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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 1934    
|          
|           |  | For the Fiscal Year Ended December 31, 2004                                                 
|          
|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                 |  | 13-4104684                          
|(State of incorporation) |  | (I.R.S. Employer Identification No.)

3 Times Square, 12th Floor


New York, New York 10036


(Address of principal executive offices) (Zip Code)


(212) 824-3100


(Registrants telephone number, including area code)


Securities registered pursuant to Section 12(b) of the
Securities Exchange Act of 1934:


None


Securities registered pursuant to Section 12(g) of the
Securities Exchange Act of 1934:


Common Stock, Par Value $0.01 Per Share




þ o


o


o þ
















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TABLE OF CONTENTS


|                                                  |  |                                                                                                                      |   |      |    |  |  | 
|------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------- | - | ---- | -- |  |  | 
|                                                  |  |                                                                                                                      |   | Page |   
|                                                  |  |                                                                                                                      |   |      |   
|PART I                                           
|                                                  |  |                                                                                                                      |   |      |    |  |  | 
|Special Note Regarding Forward-looking Statements |  |                                                                                                                      | 1 |     
|Item 1.                                           |  | Business                                                                                                             |   |      | 1  | 
|Item 2.                                           |  | Properties                                                                                                           |   |      | 31 | 
|Item 3.                                           |  | Legal Proceedings                                                                                                    |   |      | 31 | 
|Item 4.                                           |  | Submission of Matters to a Vote of Security
    Holders                                                              |   |      | 31 | 
|                                                 
|PART II                                          
|Item 5.                                           |  | Market For Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities |   |      | 32 | 
|Item 6.                                           |  | Selected Financial Data                                                                                              |   |      | 33 | 
|Item 7.                                           |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations                            |   |      | 34 | 
|Item 7A.                                          |  | Quantitative and Qualitative Disclosure
    About Market Risk                                                        |   |      | 60 | 
|Item 8.                                           |  | Financial Statements and Supplementary
    Data                                                                      |   |      | 60 | 
|Item 9.                                           |  | Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure                             |   |      | 60 | 
|Item 9A.                                          |  | Controls and Procedures                                                                                              |   |      | 60 | 
|Item 9B.                                          |  | Other Information                                                                                                    |   |      | 61 | 
|                                                 
|PART III                                         
|Item 10.                                          |  | Directors and Executive Officers of the
    Registrant                                                               |   |      | 62 | 
|Item 11.                                          |  | Executive Compensation                                                                                               |   |      | 63 | 
|Item 12.                                          |  | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters                   |   |      | 64 | 
|Item 13.                                          |  | Certain Relationships and Related
    Transactions                                                                   |   |      | 64 | 
|Item 14.                                          |  | Principal Accountant Fees and Services                                                                               |   |      | 64 | 
|                                                 
|PART IV                                          
|Item 15.                                          |  | Exhibits and Financial Statement
    Schedules                                                                       |   |      | 65 | 
|AMENDMENT NO. 2 TO CONSULTING AGREEMENT          
|EMPLOYMENT AGREEMENT                             
|AMENDMENT TO EMPLOYMENT AGREEMENT                
|SEPARATION AGREEMENT                             
|LIST OF SUBSIDIARIES                             
|CONSENT OF ERNST & YOUNG LLP                     
|CERTIFICATION                                    
|CERTIFICATION                                    
|CERTIFICATION                                    
|CERTIFICATION                                    



tm tm






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PART I





SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS









|        |         
|------- | --------
|Item 1. | Business

Overview










1



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Our Business Strategy






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Maximize Commercial Potential of Macugen. We are devoting
    most of our efforts to commercializing Macugen in the United
    States for the treatment of neovascular AMD and completing the
    clinical and regulatory development of Macugen. We are exploring
    the application of Macugen to additional ophthalmic indications,
    including DME and RVO.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | Develop Alternative Drug Delivery Technologies. We are
    working to develop or acquire alternative technologies for the
    administration of drugs to the back of the eye that could
    facilitate the use of Macugen and other drugs as continuing or
    even preventive treatments for various back of the eye diseases,
    including neovascular AMD, DME and RVO.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | Identify New Ophthalmic Products. We have established an
    internal research effort with the goal of discovering and
    validating new ophthalmic disease targets and developing novel
    therapeutics for the treatment of ophthalmic diseases. In
    particular, we are actively engaged in the pre-clinical
    development of compounds to be used in combination with Macugen
    that may enhance its effectiveness, or expand its clinical
    utility. We are also seeking to license or otherwise acquire the
    rights to potential new drugs and drug targets for the treatment
    of ophthalmic disease. We have an agreement with Archemix Corp.
    to collaborate on the research and development of aptamers for
    ophthalmic indications. Aptamers are single strands of
    oligonucleotide that bind to molecular targets in a manner
    conceptually similar to antibodies. As such, aptamers have a
    number of desirable characteristics for use as therapeutics,
    including biological efficacy, high specificity and affinity,
    and excellent pharmacokinetic properties.

2



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| |   |                                                                                                                                                                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Explore Additional Non-Ophthalmic Indications for
    Macugen. We are evaluating whether the anti-VEGF
    characteristics of Macugen may make it an attractive local
    treatment for cancer. For indications outside of ophthalmology,
    we may seek collaborators or licensees for drug development and
    commercialization.

Eye Disease











| |                                 
| | --------------------------------
| | Age-Related Macular Degeneration





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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Dry AMD. Dry AMD is the most common form of AMD,
    representing approximately 90% of all cases. However, dry AMD
    accounts for only 10% of the severe vision loss associated with
    AMD. Dry AMD is characterized by the development of yellow-white
    deposits under the retina, known as drusen, and sometimes the
    deterioration of the retina, although without abnormal blood
    vessel growth and bleeding. There is no generally accepted
    treatment for dry AMD, although vitamins, antioxidants and zinc
    supplements may slow its progression. Over time, dry AMD cases
    often develop into neovascular AMD.                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | Neovascular AMD. Neovascular AMD represents approximately
    10% of all cases of AMD, but is responsible for up to 90% of the
    severe vision loss associated with the disease. Neovascular AMD
    occurs when new blood vessels from the tissue layer in the eye
    just beneath the retina, called the choroid, invade into the
    retinal layers through a membrane known as Bruchs
    membrane. This abnormal blood vessel growth generally is known
    as angiogenesis and, in the context of neovascular AMD, is
    called choroidal neovascularization. These new blood vessels
    tend to be fragile and often bleed and leak fluid into the
    macula, resulting in loss of vision. For this reason,
    neovascular AMD is also known as wet AMD. Untreated, this blood
    vessel growth and leakage can lead to scarring and, eventually,
    to the destruction of the macula. The majority of patients with
    neovascular AMD experience severe vision loss in the affected
    eye within months to two years after diagnosis of the disease.








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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Predominantly Classic. In the predominantly classic
    subtype, more than 50% of the patients abnormal blood
    vessels are of the classic pattern. We estimate that this
    subtype accounts for up to 25% of the cases of subfoveal
    neovascular AMD and generally has the most aggressive disease
    pathology, leading to more rapid vision loss than the other
    subtypes.                       
|
| |  | Minimally Classic. In the minimally classic subtype,
    fewer than 50% of the patients abnormal blood vessels are
    of the classic pattern. We estimate that this subtype accounts
    for approximately 35% of the cases of subfoveal neovascular AMD
    and generally has a less rapid rate of vision loss than the
    predominantly classic subtype, but a more rapid rate than the
    occult subtype.
|
| |  | Occult. In the occult subtype, all of the patients
    abnormal blood vessels are of the occult pattern. We estimate
    that this subtype accounts for approximately 40% of the cases of
    subfoveal neovascular AMD and generally has a less rapid rate of
    vision loss.                                                                                                                                







| |                       
| | ----------------------
| | Diabetic Macular Edema





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| |                                                                 
| | ----------------------------------------------------------------
| | Limitations of Other Available Therapies for Neovascular
    AMD



Photodynamic Therapy.








| |   |                                                                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Severe vision decrease of four lines or more within seven days
    of treatment reported in 1-5% of patients, subject to partial
    subsequent recovery in some patients;
|
| |  | Photosensitivity in the form of skin sunburn following exposure
    to sunlight; and                                                                                      
|
| |  | Back pain resulting primarily from the infusion.                                                                                                                          



Thermal Laser Treatment.




| |                                                         
| | --------------------------------------------------------
| | Limitations of Currently Available Therapies for
    DME



6



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Thermal Laser Treatment.


Steroid Therapy.


Macugen






| |                    
| | -------------------
| | Mechanism of Action








7



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| |                         
| | ------------------------
| | Method of Administration





| |            
| | -----------
| | Specificity

in vitro




| |                  
| | -----------------
| | Anti-permeability





| |                           
| | --------------------------
| | No Observed Immunogenicity





| |                                                 
| | ------------------------------------------------
| | Stability and Attractive Pharmacokinetic Profile



8



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Clinical Development of Macugen






|                       |  |            |          |  |       |               |            |                                              |           |                                |          |                                        |          |            |        |                                                     
|---------------------- |  | ---------- | -------- |  | ----- | ------------- | ---------- | -------------------------------------------- | --------- | ------------------------------ | -------- | -------------------------------------- | -------- | ---------- | ------ | ----------------------------------------------------
|                       |  |            |          |  |       |               |            |                                              |           | First Patient                  |          | Number of                              |          | Enrollment
|Indication             |  | Trial Name |          |  | Phase |               | Objectives |                                              | Geography |                                | Enrolled |                                        | Patients |            | Status
|                       |  |            |          |  |       |               |            |                                              |           |                                |          |                                        |          |            |       
|AMD                    |  |            | EOP 1003 |  |       | 2/3 (Pivotal) |            | Safety
    Dose finding Efficacy             |           | International (including U.S.) |          | October 2001                           |          | 612        |        | Year two complete; continuation safety study ongoing
|                       |  |            | EOP 1004 |  |       | 2/3 (Pivotal) |            | Safety
    Dose finding Efficacy             |           | North America                  |          | August 2001                            |          | 578        |        | Year two complete; continuation safety study ongoing
|                       |  |            | EOP 1006 |  |       | 2             |            | Pharmacokinetics Safety
    Efficacy         |           | North America                  |          | January 2003                           |          | 147        |        | Fully enrolled                                      
|                       |  |            | EOP 1012 |  |       | 4             |            | Efficacy in combination with Visudyne        |           | International                  |          | Planned for the second quarter of 2005 |          | 360-380    |        | Planned                                             
|                       |  |            | EOP 1014 |  |       | 4             |            | Post-approval FDA commitment Safety Efficacy |           | International                  |          | Planned for the first quarter of 2006  |          | 240        |        | Planned                                             
|                      
|DME                    |  |            | EOP 1005 |  |       | 2             |            | Dose finding
    Safety
    Proof of Concept |           | International (including U.S.) |          | October 2002                           |          | 169        |        | Study completed                                     
|                       |  |            | EOP 1013 |  |       | 2/3           |            | Dose finding Efficacy                        |           | International                  |          | Planned for the second half of 2005    |          | Pending    |        | Planned                                             
|                      
|Retinal Vein Occlusion |  |            | EOP 1011 |  |       | 2             |            | Safety Dose finding Proof of Concept         |           | International                  |          | May 2004                               |          | Planned 90 |        | Currently enrolling                                 



| |                                                         
| | --------------------------------------------------------
| | Clinical Trials for the Treatment of Neovascular
    AMD



| |                                  
| | ---------------------------------
| | Phase 2/3 Pivotal Clinical Trials

Trial Design.




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First-Year Clinical Trial Results.


|                                             |                       |              |       |      |         |  |       |      | 
|-------------------------------------------- | --------------------- | ------------ | ----- | ---- | ------- |  | ----- | ---- | 
|                                             |                       | Treated with |       |      |        
|                                             |                       | Macugen      |       |      | Control | 
|                                             |                       |              |       |      |         | 
|Number of patients                           |                       |              | 892   |      |         |  | 298   |     
|Male/ Female(%)                              |                       |              | 42/58 |      |         |  | 40/60 |     
|Average age at baseline                      |                       |              | 76.0  |      |         |  | 75.7  |     
|Mean baseline visual acuity score (letters): |                       |              |       |      |         |  |       |     
|                                             | Treated eye           |              |       | 51.5 |         |  |       | 52.7 | 
|                                             | Non-treated eye       |              |       | 55.6 |         |  |       | 57.1 | 
|Neovascular AMD subtype(%):                  |                       |              |       |      |         |  |       |     
|                                             | Predominantly classic |              |       | 26.0 |         |  |       | 26.0 | 
|                                             | Minimally classic     |              |       | 36.0 |         |  |       | 34.0 | 
|                                             | Occult                |              |       | 38.0 |         |  |       | 40.0 | 

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Primary Efficacy Endpoint.




|               |  |                      |         |  |            |  |    |         |  |  |        | 
|-------------- |  | -------------------- | ------- |  | ---------- |  | -- | ------- |  |  | ------ | 
|               |  | Patients Losing Less |         |  |           
|               |  | Than 15 Letters      |         |  |           
|               |  |                      |         |  |           
|Dose           |  | Individuals          |         |  | Percentage |  |    | p-value | 
|               |  |                      |         |  |            |  |    |         | 
|0.3 mg Macugen |  |                      | 206/294 |  |            |  | 70 | %       |  |  | 0.0001 | 
|1 mg Macugen   |  |                      | 213/300 |  |            |  | 71 | %       |  |  | 0.0003 | 
|3 mg Macugen   |  |                      | 193/296 |  |            |  | 65 | %       |  |  | 0.0310 | 
|Control        |  |                      | 164/296 |  |            |  | 55 | %       |  |  |       | 





Efficacy Across All Neovascular AMD Subtypes.


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Secondary Endpoints and Other Clinical Observations.




|                                  |                     |                        |  |    |         |  |  |         |   |  |  |        | 
|--------------------------------- | ------------------- | ---------------------- |  | -- | ------- |  |  | ------- | - |  |  | ------ | 
|                                  |                     | Proportion of Patients |  |    |        
|                                  |                     |                        |  |    |        
|                                  |                     | Macugen 0.3 mg         |  |    | Control |  |  | p-value |  
|                                  |                     |                        |  |    |         |  |  |         |  
|Maintenance of or gain in vision: |                     |                        |  |    |         |  |  |         |   |  |  |       
|                                  | 30 line vision gain |                        |  | 33 | %       |  |  | 23      | % |  |  | 0.0032 | 
|Gain in vision:                   |                     |                        |  |    |         |  |  |         |   |  |  |       
|                                  | 31 line vision gain |                        |  | 22 | %       |  |  | 12      | % |  |  | 0.0043 | 
|                                  | 32 line vision gain |                        |  | 11 | %       |  |  | 6       | % |  |  | 0.0239 | 
|                                  | 33 line vision gain |                        |  | 6  | %       |  |  | 2       | % |  |  | 0.0401 | 
|Severe loss of vision:            |                     |                        |  |    |         |  |  |         |   |  |  |       
|                                  | 36 line vision loss |                        |  | 10 | %       |  |  | 22      | % |  |  | 0.0001 | 



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|                   |  |                                        |      |   |         |  |       |         |  |  |        | 
|------------------ |  | -------------------------------------- | ---- | - | ------- |  | ----- | ------- |  |  | ------ | 
|                   |  | Mean Change in Visual Acuity (Letters) |     
|Observation Period |  | Macugen 0.3 mg                         |      |   | Control |  |       | p-value | 
|                   |  |                                        |      |   |         |  |       |         | 
|6 weeks            |  |                                        | (1.5 | ) |         |  | (4.0  | )       |  |  | 0.0069 | 
|12 weeks           |  |                                        | (3.2 | ) |         |  | (6.3  | )       |  |  | 0.0037 | 
|54 weeks           |  |                                        | (8.0 | ) |         |  | (15.0 | )       |  |  | 0.0000 | 





Visudyne Use During the Trials.


Safety.


