##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2005
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from___to___
 Commission File Number: 000-50516
 
 Eyetech Pharmaceuticals, Inc.
 (Exact Name of Registrant as Specified in its Charter)
 Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
    
    13-4104684
(I.R.S. Employer
Identification No.)
 3 Times Square, 12th Floor
New York, New York 10036
(Address of Principal Executive Offices including Zip Code)
 (212) 824-3100
(Registrants Telephone Number, Including Area Code)
 No Change
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
 
 þ o
 o þ




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TABLE OF CONTENTS
  
 Page No.PART I  FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    3Condensed Consolidated Balance Sheets as of June 30, 2005 (unaudited) and December 31, 2004
    
    
    3Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2005 and June 30, 2004 (unaudited)
    
    
    4Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2005 and June 30, 2004 (unaudited)
    
    
    5Notes to Condensed Unaudited Consolidated Financial Statements
    
    
    6Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3.Quantitative and Qualitative Disclosures About Market Risk
    
    
    42Item 4. Controls and Procedures
    
    
    43PART II  OTHER INFORMATIONItem 1.Legal Proceedings
    
    
    44Item 2.Unregistered Sale of Equity Securities and Use of Proceeds
    
    
    44Item 3. Defaults Upon Senior Securities
    
    
    44Item 4.Submission of Matters to a Vote of Security Holders
    
    
    44Item 5. Other Information
    
    
    44Item 6. Exhibits
    
    
    44Signatures
    
    
    45EX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 EYETECH PHARMACEUTICALS, INC.
 CONDENSED CONSOLIDATED BALANCE SHEETS
 June 30,
    
    December 31,2005
    
    2004(in thousands, except par value and shares)
    
    (Unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    74,376
    
    
    $
    40,780Marketable securities
    
    
    189,268
    
    
    
    170,715Accounts receivable, net of allowances
    
    
    55,109
    
    
    
    Collaboration receivable
    
    
    166
    
    
    
    91,966Inventory
    
    
    9,131
    
    
    
    Prepaid expenses and other current assets
    
    
    6,358
    
    
    
    7,868Total current assets
    
    
    334,408
    
    
    
    311,329Property and equipment, net
    
    
    22,372
    
    
    
    17,817Restricted cash
    
    
    5,927
    
    
    
    5,927Other assets
    
    
    10,774
    
    
    
    4,386Total assets
    
    $
    373,481
    
    
    $
    339,459Liabilities and Stockholders EquityCurrent liabilities:Accounts payable and accrued expenses
    
    $
    31,874
    
    
    $
    25,103Collaboration profit share payable
    
    
    28,221
    
    
    
    Deferred revenue, current portion
    
    
    19,421
    
    
    
    13,693Capital lease obligations, current portion
    
    
    1,421
    
    
    
    1,460Deferred rent liability, current portion
    
    
    1,000
    
    
    
    1,038Total current liabilities
    
    
    81,937
    
    
    
    41,294Deferred revenue, net of current portion
    
    
    153,175
    
    
    
    159,706Capital lease obligations, net of current portion
    
    
    550
    
    
    
    1,254Deferred rent liability, net of current portion
    
    
    7,406
    
    
    
    6,067Stockholders equity:Preferred stock $.01 par value; 5,000,000 shares authorized,
none issued and outstanding at June 30, 2005 and December 31, 2004
    
    
    
    
    
    
    Common stock $.01 par value; 125,000,000 shares authorized;
45,290,793 issued and 44,851,764 outstanding at June 30, 2005;
42,329,499 issued and 41,904,499 outstanding at December 31, 2004
    
    
    453
    
    
    
    423Additional paid-in capital
    
    
    423,129
    
    
    
    382,177Deferred compensation
    
    
    (30,466
    )
    
    
    (11,817
    )Treasury stock, at cost
    
    
    (854
    )
    
    
    (255
    )Accumulated other comprehensive income
    
    
    (576
    )
    
    
    (573
    )Accumulated deficit
    
    
    (261,273
    )
    
    
    (238,817
    )Total stockholders equity
    
    
    130,413
    
    
    
    131,138Total liabilities and stockholders equity
    
    $
    373,481
    
    
    $
    339,459
  3




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##### Table of Contents



EYETECH PHARMACEUTICALS, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 Three Months Ended June 30,
    
    Six Months Ended June 30,(in thousands, except per share amounts)
    
    2005
    
    2004
    
    2005
    
    2004Revenue:Gross product revenue
    
    $
    49,667
    
    
    $
    
    
    
    $
    75,075
    
    
    $
    Less: Distribution service fees, allowances, and returns
    
    
    (2,681
    )
    
