10-K

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, 2005 or

            o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from          to          

Commission file number: 0-15190

OSI PHARMACEUTICALS, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	13-3159796
(State or other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

41 Pinelawn Road, Melville, N.Y.	11747
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s Telephone Number, including area code

(631) 962-2000

Securities Registered Pursuant to Section 12(b) of the Act:

Title of each class		Name of each exchange on which registered
	None		None

Securities Registered Pursuant to Section 12(g) of the Act:

Common Stock, par value $.01 per share, and

Series SRPA Junior Participating Preferred Stock Purchase Rights

(Title of Class)

         Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes    þ No    o

         Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes    o No    þ

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

         Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    o

         Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer    þ    Accelerated filer    o    Non-accelerated filer    o    

         Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes    o    No    þ

         As of June 30, 2005, the aggregate market value of the Registrant’s voting stock held by non-affiliates was $873,008,770. For purposes of this calculation, shares of common stock held by directors, officers and stockholders whose ownership exceeds five percent of the common stock outstanding at June 30, 2005 were excluded. Exclusion of shares held by any person should not be construed to indicate that the person possesses the power, direct or indirect, to direct or cause the direction of the management or policies of the Registrant, or that the person is controlled by or under common control with the Registrant.

         As of March 7, 2006, there were 56,827,114 shares of the Registrant’s common stock, par value $.01 per share, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the Registrant’s definitive proxy statement for its 2006 annual meeting of stockholders are incorporated by reference into Part III of this Form 10-K.

OSI PHARMACEUTICALS, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

			Page
PART I				1
	ITEM 1.	BUSINESS		1
	ITEM 1A.	RISK FACTORS		28
	ITEM 1B.	UNRESOLVED STAFF COMMENTS		44
	ITEM 2.	PROPERTIES		44
	ITEM 3.	LEGAL PROCEEDINGS		45
	ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS		45
PART II				45
	ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES		45
	ITEM 6.	SELECTED CONSOLIDATED FINANCIAL DATA		48
	ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		50
	ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS		70
	ITEM 8.	CONSOLIDATED FINANCIAL STATEMENTS		72
	ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE		123
	ITEM 9A.	CONTROLS AND PROCEDURES		123
	ITEM 9B.	OTHER INFORMATION		126
PART III				126
	ITEM 10.	DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT		126
	ITEM 11.	EXECUTIVE COMPENSATION		126
	ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT		126
	ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS		126
	ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES		126
PART IV				127
	ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES		127
SIGNATURES				128
EX-10.8: AMENDED AND RESTATED STOCK INCENTIVE PLAN
EX-10.32: COMPENSATORY ARRANGEMENTS OF EXECUTIVE OFFICERS
EX-10.50: COMMITMENT LETTER
EX-10.51: LICENSE AGREEMENT
EX-10.52: COLLABORATION AGREEMENT
EX-10.53: LICENSE AGREEMENT
EX-10.54: LICENSE, MANUFACTURING AND SUPPLY AGREEMENT
EX-10.55: LETTER OF UNDERSTANDING
EX-10.56: MANUFACTURING AND SUPPLY AGREEMENT
EX-10.57: LICENSE AGREEMENT
EX-10.58: MANUFACTURING AND SUPPLY AGREEMENT
EX-10.59: SUMMARY OF INTERIM RETAINER FEE FOR NON-EMPLOYEE DIRECTORS
EX-21: SUBSIDIARIES OF OSI PHARMACEUTICALS, INC.
EX-23: CONSENT OF KPMG LLP
EX-31.1: CERTIFICATION
EX-31.2: CERTIFICATION
EX-32.1: CERTIFICATION
EX-32.2: CERTIFICATION

      In this Form 10-K, “OSI,” “the Company,” “we,” “us,” and “our” refer to OSI Pharmaceuticals, Inc. and subsidiaries.

      We own or have rights to various copyrights, trademarks and trade names used in our business including the following: Tarceva^® (erlotinib); Macugen^® (pegaptanib sodium injection); Novantrone^® (mitoxantrone for injection concentrate); and Gelclair^® Bioadherent Oral Gel. This Form 10-K also includes other trademarks, service marks and trade names of other companies.

PART I

ITEM 1. BUSINESS

      We are a mid-cap biotechnology company committed to building a scientifically strong and financially successful top tier biopharmaceutical organization that discovers, develops and commercializes innovative molecular targeted therapies addressing major unmet medical needs in oncology, ophthalmology and diabetes.

      The launch in the United States in November 2004 of our flagship anti-cancer product, Tarceva (erlotinib), a small molecule inhibitor of the epidermal growth factor receptor, or HER1/EGFR, represented a major milestone in the growth of our company. Tarceva was initially approved for the treatment of advanced non-small cell lung cancer, or NSCLC, patients who have failed at least one prior chemotherapy regimen and, subsequently, in November 2005, for the treatment of patients with locally advanced and metastatic pancreatic cancer in combination with the chemotherapy agent, gemcitabine. Tarceva was also approved for sale in the European Union, or EU, for the treatment of NSCLC in September 2005. Tarceva achieved global sales of approximately $309 million during 2005, and its 2005 U.S. sales of approximately $275 million represented one of the most successful oncology product launches ever in the United States. We co-promote Tarceva in the United States with Genentech, Inc. and receive royalties on sales from our international partner, Roche.

      In 2005, we set out to define and execute a strategy that would allow us to build upon our initial success with Tarceva and establish a company capable of delivering long term, sustainable growth and value creation to our stockholders. We believe that in order to achieve this goal we need to:

•  Operate in two to three areas of attractive commercial potential that allow us to broadly leverage our core strengths in the discovery and development of novel molecular targeted therapies;

•  Continue to be a scientific innovator enabling us to deliver a novel and differentiated pipeline of products that represent major commercial opportunities by addressing significant unmet medical needs; and

•  Establish sustainable revenue growth allowing significant reinvestment in research and development programs necessary for the creation of a strong portfolio while delivering the profitability and financial strength anticipated by many stockholders following Tarceva approval.

      The successful execution of this strategy also will allow us to mitigate the risks associated with dependence on a single product and a single disease area while continuing to build on our historical strengths in oncology and broader target-based drug discovery.

      In 2005, we set out to execute upon this strategy by enhancing our investment in Prosidion Limited, or Prosidion, our UK-based subsidiary, and by seeking a secondary source of revenues and revenue growth to complement Tarceva. In Spring 2005, we acquired the minority interests of Prosidion, through which we conduct our research and development efforts in diabetes and obesity. The buyout of the minority stockholders resulted, operationally, in committing us to diabetes as a second disease area. We intend to commercialize our diabetes assets in collaboration with major pharmaceutical company partners. We believe that the widely recognized emergence of diabetes as a growing healthcare issue in the western world has created a significant enough commercial opportunity to allow innovators in this field such as ourselves to derive appreciable economic returns through a partnering strategy. We consider that our emerging diabetes clinical pipeline (a pipeline that largely derives from our historical target-based discovery efforts in this area) has us well-positioned to provide prospective partners with a pipeline of innovative and competitive drug candidates designed to meet this growing and largely unmet medical need.

      In November 2005, we completed our acquisition of Eyetech Pharmaceuticals, Inc., or Eyetech, in a transaction that we valued at approximately $638 million, net of Eyetech’s cash at closing, thereby creating a third business team operating in the commercially attractive arena of ophthalmology. The

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Eyetech franchise is anchored by Macugen (pegaptanib sodium injection), a novel, first-in-class therapeutic that selectively binds to the vascular endothelial growth factor isomer 165, or VEGF-165, the pathogenic isoform of VEGF which is believed to be the principal causative agent in the development of choroidal neovascularization. This process results in neovascular age-related macular degeneration, or wet AMD, a disease that is the leading cause of blindness for Americans over the age of 50. Macugen was launched in the United States in January 2005 and achieved approximately $185 million in U.S. net sales during 2005.

      The Eyetech acquisition has been viewed as controversial based upon two events: Phase III clinical trial data for a competitive agent, Genentech’s Lucentis^tm (ranibizumab), demonstrating impressive efficacy for this agent that targets all isoforms of the VEGF molecule (which we refer to as pan-VEGF inhibition) and the off-label use of a related pan-VEGF inhibitor, Genentech’s Avastin^® (bevacizumab), approved for the treatment of colorectal cancer. The competitive challenges facing Macugen led to a significant reduction in Eyetech’s stock price during 2005 and created the opportunity for us to acquire the company. While some commentators have continued to conclude that Macugen will have only a limited role in the market following the presumed approval and launch of Lucentis, we continue to believe that our scientific assessment (which suggested to us that the efficacy of Macugen in newly diagnosed patients is widely under-appreciated in the retinal specialist community and that the use of pan-VEGF targeted agents can lead to systemic and local side-effects) is well-founded and will allow for a continued and meaningful role for Macugen in the AMD marketplace going forward. Indeed, recently announced data for Lucentis has shown an increased incidence of thromboembolic events in patients receiving Lucentis in a Phase III clinical trial. In addition, recently published data demonstrate promising activity for Macugen in a randomized Phase II clinical trial in diabetic macular edema, or DME, a form of diabetic retinopathy currently afflicting approximately 500,000 persons in the United States, with approximately 75,000 new cases reported each year. Diabetic retinopathy is the leading cause of blindness among Americans under the age of 50. We believe that Macugen can provide an important, and potentially growing, source of long-term revenues that will help us sustain a credible level of ongoing investment in research and development while realizing much of the financial benefit (in terms of profitability) from the anticipated continued growth of our flagship product Tarceva.

      Following our acquisition of Eyetech, we announced in November 2005 our integration plan, pursuant to which two Eyetech facilities will be closed before the end of 2006, and one facility has been consolidated, and approximately 129 former Eyetech employees have been or will be terminated by the end of 2006. In total, we estimate our efforts will result in approximately $29 million of annualized savings when compared with the original expected level of annualized spending by Eyetech as a separate company.

