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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2007ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number: 0-21863
   EPIX PHARMACEUTICALS,
    INC.
 (Exact name of registrant as
    specified in its charter)
   Delaware

04-3030815(State or other jurisdiction
    of

(I.R.S. Employerincorporation or
    organization)

Identification No.)4 Maguire Road, Lexington, Massachusetts

02421(Address of principal executive
    offices)

(Zip Code)    Registrants telephone number, including area code:
 (781) 761-7600
 Securities registered pursuant to Section 12(b) of the
    Exchange Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, $0.01 par value per share

The NASDAQ Stock Market LLC    Securities registered pursuant to Section 12(g) of the
    Exchange Act:
 NONE
   o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large accelerated
    filer o

Accelerated
    filer þ

Non-accelerated
    filer o
    (Do not check if a smaller reporting company)

Smaller reporting
    company o   Rule 12b-2 o þ
      DOCUMENTS INCORPORATED BY REFERENCE
  Form 10-K: Form 10-K




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TABLE OF
    CONTENTS
  
  PageSection



No.Part IItem 1.


Business


3Item 1A.


Risk Factors


21Item 1B.


Unresolved Staff Comments


43Item 2.


Properties


43Item 3.


Legal Proceedings


43Item 4.


Submission of Matters to a Vote of Security
    Holders


43Part IIItem 5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


44Item 6.


Selected Financial Data


45Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


45Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


59Item 8.


Financial Statements and Supplementary Data


59Item 9


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


59Item 9A


Controls and Procedures


59Item 9B


Other Information


60Part IIIItem 10


Directors, Executive Officers and Corporate
    Governance


62Item 11


Executive Compensation


62Item 12


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


62Item 13


Certain Relationships and Related Transactions,
    and Director Independence


62Item 14


Principal Accounting Fees and Services


62Part IVItem 15


Exhibits, Financial Statement Schedules


62EX-10.6 Amended and Restated Strategic Collaboration Agreement dated as of June 9, 2000EX-10.7 Strategic Collaboration Agreement dated as of June 9, 2000EX-10.8 Amendment No. 1 dated as of December 22, 2000 to the Strategic Collaboration AgreementEX-12.1 Ratio of Earnings to Fixed ChargesEX-23.1 Consent of Independent Registered Public Accounting FirmEX-31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Michael G. KauffmanEX-31.2 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Kim Cobleigh DrapkinEX-32 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350    Form 10-K
 2




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PART I  This Annual Report on
    Form 10-K
    contains forward-looking statements within the meaning of
    Section 27A of the Securities Act of 1933, as amended, and
    Section 21E of the Securities Exchange Act of 1934, as
    amended, and are subject to the safe harbor created
    by those sections. These statements relate to, among other
    things, our expectations concerning our research and development
    efforts, regulatory compliance, commercial strategy, strategic
    alliances and collaborative efforts, sales and reimbursement
    efforts and their likely future success. Any statements about
    our expectations, beliefs, plans, objectives, assumptions or
    future events or performance are not historical facts and may be
    forward-looking. Some of the forward-looking statements can be
    identified by the use of forward-looking terms such as
    believes, expects, may,
    will, should, seek,
    intends, plans, estimates,
    anticipates, or other comparable terms. Accordingly,
    these statements involve estimates, assumptions and
    uncertainties that could cause actual results to differ
    materially from those expressed in them. Our actual results may
    differ significantly from the results discussed in the
    forward-looking statements. Factors that might cause such a
    difference include, but are not limited to, those set forth in
    Item 1A. Risk Factors and elsewhere in this
    Annual Report on
    Form 10-K.
    We have no plans to update our forward-looking statements to
    reflect events or circumstances after the date of this report.
    We caution readers not to place undue reliance upon any such
    forward-looking statements, which speak only as of the date
    made.
  ITEM 1.
    BUSINESS  OVERVIEW
      Form 10-K,
 3




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OUR
    PRODUCT CANDIDATES
    
  *
    Vasovist is approved for marketing in more than 30 countries
    outside of the United States. For a description of the
    collaboration agreement with Bayer Schering Pharma AG, Germany,
    see Business  Strategic Alliances and
    Collaborations below.  THERAPEUTICS
    PRX-00023
    for Depression
       4




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PRX-03140
    for Alzheimers disease
          case-by-case
   5




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PRX-08066
    for Pulmonary Hypertension
        PRX-07034
    for Cognitive Impairment associated with Schizophrenia and
    Alzheimers disease
  back-up
   6




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21-person 28-day
    IMAGING
    AGENT
  Vasovist
    three-dimensional
 7




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OUR
    THERAPEUTIC DRUG DISCOVERY TECHNOLOGY AND APPROACH
    100-200
  
    PREDICT-3D in silico modeling.  We have
    developed novel proprietary algorithms which we use in our
    PREDICT technology to model the 3D structure of targets of
    interest (GPCRs and ion channel proteins) from their primary
    amino acid sequence. PREDICT uses algorithms that explore a
    large number of possible structures of the target and then
    selects the biologically relevant one. It takes into account
    specific interactions between the target protein and the
    membrane, specific interactions within the target protein
    itself, and addresses the limitations that hamper homology-based
    modeling of GPCRs and ion channel proteins. The PREDICT software
    code and many of its algorithms are kept as trade secrets,
    making it difficult to copy or reverse engineer. We filed patent
    applications for PREDICT version 1.0 in 2000. The current
    version of PREDICT has evolved considerably from the original
    version and includes numerous new algorithms and capabilities.
    PREDICT bypasses the need for X-ray crystallography structures
    of the GPCR or ion channel protein target to initiate a
    structure-based (so-called rational) drug discovery
    program. 8




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
    Virtual libraries.  Our libraries consist of in
    silico versions of four million drug-like compounds which are
    available for purchase from commercial vendors worldwide. These
    virtual libraries reduce the need for us to synthesize or
    purchase, store and maintain tens or hundreds of thousands of
    actual compounds for the initial screening.
    Rapid in silico screening.  The process of in
    silico screening requires the computer to perform trillions of
    operations in trying to fit numerous drug-like compounds into
    the binding site of the target protein, matching both shape and
    chemical properties. We perform high-throughput in silico
    screening with a combination of proprietary and commercially
    available public software to identify compounds that may bind to
    a target GPCR or ion channel protein.
    Ranking of screening results.  We have
    developed proprietary algorithms for ranking our in silico
    screening results using internally developed tools, which we
    believe enables us to select the 100-200 most promising
    compounds for in vitro testing.
    Integrated structure-based lead
    optimization.  The most promising novel lead
    compounds, identified in silico and shown to have binding
    affinity and functionality in vitro, are optimized into
    drug candidates using an integrated structure-based approach.
    This process makes use of the PREDICT 3D structures (of the drug
    target and related off-target proteins) as well as many other in
    silico tools that we have created or acquired to enable
    efficient structure-based lead optimization, leading to highly
    selective drug candidates. These tools allow us to overcome
    challenges frequently encountered during lead optimization, such
    as selectivity, blood-brain barrier penetration and hERG ion
    channel binding, in a fraction of the time and cost compared to
    traditional lead optimization efforts. Using these in silico
    tools, our computational and medicinal chemists are able to
    select for actual synthesis the most promising subset of
    suggested compounds for further optimization. In each of our
    clinical-stage programs, this approach has allowed us to
    synthesize fewer than 10% of the compounds that we believe would
    have been synthesized if we were to follow the traditional
    methods of lead optimization.  STRATEGIC
    ALLIANCES AND COLLABORATIONS
  GlaxoSmithKline
     9




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product-by-product country-by-country
  product-by-product country-by-country
        Amgen
      
    Amgen is required to obtain third-party rights to develop and
    commercialize a product that incorporates an EPIX
    compound; and 10




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
    Amgen develops and commercializes products that are not covered
    by the intellectual property rights we licensed to Amgen, such
    as for example, S1P1-modulating products that may be acquired by
    Amgen from a third-party.  product-by-product country-by-country
      Bayer
    Schering Pharma AG, Germany
   11




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region-by-region
      Cystic
    Fibrosis Foundation Therapeutics, Incorporated
    
    The first program is focused on correcting a malfunction of the
    CFTR ion channel protein. We are using our proprietary
    structure-based technologies to model the structure of this ion
    channel protein target and identify binding sites in the channel
    for therapeutic intervention. Once these sites are identified,
    we aim to use our drug discovery capabilities to discover a drug
    that restores proper functionality to the channel in patients
    with cystic fibrosis. Based upon the results of the program, we
    have agreed with the CFFT to negotiate towards a follow-on
    agreement under which we will explore a structure-based approach
    for the discovery and commercialization of a drug that will
    target CFTR, with the financial support of CFFT and subject to a
    royalty payable to CFFT.
    The second program is focused on the discovery of a
    small-molecule agonist to the G-Protein Coupled Receptor known
    as P2Y(2), which plays a role in cystic fibrosis, using our
    proprietary structure-based drug design system. We retain the
    right to develop and commercialize any drug candidates
    discovered through this second program, and are obligated to
    make aggregate royalty payments of up to 12




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$15.0 million to CFFT for the first drug candidate that
    reaches particular regulatory and sales milestones.    TECHNOLOGY
    AGREEMENTS
  Covidien
    (formerly Tyco International Ltd.)
    Bracco
    COMPETITION
       13




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
    PRX-00023.  If approved, PRX-00023, the drug
    candidate we are developing for the treatment of depression, may
    compete with approved products from such pharmaceutical
    companies as Forest Laboratories, Inc., GlaxoSmithKline plc, Eli
    Lilly & Co., Pfizer Inc. and Wyeth, and may compete
    with drug candidates in clinical development from other
    companies, including Sanofi-Aventis.
    PRX-03140.  If approved, PRX-03140, the drug
    candidate we are developing for the treatment of
    Alzheimers disease, may compete with approved products
    from such pharmaceutical companies as Forest Laboratories, Inc.,
    Johnson & Johnson, Novartis AG and Pfizer, Inc., and
    may compete with drug candidates in clinical development from
    other companies, including Myriad Genetics, Inc.,
    GlaxoSmithKline plc and Neurochem Inc. We are studying
    PRX-03140 both as monotherapy and in combination with approved
    products, such as Aricept which is marketed by Pfizer Inc.
    PRX-08066.  If approved, PRX-08066, the drug
    candidate we are developing for the treatment of pulmonary
    arterial hypertension (PAH), may compete with approved products
    from such pharmaceutical companies as Actelion Pharmaceuticals
    Ltd., GlaxoSmithKline plc, Pfizer Inc., Gilead Sciences Inc.,
    and United Therapeutics Corporation, and may compete with drug
    candidates in clinical development by other companies, such as
    Encysive Pharmaceuticals Inc. and Bayer Schering Pharma AG.
    PRX-07034.  If approved for the treatment of
    cognitive impairment (associated with schizophrenia or
    Alzheimers disease), PRX-07034 may compete with approved
    products from such pharmaceutical companies as Forest
    Laboratories, Johnson & Johnson, Novartis AG and
    Pfizer, Inc., and may compete with several therapeutic product
    candidates in clinical development from other companies,
    including GlaxoSmithKline plc, AstraZeneca and Memory
    Pharmaceuticals Corp. If approved for the treatment of obesity,
    PRX-07034 may compete with approved products from such
    pharmaceutical companies as Abbott Laboratories and Roche
    Holding Ltd., and may compete with several therapeutic product
    candidates in clinical development by other companies, such as
    Sanofi-Aventis and Arena Pharmaceuticals, Inc.
    Vasovist.  There are a number of general use
    MRI agents approved for marketing in the United States and in
    certain foreign markets that, if used or developed for MR
    angiography, are likely to compete with Vasovist. Such products
    include Magnevist and Gadovist by Bayer Schering Pharma AG,
    Germany, Dotarem by Guerbet, S.A., Omniscan by GE Healthcare,
    ProHance and MultiHance by Bracco and OptiMARK by Covidien Ltd.
    We are aware of certain agents under clinical development that
    have been or are being evaluated for use in MRA: Bayer Schering
    Pharma AG, Germanys Gadomer and SHU555C, Guerbet,
    S.A.s Vistarem, Braccos B-22956/1, Ferropharm
    GmbHs Code VSOP-C184, and Advanced Magnetics, Inc.s
    Ferumoxytol. In addition to competition within the MRI field, we
    also face competition from other imaging technologies, including
    CT scans, ultrasounds, and X-ray scans.  INTELLECTUAL
    PROPERTY
     14