    
    
    
    
    
    (4,422
    )
    
    
    Net product revenue
    
    
    46,986
    
    
    
    
    
    
    
    70,653
    
    
    
    License fees
    
    
    3,060
    
    
    
    1,250
    
    
    
    6,147
    
    
    
    2,500Reimbursement of development costs
    
    
    6,823
    
    
    
    11,300
    
    
    
    14,070
    
    
    
    21,762Other revenue
    
    
    265
    
    
    
    
    
    
    
    815
    
    
    
    Total revenue
    
    
    57,134
    
    
    
    12,550
    
    
    
    91,685
    
    
    
    24,262Operating expenses:Cost of goods sold
    
    
    9,780
    
    
    
    
    
    
    
    14,517
    
    
    
    Research and development
    
    
    22,018
    
    
    
    33,914
    
    
    
    43,340
    
    
    
    55,844Sales and marketing
    
    
    11,922
    
    
    
    6,178
    
    
    
    22,361
    
    
    
    9,977Collaboration profit sharing
    
    
    18,756
    
    
    
    
    
    
    
    28,221
    
    
    
    General and administrative
    
    
    3,560
    
    
    
    4,319
    
    
    
    9,168
    
    
    
    5,962Total operating expenses
    
    
    66,036
    
    
    
    44,411
    
    
    
    117,607
    
    
    
    71,783Loss from operations
    
    
    (8,902
    )
    
    
    (31,861
    )
    
    
    (25,922
    )
    
    
    (47,521
    )Interest income
    
    
    1,897
    
    
    
    877
    
    
    
    3,592
    
    
    
    1,572Interest expense
    
    
    (63
    )
    
    
    (38
    )
    
    
    (126
    )
    
    
    (84
    )Net loss
    
    
    (7,068
    )
    
    
    (31,022
    )
    
    
    (22,456
    )
    
    
    (46,033
    )Preferred stock accretion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (816
    )Net loss attributable to common stockholders
    
    
    (7,068
    )
    
    
    (31,022
    )
    
    
    (22,456
    )
    
    
    (46,849
    )Basic and diluted net loss attributable
to common stockholders per share
    
    $
    (0.16
    )
    
    $
    (0.77
    )
    
    $
    (0.53
    )
    
    $
    (1.38
    )Weighted average shares outstanding  basic and diluted
    
    
    42,991
    
    
    
    40,389
    
    
    
    42,680
    
    
    
    33,960Pro forma basic and diluted net loss per share
attributable to common
stockholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (1.23
    )Weighted average shares outstanding  pro forma basic
and diluted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38,123
  4




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EYETECH PHARMACEUTICALS INC
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Six Months Ended June 30,(in thousands)
    
    2005
    
    2004Operating activitiesNet loss
    
    $
    (22,456
    )
    
    $
    (46,033
    )Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:Depreciation and amortization
    
    
    2,022
    
    
    
    863Noncash stock-based compensation
    
    
    4,939
    
    
    
    4,924Loss on disposal of assets
    
    
    7
    
    
    
    153(Gain) loss on sale of marketable securities
    
    
    (2
    )
    
    
    32Changes in operating assets and liabilities:Collaboration receivable
    
    
    91,800
    
    
    
    806Accounts receivable
    
    
    (55,109
    )
    
    
    Prepaid expenses and other current assets
    
    
    1,569
    
    
    
    (2,018
    )Inventory
    
    
    (9,131
    )
    
    
    Other assets
    
    
    (6,388
    )
    
    
    (149
    )Accounts payable and accrued expenses and
collaboration profit sharing payable
    
    
    34,994
    
    
    
    8,934Deferred revenue
    
    
    (803
    )
    
    
    (433
    )Other liabilities
    
    
    1,301
    
    
    
    2,627Net cash provided by (used in) operating activities
    
    
    42,743
    
    
    
    (30,294
    )Investing activitiesPurchases of property and equipment
    
    
    (6,584
    )
    
    
    (3,523
    )Purchase of marketable securities
    
    
    (1,140,291
    )
    
    
    (2,302,664
    )Proceeds from sale and maturities of marketable securities
    
    
    1,121,735
    
    
    
    2,234,896Increase in restricted cash
    
    
    
    
    
    
    (303
    )Repayment of loan to stockholders
    
    
    
    
    
    
    101Interest receivable
    
    
    (59
    )
    
    
    (493
    )Net cash used in investing activities
    
    
    (25,199
    )
    
    
    (71,986
    )Financing activitiesProceeds from issuance of common stock, net
    
    
    14,993
    
    
    
    154,707Proceeds from exercise of stock options
    
    
    2,401
    
    
    