13



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Second and Third Year of the Trials.












| |                     
| | --------------------
| | Phase 1 and 2 Trials



14



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| |               
| | --------------
| | Phase 4 Trials







| |                              
| | -----------------------------
| | Phase 2 Pharmacokinetic Study



15



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| |                                                                
| | ---------------------------------------------------------------
| | Clinical Trials for the Treatment of Diabetic Macular
    Edema



| |                
| | ---------------
| | Phase 2/3 Trial





| |               
| | --------------
| | Phase 2 Trials







|                                  |                     |                        |  |     |         |  |  |         |  |  |  |       | 
|--------------------------------- | ------------------- | ---------------------- |  | --- | ------- |  |  | ------- |  |  |  | ----- | 
|                                  |                     | Proportion of Patients | 
|                                  |                     |                        | 
|                                  |                     | Macugen 0.3 mg         |  |     | Control |  |  | p-value | 
|                                  |                     |                        |  |     |         |  |  |         | 
|Maintenance of or gain in vision: |                     |                        |  |     |         |  |  |         |  |  |  |      
|                                  | 30 line vision gain |                        |  | 73% |         |  |  | 51%     |  |  |  | 0.02  | 
|Gain in vision:                   |                     |                        |  |     |         |  |  |         |  |  |  |      
|                                  | 31 line vision gain |                        |  | 59% |         |  |  | 34%     |  |  |  | 0.01  | 
|                                  | 32 line vision gain |                        |  | 34% |         |  |  | 10%     |  |  |  | 0.003 | 
|                                  | 33 line vision gain |                        |  | 18% |         |  |  | 7%      |  |  |  |      | 









| |                                                                
| | ---------------------------------------------------------------
| | Clinical Trials for the Treatment of Retinal Vein
    Occlusion



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Collaboration with Pfizer




| |        
| | -------
| | Macugen





| |   |                                                                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Pfizer has funded, and is obligated to continue to fund, a
    majority of the ongoing development costs incurred pursuant to
    an agreed upon development plan covering the development of
    Macugen for AMD, DME, RVO and other agreed upon ophthalmic
    indications;
|
| |  | In the United States, we are co-promoting Macugen with Pfizer
    through our own and Pfizers sales forces and we and Pfizer
    will share in profits and losses from the sale of Macugen, with
    our having the right to book all United States product
    sales; and  
|
| |  | Outside the United States, Pfizer will market the product under
    an exclusive license, for which we will receive royalty payments
    based on net sales.                                                                                                                 





| |   |                                                                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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 NDA 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
    agreed upon sales levels of Macugen.                                           



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| |        
| | -------
| | Xalatan







Pipeline Initiatives






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| |                                              
| | ---------------------------------------------
| | Additional Ophthalmic Indications for Macugen





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | High risk dry AMD, in which the patient is at risk
    of developing neovascular AMD more rapidly than other dry AMD
    patients. It is possible to identify this form of dry AMD
    through a routine eye examination. We believe that these high
    risk patients may benefit from treatment with Macugen to control
    the progression of high risk dry AMD to neovascular AMD.                                                                                                   
|
| |  | Proliferative diabetic retinopathy, the most severe stage of
    diabetic retinopathy. The disease is characterized by
    angiogenesis and blood vessel leakage. The new vessels
    frequently bleed and damage the retina. Although laser therapy
    is effective at lowering the rate of blindness associated with
    the disease, the destruction of the retina resulting from the
    treatment leads to adverse side effects, including night
    blindness and visual field loss.
|
| |  | Uveitis, an inflammatory condition of the eye that often leads
    to macular edema. The swelling is largely a function of
    increased blood vessel leakage. Steroids are effective in some
    cases as a treatment for this condition, although their use is
    often complicated by the formation of cataracts and glaucoma.                                                                                                                                                         
|
| |  | Cystoid macular edema following cataract surgery, a condition
    that results from the inflammation caused by surgery. Steroid
    treatment is effective in some patients, but carries the risk of
    cataracts and glaucoma.                                                                                                                                                                                                                                                           
|
| |  | Myopic macular degeneration, a condition in which a patient with
    a high degree of nearsightedness develops choroidal
    neovascularization. The blood vessel growth and leakage in this
    condition closely mirrors that seen in neovascular AMD.                                                                                                                                                                                                                                   
|
| |  | Inflammatory macular degeneration, a condition in which a
    patient with inflammation in the macular area from infections or
    other causes develops choroidal neovascularization. The blood
    vessel growth and leakage in this condition is similar to that
    seen in neovascular AMD.                                                                                                                                                                                           
|
| |  | Iris neovascularization, a serious complication of diabetic
    retinopathy or RVO involving new blood vessel growth on the
    surface of the colored part of the eye, or iris. This process
    leads to an intractable type of glaucoma that often leads to
    blindness. Animal testing has revealed that this process
    involves VEGF.                                                                                                                                             



| |                                
| | -------------------------------
| | Alternate Delivery Technologies





| |                       
| | ----------------------
| | Other Ophthalmic Drugs



19



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| |                                                  
| | -------------------------------------------------
| | Additional Non-Ophthalmic Indications for Macugen



tm


Sales and Marketing






20



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Distribution and Pricing




Manufacturing










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| |   |                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | reliance on the third party 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.

License Agreements






| |                
| | ---------------
| | Gilead Sciences



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| |                    
| | -------------------
| | Nektar Therapeutics







Patents and Proprietary Rights




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Competition




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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Genentech, Inc. and Novartis are collaborating to develop a
    humanized monoclonal antibody fragment, administered by
    intravitreal injection, that targets VEGF for the treatment of
    neovascular AMD. This product candidate has been viewed as
    particularly competitive with Macugen because of the similarity
    of its mechanism of action. Preliminary results of Phase 3
    clinical trials for this product candidate will likely be
    released this year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | Alcon, Inc. is developing anecortave acetate, an angiostatic
    steroid-based compound for the treatment and prevention of
    neovascular AMD that features a less invasive injectable
    delivery that requires less frequent administration (every six
    months). This drug candidate is injected behind the eye using a
    customized injector inserted around the eye. In August 2004,
    Alcon announced that it did not meet it primary endpoint in its
    pivotal Phase 3 clinical trial of this compound. Alcon has
    received priority review status from the FDA under its fast
    track, Pilot 1 program, has announced that it expects an FDA
    decision on its NDA in May 2005 and has submitted its European
    marketing authorization application for a drug suspension to be
    approved as a treatment for patients with subfoveal choroidal
    neovascularization due to AMD. Further, Alcon is enrolling
    patients in two Phase 3 clinical trials, one in South
    America and one in Europe, comparing the safety and efficacy of
    its compound against placebo in patients with all subtypes of
    neovascular AMD. Alcon also has initiated a five-year
    Phase 3 risk reduction trial for the prevention of
    neovascular AMD.
|
| |  | Allergan, Inc., which recently acquired Oculex Pharmaceuticals,
    is developing a bioerodable steroid implant for the treatment of
    persistent macular edema.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | Eli Lilly & Co. is developing an orally administered
    inhibitor of an enzyme named PKC beta for the treatment of
    diabetic retinopathy.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | Bausch & Lomb Incorporated and Control Delivery
    Systems, Inc. are developing a surgically placed non-erodable
    intraocular implant for the delivery of steroids to treat DME
    and swelling resulting from other causes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | Regeneron Pharmaceuticals, Inc. is developing a receptor fusion
    protein in ophthalmology that contains portions of the
    extracellular domains of two different VEGF receptors and
    announced the start of a Phase 1 clinical trial in AMD in
    March 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | Miravant Medical Technologies is developing a photodynamic
    therapy that is similar to Visudyne for the treatment of
    neovascular AMD.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | Genaera Corporation is developing a small molecule derived from
    the Dogfish shark and is conducting three Phase 2 clinical
    trials and has announced plans to start a Phase 3 trial in
    the first half of 2005 for the treatment of AMD.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | Sirna Therapeutics, Inc. is developing a chemically modified
    short interfering RNA (siRNA) and announced the start of a
    Phase 1 clinical trial in neovascular AMD in November 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | Acuity Pharmaceuticals, Inc. is developing a small molecule
    interfering RNA VEGF inhibitor for the treatment of neovascular
    AMD that is in early clinical trials.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | Pfizer is developing a small molecule VEGF inhibitor for the
    treatment of neovascular AMD that is in early clinical trials.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   



25



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| |   |                                    
| | - | -----------------------------------
| |  | efficacy,                          
|
| |  | safety profile,                    
|
| |  | price relative to other treatments,
|
| |  | reimbursement status, and          
|
| |  | method of administration.          







Government Regulation






| |                                    
| | -----------------------------------
| | United States Government Regulation



26



---



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| |   |                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | preclinical laboratory tests, animal studies and formulation
    studies under FDAs good laboratory practices regulations;                                                                                      
|
| |  | submission to the FDA of an Investigational New Drug
    application, or IND, for human clinical testing, which must
    become effective before human clinical trials may begin;                                
|
| |  | adequate and well-controlled clinical trials to establish the
    safety and efficacy of the product for each indication;                                                                                        
|
| |  | submission to the FDA of a New Drug Application, or NDA, or
    Biologics License Application, or BLA;                                                                                                           
|
| |  | satisfactory completion of an FDA inspection of the
    manufacturing facility or facilities at which the product is
    produced to assess compliance with current good manufacturing
    practice, or cGMP; and
|
| |  | FDA review and approval of the NDA or BLA.                                                                                                                                                                       











| |   |                                                                              
| | - | -----------------------------------------------------------------------------
| |  | evaluate dosage tolerance and appropriate dosage;                            
|
| |  | identify possible adverse effects and safety risks; and                      
|
| |  | evaluate preliminarily the efficacy of the drug for specific
    indications.





27



---



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| |   |                                                                                                                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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 and 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.                                                                                                                                                    





28



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| |                   
| | ------------------
| | Foreign Regulation







Third Party Reimbursement and Pricing Controls




| |        
| | -------
| | General







| |         
| | --------
| | Medicare



29



---



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| |                                                                  
| | -----------------------------------------------------------------
| | Commercial Insurers Payment for
    Physician-Administered Drugs



30



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##### Table of Contents



Employees






Trademarks


tm tm tm


Access to Our Filings with the Securities and Exchange
Commission


www.eyetech.com







|        |           
|------- | ----------
|Item 2. | Properties



|                                           |  |             |        |  |     |                                            |                 |  |               | 
|------------------------------------------ |  | ----------- | ------ |  | --- | ------------------------------------------ | --------------- |  | ------------- | 
|                                           |  | Approximate |        |  |     |                                            | Lease           | 
|Property Location                          |  | Square Feet |        |  | Use |                                            | Expiration Date | 
|                                           |  |             |        |  |     |                                            |                 | 
|3 Times Square,
    New York, New York     |  |             | 62,000 |  |     | Corporate, Clinical, Safety and Regulatory |                 |  | November 2021 | 
|500 Seventh Avenue,
    New York, New York |  |             | 16,700 |  |     | Former office space                        |                 |  | December 2010 | 
|Lexington, Massachusetts                   |  |             | 46,700 |  |     | Laboratory                                 |                 |  | October 2014  | 
|Woburn, Massachusetts                      |  |             | 10,600 |  |     | Laboratory                                 |                 |  | July 2007     | 
|Cedar Knolls, New Jersey                   |  |             | 25,000 |  |     | Laboratory                                 |                 |  | April 2008    | 
|Boulder, Colorado                          |  |             | 33,000 |  |     | Manufacturing facility in development      |                 |  | November 2007 | 








|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings








|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders



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PART II







|        |                                                                                                                     
|------- | --------------------------------------------------------------------------------------------------------------------
|Item 5. | Market For Registrants Common Equity, Related
    Stockholder Matters and Issuer Purchases of Equity
    Securities



|                             |  |      |       |  |     |   |       | 
|---------------------------- |  | ---- | ----- |  | --- | - | ----- | 
|                             |  | High |       |  | Low |  
|                             |  |      |       |  |     |  
|Year Ended December 31, 2004 |  |      |       |  |     |   |       | 
|January 30 through March 31  |  | $    | 37.15 |  |     | $ | 29.25 | 
|Second Quarter               |  | $    | 49.12 |  |     | $ | 30.08 | 
|Third Quarter                |  | $    | 45.50 |  |     | $ | 29.68 | 
|Fourth Quarter               |  | $    | 47.92 |  |     | $ | 34.11 | 





32



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|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data



|                                                                                                   |                                    |                                                    |           |        |                         |   |           |        |  |   |           |        |  |      |            |        |  |   |            |         | 
|-------------------------------------------------------------------------------------------------- | ---------------------------------- | -------------------------------------------------- | --------- | ------ | ----------------------- | - | --------- | ------ |  | - | --------- | ------ |  | ---- | ---------- | ------ |  | - | ---------- | ------- | 
|                                                                                                   |                                    | Period from                                        |           |        |                         |   |           |        |  |   |          
|                                                                                                   |                                    | February 9,                                        |           |        |                         |   |           |        |  |   |          
|                                                                                                   |                                    | 2000 (Date of                                      |           |        |                        
|                                                                                                   |                                    | Inception) to                                      |           |        | Year Ended December 31, |  
|                                                                                                   |                                    | December 31,                                       |           |        |                         |  
|                                                                                                   |                                    | 2000                                               |           |        | 2001                    |   |           | 2002   |  |   | 2003      |        |  | 2004 |           
|                                                                                                   |                                    |                                                    |           |        |                         |   |           |        |  |   |           |        |  |      |           
|                                                                                                   |                                    | (In thousands, except share and per share numbers) |          
|Consolidated Statement of Operations Information:                                                  |                                    |                                                    |           |        |                         |   |           |        |  |   |           |        |  |      |            |        |  |   |            |        
|Collaboration revenue                                                                              |                                    |                                                    |           |        |                         |   |           |        |  |   |           |        |  |      |            |        |  |   |            |        
|                                                                                                   | License fees                       |                                                    | $         |       |                         |   | $         |       |  |   | $         |       |  |      | $          | 4,583  |  |   | $          | 5,723   | 
|                                                                                                   | Reimbursement of development costs |                                                    |           |       |                         |   |           |       |  |   |           |       |  |      |            | 36,836 |  |   |            | 43,629  | 
|                                                                                                   |                                    |                                                    |           |        |                         |   |           |        |  |   |           |        |  |      |           
|Total collaboration revenue                                                                        |                                    |                                                    |          |        |                         |   |          |        |  |   |          |        |  |      | 41,419     |        |  |   | 49,352     |        
|Operating expenses:                                                                                |                                    |                                                    |           |        |                         |   |           |        |  |   |           |        |  |      |            |        |  |   |            |        
|                                                                                                   | Research and development           |                                                    |           | 10,879 |                         |   |           | 22,157 |  |   |           | 39,663 |  |      |            | 70,932 |  |   |            | 102,739 | 
|                                                                                                   | Sales and marketing                |                                                    |           |       |                         |   |           |       |  |   |           |       |  |      |            | 4,599  |  |   |            | 33,343  | 
|                                                                                                   | General and administrative         |                                                    |           | 1,413  |                         |   |           | 4,338  |  |   |           | 5,319  |  |      |            | 6,822  |  |   |            | 17,435  | 
|                                                                                                   |                                    |                                                    |           |        |                         |   |           |        |  |   |           |        |  |      |           
|Total operating expenses                                                                           |                                    |                                                    | 12,292    |        |                         |   | 26,495    |        |  |   | 44,982    |        |  |      | 82,353     |        |  |   | 153,517    |        
|                                                                                                   |                                    |                                                    |           |        |                         |   |           |        |  |   |           |        |  |      |           
|Loss from operations                                                                               |                                    |                                                    | (12,292   | )      |                         |   | (26,495   | )      |  |   | (44,982   | )      |  |      | (40,934    | )      |  |   | (104,165   | )      
|Interest income                                                                                    |                                    |                                                    | 1,181     |        |                         |   | 1,815     |        |  |   | 1,809     |        |  |      | 2,171      |        |  |   | 3,810      |        
|Interest expense                                                                                   |                                    |                                                    |          |        |                         |   |          |        |  |   |          |        |  |      | (248       | )      |  |   | (151       | )      
|                                                                                                   |                                    |                                                    |           |        |                         |   |           |        |  |   |           |        |  |      |           
|Loss before income taxes                                                                           |                                    |                                                    | (11,111   | )      |                         |   | (24,680   | )      |  |   | (43,173   | )      |  |      | (39,011    | )      |  |   | (100,506   | )      
|Provision for income taxes                                                                         |                                    |                                                    |          |        |                         |   |          |        |  |   |          |        |  |      | (1,688     | )      |  |   |           |        
|                                                                                                   |                                    |                                                    |           |        |                         |   |           |        |  |   |           |        |  |      |           
|Net loss                                                                                           |                                    |                                                    | (11,111   | )      |                         |   | (24,680   | )      |  |   | (43,173   | )      |  |      | (40,699    | )      |  |   | (100,506   | )      
|Preferred stock accretion                                                                          |                                    |                                                    | (1,080    | )      |                         |   | (2,494    | )      |  |   | (5,096    | )      |  |      | (9,160     | )      |  |   | (816       | )      
|                                                                                                   |                                    |                                                    |           |        |                         |   |           |        |  |   |           |        |  |      |           
|Net loss attributable to common stockholders                                                       |                                    | $                                                  | (12,191   | )      |                         | $ | (27,174   | )      |  | $ | (48,270   | )      |  | $    | (49,860    | )      |  | $ | (101,322   | )      
|                                                                                                   |                                    |                                                    |           |        |                         |   |           |        |  |   |           |        |  |      |           
|Basic and diluted net loss attributable to common stockholders
    per share                       |                                    | $                                                  | (5.49     | )      |                         | $ | (7.43     | )      |  | $ | (13.06    | )      |  | $    | (12.62     | )      |  | $ | (2.70      | )      
|                                                                                                   |                                    |                                                    |           |        |                         |   |           |        |  |   |           |        |  |      |           
|Weighted average shares outstanding  basic and diluted                                            |                                    |                                                    | 2,219,178 |        |                         |   | 3,659,422 |        |  |   | 3,697,192 |        |  |      | 3,950,481  |        |  |   | 37,587,299 |        
|                                                                                                   |                                    |                                                    |           |        |                         |   |           |        |  |   |           |        |  |      |           
|Pro forma basic and diluted net loss attributable to common
    stockholders per share (unaudited) |                                    |                                                    |           |        |                         |   |           |        |  |   |           |        |  | $    | (1.77      | )      |  | $ | (2.56      | )      
|                                                                                                   |                                    |                                                    |           |        |                         |   |           |        |  |   |           |        |  |      |           
|Pro forma weighted average shares outstanding  basic
    and diluted (unaudited)                  |                                    |                                                    |           |        |                         |   |           |        |  |   |           |        |  |      | 28,094,165 |        |  |   | 39,651,420 |        
|                                                                                                   |                                    |                                                    |           |        |                         |   |           |        |  |   |           |        |  |      |           

33



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|                                                                                   |  |                    |         |   |      |   |         |      |  |   |          |   |  |      |          |   |  |   |          |  
|---------------------------------------------------------------------------------- |  | ------------------ | ------- | - | ---- | - | ------- | ---- |  | - | -------- | - |  | ---- | -------- | - |  | - | -------- | -
|                                                                                   |  | As of December 31, |        
|                                                                                   |  |                    |        
|                                                                                   |  | 2000               |         |   | 2001 |   |         | 2002 |  |   | 2003     |   |  | 2004 |         
|                                                                                   |  |                    |         |   |      |   |         |      |  |   |          |   |  |      |         
|                                                                                   |  | (In thousands)     |        
|Balance Sheet Information:                                                         |  |                    |         |   |      |   |         |      |  |   |          |   |  |      |          |   |  |   |          |  
|Cash, cash equivalents and marketable securities                                   |  | $                  | 24,012  |   |      | $ | 57,019  |      |  | $ | 69,151   |   |  | $    | 131,374  |   |  | $ | 211,495  |  
|Total assets                                                                       |  |                    | 25,252  |   |      |   | 60,090  |      |  |   | 76,589   |   |  |      | 149,480  |   |  |   | 339,459  |  
|Deferred revenue, less current portion                                             |  |                    |         |   |      |   |         |      |  |   |          |   |  |      | (65,417  | ) |  |   | (159,706 | )
|Long-term capital lease obligations and redeemable convertible
    preferred stock |  |                    | (33,433 | ) |      |   | (88,458 | )    |  |   | (145,980 | ) |  |      | (186,545 | ) |  |   | (1,255   | )
|Accumulated deficit                                                                |  |                    | (11,111 | ) |      |   | (39,365 | )    |  |   | (87,635  | ) |  |      | (137,495 | ) |  |   | (238,817 | )
|Total stockholders (deficit) equity                                               |  |                    | (8,981  | ) |      |   | (34,327 | )    |  |   | (78,036  | ) |  |      | (123,006 | ) |  |   | 131,138  |  






|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations



Overview












| |   |                                                                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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;             

34



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| |   |                                                                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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.                                             















35



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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 provide subsequent information on
    the potential degenerative effects on the neurosensory retina
    and adverse effects on the corneal endothelium.                                                                                            
|
| |  | In the second half of 2005, we plan to start a DME
    Phase 2/3 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 quarter 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.                                                         
|
| |  | Beginning in the second quarter of 2005, we are planning with
    Pfizer to conduct 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.                                                            
|
| |  | We are conducting a pre-clinical research effort 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.