      In December 2005, we strengthened the cash position on our balance sheet by issuing $115 million aggregate principal amount of 2% convertible senior subordinated notes due 2025, or the 2025 Notes. The sale of the 2025 Notes generated net proceeds of approximately $111 million, a portion of which was used to repurchase our common stock and enter into a call spread transaction, and allowed us to exit 2005 with approximately $179 million in cash, restricted cash and short-term investments.

      We believe we now have established the strategic and operating framework from which to build a scientifically strong and financially successful biopharmaceutical company. Oncology, ophthalmology and diabetes represent three of the most attractive areas of commercial growth in the biotechnology/pharmaceutical industries and in Tarceva and Macugen we have two scientifically innovative products that are both in the early stages of their product life cycles and which, together with our partners (Genentech and Roche for Tarceva and Pfizer Inc. for Macugen), we believe can be grown into appreciable sources of ongoing revenue. Our emerging pipeline of products in oncology and back of the eye disease, along with our diabetes franchise (with three novel and differentiated agents in clinical development) represents an additional source of future value which, with our assembled research and development infrastructure and established team of scientists and clinicians, we believe we are well equipped to pursue. Our two high quality commercial organizations in the specialty areas of oncology and back of the eye disease give us the ability to add significant value to our partners’ efforts to

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commercialize Tarceva and Macugen in the United States and the future opportunity to commercialize our oncology and ophthalmology pipeline products in the U.S. market on our own. In addition, our patent portfolio around dipeptidyl peptidase IV, or DPIV, the target for our leading diabetes drug candidate, PSN9301, could generate a valuable near term flow of royalty revenues from first-in-class competitor products, one of which is currently under review at the U.S. Food and Drug Administration, or FDA, and is scheduled to come to market in the next nine to 12 months if approved, and one of which is scheduled for filing with the FDA in the first quarter of 2006.

      As we move forward our focus will be on executing the core elements of a business plan designed to draw out the significant potential that we believe to be inherent in the strategic framework that we have established. We are committed to achieving this in a disciplined manner and to balance all of our investments in the longer term against the need to deliver revenue growth and profitability for our stockholders in the nearer term.

Our Marketed Products

Tarceva

      Tarceva is an oral, once-a-day, small molecule therapeutic designed to inhibit the receptor tyrosine kinase activity of the protein product of the HER1/EGFR gene. HER1/ EGFR is a key component of the HER signaling pathway, which plays a role in the regulation of growth in many normal cells. EGFR inhibitors were designed to arrest the growth of tumors (cytostasis); however, under certain circumstances EGFR inhibition can lead to apoptosis (programmed cell death) which in turn would result in tumor shrinkage. The HER1/ EGFR gene is over-expressed, mutated or amplified in approximately 40% to 60% of all cancers and contributes to the abnormal growth signaling in these cancer cells. There is a strong scientific rationale and a substantial potential market for EGFR inhibitors. While we believe that Tarceva is likely to have utility in many oncology disease settings, the initial focus of our development program has been on NSCLC and pancreatic cancer.

      Tarceva is currently approved for sale in the United States for the treatment of NSCLC patients following the failure of at least one prior chemotherapy regimen and, in combination with gemcitabine, for the treatment of advanced pancreatic cancer patients. It is approved for sale in the EU, Canada and Switzerland, among others, for NSCLC.

      The American Cancer Society estimates that approximately 151,800 American cancer patients will be diagnosed with NSCLC in 2006. Based on data from the Tandem Oncology Monitor, a national audit by Synovate, Inc. of cancer patients receiving therapy, in 2005, approximately 67,000 subsequent courses of therapy were provided to NSCLC Stage IIIB/IV patients following a course of front-line chemotherapy. The American Cancer Society estimates that approximately 32,000 cancer patients in the United States will die from pancreatic cancer in 2006, which makes it the fourth leading cause of cancer death in the United States. In Europe, based on information collected by the International Agency for Research on Cancer in Lyon, France, the most common incident form of cancer in 2004 was lung cancer, with approximately 381,500 cases. Lung cancer was also the most common cause of cancer death in Europe, with approximately 341,800 deaths.

      We have an ongoing collaboration with our partners, Genentech and Roche, for the continued development and commercialization of Tarceva. We co-promote Tarceva in the United States with Genentech and receive a 50% share of net profits after the deduction of costs of goods and certain sales and marketing expenses. We are also responsible for manufacturing and supply of Tarceva in the United States and receive reimbursement of manufacturing costs from Genentech. Roche is responsible for sales outside of the United States and, we receive a 21% royalty on net sales. Tarceva research and development expenses that are part of the alliance’s global development program are shared equally among the three parties.

      Commercial/ Regulatory Milestones. On November 18, 2004, we received full approval from the FDA for monotherapy Tarceva use in the treatment of NSCLC patients after the failure of at least one

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prior chemotherapy regimen, and we launched Tarceva on November 22, 2004. Tarceva was the most successful oncology drug launch in the United States in terms of number of patients treated during the first 12 months of launch, and had the fourth most successful oncology drug launch in terms of sales in the United States. Total U.S. net sales for Tarceva for 2005 were approximately $275 million and worldwide net sales (reflecting a late 2005 launch in the EU) were approximately $309 million.

      Tarceva was approved for NSCLC by the Swiss health authority, Swissmedic, in March 2005, by Health Canada in July 2005 and by the European Commission for the EU in September 2005. On November 2, 2005, the FDA approved Tarceva in combination with gemcitabine for the treatment of advanced pancreatic cancer in patients who have not received previous chemotherapy. As of January 31, 2006, Tarceva has received approval in a total of 24 countries. We anticipate that Chugai Pharmaceutical Co., Ltd., a subsidiary of Roche, our international collaborator for Tarceva, will file a submission for approval of Tarceva in Japan during the second quarter of 2006 and that, if successful, Tarceva will be launched in Japan in 2007.

      Growth Drivers for 2006. We believe that a number of factors should contribute to continued growth of Tarceva sales revenues in 2006. These include:

      (i) We estimate that the two price increases taken by our partner Genentech in 2005 will contribute an approximate 15% annualized increase in U.S. net sales of Tarceva for the full year of 2006 assuming the same unit sales levels of Tarceva as in 2005;

      (ii) Tarceva was launched for pancreatic cancer in November of 2005. We expect continued uptake in the pancreatic market through 2006;

      (iii) The European launch of Tarceva for NSCLC is currently underway. Existing treatment options and patterns differ in Europe from those in the United States. Tarceva is the first oral EGFR inhibitor available for use in Europe and, due to differences in reimbursement and views on the use of chemotherapy as a treatment option, Tarceva is well positioned to emerge as the second-line treatment of choice. In the United States, the second-line use of Tarceva competes with chemotherapy agents such as Alimta^® (pemetrexed); and

      (iv) We believe that changes to the Medicare program in the United States will improve the reimbursement environment for Tarceva and will help increase sales. Beginning January 1, 2006, Medicare patients were eligible to receive reimbursement for Tarceva under the Medicare Part D Program. At the end of 2005, approximately one in five patients treated with Tarceva received Tarceva free-of-charge under Genentech’s drug access program. We believe that many of these types of patients will now be eligible for reimbursement for Tarceva through Medicare Part D if they elect to enroll. We would expect our Tarceva revenues to increase in the event such enrollment occurs, as many patients would acquire Tarceva as part of the Medicare Part D benefits rather than receiving Tarceva free under the Genentech program.

      Lifecycle Plan. Our longer-term strategy for maximizing the Tarceva brand is focused on progressing Tarceva use to the front-line and adjuvant settings in NSCLC, expanding Tarceva use to other cancers, and exploring the use of Tarceva in combination with other targeted therapies, including Avastin. Phase II data has shown good activity for Tarceva in the front-line setting. Anti-tumor activity has also been demonstrated in Phase II trials for ovarian, head and neck, brain, liver, breast and colon cancers.

      Together with our collaborators for Tarceva, Genentech and Roche, we have implemented a broad-based global development strategy for Tarceva comprised of simultaneous clinical programs currently designed to potentially expand the number of approved indications for Tarceva, evaluate its use in new and/or novel combinations and provide additional clinical data pertinent to our understanding of the drug. The studies will be sponsored by us, Genentech, Roche or third parties through investigator-sponsored studies. Our priority studies are summarized below.

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      SATURN AND TITAN Studies. In conjunction with the approval of Tarceva in the United States, we have agreed with the FDA to conduct the SATURN and TITAN studies as part of our post-marketing clinical studies commitments. The SATURN study is a double-blind randomized Phase III study to evaluate the efficacy of Tarceva or placebo following four cycles of chemotherapy in patients with advanced, recurrent or metastatic NSCLC who have not experienced disease progression or unacceptable toxicity during the four cycles of front-line chemotherapy. The TITAN study is a randomized Phase III study to evaluate the efficacy of Tarceva compared to either of two chemotherapy agents, Alimta or Taxotere^® (Docetaxel), following four cycles of front-line chemotherapy in advanced, recurrent metastatic NSCLC patients who have experienced disease progression or unacceptable toxicity.

      The SATURN and TITAN studies are expected to enroll approximately 1,500 patients as part of a merged protocol in which patients will receive four cycles of platinum-containing chemotherapy. Those patients who do not progress on chemotherapy will be enrolled in SATURN and randomized to Tarceva or placebo. This study, if positive, could provide a new label for Tarceva as a front-line maintenance therapy. Patients with progressive disease as best response to platinum-containing chemotherapy will be enrolled in TITAN and will be randomized to Tarceva or chemotherapy (Alimta or Taxotere at the discretion of the investigator). This study will provide head-to-head comparative data for Tarceva versus chemotherapy in the sub-set of patients who rapidly progress on front-line chemotherapy. In both SATURN and TITAN, tissue collection for analyses of molecular markers will be mandatory and the information gained will be used to design the next series of studies with Tarceva in NSCLC. The clinical protocols for these studies were filed with the FDA in 2005, and the studies are currently enrolling.