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Ramot
      country-by-country
     15




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Massachusetts
    General Hospital
  country-by-country
  Prince
    MARKETING,
    SALES AND DISTRIBUTION
   16




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MANUFACTURING
        GOVERNMENT
    REGULATION AND PRODUCT APPROVAL
      
    preclinical laboratory and animal studies;
    submission of an investigational new drug application, or IND,
    which must become effective before human clinical trials may
    begin; 17




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
    adequate and well-controlled human clinical trials to establish
    the safety and efficacy of the proposed drug for its intended
    use; and
    FDA approval of a new drug application, or NDA.      30-day
    
    Phase 1:  The drug is initially introduced into
    healthy human subjects or patients with the disease and tested
    for safety, dosage tolerance, absorption, metabolism,
    distribution and excretion.
    Phase 2:  Involves studies in a limited patient
    population to identify possible adverse effects and safety
    risks, to preliminarily evaluate the efficacy of the product for
    specific targeted diseases and to determine dosage tolerance and
    optimal dosage.
    Phase 3:  Clinical trials are undertaken to
    further evaluate dosage, clinical efficacy and safety in an
    expanded patient population at geographically dispersed clinical
    study sites. These studies are intended to establish the overall
    risk-benefit ratio of the product and provide, if appropriate,
    an adequate basis for product labeling.         18




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agreed-upon agreed-upon
    and/or
     19




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REIMBURSEMENT
     20




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EMPLOYEES
    RESEARCH
    AND DEVELOPMENT
    AVAILABLE
    INFORMATION
  (781) 761-7600. http://www.epixpharma.com Form 10-K, Form 10-Q Form 8-K Form 10-K.
  ITEM 1A.
    RISK
    FACTORS  We operate in a rapidly changing environment that involves a
    number of risks, some of which are beyond our control. This
    discussion highlights some of the risks which may affect future
    operating results. These are the risks and uncertainties we
    believe are most important for you to consider. Additional risks
    and uncertainties not presently known to us, which we currently
    deem immaterial or which are similar to those
 21




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faced by other companies in our industry or business in
    general, may also impair our business operations. If any of the
    following risks or uncertainties actually occurs, our business,
    financial condition and operating results would likely
    suffer.
  RISKS
    RELATED TO OUR BUSINESS
  We
    anticipate future losses and may never become
    profitable.
      We may
    need to raise additional funds necessary to fund our operations,
    and if we do not do so, we may not be able to implement our
    business plan.
    
    the progress and scope of clinical trials;
    the timing and costs of filing future regulatory submissions;
    the timing and costs required to receive both U.S. and
    foreign governmental approvals;
    the cost of filing, prosecuting, defending and enforcing patent
    claims and other intellectual property rights;
    the extent to which our product candidates gain market
    acceptance;
    the timing and costs of product introductions;
    the extent of our ongoing and any new research and development
    programs;
    changes in our strategy or our planned activities;
    the costs of training physicians to become proficient with the
    use of our product candidates; and
    the costs of developing marketing and distribution capabilities.   22




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We
    significantly increased our leverage as a result of the sale of
    3.0% Convertible Senior Notes due 2024, and may be unable
    to repay, repurchase or redeem these notes if, and when,
    required.
    
    make it difficult for us to make payments on the notes;
    make it difficult for us to obtain financing for working
    capital, acquisitions or other purposes on favorable terms, if
    at all;
    make us more vulnerable to industry downturns and competitive
    pressures; and
    limit our flexibility in planning for, or reacting to changes
    in, our business.    A
    substantial portion of our future revenues will be dependent
    upon our agreements with GlaxoSmithKline, Amgen Inc. and Bayer
    Schering Pharma AG, Germany.
   23




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We
    have never had a commercially available product in the United
    States and we may never succeed in developing marketable
    products.
     24




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We
    have never generated positive cash flow, and if we fail to
    generate revenue, it will have a material adverse effect on our
    business.
      
    successfully complete our product development efforts;
    obtain required regulatory approvals in a timely manner, if at
    all;
    manufacture our product candidates at an acceptable cost and
    with acceptable quality; or
    successfully market any approved products.    We
    depend on our strategic collaborators for support in product
    development and the regulatory approval process for our product
    candidates and, if approved, for product
    marketing.
     25




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EP-2104R.
  We
    rely on third-parties to conduct our clinical trials, and those
    third-parties may not perform satisfactorily, including failing
    to maintain adequate diligence in the conduct of our trials and
    failing to meet established deadlines for the completion of such
    trials.
    If
    clinical trials for our product candidates are prolonged or
    delayed, we may be unable to commercialize our product
    candidates on a timely basis, which would require us to incur
    additional costs and delay our receipt of any revenue from
    potential product sales.
    
    conditions imposed on us by the FDA or any foreign regulatory
    authority regarding the scope or design of our clinical trials;
    delays in obtaining, or our inability to obtain, required
    approvals from institutional review boards or other reviewing
    entities at clinical sites selected for participation in our
    clinical trials;
    delay in developing a clinical dosage form, insufficient supply
    or deficient quality of our product candidates or other
    materials necessary to conduct our clinical trials; 26




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
    negative or inconclusive results from clinical trials, or
    results that are inconsistent with earlier results, that
    necessitate additional clinical study;
    serious
    and/or
    unexpected product-related side effects experienced by subjects
    in clinical trials; or
    failure of our third-party contractors or our investigators to
    comply with regulatory requirements or otherwise meet their
    contractual obligations to us in a timely manner.  15-month
    If we
    are unsuccessful in our appeal process for Vasovist with the
    FDA, we may never obtain approval to market and sell Vasovist in
    the United States and our revenues will be materially
    harmed.
   27




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
    obtaining positive results of such a re-read of images by a new
    group of radiologists; and
    the FDAs review process and conclusions regarding any
    additional Vasovist regulatory submissions.    If we
    are unable to obtain required regulatory approval of our
    therapeutic product candidates, we will be unable to market and
    sell our therapeutic product candidates and our business will be
    materially harmed.
    
    our failure to demonstrate to the satisfaction of the FDA or
    comparable foreign regulatory authorities that a product
    candidate is safe and effective for a particular indication;
    our inability to demonstrate that a product candidates
    benefits outweigh its risks;
    our inability to demonstrate that the product candidate presents
    a significant advantage over existing therapies;
    the FDAs or comparable foreign regulatory
    authorities disagreement with the manner in which we and
    our collaborators interpret the data from preclinical studies or
    clinical trials;
    the FDAs or comparable foreign regulatory
    authorities failure to approve our manufacturing processes
    or facilities or the processes or facilities of our
    collaborators; or
    a change in the approval policies or regulations of the FDA or
    comparable foreign regulatory authorities.   28




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Our
    clinical trials may not yield results that will enable us to
    obtain regulatory approval for our product
    candidates.
  PRX-00023
  
    the product candidate may not prove to be safe and efficacious;
    the dosage form of the product candidate may not deliver
    reproducible amounts of product to patients;
    patients may die or suffer other adverse effects for reasons
    that may or may not be related to the product candidate being
    tested;
    the results of later-stage clinical trials may not confirm the
    positive results of earlier trials;
    the results may not meet the level of statistical significance
    required by the FDA or other regulatory agencies for
    approval; and
    the FDA or other regulatory agencies may require additional or
    expanded trials.    Gadolinium-based
    imaging agents, such as Vasovist, may cause adverse side effects
    which could limit our ability to receive approval for these
    product candidates and our ability to effectively market these
    product candidates, if approved.
   29




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If we
    encounter difficulties enrolling subjects in our clinical trials
    for our product candidates, or subjects drop out of trials in
    progress for our product candidates, our trials could be delayed
    or otherwise adversely affected.
    
    the limited size of the patient population and the availability
    of commercial products for certain target indications, including
    pulmonary arterial hypertension and pulmonary hypertension
    associated with chronic obstructive pulmonary disease;
    the nature and design of the trial protocol;
    the proximity of patients to clinical sites;
    the availability of other effective treatments for the relevant
    disease (whether approved or experimental);
    the eligibility criteria for enrollment in our clinical trials;
    perceived risks and benefits of the product candidate under
    study; and
    competing studies or trials.   30




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Our
    therapeutic product candidates are currently
    unformulated.
  PRX-07034,
  
    the current dosage may not provide reproducible amounts of
    product;
    the pharmaceutical development of a commercially viable
    formulation may add significant cost and time to our clinical
    development programs for therapeutics;
    additional trials may be required if the new formulation is not
    bioequivalent to formulations already used in clinical trials;
    future clinical trials may be delayed in order to identify,
    develop, optimize, manufacture and certify a commercially viable
    formulation; and
    regulatory filings,
    and/or
    commercial launch may be delayed due to the lack of a commercial
    process for cGMP manufacturing of the new formulation.    Our
    prior stock option practices may result in significant
    liability.
  Form 10-K, and/or
 31




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Failure
    to comply with foreign regulatory requirements governing human
    clinical trials and marketing approval for our product
    candidates could prevent us from selling our product candidates
    in foreign markets, which may adversely affect our operating
    results and financial condition.
    Our
    product candidates will remain subject to ongoing regulatory
    requirements even if they receive marketing approval, and if we
    fail to comply with requirements, we could lose these approvals
    and the sale of any approved commercial products could be
    temporarily or permanently suspended.
    
    restrictions on the products, manufacturers or manufacturing
    processes;
    warning letters;
    civil or criminal penalties;
    fines;
    injunctions;
    product seizures or detentions;
    import bans;
    product recalls and related publicity requirements; 32




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
    unanticipated expenditures;
    total or partial suspension of production; and
    refusal to approve pending applications for marketing approval
    of new products or supplements to approved applications.    We are
    focusing our therapeutic product discovery and development
    efforts on G-Protein Coupled Receptor and ion channel-targeted
    product candidates, which have historically had a high incidence
    of adverse side effects.
    The
    application of our in silico therapeutic product discovery
    technology and approach may be limited to a subset of
    therapeutically useful proteins, which may reduce the
    opportunities to develop and commercialize product candidates
    against other important therapeutic targets.
      Our
    competitors may develop products that are less expensive, safer
    or more effective, which may diminish or eliminate the
    commercial success of any future products that we may
    commercialize.
    