Critical Accounting Policies and Significant Judgments and
Estimates




36



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##### Table of Contents







| |                    
| | -------------------
| | Revenue Recognition













| |                                        
| | ---------------------------------------
| | Manufacturing Development and Inventory



37



---



##### Table of Contents





| |                         
| | ------------------------
| | Stock-based Compensation





Accounting Pronouncements




Results of Operations




| |                                       
| | --------------------------------------
| | Years Ended December 31, 2003 and 2004



Revenue


|                                                             |       |                         |            |            |      |   |            |            | 
|------------------------------------------------------------ | ----- | ----------------------- | ---------- | ---------- | ---- | - | ---------- | ---------- | 
|                                                             |       | Year Ended December 31, |           
|                                                             |       |                         |           
|                                                             |       | 2003                    |            |            | 2004 |  
|                                                             |       |                         |            |            |      |  
|Revenue from license fees                                    |       | $                       | 4,583,337  |            |      | $ | 5,722,499  |           
|Revenue from reimbursement of research and development costs |       |                         | 36,835,829 |            |      |   | 43,629,406 |           
|                                                             |       |                         |            |            |      |  
|                                                             | Total |                         | $          | 41,419,166 |      |   | $          | 49,351,904 | 
|                                                             |       |                         |            |            |      |  

Revenue.


Research and Development Expenses.


38



---



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Sales and Marketing Expenses.


General and Administrative Expenses.


Interest Income.


Net Loss.




| |                                       
| | --------------------------------------
| | Years Ended December 31, 2002 and 2003

Revenue.


Research and Development Expenses.


39



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Sales and Marketing Expenses.


General and Administrative Expenses.


Interest Income.


Liquidity and Capital Resources




| |                     
| | --------------------
| | Sources of Liquidity











40



---



##### Table of Contents











| |             
| | ------------
| | Income Taxes









| |           
| | ----------
| | Cash Flows



41



---



##### Table of Contents





| |                     
| | --------------------
| | Funding Requirements





| |   |                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the success of our collaboration with Pfizer to develop and
    commercialize Macugen;                                                                                                                      
|
| |  | the scope and results of our clinical trials;                                                                                                                                                               
|
| |  | the cost of manufacturing activities;                                                                                                                                                                       
|
| |  | 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 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.                                                                                                                            





| |   |                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our ability to commercially launch 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; and                                                                        
|
| |  | our ability to enter into additional strategic collaborations
    with corporate and academic collaborators and the success of
    such collaborations.



Contractual Obligations






|                                              |                                    |                        |            |            |          |   |           |             |  |          |            |            |           |            |            |            |  |   |            |            | 
|--------------------------------------------- | ---------------------------------- | ---------------------- | ---------- | ---------- | -------- | - | --------- | ----------- |  | -------- | ---------- | ---------- | --------- | ---------- | ---------- | ---------- |  | - | ---------- | ---------- | 
|                                              |                                    | Payments Due by Period |           
|                                              |                                    |                        |           
|                                              |                                    |                        |            | Less Than  |          |   | One to    |             |  | Three to |            |            | More Than |           
|Contractual Obligations                       |                                    | Total                  |            |            | One Year |   |           | Three Years |  |          | Five Years |            |           | Five Years |           
|                                              |                                    |                        |            |            |          |   |           |             |  |          |            |            |           |            |           
|Capital lease obligations, including interest |                                    | $                      | 2,954,901  |            |          | $ | 1,625,844 |             |  | $        | 1,329,057  |            |           | $          |           |            |  | $ |           |           
|Operating leases                              |                                    |                        | 79,120,905 |            |          |   | 3,903,770 |             |  |          | 11,111,321 |            |           |            | 10,096,948 |            |  |   | 54,008,866 |           
|                                              |                                    |                        |            |            |          |   |           |             |  |          |            |            |           |            |           
|                                              | Total contractual cash obligations |                        | $          | 82,075,806 |          |   | $         | 5,529,614   |  |          | $          | 12,440,378 |           |            | $          | 10,096,948 |  |   | $          | 54,008,866 | 
|                                              |                                    |                        |            |            |          |   |           |             |  |          |            |            |           |            |           

42



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43



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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 the FDA recently approved for use in the
    treatment of neovascular AMD.





| |   |                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------
| |  | acceptance of the product in the medical community, by patients
    receiving therapy and by third party payors;
|
| |  | supplying sufficient quantities of Macugen to meet anticipated
    market;                                      
|
| |  | successfully building and sustaining manufacturing capacity to
    meet anticipated future demand;              
|
| |  | the competitive landscape for approved and developing therapies
    that will compete with Macugen;             
|
| |  | 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.                             



| |                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.







| |                                                                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our product revenues are substantially dependent on a
    limited number of wholesale distributors to which we plan to
    sell Macugen. Product revenues may fluctuate from quarter to
    quarter based on the buying patterns of these
    distributors.



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| |                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We face substantial competition with respect to sales of
    Macugen or other drugs that we may develop or commercialize,
    which may result in others discovering, developing or
    commercializing competing products before or more successfully
    than we do.







45



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| |                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------
| | There may be limited market acceptance of Macugen and
    other products we may develop in the future that are based on
    new technologies.





| |                                                                                                                                                                                                                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We have only recently established our sales and marketing
    capabilities and have never marketed or sold products as a
    company. We will need to work with our partner, Pfizer, and
    integrate our marketing and sales infrastructures to
    successfully commercialize any products that we may develop,
    acquire or license.





| |                                                                                 
| | --------------------------------------------------------------------------------
| | 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.



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| |   |                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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;                                                                                                                                                                                                                                                                      
|
| |  | 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.



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| |                                                                                                                                                                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We currently have no operational manufacturing facilities
    and a limited number of manufacturing personnel. We will depend
    on third parties to manufacture Macugen and future products. If
    these manufacturers fail to meet our requirements, our product
    development and commercialization efforts may be materially
    harmed.











| |   |                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | reliance on the third party 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 continue to assimilate a large number of new
    employees in different functions throughout the company;                                                                                                                                                                               
|
| |  | 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; and                                                                                                                                                                                                                   
|
| |  | our clinical trials may not demonstrate the safety and efficacy
    needed for our products to receive regulatory approval.                                                                                                                                                                                                                                                                                                                              

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| |                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The fast track designation for development of
    Macugen in DME may not actually lead to a faster development or
    regulatory review or approval process.







| |                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.



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| |                                                                                                                                                                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.                                                                                                                                                    







| |   |                                                          
| | - | ---------------------------------------------------------
| |  | restrictions on such products or manufacturing processes;
|
| |  | withdrawal of the products from the market;              
|
| |  | voluntary or mandatory recall;                           
|
| |  | fines;                                                   
|
| |  | suspension of regulatory approvals;                      

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| |   |                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------
| |  | 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.





| |                                                                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We have only limited experience in regulatory affairs, and
    some of our products may be based on new technologies. These
    factors may affect our ability or the time we require to obtain
    necessary regulatory approvals.



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 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.                                                 



| |                                                                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.





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| |   |                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the success of our collaboration with Pfizer to commercialize
    and further develop Macugen;                                                                                                              
|
| |  | the scope and results of our clinical trials;                                                                                                                                                               
|
| |  | 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 cost of commercialization activities, including product
    marketing, sales and distribution;                                                                                                          
|
| |  | 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.





| |                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.

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| |                                                                                                
| | -----------------------------------------------------------------------------------------------
| | Our stock price is volatile; purchasers of our common
    stock could incur substantial losses.





| |   |                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------
| |  | failure of Macugen or any of our product candidates, if
    approved, to achieve commercial success; 
|
| |  | results of our clinical trials or those of our competitors;                                          
|
| |  | the regulatory status of Macugen and our other potential
    products;                               
|
| |  | 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 drugs;                                                                       
|
| |  | 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.



59



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|         |                                                              
|-------- | -------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosure About Market
    Risk










|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data








|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure








|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures







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|         |                  
|-------- | -----------------
|Item 9B. | Other Information











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PART III







|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant



www.eyetech.com




EXECUTIVE OFFICERS AND OTHER SIGNIFICANT EMPLOYEES




|                            |  |     |    |  |          |                                                                                    
|--------------------------- |  | --- | -- |  | -------- | -----------------------------------------------------------------------------------
|Name                        |  | Age |    |  | Position
|                            |  |     |    |  |         
|Executive Officers          |  |     |    |  |          |                                                                                    
|David R. Guyer, M.D.        |  |     | 45 |  |          | Chief Executive Officer and Director                                               
|Paul G. Chaney              |  |     | 47 |  |          | Chief Operating Officer                                                            
|Glenn P. Sblendorio         |  |     | 49 |  |          | Chief Financial Officer and Senior Vice President, Finance                         
|Anthony P. Adamis, M.D.     |  |     | 46 |  |          | Chief Scientific Officer and Executive Vice President, Research
    and Development
|Other Significant Employees |  |     |    |  |          |                                                                                    
|Denis OShaughnessy, Ph.D.  |  |     | 54 |  |          | Senior Vice President, Clinical Development                                        

David R. Guyer, M.D.


Paul G. Chaney


62



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Glenn P. Sblendorio


Anthony P. Adamis, M.D.


Denis OShaughnessy, Ph.D. .







|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation



63



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|         |                                                                                                   
|-------- | --------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management and Related Stockholder Matters








|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions








|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services



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PART IV







|         |                                           
|-------- | ------------------------------------------
|Item 15. | Exhibits and Financial Statement Schedules







|        |    |             |  |                                                                                                                                                                                 
|------- | -- | ----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|Number  |    | Description
|        |    |            
|        | 3  | .1(1)       |  | Amended and Restated Certificate of Incorporation of the
    Registrant                                                                                                         
|       
|        | 3  | .2(1)       |  | Amended and Restated Bylaws of the Registrant                                                                                                                                   
|       
|        | 4  | .1(3)       |  | Specimen Certificate evidencing shares of common stock                                                                                                                          
|       
|        | 4  | .2(2)       |  | Warrant Agreement, dated as of March 31, 2000, by and
    between the Registrant and Gilead Sciences, Inc.                                                                      
|       
|        | 4  | .3(2)       |  | Warrant Agreement Amendment, dated as of September 4, 2003,
    by and among the Registrant, Gilead Sciences, Inc. and
    University License Equity Holdings, Inc.             
|       
|        | 4  | .4(2)      |  | Series D Preferred Stock Purchase Agreement, dated as of
    December 17, 2002, by and between the Registrant, Pfizer
    Ireland Pharmaceuticals and Pfizer Inc.               
|       
|        | 4  | .5(2)       |  | Amended and Restated Investors Rights Agreement, dated as
    of February 7, 2003, by and among the Registrant and the
    parties listed therein                              
|       
|        | 10 | .1(2)       |  | 2001 Stock Plan, as amended                                                                                                                                                     
|       
|        | 10 | .2(1)       |  | 2003 Stock Incentive Plan                                                                                                                                                       
|       
|        | 10 | .3(1)       |  | 2003 Employee Stock Purchase Plan                                                                                                                                               
|       
|        | 10 | .4(2)      |  | License Agreement, dated as of December 17, 2002, by and
    between Pfizer Inc. and the Registrant                                                                             
|       
|        | 10 | .5(2)      |  | Collaboration Agreement, dated as of December 17, 2002, by
    and between Pfizer Inc. and the Registrant                                                                       
|       
|        | 10 | .6(2)      |  | License, Manufacturing and Supply Agreement, dated
    February 5, 2002, by and between Shearwater Corporation and
    the Registrant                                           
|       
|        | 10 | .7(2)      |  | Licensing Agreement, dated as of March 30, 2000 and amended
    on May 9, 2000, December 4, 2001 and April 12,
    2002, by and between Gilead Sciences, Inc. and the Registrant
|       
|        | 10 | .8(2)      |  | License Agreement, dated as of December 31, 2001, by and
    between Isis Pharmaceuticals, Inc. and the Registrant                                                              
|       
|        | 10 | .9(2)       |  | Consulting Agreement, dated as of October 30, 2001, by and
    between the Registrant and Samir Patel                                                                           
|       
|        | 10 | .10(7)      |  | Amendment No. 1, dated May 4, 2004, to Consulting
    Agreement by and between the Registrant and Samir Patel.                                                                  
|       
|        | 10 | .11         |  | Amendment No. 2, dated January 3, 2005, to Consulting
    Agreement by and between the Registrant and Samir Patel.                                                              
|       
|        | 10 | .12         |  | Employment Agreement, dated as of January 4, 2005, by and
    between the Registrant and Samir Patel.                                                                           
|       
|        | 10 | .13(2)      |  | Executive Employment Agreement, dated as of April 12, 2000,
    by and between the Registrant and David R. Guyer                                                                
|       
|        | 10 | .14(2)      |  | Amendment to Executive Employment Agreement, dated as of
    August 25, 2003, by and between the Registrant and David R.
    Guyer                                              
|       
|        | 10 | .15(2)      |  | Employment Agreement, dated as of August 25, 2003, by and
    between Paul Chaney and the Registrant                                                                            
|       
|        | 10 | .16(8)      |  | Amended and Restated Amendment to Employment Agreement, dated as
    of November 15, 2004, by and between the Registrant and
    Glenn Sblendorio                               

65



---



##### Table of Contents



|        |    |         |             |                                                                                                                                                                                                                     
|------- | -- | ------- | ----------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |         |            
|Number  |    |         | Description
|        |    |         |            
|       
|        | 10 | .17(8)  |             | Amended and Restated Amendment to Employment Agreement, dated as
    of August 20, 2004, by and between the Registrant and
    Anthony P. Adamis                                                                    
|       
|        | 10 | .18     |             | Amendment to Employment Agreement, dated as of January 3,
    2005, by and between the Registrant and Anthony P. Adamis                                                                                             
|       
|        | 10 | .19(2)  |             | Employment Agreement, dated as of August 25, 2003, by and
    between Douglas H. Altschuler and the Registrant                                                                                                      
|       
|        | 10 | .20(10) |             | Summary description of the 2005 compensation for directors and
    named executive officers (as defined in the Registrants
    Proxy Statement) of the Registrant                                                  
|       
|        | 10 | .21(2)  |             | Restricted Stock Purchase Promissory Note, dated July 1,
    2002, issued by Anthony P. Adamis to the Registrant                                                                                                    
|       
|        | 10 | .22(2)  |             | Stock Pledge Agreement, dated July 1, 2002, by and between
    Anthony P. Adamis and the Registrant                                                                                                                 
|       
|        | 10 | .23(2)  |             | Sublease Agreement, dated as of December 19, 2001 and
    amended as of February 22, 2002, by and between
    AnswerThink, Inc., successor-in-interest to AnswerThink
    Consulting Group, Inc., and the Registrant
|       
|        | 10 | .24(2)  |             | Lease Agreement, dated March 14, 2002, by and between First
    Industrial, L.P. and the Registrant                                                                                                                 
|       
|        | 10 | .25(2)  |             | Commercial Lease, dated March 27, 2002, by and between
    Cummings Properties, LLC and the Registrant                                                                                                              
|       
|        | 10 | .26(9)  |             | Lease Agreement, dated as of May 13, 2004, by and between
    ARE-35 Hartwell Avenue, LLC and the Registrant                                                                                                        
|       
|        | 10 | .27(4) |             | Manufacturing and Supply Agreement, dated as of
    November 11, 2003, by and between Raylo Chemicals, Inc. and
    the Registrant                                                                                  
|       
|        | 10 | .28(5) |             | Letter of Understanding, effective as of September 1, 2003,
    by and between the Registrant and Raylo Chemicals, Inc., as
    amended                                                                             
|       
|        | 10 | .29(5) |             | Manufacturing and Supply Agreement, dated as of
    November 26, 2003 by and between the Registrant and Gilead
    Sciences, Inc.                                                                                   
|       
|        | 10 | .30(6)  |             | Sub-Sublease Agreement, dated December 19, 2003, by and
    between Instinet Global Holdings, Inc. and the Registrant                                                                                               
|       
|        | 10 | .31     |             | Separation and Release Agreement, dated March 18, 2004
    between Registrant and Douglas H. Altschuler                                                                                                             
|       
|        | 21 | .1      |             | List of Subsidiaries                                                                                                                                                                                                
|       
|        | 23 | .1      |             | Consent of Ernst & Young LLP                                                                                                                                                                                        
|       
|        | 31 | .1      |             | Rule 13a-14(a)/15d-14(a) Certification of Principal
    Executive Officer                                                                                                                                           
|       
|        | 31 | .2      |             | Rule 13a-14(a)/15d-14(a) Certification of Principal
    Financial Officer                                                                                                                                           
|       
|        | 32 | .1      |             | Section 1350 Certification of Chief Executive Officer                                                                                                                                                               
|       
|        | 32 | .2      |             | Section 1350 Certification of Chief Financial Officer                                                                                                                                                               






|    |                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Incorporated by reference to the Registrants Annual Report
    on Form 10-K filed on March 24, 2004                                          
|   
|(2) | Incorporated by reference to the Registrants Registration
    Statement on Form S-1 (SEC File No. 333-108781) filed
    on September 12, 2003
|   
|(3) | Incorporated by reference to the Registrants Registration
    Statement on Form S-1 (SEC File No. 333-108781) filed
    on October 21, 2003  
|   
|(4) | Incorporated by reference to the Registrants Registration
    Statement on Form S-1 (SEC File No. 333-108781) filed
    on November 14, 2003 
|   
|(5) | Incorporated by reference to the Registrants Registration
    Statement on Form S-1 (SEC File No. 333-108781) filed
    on December 18, 2003 

66



---



##### Table of Contents





|    |                                                                                                                                             
|--- | --------------------------------------------------------------------------------------------------------------------------------------------
|(6) | Incorporated by reference to the Registrants Registration
    Statement on Form S-1 (SEC File No. 333-108781) filed
    on January 27, 2004
|   
|(7) | Incorporated by reference to the Registrants Quarterly
    Report on Form  10-Q filed on May 12, 2004                                      
|   
|(8) | Incorporated by reference to the Registrants Quarterly
    Report on Form  10-Q filed on November 15, 2004                                 
|   
|(9) | Incorporated by reference to the Registrants Quarterly
    Report on Form  10-Q filed on August 13, 2004                                   



|     |                                                                                                        
|---- | -------------------------------------------------------------------------------------------------------
|(10) | Incorporated by reference to the Registrants Current
    Report on Form 8-K filed on February 15, 2005



| |   |                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Confidential treatment granted as to certain portions, which
    portions have been omitted and filed separately with the
    Securities and Exchange Commission.