      RADIANT Study (Adjuvant Tarceva after surgery and chemotherapy in patients with Stage IB-IIIA NSCLC). Due to its demonstrated efficacy, favorable safety profile and convenience, Tarceva is well suited for testing in the adjuvant treatment of patients with fully resected stage IB through IIIA NSCLC. Over the last two years, it has been confirmed that patients with resectable NSCLC benefit from platinum-containing adjuvant chemotherapy. This treatment paradigm is rapidly becoming the standard of care in the United States. In the RADIANT study, patients with fully resected NSCLC who do or do not receive platinum-containing adjuvant chemotherapy will be randomized to Tarceva or placebo for up to two years. This study has the potential to change the standard of care for patients with early stage NSCLC and to increase the number of patients that are cured of this disease.

      Phase II Study in Enriched Population. The use of molecular markers to select patients with NSCLC for treatment with Tarceva continues to be a controversial topic and one that may in part determine the long-term success of the product especially in the earlier line settings. Results from our registrational study for NSCLC, the BR.21 study, suggest that patients with tumors that are EGFR positive by either fluorescent in situ hybridization, or FISH, and/or immunohistochemistry, or IHC, derive a larger survival benefit from Tarceva than those with EGFR negative tumors. However, the two front-line Phase III studies of Tarceva plus standard chemotherapy in metastatic NSCLC failed to demonstrate a benefit from Tarceva in patients with tumors that were EGFR positive by IHC. We are conducting a 140-patient Phase II study in which we are prospectively selecting patients with untreated NSCLC based on EGFR positivity using IHC and/or FISH. Patients with tumors that are EGFR-negative by both IHC and FISH will be excluded from the study. After enrollment, patients will be randomized to either single agent Tarceva or Tarceva intercalated with chemotherapy. The treatment regimen for the patients in the Tarceva plus chemotherapy arm will differ from the concurrent regimen utilized in the two front-line Phase III Tarceva studies. We hypothesize that the administration of Tarceva in combination with chemotherapy in a unique schedule to patients with EGFR-positive tumors may have the potential for an increased effect on survival when compared with historical controls. The study is currently enrolling.

      Ovarian and Colorectal Cancer Studies. Additional collaborative Phase III trials are under way in both ovarian cancer and colorectal cancer. The ovarian cancer study is an 830-patient Phase III trial being conducted by the European Organization for Research into the Treatment of Cancer and follows a similar maintenance protocol to the one described above for NSCLC in which Tarceva is used as a monotherapy following initial chemotherapy. The colorectal cancer study is a 640-patient study being

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conducted through our collaboration partner, Roche, and also employs Tarceva in a maintenance setting. In this study Tarceva is being tested in a four–arm study that also explores the use of Avastin in combination with the established front-line chemotherapy regimens FOLFOX and XELOX that are widely employed in the treatment of colorectal cancer.

      Smoker Maximum Tolerated Dose Study. Pharmacokinetic analyses from our BR.21 study suggest that patients that are current smokers have lower drug exposure. In addition, as judged by the lower incidence of rash and diarrhea, these patients appear to have a less marked biological effect from Tarceva. Retrospective analyses for the BR.21 study showed that the treatment effect of Tarceva on survival was less pronounced in this population. The data suggest that under-dosing of current smokers with NSCLC could be partially responsible for the sub-optimal treatment effect observed in these patients in the registrational study. We are conducting a 62-patient Phase I dose escalation study with Tarceva in smokers with NSCLC in an attempt to establish the maximum-tolerated dose of Tarceva in this population. This study is currently enrolling. We have already conducted a Phase I clinical study in healthy volunteers which demonstrated that the plasma levels of Tarceva achieved in active smokers were approximately half those observed in non-smokers.

      Investigator Sponsored Studies. In addition to the studies listed above, there are currently over 150 investigator-sponsored studies and National Cancer Institute/ Cancer Therapy Evaluation Program Studies ongoing or planned in the Tarceva program. These studies are exploring monotherapy and combination uses of Tarceva, including with novel agents, in various tumor types and with a variety of treatment modalities, such as radiation and surgery. The studies also include examining the use of Tarceva earlier in the treatment paradigm in both the adjuvant and chemoprevention settings. In general, those studies are carried out at minimal cost to us or our partners beyond the supply of Tarceva.

      Translational Research. Translational research is an area of investigation designed to bridge our research knowledge base into the clinic and the marketplace, and one of the key goals for our translational research group has been to generate data that could enhance the quality of the clinical strategies for compounds within our development portfolio. The current emphasis of our translational research programs is on Tarceva, and a series of collaborations and studies are ongoing. Our translational research group has pioneered research on Tarceva cellular action relative to a process known as epithelial mesenchymal transition, or EMT (see “Our Proprietary Clinical and Pre-Clinical Oncology Programs — Oncology Research”), and is planning studies of effective markers of EMT and EGFR signaling in retrospective and prospective clinical trials. These studies may lead to an enhancement of the likelihood of success of Tarceva in additional indications by selecting those patients most likely to respond to therapy.

      Sales and Marketing. In order to maximize the Tarceva brand and to ensure the optimal competitive positioning of Tarceva, we entered into a co-development and commercialization alliance with Genentech and Roche in January 2001. Under the alliance, Genentech leads the marketing efforts in the United States and Roche markets the drug in the rest of the world. We assist with the promotion of Tarceva by providing at least 25% of the combined U.S. sales force, covering 43 territories. Our oncology sales specialists perform sales calls to certain high-volume physician call targets and associated medical staff in addition to attending OSI promotional exhibit booths at medical meetings and tradeshows. We believe that our sales team is a key contributor to the Tarceva sales effort, based upon the significantly higher sales volume for Tarceva in the territories where Tarceva is being co-promoted by us and Genentech. As of February 28, 2006, our oncology commercial organization consisted of 89 employees, 58 of which were in sales and marketing and the remainder of which were in medical affairs, corporate development and strategic management and operations.

      The OSI/ Genentech/ Roche Alliance. We manage the ongoing development program for Tarceva with Genentech and Roche through a global development committee under a Tripartite Agreement among the parties. OSI and Genentech are parties to a collaboration agreement which was amended in 2004 to provide us with the right to co-promote Tarceva. The OSI/ Genentech collaboration agreement

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continues until the date on which neither we nor Genentech are entitled to receive a share of the operating profits or losses on any products resulting from the collaboration, that is, until the date that we and Genentech mutually agree to terminate the collaboration or until either party exercises its early termination rights as described as follows. The OSI/ Genentech collaboration agreement is subject to early termination in the event of certain customary defaults, such as material breach of the agreement and bankruptcy. Since January 8, 2003, Genentech has had the right to terminate the OSI/ Genentech collaboration agreement with six months’ prior written notice. The provisions of the amendment allowing us to co-promote are also subject to termination by Genentech upon a material breach of the amendment by us, which remains uncured, or upon a pattern of nonmaterial breaches which remain uncured. In 2004, we signed a Manufacturing and Supply Agreement with Genentech that clarified our role in supplying Tarceva for the U.S. market.

      We are also parties to an agreement with Roche whereby we have provided Roche with the right to sell Tarceva worldwide except for the United States, its territories, possessions and Puerto Rico, in exchange for a royalty. The OSI/ Roche agreement continues until the date on which we are no longer entitled to receive a royalty on products resulting from the development of Tarceva, that is, until the date of expiration or revocation or complete rejection of the last to expire patent covering Tarceva or, in countries where there is no valid patent covering Tarceva, on the tenth anniversary of the first commercial sale of Tarceva in that country. The OSI/ Roche agreement is subject to early termination in the event of certain customary defaults, such as material breach of the agreement and bankruptcy. In addition, since July 31, 2003, Roche has had the right to terminate the agreement on a country-by-country basis with six months’ prior written notice. We also currently have the right to terminate the agreement on a country-by-country basis if Roche has not launched or marketed a product in such country under certain circumstances.

      Manufacturing and Supply. We currently manage the supply of Tarceva through third-party manufacturers. Under our collaboration agreement with Genentech, we are responsible for the manufacture and supply of erlotinib, the active pharmaceutical ingredient, or API, and Tarceva tablets for pre-clinical and clinical trials and for the supply of commercial quantities of Tarceva tablets for sales within the United States. Under our collaboration agreement with Roche, Roche has elected to take responsibility for the supply of Tarceva tablets for sales outside of the United States.

      Erlotinib is manufactured in a three-step process with high yield. Sumitomo Chemical Co., Ltd. and Dipharma S.p.A are our manufacturers of the API used for commercial supplies. Both of these manufacturers have also manufactured API for Tarceva clinical trials. Schwarz Pharma AG is our manufacturer of Tarceva tablets and placebo product for clinical and commercial supplies. We have entered into long term supply agreements with our API and tablet manufacturers. We are evaluating the capability of another manufacturer to serve as an alternative (i.e., back-up) provider of Tarceva tablets. Clinical supplies of Tarceva tablets are currently stored, labeled, packaged and distributed by Cardinal Health Clinical Services, and Cardinal Health Packaging Services also labels and provides secondary packaging services for commercial supplies of Tarceva tablets before their subsequent distribution to Genentech or a storage facility designated by Genentech. All manufacturers of the API and Tarceva tablets are required to comply with current good manufacturing practices. We have produced sufficient quantities of Tarceva tablets to conduct our ongoing clinical trials, and we have a supply chain organization in place, with inventory on hand, to support the commercial sales of Tarceva.

Macugen

      Macugen is our innovative, first-in-class product for the treatment of wet AMD and the cornerstone of our ophthalmology business. Macugen is co-promoted in the United States by our specialty ophthalmology sales force as part of a co-development and marketing arrangement with Pfizer. Macugen was launched in the United States in January 2005 for use in the treatment of all types of wet AMD. Macugen is a novel therapeutic (a pegylated aptamer) that selectively binds to the VEGF Isoform-165, the pathogenic isoform causing choroidal neovascularization associated with wet AMD. Macugen is administered inside the eye once every six weeks via an intravitreous injection, and addresses the

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abnormal blood vessel growth and blood vessel leakage that is believed to be the underlying cause of the disease. It is the first and only FDA-approved therapy for the treatment of all subtypes of wet AMD. Total U.S. net sales for Macugen were approximately $185 million for the year ended December 31, 2005. We share with Pfizer on a 50/50 basis the gross profits of Macugen sales in the United States. We and Pfizer are responsible for our own sales costs and we share equally with Pfizer manufacturing, regulatory and marketing costs. Development costs are shared, with Pfizer paying 75% of the external costs of any agreed development program and 50% of the costs of any post-marketing program. Pfizer is responsible for all commercialization of Macugen outside of the United States. Macugen was approved in the EU in February 2006 and has now been approved in 33 countries and territories around the world. With respect to Macugen sales in the EU, we receive the greater of 20% of product operating profit or (i) for aggregate net sales of Macugen below $1 billion, a 15% royalty and (ii) for aggregate net sales of Macugen greater than $1 billion, a 20% royalty on such incremental net sales. In all other countries (other than the United States, where we do not receive royalties), we receive a 10% royalty on net sales of Macugen.