    PRX-00023.  If approved, PRX-00023, the product
    candidate we are developing for the treatment of depression, may
    compete with approved products from such pharmaceutical
    companies as Forest 33




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Laboratories, Inc., GlaxoSmithKline plc, Eli Lilly &
    Co., Pfizer Inc. and Wyeth, and may compete with several
    therapeutic product candidates in clinical development from
    other companies, including
    Sanofi-Aventis.
    We believe that there are over 60 therapeutic product candidates
    in clinical trials or that have been submitted for approval for
    the treatment of depression.  
    PRX-03140.  If approved, PRX-03140, the drug
    candidate we are developing for the treatment of
    Alzheimers disease, may compete with approved products
    from such pharmaceutical companies as Forest Laboratories, Inc.,
    Johnson & Johnson, Novartis AG and Pfizer, Inc., and
    may compete with drug candidates in clinical development from
    other companies, including Myriad Genetics, Inc.,
    GlaxoSmithKline plc and Neurochem Inc. We are studying
    PRX-03140 both as monotherapy and in combination with approved
    products, such as Aricept which is marketed by Pfizer Inc. We
    believe that there are over 70 therapeutic product candidates in
    clinical trials for the treatment of Alzheimers disease.
    PRX-08066.  If approved, PRX-08066, the drug
    candidate we are developing for the treatment of pulmonary
    arterial hypertension (PAH), may compete with approved products
    from such pharmaceutical companies as Actelion Pharmaceuticals
    Ltd., GlaxoSmithKline plc, Pfizer Inc., Gilead Sciences Inc.,
    and United Therapeutics Corporation, and may compete with drug
    candidates in clinical development by other companies, such as
    Encysive Pharmaceuticals Inc. and Bayer Schering Pharma AG. We
    believe that there are approximately ten therapeutic product
    candidates in clinical trials or that have been submitted for
    approval for the treatment of pulmonary arterial hypertension
    and/or
    pulmonary hypertension associated with chronic obstructive
    pulmonary disease.
    PRX-07034.  If approved for the treatment of
    cognitive impairment (associated with schizophrenia or
    Alzheimers disease), PRX-07034 may compete with approved
    products from such pharmaceutical companies as Forest
    Laboratories, Johnson & Johnson, Novartis AG and
    Pfizer, Inc., and may compete with several therapeutic product
    candidates in clinical development from other companies,
    including GlaxoSmithKline plc, AstraZeneca and Memory
    Pharmaceuticals Corp. We believe that there are over 60
    therapeutic product candidates in clinical trials for the
    treatment of cognitive impairment in association with
    schizophrenia. If approved for the treatment of obesity,
    PRX-07034 may compete with approved products from such
    pharmaceutical companies as Abbott Laboratories and Roche
    Holding Ltd., and may compete with several therapeutic product
    candidates in clinical development by other companies, such as
    Sanofi-Aventis and Arena Pharmaceuticals, Inc. We believe that
    there are over 40 therapeutic product candidates in
    clinical trials for the treatment of obesity.     34




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##### Table of Contents



If the
    market does not accept our technology and product candidates, we
    may not generate sufficient revenues to achieve or maintain
    profitability.
    
    safety;
    cost-effectiveness relative to alternative therapies, methods or
    products;
    availability of third-party reimbursement;
    ease of administration;
    clinical efficacy; and
    availability of competitive products.      We may
    not be able to keep up with the rapid technological change in
    the biotechnology and pharmaceutical industries, which could
    make any of our future approved therapeutic products obsolete
    and reduce our revenue.
   35




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##### Table of Contents



We are
    currently focusing our imaging development efforts primarily on
    Vasovist and will have limited prospects for successful imaging
    operations if it does not prove successful.
    Our
    product candidates require significant biological testing,
    preclinical testing, manufacturing and pharmaceutical
    development expertise and investment. We rely primarily on
    external partners to complete these activities.
  and/or
  If we
    are unable to attract and retain key management and other
    personnel, it would hurt our ability to compete.
   36




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##### Table of Contents



Our
    research and development efforts may not result in product
    candidates appropriate for testing in human clinical
    trials.
    If we
    fail to get adequate levels of reimbursement from third-party
    payors for our product candidates after they are approved in the
    United States and abroad, we may have difficulty commercializing
    our product candidates.
     37




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##### Table of Contents



We
    deal with hazardous materials and must comply with environmental
    laws and regulations, which can be expensive and restrict how we
    do business.
      Product
    liability claims could increase our costs and adversely affect
    our results of operations.
   38




---



##### Table of Contents



Political
    and military instability and other factors may adversely affect
    our operations in Israel.
    RISKS
    RELATED TO OUR INTELLECTUAL PROPERTY
  We
    depend on patents and other proprietary rights, and if they fail
    to protect our business, we may not be able to compete
    effectively.
    We
    depend on exclusively licensed technology from Ramot at Tel Aviv
    University Ltd. and Massachusetts General Hospital and, if we
    lose either of these licenses, it is unlikely we could obtain
    such technology elsewhere, which would have a material adverse
    effect on our business.
   39




---



##### Table of Contents



country-by-country
  We may
    need to initiate lawsuits to protect or enforce our patents and
    other intellectual property rights, which could result in our
    incurrence of substantial costs and which could result in the
    forfeiture of these rights.
    Other
    rights and measures that we rely upon to protect our
    intellectual property may not be adequate to protect our
    products and services and could reduce our ability to compete in
    the market.
  and/or
  
    the agreements may be breached;
    we may have inadequate remedies for any breach;
    proprietary information could be disclosed to our
    competitors; or
    others may independently develop substantially equivalent
    proprietary information and techniques or otherwise gain access
    to our trade secrets or disclose such technologies.   40




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##### Table of Contents



Our
    success will depend partly on our ability to operate without
    infringing the intellectual property rights of others, and if we
    are unable to do so, we may not be able to sell our
    products.
    If MRI
    manufacturers are not able to enhance their hardware and
    software sufficiently, we will not be able to complete
    development of our contrast agent for the evaluation of cardiac
    indications.
    RISKS
    RELATED TO OUR SECURITIES
  Our
    stock price is volatile, which could subject us to securities
    class action litigation.
    
    actual or anticipated fluctuations in our operating results;
    announcements of technological innovation or new commercial
    products by us or our competitors; 41




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##### Table of Contents




    new collaborations entered into by us or our competitors;
    developments with respect to proprietary rights, including
    patent and litigation matters;
    results of preclinical studies and clinical trials;
    the timing of our achievement of regulatory milestones;
    conditions and trends in the pharmaceutical and other technology
    industries;
    adoption of new accounting standards affecting such industries;
    changes in financial estimates by securities analysts;
    perceptions of the value of corporate transactions; and
    degree of trading liquidity in our common stock and general
    market conditions.      Future
    sales of common stock by our existing stockholders and former
    security holders of Predix may cause the stock price of our
    common stock to fall.
    Certain
    anti-takeover clauses in our charter and by-laws and in Delaware
    law may make an acquisition of us more difficult.
   42




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##### Table of Contents



ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 2.
    PROPERTIES    ITEM 3.
    LEGAL
    PROCEEDINGS      ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   43




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##### Table of Contents



PART II  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES      High


Low2006First Quarter

$
7.76


$
5.00Second Quarter


7.25



4.05Third Quarter


8.35



4.05Fourth Quarter


8.75



3.502007First Quarter


7.20



6.08Second Quarter


7.28



5.08Third Quarter


5.90



3.67Fourth Quarter


5.40



2.89   mark-up,
      EQUITY
    COMPENSATION PLAN INFORMATION
    (A)


(B)


(C)Number of SecuritiesRemaining Available forNumber of Securities





Future Issuance Underto be Issued Upon


Weighted-Average


Equity CompensationExercise of


Exercise Price of


Plans (ExcludingOutstanding Options,


Outstanding Options,


Securities Reflected inPlan Category

Warrants and Rights


Warrants and Rights


Column (A))Equity compensation plans approved by security holders


2,517,105


$
9.36



666,084Equity compensation plans not approved by security holders(1)


1,330,281


$
2.09



922,113Total


3,847,386


$
6.85



1,588,197  44




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##### Table of Contents



(1)
    
    Represents the Predix Pharmaceuticals Holdings, Inc. Amended and
    Restated 2003 Stock Incentive Plan assumed in our 2006 merger
    with Predix.  ITEM 6.
    SELECTED
    FINANCIAL DATA    Year Ended December 31,2007


2006(1)


2005


2004


2003Statement of Operations Data:Revenues

$
14,960


$
6,041


$
7,190


$
12,259


$
13,525Operating loss


(63,564
)


(157,668
)


(21,760
)


(22,351
)


(26,008
)Net loss


(62,789
)


(157,393
)


(21,269
)


(22,621
)


(25,720
)Weighted average common shares outstanding:Basic and diluted


33,936



20,789



15,505



15,259



12,704Net loss per share, basic and diluted

$
(1.85
)

$
(7.57
)

$
(1.37
)

$
(1.48
)

$
(2.02
)   December 31,2007


2006


2005


2004


2003Balance Sheet Data:Cash, cash equivalents and marketable securities

$
61,077


$
109,543


$
124,728


$
164,440


$
79,958Total assets


78,075



125,027



130,716



171,287



81,875Convertible debt


100,000



100,000



100,000



100,000



Total long-term liabilities


120,846



120,066



100,756



101,210



4,331     (1)
    
    The company merged with Predix on August 16, 2006. 2006
    includes a charge of $123.5 million for acquired in-process
    research and development related to the merger.    ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  Form 10-K.
  Overview
   45




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Critical
    Accounting Policies And Estimates
      Revenue
    Recognition
  Revenue Recognition,
    
    ratably over the development period; or
    based upon the level of research services performed during the
    period of the research contract. 46




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##### Table of Contents



Product
    development revenue
      
    We calculate our development costs directly related to Vasovist.
    We obtain cost reports from Bayer Schering Pharma AG, Germany
    for costs incurred by Bayer Schering Pharma AG, Germany related
    to the development of Vasovist during the same period.
    We multiply our and Bayer Schering Pharma AG, Germanys
    development costs by approximately 50% based on the contractual
    allocation of work contemplated under the agreement.
    We then record the net difference as development revenue if the
    balance results in a payment to us and negative revenue if the
    balance results in a payment to Bayer Schering Pharma AG,
    Germany.      Royalty
    revenue
   47




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##### Table of Contents



License
    fee revenue
  Revenue Recognition.
  Research
    and Development
  Accounting for Research and Development Cost,
      Employee
    Stock Compensation
  Share-Based Payment  An Amendment of FASB
    Statements No. 123 and 95,
   48




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##### Table of Contents



Results
    of Operations
  Research
    and Development Overview
    
    salaries, benefits and related expenses for personnel engaged in
    research and development activities;
    fees paid to contract research organizations to manage and
    monitor clinical trials;
    fees paid to research organizations in conjunction with
    preclinical studies;
    fees paid to access chemical and intellectual property databases;
    costs of materials used in research and development and clinical
    studies;
    academic testing and consulting, license and sponsored research
    fees paid to third-parties; and
    costs of facilities and equipment, including depreciation, used
    in research and development activities.          DrugCandidate

Disease Indication

Clinical Trial StatusPRX-08066(1)

PH/COPD


Phase 2aPRX-00023(2)

Depression


Phase 2bPRX-03140(3)

Alzheimers disease


Phase 2aPRX-07034(4)

Cognitive impairment


Phase 1b  49




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##### Table of Contents



(1)
    
    We completed a Phase 2 trial of PRX-08066 in pulmonary
    hypertension associated with chronic obstructive pulmonary
    disease, or COPD, in August 2007. This randomized, double-blind,
    placebo-controlled Phase 2 trial enrolled 71 patients with
    PH associated with COPD. Patients were randomized to one of
    three arms; 200 mg of PRX-08066 once-daily; 400 mg of
    PRX-08066 once-daily; or placebo. The two-week double-blind
    phase of the study was followed by an open label extension in
    which 10 patients received 200 mg daily for six weeks.
    The primary endpoints of the trial were safety and tolerability
    of PRX-08066. Efficacy was measured by the effect of PRX-08066
    compared to placebo on systolic pulmonary artery pressure, or
    SPAP, and included 62 evaluable patients who completed the
    double-blind portion of the study. In a population where
    decreases of 3 mmHg to 4 mmHg in a post-exercise SPAP are
    considered clinically significant, the results showed a
    statistically significant dose-response for the patients that
    demonstrated a decrease of 4 mmHg or more. In the 400 mg
    dose group, 45% of the patients had a reduction in post-exercise
    SPAP of 4 mmHg or more versus 14% on placebo (p=0.043). An
    analysis of SPAP changes in all subjects revealed a dose trend
    with median reductions of 1.2 mmHg and 3.38 mmHg in the
    200 mg and 400 mg dose groups, respectively, compared
    with no change on placebo. PRX-08066 was generally
    well-tolerated. There were no serious adverse events considered
    related to PRX-08066, and the majority of adverse events were
    mild or moderate in nature. One subject in the 200 mg dose
    group who then continued into the six-week open-label extension
    experienced a modest increase in liver enzyme levels at the end
    of the extension that was believed to be drug-related. These
    values returned to normal within two weeks and the subject
    remained asymptomatic.(2)
    
    We have discontinued clinical development of PRX-00023 at a dose
    of 80 mg once daily in generalized anxiety disorder and are
    currently focusing our development efforts for this drug
    candidate on depression. In March 2007, we initiated a Phase 2b
    clinical trial to evaluate the efficacy of PRX-00023 in patients
    with a primary diagnosis of Major Depressive Disorder
    (MDD) who also have concurrent anxiety. The randomized,
    double-blind, placebo-controlled trial completed enrollment in
    October 2007, enrolling 362 adult patients with MDD, and is
    designed to evaluate the effect of treatment with up to
    120 mg of PRX-00023 twice-daily for eight weeks as
    determined by change from baseline in the Montgomery Asberg
    Depression Rating Scale (MADRS) compared with placebo. All
    patients randomized to the drug treatment began with 40 mg
    PRX-00023 twice daily, and would increase the dose, if
    tolerated, to a maximum of 120 mg twice daily within the
    first week. Changes in the Hamilton Anxiety Score (HAM-A),
    Clinical Global Impressions Improvement Scale (CGI-I) and
    Clinical Global Severity of Illness Scale (CGI-S) were also
    measured. Results of the study are expected to be reported in
    March 2008.(3)
    