    Proceeds from issuance of redeemable convertible
preferred stock and warrants, net
    
    
    
    
    
    
    2,640Purchase of treasury stock
    
    
    (599
    )
    
    
    Repayment of capital leases
    
    
    (743
    )
    
    
    (301
    )Net cash provided by financing activities
    
    
    16,052
    
    
    
    157,046Net increase in cash and cash equivalents
    
    
    33,596
    
    
    
    54,766Cash and cash equivalents at beginning of period
    
    
    40,780
    
    
    
    25,014Cash and cash equivalents at end of period
    
    $
    74,376
    
    
    $
    79,780Supplemental disclosures of cash flow informationCash paid during the period for:Interest
    
    $
    126
    
    
    $
    38Issuance of redeemable preferred stock
on conditional exercise of warrants
    
    $
    
    
    
    $
    501Conversion of redeemable and convertible
preferred stock to common stock
    
    $
    
    
    
    $
    189,614Expenses in connection with initial public
offering of common stock reclassified to
additional paid in capital
    
    $
    
    
    
    $
    1,701
  5




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EYETECH PHARMACEUTICALS, INC.
 
 NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2005
 1. Organization and Description of Business
   2. Summary of Significant Accounting Policies
 Basis of Presentation
   Cash Equivalents
  Marketable Securities
  6




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Restricted Cash
  Concentration of Credit Risk
  Revenue Recognition
 Product Revenue
    
    
    The Companys distributors have a limited right of return for unopened product during a
specified time period based on the products labeled expiration date. As a result, in
calculating the allowance for product returns, the Company estimates the likelihood that
product sold to distributors might be returned within a specific timeframe. The Company
determines its estimates using actual product data from distributors, industry data on
products with similar characteristics and the expiration dates of product sold.
    
    Certain government buying groups that purchase the Companys product from wholesalers
have the right to receive a discounted price from the Company. As a result, the Company
estimates the amount of product which will ultimately be sold to these buying groups. The
Company determines its estimates using actual product data from distributors and historical
industry trends.
  Reimbursement of Development Costs and License Revenue
  7




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##### Table of Contents



Research and Development Costs
  Inventory
  The major classes of inventory were as follows (in thousands) :
 June 30,
    
    June 30,Inventory
    
    2005
    
    2004Raw materials
    
    $
    1,685
    
    
    $
    Work-in-progress
    
    
    3,203
    
    
    
    Finished goods
    
    
    4,243
    
    
    
    Total inventory
    
    $
    9,131
    
    
    $
    
 Stock-Based Compensation
  8




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##### Table of Contents



(in thousands):
 Three Months Ended June 30,
    
    Six Months Ended June 30,2005
    
    2004
    
    2005
    
    2004Net loss attributable
to common
stockholders, as
reported
    
    $
    (7,068
    )
    
    $
    (31,022
    )
    
    $
    (22,456
    )
    
    $
    (46,849
    )Add: Non-cash employee
compensation as
reported
    
    
    1,463
    
    
    
    1,649
    
    
    
    5,609
    
    
    
    2,790Deduct: Total
stock-based employee
compensation expense
determined under fair
value based method for
all awards
    
    
    (59,543
    )
    
    
    (2,759
    )
    
    
    (64,639
    )
    
    
    (4,539
    )SFAS 123 pro forma loss
    
    $
    (65,148
    )
    
    $
    (32,132
    )
    
    $
    (81,486
    )
    
    $
    (48,598
    )Basic and diluted loss
attributable to common
stockholders per
share, as reported
    
    $
    (0.16
    )
    
    $
    (0.77
    )
    
    $
    (0.53
    )
    
    $
    (1.38
    )Basic and diluted loss
attributable to common
stockholders per
share, SFAS 123 pro
forma
    
    $
    (1.52
    )
    
    $
    (0.80
    )
    
    $
    (1.91
    )
    
    $
    (1.43
    )
 9




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##### Table of Contents



Three Months Ended June 30,
    
    Six Months Ended June 30,2005
    
    2004
    
    2005
    
    2004Risk-free interest rate
    
    
    4.1% - 4.34
    %
    
    
    3.8% - 4.75
    
    
    
    4.1% - 4.96
    %
    
    
    3.9% - 4.75Dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Expected life
    
    6.25 years
    
    
    5 years
    
    
    6.25 years
    
    
    5 yearsVolatility
    
    
    77
    %
    
    
    76
    %
    
    
    74
    %
    
    
    74
    %
   Income Taxes
  Recently Issued Accounting Pronouncements
    10




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##### Table of Contents



Stock Based Compensation.
 3. Net Loss Per Share
  (in thousands)
 Three Months Ended June 30,
    