      In addition to wet AMD, we are currently jointly developing Macugen with Pfizer for use in DME, a condition that afflicts a significant subset of diabetic retinopathy patients, and in central retinal vein occlusion, or CRVO, another serious disease of the retina that leads to significantly impaired vision. We are currently conducting a 900-patient Phase III clinical trial in DME and expect to report results of an ongoing Phase II clinical trial for CRVO during 2006. Wet AMD and DME are two of the leading causes of severe vision loss and blindness in the adult population. As of December 31, 2005, we estimate that there are more than 1.6 million people in the United States age 50 and older who have wet AMD. Approximately 500,000 new cases of wet AMD arise each year worldwide, approximately 200,000 of which occur in the United States. Although wet AMD represents approximately 10% of all AMD cases, it is responsible for up to 90% of the severe vision loss associated with AMD, with a majority of wet AMD patients experiencing severe vision loss in the affected eye within as little as a few months to two years after diagnosis of the disease. Because wet AMD generally affects adults over 50 years of age, we expect the incidence of wet AMD to continue to increase as the elderly population and overall life expectancy increases. Diabetic retinopathy is the leading cause of blindness in people less than 50 years of age in developed countries. DME is a manifestation of diabetic retinopathy and the leading cause of vision loss in patients with diabetic retinopathy. As of December 31, 2005, there were approximately 500,000 people suffering from DME in the United States, with approximately 75,000 new cases reported each year. We expect the incidence of DME in the United States to increase as the number of people with diabetes increases. We also believe that the prevalence and incidence of AMD and DME in the EU are similar to those in the United States. Because the existing treatments for DME have significant limitations, there is a significant unmet medical need for a new therapy for this disease. As of December 31, 2005, there were an estimated 130,000 patients with CRVO in the United States. Like wet AMD and DME, we believe that CRVO remains a major unmet clinical need and a significant commercial opportunity.

      Currently, the only other approved treatment for wet AMD is photodynamic therapy, or PDT, in combination with Novartis AG’s Visudyne^®, which is approved for the predominantly classic form of wet AMD. However, Genentech has filed a biologics license application, or BLA, in the United States for its anti-VEGF agent Lucentis, an antibody fragment of Genentech’s anti-cancer agent Avastin, which is approved in the United States for the systemic, intravenous treatment of colorectal cancer. Unlike Macugen, Lucentis and Avastin are pan-VEGF inhibitors designed to inhibit all isoforms of the VEGF molecule. Avastin has been re-formulated for intravitreous injection by independent compounding pharmacies and used extensively in an off-label manner by retinal specialists in the United States, prompted by the announcement of Phase III trial results for Lucentis and the fact that Avastin is the full-length antibody from which the Lucentis product candidate is derived. Despite the lack of comparative studies, it has been suggested that the pan-VEGF agents may have better efficacy than Macugen. The off-label use of Avastin has occurred despite the lack of formal clinical trials demonstrating the safety and efficacy of intravitreous Avastin, an agent which contains a black-box warning in its FDA approved label highlighting the risk of gastrointestinal perforations, wound healing complications, and hemor-

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rhage, as well as warnings and precautions regarding adverse events including proteinuria, hypertension, congestive heart failure, and thromboembolic events. We believe that while pan-VEGF targeting may provide enhanced efficacy over Macugen, the perception of this potential advantage may be over-stated, and is based on comparisons of Phase III trials of different design and patient eligibility. In addition, the Phase III clinical trial results reported to date have demonstrated an imbalance in thromboembolic events for Lucentis. Macugen demonstrated no imbalance in thromboembolic events in any clinical study to date and has an established safety profile through two-plus years of follow-up. For these reasons, we believe there will be an important ongoing role for Macugen in the chronic management of wet AMD even after the anticipated launch of Lucentis.

      A number of recent developments have begun to support our belief that the efficacy of Macugen is under-appreciated and that Macugen’s established safety profile may prove to be an important advantage. In an October 2005 publication in the journal Retina, data from a retrospective analysis of a sub-set of patients from our two registrational Phase III trials, or the VISION trials, for Macugen were presented. The data demonstrated that in patients afflicted with “early-stage” wet AMD, which is characterized by either (i) small lesions with better vision, without prior treatment and lacking scarring or atrophy, or (ii) occult lesions without lipid and with better vision in the fellow eye treatment with Macugen, leads to better overall outcomes than was shown in the overall VISION trial population. Up to 20% of these patients gained three or more lines of vision (using the standardized early treatment of diabetic retinopathy study, or ETDRS, visual acuity chart) compared to 0% in the control group and 6% of the Macugen-treated patients in the VISION trial population. More recently, a retrospective analysis from The Associated Retinal Consultants, P.C. in Royal Oaks, Michigan, regarding the efficacy of Macugen in previously untreated wet AMD patients treated for an average of six months was presented at the Royal Hawaiian Eye conference in January 2006 and showed that 90% of these patients maintained their vision and 22% experienced three or more lines of vision gain. These results were appreciably better than those reported in the VISION studies. As a result, we are currently enrolling patients in a Phase II collaborative study with UCLA designed to attempt to reproduce the encouraging results of these retrospective studies in a prospective clinical trial in newly diagnosed early-stage wet AMD patients. We expect that the UCLA study data will be available for presentation and publication during 2007.

      Positioning Macugen in the Rapidly Evolving Wet AMD Market. There are three key components of the strategy we are developing, together with our partner Pfizer, for stabilizing, maintaining and ultimately growing Macugen’s share in the wet AMD market, especially in the face of current competition from off-label intravitreous Avastin and future competition from Lucentis:

•  To demonstrate through publications in peer-reviewed journals, case studies, and through clinical trials, Macugen’s under-appreciated efficacy in treating patients with early-stage wet AMD. Much of the clinical experience with Macugen was limited to patients with advanced wet AMD, who often had failed one or more previous therapies;

•  To capitalize on Macugen’s established safety profile which we believe is particularly advantageous for patients with higher cardiovascular risk, and newly diagnosed patients who present with good baseline visual acuity; and

•  To establish and demonstrate through clinical trials a new treatment paradigm that positions Macugen as safe and effective in the chronic management of wet AMD — both in sequential regimens, such as following induction therapy with a pan-VEGF agent such as Avastin or Lucentis, or PDT or steroids, or as first-line therapy in early-stage wet AMD to which other pan-VEGF agents may be added adjunctively if the disease progresses.

      The systemic safety profile of Macugen, established in data from the first year of the VISION trials, has now been demonstrated in over two years of treatment with no evidence of association with hypertension or serious hemorrhagic or thromboembolic events as compared to the control group. Furthermore, a preliminary analysis of a third year of follow-up from the VISION trials suggests that the safety of Macugen is maintained throughout three years of treatment. Biology and scientific data

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suggest possible safety issues with the use of pan-VEGF agents. In addition, clinical trial data suggests the potential for neurotoxicity, vascular abnormalities and thromboembolic events. Given that wet AMD afflicts the older population (most patients are age 50 and older), who are at a greater risk for thromboembolic events, we believe that Macugen has the potential to become the preferred anti-VEGF agent for maintenance use following induction treatment with a pan-VEGF agent.

      Clinical Data and Lifecycle Plan. In December 2004 we announced that the FDA had approved Macugen for the treatment of wet AMD based on data from our VISION trials. We have completed approximately three and a half years of our Phase II/ III pivotal clinical trials for the use of Macugen in the treatment of wet AMD. These Phase II/ III clinical trials are ongoing to generate long-term safety data for up to five years.

      We are also presently conducting a number of additional clinical trials of Macugen, including (i) a Phase IV clinical trial for the efficacy of Macugen in combination with Visudyne, an intravenously administered light activated drug, in the treatment of wet AMD, (ii) a Phase IV clinical trial to explore the safety and efficacy of the FDA approved 0.3 mg dose of Macugen versus two different lower doses of Macugen in patients with wet AMD, (iii) a Phase II/ III clinical trial for the use of Macugen in the treatment of DME and (iv) Phase II clinical trial of Macugen in the treatment of CRVO which completed enrollment in August 2005.

      Wet AMD Post-Approval Commitment Study. In conjunction with the approval of Macugen in the United States, we have agreed with the FDA to conduct a Phase IV post-approval safety and efficacy study. This Phase IV clinical trial will explore the safety and efficacy of the approved dose of Macugen (0.3 mg) versus two additional lower doses of Macugen in patients with subfoveal wet AMD. This global study will run for two years with the primary endpoint being the proportion of subjects losing less than three lines on the ETDRS eye chart at the end of 54 weeks. This Phase IV study is expected to enroll approximately 262 patients, with the first patient expected to be enrolled in March 2006. The study will provide us with additional data on lower doses of Macugen as well as safety data on retinal and corneal toxicity.

      Macugen plus PDT Combination Study for Wet AMD. This Phase IV combination trial is a 360-patient study that compares Macugen and PDT with Visudyne versus Macugen alone, to determine if patients with the predominantly classic form of wet AMD benefit from combination therapy. The study, which began in the second quarter of 2005, is being conducted in both U.S. and international sites and will compare the proportion of patients who maintain vision after both one and two years of treatment. Maintenance of vision is defined as a loss of less than three lines on the ETDRS eye chart. All patients will receive Macugen every six weeks, and half the patients will receive PDT with Visudyne as needed, while the other half will receive a control sham PDT infusion. The study is currently ongoing.