    We completed a Phase 2 trial of PRX-03140 alone and in
    combination with an approved drug for Alzheimers disease
    (the cholinesterase inhibitor Aricept (donepezil)) in patients
    with Alzheimers disease in the fourth quarter of 2007.
    This randomized, double-blind, placebo-controlled, multiple
    ascending dose trial enrolled 80 patients with mild
    Alzheimers disease. Patients were studied on PRX-03140
    across three dose groups of 10 patients each: 50 mg
    once-daily, 150 mg once-daily and placebo, or in a
    placebo-controlled combination across five dose arms of
    10 patients each: PRX-03140 at 5, 25, 50, 100 and
    200 mg with Aricept 10 mg once-daily. The two primary
    endpoints of the trial were: (1) to assess the safety and
    tolerability of PRX-03140 in patients with Alzheimers
    disease when dosed orally once-daily for 14 days alone and
    in combination with donepezil, and (2) to assess the effect
    of PRX-03140 on brain wave activity, as was performed in the
    Phase 1b clinical trial. Secondary endpoints of the trial
    included evaluating the pharmacokinetic effect of PRX-03140 on
    Aricept concentrations in patients with mild Alzheimers
    disease and assessing the effects of repeat doses of PRX-03140
    on a battery of standardized cognitive function tests, such as
    the Alzheimers Disease Assessment Scale cognitive subscale
    (ADAS-cog).Efficacy results show that patients receiving 150 mg of
    PRX-03140 orally once daily as monotherapy achieved a mean 3.6
    point improvement on the ADAS-cog versus a 0.9 point worsening
    in patients on placebo. This result corresponds to a p-value of
    0.021, which is statistically significant. Data for the patients
    on a 50 mg dose of PRX-03140 showed a 1.0 point improvement
    on the ADAS-cog. The monotherapy dose response (150 mg
    versus 50 mg versus placebo) was also statistically
    significant (p=0.026). ADAS-cog changes in the combination arms
    of the trial were not statistically significant. 50




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##### Table of Contents



PRX-03140 appeared to be well tolerated in this trial, both
    alone and in combination with Aricept. No serious drug-related
    adverse events occurred during the trial.(4)
    
    In April 2007, we completed a Phase 1 multiple ascending dose
    clinical trial studying the safety, tolerability,
    pharmacokinetics, and pharmacodynamics of PRX-07034 administered
    once-daily for 28 days in a population of 33 otherwise
    healthy obese adults with body mass indices, or BMI, between 30
    and 42 kg/m2. Normal BMI is less than 25 kg/m2. PRX-07034
    demonstrated predictable pharmacokinetics with dose proportional
    increases in exposures, and a half-life supporting once-daily
    dosing. Signals suggestive of pharmacologic activity were
    observed for obesity with a greater proportion of subjects on
    drug experiencing weight loss during the one month period than
    subjects on placebo. Overall results on cognitive function as
    measured by the CogScreen test battery, showed a dose dependent
    trend for improvement. For the predetermined cognitive endpoint
    that combines speed and accuracy, there was a statistically
    significant improvement at the 600 mg dose once daily.
    Subsequently, an independent external analysis of the CogScreen
    test battery results confirmed a significant drug effect on
    cognition but was not able to confirm the dose-dependent trend.
    No dose limiting toxicity was identified, and no serious adverse
    events were reported.In October 2007, we completed a randomized, double-blind,
    placebo-controlled Phase 1 trial of 21 obese, but otherwise
    healthy, adults. Findings from this study demonstrated that
    adults taking 600 mg of PRX-07034 twice-daily for
    28 days had a weight reduction of an average of 0.45 kg
    (approximately 1 pound), while adults on placebo gained 1.37 kg
    (approximately 3 pounds) during the same period, which was
    statistically significant (p < 0.005). Subjects
    in the study were not required to follow any pre-specified diet
    or exercise program. PRX-07034 was associated with a
    statistically significant (p=0.036) reduction in serum leptin
    levels, a marker of fat stores in the body. Overall, only one of
    the subjects (approximately 10%) on placebo lost any weight
    during the trial, while 7 of the 11 subjects (approximately 64%)
    on PRX-07034 lost weight. PRX-07034 appeared well-tolerated and
    there were no serious adverse events reported. An increase in
    corrected QT interval, or QTc, was apparent at the dose tested,
    however, with a mean increase over the duration of the study of
    10.7 milliseconds for the drug group versus a decrease of 1.7
    milliseconds for the placebo group. The corrected QTc is a
    measurement of the QT interval, which is corrected for heart
    rate. Prolongations of the QTc are associated with an increased
    risk for potentially life-threatening heart rhythms and so this
    measurement is an important index to measure during the
    development of new drugs. In addition, of the population of 21
    adults, one patient on drug discontinued due to a rash that
    resolved rapidly. There were no discontinuations on placebo. In
    the prior Phase 1 trial where doses up to 600 mg once daily
    were studied for 28 days, no clinically meaningful
    prolongations of the QTc were noted.The
    21-person
    trial, which was conducted in an outpatient setting (subjects
    spent three nights of the total
    28-day trial
    as inpatients to accommodate measurements and physical
    examinations), included secondary endpoint measures to assess
    potential effects on body weight, hunger, satiety and
    exploratory endpoint measures of cognitive function. An analysis
    of cognitive data in this study showed no difference between
    drug and placebo at a dose of 600 mg twice daily.
    Accordingly, future studies in cognitive impairment are expected
    to utilize doses less than 600 mg twice daily based on the
    study results and the positive data in cognition previously
    demonstrated in lower doses.    
    the number of sites included in the trials;
    the length of time required to enroll suitable patient subjects;
    the number of patients that participate in the trials; 51




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##### Table of Contents




    the duration of patient
    follow-up
    that seems appropriate in view of results; and
    the efficacy and safety profile of the drug candidate.      Clinical



EstimatedPhase

Objective

Completion PeriodPhase 1

Establish safety in healthy volunteers and occasionally in
    patients; study how the drug works, is metabolized and interacts
    with other drugs


1-2 yearsPhase 2

Evaluate efficacy, optimal dosages and expanded evidence of
    safety


2-3 yearsPhase 3

Further evaluate efficacy and safety of the drug candidate in a
    larger patient population


2-3 years       project-by-project
  PRX-08066

$
5.1 millionPRX-00023

$
12.6 millionPRX-03140

$
9.1 millionPRX-07034

$
8.5 million    52




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##### Table of Contents



Financial
    Results
  Years
    ended December 31, 2007 and 2006
  Revenue
    Years Ended December 31,2007


2006


2005Increase





IncreaseRevenue


(Decrease)


Revenue


(Decrease)


RevenueProduct development revenue

$
10,239,120



252
%

$
2,909,402



(31
)%

$
4,195,530Royalty revenue


1,017,669



(37
)%


1,603,230



(31
)%


2,333,384License fee revenue


3,703,260



142
%


1,527,910



131
%


660,747Total

$
14,960,049



148
%

$
6,040,542



(16
)%

$
7,189,661           Research
    and Development Expense
  PRX-00023
 53




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##### Table of Contents



In-Process
    Research and Development Charge
    General
    and Administrative Expense
    Royalty
    Expense
        Restructuring
    Costs
   54




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##### Table of Contents



Interest
    and Other Income
    Interest
    Expense
  30-day
  Provision
    for Income Taxes
    Years
    ended December 31, 2006 and 2005
  Revenue
     55




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##### Table of Contents



Research
    and Development Expense
    General
    and Administrative Expense
    Royalty
    Expense
   56




---



##### Table of Contents



Restructuring
    Costs
    Interest
    and Other Income
    Interest
    Expense
  30-day
  Provision
    for Income Taxes
    Liquidity
    and Capital Resources
     57




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##### Table of Contents



non-United
      Payments Due by PeriodLess Than


1-3


3-5


More ThanContractual Obligations

Total


1 Year


Years


Years


5 YearsLong-term debt obligations, including interest payments

$
110,500,000


$
3,000,000


$
6,000,000


$
101,500,000


$
Operating lease obligations


15,380,260



2,698,410



5,035,970



3,853,363



3,792,517Capital lease obligations


406,489



208,478



198,011







Unconditional purchase obligations


1,566,379



1,566,379











Other long-term liabilities


2,905,000



385,000



280,000



280,000



1,960,000Total

$
130,758,128


$
7,858,267


$
11,513,981


$
105,633,363


$
5,752,517    58




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##### Table of Contents



ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK      ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  Index to Consolidated Financial Statements

NumberReport of Independent Registered Public Accounting Firm


F-2Consolidated Financial Statements:Consolidated Balance Sheets


F-3Consolidated Statements of Operations


F-4Consolidated Statements of Stockholders Equity (Deficit)


F-5Consolidated Statements of Cash Flows


F-6Notes to Consolidated Financial Statements


F-7   ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    Item 9A.
    CONTROLS
    AND PROCEDURES  Managements
    Evaluation of Disclosure Controls and Procedures
   59




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##### Table of Contents



Rules 13a-15(e))
  Managements
    Annual Report on Internal Control Over Financial
    Reporting
  Rules 13a-15(f)
  
    pertain to the maintenance of records that, in reasonable
    detail, accurately and fairly reflects transactions in and
    dispositions of our assets;
    provide reasonable assurance that transactions are recorded as
    necessary to permit preparation of financial statements in
    accordance with generally accepted accounting principles, and
    that our receipts and expenditures are being made only in
    accordance with authorizations of our management and
    directors; and
    provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use or disposition of our
    assets that could have a material effect on the financial
    statements.        Form 10-K.
  Changes
    in Internal Controls over Financial Reporting
    Item 9B.
    OTHER
    INFORMATION   60




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##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
  
              
    61




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##### Table of Contents



PART III  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE    ITEM 11.
    EXECUTIVE
    COMPENSATION    ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS    ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE    ITEM 14.
    PRINCIPAL
    ACCOUNTING FEES AND SERVICES   PART IV  ITEM 15.
    EXHIBITS,
    FINANCIAL STATEMENT SCHEDULES  Item 15(a).
  Form 10-K
  Item 15(a) (1) and (2).
  Form 10-K.
 62




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##### Table of Contents



Item 15(a) (3).  Exhibits
  Form 10-K.
  ExhibitNumber

Description3.1@

Restated Certificate of Incorporation of the Company. Filed as
    Exhibit 3.1 to the Companys Quarterly Report on
    Form 10-Q
    for the period ended September 30, 2006 and incorporated
    herein by reference.3.2@

Amended and Restated By-Laws of the Company. Filed as
    Exhibit 3.1 to the Companys Quarterly Report on
    Form 10-Q
    for the period ended March 31, 2007 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 Quarterly Report
    on
    Form 10-Q
    for the period ended September 30, 2006 and incorporated
    herein by reference.4.2@

Indenture dated as of June 7, 2004 between the Company and
    U.S. Bank National Association as Trustee, relating to
    3% Convertible Senior Notes due June 15, 2024. Filed
    as Exhibit 4.1 to the Companys Current Report on
    Form 8-K
    filed June 7, 2004 and incorporated herein by reference.4.3@

Warrant issued to RRD International, LLC. Filed as
    Exhibit 4.3 to the Companys Quarterly Report on
    Form 10-Q
    for the period ended September 30, 2006 and incorporated
    herein by reference.4.4@

Warrant issued to General Electric Capital Corporation. Filed as
    Exhibit 4.4 to the Companys Quarterly Report on
    Form 10-Q
    for the period ended September 30, 2006 and incorporated
    herein by reference.10.1@+

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
    filed December 10, 1996 (File
    No. 333-17581)
    and incorporated herein by reference.10.2@#

Amended and Restated 1992 Incentive Plan. Filed as
    Appendix A to the Companys 2005 Definitive Proxy
    Statement on Schedule 14A filed April 29, 2005 and
    incorporated herein by reference.10.3@#