    Six Months Ended June 30,2005
    
    2004
    
    2005
    
    2004Numerator:Net Loss
    
    $
    (7,068
    )
    
    $
    (31,022
    )
    
    $
    (22,456
    )
    
    $
    (46,033
    )Preferred stock accretion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (816
    )Numerator for basic and
diluted net loss
attributable to common
stockholders per share 
net loss attributable to
common stockholders
    
    $
    (7,068
    )
    
    $
    (31,022
    )
    
    $
    (22,456
    )
    
    $
    (46,849
    )Denominator:Denominator for basic
and dilutive net loss
attributable to common
stockholders per share 
weighted-average shares
    
    
    42,991
    
    
    
    40,389
    
    
    
    42,680
    
    
    
    33,960Basic and diluted net
loss attributable to
common stockholders per
share
    
    $
    (0.16
    )
    
    $
    (0.77
    )
    
    $
    (0.53
    )
    
    $
    (1.38
    )Denominator for
unaudited pro forma
basic and diluted net
loss attributable to
common stockholders per
share  weighted average
shares
    
    
    42,991
    
    
    
    40,389
    
    
    
    42,680
    
    
    
    38,123Unaudited pro forma
basic and diluted net
loss attributable to
common stockholders per
share
    
    $
    (0.16
    )
    
    $
    (0.77
    )
    
    $
    (0.53
    )
    
    $
    (1.23
    )
  11




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##### Table of Contents



(in thousands)
 Three Months Ended June 30,
    
    Six Months Ended June 30,2005
    
    2004
    
    2005
    
    2004Preferred Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,163Options
    
    
    5,117
    
    
    
    6,064
    
    
    
    5,268
    
    
    
    6,064Warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9235,117
    
    
    
    6,064
    
    
    
    5,268
    
    
    
    11,150
 4. Comprehensive Loss
 (in thousands)
 Three Months Ended June 30,
    
    Six Months Ended June 30,2005
    
    2004
    
    2005
    
    2004Net loss
    
    $
    (7,068
    )
    
    $
    (31,022
    )
    
    $
    (22,456
    )
    
    $
    (46,033
    )Unrealized gain (loss) on available for sale securities
    
    
    216
    
    
    
    (725)
    )
    
    
    (4
    )
    
    
    (690
    )Comprehensive loss
    
    $
    (6,852
    )
    
    $
    (31,747
    )
    
    $
    (22,460
    )
    
    $
    (46,723
    )
 5. Pfizer Collaboration
    12




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6. Termination Benefits
  13




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Overview
       14




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
    
    In February 2003, upon effectiveness of the collaboration arrangements, Pfizer paid us
$100 million, consisting of a $75 million initial license fee and a $25 million equity
investment;
    
    In February 2004, Pfizer purchased an additional $10 million of our common stock at the
closing of our initial public offering;
    
    In September 2004, Pfizer paid us $10 million after the acceptance for review by the FDA
of our new drug application for the use of Macugen in the treatment of neovascular AMD;
    
    In October 2004, Pfizer paid us $5.5 million after the European Medicines Agencys
acceptance of the filing of Pfizers marketing authorization application for Macugen for
use in the treatment of neovascular AMD;
    
    In January 2005, Pfizer paid us a $90 million license fee after the approval in December
2004 by the FDA of Macugen for the treatment of neovascular AMD; and
    
    In February 2005, Pfizer purchased 344,000 shares of our common stock at a purchase
price of approximately $43.60 per share for total proceeds of $15 million after the
approval by the FDA of Macugen for the treatment of neovascular AMD.
  
    
    Up to $90 million in additional payments based on the achievement of additional
worldwide regulatory submissions and approvals; and
    
    Up to $450 million in payments based upon attainment of specified sales levels of
Macugen.
    15




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##### Table of Contents



Planned and Ongoing Clinical Programs
  
    
    We are continuing our Phase 2/3 clinical trial studying Macugen in
neovascular AMD to gain longer term safety data.
    
    In the second half of 2005, we plan to start a Phase 2/3 DME clinical
trial and our Phase 2 RVO clinical trial is currently enrolling patients. Both
DME and RVO represent large unmet medical needs, where there is no approved
pharmacological therapy.
    
    During the first half of 2006, we are planning to launch a Phase 4
clinical trial which will explore the safety and efficacy of the FDA approved
0.3 mg dose of Macugen versus two additional lower doses of Macugen in patients
with subfoveal, neovascular AMD. This trial will also provide subsequent
information on the potential degenerative effects on the neurosensory retina
and adverse effects on the corneal endothelium.
    