      DME Clinical Study. In February 2005, we completed a Phase II clinical trial for the use of Macugen in the treatment of DME. The 172 patients enrolled in this study were required to have DME involving the center of the macula. In this randomized, double-masked placebo controlled trial, patients received 0.3 mg, 1.0 mg and 3.0 mg doses of Macugen via intravitreous injection or sham control injections every six weeks for at least 12 weeks and then up to an additional 18 weeks at the discretion of the investigators. Focal laser photocoagulation was allowed in the investigators’ discretion after week 12. The results of the study, which were published in the November 2005 edition of the journal Ophthalmology, demonstrated that the therapy was well tolerated, and there were no serious adverse events determined by the clinical trial investigators as related to the drug or its administration. 59% of the patients had one or more lines of vision gain and 18% of patients had three or more lines of vision gain (using the ETDRS chart). Based on this data we have initiated a Phase III trial in this indication and are currently exploring a compendia listing for the reimbursement of Macugen use for the treatment of DME in the United States. The Phase III DME study is a 900-patient trial being conducted in the United States, Europe, Australia, South Africa, and South America. Patients will be given intravitreous injections of 0.3 mg, 0.03 mg or 0.003 mg Macugen, every six weeks for three years versus sham injections

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in subjects with DME involving the center of the macula. If this study is positive, it could result in the approval of a new indication for Macugen.

      CRVO Clinical Study. A Phase II clinical trial designed to test the efficacy, safety, and pharmacokinetics of Macugen in CRVO patients was started in 2004. CRVO is characterized by high VEGF levels, abnormal blood vessel growth and blood vessel leakage. CRVO occurs when the circulation of a retinal vein becomes obstructed, causing blood vessel bleeding and leakage in the retina and/or iris. The CRVO study is a 90-patient study conducted in the United States, Europe, Australia and Israel. Patients will be given intravitreous injections of 1.0 mg or 3.0 mg Macugen every six weeks for 30 weeks versus sham injection. Recruitment for this trial was completed in September 2005 and results are expected the second quarter of 2006. If this trial is positive, a Phase III study may be initiated in the fourth quarter of 2006.

      Macugen Maintenance Study. We, together with Pfizer, have agreed to begin a study for the use of Macugen as a maintenance therapy to sustain the vision outcomes of patients previously treated with PDT, triamcinolone, Avastin or Lucentis. The study is expected to run for approximately one year, with the primary endpoint being the proportion of subjects losing less than three lines on the ETDRS chart at the end of 52 weeks, and the secondary endpoints being the measurement of retinal thickness and leakage. The study is expected to enroll between 750 and 1,000 patients, with the first patient expected to be enrolled in the third quarter of 2006.

      Investigator Sponsored Studies. In addition to the studies listed above, there are currently 13 investigator-sponsored studies of Macugen being conducted at various institutions in the United States. The most significant is the prospective trial studying the efficacy of Macugen in the treatment of early-stage wet AMD, a multi-center trial sponsored by University of California at Los Angeles, or UCLA, which is currently enrolling.

      Additional studies explore monotherapy and combination uses of Macugen. In addition to studies focusing on wet AMD and DME, other research areas include: branch retinal vein occlusion; retinal ischemia; histoplasmosis; diabetic retinopathy; angioid streaks; myopia; and iris neovascularization.

      Sales and Marketing. We commercialize Macugen with our collaboration partner, Pfizer. Under this arrangement, we and Pfizer co-promote Macugen in the United States. We have granted Pfizer the exclusive right to develop and commercialize Macugen outside the United States under a royalty-bearing license. As of February 28, 2006 our commercial organization in ophthalmology comprised approximately 70 employees, 54 of whom were in sales and marketing and the remainder of whom were in medical affairs and reimbursement. We also employ certain sales operations and training functions dedicated to ophthalmology, while others are shared with the oncology commercial organization. Our sales team performs the majority of details of Macugen to retinal specialists, whereas the Pfizer team details both ophthalmologists and retinal specialists.

      Collaboration with Pfizer. In December 2002, we entered into several concurrent agreements with Pfizer to jointly develop and commercialize Macugen for the prevention and treatment of diseases of the eye and related conditions. Under the terms of our collaboration agreements with Pfizer:

•  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 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, we and Pfizer share in gross profits and losses from the sale of Macugen, and we book all U.S. product sales;

•  Outside the United States, Pfizer markets the product under an exclusive license, for which we are entitled to royalty payments based on net sales; and

•  Pfizer has the principal responsibility for regulatory filings.

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      Macugen has been approved by regulatory authorities in the United States, Canada, Brazil, Argentina, Peru, Pakistan, the Philippines and Switzerland, and was approved in February 2006 by the European Agency for the Evaluation of Medicinal Products, which covers 25 countries. Pfizer has filed new drug applications, or NDAs, for Macugen in 13 other countries.

      We are entitled to milestone payments from Pfizer based on the launch of Macugen in the EU, the achievement of additional worldwide regulatory submissions and approvals and the attainment of agreed upon sales levels of Macugen.

      Under the agreements, the parties’ sharing of profits and losses from the commercialization of Macugen in the United States extends until the later of 15 years after commercial launch in the United States and the expiration of the United States patent rights licensed to Pfizer. The payment of royalties to us by Pfizer based on net sales of Macugen outside the United States extends, on a country-by-country basis, until the later of 15 years after commercial launch and the expiration of the patent rights licensed to Pfizer in each particular country. The royalty rate on net sales of Macugen outside the United States is reduced on a country-by-country basis to the extent that the patent rights in a particular country expire or a generic form of Macugen is marketed in that country. The U.S. patent rights licensed by us to Pfizer expire between 2010 and 2017. The corresponding foreign rights include patents that expire between 2011 and 2017. Pfizer may terminate the collaboration relationship without cause upon six to 12 months’ prior notice, depending on when such notice is given. Either party may terminate the collaboration relationship based upon material uncured breaches by the other party. In addition, we may terminate the collaboration relationship if, during specified periods, net sales of Macugen do not reach specified levels. If we elect to terminate the collaboration in this situation, we would be required to pay royalties to Pfizer based on net sales of Macugen following such termination.

      Distribution and Pricing. We distribute Macugen in the United States primarily through national distributors that specialize in pharmaceutical product distribution to specialty markets. In January 2005, we announced the distribution of Macugen through three distributors: McKesson Corporation, Priority Healthcare Corporation and Besse Medical. Under these arrangements, we ship Macugen to our distributors and title and risk of loss pass upon shipment to the distributors. These distributors sell Macugen to physicians, physician group practices, hospitals, federal government buying groups and clinics. Our agreement with Pfizer provides that the parties will mutually agree on the pricing of Macugen.

      Manufacturing. We currently depend on third parties to manufacture Macugen. We engaged a third party manufacturer, Raylo Chemicals Inc., an independently operating subsidiary of Degussa AG, to produce the active pharmaceutical ingredient used in Macugen. Under the terms of our agreement with Degussa, we are obligated to purchase minimum specified percentages of our requirements for the API.

      For our commercial and clinical trial supply of Macugen, we engaged Gilead Sciences, Inc. in December 2003 as a separate fill and finish manufacturer to formulate the active pharmaceutical ingredient from a solid into a solution and to fill the solution into syringes. Under the terms of our agreement with Gilead, we are obligated to purchase minimum specified percentages of our requirements through the third anniversary of the January 2005 commercial launch of Macugen in the United States.

      If our relationship with Raylo or Gilead terminates or if these manufacturers are unable to meet their obligations, we would need to find other sources of supply. We are currently in the process of identifying an alternate supplier of Macugen, but until this occurs, a loss of one of our suppliers could potentially result in a delay in our supply of Macugen.

      Macugen License Agreements. We license key components of Macugen pursuant to the following two license agreements:

      Gilead Sciences. In March 2000, we entered into an agreement with Gilead and one of its subsidiaries for an exclusive worldwide license for the API for Macugen. In exchange for the rights

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licensed from Gilead, we pay royalties to Gilead based on net sales of Macugen by us or our affiliates or sublicensees. Our royalty obligation extends on a country-by-country basis until the later of 10 years after first commercial sale of Macugen, which occurred in January 2005, or the expiration of the last-to-expire patent licensed from Gilead in each particular country. We also pay milestones based upon the commercial launch of Macugen in Europe and Japan. Upon the expiration of the last-to-expire royalty term, the agreement expires and, at our option, our license from Gilead either (1) survives and remains exclusive, in which case we would be obligated to continue paying Gilead a reduced royalty on product sales or (2) survives and converts to nonexclusive, in which case we would not have any further royalty obligation to Gilead. The agreement obligates us to use commercially reasonable efforts to develop, obtain regulatory approvals for and commercialize Macugen.

      Nektar Therapeutics. In February 2002, we entered into a license, manufacturing and supply agreement with Nektar Therapeutics, formerly Shearwater Corporation, pursuant to which Nektar supplies us with the reagent that we link to the aptamer to create the API in Macugen. Under the terms of the agreement, Nektar granted us various exclusive and non-exclusive worldwide licenses, with the right to grant sublicenses, under patents and know-how related to the reagent controlled by Nektar, to develop, manufacture and commercialize Macugen. In exchange for these rights, we pay Nektar royalties based on net sales of Macugen by us or our affiliates or sublicensees. Nektar also has an exclusive right to supply us with the pegylation reagent for Macugen, subject to Nektar meeting its supply obligations. The agreement expires upon the expiration of the last-to-expire patent licensed by us from Nektar. The United States patent rights licensed to us by Nektar expire between 2013 and 2016.

      Isis Pharmaceuticals. In December 2001, we entered into a non-exclusive license agreement with Isis Pharmaceuticals, Inc., which grants us rights under patents owned or controlled by Isis to commercialize Macugen worldwide. In exchange for this license, we pay Isis royalties based on net sales of Macugen. We also will make milestone payments to Isis for additional NDA filings and approvals of Macugen for additional applications. The U.S. patent rights we license from Isis expire between 2010 and 2014.