Form of Incentive Stock Option Certificate. Filed as
    Exhibit 10.29 to the Companys Registration Statement
    on
    Form S-1
    filed December 10, 1996 (File
    No. 333-17581)
    and incorporated herein by reference.10.4@#

Form of Nonstatutory Stock Option Certificate. Filed as
    Exhibit 10.30 to the Companys Registration Statement
    on
    Form S-1
    filed December 10, 1996 (File
    No. 333-17581)
    and incorporated herein by reference.10.5@#

Amended and Restated 1996 Director Stock Option Plan. Filed
    as Appendix B to the Companys 2005 Definitive Proxy
    Statement on Schedule 14A filed April 29, 2005 and
    incorporated herein by reference.10.6*++

Amended and Restated Strategic Collaboration Agreement dated as
    of June 9, 2000, among the Company, Mallinckrodt Inc. (a
    Delaware corporation) and Mallinckrodt Inc. (a New York
    corporation).10.7*++

Strategic Collaboration Agreement dated as of June 9, 2000,
    between the Company and Schering Aktiengesellschaft.10.8*

Amendment No. 1 dated as of December 22, 2000 to the
    Strategic Collaboration Agreement, dated as of June 9,
    2000, between the Company and Schering Aktiengesellschaft.10.9@

Intellectual Property Agreement by and between the Company and
    Dr. Martin R. Prince, dated November 17, 2003. Filed
    as Exhibit 10.1 to the Companys Current Report on
    Form 8-K
    filed November 18, 2003 and incorporated herein by
    reference.10.10@#

Description of Director Compensation Arrangements. Filed with
    the Companys Current Report on
    Form 8-K
    filed June 4, 2007 and incorporated herein by reference.10.11@#

Form of Indemnification Agreement. Filed as Exhibit 10.29
    to the Companys Annual Report on
    Form 10-K
    for the year ended December 31, 2004 and incorporated
    herein by reference.10.12@

Form of Amendment to Stock Option Agreement. Filed as
    Exhibit 10.30 to the Companys Annual Report on
    Form 10-K
    for the year ended December 31, 2004 and incorporated
    herein by reference. 63




---



##### Table of Contents



ExhibitNumber

Description10.13@

Predix Pharmaceuticals Holdings, Inc. Amended and Restated 2003
    Stock Incentive Plan. Filed as Exhibit 10.1 to the
    Companys Quarterly Report on
    Form 10-Q
    for the period ended September 30, 2006 and incorporated
    herein by reference.10.14@

Physiome Sciences, Inc. Stock Option Plan (as amended
    September 21, 2001). Filed as Exhibit 10.2 to the
    Companys Quarterly Report on
    Form 10-Q
    for the period ended September 30, 2006 and incorporated
    herein by reference.10.15@++

Amended and Restated License Agreement between Ramot at Tel Aviv
    University Ltd., Company Registration
    No. 51-066714-0
    and Predix Pharmaceuticals Holdings, Inc., dated as of
    May 20, 2004. Filed as Exhibit 10.3 to the
    Companys Quarterly Report on
    Form 10-Q
    for the period ended September 30, 2006 and incorporated
    herein by reference.10.16@++

Research, Development and Commercialization Agreement between
    Predix Pharmaceuticals Holdings, Inc. and Cystic Fibrosis
    Foundation Therapeutics, Incorporated, dated as of March 7,
    2005. Filed as Exhibit 10.4 to the Companys Quarterly
    Report on
    Form 10-Q
    for the period ended September 30, 2006 and incorporated
    herein by reference.10.17@++

License Agreement between Amgen Inc. and Predix Pharmaceuticals
    Holdings, Inc., dated as of July 31, 2006. Filed as
    Exhibit 10.5 to the Companys Quarterly Report on
    Form 10-Q
    for the period ended September 30, 2006 and incorporated
    herein by reference.10.18@

Lease by and between Trustees of 4 Maguire Road Realty Trust and
    Predix Pharmaceuticals Holdings, Inc., dated as of
    January 30, 1998, as amended by First Amendment to Lease by
    and between Trustees of 4 Maguire Road Realty Trust and EPIX
    Delaware, Inc., dated as of August 31, 2006. Filed as
    Exhibit 10.6 to the Companys Quarterly Report on
    Form 10-Q
    for the period ended September 30, 2006 and incorporated
    herein by reference.10.19@

Lease Agreement by and between 150 College Road, LLC and
    Physiome Sciences, Inc., dated as of December 21, 2000, as
    amended. Filed as Exhibit 10.7 to the Companys
    Quarterly Report on
    Form 10-Q
    for the period ended September 30, 2006 and incorporated
    herein by reference.10.20@

Sublease by and between Predix Pharmaceuticals Holdings, Inc.
    and Novo Nordisk Pharmaceuticals, Inc., dated as of
    December 12, 2003. Filed as Exhibit 10.8 to the
    Companys Quarterly Report on
    Form 10-Q
    for the period ended September 30, 2006 and incorporated
    herein by reference.10.21@

Unprotected Lease Agreement between Emed Real Estate
    Development and Investments Company Ltd. and Predix
    Pharmaceuticals Ltd., dated as of September 26, 2004. Filed
    as Exhibit 10.9 to the Companys Quarterly Report on
    Form 10-Q
    for the period ended September 30, 2006 and incorporated
    herein by reference.10.22@#

Predix Pharmaceuticals, Inc. Employment Agreement between Predix
    Pharmaceuticals, Inc. and Chen Schor, dated as of
    November 23, 2003. Filed as Exhibit 10.13 to the
    Companys Quarterly Report on
    Form 10-Q
    for the period ended September 30, 2006 and incorporated
    herein by reference.10.23@#

Bio-I.T. (Bio Information Technologies) Ltd. Employment
    Agreement between Bio-I.T. (Bio Information Technologies) Ltd.
    and Dr. Oren Becker, dated as of October 31, 2000.
    Filed as Exhibit 10.14 to the Companys Quarterly
    Report on
    Form 10-Q
    for the period ended September 30, 2006 and incorporated
    herein by reference.10.24@++

Development and License Agreement among SmithKline Beecham
    Corporation, doing business as GlaxoSmithKline, Glaxo Group
    Limited and the Company, dated as of December 11, 2006.
    Filed as Exhibit 10.1 to the Companys Current Report
    on
    Form 8-K/A
    filed January 18, 2007 and incorporated herein by reference.10.25@

Stock Purchase Agreement among the Company, Glaxo Group Limited
    and SmithKline Beecham Corporation, doing business as
    GlaxoSmithKline, dated as of December 11, 2006. Filed as
    Exhibit 10.2 to the Companys Current Report on
    Form 8-K/A
    filed January 18, 2007 and incorporated herein by reference.10.26@

First Amendment to License Agreement between Amgen Inc. and the
    Company, dated as of March 20, 2007. Filed as
    Exhibit 10.52 to the Companys Annual Report on
    Form 10-K
    for the year ended December 31, 2006 and incorporated
    herein by reference.10.27@#

Employment Agreement between the Company and Kimberlee C.
    Drapkin, dated as of March 26, 2007. Filed as
    Exhibit 10.1 to the Companys Current Report on
    Form 8-K
    filed March 29, 2007 and incorporated herein by reference. 64




---



##### Table of Contents



ExhibitNumber

Description10.28@#

Employment Agreement between the Company and Michael G.
    Kauffman, M.D., Ph.D., dated as of March 27,
    2007. Filed as Exhibit 10.2 to the Companys Current
    Report on
    Form 8-K
    filed March 29, 2007 and incorporated herein by reference.10.29@#

Release Agreement by and between the Company and Oren Becker,
    dated as of April 5, 2007. Filed as Exhibit 10.1 to
    the Companys Current Report on
    Form 8-K
    filed April 6, 2007 and incorporated herein by reference.10.30@#

2006 Employee Stock Purchase Plan. Filed as Appendix A to
    the Companys 2007 Definitive Proxy Statement on
    Schedule 14A filed April 30, 2007 and incorporated
    herein by reference.10.31@++

First Amendment to Amended and Restated License Agreement
    between the Company and Ramot at Tel Aviv University Ltd., dated
    as of June 13, 2007. Filed as Exhibit 10.1 to the
    Companys Current Report on
    Form 8-K
    filed June 15, 2007 and incorporated herein by reference.10.32@#

Employment Agreement between the Company and Andrew Uprichard,
    MD, dated as of August 9, 2007. Filed as Exhibit 10.1
    to the Companys Current Report on
    Form 8-K
    filed August 10, 2007 and incorporated herein by reference.10.33@++

Third Amendment to Research, Development and Commercialization
    Agreement between the Company and Cystic Fibrosis Foundation
    Therapeutics, Incorporated, dated as of November 1, 2007.
    Filed as Exhibit 10.1 to the Companys Current Report
    on
    Form 8-K
    filed November 7, 2007 and incorporated herein by reference.10.34@

Form of Securities Purchase Agreement dated November 9,
    2007 between the Company and each of the purchasers listed on
    Exhibit A thereto. Filed as Exhibit 10.1 to the
    Companys Current Report on
    Form 8-K
    filed November 15, 2007 and incorporated herein by
    reference.10.35@#

Form of Restricted Stock Unit Agreement under the Amended and
    Restated 1992 Incentive Plan. Filed as Exhibit 10.1 to the
    Companys Current Report on
    Form 8-K
    filed February 22, 2008 and incorporated herein by
    reference.10.36@#

Form of Restricted Stock Unit Agreement under the Amended and
    Restated 2003 Stock Option and Incentive Plan. Filed as
    Exhibit 10.2 to the Companys Current Report on
    Form 8-K
    filed February 22, 2008 and incorporated herein by
    reference.12.1*

Ratio of Earnings to Fixed Charges.21.1@

Subsidiaries of the Company. Filed as Exhibit 21.1 to the
    Companys Annual Report on
    Form 10-K
    for the year ended December 31, 2006 and incorporated
    herein by reference.23.1*

Consent of Independent Registered Public Accounting Firm.24.1

Power of Attorney (included on signature page to this Annual
    Report on Form 10-K).31.1*

Certification pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002 for Michael G. Kauffman.31.2*

Certification pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002 for Kim Cobleigh Drapkin.32*

Certification pursuant to Section 906 of the Sarbanes-Oxley
    Act of 2002 (Subsections (a) and (b) of
    Section 1350, Chapter 63 of Title 18, U.S. Code).     @
    
    Incorporated by reference as indicated.*
    
    Filed herewith.#
    
    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 406 of the Securities Act of
    1933, as amended.++
    
    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. 65




---



##### Table of Contents



SIGNATURES
      By:
    /s/  KIM
    COBLEIGH DRAPKIN        POWER OF
    ATTORNEY
  Form 10-K
    Signature

Title

Date/s/  MICHAEL
    G. KAUFFMANMichael
    G. Kauffman, M.D., Ph.D.

Chief Executive Officer and Director (Principal Executive
    Officer)

March 17, 2008/s/  KIM
    COBLEIGH DRAPKINKim
    Cobleigh Drapkin, CPA

Chief Financial Officer
    (Principal Financial and Accounting Officer)

March 17, 2008/s/  FREDERICK
    FRANKFrederick
    Frank

Chairman of the Board of Directors

March 17, 2008/s/  PATRICK
    J. FORTUNEPatrick
    J. Fortune, Ph.D.

Director

March 17, 2008/s/  MICHAEL
    GILMANMichael
    Gilman, Ph.D.

