PROGENICS PHARMACEUTICALS INC

Pending Merger with Lantheus Holdings, Inc.

On February 20, 2020, we announced the signing of an amended and restated agreement and plan of merger with Lantheus Holdings, Inc. (“Lantheus Holdings”) (the “Merger Agreement”). The Merger Agreement reflects the renegotiation of certain of the terms of our original agreement for the proposed merger entered into on October 1, 2019. The combined company would be led by Lantheus Holdings’ Chief Executive Officer, Mary Anne Heino. Ms. Heino will be supported by Chief Financial Officer, Robert J. Marshall Jr., and Chief Operations Officer, John Bolla. The Merger Agreement provides that, following the closing, Dr. Gérard Ber and Mr. Heinz Mäusli, currently members of Progenics’ Board of Directors (the “Board”), will be added as members of the Board of Directors of Lantheus Holdings. At the effective time of the merger, each share of Progenics common stock issued and outstanding immediately prior to such time (other than excluded shares and dissenting shares) will be converted into the right to receive (i) 0.31 of a share of Lantheus Holdings common stock (an increase from 0.2502 under the original agreement) and (ii) one non-transferrable contingent value right (a "CVR") per share of Progenics common stock, which will represent the right to receive up to two contingent payments upon the achievement of certain milestones subject to the terms of the Contingent Value Rights Agreement to be entered into between Lantheus Holdings and a rights agent reasonable acceptable to Progenics at or immediately prior to the effective time of the merger. In no event will Lantheus Holdings’ aggregate payments in respect of the CVRs, together with any other non-stock consideration treated as paid in connection with the proposed merger, exceed 19.9% of the total consideration Lantheus Holdings pays in the proposed merger. As a result of the increase in the exchange ratio, following the completion of the proposed merger, former Progenics stockholders’ aggregate ownership stake will increase to approximately 40% of the combined company from approximately 35% under the terms set forth in the original agreement.

Several abstracts pertaining to PyL were recently published in the Journal of Urology, including the results of the Phase 3 CONDOR study in patients with biochemical recurrent prostate cancer. The CONDOR trial achieved its primary endpoint, with a correct localization rate (CLR) of 84.8% to 87.0% among the three blinded independent readers (the lower bound of the 95% confidence intervals ranging from 77.8% to 80.4%). The results of additional investigator-sponsored studies of PyL conducted in post-prostatectomy patients and metastatic clear cell renal cell carcinoma were also published in the journal.

Following the removal of the import alert on Centre for Probe Development & Commercialization (CPDC), we have initiated eleven clinical sites in the U.S along with the six active sites in Canada to support enrollment in the Company’s multicenter, randomized, controlled, ARROW Phase 2 study in mCRPC. Progenics’1095 is a small molecule radiotherapeutic designed to selectively bind to the extracellular domain of PSMA, a protein that is highly expressed on prostate cancer cells. As the clinical community is facing challenges in trial conduct due to the COVID-19 pandemic, we are committed to ensuring adequate safety monitoring of ARROW subjects and maintaining the integrity of the trial in alignment with government, regulatory and public health recommendations. As such, Progenics has paused new enrollment for several months in the Phase 2 trial of I-131-1095 (1095) in combination with enzalutamide in chemotherapy-naïve patients with metastatic castration-resistant prostate cancer (mCRPC) to minimize the risk to patients and healthcare providers during the pandemic. For patients who are active and have been randomized for the study, they will continue to receive treatment doses and will be monitored for safety and efficacy in a manner that is permissible by each clinical site. As a result, the Company has decided to furlough a portion of the clinical employees to support cost-saving measures as the Company continues to navigate through the changing COVID-19 environment. Progenics continues to assess this emerging situation and will make any relevant adjustments in alignment with government mandates when necessary.

At March 31, 2020, we had $29.5 million of cash and cash equivalents, a decrease of $12.5 million from $42.0 million at December 31, 2019. On February 20, 2020, we announced the signing of the Merger Agreement. Additionally, on March 15, 2020, Progenics as borrower, and Lantheus Medical Imaging, Inc. (“Lantheus Medical Imaging”), a subsidiary of Lantheus Holdings, as lender, entered into a bridge loan agreement, pursuant to which Lantheus Medical Imaging agreed to provide for a secured short-term loan to the Company on or after May 1, 2020 in an aggregate principal amount of up to $10 million (the “Bridge Loan Agreement”). The bridge loan matures on the earlier to occur of (a) September 30, 2020 and (b) the date on which the Company enters into a debt financing or similar arrangements or any amendment to, or replacement of, its existing debt, provided by one or more third parties following the termination date of the Merger Agreement, in either case, having aggregate net cash proceeds that exceed the amount then required to repay all obligations under the Bridge Loan Agreement in full in cash. The bridge loan bears interest at a rate per annum of 9.5% and is secured through the pledge to Lantheus Medical Imaging of all of the issued and outstanding shares of capital stock of Molecular Insight Pharmaceuticals, Inc., a subsidiary of Progenics (“MIP”), and any debt of MIP owed to Progenics. Progenics will use the proceeds of the bridge loan for working capital and other general corporate purposes.