67



---



##### Table of Contents






SIGNATURES






| |                                  
| | ---------------------------------
| | Eyetech Pharmaceuticals,
    Inc.



| |     |                   
| | --- | ------------------
| | By: | /s/ David R. Guyer

| |                                  
| | ---------------------------------
| |                                  
| | David R. Guyer, M.D.             
| | Chief Executive Officer, Director



|                                                                         |  |                                                                          |  |                |  | 
|------------------------------------------------------------------------ |  | ------------------------------------------------------------------------ |  | -------------- |  | 
|Signature                                                                |  | Title                                                                    |  | Date          
|                                                                         |  |                                                                          |  |               
|                                                                        
|/s/ David R.
    Guyer, M.D.David
    R. Guyer, M.D.                     |  | Chief Executive Officer, Director (Principal Executive Officer)          |  | March 21, 2005
|                                                                        
|/s/ Glenn P. SblendorioGlenn
    P. Sblendorio                           |  | Chief Financial Officer (Principal Financial and Accounting
    Officer) |  | March 21, 2005
|                                                                        
|/s/ John P. McLaughlinJohn
    P. McLaughlin                             |  | Chairman of the Board of Directors                                       |  | March 21, 2005
|                                                                        
|/s/ Srinivas
    Akkaraju, M.D., Ph.D.Srinivas
    Akkaraju, M.D., Ph.D. |  | Director                                                                 |  | March 21, 2005
|                                                                        
|/s/ Marty GlickMarty
    Glick                                           |  | Director                                                                 |  | March 21, 2005
|                                                                        
|/s/ Samir
    Patel, M.D.Samir
    Patel, M.D.                           |  | Director                                                                 |  | March 21, 2005
|                                                                        
|/s/ Michael J. ReganMichael
    J. Regan                                 |  | Director                                                                 |  | March 21, 2005
|                                                                        
|/s/ Phillip M. SatowPhillip
    M. Satow                                 |  | Director                                                                 |  | March 21, 2005
|                                                                        
|/s/ Henry SimonHenry
    Simon                                           |  | Director                                                                 |  | March 21, 2005
|                                                                        
|/s/ Damion E.
    Wicker, M.D.Damion
    E. Wicker, M.D.                 |  | Director                                                                 |  | March 21, 2005

68



---



##### Table of Contents






EXHIBIT INDEX


|        |    |             |  |                                                                                                                                                                                 
|------- | -- | ----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|Number  |    | Description
|        |    |            
|        | 3  | .1(1)       |  | Amended and Restated Certificate of Incorporation of the
    Registrant                                                                                                         
|       
|        | 3  | .2(1)       |  | Amended and Restated Bylaws of the Registrant                                                                                                                                   
|       
|        | 4  | .1(3)       |  | Specimen Certificate evidencing shares of common stock                                                                                                                          
|       
|        | 4  | .2(2)       |  | Warrant Agreement, dated as of March 31, 2000, by and
    between the Registrant and Gilead Sciences, Inc.                                                                      
|       
|        | 4  | .3(2)       |  | Warrant Agreement Amendment, dated as of September 4, 2003,
    by and among the Registrant, Gilead Sciences, Inc. and
    University License Equity Holdings, Inc.             
|       
|        | 4  | .4(2)      |  | Series D Preferred Stock Purchase Agreement, dated as of
    December 17, 2002, by and between the Registrant, Pfizer
    Ireland Pharmaceuticals and Pfizer Inc.               
|       
|        | 4  | .5(2)       |  | Amended and Restated Investors Rights Agreement, dated as
    of February 7, 2003, by and among the Registrant and the
    parties listed therein                              
|       
|        | 10 | .1(2)       |  | 2001 Stock Plan, as amended                                                                                                                                                     
|       
|        | 10 | .2(1)       |  | 2003 Stock Incentive Plan                                                                                                                                                       
|       
|        | 10 | .3(1)       |  | 2003 Employee Stock Purchase Plan                                                                                                                                               
|       
|        | 10 | .4(2)      |  | License Agreement, dated as of December 17, 2002, by and
    between Pfizer Inc. and the Registrant                                                                             
|       
|        | 10 | .5(2)      |  | Collaboration Agreement, dated as of December 17, 2002, by
    and between Pfizer Inc. and the Registrant                                                                       
|       
|        | 10 | .6(2)      |  | License, Manufacturing and Supply Agreement, dated
    February 5, 2002, by and between Shearwater Corporation and
    the Registrant                                           
|       
|        | 10 | .7(2)      |  | Licensing Agreement, dated as of March 30, 2000 and amended
    on May 9, 2000, December 4, 2001 and April 12,
    2002, by and between Gilead Sciences, Inc. and the Registrant
|       
|        | 10 | .8(2)      |  | License Agreement, dated as of December 31, 2001, by and
    between Isis Pharmaceuticals, Inc. and the Registrant                                                              
|       
|        | 10 | .9(2)       |  | Consulting Agreement, dated as of October 30, 2001, by and
    between the Registrant and Samir Patel                                                                           
|       
|        | 10 | .10(7)      |  | Amendment No. 1, dated May 4, 2004, to Consulting
    Agreement by and between the Registrant and Samir Patel.                                                                  
|       
|        | 10 | .11         |  | Amendment No. 2, dated January 3, 2005, to Consulting
    Agreement by and between the Registrant and Samir Patel.                                                              
|       
|        | 10 | .12         |  | Employment Agreement, dated as of January 4, 2005, by and
    between the Registrant and Samir Patel.                                                                           
|       
|        | 10 | .13(2)      |  | Executive Employment Agreement, dated as of April 12, 2000,
    by and between the Registrant and David R. Guyer                                                                
|       
|        | 10 | .14(2)      |  | Amendment to Executive Employment Agreement, dated as of
    August 25, 2003, by and between the Registrant and David R.
    Guyer                                              
|       
|        | 10 | .15(2)      |  | Employment Agreement, dated as of August 25, 2003, by and
    between Paul Chaney and the Registrant                                                                            
|       
|        | 10 | .16(8)      |  | Amended and Restated Amendment to Employment Agreement, dated as
    of November 15, 2004, by and between the Registrant and
    Glenn Sblendorio                               
|       
|        | 10 | .17(8)      |  | Amended and Restated Amendment to Employment Agreement, dated as
    of August 20, 2004, by and between the Registrant and
    Anthony P. Adamis                                
|       
|        | 10 | .18         |  | Amendment to Employment Agreement, dated as of January 3,
    2005, by and between the Registrant and Anthony P. Adamis                                                         
|       
|        | 10 | .19(2)      |  | Employment Agreement, dated as of August 25, 2003, by and
    between Douglas H. Altschuler and the Registrant                                                                  
|       
|        | 10 | .20(10)     |  | Summary description of the 2005 compensation for directors and
    named executive officers (as defined in the Registrants
    Proxy Statement) of the Registrant              



---



##### Table of Contents



|        |    |         |             |                                                                                                                                                                                                                     
|------- | -- | ------- | ----------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |         |            
|Number  |    |         | Description
|        |    |         |            
|       
|        | 10 | .21(2)  |             | Restricted Stock Purchase Promissory Note, dated July 1,
    2002, issued by Anthony P. Adamis to the Registrant                                                                                                    
|       
|        | 10 | .22(2)  |             | Stock Pledge Agreement, dated July 1, 2002, by and between
    Anthony P. Adamis and the Registrant                                                                                                                 
|       
|        | 10 | .23(2)  |             | Sublease Agreement, dated as of December 19, 2001 and
    amended as of February 22, 2002, by and between
    AnswerThink, Inc., successor-in-interest to AnswerThink
    Consulting Group, Inc., and the Registrant
|       
|        | 10 | .24(2)  |             | Lease Agreement, dated March 14, 2002, by and between First
    Industrial, L.P. and the Registrant                                                                                                                 
|       
|        | 10 | .25(2)  |             | Commercial Lease, dated March 27, 2002, by and between
    Cummings Properties, LLC and the Registrant                                                                                                              
|       
|        | 10 | .26(9)  |             | Lease Agreement, dated as of May 13, 2004, by and between
    ARE-35 Hartwell Avenue, LLC and the Registrant                                                                                                        
|       
|        | 10 | .27(4) |             | Manufacturing and Supply Agreement, dated as of
    November 11, 2003, by and between Raylo Chemicals, Inc. and
    the Registrant                                                                                  
|       
|        | 10 | .28(5) |             | Letter of Understanding, effective as of September 1, 2003,
    by and between the Registrant and Raylo Chemicals, Inc., as
    amended                                                                             
|       
|        | 10 | .29(5) |             | Manufacturing and Supply Agreement, dated as of
    November 26, 2003 by and between the Registrant and Gilead
    Sciences, Inc.                                                                                   
|       
|        | 10 | .30(6)  |             | Sub-Sublease Agreement, dated December 19, 2003, by and
    between Instinet Global Holdings, Inc. and the Registrant                                                                                               
|       
|        | 10 | .31     |             | Separation and Release Agreement, dated March 18, 2004
    between Registrant and Douglas H. Altschuler                                                                                                             
|       
|        | 21 | .1      |             | List of Subsidiaries                                                                                                                                                                                                
|       
|        | 23 | .1      |             | Consent of Ernst & Young LLP                                                                                                                                                                                        
|       
|        | 31 | .1      |             | Rule 13a-14(a)/15d-14(a) Certification of Principal
    Executive Officer                                                                                                                                           
|       
|        | 31 | .2      |             | Rule 13a-14(a)/15d-14(a) Certification of Principal
    Financial Officer                                                                                                                                           
|       
|        | 32 | .1      |             | Section 1350 Certification of Chief Executive Officer                                                                                                                                                               
|       
|        | 32 | .2      |             | Section 1350 Certification of Chief Financial Officer                                                                                                                                                               






|    |                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Incorporated by reference to the Registrants Annual Report
    on Form 10-K filed on March 24, 2004                                          
|   
|(2) | Incorporated by reference to the Registrants Registration
    Statement on Form S-1 (SEC File No. 333-108781) filed
    on September 12, 2003
|   
|(3) | Incorporated by reference to the Registrants Registration
    Statement on Form S-1 (SEC File No. 333-108781) filed
    on October 21, 2003  
|   
|(4) | Incorporated by reference to the Registrants Registration
    Statement on Form S-1 (SEC File No. 333-108781) filed
    on November 14, 2003 
|   
|(5) | Incorporated by reference to the Registrants Registration
    Statement on Form S-1 (SEC File No. 333-108781) filed
    on December 18, 2003 
|   
|(6) | Incorporated by reference to the Registrants Registration
    Statement on Form S-1 (SEC File No. 333-108781) filed
    on January 27, 2004  
|   
|(7) | Incorporated by reference to the Registrants Quarterly
    Report on Form  10-Q filed on May 12, 2004                                        
|   
|(8) | Incorporated by reference to the Registrants Quarterly
    Report on Form  10-Q filed on November 15, 2004                                   
|   
|(9) | Incorporated by reference to the Registrants Quarterly
    Report on Form  10-Q filed on August 13, 2004                                     



|     |                                                                                                        
|---- | -------------------------------------------------------------------------------------------------------
|(10) | Incorporated by reference to the Registrants Current
    Report on Form 8-K filed on February 15, 2005



| |   |                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Confidential treatment granted as to certain portions, which
    portions have been omitted and filed separately with the
    Securities and Exchange Commission.



---



EYETECH PHARMACEUTICALS, INC.


INDEX TO CONSOLIDATED FINANCIAL STATEMENTS







|                                                                                                                       |  |  |     | 
|---------------------------------------------------------------------------------------------------------------------- |  |  | --- | 
|Report of Independent Registered Public
    Accounting Firm                                                            |  |  | F-2 | 
|Consolidated Balance Sheets as of
    December 31, 2003 and 2004                                                       |  |  | F-3 | 
|Consolidated Statements of Operations for
    the Years ended December 31, 2002, 2003 and 2004                         |  |  | F-4 | 
|Consolidated Statements of
    Stockholders (Deficit) Equity for the Years Ended
    December 31, 2002, 2003 and 2004 |  |  | F-5 | 
|Consolidated Statements of Cash Flows for
    the Years Ended December 31, 2002, 2003 and 2004                         |  |  | F-7 | 
|Notes to Consolidated Financial
    Statements                                                                         |  |  | F-8 | 



F-1



---



##### Table of Contents






REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM














| |                          
| | -------------------------
| | /s/ Ernst & Young
    LLP





F-2



---



##### Table of Contents



EYETECH PHARMACEUTICALS, INC.





CONSOLIDATED BALANCE SHEETS


|                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                 |              |              |              |      |   |             |              |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------ | ------------ | ------------ | ---- | - | ----------- | ------------ | -
|                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                 | December 31, |             
|                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                 |              |             
|                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                 | 2003         |              |              | 2004 |  
|                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                 |              |              |              |      |  
|Current assets:                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                 |              |              |              |      |   |             |             
|                                                                                                                                                                                                                                                                   | Cash and cash equivalents                                                                                                                                                                                                                                                       |              | $            | 25,013,756   |      |   | $           | 40,779,860   |  
|                                                                                                                                                                                                                                                                   | Marketable securities                                                                                                                                                                                                                                                           |              |              | 106,360,073  |      |   |             | 170,715,315  |  
|                                                                                                                                                                                                                                                                   | Collaboration receivable                                                                                                                                                                                                                                                        |              |              | 2,562,000    |      |   |             | 91,965,888   |  
|                                                                                                                                                                                                                                                                   | Prepaid expenses and other current assets                                                                                                                                                                                                                                       |              |              | 1,301,027    |      |   |             | 7,868,007    |  
|Total current assets                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                 |              | 135,236,856  |              |      |   | 311,329,071 |             
|Property and equipment, net                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                 |              | 5,867,582    |              |      |   | 17,817,388  |             
|Restricted cash                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                 |              | 5,623,865    |              |      |   | 5,927,360   |             
|Other assets                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                 |              | 2,751,375    |              |      |   | 4,385,189   |             
|                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                 |              |              |              |      |  
|Total assets                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                 | $            | 149,479,678  |              |      | $ | 339,459,007 |             
|                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                 |              |              |              |      |  
|Current liabilities:                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                 |              |              |              |      |   |             |             
|                                                                                                                                                                                                                                                                   | Accounts payable and accrued expenses                                                                                                                                                                                                                                           |              | $            | 14,308,103   |      |   | $           | 25,103,180   |  
|                                                                                                                                                                                                                                                                   | Deferred license fee revenue, current portion                                                                                                                                                                                                                                   |              |              | 5,000,000    |      |   |             | 13,692,958   |  
|                                                                                                                                                                                                                                                                   | Capital lease obligations, current portion                                                                                                                                                                                                                                      |              |              | 618,350      |      |   |             | 1,459,544    |  
|                                                                                                                                                                                                                                                                   | Deferred rent liability, current portion                                                                                                                                                                                                                                        |              |              | 171,856      |      |   |             | 1,038,407    |  
|                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                 |              |              |              |      |  
|Total current liabilities                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                 |              | 20,098,309   |              |      |   | 41,294,089  |             
|Deferred license fee revenue, net of current portion                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                 |              | 65,416,663   |              |      |   | 159,705,676 |             
|Capital lease obligations, net of current portion                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                 |              | 1,038,279    |              |      |   | 1,254,645   |             
|Other liabilities, net of current portion                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                 |              | 425,761      |              |      |   | 6,066,546   |             
|Redeemable convertible preferred stock  $.01 par
    value; 29,093,695 shares authorized; 25,062,278 and no
    shares issued and outstanding at December 31, 2003 and
    2004, respectively, liquidation preference of $252,053,310 as of
    December 31, 2003 |                                                                                                                                                                                                                                                                                 |              | 185,506,532  |              |      |   |            |             
|Stockholders (deficit) equity:                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                 |              |              |              |      |   |             |             
|                                                                                                                                                                                                                                                                   | Convertible preferred stock  $.01 par value;
    120,000 and none authorized, issued and outstanding at
    December 31, 2003 and 2004, respectively; liquidation
    preference of $225,000 as of December 31, 2003                                                           |              |              | 150,000      |      |   |             |             |  
|                                                                                                                                                                                                                                                                   | Preferred stock $.01 par value; 5,000,000 shares
    authorized, none issued and outstanding at December 31,
    2003 and 2004                                                                                                                                                  |              |              |             |      |   |             |             |  
|                                                                                                                                                                                                                                                                   | Common stock  $.01 par value; 60,000,000 and
    125,000,000 shares authorized at December 31, 2003 and
    2004, respectively; 4,527,736 issued and 4,102,736 outstanding
    at December 31, 2003; and 42,329,499 issued and 41,904,499
    outstanding at December 31, 2004 |              |              | 45,277       |      |   |             | 423,295      |  
|                                                                                                                                                                                                                                                                   | Additional paid-in capital                                                                                                                                                                                                                                                      |              |              | 28,804,713   |      |   |             | 382,176,673  |  
|                                                                                                                                                                                                                                                                   | Loans to stockholders                                                                                                                                                                                                                                                           |              |              | (430,666     | )    |   |             |             |  
|                                                                                                                                                                                                                                                                   | Deferred compensation                                                                                                                                                                                                                                                           |              |              | (13,956,265  | )    |   |             | (11,817,358  | )
|                                                                                                                                                                                                                                                                   | Treasury stock, at cost                                                                                                                                                                                                                                                         |              |              | (255,000     | )    |   |             | (255,000     | )
|                                                                                                                                                                                                                                                                   | Accumulated other comprehensive income                                                                                                                                                                                                                                          |              |              | 130,831      |      |   |             | (572,984     | )
|                                                                                                                                                                                                                                                                   | Accumulated deficit                                                                                                                                                                                                                                                             |              |              | (137,494,756 | )    |   |             | (238,816,575 | )
|                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                 |              |              |              |      |  
|Total stockholders (deficit) equity                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                 |              | (123,005,866 | )            |      |   | 131,138,050 |             
|                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                 |              |              |              |      |  
|Total liabilities and stockholders (deficit) equity                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                 | $            | 149,479,678  |              |      | $ | 339,459,007 |             
|                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                 |              |              |              |      |  



F-3



---



##### Table of Contents



EYETECH PHARMACEUTICALS, INC.