Novantrone

      Novantrone (mitoxantrone concentrate for injection) is an anthracenedione used as an intravenous chemotherapy agent. Novantrone is approved by the FDA for the treatment of acute non-lymphocytic leukemia, and the relief of pain associated with advanced hormone refractory prostate cancer. We market and promote Novantrone for these approved oncology indications in the United States pursuant to a co-promotion agreement with an affiliate of Serono, S.A. signed in March 2003. We receive commissions from Serono on net oncology sales in this market. The patent for Novantrone will expire in April 2006. The expiration of a product patent results in a loss of market exclusivity for the covered pharmaceutical product. Therefore, we expect a significant decrease in our commissions related to Novantrone as we approach patent expiration or shortly thereafter as a result of an expected decrease in oncology sales.

Our Research and Development Programs

      The entire drug discovery and development process typically takes well over a decade and is subject to significant risk and attrition. A significant majority of drug candidates which enter clinical trials fail to result in a successful product with typical metrics for the industry suggesting that only approximately one in eight drug candidates that enter clinical trials will result in a successful product. We believe it is essential, in this high risk setting, to have a portfolio approach to drug discovery and development that manages a pipeline of opportunity in a disciplined manner and leverages the core expertise of the company. We have built, over two decades, extensive expertise in the discovery and development of molecular targeted therapies — drugs designed to directly inhibit a biomolecule that we believe to be causally or mechanistically involved in the disease state we are addressing. In addition

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to our technology and scientific expertise in this area (which includes automated high throughput screening, small molecule libraries, molecular modeling, medicinal chemistry, molecular and cellular biology, toxicology, pharmacology and regulatory affairs), we believe that focused scientific and medical disease area expertise is essential to success and we have either built or acquired this expertise in the three disease areas in which we operate, oncology, ophthalmology and diabetes. We have focused our efforts on the discovery and development of novel and differentiated agents that target significant unmet medical needs in these three areas.

Our Proprietary Clinical and Pre-Clinical Diabetes and Obesity Programs

      Our diabetes and obesity research and development programs are carried out through our wholly-owned UK-based subsidiary, Prosidion, in conjunction with our core research and development functional teams (handling screening, toxicology and regulatory affairs, among other functional disciplines) based in the United States. The programs are anchored by our assets relating to DPIV, one of the most topical targets in diabetes drug development today. DPIV inhibitors are designed to regulate blood glucose by preventing the breakdown of GLP-1, a key glucose regulatory hormone that is cleaved and inactivated by DPIV. The development of DPIV inhibitors in the pharmaceutical industry is a very competitive area. Our lead compound in this area is PSN9301, a small molecule DPIV inhibitor currently in Phase II studies. We believe that PSN9301, which is a rapidly absorbed, short-acting oral agent designed to be prandially dosed, may offer competitive advantages over other DPIV agents by virtue of inhibiting GLP-1 breakdown only in the prandial period when its activity is of primary physiological importance to glucose regulation. By only acting at this time PSN9301 also may avoid potential side-effects arising from the chronic inhibition of DPIV activity. DPIV also cleaves and inactivates other physiologically important substrates like PYY and substance-P.

      DPIV Assets. In July 2004, we acquired, through Prosidion, a platform of DPIV technology from Probiodrug AG for approximately $35 million in cash plus future milestones. The milestone payments are payable upon the successful development of PSN9301, the lead DPIV inhibitor acquired from Probiodrug, which is currently in Phase II clinical trials for the treatment of type 2 diabetes. These milestone payments are payable in January 2007 and January 2010, or on such earlier dates upon which the criteria are met, unless the development of PSN9301 is terminated prior to such dates due to safety, efficacy or regulatory issues, in which event the obligation to make the milestone payments will lapse. Probiodrug, based in Halle, Germany, pioneered much of the research and development that has led to the characterization of DPIV as one of the most important targets in diabetes drug development today. Included in the acquired assets is a portfolio of medical use patents around the target. This portfolio includes issued and pending patents and patent applications with claims covering DPIV as a target for anti-diabetes therapy and licensed rights to patent applications claiming combinations of DPIV inhibitors with other oral anti-diabetes drugs such as metformin. Our rights to this patent estate of DPIV medical use patents provide us with a potential source of milestone and royalty revenue through the issuance of non-exclusive licenses to the patent estate. Six major pharmaceutical companies, including Novartis and Merck, have taken licenses to this patent estate. These licenses provide us with upfront payments, milestones and royalties. In February 2006, Merck announced that it had filed an NDA for its DPIV inhibitor, Januvia^tm (sitagliptin phosphate), which has resulted in a milestone payment to us and could potentially trigger additional milestone and royalty payments to us if Januvia is approved by the FDA. Novartis has stated that it expects to file an NDA for its DPIV inhibitor, Galvus^tm (vildagliptin), during the first quarter of 2006.

      PSN9301. PSN9301 is an oral, fast-acting inhibitor of DPIV. DPIV cleaves and inactivates glucagon-like peptide-1, or GLP-1, an important mediator of blood glucose levels. Inhibition of DPIV leads to enhanced GLP-1 activity which leads to increased insulin secretion and decreased glucagon secretion resulting in significant lowering of both mean and post-prandial blood glucose levels. DPIV inhibitors have been shown in clinical studies to have additional benefits. The increased insulin secretion has been shown to be glucose-dependent, providing a possible built-in safety mechanism against hypoglycaemia, or abnormally low blood sugar levels. While the field is competitive, with numerous pharma-

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ceutical companies currently developing DPIV inhibitors, we believe that PSN9301 is potentially differentiated from these competing products in that it has a very rapid onset of action and a relatively short duration of action and, therefore, is an ideal product candidate for prandial, or mealtime, dosing. It is anticipated that prandial dosing may result in less interference with other DPIV substrates between meals and overnight. Our goal is to develop a safer product by reducing potential unwanted side-effects arising from the chronic inhibition of the breakdown of other physiologically important DPIV substrates such as substance-P and PYY. PSN9301 has undergone a Phase IIa clinical trial investigating safety, tolerability, pharmacodynamics and pharmacokinetics (generally, the study of the biochemical and physiologic effects of drugs and their mechanisms and timing of action) in type 2 diabetes patients. Primary endpoints included improved oral glucose tolerance test, effect on insulin and DPIV activity and the results demonstrated that PSN9301 reduced blood glucose levels in type 2 diabetics by between 25% and 42% in oral glucose tolerance tests. A Phase IIb clinical trial is scheduled to commence in the middle of 2006.

      Other Diabetes Clinical Candidates. In addition to PSN9301, we have two further diabetes compounds in clinical development. PSN357 is an oral, small molecule inhibitor of glycogen phosphorylase which entered Phase IIa clinical trials in late February 2006 and PSN010 is an oral, small molecule activator of glucokinase which entered Phase I clinical trials in mid February 2006. Both glycogen phosphorylase and glucokinase are targets for therapeutic intervention in type 2 diabetes. PSN357 inhibits glycogen phosphorylase and reduces blood glucose by preventing glycogen breakdown in the liver and has demonstrated safety in Phase I trials and efficacy in animal models. Glucokinase activators have a dual effect in the pancreas and the liver resulting in increased hepatic glucose uptake in the liver and stimulated insulin secretion by the pancreas. PSN010 has demonstrated efficacy in animal models and successfully completed pre-clinical toxicological profiling. Both PSN357 and PSN010 have resulted from our target-based discovery efforts in diabetes.

      Diabetes and Obesity Discovery Research. We currently have two advanced projects in discovery research which are focused on diabetes and/or obesity. The first of these is a central nervous system targeted approach which targets satiety by Serotonin 1A agonism plus monoamine reuptake inhibition (the S1RUP program) and is seeking the development of a drug candidate that overcomes some of the cardiovascular side-effects associated with the marketed product sibutramine. We anticipate the selection of a development candidate from this project during the course of 2006. The second project is targeting selective agonists to the novel G-protein coupled receptor, GPR-119, a program with potential utility both in the anti-obesity and diabetes area. We anticipate selecting a development candidate from this project by early 2007. We also have several exploratory projects targeting diabetes and/or obesity.

Our Proprietary Clinical and Pre-Clinical Oncology Programs

      Dual c-Kit/ VEGFR Program. OSI-930 is a promiscuous tyrosine kinase inhibitor that principally acts as a potent co-inhibitor of the receptor tyrosine kinases c-kit and VEGFR. It is designed to target both cancer cell proliferation and blood vessel growth, or angiogenesis, in selected tumors. OSI-930 is the first development candidate to emerge from the independent, non-collaborative efforts of our oncology discovery research group. We have completed Phase I dose escalation studies of OSI-930 in healthy volunteer patients and will execute a Phase I dose escalation study in cancer patients during 2006. We are also investigating a second development candidate in our c-Kit/VEGFR program, OSI-817, which serves as a back-up candidate to OSI-930.

      The mutated Kit receptor is directly involved in tumor progression in the majority of gastrointestinal stromal tumors and certain leukemias, and over-expressed normal Kit is thought to play a role in small cell lung cancer. The inhibition of the tyrosine kinase activity of Kit is expected to result in reduced cancer cell proliferation and increased cellular apoptosis in tumor types driven by Kit, resulting in inhibition of tumor growth. In addition to inhibiting Kit activity, each of OSI-930 and OSI-817 is also capable of inhibiting the receptor tyrosine kinase called KDR. KDR, or vascular endothelial growth factor receptor-2, or VEGFR-2, is present on endothelial cells and is a key mediator of blood vessel growth in

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response to the angiogenic growth factor VEGF. This pathway is believed to be the single most important mechanism for recruitment of new blood vessels in nearly all solid tumors; hence, inhibition of this pathway should impact the growth and metastases of a wide range of angiogenesis-dependent malignancies. While the combination of Kit and KDR inhibition would be expected to offer the greatest therapeutic benefit to patients bearing Kit expressing solid tumors, the KDR component is considered an attractive target for all solid tumors.