Director

March 17, 2008/s/  MARK
    LEUCHTENBERGERMark
    Leuchtenberger

Director

March 17, 2008/s/  ROBERT
    J. PEREZRobert
    J. Perez

Director

March 17, 2008/s/  GREGORY
    D. PHELPSGregory
    D. Phelps

Director

March 17, 2008/s/  IAN
    F. SMITHIan
    F. Smith, CPA, ACA

Director

March 17, 2008  66




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##### Table of Contents



EXHIBIT INDEX
  ExhibitNumber

Description3.1@

Restated Certificate of Incorporation of the Company. Filed as
    Exhibit 3.1 to the Companys Quarterly Report on
    Form 10-Q
    for the period ended September 30, 2006 and incorporated
    herein by reference.3.2@

Amended and Restated By-Laws of the Company. Filed as
    Exhibit 3.1 to the Companys Quarterly Report on
    Form 10-Q
    for the period ended March 31, 2007 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 Quarterly Report
    on
    Form 10-Q
    for the period ended September 30, 2006 and incorporated
    herein by reference.4.2@

Indenture dated as of June 7, 2004 between the Company and
    U.S. Bank National Association as Trustee, relating to
    3% Convertible Senior Notes due June 15, 2024. Filed
    as Exhibit 4.1 to the Companys Current Report on
    Form 8-K
    filed June 7, 2004 and incorporated herein by reference.4.3@

Warrant issued to RRD International, LLC. Filed as
    Exhibit 4.3 to the Companys Quarterly Report on
    Form 10-Q
    for the period ended September 30, 2006 and incorporated
    herein by reference.4.4@

Warrant issued to General Electric Capital Corporation. Filed as
    Exhibit 4.4 to the Companys Quarterly Report on
    Form 10-Q
    for the period ended September 30, 2006 and incorporated
    herein by reference.10.1@+

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
    filed December 10, 1996 (File
    No. 333-17581)
    and incorporated herein by reference.10.2@#

Amended and Restated 1992 Incentive Plan. Filed as
    Appendix A to the Companys 2005 Definitive Proxy
    Statement on Schedule 14A filed April 29, 2005 and
    incorporated herein by reference.10.3@#

Form of Incentive Stock Option Certificate. Filed as
    Exhibit 10.29 to the Companys Registration Statement
    on
    Form S-1
    filed December 10, 1996 (File
    No. 333-17581)
    and incorporated herein by reference.10.4@#

Form of Nonstatutory Stock Option Certificate. Filed as
    Exhibit 10.30 to the Companys Registration Statement
    on
    Form S-1
    filed December 10, 1996 (File
    No. 333-17581)
    and incorporated herein by reference.10.5@#

Amended and Restated 1996 Director Stock Option Plan. Filed
    as Appendix B to the Companys 2005 Definitive Proxy
    Statement on Schedule 14A filed April 29, 2005 and
    incorporated herein by reference.10.6*++

Amended and Restated Strategic Collaboration Agreement dated as
    of June 9, 2000, among the Company, Mallinckrodt Inc. (a
    Delaware corporation) and Mallinckrodt Inc. (a New York
    corporation).10.7*++

Strategic Collaboration Agreement dated as of June 9, 2000,
    between the Company and Schering Aktiengesellschaft.10.8*

Amendment No. 1 dated as of December 22, 2000 to the
    Strategic Collaboration Agreement, dated as of June 9,
    2000, between the Company and Schering Aktiengesellschaft.10.9@

Intellectual Property Agreement by and between the Company and
    Dr. Martin R. Prince, dated November 17, 2003. Filed
    as Exhibit 10.1 to the Companys Current Report on
    Form 8-K
    filed November 18, 2003 and incorporated herein by
    reference.10.10@#

Description of Director Compensation Arrangements. Filed with
    the Companys Current Report on
    Form 8-K
    filed June 4, 2007 and incorporated herein by reference.10.11@#

Form of Indemnification Agreement. Filed as Exhibit 10.29
    to the Companys Annual Report on
    Form 10-K
    for the year ended December 31, 2004 and incorporated
    herein by reference.10.12@

Form of Amendment to Stock Option Agreement. Filed as
    Exhibit 10.30 to the Companys Annual Report on
    Form 10-K
    for the year ended December 31, 2004 and incorporated
    herein by reference. 67




---



##### Table of Contents



ExhibitNumber

Description10.13@

Predix Pharmaceuticals Holdings, Inc. Amended and Restated 2003
    Stock Incentive Plan. Filed as Exhibit 10.1 to the
    Companys Quarterly Report on
    Form 10-Q
    for the period ended September 30, 2006 and incorporated
    herein by reference.10.14@

Physiome Sciences, Inc. Stock Option Plan (as amended
    September 21, 2001). Filed as Exhibit 10.2 to the
    Companys Quarterly Report on
    Form 10-Q
    for the period ended September 30, 2006 and incorporated
    herein by reference.10.15@++

Amended and Restated License Agreement between Ramot at Tel Aviv
    University Ltd., Company Registration
    No. 51-066714-0
    and Predix Pharmaceuticals Holdings, Inc., dated as of
    May 20, 2004. Filed as Exhibit 10.3 to the
    Companys Quarterly Report on
    Form 10-Q
    for the period ended September 30, 2006 and incorporated
    herein by reference.10.16@++

Research, Development and Commercialization Agreement between
    Predix Pharmaceuticals Holdings, Inc. and Cystic Fibrosis
    Foundation Therapeutics, Incorporated, dated as of March 7,
    2005. Filed as Exhibit 10.4 to the Companys Quarterly
    Report on
    Form 10-Q
    for the period ended September 30, 2006 and incorporated
    herein by reference.10.17@++

License Agreement between Amgen Inc. and Predix Pharmaceuticals
    Holdings, Inc., dated as of July 31, 2006. Filed as
    Exhibit 10.5 to the Companys Quarterly Report on
    Form 10-Q
    for the period ended September 30, 2006 and incorporated
    herein by reference.10.18@

Lease by and between Trustees of 4 Maguire Road Realty Trust and
    Predix Pharmaceuticals Holdings, Inc., dated as of
    January 30, 1998, as amended by First Amendment to Lease by
    and between Trustees of 4 Maguire Road Realty Trust and EPIX
    Delaware, Inc., dated as of August 31, 2006. Filed as
    Exhibit 10.6 to the Companys Quarterly Report on
    Form 10-Q
    for the period ended September 30, 2006 and incorporated
    herein by reference.10.19@

Lease Agreement by and between 150 College Road, LLC and
    Physiome Sciences, Inc., dated as of December 21, 2000, as
    amended. Filed as Exhibit 10.7 to the Companys
    Quarterly Report on
    Form 10-Q
    for the period ended September 30, 2006 and incorporated
    herein by reference.10.20@

Sublease by and between Predix Pharmaceuticals Holdings, Inc.
    and Novo Nordisk Pharmaceuticals, Inc., dated as of
    December 12, 2003. Filed as Exhibit 10.8 to the
    Companys Quarterly Report on
    Form 10-Q
    for the period ended September 30, 2006 and incorporated
    herein by reference.10.21@

Unprotected Lease Agreement between Emed Real Estate
    Development and Investments Company Ltd. and Predix
    Pharmaceuticals Ltd., dated as of September 26, 2004. Filed
    as Exhibit 10.9 to the Companys Quarterly Report on
    Form 10-Q
    for the period ended September 30, 2006 and incorporated
    herein by reference.10.22@#

Predix Pharmaceuticals, Inc. Employment Agreement between Predix
    Pharmaceuticals, Inc. and Chen Schor, dated as of
    November 23, 2003. Filed as Exhibit 10.13 to the
    Companys Quarterly Report on
    Form 10-Q
    for the period ended September 30, 2006 and incorporated
    herein by reference.10.23@#

Bio-I.T. (Bio Information Technologies) Ltd. Employment
    Agreement between Bio-I.T. (Bio Information Technologies) Ltd.
    and Dr. Oren Becker, dated as of October 31, 2000.
    Filed as Exhibit 10.14 to the Companys Quarterly
    Report on
    Form 10-Q
    for the period ended September 30, 2006 and incorporated
    herein by reference.10.24@++

Development and License Agreement among SmithKline Beecham
    Corporation, doing business as GlaxoSmithKline, Glaxo Group
    Limited and the Company, dated as of December 11, 2006.
    Filed as Exhibit 10.1 to the Companys Current Report
    on
    Form 8-K/A
    filed January 18, 2007 and incorporated herein by reference.10.25@

Stock Purchase Agreement among the Company, Glaxo Group Limited
    and SmithKline Beecham Corporation, doing business as
    GlaxoSmithKline, dated as of December 11, 2006. Filed as
    Exhibit 10.2 to the Companys Current Report on
    Form 8-K/A
    filed January 18, 2007 and incorporated herein by reference.10.26@

First Amendment to License Agreement between Amgen Inc. and the
    Company, dated as of March 20, 2007. Filed as
    Exhibit 10.52 to the Companys Annual Report on
    Form 10-K
    for the year ended December 31, 2006 and incorporated
    herein by reference. 68




---



##### Table of Contents



ExhibitNumber

Description10.27@#

Employment Agreement between the Company and Kimberlee C.
    Drapkin, dated as of March 26, 2007. Filed as
    Exhibit 10.1 to the Companys Current Report on
    Form 8-K
    filed March 29, 2007 and incorporated herein by reference.10.28@#

Employment Agreement between the Company and Michael G.
    Kauffman, M.D., Ph.D., dated as of March 27,
    2007. Filed as Exhibit 10.2 to the Companys Current
    Report on
    Form 8-K
    filed March 29, 2007 and incorporated herein by reference.10.29@#

Release Agreement by and between the Company and Oren Becker,
    dated as of April 5, 2007. Filed as Exhibit 10.1 to
    the Companys Current Report on
    Form 8-K
    filed April 6, 2007 and incorporated herein by reference.10.30@#

2006 Employee Stock Purchase Plan. Filed as Appendix A to
    the Companys 2007 Definitive Proxy Statement on
    Schedule 14A filed April 30, 2007 and incorporated
    herein by reference.10.31@++

First Amendment to Amended and Restated License Agreement
    between the Company and Ramot at Tel Aviv University Ltd., dated
    as of June 13, 2007. Filed as Exhibit 10.1 to the
    Companys Current Report on
    Form 8-K
    filed June 15, 2007 and incorporated herein by reference.10.32@#

Employment Agreement between the Company and Andrew Uprichard,
    MD, dated as of August 9, 2007. Filed as Exhibit 10.1
    to the Companys Current Report on
    Form 8-K
    filed August 10, 2007 and incorporated herein by reference.10.33@++

Third Amendment to Research, Development and Commercialization
    Agreement between the Company and Cystic Fibrosis Foundation
    Therapeutics, Incorporated, dated as of November 1, 2007.
    Filed as Exhibit 10.1 to the Companys Current Report
    on
    Form 8-K
    filed November 7, 2007 and incorporated herein by reference.10.34@

Form of Securities Purchase Agreement dated November 9,
    2007 between the Company and each of the purchasers listed on
    Exhibit A thereto. Filed as Exhibit 10.1 to the
    Companys Current Report on
    Form 8-K
    filed November 15, 2007 and incorporated herein by
    reference.10.35@#

Form of Restricted Stock Unit Agreement under the Amended and
    Restated 1992 Incentive Plan. Filed as Exhibit 10.1 to the
    Companys Current Report on
    Form 8-K
    filed February 22, 2008 and incorporated herein by
    reference.10.36@#

Form of Restricted Stock Unit Agreement under the Amended and
    Restated 2003 Stock Option and Incentive Plan. Filed as
    Exhibit 10.2 to the Companys Current Report on
    Form 8-K
    filed February 22, 2008 and incorporated herein by
    reference.12.1*

Ratio of Earnings to Fixed Charges.21.1@

Subsidiaries of the Company. Filed as Exhibit 21.1 to the
    Companys Annual Report on
    Form 10-K
    for the year ended December 31, 2006 and incorporated
    herein by reference.23.1*

Consent of Independent Registered Public Accounting Firm.24.1

Power of Attorney (included on signature page to this Annual
    Report on Form 10-K).31.1*

Certification pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002 for Michael G. Kauffman.31.2*

Certification pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002 for Kim Cobleigh Drapkin.32*

Certification pursuant to Section 906 of the Sarbanes-Oxley
    Act of 2002 (Subsections (a) and (b) of
    Section 1350, Chapter 63 of Title 18, U.S. Code).     @
    
    Incorporated by reference as indicated.*
    
    Filed herewith.#
    
    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 406 of the Securities Act of
    1933, as amended.++
    
    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. 69




---



##### 



EPIX
    PHARMACEUTICALS, INC.
  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
   Report of Independent Registered Public
    Accounting Firm


F-2Consolidated Financial StatementsConsolidated Balance Sheets


F-3Consolidated Statements of Operations


F-4Consolidated Statements of Stockholders
    Equity (Deficit)