    In the second quarter of 2005, we and Pfizer started enrolling patients
in a Phase 4 combination trial with Macugen and Visudyne versus Macugen alone,
to determine if patients with the predominantly classic form of AMD benefit
from combination therapy.
 16




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##### Table of Contents




    
    We are conducting pre-clinical research on improving Macugens drug
delivery, which if successful, may ultimately enable us to simplify the
treatment for AMD patients. In addition, if extended release Macugen is
ultimately successful, it may enable us to pursue the large prophylactic market
for dry AMD.
    
    We are conducting pre-clinical research to develop agents designed for
use in combination with Macugen to enhance its efficacy in the treatment of
neovascular AMD. Specifically, we are developing an aptamer which targets
platelet-derived growth factor (PDGF), a protein believed important in the
disease process underlying neovascular AMD.
 Critical Accounting Policies and Significant Judgments and Estimates
  Revenue Recognition
   o
    
    The price of the sales order is fixed and determinable, and the buyer is obligated to
pay us;o
    
    The obligation to pay is not contingent on resale of the product as the buyer has
economic substance apart from us, thus we have no obligation to bring about sale of the
product; ando
    
    The amount of returns can be reasonably estimated and collectibility is reasonably
assured.
  17




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Inventory
  Stock-based Compensation
  18




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##### Table of Contents



Accounting Pronouncements
  Results of Operations
 Quarters Ended June 30, 2005 and 2004
 Revenue.
 Product Sales.
 License Fees, Reimbursements of Development Costs and Other Revenue .
 Cost of Goods Sold.
 19




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##### Table of Contents



Research and Development Expenses.
 Sales and Marketing Expenses .
 General and Administrative Expenses .
 Collaboration Profit Sharing.
 Interest Income.
 20




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##### Table of Contents



Net Loss.
 Six months ended June 30, 2005 and 2004
 Revenue.
 Product Sales.
 License Fees, Reimbursements of Development Costs and Other Revenue.
 Cost of Goods Sold.
 Research and Development Expenses.
 21




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##### Table of Contents



Sales and Marketing Expenses .
 General and Administrative Expenses .
 Collaboration Profit Sharing.
 Interest Income.
 Net Loss.
 22




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##### Table of Contents



Liquidity and Capital Resources
 Sources of Liquidity
    Income Taxes
    23




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##### Table of Contents



Cash Flows
  Funding Requirements
   
    
    the success of our collaboration with Pfizer to further develop and commercialize Macugen;
    
    the scope and results of our clinical trials;
    
    the cost of manufacturing activities including the expansion of our Boulder facility;
    
    the cost of commercialization activities, including product marketing, sales and distribution;
    
    advancement of other product candidates into development;
    
    potential acquisition or in-licensing of other products or technologies;
    
    the timing of, extent of, and the costs involved in, obtaining additional regulatory approvals;
    
    the costs involved in preparing, filing, prosecuting, maintaining and enforcing patent
claims and other patent-related costs, including litigation costs and the results of such
litigation; and
    
    our ability to establish and maintain additional collaborative arrangements.
 We believe that the key factors that will affect our internal and external sources of cash
are:
 
    
    our ability to continue the successful launch of Macugen in the United States and to
obtain marketing approval outside the United States;
    
    the receptivity of the capital markets to financings by biotechnology companies;
    
    the success of our other preclinical and clinical development programs;
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
    
    our accounts receivable growth and collections cycle; and
    
    our ability to enter into additional strategic collaborations with corporate and
academic collaborators and the success of such collaborations.
  Contractual Obligations
  We have summarized in the table below our fixed contractual cash obligations as of June 30, 2005 (in thousands) .
 Payments Due by PeriodLess Than
    
    
    One to
    
    
    Three to
    
    
    More ThanContractual Obligations
    
    Total
    
    
    One Year
    
    
    Three Years
    
    
    Five Years
    
    
    Five YearsCapital lease obligations, including
interest
    $
    
    2,102
    
    $
    
    1,540
    
    $
    
    562
    
    $
    
    
    
    $
    
    Operating leases
    
    
    78,628
    
    
    
    5,418
    
    
    
    11,566
    
    
    
    10,285
    
    
    
    51,359Total contractual cash obligations
    $
    
    80,730
    
    
    
    6,958
    
    
    
    12,128
    
    
    
    10,285
    
    
    
    51,359
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RISK FACTORS THAT MAY AFFECT RESULTS
 Risks Relating to Our Business
 We depend heavily on the success of our one product, Macugen, which we began selling in the United
States in January 2005.
  
    
    continued acceptance of Macugen in the medical community, by patients receiving
therapy and by third party payors;
    
    supplying sufficient quantities of Macugen to meet market demand;
    
    successfully building and sustaining manufacturing capacity to meet future demand;
    
    the competitive landscape for approved and developing therapies that will compete
with Macugen;
    
    Macugens efficacy and safety profile as demonstrated in a broad patient population
continuing to be consistent with that shown in clinical trials;
    
    receipt of marketing approvals from non-U.S. regulatory authorities;
    
    our ability to expand the indications for which we can market Macugen;
    
    continued positive data from our clinical trials; and
    
    implementation of our post-approval commitments to the FDA in a timely fashion.
    