      OSI-906. OSI-906 is a tyrosine kinase inhibitor that acts as a selective inhibitor of the receptor tyrosine kinase IGF-1R. IGF-1R stimulates proliferation, enables oncogenic transformation, and suppresses apoptosis. It has been one of the most widely pursued targets of drug discovery in the oncology arena over the last decade but efforts have been hampered by the close resemblance of IGF-1R to the insulin receptor. Inhibitors of IGF-1R are expected to have broad utility in oncology since the over-expression of IGF-1R and/or its ligands (IGF-I and IGF-II) or the down-regulation of ligand binding proteins, or IGFBP, occurs in numerous human malignancies including lung, colon, breast, prostate, brain and skin cancers. Correlations with increased risk and poor prognosis have been established. In addition, signaling through the IGF system has been implicated in protecting tumor cells from apoptosis induced by a number of anti-cancer treatments such as EGFR inhibitors (e.g., Tarceva and the anti-HER2/erbB2 anti-body Herceptin^® (Trastuzumab)) and cytotoxic agents. We believe that OSI-906 should be useful both as a single agent and in the potentiation of other molecularly targeted therapeutic agents. OSI-906 is on investigational drug application, or IND, track, and we anticipate filing an IND for OSI-906 in the fourth quarter of 2006.

      Cessation of Certain Clinical Programs. During 2005, we made the decision to cease development of OSI-7904L and OSI-461. OSI-7904L is a liposomal formulation of the thymidylate synthase inhibitor, which was licensed from GlaxoSmithKline plc and acquired by us as part of the acquisition of the oncology business of Gilead in 2001. OSI-461 is a pro apoptotic cyclic GMP phosphodiesterase inhibitor that we acquired from Cell Pathways, Inc. in 2003. We are seeking licensees for these compounds, along with OSI-211 and Aptosyn (exisulind), which we ceased developing in 2004.

      Oncology Research. It is becoming increasingly clear that a critical development process known as epithelial mesenchymal transition, or EMT, plays a major role in the progression of cancer. EMT is characterized by the combined loss of epithelial cell junction proteins, such as E-cadherin, and the gain of mesenchymal markers, such as vimentin, fibronectin or MMP-2. The loss of E-cadherin and the acquisition of a more mesenchymal phenotype has been shown to correlate with poor prognosis in multiple epithelial derived solid tumors. By acquiring or co-opting a mesenchymal phenotype, epithelial derived tumor cells acquire or gain the ability to migrate, invade and metastasize. These properties may result in the poorer prognosis of solid tumors that have undergone an EMT-like transition and conversely with the need to target distinctly different molecular targets in order to effectively treat these tumors. With this insight, we have aligned our drug discovery strategies to focus on EMT. This re-alignment continues to build upon and extend our prior strategy of exploiting signaling pathways involved in the control of proliferation and/or in modulating tumor cell apoptosis. We are employing various processes from an EMT perspective in our oncology research, and such processes may allow us to identify compounds and appropriate combinations of targeted therapies that could have activity in a disease indication for which there is strong biological support.

      Cancer Applications for Pegaptanib. There are currently other VEGF inhibitors either being marketed or in development for the treatment of cancer. We are investigating whether pegaptanib, our VEGF-targeted pegylated aptamer that is the API for Macugen, may have applications for the treatment of certain forms of cancer. We are currently sponsoring pre-clinical experiments to determine if a sustained release version of pegaptanib may be effective in the localized treatment of solid cancerous tumors.

      Collaborative Development Programs with Pfizer. From 1986 to 2001, our oncology drug discovery efforts in targeted therapies were conducted in collaboration with Pfizer. During the course of the alliance, five novel molecular targeted therapies, including Tarceva, were advanced to clinical develop-

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ment. Pfizer is continuing to develop two clinical stage targeted therapies from this prior alliance: CP-547,632, a VEGFR inhibitor in Phase II trials, and CP-868,596, a PDGFR inhibitor in Phase I trials. If Pfizer is successful in commercializing either of these drug candidates, we will receive a royalty from Pfizer on the sales of these drugs. Pursuant to our agreement with Pfizer for this collaboration, if Pfizer chooses to discontinue development of any of these drug candidates, we will have the right to pursue development of them. We have recently been informed that Pfizer has ceased development of CP-724,714, a HER2-neu inhibitor discovered in our collaboration with Pfizer which is in Phase I trials. We are examining our options with respect to this candidate.

Our Proprietary Clinical and Pre-Clinical Ophthalmology Programs

      Anti-PDGF Program. We are currently studying the use of E10030, an anti-platelet derived growth factor, or anti-PDGF, aptamer, in combination with Macugen and other anti-VEGF agents. We believe combining an anti-PDGF aptamer with an anti-VEGF agent may significantly improve the efficacy of anti-VEGF therapy by regressing abnormal blood vessels in the eye. To date, anti-VEGF agents alone may slow or halt abnormal vessel growth and leakage, but do not regress neovascular lesions, and neovascular recurrence and leakage is frequent. Our anti-PDGF aptamer has shown the ability to regress neovascularization in three relevant models of ocular neovascularization when used in combination with a VEGF inhibitor. Phase I clinical trials regarding this combination therapy are expected to commence in the second half of 2006.

      Reduced Frequency Program. We believe that the number of patients who utilize Macugen would increase if we can reduce the required frequency of the treatment. Therefore, we are currently exploring the development of sustained release formulations for Macugen and also the possibility of conducting a clinical trial program evaluating different dosing regimens.

Our Research and Development Core Capabilities

      In order to provide optimal support to our oncology, ophthalmology, and diabetes teams, we have created two core groups (one research and one development) that house the skills and expertise that enhance our drug discovery and development capabilities. We have established internal development expertise in the following areas: (i) regulatory affairs; (ii) preclinical functions such as toxicology and pharmacokinetics; (iii) clinical safety/medical writing; (iv) quality assurance/quality control; (v) chemistry/pharmacy/analytical; and (vi) manufacturing. We complement this expertise, on an as needed basis, with third party support. Our core research expertise includes: (i) leads discovery, including automated and in silico high throughput screening and absorption, distribution, metabolism and excretion, pre-screening and molecular modeling; and (ii) research pharmacokinetics, drug metabolism and delivery. This group also has expertise in aptamer chemistry, small molecules, pharmacokinetics modeling, formulation and drug delivery. As of February 28, 2006, we employed a total of 166 employees in these areas of critical functional expertise. We have created these groups in order to leverage our core scientific expertise in biology and drug development and to minimize duplication across the three disease areas. We believe that these core groups foster synergies and opportunities across the disease areas.

Our Intellectual Property

      Patents and other proprietary rights are vital to our business. Our policy is to protect our intellectual property rights through a variety of means, including applying for patents in the United States and other major industrialized countries, to operate without infringing on the valid proprietary rights of others and to prevent others from infringing our proprietary rights. We also rely upon trade secrets and improvements, unpatented proprietary know-how and continuing technological innovations to develop and maintain our competitive position. In this regard, we seek restrictions in our agreements with third-parties, including research institutions, with respect to the use and disclosure of our proprietary technology. We also enter into confidentiality agreements with our employees, consultants and scientific advisors.

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      We have obtained patents for erlotinib, the API for Tarceva, in the United States, Europe, Japan, and over 30 other countries. These patents expire in the major commercial markets in 2015. We are pursuing extensions of the patent term or of the data exclusivity term in the countries where such extensions are available. Significantly, we filed for a patent extension that we anticipate will extend our U.S. patent for erlotinib to November 2018. We also are currently pursuing United States and international patents for various other formulations of erlotinib and related intermediate chemicals and processes in an effort to enhance our intellectual property rights in this compound. We have obtained a patent covering key polymorphic forms of Tarceva in the United States, which we anticipate will provide us with added patent exclusivity for erlotinib through 2020. We are also currently seeking patent protection for additional methods of use for Tarceva, including the use of Tarceva in combination with other compounds.

      We have filed a number of U.S. and international patent applications relating to the OSI-930, OSI-817 and OSI-906 compounds, each of which we are developing as potential treatments for cancer. We received approval for a U.S. patent which protects the OSI-930 compound and method of use until 2024.

      In the ophthalmology arena, we license exclusively a patent portfolio from Gilead related to Macugen which includes issued patents in the United States, Europe, Japan and six other countries. These patents expire between 2010 and 2017. We are pursuing extensions of the patent term or of the data exclusivity term in the countries where such extensions are available. We also license exclusively and non-exclusively from Nektar patents related to the pegylation reagent, and license non-exclusively from Isis patents related to oligonucleotide modifications, of the Macugen API. We are currently seeking U.S. and international patents for additional formulations and methods of use for Macugen, including a sustained release formulation of Macugen.

      We license exclusively a patent portfolio related to E10030, an anti-PDGF aptamer, under our collaboration agreement with Archemix Corp. This patent portfolio includes patents which have issued in the United States and patent applications which are pending in Europe, Japan, Canada and Australia. We are also seeking U.S. and international patents for anti-VEGF/anti-PDGF combination therapies.

      We have obtained patents for PSN9301 in the United States, Europe and six other countries. Corresponding patent applications are pending in Japan and 11 other countries. These patents will expire in 2019 with the possibility for patent term extensions of up to five years. We have received an indication of allowance for a patent on the specific salt form of PSN9301 in the United States and in Europe. Corresponding patent applications are pending in Japan and 21 other countries. These patents expire in 2022 and there may be the possibility for patent term extension in some of these countries. We are also pursuing patent applications for the use of PSN9301 in combination with other antidiabetic agents, such as metformin, and processes used in its manufacture. Uses of PSN9301 are also protected by our DPIV medical use patent estate referred to below.

      Patents for PSN357, an inhibitor of glycogen phosphorylase with potential for the treatment of type 2 diabetes, are pending in the United States, Europe, Japan and 18 other countries. These patents will expire in 2024 with the possibility for patent term extensions of up to five years. We are also pursuing patents for a specific salt form of PSN357.

      Patents for PSN010, a glucokinase activator with potential for the treatment of type 2 diabetes, are pending in the United States, Europe, Japan and 30 other countries. These patents will expire in 2024 with the possibility for patent term extensions of up to five years. We are also pursuing patents to further methods of manufacture for PSN010 and intermediates.