F-5Consolidated Statements of Cash Flows


F-6Notes to Consolidated Financial Statements


F-7   F-1




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                 
    F-2




---



##### Table of Contents



EPIX
    PHARMACEUTICALS, INC.
 CONSOLIDATED
    BALANCE SHEETS  December 31,2007


2006ASSETSCurrent assets:Cash and cash equivalents

$
9,157,973


$
30,332,468Available-for-sale marketable securities


51,919,128



79,210,430Accounts receivable






46,367Prepaid expenses and other assets


2,162,895



2,575,265Total current assets


63,239,996



112,164,530Property and equipment, net


6,044,886



3,592,570Other assets


3,850,431



4,330,578Goodwill


4,939,814



4,939,814Total assets

$
78,075,127


$
125,027,492LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilities:Accounts payable

$
3,539,099


$
1,982,032Accrued expenses


8,099,539



7,695,548Contract advances


4,719,201



4,605,079Merger consideration payable






18,504,084Current portion of capital lease obligation


179,859



84,633Deferred revenue


1,372,042



3,665,120Other current liabilities


610,867



446,137Total current liabilities


18,520,607



36,982,633Deferred revenue


15,688,296



17,101,165Capital lease obligation


182,748



102,077Other liabilities


4,975,123



2,862,898Convertible debt


100,000,000



100,000,000Total liabilities


139,366,774



157,048,773Commitments and contigencies (Note 9)Stockholders deficit:Preferred Stock, $0.01 par value, 1,000,000 shares
    authorized; no shares issued






Common Stock, $0.01 par value, 100,000,000 shares
    authorized; 41,353,079 and 32,524,726 shares issued and
    outstanding at December 31, 2007 and December 31,
    2006, respectively


413,530



325,247Additional
    paid-in-capital


346,289,024



312,984,862Accumulated deficit


(408,157,261
)


(345,368,698
)Accumulated other comprehensive income


163,060



37,308Total stockholders deficit


(61,291,647
)


(32,021,281
)Total liabilities and stockholders deficit

$
78,075,127


$
125,027,492    F-3




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##### Table of Contents



EPIX
    PHARMACEUTICALS, INC.
 CONSOLIDATED
    STATEMENTS OF OPERATIONS  Year ended December 31,2007


2006


2005Revenues:Product development revenue

$
10,239,120


$
2,909,402


$
4,195,530Royalty revenue


1,017,669



1,603,230



2,333,384License fee revenue


3,703,260



1,527,910



660,747Total revenues


14,960,049



6,040,542



7,189,661Operating expenses:Research and development


57,526,506



26,255,000



18,293,921Acquired in-process research and development






123,500,000



General and administrative


20,051,893



12,257,320



9,586,132Royalties


595,269



1,063,102



98,089Restructuring


350,137



633,238



971,828Total operating expenses


78,523,805



163,708,660



28,949,970Operating loss


(63,563,756
)


(157,668,118
)


(21,760,309
)Interest and other income


4,901,106



5,496,081



4,146,532Interest expense


(4,067,795
)


(5,075,848
)


(3,613,190
)Loss before provision for income taxes


(62,730,445
)


(157,247,885
)


(21,226,967
)Provision for income taxes


58,118



145,313



41,991Net loss

$
(62,788,563
)

$
(157,393,198
)

$
(21,268,958
)Weighted average shares:Basic and diluted


33,936,317



20,789,388



15,505,458Net loss per share, basic and diluted

$
(1.85
)

$
(7.57
)

$
(1.37
)    F-4




---



##### Table of Contents



EPIX
    PHARMACEUTICALS, INC.
 CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)  Accumulated


TotalAdditional





Other


StockholdersCommon Stock


Paid-In


Accumulated


Comprehensive


EquityShares


Amount


Capital


Deficit


Income/(loss)


(Deficit)Balance at December 31, 2004


15,460,103


$
154,601


$
207,274,676


$
(166,706,542
)

$
(246,883
)

$
40,475,852Issuance of common stock upon exercise of options


50,332



503



473,612











474,115Issuance of common stock under employee stock purchase plan


12,772



128



103,868











103,996Stock-based compensation expense










(3,018,396
)










(3,018,396
)Net loss














(21,268,958
)






(21,268,958
)Available-for-sale marketable securities unrealized gain


















180,685



180,685Comprehensive loss






















(21,088,273
)Balance at December 31, 2005


15,523,207



155,232



204,833,760



(187,975,500
)


(66,198
)


16,947,294Issuance of common stock under employee stock purchase plan


11,165



112



59,863











59,975Issuance of common stock upon exercise of options


360,018



3,600



454,124











457,724Sale of common stock to GlaxoSmithKline


3,009,027



30,090



17,469,910











17,500,000Stock-based compensation expense










4,203,663











4,203,663Cash paid for fractional shares


(29
)






(205
)










(205
)Issuance of common stock in connection with merger


13,621,338



136,213



85,963,747











86,099,960Net loss














(157,393,198
)






(157,393,198
)Available-for-sale marketable securities unrealized gain


















103,506



103,506Comprehensive loss






















(157,289,692
)Balance at December 31, 2006


32,524,726



325,247



312,984,862



(345,368,698
)


37,308



(32,021,281
)Issuance of common stock under employee stock purchase plan


54,731



547



203,257











203,804Issuance of common stock upon exercise of options


361,154



3,612



414,824











418,436Sale of common stock


5,245,468



52,454



14,957,898











15,010,352Stock-based compensation expense










4,775,152











4,775,152Issuance of common stock in connection with merger


3,167,000



31,670



12,953,031











12,984,701Net loss














(62,788,563
)






(62,788,563
)Available-for-sale marketable securities unrealized gain


















125,752



125,752Comprehensive loss






















(62,662,811
)Balance at December 31, 2007


41,353,079


$
413,530


$
346,289,024


$
(408,157,261
)

$
163,060


$
(61,291,647
)    F-5




---



##### Table of Contents



EPIX
    PHARMACEUTICALS, INC.
  CONSOLIDATED STATEMENTS OF CASH FLOWS
  Year Ended December 31,2007


2006


2005Operating activities:Net loss

$
(62,788,563
)

$
(157,393,198
)

$
(21,268,958
)Adjustments to reconcile net loss to net cash used in operating
    activities:Depreciation, amortization and asset write offs


1,959,542



1,548,422



1,188,610Write-off of acquired in-process research and development






123,500,000



Stock compensation expense


4,775,152



4,203,663



(3,018,396
)Noncash interest expense (credit) from embedded derivative


(771,592
)


936,536



Merger consideration interest paid in common stock


975,432







Amortization of deferred financing costs


510,184



492,337



475,115Accretion of (discount) premium on available-for-sale securities


(2,582,393
)


(593,665
)


530,811Changes in operating assets and liabilities, exclusive of
    amounts acquired from the merger with Predix:Accounts receivable


46,367



852,920



173,259Prepaid expenses and other current assets


412,370



(282,827
)


238,219Other assets and liabilities


2,421,205



2,073,119



Accounts payable


1,557,067



216,567



329,827Accrued expenses


403,991



(5,892,204
)


71,084Contract advances


114,122



(1,507,470
)


(37,464
)Merger consideration payable


(465,517
)


465,517



Deferred revenue


(3,705,947
)


15,741,238



(2,406,099
)Net cash used in operating activities


(57,138,580
)


(15,639,045
)


(23,723,992
)Investing activities:Cash paid for merger with Predix, net of cash acquired


(5,257,707
)


(7,142,601
)


Purchases of marketable securities


(108,710,354
)


(124,598,368
)


(88,618,059
)Sales or redemptions of marketable securities


138,317,442



98,310,699



127,117,973Purchases of fixed assets


(4,161,704
)


(1,314,374
)


(1,215,665
)Other investing activities


293,073



(243,327
)


Net cash provided by (used in) investing activities


20,480,750



(34,987,971
)


37,284,249Financing activities:Proceeds from loan payable from strategic partner










45,000,000Repayment of loan payable to strategic partner










(60,000,000
)Principal payments of notes payable






(9,516,380
)


Principal payments on capital leases


(149,257
)


(44,536
)


Proceeds from sale of common stock


15,010,352



17,500,000



Proceeds from stock option exercises


418,436



457,724



474,115Proceeds from Employee Stock Purchase Plan


203,804



59,975



103,996Cash paid for fractional shares from reverse stock split






(205
)


Net cash provided by (used in) financing activities


15,483,335



8,456,578



(14,421,889
)Net decrease in cash and cash equivalents


(21,174,495
)


(42,170,438
)


(861,632
)Cash and cash equivalents at beginning of year


30,332,468



72,502,906



73,364,538Cash and cash equivalents at end of year

$
9,157,973


$
30,332,468


$
72,502,906Supplemental cash flow information:Cash paid for interest

$
3,552,440


$
3,383,774


$
3,145,883Cash paid for taxes

$
58,118


$
145,313


$
41,991Supplemental disclosure of noncash financing and investing
    activities:Milestone obligation paid in common stock

$
12,009,268


$



$
Purchases of fixed asset with capital lease

$
325,154


$



$
    F-6




---



##### Table of Contents



EPIX
    PHARMACEUTICALS, INC.
 NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  1.
    Business        2.
    Significant
    Accounting Policies  Principles
    of Consolidation
    Use of
    Estimates
   F-7




---



##### Table of Contents



EPIX
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Translation
    of Foreign Currencies
    Cash
    Equivalents
    Marketable
    Securities
  Accounting for Certain
    Investments in Debt and Equity Securities
  Fair
    Value of Financial Instruments
    30-day
 F-8




---



##### Table of Contents



EPIX
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Concentrations
    of Credit Risk
    Property
    and Equipment
    Long-Lived
    Assets
  Accounting
    for the Impairment or Disposal of Long-Lived Assets,
  Other
    Assets
    Goodwill
    Income
    Taxes
  Accounting for Income
    Taxes.
 F-9




---



##### Table of Contents



EPIX
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Segment
    Information
  Disclosure about Segments of an
    Enterprise and Related Information,
  Revenue
    Revenue Recognition in
    Financial Statements,
    
    ratably over the development period; or
    based upon the level of research services performed during the
    period of the research contract.          Product
    development revenue
  non-U.S. sales.
 F-10




---



##### Table of Contents



EPIX
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    
    The Company calculates its development costs directly related to
    Vasovist.
    The Company obtains cost reports from Bayer Schering Pharma AG,
    Germany for costs incurred by Bayer Schering Pharma AG, Germany
    related to the development of Vasovist during the same period.
    The Company multiplies its and Bayer Schering Pharma AG,
    Germanys development costs by approximately 50% based on
    the contractual allocation of work contemplated under the
    agreement.
    The Company then records the net difference as development
    revenue if the balance results in a payment to the Company and
    negative revenue if the balance results in a payment to Bayer
    Schering Pharma AG, Germany.           F-11




---



##### Table of Contents



EPIX
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Royalty
    revenue
  country-by-country
    License
    fee revenue
    early-stage
         F-12




---



##### Table of Contents



EPIX
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Research
    and Development Expenses
      Loss
    Per Share
  Earnings per
    Share.
    2007


2006


2005Stock options and awards


3,847,386



3,427,107



2,181,184Shares issuable on conversion of 3% Convertible Senior
    Notes(A)


2,239,393



2,239,393



2,239,393Shares issuable in satisfaction of merger consideration
    payable(B)






3,008,726



Total


6,086,779



8,675,226



4,420,577   (A)
    
    Each $1,000 of senior notes is convertible into
    22.39 shares of the Companys common stock
    representing a conversion price of approximately $44.66 per
    share if (1) the price of the Companys common stock
    trades above 120% of the conversion price for a specified time
    period, (2) the trading price of the senior notes is below
    a certain threshold, (3) the senior notes have been called
    for redemption, or (4) specified F-13




---



##### Table of Contents



EPIX
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  corporate transactions have occurred. None of these conversion
    triggers have occurred as of December 31, 2007.(B)
    