CONSOLIDATED STATEMENTS OF OPERATIONS


|                                                                                                  |                                    |                         |             |            |      |   |             |            |  |   |              |             | 
|------------------------------------------------------------------------------------------------- | ---------------------------------- | ----------------------- | ----------- | ---------- | ---- | - | ----------- | ---------- |  | - | ------------ | ----------- | 
|                                                                                                  |                                    | Year Ended December 31, |            
|                                                                                                  |                                    |                         |            
|                                                                                                  |                                    | 2002                    |             |            | 2003 |   |             | 2004       | 
|                                                                                                  |                                    |                         |             |            |      |   |             |            | 
|Collaboration revenue:                                                                            |                                    |                         |             |            |      |   |             |            |  |   |              |            
|                                                                                                  | License fees                       |                         | $           |           |      |   | $           | 4,583,337  |  |   | $            | 5,722,499   | 
|                                                                                                  | Reimbursement of development costs |                         |             |           |      |   |             | 36,835,829 |  |   |              | 43,629,406  | 
|                                                                                                  |                                    |                         |             |            |      |   |             |            | 
|Total collaboration revenue                                                                       |                                    |                         |            |            |      |   | 41,419,166  |            |  |   | 49,351,904   |            
|Operating expenses:                                                                               |                                    |                         |             |            |      |   |             |            |  |   |              |            
|                                                                                                  | Research and development           |                         |             | 39,663,303 |      |   |             | 70,931,916 |  |   |              | 102,738,907 | 
|                                                                                                  | Sales and marketing                |                         |             |           |      |   |             | 4,598,588  |  |   |              | 33,342,575  | 
|                                                                                                  | General and administrative         |                         |             | 5,286,707  |      |   |             | 6,822,949  |  |   |              | 17,435,387  | 
|                                                                                                  |                                    |                         |             |            |      |   |             |            | 
|Total operating expenses                                                                          |                                    |                         | 44,950,010  |            |      |   | 82,353,453  |            |  |   | 153,516,868  |            
|                                                                                                  |                                    |                         |             |            |      |   |             |            | 
|Loss from operations                                                                              |                                    |                         | (44,950,010 | )          |      |   | (40,934,287 | )          |  |   | (104,164,964 | )          
|Interest income                                                                                   |                                    |                         | 1,808,727   |            |      |   | 2,171,226   |            |  |   | 3,810,429    |            
|Interest expense                                                                                  |                                    |                         | (32,179     | )          |      |   | (248,184    | )          |  |   | (151,272     | )          
|                                                                                                  |                                    |                         |             |            |      |   |             |            | 
|Loss before income taxes                                                                          |                                    |                         | (43,173,462 | )          |      |   | (39,011,245 | )          |  |   | (100,505,807 | )          
|Provision for income taxes                                                                        |                                    |                         |            |            |      |   | (1,688,000  | )          |  |   |             |            
|                                                                                                  |                                    |                         |             |            |      |   |             |            | 
|Net loss                                                                                          |                                    |                         | (43,173,462 | )          |      |   | (40,699,245 | )          |  |   | (100,505,807 | )          
|Preferred stock accretion                                                                         |                                    |                         | (5,096,282  | )          |      |   | (9,160,382  | )          |  |   | (816,013     | )          
|                                                                                                  |                                    |                         |             |            |      |   |             |            | 
|Net loss attributable to common stockholders                                                      |                                    | $                       | (48,269,744 | )          |      | $ | (49,859,627 | )          |  | $ | (101,321,820 | )          
|                                                                                                  |                                    |                         |             |            |      |   |             |            | 
|Historical  Basic and diluted net loss attributable
    to common stockholders per share         |                                    | $                       | (13.06      | )          |      | $ | (12.62      | )          |  | $ | (2.70        | )          
|                                                                                                  |                                    |                         |             |            |      |   |             |            | 
|Weighted average shares outstanding  historical basic
    and diluted                            |                                    |                         | 3,697,192   |            |      |   | 3,950,481   |            |  |   | 37,587,299   |            
|                                                                                                  |                                    |                         |             |            |      |   |             |            | 
|Pro forma  Basic and diluted net loss attributable to
    common stockholders per share (Note 2) |                                    |                         |             |            |      | $ | (1.77       | )          |  | $ | (2.56        | )          
|                                                                                                  |                                    |                         |             |            |      |   |             |            | 
|Pro forma weighted average shares outstanding  basic
    and diluted (Note 2)                    |                                    |                         |             |            |      |   | 28,094,165  |            |  |   | 39,651,420   |            
|                                                                                                  |                                    |                         |             |            |      |   |             |            | 



F-4



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##### Table of Contents



EYETECH PHARMACEUTICALS, INC.





CONSOLIDATED STATEMENTS OF STOCKHOLDERS
(DEFICIT) EQUITY


For the Years Ended December 31, 2002, 2003 and 2004


|                                                                                              |                                                  |                      |          |   |              |   |          |            |  |  |            |  |  |                 |         |  |              |   |             |              |  |   |          |   |  |   |             |   | 
|--------------------------------------------------------------------------------------------- | ------------------------------------------------ | -------------------- | -------- | - | ------------ | - | -------- | ---------- |  |  | ---------- |  |  | --------------- | ------- |  | ------------ | - | ----------- | ------------ |  | - | -------- | - |  | - | ----------- | - | 
|                                                                                              |                                                  | Series A Convertible |          |   |              |   |          |            |  |  |           
|                                                                                              |                                                  | Preferred Stock      |          |   | Common Stock |   |          |            |  |  |            | 
|                                                                                              |                                                  |                      |          |   |              |   |          | Additional |  |  | Loans to   |  |  | Deferred        |        
|                                                                                              |                                                  | Shares               |          |   | Amount       |   |          | Shares     |  |  | Amount     |  |  | Paid-In Capital |         |  | Stockholders |   |             | Compensation | 
|                                                                                              |                                                  |                      |          |   |              |   |          |            |  |  |            |  |  |                 |         |  |              |   |             |              | 
|Balance at December 31, 2001                                                                  |                                                  |                      | 120,000  |   |              |   | 150,000  |            |  |  | 4,152,000  |  |  |                 | 41,520  |  |              |   | 5,294,812   |              |  |   | (300,000 | ) |  |   | (203,000    | )
|Warrants issued in connection with the issuance of
    Series C-2                             |                                                  |                      |          |   |              |   |          |            |  |  |            |  |  |                 |         |  |              |   | 3,384,794   |              |  |   |          |   |  |   |             |  
|Deferred compensation related to stock options and restricted
    Stock, net of cancellations |                                                  |                      |          |   |              |   |          |            |  |  |            |  |  |                 |         |  |              |   | 1,334,763   |              |  |   |          |   |  |   | (1,334,763  | )
|Amortization of deferred compensation                                                         |                                                  |                      |          |   |              |   |          |            |  |  |            |  |  |                 |         |  |              |   |             |              |  |   |          |   |  |   | 238,600     |  
|Exercise of stock options                                                                     |                                                  |                      |          |   |              |   |          |            |  |  | 10,000     |  |  |                 | 100     |  |              |   | 5,900       |              |  |   |          |   |  |   |             |  
|Loan to purchase restricted stock                                                             |                                                  |                      |          |   |              |   |          |            |  |  |            |  |  |                 |         |  |              |   | 57,000      |              |  |   | (102,000 | ) |  |   |             |  
|Repayment of loan to purchase restricted stock                                                |                                                  |                      |          |   |              |   |          |            |  |  |            |  |  |                 |         |  |              |   |             |              |  |   | 5,000    |   |  |   |             |  
|Options granted to nonemployees                                                               |                                                  |                      |          |   |              |   |          |            |  |  |            |  |  |                 |         |  |              |   | 1,048,539   |              |  |   |          |   |  |   |             |  
|Preferred stock accretion                                                                     |                                                  |                      |          |   |              |   |          |            |  |  |            |  |  |                 |         |  |              |   |             |              |  |   |          |   |  |   |             |  
|Net loss                                                                                      |                                                  |                      |          |   |              |   |          |            |  |  |            |  |  |                 |         |  |              |   |             |              |  |   |          |   |  |   |             |  
|Other comprehensive loss:                                                                     |                                                  |                      |          |   |              |   |          |            |  |  |            |  |  |                 |         |  |              |   |             |              |  |   |          |   |  |   |             |  
|                                                                                              | Unrealized depreciation on marketable securities |                      |          |   |              |   |          |            |  |  |            |  |  |                 |         |  |              |   |             |              |  |   |          |   |  |   |             |   | 
|Comprehensive loss                                                                            |                                                  |                      |          |   |              |   |          |            |  |  |            |  |  |                 |         |  |              |   |             |              |  |   |          |   |  |   |             |  
|                                                                                              |                                                  |                      |          |   |              |   |          |            |  |  |            |  |  |                 |         |  |              |   |             |              | 
|Balance at December 31, 2002                                                                  |                                                  |                      | 120,000  |   |              |   | 150,000  |            |  |  | 4,162,000  |  |  |                 | 41,620  |  |              |   | 11,125,808  |              |  |   | (397,000 | ) |  |   | (1,299,163  | )
|Deferred compensation related to stock options, net of
    cancellations                      |                                                  |                      |          |   |              |   |          |            |  |  |            |  |  |                 |         |  |              |   | 15,001,255  |              |  |   |          |   |  |   | (15,001,255 | )
|Amortization of deferred compensation                                                         |                                                  |                      |          |   |              |   |          |            |  |  |            |  |  |                 |         |  |              |   |             |              |  |   |          |   |  |   | 2,344,153   |  
|Exercise of stock options                                                                     |                                                  |                      |          |   |              |   |          |            |  |  | 365,736    |  |  |                 | 3,657   |  |              |   | 280,496     |              |  |   | (34,416  | ) |  |   |             |  
|Repayment of loan to purchase restricted stock                                                |                                                  |                      |          |   |              |   |          |            |  |  |            |  |  |                 |         |  |              |   |             |              |  |   | 750      |   |  |   |             |  
|Options granted to nonemployees                                                               |                                                  |                      |          |   |              |   |          |            |  |  |            |  |  |                 |         |  |              |   | 2,397,154   |              |  |   |          |   |  |   |             |  
|Preferred stock accretion                                                                     |                                                  |                      |          |   |              |   |          |            |  |  |            |  |  |                 |         |  |              |   |             |              |  |   |          |   |  |   |             |  
|Net loss                                                                                      |                                                  |                      |          |   |              |   |          |            |  |  |            |  |  |                 |         |  |              |   |             |              |  |   |          |   |  |   |             |  
|Other comprehensive loss:                                                                     |                                                  |                      |          |   |              |   |          |            |  |  |            |  |  |                 |         |  |              |   |             |              |  |   |          |   |  |   |             |  
|                                                                                              | Unrealized depreciation on marketable securities |                      |          |   |              |   |          |            |  |  |            |  |  |                 |         |  |              |   |             |              |  |   |          |   |  |   |             |   | 
|Comprehensive loss                                                                            |                                                  |                      |          |   |              |   |          |            |  |  |            |  |  |                 |         |  |              |   |             |              |  |   |          |   |  |   |             |  
|                                                                                              |                                                  |                      |          |   |              |   |          |            |  |  |            |  |  |                 |         |  |              |   |             |              | 
|Balance at December 31, 2003                                                                  |                                                  |                      | 120,000  |   |              | $ | 150,000  |            |  |  | 4,527,736  |  |  | $               | 45,277  |  |              | $ | 28,804,713  |              |  | $ | (430,666 | ) |  | $ | (13,956,265 | )
|Deferred compensation related to stock options and restricted
    stock, net of cancellations |                                                  |                      |          |   |              |   |          |            |  |  |            |  |  |                 |         |  |              |   | 4,729,871   |              |  |   |          |   |  |   | (4,729,871  | )
|Comp charge in connection with acceleration                                                   |                                                  |                      |          |   |              |   |          |            |  |  |            |  |  |                 |         |  |              |   | 775,132     |              |  |   |          |   |  |   |             |  
|Amortization of deferred compensation                                                         |                                                  |                      |          |   |              |   |          |            |  |  |            |  |  |                 |         |  |              |   |             |              |  |   |          |   |  |   | 6,868,778   |  
|Common stock issued pursuant to equity compensation plans                                     |                                                  |                      |          |   |              |   |          |            |  |  | 1,651,302  |  |  |                 | 16,513  |  |              |   | 3,769,701   |              |  |   |          |   |  |   |             |  
|Conversion of series A convertible preferred stock                                            |                                                  |                      | (120,000 | ) |              |   | (150,000 | )          |  |  | 120,000    |  |  |                 | 1,200   |  |              |   | 148,800     |              |  |   |          |   |  |   |             |  
|Conversion of redeemable convertible preferred stock                                          |                                                  |                      |          |   |              |   |          |            |  |  | 27,398,762 |  |  |                 | 273,988 |  |              |   | 189,189,945 |              |  |   |          |   |  |   |             |  
|Common stock issued pursuant to cashless exercise of warrants                                 |                                                  |                      |          |   |              |   |          |            |  |  | 680,509    |  |  |                 | 6,805   |  |              |   | (6,805      | )            |  |   |          |   |  |   |             |  
|Common stock issued pursuant to IPO, net of offering costs of
    $14,154,225                 |                                                  |                      |          |   |              |   |          |            |  |  | 7,951,190  |  |  |                 | 79,512  |  |              |   | 152,741,050 |              |  |   |          |   |  |   |             |  
|Options granted to non-employees                                                              |                                                  |                      |          |   |              |   |          |            |  |  |            |  |  |                 |         |  |              |   | 2,024,266   |              |  |   |          |   |  |   |             |  
|Repayment of loan by officer                                                                  |                                                  |                      |          |   |              |   |          |            |  |  |            |  |  |                 |         |  |              |   |             |              |  |   | 430,666  |   |  |   |             |  
|Net loss                                                                                      |                                                  |                      |          |   |              |   |          |            |  |  |            |  |  |                 |         |  |              |   |             |              |  |   |          |   |  |   |             |  
|Other comprehensive loss:                                                                     |                                                  |                      |          |   |              |   |          |            |  |  |            |  |  |                 |         |  |              |   |             |              |  |   |          |   |  |   |             |  
|                                                                                              | Unrealized depreciation on marketable securities |                      |          |   |              |   |          |            |  |  |            |  |  |                 |         |  |              |   |             |              |  |   |          |   |  |   |             |   | 
|Comprehensive loss                                                                            |                                                  |                      |          |   |              |   |          |            |  |  |            |  |  |                 |         |  |              |   |             |              |  |   |          |   |  |   |             |  
|                                                                                              |                                                  |                      |          |   |              |   |          |            |  |  |            |  |  |                 |         |  |              |   |             |              | 
|Balance at December 31, 2004                                                                  |                                                  |                      |         |   |              |   |         |            |  |  | 42,329,499 |  |  | $               | 423,295 |  |              | $ | 382,176,673 |              |  |   |         |   |  | $ | (11,817,358 | )
|                                                                                              |                                                  |                      |          |   |              |   |          |            |  |  |            |  |  |                 |         |  |              |   |             |              | 