On November 22, 2019, a purported stockholder filed a putative class action complaint in the United States District Court for the District of Delaware, captioned Johnson v. Progenics Pharmaceuticals, Inc., et al., Civil Action No. 1:19-cv-02183, against Progenics and members of the Progenics Board, which is referred to in this Quarterly Report on Form 10-Q as the Johnson I Action. On March 5, 2020, the Johnson I Action was voluntarily dismissed without prejudice. On November 25, 2019, a second purported stockholder filed a putative class action complaint in the United States District Court for the District of Delaware, captioned Thompson v. Progenics Pharmaceuticals, Inc., et al., Civil Action No. 1:19-cv-02194, against Progenics, certain members of the Progenics Board, Lantheus Holdings, and Plato Merger Sub, Inc. ("Merger Sub"), which is referred to in this Quarterly Report on Form 10-Q as the Thompson Action. On March 10, 2020, the Thompson Action was voluntarily dismissed without prejudice. On November 26, 2019, a third purported stockholder filed a complaint in the United States District Court for the Southern District of New York, captioned Wang v. Progenics Pharmaceuticals, Inc., et al., Civil Action No. 1:19-cv-10936, against Progenics and members of the Progenics Board, which is referred to in this Quarterly Report on Form 10-Q as the Wang Action. On December 9, 2019, a fourth purported stockholder filed a putative class action complaint in the United States District Court for the District of New Jersey, captioned Michael A. Bernstein IRA v. Progenics Pharmaceuticals, Inc. et al., Civil Action No. 2:19-cv-21200, against Progenics, members of the Progenics Board, Lantheus Holdings, and Merger Sub, which is referred to in this Quarterly Report on Form 10-Q as the Bernstein IRA Action. On April 21, 2020 an amended complaint was filed in the Bernstein IRA Action, and on May 6, 2020, the Bernstein IRA action was transferred to the United States District Court for the Southern District of New York under Civil Action No. 1:20-cv-03521. On December 12, 2019, a fifth purported stockholder filed a putative class action complaint in the United States District Court for the District of Delaware, captioned Pill v. Progenics Pharmaceuticals, Inc., et al., Civil Action No. 1:19-cv-02268, against Progenics and members of the Progenics Board. The purported stockholder voluntarily dismissed this action without prejudice and the court closed the case on March 10, 2020. On December 20, 2019, a sixth purported stockholder filed a complaint in the United States District Court for the Southern District of New York, captioned Hess v. Progenics Pharmaceuticals, Inc., et al., Civil Action No. 1:19-cv-11683, against Progenics, Progenics’ Chief Executive Officer and Chief Financial Officer, and members of the Progenics Board, which is referred to in this Quarterly Report on Form 10-Q as the Hess Action. On April 8, 2020, an amended complaint was filed in the Hess Action.

In July 2019, we received notification of a complaint submitted by Dr. Syed Mahmood, the former Vice President of Medical Affairs for Progenics, to the Occupational Safety and Health Administration of the United States Department of Labor (“DOL”), alleging that the termination of his employment by Progenics was in violation of Section 806 of the Sarbanes-Oxley Act of 2002 (“SOX”). Dr. Mahmood is seeking reinstatement as Vice President of Medical Affairs, back pay, front pay in lieu of reinstatement, interest, attorneys’ fees and costs incurred, and special damages. In March 2020, Dr. Mahmood filed a complaint in the U.S. District Court for the Southern District of New York (as permitted by SOX because the DOL had not issued a decision within 180 days). Dr. Mahmood’s federal complaint makes similar allegations as his DOL claim. The DOL action will now be dismissed and the action will proceed in federal district court. Progenics’ response in the federal action is due May 26, 2020. The Company believes that it had ample reason for terminating such employment for good and sufficient legal cause, and the Company believes that the claim is without merit and is vigorously defending this claim.