    The ability and willingness of clinicians and patients to maintain continuous
therapy at intervals every six weeks.
 We depend heavily on our collaboration with Pfizer, which involves a complex sharing of control
over decisions, responsibilities and costs and benefits. Any loss of Pfizer as a collaborator, or
adverse development in the collaboration, would materially harm our business.
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We face substantial competition with respect to sales of Macugen and expect competition with
respect to other drugs that we may develop or commercialize. Such competition may result in others
discovering, developing or commercializing competing products before or more successfully than we
do.
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Our product revenues are substantially dependent on a limited number of wholesale distributors to
which we sell Macugen. Product revenues may fluctuate from quarter to quarter based on the buying
patterns of these distributors.
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We may not be successful in our efforts to expand our portfolio of products.
   
    
    the research methodology used may not be successful in identifying potential product
candidates; or
    
    potential product candidates may on further study be shown to have harmful side
effects or other characteristics that indicate they are unlikely to be effective drugs.
  
    
    we may be unable to license or acquire the relevant technology on terms that would
allow us to make an appropriate return from the product;
    
    companies that perceive us to be their competitors may be unwilling to assign or
license their product rights to us; or
    
    we may be unable to identify suitable products or product candidates within our
areas of expertise.
  We expect to depend on collaborations with third parties to develop and commercialize our products.
   
    
    our collaboration agreements are, or are expected to be, for fixed terms and subject
to termination under various circumstances, including, in many cases, on short notice
without cause;
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
    
    we expect to be required in our collaboration agreements not to conduct specified
types of research and development in the field that is the subject of the
collaboration. These agreements may have the effect of limiting the areas of research
and development that we may pursue, either alone or in cooperation with third parties;
    
    our collaborators may develop and commercialize, either alone or with others,
products and services that are similar to or competitive with our products that are the
subject of the collaboration with us; and
    
    our collaborators may change the focus of their development and commercialization
efforts. Pharmaceutical and biotechnology companies historically have re-evaluated
their priorities following mergers and consolidations, which have been common in recent
years in these industries. The ability of our products to reach their potential could
be limited if our collaborators decrease or fail to increase spending relating to such
products.
  We may not be successful in establishing additional collaborations, which could adversely affect
our ability to develop and commercialize products and services.
  We currently have no operational manufacturing facilities for Macugen and a limited number of
manufacturing personnel. We depend on third parties to manufacture Macugen. If these manufacturers
fail to meet our requirements, our product development and commercialization efforts may be
materially harmed.
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
    
    reliance on the third party manufacturers for regulatory compliance and quality
assurance;
    
    the possible breach of the manufacturing agreement by the third party because of
factors beyond our control; and
    
    the possibility of termination or non-renewal of the agreement by the third party,
based on its own business priorities, at a time that is costly or inconvenient for us.
 The manufacture and packaging of pharmaceutical products such as Macugen are subject to the
requirements of the FDA and similar foreign regulatory bodies. If we or our third party
manufacturers fail to satisfy these requirements, our product development and commercialization
efforts may be materially harmed.
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Macugen and our other potential products may not be commercially viable if we fail to obtain an
adequate level of reimbursement for these products by Medicare and other third party payors. The
markets for our products may also be limited by the indications for which their use may be
reimbursed or the frequency in which they may be administered.
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The 2003 Medicare prescription drug coverage legislation, The Medicare Prescription Drug
Improvement and Modernization Act, or the MMA, and future legislative or regulatory reform of the
healthcare system may affect our ability to sell our products profitably.
  We face the risk of product liability claims and may not have adequate insurance coverage.
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We depend on our key personnel. If we are not able to retain them or recruit additional technical
personnel, our business will suffer.
   We are growing rapidly, and if we fail to adequately manage that growth, our business could be
adversely impacted.
  