    Share amount calculated as if the merger consideration was
    payable as of December 31, 2006. Actual settlement occurred
    on October 29, 2007 as the Company issued
    3,167,000 shares of common stock and paid $5.8 million
    in cash.  Comprehensive
    Loss
  Reporting
    Comprehensive Income
  Employee
    Stock Compensation
  Share-Based Payment  An Amendment of FASB
    Statements No. 123 and 95
  Accounting for Stock Issued to Employees
  Reclassifications
    Recent
    Accounting Pronouncements
  Fair Value
    Measurements.
  The Fair Value Option for Financial Assets and
    Financial Liabilities  Including an Amendment of FASB
    Statement No. 115,
 F-14




---



##### Table of Contents



EPIX
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    No. 07-03, Accounting for Nonrefundable Advance Payments for Goods
    or Services to Be Used in Future Research and Development
    Activities. EITF 07-03 EITF 07-03 EITF 07-03
  Business Combinations.
  3.
    Marketable
    Securities    2007


2006Fair Value


Cost


Fair Value


CostGovernment-sponsored agency securities

$



$



$
61,036,088


$
61,002,190Corporate bonds


2,565,474



2,566,837



16,348,698



16,342,795Commercial paper


35,357,829



35,206,400



1,825,644



1,828,137Asset backed securities


13,524,757



13,511,763







Certificates of deposit


471,068



471,068







$
51,919,128


$
51,756,068


$
79,210,430


$
79,173,122       4.
    Acquisition
    of Predix   F-15




---



##### Table of Contents



EPIX
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      Year EndedDecember 31, 2006Revenues

$
10,865Net loss

$
(57,592
)Net loss per share, basic and diluted

$
(1.79
)   5.
    Property
    and Equipment    December 31,2007


2006Leasehold improvements

$
3,766,584


$
4,444,244Laboratory equipment


2,777,731



2,524,697Furniture, fixtures and other equipment


3,020,935



2,164,6369,565,250



9,133,577Less accumulated depreciation and amortization


(3,520,364
)


(5,541,007
)$
6,044,886


$
3,592,570   6.
    Accrued
    Expenses    December 31,2007


2006Accrued contractual product development expenses

$
3,407,600


$
2,021,998Accrued compensation


2,184,368



1,968,127Other accrued expenses


2,507,571



3,705,423$
8,099,539


$
7,695,548   7.
    Restructuring
    Charges   F-16




---



##### Table of Contents



EPIX
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
        Asset


LeaseSeverance


Write Off


Obligation


TotalRestructuring charges in fourth quarter of 2005

$
971,828


$



$



$
971,828Balance at December 31, 2005


971,828











971,828Restructuring charge


134,642



177,906



320,690



633,238Cash payments


(1,106,470
)






(90,714
)


(1,197,184
)Non-cash items






(177,906
)






(177,906
)Balance at December 31, 2006










229,976



229,976Restructuring charge










482,535



482,535Cash payments










(580,113
)


(580,113
)Reduction of 2006 restructuring charge










(132,398
)


(132,398
)Balance at December 31, 2007

$



$



$



$
   8.
    Financing
    Arrangements  Convertible
    Debt
   F-17




---



##### Table of Contents



EPIX
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      Loan
    Agreement to Strategic Partner
    9.
    Commitments
    and Contingencies  Leases
   F-18




---



##### Table of Contents



EPIX
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Capital


OperatingLeases


Leases2008

$
208,478


$
2,698,4102009


139,163



2,546,5012010


58,848



2,489,4692011






2,127,4952012






1,725,868Thereafter






3,792,517Total minimum lease payments


406,489



15,380,260Less aggregate future sublease income






(1,960,466
)406,489


$
13,419,794Less amount representing interest


(43,882
)Present value of minimum lease payment


362,607Less current portion of capital lease obligation


(179,859
)Capital lease obligations, net of current portion

$
182,748     Other
    Commitments
    Informal
    SEC Investigation
   F-19




---



##### Table of Contents



EPIX
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Form 10-K,
  10.
    Stockholders
    Equity  Common
    Stock
  Form S-3 Form 10-K 12-month Form S-3 Form 10-K Form 10-K
    Form S-1
  Equity
    Plans
   F-20




---



##### Table of Contents



EPIX
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
          Net loss  as reported

$
(21,268,958
)Add: employee stock-based compensation included in net loss


(3,021,815
)Deduct: pro forma adjustment for stock-based compensation


(4,511,982
)Net loss  pro forma

$
(28,802,755
)Net loss per share, basic and dilutedAs reported

$
(1.37
)Pro forma


(1.86
)    F-21




---



##### Table of Contents



EPIX
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Options


ESPPYear Ended December 31,2007


2006


2005


2007


2006


2005Expected life of option (years)


6.3



6.3



6.9



0.5



0.5



0.5Expected stock price volatility


70
%


70
%


83
%


48
%


71
%


82
%Weighted average risk-free interest rate


4.52
%


4.69
%


3.77
%


4.30
%


4.93
%


3.51
%Expected annual dividend per share

$



$



$



$



$



$
       Weighted -Weighted -


AverageAverage


Remaining


AggregateExercise


Contractual


IntrinsicShares


Price


Term (in years)


ValueOutstanding at December 31, 2006


3,427,107


$
7.14Granted


1,414,587



5.58Exercised


(361,154
)


1.16Cancelled


(633,154
)


8.83Outstanding at December 31, 2007


3,847,386


$
6.85



7.85


$
2,543,267Exercisable at December 31, 2007


1,596,565


$
7.65



6.76


$
1,900,294Vested and expected to vest at December 31, 2007


3,519,088


$
6.91



7.75


$
2,489,443   2006
    Employee Stock Purchase Plan
   F-22




---



##### Table of Contents



EPIX
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  11.
    Income
    Taxes    December 31,2007


2006Deferred tax assets:Net operating loss carry forwards

$
65,651,000


$
48,269,000Research and development tax credits


1,274,000



857,000Book over tax depreciation and amortization


3,973,000



4,090,000Deferred revenue


6,301,000



7,323,000Other


1,536,000



1,487,000Total deferred tax assets


78,735,000



62,026,000Valuation allowance


(78,735,000
)


(62,026,000
)Deferred income taxes, net

$



$
       SFAS No. 141-R, Business Combinations,
 F-23




---



##### Table of Contents



EPIX
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Years Ended December 31,


Years Ended December 31,2007


2006


2005


2007


2006


2005Tax at U.S. statutory rate

$
(21,328,352
)

$
(53,464,281
)

$
(7,217,169
)


(34.00
)%


(34.00
)%


(34.00
)%Permanent differences, net of federal benefit


832,198



43,305,862



18,185



1.33
%


27.54
%


0.09
%Foreign taxes


58,118



145,313



41,991



0.09
%


0.09
%


0.20
%Operating losses not benefited


20,496,154



10,158,419



7,198,984



32.67
%


6.46
%


33.91
%Income tax expense

$
58,118


$
145,313


$
41,991



0.09
%


0.09
%


0.20
%   Accounting for Uncertain Tax Positions Accounting for Income Taxes.
    12.
    Defined
    Contribution Plan    13.
    Strategic
    Alliances and Collaborations    GlaxoSmithKline
     F-24




---



##### Table of Contents



EPIX
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  product-by-product country-by-country
  product-by-product country-by-country
        Amgen
     F-25




---



##### Table of Contents



EPIX
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    
    Amgen is required to obtain third-party rights to develop and
    commercialize a product that incorporates an EPIX
    compound; and
    Amgen develops and commercializes products that are not covered
    by the intellectual property rights the Company licensed to
    Amgen, such as for example, S1P1-modulating products that may be
    acquired by Amgen from a third-party.  product-by-product country-by-country
      Cystic
    Fibrosis Foundation Therapeutics, Incorporated
   F-26




---



##### Table of Contents



EPIX
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      
    The first program is focused on correcting a malfunction of the
    Cystic Fibrosis Transmembrane conductance Regulator, or CFTR,
    ion channel protein. The Company is using its proprietary
    structure-based technologies to model the structure of this ion
    channel protein target and identify binding sites in the channel
    for therapeutic intervention. Once these sites are identified,
    the Company aims to use its drug discovery capabilities to
    discover a drug that restores proper functionality to the
    channel in patients with cystic fibrosis. Based upon the results
    of the program, the Company and CFFT have agreed to negotiate
    towards a follow-on agreement under which the Company will
    explore a structure-based approach for the discovery and
    commercialization of a drug that will target CFTR, with the
    financial support of CFFT and subject to a royalty payable to
    CFFT.
    The second program, which expired in 2007, was focused on the
    discovery of a small-molecule agonist to the G-Protein Coupled
    Receptor known as P2Y(2), which plays a role in cystic fibrosis,
    using the Companys proprietary structure-based drug design
    system. The Company retains the right to develop and
    commercialize any drug candidates discovered through this second
    program, and is obligated to make aggregate royalty payments of
    up to $15.0 million to CFFT for the first drug candidate
    that reaches particular regulatory and sales milestones.    Bayer
    Schering Pharma AG, Germany
    region-by-region
 F-27




---



##### Table of Contents



EPIX
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      Technology
    Agreements
  Ramot
       F-28




---



##### Table of Contents



EPIX
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  country-by-country
      Covidien
    (formerly Tyco International)
    Massachusetts
    General Hospital
  country-by-country
 F-29




---



##### Table of Contents



EPIX
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    14.
    Quarterly
    Financial Information (unaudited)    March 31,


June 30,


September 30,


December 31,2007


2007


2007


2007Revenues:Product development revenue

$
434,392


$
395,087


$
4,192,766


$
5,216,875Royalty revenue


487,658



315,135



100,470



114,406License fee revenue


1,032,850



1,046,458



1,046,459



577,493Total revenues


1,954,900



1,756,680



5,339,695



5,908,774Operating expenses:Research and development


13,491,119



14,789,943



14,930,082



14,315,362General and administrative


8,613,758



4,478,387



3,560,010



3,399,738Royalties


53,668



83,428



203,475



254,698Restructuring






350,137







Total operating expenses


22,158,545



19,701,895



18,693,567



17,969,798Operating loss


(20,203,645
)


(17,945,215
)


(13,353,872
)


(12,061,024
)Interest and other income


1,962,953



1,174,354



927,549



836,250Interest expense


(1,230,734
)


(1,252,945
)


(504,397
)


(1,079,719
)Loss before provision for income taxes


(19,471,426
)


(18,023,806
)


(12,930,720
)


(12,304,493
)Provision for income taxes


38,089



20,029







Net loss

$
(19,509,515
)

$
(18,043,835
)

$
(12,930,720
)

$
(12,304,493
)Weighted average shares, basic and diluted


32,586,377



32,622,318



32,850,191



37,686,382Net loss per share, basic and diluted

$
(0.60
)

$
(0.55
)

$
(0.39
)

$
(0.33
)  F-30




---



##### Table of Contents



EPIX
    PHARMACEUTICALS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  March 31,


June 30,


September 30,


December 31,2006


2006


2006


2006Revenues:Product development revenue

$
1,082,867


$
731,191


$
569,378


$
525,966Royalty revenue


457,778



462,718



362,449



320,285License fee revenue


161,597



161,597



413,802



790,914Total revenues


1,702,242



1,355,506



1,345,629



1,637,165Operating expenses:Research and development


3,865,001



3,135,417



7,881,361



11,373,221Acquired in-process research and development










123,500,000



General and administrative


2,422,528



1,777,927



3,146,316



4,910,549Royalties


43,795



28,233



31,778



959,296Restructuring


289,633



61,472



282,133



Total operating expenses


6,620,957



5,003,049



134,841,588



17,243,066Operating loss


(4,918,715
)


(3,647,543
)


(133,495,959
)


(15,605,901
)Interest and other income


1,304,573



1,410,928



1,519,338



1,261,242Interest expense


(869,363
)


(875,631
)


(1,082,380
)


(2,248,474
)Loss before provision for income taxes


(4,483,505
)


(3,112,246
)


(133,059,001
)


(16,593,133
)Provision for income taxes


43,816



43,818



31,551



26,128Net loss

$
(4,527,321
)

$
(3,156,064
)

$
(133,090,552
)

$
(16,619,261
)Weighted average shares, basic and diluted


15,523,207



15,523,207



22,193,441



29,917,696Net loss per share, basic and diluted

$
(0.29
)

$
(0.20
)

$
(6.00
)

$
(0.56
)  F-31