F-5



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##### Table of Contents



|                                                                                                                                                                 |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         |              |   |  |   |              |          |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------ | -------------- | ------- | ----- | ------------- | - | -------- | ----------- |  | ----- | ------------- | -------- | - | ------- | ------------ | - |  | - | ------------ | -------- | -
|                                                                                                                                                                 |                                                  |                |         | Other |               |   |          |             | 
|                                                                                                                                                                 |                                                  | Treasury Stock |         |       | Comprehensive |   |          |             |  | Total |              
|                                                                                                                                                                 |                                                  |                |         |       | Income        |   |          | Accumulated |  |       | Stockholders |         
|                                                                                                                                                                 |                                                  | Shares         |         |       | Amount        |   |          | (Loss)      |  |       | Deficit       |          |   | Deficit |             
|                                                                                                                                                                 |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         |             
|Balance at December 31, 2001                                                                                                                                     |                                                  |                | 500,000 |       |               |   | (300,000 | )           |  |       | 354,695       |          |   |         | (39,365,385  | ) |  |   | (34,327,358  | )       
|Warrants issued in connection with the issuance of
    Series C-2                                                                                                |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         |              |   |  |   | 3,384,794    |         
|Deferred compensation related to stock options, net of
    cancellations                                                                                         |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         |              |   |  |   |             |         
|Amortization of deferred compensation                                                                                                                            |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         |              |   |  |   | 238,600      |         
|Exercise of stock options                                                                                                                                        |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         |              |   |  |   | 6,000        |         
|Loan to purchase restricted stock                                                                                                                                |                                                  |                | (75,000 | )     |               |   | 45,000   |             |  |       |               |          |   |         |              |   |  |   |             |         
|Repayment of loan to purchase restricted stock                                                                                                                   |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         |              |   |  |   | 5,000        |         
|Options granted to nonemployees                                                                                                                                  |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         |              |   |  |   | 1,048,539    |         
|Preferred stock accretion                                                                                                                                        |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         | (5,096,282   | ) |  |   | (5,096,282   | )       
|Net loss                                                                                                                                                         |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         | (43,173,462  | ) |  |   | (43,173,462  | )       
|Other comprehensive loss:                                                                                                                                        |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         |              |   |  |   |              |         
|                                                                                                                                                                 | Unrealized depreciation on marketable securities |                |         |       |               |   |          |             |  |       |               | (121,907 | ) |         |              |   |  |   |              | (121,907 | )
|                                                                                                                                                                 |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         |             
|Comprehensive loss                                                                                                                                               |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         |              |   |  |   | (43,295,369  | )       
|                                                                                                                                                                 |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         |             
|Balance at December 31, 2002                                                                                                                                     |                                                  |                | 425,000 |       |               |   | (255,000 | )           |  |       | 232,788       |          |   |         | (87,635,129  | ) |  |   | (78,036,076  | )       
|Deferred compensation related to stock options, net of
    cancellations                                                                                         |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         |              |   |  |   |             |         
|Amortization of deferred compensation                                                                                                                            |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         |              |   |  |   | 2,344,153    |         
|Exercise of stock options                                                                                                                                        |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         |              |   |  |   | 249,737      |         
|Repayment of loan to purchase restricted stock                                                                                                                   |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         |              |   |  |   | 750          |         
|Options granted to nonemployees                                                                                                                                  |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         |              |   |  |   | 2,397,154    |         
|Preferred stock accretion                                                                                                                                        |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         | (9,160,382   | ) |  |   | (9,160,382   | )       
|Net loss                                                                                                                                                         |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         | (40,699,245  | ) |  |   | (40,699,245  | )       
|Other comprehensive loss:                                                                                                                                        |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         |              |   |  |   |              |         
|                                                                                                                                                                 | Unrealized depreciation on marketable securities |                |         |       |               |   |          |             |  |       |               | (101,957 | ) |         |              |   |  |   |              | (101,957 | )
|                                                                                                                                                                 |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         |             
|Comprehensive loss                                                                                                                                               |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         |              |   |  |   | (40,801,202  | )       
|                                                                                                                                                                 |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         |             
|Balance at December 31, 2003                                                                                                                                     |                                                  |                | 425,000 |       |               | $ | (255,000 | )           |  | $     | 130,831       |          |   | $       | (137,494,756 | ) |  | $ | (123,005,866 | )       
|Deferred compensation related to stock options and restricted
    stock, net of cancellations Compensation charge in connection
    with acceleration of options |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         |              |   |  |   | 775,132      |         
|Amortization of Deferred compensation                                                                                                                            |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         |              |   |  |   | 6,868,778    |         
|Common stock issued pursuant to equity compensation plans                                                                                                        |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         |              |   |  |   | 3,786,214    |         
|Conversion of Series A convertible preferred stock                                                                                                               |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         |              |   |  |   |              |         
|Conversion of redeemable convertible preferred stock                                                                                                             |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         |              |   |  |   | 189,463,932  |         
|Common stock issued pursuant to cashless exercise of warrants                                                                                                    |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         |              |   |  |   |              |         
|Common stock issued pursuant to IPO, net of offering costs of
    $14,154,225                                                                                    |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         |              |   |  |   | 152,820,562  |         
|Options granted to non-employees                                                                                                                                 |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         |              |   |  |   | 2,024,266    |         
|Preferred stock accretion                                                                                                                                        |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         | (816,012     | ) |  |   | (816,012     | )       
|Repayment of loan by officer                                                                                                                                     |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         |              |   |  |   | 430,666      |         
|Net loss                                                                                                                                                         |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         | (100,505,807 | ) |  |   | (100,505,807 | )       
|Other comprehensive loss:                                                                                                                                        |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         |              |   |  |   |              |         
|                                                                                                                                                                 | Unrealized depreciation on marketable securities |                |         |       |               |   |          |             |  |       |               | (703,815 | ) |         |              |   |  |   |              | (703,815 | )
|                                                                                                                                                                 |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         |             
|Comprehensive loss                                                                                                                                               |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         |              |   |  |   | (101,209,622 | )       
|                                                                                                                                                                 |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         |             
|Balance at December 31, 2004                                                                                                                                     |                                                  |                | 425,000 |       |               | $ | (255,000 | )           |  | $     | (572,984      | )        |   | $       | (238,816,575 | ) |  | $ | 131,138,050  |         
|                                                                                                                                                                 |                                                  |                |         |       |               |   |          |             |  |       |               |          |   |         |             



F-6



---



##### Table of Contents



EYETECH PHARMACEUTICALS, INC.





CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                                                              |                                              |                                           |              |           |           |   |              |           |            |   |                |           |             |  
|--------------------------------------------------------------------------------------------- | -------------------------------------------- | ----------------------------------------- | ------------ | --------- | --------- | - | ------------ | --------- | ---------- | - | -------------- | --------- | ----------- | -
|                                                                                              |                                              | Year Ended December 31,                   |             
|                                                                                              |                                              |                                           |             
|                                                                                              |                                              | 2002                                      |              |           | 2003      |   |              | 2004      |           
|                                                                                              |                                              |                                           |              |           |           |   |              |           |           
|Operating activities                                                                          |                                              |                                           |              |           |           |   |              |           |            |   |                |          
|Net loss                                                                                      |                                              | $                                         | (43,173,462  | )         |           | $ | (40,699,245  | )         |            | $ | (100,505,807   | )        
|Adjustments to reconcile net loss to net cash provided by (used
    in) operating activities: |                                              |                                           |              |           |           |   |              |           |            |   |                |          
|                                                                                              | Depreciation and amortization                |                                           |              | 316,728   |           |   |              | 891,177   |            |   |                | 2,195,911 |            
|                                                                                              | Loss on disposal of assets                   |                                           |              |          |           |   |              | 31,268    |            |   |                | 141,765   |            
|                                                                                              | Noncash stock-based compensation             |                                           |              | 1,287,134 |           |   |              | 4,741,307 |            |   |                | 9,668,176 |            
|                                                                                              | Loss on lease termination                    |                                           |              |          |           |   |              |          |            |   |                | 2,475,070 |            
|                                                                                              | Gain on sale of marketable securities        |                                           |              | (333,235  | )         |   |              | (16,077   | )          |   |                | 28,470    |            
|                                                                                              | Changes in operating assets and liabilities: |                                           |              |           |           |   |              |           |            |   |                |           |            
|                                                                                              |                                              | Collaboration receivable                  |              |           |          |   |              |           | (2,562,000 | ) |                |           | (89,403,888 | )
|                                                                                              |                                              | Prepaid expenses and other current assets |              |           | (43,073   | ) |              |           | 77,643     |   |                |           | (6,088,997  | )
|                                                                                              |                                              | Other assets                              |              |           |          |   |              |           | (260,757   | ) |                |           | (3,335,037  | )
|                                                                                              |                                              | Accounts payable and accrued expenses     |              |           | 1,626,614 |   |              |           | 6,865,625  |   |                |           | 11,296,041  |  
|                                                                                              |                                              | Deferred license fee revenue              |              |           |          |   |              |           | 70,416,663 |   |                |           | 102,981,971 |  
|                                                                                              |                                              | Other liabilities                         |              |           | 498,212   |   |              |           | (44,859    | ) |                |           | 4,032,265   |  
|                                                                                              |                                              |                                           |              |           |           |   |              |           |           
|Net cash provided by (used in) operating activities                                           |                                              |                                           | (39,821,082  | )         |           |   | 39,440,745   |           |            |   | (66,514,060    | )        
|Investing activities                                                                          |                                              |                                           |              |           |           |   |              |           |            |   |                |          
|Purchases of property and equipment                                                           |                                              |                                           | (582,330     | )         |           |   | (3,778,026   | )         |            |   | (12,532,316    | )        
|Purchase of marketable securities                                                             |                                              |                                           | (136,447,734 | )         |           |   | (400,556,838 | )         |            |   | (3,382,237,258 | )        
|Proceeds from sale of marketable securities                                                   |                                              |                                           | 126,796,094  |           |           |   | 357,470,013  |           |            |   | 3,317,149,730  |          
|Increase in restricted cash                                                                   |                                              |                                           | (1,084,543   | )         |           |   | (2,958,225   | )         |            |   | (303,495       | )        
|Repayment of loan to stockholders                                                             |                                              |                                           | 255,000      |           |           |   | 750          |           |            |   | 430,666        |          
|Increase in prepaid expenses and other current assets                                         |                                              |                                           | (39,538      | )         |           |   | (407,663     | )         |            |   | (477,983       | )        
|Increase in other assets                                                                      |                                              |                                           | (839,395     | )         |           |   | (1,701,223   | )         |            |   |               |          
|                                                                                              |                                              |                                           |              |           |           |   |              |           |           
|Net cash (used in) investing activities                                                       |                                              |                                           | (11,942,446  | )         |           |   | (51,931,212  | )         |            |   | (77,970,655    | )        
|Financing activities                                                                          |                                              |                                           |              |           |           |   |              |           |            |   |                |          
|Proceeds from issuance of common stock                                                        |                                              |                                           | 6,000        |           |           |   | 249,737      |           |            |   | 154,521,783    |          
|Proceeds from exercise of stock options                                                       |                                              |                                           |             |           |           |   |             |           |            |   | 3,786,214      |          
|Proceeds from issuance of redeemable convertible preferred stock
    and warrants, net        |                                              |                                           | 54,154,200   |           |           |   | 32,022,769   |           |            |   | 2,640,427      |          
|Repayment of capital lease obligations                                                        |                                              |                                           | (127,184     | )         |           |   | (560,128     | )         |            |   | (697,605       | )        
|                                                                                              |                                              |                                           |              |           |           |   |              |           |           
|Net cash provided by financing activities                                                     |                                              |                                           | 54,033,016   |           |           |   | 31,712,378   |           |            |   | 160,250,818    |          
|                                                                                              |                                              |                                           |              |           |           |   |              |           |           
|Net increase in cash and cash equivalents                                                     |                                              |                                           | 2,269,488    |           |           |   | 19,221,911   |           |            |   | 15,766,104     |          
|Cash and cash equivalents at beginning of period                                              |                                              |                                           | 3,522,357    |           |           |   | 5,791,845    |           |            |   | 25,013,756     |          
|Cash and cash equivalents at end of period                                                    |                                              | $                                         | 5,791,845    |           |           | $ | 25,013,756   |           |            | $ | 40,779,860     |          
|                                                                                              |                                              |                                           |              |           |           |   |              |           |           
|Noncash financing and investing activities                                                    |                                              |                                           |              |           |           |   |              |           |            |   |                |          
|Fixed assets capitalized using capital leases                                                 |                                              | $                                         | 2,355,686    |           |           | $ |             |           |            | $ | 1,755,166      |          
|                                                                                              |                                              |                                           |              |           |           |   |              |           |           
|Loans to stockholders in connection with exercise of stock
    options and stock purchase     |                                              | $                                         | 102,000      |           |           | $ | 34,416       |           |            | $ |               |          
|                                                                                              |                                              |                                           |              |           |           |   |              |           |           
|Supplemental disclosures of cash flow information                                             |                                              |                                           |              |           |           |   |              |           |            |   |                |          
|Cash paid during the period for:                                                              |                                              |                                           |              |           |           |   |              |           |            |   |                |          
|                                                                                              | Interest                                     |                                           | $            | 32,179    |           |   | $            | 248,184   |            |   | $              | 151,272   |            
|                                                                                              |                                              |                                           |              |           |           |   |              |           |           
|                                                                                              | Income taxes paid                            |                                           | $            |          |           |   | $            | 1,709,890 |            |   | $              |          |            
|                                                                                              |                                              |                                           |              |           |           |   |              |           |           



F-7



---



##### Table of Contents



EYETECH PHARMACEUTICALS, INC.





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2004




|   |                                         
|-- | ----------------------------------------
|1. | Organization and Description of Business











|   |                                                          
|-- | ---------------------------------------------------------
|2. | Basis of Presentation and Significant Accounting Policies



| |              
| | -------------
| | Consolidation





| |                 
| | ----------------
| | Use of Estimates



F-8



---



##### Table of Contents



EYETECH PHARMACEUTICALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


December 31, 2004




| |                 
| | ----------------
| | Cash Equivalents





| |                      
| | ---------------------
| | Marketable Securities





| |                
| | ---------------
| | Restricted Cash





| |                             
| | ----------------------------
| | Concentration of Credit Risk





| |                                    
| | -----------------------------------
| | Fair Value of Financial Instruments





| |          
| | ---------
| | Inventory





| |                       
| | ----------------------
| | Property and Equipment





| |                               
| | ------------------------------
| | Impairment of Long-Lived Asset



F-9



---



##### Table of Contents



EYETECH PHARMACEUTICALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


December 31, 2004






| |                    
| | -------------------
| | Revenue Recognition









| |                               
| | ------------------------------
| | Research and Development Costs





| |                         
| | ------------------------
| | Stock-Based Compensation



F-10



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##### Table of Contents



EYETECH PHARMACEUTICALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


December 31, 2004




|                                                                                                                             |  |                         |             |   |      |   |             |      |  |   |              |  
|---------------------------------------------------------------------------------------------------------------------------- |  | ----------------------- | ----------- | - | ---- | - | ----------- | ---- |  | - | ------------ | -
|                                                                                                                             |  | Year Ended December 31, |            
|                                                                                                                             |  |                         |            
|                                                                                                                             |  | 2002                    |             |   | 2003 |   |             | 2004 | 
|                                                                                                                             |  |                         |             |   |      |   |             |      | 
|Net loss attributable to common stockholders, as reported                                                                    |  | $                       | (48,269,744 | ) |      | $ | (49,859,627 | )    |  | $ | (101,321,820 | )
|Add: Non-cash employee compensation as reported                                                                              |  |                         | 238,600     |   |      |   | 2,344,153   |      |  |   | 6,868,778    |  
|Deduct: Total stock-based employee compensation expense
    determined under fair value based method for all awards          |  |                         | (350,877    | ) |      |   | (2,450,510  | )    |  |   | (11,973,703  | )
|                                                                                                                             |  |                         |             |   |      |   |             |      | 
|SFAS No. 123 pro forma net loss                                                                                              |  | $                       | (48,382,021 | ) |      | $ | (49,965,984 | )    |  | $ | (106,426,745 | )
|                                                                                                                             |  |                         |             |   |      |   |             |      | 
|Basic and diluted loss attributable to common stockholders per
    share, as reported                                        |  | $                       | (13.06      | ) |      | $ | (12.62      | )    |  | $ | (2.70        | )
|                                                                                                                             |  |                         |             |   |      |   |             |      | 
|Basic and diluted loss attributable to common stockholders per
    share, SFAS No. 123 pro forma                             |  | $                       | (13.09      | ) |      | $ | (12.65      | )    |  | $ | (2.83        | )
|                                                                                                                             |  |                         |             |   |      |   |             |      | 
|Unaudited pro forma basic and diluted net loss attributable to
    common stockholders per share, SFAS No. 123
    pro forma |  |                         |             |   |      | $ | (1.78       | )    |  | $ | (2.68        | )
|                                                                                                                             |  |                         |             |   |      |   |             |      | 



|                        |  |                         |  |             |  |             
|----------------------- |  | ----------------------- |  | ----------- |  | ------------
|                        |  | Year Ended December 31,
|                        |  |                        
|                        |  | 2002                    |  | 2003        |  | 2004        
|                        |  |                         |  |             |  |             
|Volatility              |  |                        |  |            |  | 72%         
|Risk-free interest rate |  | 3.5% - 5.0%             |  | 2.8% - 4.2% |  | 3.9% - 4.75%
|Dividend yield          |  | 0%                      |  | 0%          |  | 0%          
|Expected life           |  | 7 years                 |  | 5 years     |  | 5 years     







| |                   
| | ------------------
| | Comprehensive Loss



F-11



---



##### Table of Contents



EYETECH PHARMACEUTICALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


December 31, 2004




| |             
| | ------------
| | Income Taxes





| |                   
| | ------------------
| | Net Loss Per Share





| |                                  
| | ---------------------------------
| | Pro Forma Information (Unaudited)





| |                 
| | ----------------
| | Reclassification





| |                                          
| | -----------------------------------------
| | Recently Issued Accounting Pronouncements