    
    we have a single source of product revenue, a fixed amount of cash and predetermined
anticipated milestone payments that may be due to us, so we will need to generate
significant and continued product or other revenues to cover our anticipated growing
level of operating expenses;
    
    we will need to manage complexities associated with a larger and faster growing
organization; and
    
    we will need to accurately anticipate demand for our products and maintain adequate
manufacturing capacity, and our ability to do so may depend on factors that we do not
control.
  We depend on third parties in the conduct of our clinical trials for Macugen and any failure of
those parties to fulfill their obligations could adversely affect our development and
commercialization plans.
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Regulatory Risks
 If our clinical trials generate data that are not as favorable as historical data, our clinical
trials are viewed as unsuccessful, or if we experience significant delays in these trials, our
ability to further commercialize Macugen and our future product candidates will be impaired.
    
    
    interim results of preclinical or clinical studies are not necessarily predictive of
their final results, and acceptable results in early studies might not be seen in later
studies, in large part because earlier phases of studies are often conducted on smaller
groups of patients than later studies, and without the same trial design features, such
as randomized controls and long-term patient follow-up and analysis;
    
    potential products that appear promising at early stages of development may
ultimately fail for a number of reasons, including the possibility that the products
may be ineffective, less effective than products of our competitors or cause harmful
side effects;
    
    any preclinical or clinical test may fail to produce results satisfactory to the FDA
or foreign regulatory authorities;
    
    preclinical and clinical data can be interpreted in different ways, which could
delay, limit or prevent regulatory approval;
    
    negative or inconclusive results from a preclinical study or clinical trial or
adverse medical events during a clinical trial could cause a preclinical study or
clinical trial to be repeated or a program to be terminated, even if other studies or
trials relating to the program are successful;
    
    the FDA can place a hold on a clinical trial if, among other reasons, it finds that
patients enrolled in the trial are or would be exposed to an unreasonable and
significant risk of illness or injury;
    
    we may encounter delays or rejections based on changes in regulatory agency policies
during the period in which we develop a drug or the period required for review of any
application for regulatory agency approval;
    
    our clinical trials may not demonstrate the safety and efficacy needed for our
products to receive regulatory approval; and
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
    
    our FDA-required post-marketing safety trials may identify new, more frequent, or
more serious adverse events than those previously characterized, which may limit
product acceptance.
    The fast track designation for development of Macugen in DME may not actually lead to a faster
development or regulatory review or approval process.
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We may not be able to obtain marketing approval for any other product resulting from our
development efforts. Failure to obtain additional approvals could materially harm our business.
     Macugen and any future products could be subject to restrictions or withdrawal from the market and
we may be subject to penalties if we fail to comply with regulatory requirements, or if we
experience unanticipated problems with our products after approval.
  
    
    provide subsequent information on the potential degenerative effects on the
neurosensory retina based on a study of at least two years and adverse effects on the
corneal endothelium based on a study of at least one year;
    
    provide safety and efficacy data from a clinical study of at least two years of at
least two additional doses of Macugen below the approved dose of 0.3 mg for neovascular
AMD; and
    
    strengthen controls relative to the Macugen packaging components and operations.
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
    
    restrictions on such products or manufacturing processes;
    
    withdrawal of the products from the market;
    
    voluntary or mandatory recall;
    
    fines;
    
    suspension of regulatory approvals;
    
    requests from the FDA or other agencies for additional information from us or data
from additional clinical trials;
    
    product seizure; and
    
    injunctions or the imposition of civil or criminal penalties.
  Failure to obtain regulatory approval in foreign jurisdictions would prevent us from marketing our
products abroad.
  Risks Relating to Intellectual Property
 If we are unable to obtain and maintain protection for the intellectual property incorporated into
our products, the value of our technology and products will be adversely affected.
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If we fail to comply with our obligations in the agreements under which we license development or
commercialization rights to products or technology from third parties, we could lose license rights
that are important to our business.
  If we are unable to protect the confidentiality of our proprietary information and know-how, the
value of our technology and products could be adversely affected.
  Third parties may own or control patents or patent applications that could be determined to be
infringed by our technologies, drug targets or potential products. This could cause us to become
involved in expensive patent litigation or other proceedings, which could result in our incurring
substantial costs and expenses and liability for damages. This could also require us to seek
licenses, which could increase our development and commercialization costs. In either case, this
could require us to stop some of our development and commercialization efforts.
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Risks Relating to Our Financial Results and Need for Financing
 We have a limited operating history and have incurred losses since inception. If we do not generate
significant revenues, we will not be able to achieve profitability.
  Our revenues and operating results may fluctuate, and this fluctuation could cause our financial
results to be below expectations.
  
