                          Exhibit 10.33 to the Company's Registration Statement on
                          Form S-1 (File No. 333-17581) and incorporated herein by
                          reference.
10.34                     Form of Invention and Non-Disclosure Agreement between the
                          Company and certain employees of the Company. Filed as
                          Exhibit 10.34 to the Company's Registration Statement on
                          Form S-1 (File No. 333-17581) and incorporated herein by
                          reference.
10.35                     Form of Non-Competition and Non-Solicitation Agreement
                          between the Company and certain employees of the Company.
                          Filed as Exhibit 10.35 to the Company's Registration
                          Statement on Form S-1 (File No. 333-17581) and incorporated
                          herein by reference.
10.36                     Form of Common Stock Purchase Agreement. Filed as
                          Exhibit 10.36 to the Company's Registration Statement on
                          Form S-1 (File No. 333-17581) and incorporated herein by
                          reference.
10.37                     Form of Stock Purchase and Right of First Refusal Agreement.
                          Filed as Exhibit 10.37 to the Company's Registration
                          Statement on Form S-1 (File No. 333-17581) and incorporated
                          herein by reference.
10.38                     Collaboration Agreement effective as of June 20, 1997
                          between Dyax Corp. and the Company. Filed as Exhibit 10.1 to
                          the Company's quarterly report on Form 10-Q for the period
                          ended September 30, 1997 (File No. 000-21863) and
                          incorporated herein by reference.
10.39                     Short Form Lease from Trustees of the Cambridge Trust to the
                          Company with a commencement date of January 1, 1998. Filed
                          as Exhibit 10.39 to the Company's Registration Statement on
                          Form S-1 (File No. 333-38399) and incorporated herein by
                          reference.
10.40                     Sublease dated as of October 31, 1997 between the Company
                          and SatCon Technology Corporation. Filed as Exhibit 10.40 to
                          the Company's annual report on Form 10-K for the period
                          ended December 31, 1998 (File No. 000-21863) and
                          incorporated herein by reference.
10.41                     First Amendment to Sublease dated as of July 15, 1998
                          between the Company and SatCon Technology Corporation. Filed
                          as Exhibit 10.41 to the Company's annual report on
                          Form 10-K for the period ended December 31, 1998 (File
                          No. 000-21863) and incorporated herein by reference.
10.42++                   Amendment No. 1 dated as of September 10, 1998 to the
                          Strategic Collaboration Agreement between the Company and
                          Mallinckrodt Medical, Inc. and Mallinckrodt Group Inc. dated
                          August 30, 1996. Filed as Exhibit 10.42 to the Company's
                          annual report on Form 10-K for the period ended
                          December 31, 1998 (File No. 000-21863) and incorporated
                          herein by reference.
10.43                     Promissory Note dated December 21, 1998 between the Company
                          and Finova Technology Finance, Inc. Filed as Exhibit 10.43
                          to the Company's annual report on Form 10-K for the period
                          ended December 31, 1998 (File No. 000-21863) and
                          incorporated herein by reference.
10.44                     First Amendment dated February 8, 1999 to the Short Form
                          Lease dated as of July 7, 1998 with a commencement date as
                          of January 1, 1998 between the Company and the Trustees of
                          The Cambridge East Trust. Filed as Exhibit 10.1 to the
                          Company's quarterly report on Form 10-Q for the period ended
                          March 31, 1999 (File No. 000-21863) and incorporated herein
                          by reference.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                            DESCRIPTION
-------                                           -----------
<S>                       <C>
10.45                     Sublease extension election for an additional three years,
                          beginning January 1, 2000 and ending December 31, 2002
                          pursuant to Article 5 of the First Amendment to Sublease
                          dated as of July 15, 1998 between the Company and SatCon
                          Technology Corporation. Filed as Exhibit 10.1 to the
                          Company's quarterly report on Form 10-Q for the period ended
                          June 30, 1999 (File No. 000-21863) and incorporated herein
                          by reference.
10.46++                   Amendment No. 2 dated as of July 9, 1999 to the Strategic
                          Collaboration Agreement between the Company and Mallinckrodt
                          Medical, Inc. and Mallinckrodt Group, Inc. dated August 30,
                          1996 and amended pursuant to Amendment No. 1 as of
                          September 10, 1998. Filed herewith.
10.47                     Non-Negotiable Promissory Note dated October 8, 1999 between
                          the Company and Mallinckrodt Inc. Filed herewith.
10.48                     Security Agreement dated October 8, 1999 between the Company
                          and Mallinckrodt Inc. Filed herewith.
23.1                      Consent of Ernst & Young LLP. Filed herewith.
24.1                      Power of Attorney. Contained on signature page hereto.
27.1                      Financial Data Schedule. Filed herewith.
99.1                      Important Factors Regarding Forward-Looking Statements.
                          Filed herewith.
</TABLE>

------------------------

+   Certain confidential material contained in the document has been omitted and
    filed separately with the Securities and Exchange Commission pursuant to
    Rule 406 of the Securities Act of 1933, as amended.

#  Identifies a management contract or compensatory plan or agreement in which
    an executive officer or director of the Company participates.

++  Certain confidential material contained in the document has been omitted and
    filed separately with the Securities and Exchange Commission pursuant to
    Rule 24b-2 of the Securities Exchange Act of 1934, as amended.