F-12



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##### Table of Contents



EYETECH PHARMACEUTICALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


December 31, 2004








|   |                               
|-- | ------------------------------
|3. | Available for Sale Investments



|                                     |                            |      |             |            |       |   |            |         |  |   |            |         |   |   |             |            | 
|------------------------------------ | -------------------------- | ---- | ----------- | ---------- | ----- | - | ---------- | ------- |  | - | ---------- | ------- | - | - | ----------- | ---------- | 
|                                     |                            |      |             | Gross      |       |   | Gross      |         |  |  
|                                     |                            |      |             | Unrealized |       |   | Unrealized |         |  |  
|                                     |                            | Cost |             |            | Gains |   |            | Losses  |  |   | Fair Value |        
|                                     |                            |      |             |            |       |   |            |         |  |   |            |        
|December 31, 2003                    |                            |      |             |            |       |   |            |         |  |   |            |         |   |   |             |           
|Maturities within one year:          |                            |      |             |            |       |   |            |         |  |   |            |         |   |   |             |           
|                                     | Corporate notes            |      | $           | 24,386,443 |       |   | $          | 9,725   |  |   | $          | (7,720  | ) |   | $           | 24,388,448 | 
|                                     | Federal agency notes       |      |             | 23,951,489 |       |   |            | 10,670  |  |   |            | (1,695  | ) |   |             | 23,960,464 | 
|                                     | Asset-backed securities    |      |             | 32,023,764 |       |   |            | 100,669 |  |   |            | (2,463  | ) |   |             | 32,121,970 | 
|                                     |                            |      |             |            |       |   |            |         |  |   |            |        
|                                     |                            |      | 80,361,696  |            |       |   | 121,064    |         |  |   | (11,878    | )       |   |   | 80,470,882  |           
|                                     |                            |      |             |            |       |   |            |         |  |   |            |        
|Maturities between one to two years: |                            |      |             |            |       |   |            |         |  |   |            |         |   |   |             |           
|                                     | Corporate notes            |      |             | 16,316,113 |       |   |            | 12,833  |  |   |            | (3,658  | ) |   |             | 16,325,288 | 
|                                     | Federal agency notes       |      |             | 6,909,507  |       |   |            | 1,031   |  |   |            | (14,664 | ) |   |             | 6,895,874  | 
|                                     | Mortgage-backed securities |      |             | 730,202    |       |   |            | 8,486   |  |   |            |        |   |   |             | 738,688    | 
|                                     | Municipal bonds            |      |             | 1,911,724  |       |   |            | 17,617  |  |   |            |        |   |   |             | 1,929,341  | 
|                                     |                            |      |             |            |       |   |            |         |  |   |            |        
|                                     |                            |      | 25,867,546  |            |       |   | 39,967     |         |  |   | (18,322    | )       |   |   | 25,889,191  |           
|                                     |                            |      |             |            |       |   |            |         |  |   |            |        
|Total                                |                            | $    | 106,229,242 |            |       | $ | 161,031    |         |  | $ | (30,200    | )       |   | $ | 106,360,073 |           
|                                     |                            |      |             |            |       |   |            |         |  |   |            |        

F-13



---



##### Table of Contents



EYETECH PHARMACEUTICALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


December 31, 2004


|                                     |                            |      |             |            |       |   |            |        |  |   |            |          |   |   |             |            | 
|------------------------------------ | -------------------------- | ---- | ----------- | ---------- | ----- | - | ---------- | ------ |  | - | ---------- | -------- | - | - | ----------- | ---------- | 
|                                     |                            |      |             | Gross      |       |   | Gross      |        |  |  
|                                     |                            |      |             | Unrealized |       |   | Unrealized |        |  |  
|                                     |                            | Cost |             |            | Gains |   |            | Losses |  |   | Fair Value |         
|                                     |                            |      |             |            |       |   |            |        |  |   |            |         
|December 31, 2004                    |                            |      |             |            |       |   |            |        |  |   |            |          |   |   |             |           
|Maturities within one year:          |                            |      |             |            |       |   |            |        |  |   |            |          |   |   |             |           
|                                     | Corporate notes            |      | $           | 42,226,280 |       |   | $          | 4,417  |  |   | $          | (85,206  | ) |   | $           | 40,717,367 | 
|                                     | Federal agency notes       |      |             | 10,181,803 |       |   |            | 2,851  |  |   |            | (16,566  | ) |   |             | 10,025,965 | 
|                                     |                            |      |             |            |       |   |            |        |  |   |            |         
|                                     |                            |      | 52,408,083  |            |       |   | 7,268      |        |  |   | (101,773   | )        |   |   | 50,743,332  |           
|                                     |                            |      |             |            |       |   |            |        |  |   |            |         
|Maturities between one to two years: |                            |      |             |            |       |   |            |        |  |   |            |          |   |   |             |           
|                                     | Corporate notes            |      |             | 45,891,785 |       |   |            | 6,714  |  |   |            | (197,840 | ) |   |             | 45,370,563 | 
|                                     | Federal agency notes       |      |             | 9,140,212  |       |   |            | 987    |  |   |            | (93,782  | ) |   |             | 8,980,323  | 
|                                     | Mortgage-backed securities |      |             | 3,479,739  |       |   |            |       |  |   |            | (17,991  | ) |   |             | 3,404,501  | 
|                                     | Asset-backed securities    |      |             | 52,746,356 |       |   |            | 6,448  |  |   |            | (129,770 | ) |   |             | 52,032,551 | 
|                                     | Municipal bonds            |      |             | 3,309,543  |       |   |            | 10,870 |  |   |            |         |   |   |             | 3,248,732  | 
|                                     | U.S. Treasury Notes        |      |             | 6,997,773  |       |   |            |       |  |   |            | (62,845  | ) |   |             | 6,935,313  | 
|                                     |                            |      |             |            |       |   |            |        |  |   |            |         
|                                     |                            |      | 121,565,408 |            |       |   | 25,019     |        |  |   | (502,227   | )        |   |   | 119,971,983 |           
|                                     |                            |      |             |            |       |   |            |        |  |   |            |         
|Total                                |                            | $    | 173,973,491 |            |       | $ | 32,287     |        |  | $ | (604,000   | )        |   | $ | 170,715,315 |           
|                                     |                            |      |             |            |       |   |            |        |  |   |            |         



|   |                       
|-- | ----------------------
|4. | Property and Equipment



|                                          |  |              |            |   |      |   |            |  
|----------------------------------------- |  | ------------ | ---------- | - | ---- | - | ---------- | -
|                                          |  | December 31, |           
|                                          |  |              |           
|                                          |  | 2003         |            |   | 2004 |  
|                                          |  |              |            |   |      |  
|Furniture and office equipment            |  | $            | 562,826    |   |      | $ | 965,028    |  
|Computer equipment                        |  |              | 1,728,918  |   |      |   | 3,626,825  |  
|Laboratory equipment                      |  |              | 4,348,071  |   |      |   | 7,082,596  |  
|Manufacturing equipment                   |  |              |           |   |      |   | 5,115,637  |  
|Leasehold improvements                    |  |              | 559,108    |   |      |   | 4,554,554  |  
|                                          |  |              |            |   |      |  
|                                          |  |              | 7,198,923  |   |      |   | 21,344,640 |  
|Accumulated depreciation and amortization |  |              | (1,331,341 | ) |      |   | (3,527,252 | )
|                                          |  |              |            |   |      |  
|                                          |  | $            | 5,867,582  |   |      | $ | 17,817,388 |  
|                                          |  |              |            |   |      |  



F-14



---



##### Table of Contents



EYETECH PHARMACEUTICALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


December 31, 2004




|   |                                      
|-- | -------------------------------------
|5. | Accounts Payable and Accrued Expenses



|                              |  |              |            |  |      |   |            | 
|----------------------------- |  | ------------ | ---------- |  | ---- | - | ---------- | 
|                              |  | December 31, |           
|                              |  |              |           
|                              |  | 2003         |            |  | 2004 |  
|                              |  |              |            |  |      |  
|Milestones                    |  | $            |           |  |      | $ | 6,000,000  | 
|Clinical development expenses |  |              | 3,862,646  |  |      |   | 3,725,479  | 
|Manufacturing expenses        |  |              | 2,469,740  |  |      |   | 2,597,638  | 
|Payroll and related expenses  |  |              | 2,483,688  |  |      |   | 6,272,244  | 
|Professional fees             |  |              | 1,876,267  |  |      |   | 1,516,321  | 
|Collaboration payable         |  |              | 715,000    |  |      |   | 2,142,000  | 
|Other expenses                |  |              | 2,900,762  |  |      |   | 2,849,499  | 
|                              |  |              |            |  |      |  
|                              |  | $            | 14,308,103 |  |      | $ | 25,103,180 | 
|                              |  |              |            |  |      |  



|   |                                                                              
|-- | -----------------------------------------------------------------------------
|6. | Redeemable Convertible Preferred Stock and Stockholders
    (Deficit) Equity



| |             
| | ------------
| | Common Stock





|                                                                           |  |              |            |  |      |  |           | 
|-------------------------------------------------------------------------- |  | ------------ | ---------- |  | ---- |  | --------- | 
|                                                                           |  | December 31, |           
|                                                                           |  |              |           
|                                                                           |  | 2003         |            |  | 2004 | 
|                                                                           |  |              |            |  |      | 
|Common stock options and restricted stock grants                           |  |              | 9,049,250  |  |      |  | 7,688,783 | 
|Conversion of Series A preferred stock                                     |  |              | 120,000    |  |      |  |          | 
|Conversion of Series B preferred stock                                     |  |              | 5,790,331  |  |      |  |          | 
|Conversion of Series C-1 and C-2 preferred stock                           |  |              | 16,524,694 |  |      |  |          | 
|Conversion of Series D preferred stock                                     |  |              | 2,747,253  |  |      |  |          | 
|Exercise of warrants to purchase Series B, C-1 and C-2
    preferred stock |  |              | 4,031,414  |  |      |  |          | 
|                                                                           |  |              |            |  |      | 
|                                                                           |  |              | 38,262,942 |  |      |  | 7,688,783 | 
|                                                                           |  |              |            |  |      | 

F-15



---



##### Table of Contents



EYETECH PHARMACEUTICALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


December 31, 2004




| |                            
| | ---------------------------
| | Convertible Preferred Stock



|           |  |               |            |        |           |   |             |                  |            |           |                |  |           |  |   |  |   | 
|---------- |  | ------------- | ---------- | ------ | --------- | - | ----------- | ---------------- | ---------- | --------- | -------------- |  | --------- |  | - |  | - | 
|Preferred  |  |               |            |        |           |   |             | Converted at IPO |            |           | Outstanding at | 
|Issue      |  | Issue Date    |            | Shares |           |   | Proceeds    |                  |            | to Common |                |  | 12/31/04  | 
|           |  |               |            |        |           |   |             |                  |            |           |                |  |           | 
|Series A   |  | March 2000    |            |        | 120,000   |   |             | $                | 150,000    |           |                |  | 120,000   |  |   |  |  | 
|Series B   |  | April 2000    |            |        | 5,766,332 |   |             | $                | 34,473,000 |           |                |  | 5,766,332 |  |   |  |  | 
|Series B   |  | January 2001  |            |        | 20,666    |   |             | $                | 124,000    |           |                |  | 20,666    |  |   |  |  | 
|Series C-1 |  | July 2001     |            |        | 7,964,229 |   |             | $                | 53,461,000 |           |                |  | 7,964,229 |  |   |  |  | 
|Series C-2 |  | August 2001   |            |        | 7,521,777 |   |             | $                | 54,157,000 |           |                |  | 7,521,777 |  |   |  |  | 
|Series D   |  | December 2002 |            |        | 2,747,253 |   |             | $                | 24,737,000 |           |                |  | 2,747,253 |  |   |  |  | 
|           |  |               |            |        |           |   |             |                  |            |           |                |  |           | 
|Totals     |  |               | 24,140,257 |        |           | $ | 167,102,000 |                  |            |           | 24,140,257     |  |           |  |  | 
|           |  |               |            |        |           |   |             |                  |            |           |                | 





| |                         
| | ------------------------
| | Preferred Stock Warrants



|             |            |  |            |             |          |  |           |       |  |            |             |  |      |             |           |          |          |  |             |          |  |             |             |  |  |  |         |  |  |  |   | 
|------------ | ---------- |  | ---------- | ----------- | -------- |  | --------- | ----- |  | ---------- | ----------- |  | ---- | ----------- | --------- | -------- | -------- |  | ----------- | -------- |  | ----------- | ----------- |  |  |  | ------- |  |  |  | - | 
|             |            |  |            |             |          |  |           |       |  |            |             |  |      | Warrants    |           |          |         
|             |            |  |            |             |          |  |           |       |  |            |             |  |      | Surrendered |           |          |         
|Preferred    |            |  |            |             |          |  | Exercise  |       |  | Fair Value |             |  | Cash |             |           | Cashless |          |  | in Cashless |          |  | Outstanding |            
|Stock Series |            |  | Issue Date |             | Warrants |  |           | Price |  |            | at Issuance |  |      | Exercise    |           |          | Exercise |  |             | Exercise |  |             | at 12/31/04 | 
|             |            |  |            |             |          |  |           |       |  |            |             |  |      |             |           |          |          |  |             |          |  |             |             | 
|             | Series B   |  |            | March 2000  |          |  | 1,142,902 |       |  | $          | 6.00        |  |      | $           | 1,040,000 |          |          |  | 149,566     |          |  |             | 709,517     |  |  |  | 283,819 |  |  |  |  | 
|             | Series C-1 |  |            | July 2001   |          |  | 1,592,846 |       |  | $          | 6.80        |  |      | $           | 2,134,000 |          |          |  | 688,134     |          |  |             | 611,746     |  |  |  | 292,966 |  |  |  |  | 
|             | Series C-2 |  |            | August 2001 |          |  | 1,504,354 |       |  | $          | 7.20        |  |      | $           | 3,385,000 |          |          |  | 673,681     |          |  |             | 545,861     |  |  |  | 284,812 |  |  |  |  | 
|             |            |  |            |             |          |  |           |       |  |            |             |  |      |             |           |          |          |  |             |          |  |             |             | 
|Total        |            |  | 4,240,102  |             |          |  |           |       |  | $          | 6,559,000   |  |      |             | 1,511,381 |          |          |  | 1,867,124   |          |  |             | 861,597     |  |  |  |        | 
|             |            |  |            |             |          |  |           |       |  |            |             |  |      |             |           |          |          |  |             |          | 





| |       
| | ------
| | Voting





| |          
| | ---------
| | Dividends



F-16



---



##### Table of Contents



EYETECH PHARMACEUTICALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


December 31, 2004




| |            
| | -----------
| | Liquidation





|           |  |            |            |  |             |  |            |             |  |   |             | 
|---------- |  | ---------- | ---------- |  | ----------- |  | ---------- | ----------- |  | - | ----------- | 
|           |  | Authorized |            |  | Issued and  |  |            | Liquidation | 
|           |  | Shares     |            |  | Outstanding |  |            | Preference  | 
|           |  |            |            |  |             |  |            |             | 
|Series A   |  |            | 120,000    |  |             |  | 120,000    |             |  | $ | 225,000     | 
|Series B   |  |            | 7,763,233  |  |             |  | 5,790,331  |             |  |   | 52,112,979  | 
|Series C-1 |  |            | 9,557,077  |  |             |  | 8,496,054  |             |  |   | 86,659,751  | 
|Series C-2 |  |            | 9,026,132  |  |             |  | 8,028,640  |             |  |   | 86,709,312  | 
|Series D   |  |            | 2,747,253  |  |             |  | 2,747,253  |             |  |   | 37,500,003  | 
|           |  |            |            |  |             |  |            |             | 
|           |  |            | 29,213,695 |  |             |  | 25,182,278 |             |  | $ | 263,207,045 | 
|           |  |            |            |  |             |  |            |             | 





| |           
| | ----------
| | Conversion





| |           
| | ----------
| | Redemption





|   |              
|-- | -------------
|7. | Stock Options



F-17



---



##### Table of Contents



EYETECH PHARMACEUTICALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


December 31, 2004








|                                 |           |              |           |            |                  |   |       |       | 
|-------------------------------- | --------- | ------------ | --------- | ---------- | ---------------- | - | ----- | ----- | 
|                                 |           | Common Stock |           |            | Weighted-Average |  
|                                 |           | Options      |           |            | Exercise Price   |  
|                                 |           |              |           |            |                  |  
|Outstanding at January 1, 2002   |           |              | 1,983,500 |            |                  | $ | 1.24  |      
|                                 | Granted   |              |           | 1,885,000  |                  |   |       | 1.38  | 
|                                 | Exercised |              |           | (10,000    | )                |   |       | 0.60  | 
|                                 | Cancelled |              |           | (105,084   | )                |   |       | 0.89  | 
|                                 |           |              |           |            |                  |  
|Outstanding at December 31, 2002 |           |              | 3,753,416 |            |                  | $ | 0.98  |      
|                                 | Granted   |              |           | 1,518,500  |                  |   |       | 5.18  | 
|                                 | Exercised |              |           | (365,736   | )                |   |       | 0.78  | 
|                                 | Cancelled |              |           | (209,264   | )                |   |       | 2.33  | 
|                                 |           |              |           |            |                  |  
|Outstanding at December 31, 2003 |           |              | 4,696,916 |            |                  | $ | 2.30  |      
|                                 | Granted   |              |           | 2,683,919  |                  |   |       | 34.97 | 
|                                 | Exercised |              |           | (1,547,711 | )                |   |       | 1.99  | 
|                                 | Cancelled |              |           | (450,495   | )                |   |       | 8.58  | 
|                                 |           |              |           |            |                  |  
|Outstanding at December 31, 2004 |           |              | 5,382,629 |            |                  | $ | 18.16 |      
|                                 |           |              |           |            |                  |  



|                                |  |              |           |  |      |   |           |      |  |   |           | 
|------------------------------- |  | ------------ | --------- |  | ---- | - | --------- | ---- |  | - | --------- | 
|                                |  | December 31, |          
|                                |  |              |          
|                                |  | 2002         |           |  | 2003 |   |           | 2004 | 
|                                |  |              |           |  |      |   |           |      | 
|Vested stock options            |  |              | 1,210,891 |  |      |   | 1,844,793 |      |  |   | 1,490,855 | 
|Weighted average exercise price |  | $            | 0.60      |  |      | $ | 0.87      |      |  | $ | 3.17      | 