    
    lower than expected demand for our products;
    
    inability to provide adequate supply of our products;
    
    changes in the governments or private payors reimbursement policies for our products;
    
    changes in wholesaler buying patterns;
    
    increased competition from new or existing products;
    
    delays in approvals for new products;
    
    fluctuations in foreign currency exchange rates; and
    
    changes in our product pricing strategies.
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We may need additional financing, which may be difficult to obtain. Our failure to obtain necessary
financing or obtaining financing on unattractive terms could adversely affect our development
programs and other operations.
   
    
    the success of our collaboration with Pfizer to commercialize and further develop
Macugen;
    
    the scope and results of our clinical trials;
    
    the cost of manufacturing activities including the expansion of our Boulder facility;
    
    the cost of commercialization activities, including product marketing, sales and
distribution;
    
    advancement of other product candidates into development;
    
    potential acquisition or in-licensing of other products or technologies;
    
    the timing of, extent of, and the costs involved in, obtaining regulatory approvals;
    
    the cost of manufacturing activities;
    
    the costs involved in preparing, filing, prosecuting, maintaining and enforcing
patent claims and other patent-related costs, including litigation costs and the
results of such litigation; and
    
    our ability to establish and maintain additional collaborative arrangements.
  General Company Related Risks
 Our executive officers, directors and major stockholders will maintain the ability to control all
matters submitted to stockholders for approval.
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Our recently adopted stockholder rights plan, provisions in our charter documents and under
Delaware law may prevent or frustrate attempts by our stockholders to change our management and
hinder efforts to acquire a controlling interest in us.
  
    
    a classified board of directors;
    
    limitations on the removal of directors;
    
    advance notice requirements for stockholder proposals and nominations;
    
    the inability of stockholders to act by written consent or to call special meetings; and
    
    the ability of our board of directors to designate the terms of and issue new series
of preferred stock without stockholder approval.
   Our stock price is volatile; purchasers of our common stock could incur substantial losses.
  
    
    failure of Macugen to continue its commercial success;
    
    results of our clinical trials or those of our competitors;
    
    the regulatory status of Macugen and our other potential products;
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
    
    the regulatory status of potentially competitive products;
    
    developments concerning our collaborators, including Pfizer;
    
    regulatory developments in, and outside of, the United States;
    
    developments or disputes concerning patents or other proprietary rights;
    
    our ability to manufacture products to commercial standards;
    
    public concern over our products;
    
    litigation;
    
    the departure of key personnel;
    
    future sales of our common stock;
    
    variations in our financial results or those of companies that are perceived to be
similar to us;
    
    changes in the structure of healthcare payment systems;
    
    investors perceptions of us; and
    
    general economic, industry and market conditions.
 If there are substantial sales of our common stock, our stock price could decline.
   
 Item 3. Quantitative and Qualitative Disclosure About Market Risk
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Item 4. Controls and Procedures
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Part II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 2. Unregistered Sale of Equity Securities and Use of Proceeds.
  
 Item 3. Defaults Upon Senior Securities.
  
 Item 4. Submission to a Vote of Security Holders.
   Director
    
    For
    
    WithheldSamir Patel, M.D.
    
    
    25,238,807
    
    
    
    4,529,905Michael J. Regan
    
    
    28,147,071
    
    
    
    1,621,641Damion E. Wicker, M.D.
    
    
    28,759,447
    
    
    
    1,009,265
  Director
    
    For
    
    WithheldPhillip M. Satow
    
    
    29,023,210
    
    
    
    745,502
   For
    
    Against
    
    Abstain29,656,714
    
    
    101,468
    
    
    
    10,530
 
 Item 5. Other Information.
  
 Item 6. Exhibits.
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Exhibit No.
    
    Description31.1
    
    Rule 13a-14(a) Certification of Principal Executive Officer31.2
    
    Rule 13a-14(a) Certification of Principal Financial Officer32.1
    
    Rule 1350 Certification of Chief Executive Officer32.2
    
    Rule 1350 Certification of Chief Financial Officer
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SIGNATURES
  EYETECH PHARMACEUTICALS, INC.(Registrant)Dated:
August 15, 2005By:
    
    /s/ DAVID R. GUYERDavid R. Guyer, M.D.Chief Executive OfficerBy:
    
    /s/ CHRISTOPHER CARROLLChristopher CarrollChief Accounting Officer
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EXHIBIT INDEX
 Exhibit No.
    
    Description31.1
    
    Rule 13a-14(a) Certification of Principal Executive Officer31.2
    
    Rule 13a-14(a) Certification of Principal Financial Officer32.1
    
    Rule 1350 Certification of Chief Executive Officer32.2
    
    Rule 1350 Certification of Chief Financial Officer