F-18



---



##### Table of Contents



EYETECH PHARMACEUTICALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


December 31, 2004




|                         |  |                           |           |                 |                  |  |          |               |  |   |        |          |  |       |           |  |  |   |       | 
|------------------------ |  | ------------------------- | --------- | --------------- | ---------------- |  | -------- | ------------- |  | - | ------ | -------- |  | ----- | --------- |  |  | - | ----- | 
|                         |  |                           |           |                 |                  |  |          | Stock Options | 
|                         |  |                           |           | Outstanding and |                 
|                         |  | Stock Options Outstanding |           |                 | Exercisable      | 
|                         |  |                           |           |                 |                  | 
|                         |  |                           |           | Weighted        |                  |  | Weighted |               |  |   |        | Weighted | 
|                         |  |                           |           | Average         |                  |  | Average  |               |  |   |        | Average  | 
|                         |  |                           |           | Remaining       |                  |  | Exercise |               |  |   |        | Exercise | 
|Range of Exercise Prices |  | Shares                    |           |                 | Contractual Life |  |          | Price         |  |   | Shares |          |  | Price |          
|                         |  |                           |           |                 |                  |  |          |               |  |   |        |          |  |       |          
|$ 0.60 to $ 1.40         |  |                           | 1,437,234 |                 |                  |  | 6.71     |               |  | $ | 1.01   |          |  |       | 1,437,234 |  |  | $ | 1.01  | 
|$ 1.41 to $10.00         |  |                           | 1,443,706 |                 |                  |  | 8.42     |               |  |   | 4.48   |          |  |       | 1,443,706 |  |  |   | 4.48  | 
|$10.01 to $30.00         |  |                           | 1,018,927 |                 |                  |  | 9.11     |               |  |   | 28.63  |          |  |       | 117,926   |  |  |   | 18.15 | 
|$30.01 to $47.95         |  |                           | 1,482,762 |                 |                  |  | 9.67     |               |  |   | 40.90  |          |  |       |          |  |  |   |       | 
|                         |  |                           |           |                 |                  |  |          |               |  |   |        |          |  |       |          
|Total                    |  |                           | 5,382,629 |                 |                  |  | 8.44     |               |  | $ | 18.16  |          |  |       | 2,998,866 |  |  | $ | 3.39  | 
|                         |  |                           |           |                 |                  |  |          |               |  |   |        |          |  |       |          









F-19



---



##### Table of Contents



EYETECH PHARMACEUTICALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


December 31, 2004




|   |               
|-- | --------------
|8. | Loss Per Share



|                                                                                                                                                        |                                                                                                                        |                         |             |             |      |   |             |             |   |   |              |              |  
|------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------- | ----------------------- | ----------- | ----------- | ---- | - | ----------- | ----------- | - | - | ------------ | ------------ | -
|                                                                                                                                                        |                                                                                                                        | Year Ended December 31, |            
|                                                                                                                                                        |                                                                                                                        |                         |            
|                                                                                                                                                        |                                                                                                                        | 2002                    |             |             | 2003 |   |             | 2004        |  
|                                                                                                                                                        |                                                                                                                        |                         |             |             |      |   |             |             |  
|Numerator:                                                                                                                                              |                                                                                                                        |                         |             |             |      |   |             |             |   |   |              |             
|                                                                                                                                                        | Net loss                                                                                                               |                         | $           | (43,173,462 | )    |   | $           | (40,699,245 | ) |   | $            | (100,505,807 | )
|                                                                                                                                                        | Preferred stock accretion                                                                                              |                         |             | (5,096,282  | )    |   |             | (9,160,382  | ) |   |              | (816,013     | )
|                                                                                                                                                        |                                                                                                                        |                         |             |             |      |   |             |             |  
|Numerator for basic and diluted net loss attributable to common
    stockholders per share  net loss attributable to
    common stockholders           |                                                                                                                        | $                       | (48,269,744 | )           |      | $ | (49,859,627 | )           |   | $ | (101,321,820 | )           
|                                                                                                                                                        |                                                                                                                        |                         |             |             |      |   |             |             |  
|Denominator:                                                                                                                                            |                                                                                                                        |                         |             |             |      |   |             |             |   |   |              |             
|                                                                                                                                                        | Denominator for basic and diluted net loss attributable to
    common stockholders per share  weighted average shares |                         |             | 3,697,192   |      |   |             | 3,950,481   |   |   |              | 37,587,299   |  
|                                                                                                                                                        |                                                                                                                        |                         |             |             |      |   |             |             |  
|Basic and diluted net loss attributable to common stockholders
    per share                                                                            |                                                                                                                        | $                       | (13.06      | )           |      | $ | (12.62      | )           |   | $ | (2.70        | )           
|                                                                                                                                                        |                                                                                                                        |                         |             |             |      |   |             |             |  
|Denominator for unaudited pro forma basic and diluted net loss
    attributable to common stockholders per share 
    weighted average shares (Note 2) |                                                                                                                        |                         |             |             |      |   | 28,094,165  |             |   |   | 39,651,420   |             
|                                                                                                                                                        |                                                                                                                        |                         |             |             |      |   |             |             |  
|Unaudited pro forma basic and diluted net loss attributable to
    common stockholders per share (Note 2)                                               |                                                                                                                        |                         |             |             |      | $ | (1.77       | )           |   | $ | (2.56        | )           
|                                                                                                                                                        |                                                                                                                        |                         |             |             |      |   |             |             |  



|                |  |                         |            |  |      |  |            |      |  |  |           | 
|--------------- |  | ----------------------- | ---------- |  | ---- |  | ---------- | ---- |  |  | --------- | 
|                |  | Year Ended December 31, |           
|                |  |                         |           
|                |  | 2002                    |            |  | 2003 |  |            | 2004 | 
|                |  |                         |            |  |      |  |            |      | 
|Preferred stock |  |                         | 21,393,004 |  |      |  | 25,182,278 |      |  |  |          | 
|Options         |  |                         | 3,753,416  |  |      |  | 4,696,916  |      |  |  | 5,382,629 | 
|Warrants        |  |                         | 5,073,435  |  |      |  | 4,031,414  |      |  |  |          | 
|                |  |                         |            |  |      |  |            |      | 
|                |  |                         | 30,219,855 |  |      |  | 33,910,608 |      |  |  | 5,382,629 | 
|                |  |                         |            |  |      |  |            |      | 



|   |             
|-- | ------------
|9. | Income Taxes





F-20



---



##### Table of Contents



EYETECH PHARMACEUTICALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


December 31, 2004




|                                        |  |      |   |      |  |   |           |  |  |   |   | 
|--------------------------------------- |  | ---- | - | ---- |  | - | --------- |  |  | - | - | 
|                                        |  | 2002 |   | 2003 |  |   | 2004     
|                                        |  |      |   |      |  |   |          
|Current Federal alternative minimum tax |  | $    |  |      |  | $ | 833,000   |  |  | $ |  | 
|Current State taxes                     |  |      |  |      |  |   | 855,000   |  |  |   |  | 
|                                        |  |      |   |      |  |   |           |  | 
|                                        |  | $    |  |      |  | $ | 1,688,000 |  |  | $ |  | 
|                                        |  |      |   |      |  |   |           |  | 



|                                     |                                     |                          |             |            |      |   |              |            |  
|------------------------------------ | ----------------------------------- | ------------------------ | ----------- | ---------- | ---- | - | ------------ | ---------- | -
|                                     |                                     | Year Ending December 31, |            
|                                     |                                     |                          |            
|                                     |                                     | 2003                     |             |            | 2004 |  
|                                     |                                     |                          |             |            |      |  
|Deferred tax assets:                 |                                     |                          |             |            |      |   |              |           
|                                     | Net operating loss carryforwards    |                          | $           | 17,326,000 |      |   | $            | 69,921,000 |  
|                                     | Stock-based compensation            |                          |             | 2,286,000  |      |   |              |           |  
|                                     | Start-up costs, net of amortization |                          |             | 122,000    |      |   |              | 9,000      |  
|                                     | Deferred license fee revenue        |                          |             | 28,167,000 |      |   |              | 26,167,000 |  
|                                     | Alternative minimum tax credit      |                          |             | 833,000    |      |   |              | 667,000    |  
|                                     | Research and development tax credit |                          |             | 1,027,000  |      |   |              | 3,458,000  |  
|                                     | Deferred rent liability             |                          |             | 197,000    |      |   |              | 2,813,000  |  
|                                     |                                     |                          |             |            |      |  
|Total gross deferred tax assets      |                                     |                          | 49,958,000  |            |      |   | 103,035,000  |           
|                                     |                                     |                          |             |            |      |  
|Deferred tax liabilities:            |                                     |                          |             |            |      |   |              |           
|                                     | Depreciation                        |                          |             | (993,000   | )    |   |              | (2,306,000 | )
|                                     |                                     |                          |             |            |      |  
|Total gross deferred tax liabilities |                                     |                          | (993,000    | )          |      |   | (2,306,000   | )         
|                                     |                                     |                          |             |            |      |  
|Valuation allowance                  |                                     |                          | (48,965,000 | )          |      |   | (100,729,000 | )         
|                                     |                                     |                          |             |            |      |  
|Net deferred tax assets              |                                     | $                        |            |            |      | $ |             |           
|                                     |                                     |                          |             |            |      |  



|                                                          |  |              |     |    |      |  |     |      |  |  |     |   
|--------------------------------------------------------- |  | ------------ | --- | -- | ---- |  | --- | ---- |  |  | --- | --
|                                                          |  | Year Ended   |    
|                                                          |  | December 31, |    
|                                                          |  |              |    
|                                                          |  | 2002         |     |    | 2003 |  |     | 2004 | 
|                                                          |  |              |     |    |      |  |     |      | 
|Statutory rate                                            |  |              | (34 | )% |      |  | (34 | )%   |  |  | (34 | )%
|State and local income taxes (net of federal tax benefit) |  |              | (6  | )  |      |  | (4  | )    |  |  | (6  | ) 
|Tax credits                                               |  |              |    |    |      |  | (3  | )    |  |  | (2  | ) 
|Change in valuation allowance                             |  |              | 40  |    |      |  | 45  |      |  |  | 42  |   
|                                                          |  |              |     |    |      |  |     |      | 
|                                                          |  |              | 0   | %  |      |  | 4   | %    |  |  | 0   | % 
|                                                          |  |              |     |    |      |  |     |      | 

F-21



---



##### Table of Contents



EYETECH PHARMACEUTICALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


December 31, 2004




|    |                      
|--- | ---------------------
|10. | Loans to Stockholders





|    |                         
|--- | ------------------------
|11. | Collaboration Agreements









F-22



---



##### Table of Contents



EYETECH PHARMACEUTICALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


December 31, 2004












|                                     |                                       |                         |            |            |           |   |             |             |            | 
|------------------------------------ | ------------------------------------- | ----------------------- | ---------- | ---------- | --------- | - | ----------- | ----------- | ---------- | 
|                                     |                                       | Year Ended December 31, |           
|                                     |                                       |                         |           
|                                     |                                       | 2003                    |            |            | 2004      |  
|                                     |                                       |                         |            |            |           |  
|License fee amortization             |                                       | $                       | 4,583,337  |            |           | $ | 5,722,499   |            
|Reimbursement of development expense |                                       | $                       | 36,835,829 |            |           | $ | 43,629,406  |            
|Development and marketing expense    |                                       | $                       | 3,305,552  |            |           | $ | 8,224,000   |            
|Payments received from Pfizer        |                                       | $                       | 31,683,277 |            |           | $ | 41,329,917  |            
|                                     | Collaboration Receivable and Payable: |                         |            |            |           |   |             |             |           
|Collaboration receivable             |                                       | $                       | 2,562,000  |            |           | $ | 294,000     |            
|Equipment receivable                 |                                       | $                       |           |            |           | $ | 1,671,888   |            
|Milestone receivable                 |                                       | $                       |           |            |           | $ | 90,000,000  |            
|                                     |                                       |                         |            |            |           |  
|                                     |                                       | Total Receivable        |            | $          | 2,562,000 |   |             | $           | 91,965,888 | 
|Deferred license fee revenue         |                                       | $                       | 70,416,633 |            |           | $ | 170,213,235 |            
|Deferred collaboration revenue       |                                       |                         |            |            |           | $ | 3,185,399   |            
|Collaboration payable                |                                       | $                       | 715,000    |            |           | $ | 2,142,000   |            
|                                     |                                       |                         |            |            |           |  
|                                     | Total Deferred Revenues and Payable * |                         | $          | 71,131,663 |           |   | $           | 175,540,634 |           
|                                     |                                       |                         |            |            |           |  






|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Deferred license fee revenues are payments received in
    connection with up-front license fees and are amortized to
    license fee revenue over the life of the contract. Deferred
    collaboration revenues are payments received in advance of the
    incurrence of collaboration costs and costs related to the
    reimbursement of certain capital expenditures. Collaboration
    payable represents the Companys share of costs incurred by
    Pfizer which the Company is contractually liable to pay to
    Pfizer.

F-23



---



##### Table of Contents



EYETECH PHARMACEUTICALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


December 31, 2004




|    |               
|--- | --------------
|12. | Capital Leases



|                                                  |  |   |           | 
|------------------------------------------------- |  | - | --------- | 
|Year Ending December 31,                          |  |  
|                                                  |  |  
|2005                                              |  | $ | 1,625,844 | 
|2006                                              |  |   | 1,329,057 | 
|                                                  |  |   |          
|Total                                             |  |   | 2,954,901 | 
|Less amount representing interest                 |  |   | 240,712   | 
|                                                  |  |   |          
|Present value of the minimum lease payments       |  |   | 2,714,189 | 
|Less current portion of capital lease obligations |  |   | 1,459,544 | 
|                                                  |  |   |          
|                                                  |  | $ | 1,254,645 | 
|                                                  |  |   |          



|    |            
|--- | -----------
|13. | Commitments







|                         |  |   |            | 
|------------------------ |  | - | ---------- | 
|Year Ending December 31, |  |  
|                         |  |  
|2005                     |  | $ | 3,903,770  | 
|2006                     |  |   | 5,546,538  | 
|2007                     |  |   | 5,564,783  | 
|2008                     |  |   | 4,911,431  | 
|2009                     |  |   | 5,185,517  | 
|Thereafter               |  |   | 54,008,866 | 
|                         |  |   |           
|                         |  | $ | 79,120,905 | 
|                         |  |   |           





|    |            
|--- | -----------
|14. | 401(k) Plan



F-24



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##### Table of Contents



EYETECH PHARMACEUTICALS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


December 31, 2004






|    |                                              
|--- | ---------------------------------------------
|15. | Selected Quarterly Financial Data (Unaudited)

|                                               |  |               |             |   |         |   |             |              |  |   |             |   |  |   |             |  
|---------------------------------------------- |  | ------------- | ----------- | - | ------- | - | ----------- | ------------ |  | - | ----------- | - |  | - | ----------- | -
|                                               |  | Quarter Ended |            
|                                               |  |               |            
|                                               |  | March 31      |             |   | June 30 |   |             | September 30 |  |   | December 31 |  
|                                               |  |               |             |   |         |   |             |              |  |   |             |  
|2002                                           |  |               |             |   |         |   |             |              |  |   |             |   |  |   |             |  
|Net loss                                       |  | $             | (8,747,753  | ) |         | $ | (9,631,821  | )            |  | $ | (10,697,851 | ) |  | $ | (14,096,037 | )
|Net loss attributable to common stockholders   |  |               | (9,833,552  | ) |         |   | (10,717,620 | )            |  |   | (11,971,922 | ) |  |   | (15,746,650 | )
|Basic and diluted net (loss) per common share* |  | $             | (2.69       | ) |         | $ | (2.93       | )            |  | $ | (3.20       | ) |  | $ | (4.22       | )
|2003*                                          |  |               |             |   |         |   |             |              |  |   |             |   |  |   |             |  
|License fees                                   |  | $             | 833,334     |   |         | $ | 1,250,001   |              |  | $ | 1,250,001   |   |  | $ | 1,250,001   |  
|Reimbursement of development costs             |  |               | 6,475,830   |   |         |   | 9,948,756   |              |  |   | 11,143,313  |   |  |   | 9,267,930   |  
|Net loss                                       |  |               | (5,422,172  | ) |         |   | (9,071,789  | )            |  |   | (14,308,255 | ) |  |   | (11,897,029 | )
|Net loss attributable to common stockholders   |  |               | (7,681,135  | ) |         |   | (11,330,753 | )            |  |   | (16,583,830 | ) |  |   | (14,263,909 | )
|Basic and diluted net (loss) per common share* |  | $             | (2.04       | ) |         | $ | (2.88       | )            |  | $ | (4.12       | ) |  | $ | (3.50       | )
|2004                                           |  |               |             |   |         |   |             |              |  |   |             |   |  |   |             |  
|License fees                                   |  |               | 1,250,000   |   |         |   | 1,250,000   |              |  |   | 1,407,613   |   |  |   | 1,814,884   |  
|Reimbursement of development costs             |  |               | 10,462,600  |   |         |   | 11,299,799  |              |  |   | 12,058,749  |   |  |   | 9,808,259   |  
|Net loss                                       |  |               | (15,011,745 | ) |         |   | (31,021,698 | )            |  |   | (24,716,974 | ) |  |   | (29,755,389 | )
|Net loss attributable to common stockholders   |  |               | (15,827,757 | ) |         |   | (31,021,698 | )            |  |   | (24,716,974 | ) |  |   | (29,755,389 | )
|Basic and diluted net (loss) per common share* |  |               | (0.57       | ) |         |   | (0.77       | )            |  |   | (0.60       | ) |  |   | (0.72       | )






|  |                                                                                                                                                                                                                                                                                                                                                                            
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Per common share amounts for the quarters and full years have
    been calculated separately. Accordingly, quarterly amounts do
    not add to the annual amount because of differences in the
    weighted average common shares outstanding during each period
    principally due to the effect of the Companys issuing
    shares of its common stock during the year.





|    |                 
|--- | ----------------
|16. | Subsequent Event



F-25