      The DPIV technology we acquired from Probiodrug included a portfolio of medical use patents. This portfolio contained a number of patent families comprising issued and pending patents and patent applications with claims covering DPIV as a target for anti-diabetes therapy and related indications. We also have licensed sub-licensable rights to patents and patent applications claiming combinations of DPIV inhibitors with other oral anti-diabetes drugs such as metformin. Merck and Novartis are non-

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exclusive licensees under these medical use patents, together with four other major pharmaceutical companies. We are entitled to future potential milestones and royalties arising from the licenses under this patent portfolio. Patents which are the subject of these licenses will expire between 2017 and 2023. The earliest of these patents, which claims the use of DPIV inhibitors for lowering blood glucose levels, was revoked by the European Patent Office in May 2004, and is being opposed in the German and Australian patent offices. We are currently appealing the revocation of our patent by the European Patent Office, which has the effect of suspending the revocation of the patent until the appeal is decided. No date has yet been set for the hearing of the appeal proceedings. In Germany and Australia the proceedings are still at an early stage and no dates have yet been set for a hearing on substantive issues. If we are unsuccessful in defending these oppositions and the patents are revoked in one or more of these countries without the further possibility of appeal, this will potentially reduce the royalty revenue we derive from the non-exclusive licenses we have granted under these patents in those territories where the patent or patents are revoked.

      We have assembled a strong gene transcription patent portfolio which we have non-exclusively out-licensed to a number of pharmaceutical companies. We also have non-exclusive licenses from Cadus Pharmaceutical Corporation, or Cadus, consisting of seven U.S. patents and additional U.S. and foreign applications, and Wyeth, consisting of four U.S. patents and additional foreign applications, to a portfolio of patents and applications covering yeast cells engineered to express heterologous GPCRs and G-protein polypeptides, methods of use thereof in screening assays, and DNAs encoding biologically active yeast-mammalian hybrid GPCRs.

Our Integration of Eyetech

      On November 14, 2005, we completed our acquisition of Eyetech. One of the factors in our decision to acquire Eyetech was our belief that we could create significant efficiencies and cost savings by leveraging our existing research and development core capabilities and our operating infrastructure across a new business area, ophthalmology. These anticipated cost savings included a lower level of allocated costs for our core research, pharmaceutical development and technical operations services, as such costs would be shared by three rather than two disease areas, and a reduction in the cost of running the Eyetech business as it would no longer incur the general and administrative costs of a public company.

      On November 21, 2005, we announced our targeted plan to integrate Eyetech’s operations into our business in an efficient and cost effective manner. Under this plan, our Eyetech facilities located in Lexington Massachusetts and Boulder Colorado will be closed before the end of 2006, and our New York, New York facility has been consolidated. The unused portion of our New York facility has already been closed and sublet for a complete offset against our lease carrying costs. We have entered into a letter of intent with a third party to transfer assets and leases from our Eyetech facility in Boulder. In addition, since the date of the acquisition, approximately 129 former Eyetech employees have been terminated or will be terminated by the end of 2006. In total, we estimate our efforts will result in approximately $29 million of annualized savings when compared with the original expected level of annualized spending by Eyetech as a public company.

Our Competition

      The pharmaceutical and biotechnology industries are very competitive. We face, and will continue to face, intense competition from large pharmaceutical companies, as well as from numerous smaller biotechnology companies and academic and research institutions. Our competitors are pursuing technologies that are similar to those that comprise our technology platforms and are pursuing pharmaceutical products or therapies that are directly competitive with ours. Many of these competitors have greater capital resources than we do, which provides them with potentially greater flexibility in the development and marketing of their products and has led us, in the case of both Tarceva and Macugen, to seek partnerships with leading biotechnology and pharmaceutical industry allies like Pfizer, Genentech and Roche, in order to ensure our competitiveness on a global basis.

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      The market for oncology products is very competitive, with several products currently in Phase III development. Most major pharmaceutical companies and many biotechnology companies, including our collaborators for Tarceva, Genentech and Roche, currently devote a portion or all of their operations to the research and development of new oncology drugs or additional indications for oncology drugs which are already marketed.

      The near term competition to Tarceva in the second and third line settings for the NSCLC indication includes existing chemotherapy options such as Alimta. A key factor for penetrating the second line setting is successfully convincing oncologists to switch from conventional chemotherapy to Tarceva and to employ Tarceva more extensively in the treatment of patients with good performance status prior to the use of second line chemotherapy agents. In addition, Genentech is currently testing its oncology product, Avastin, in combination with chemotherapy in first and second line NSCLC. If the combination of Avastin plus chemotherapy proves to be more efficacious than Tarceva as a single agent or Tarceva in combination with Avastin, the market share of Tarceva may be more limited. Other oncology drugs currently in clinical trials for treatment of NSCLC either as a single agent or in combination, such as Velcade^® (bortezomib), Erbitux^® (cetuximab) and panitumumab, are not expected to have a near term impact in 2006. However, if ongoing Phase III trials for Erbitux have exceptional activity, it could pose a serious competitive threat to Tarceva as early as 2007.

      In the pancreatic setting, Tarceva may experience competition from Avastin, Erbitux and Eloxatin^® (oxaliplatin injection) if ongoing studies for those drugs produce positive results. Additionally, Roche recently announced favorable results for its chemotherapy product, Xeloda^® (capecitabine), in pancreatic cancer in combination with gemcitabine. However, it is uncertain at this time whether Roche will seek approval in the United States for the use of Xeloda in this indication or, if it does seek registration, whether it will be successful in achieving approval.

      OSI-930 is in Phase I clinical trials. As it is a dual c-KIT/ KDR inhibitor, its potential commercial competitors could be Gleevec^® (imatinib mesylate), Sutent^® (sunitinib), and Nexavar^® (sorafenib tosylate), each of which is already in the market.

      We expect competition for Macugen to intensify in 2006, both in the market for the treatment of wet AMD, as well as for Macugen’s other potential indications. Genentech and Novartis are collaborating to develop Lucentis, an anti-VEGF humanized antibody fragment, for intravitreous injection. This product candidate may be viewed as particularly competitive with Macugen because of the similarity of its mechanism of action and favorable efficacy results recently announced from two Phase III clinical studies in the treatment of wet AMD. Genentech filed a BLA with the FDA in December of 2005 and announced that it has been granted priority review in February 2006. As a result, we anticipate that Lucentis may launch as early as July 2006. Genentech’s collaborator, Novartis, has also filed for approval of Lucentis as a treatment for wet AMD in the EU and Switzerland.

      The launch of Lucentis is likely to adversely impact the market share for Macugen in the near term. An additional Phase IIb study for Lucentis, known as the PIER study, is investigating an alternative dosing regimen for Lucentis consisting of three initial monthly injections followed by an injection once every three months. If this trial demonstrates the same or very similar efficacy to the monthly dosing frequency tested in the pivotal Lucentis trials, it would eliminate the current advantage Macugen enjoys over Lucentis in treatment frequency, as Macugen currently requires administration every six weeks versus every four weeks for Lucentis. Positive results from this study could also undermine our strategy to capitalize on Macugen’s established safety profile and to position Macugen as safe and effective in the chronic treatment of wet AMD.

      In addition, extensive off-label use of Genentech’s cancer product, Avastin, for the treatment of wet AMD has also been recently reported. Avastin is the full-length antibody from which the Lucentis product candidate is derived. Off-label systemic and more recently, widespread, intravitreous administration of Avastin is being utilized by clinicians for the treatment of patients with wet AMD, which we estimate accounts for up to 20% share of the patient treatments for wet AMD. To date, no formal, prospective clinical trials have been conducted with Avastin, and in December 2005 local Medicare

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carriers began to decline reimbursement for both Avastin and the injection procedure when used for this indication. In addition, while Macugen, Lucentis and Avastin all target VEGF, Macugen is a selective inhibitor of a single VEGF isoform, VEGF-165, the pathological isoform involved in wet AMD. For this reason, we believe Macugen may demonstrate a potentially superior safety profile than either of the pan-VEGF inhibitors, Lucentis and Avastin. We, together with Pfizer, plan to initiate trials, and retrospective studies are under way, both of which explore the ability of Macugen to sustain vision gains and preserve vision in sequential regimens combining Macugen with short-courses of a pan-VEGF therapy, either as an initial induction agent, or as a short-term adjunct to Macugen first-line therapy in patients with higher cardiovascular risk. These strategies offer the potential to both limit the competitive threat associated with the pan-VEGF therapies, and to optimize the risk/benefit in the chronic management of wet AMD patients. However, this strategy depends on a clear understanding by ophthalmologists and retinal specialists of a higher risk for either ocular or systemic adverse events related to pan-VEGF agents, as well as clinical data which continues to support a lower risk profile for Macugen.

      Macugen will also continue to face competition from the two current therapies for the treatment of wet AMD: (i) PDT with the drug Visudyne, commonly combined with off-label intravitreous injection of the corticosteroid, triamcinolone, and (ii) thermal laser treatment. In the United States, PDT is approved only for the predominantly classic subtype of wet AMD, which we estimate to currently represent approximately 18% of the patient market share for subfoveal wet AMD. In the United States, however, the Centers for Medicare & Medicaid Services, or CMS, implemented a decision in April 2004 to provide coverage for PDT to patients with wet AMD who have occult and minimally classic lesions that are four disc areas or less in size and show evidence of recent disease progression, even though the FDA has not approved PDT for such treatment.

      In the European Union, PDT was the only previously approved therapy for wet AMD. Macugen received European regulatory approval to treat wet AMD on February 2, 2006. We have provided Pfizer with an exclusive license to market Macugen in the EU and Pfizer plans to launch this product in the second quarter of 2006.

      Additional treatments for wet AMD and DME are in various stages of preclinical or clinical testing. If approved, these treatments would also compete with Macugen. Potential treatments in late stage clinical trials include drugs sponsored by Alcon, Inc., Allergan, Inc. through its acquisition of Oculex Pharmaceuticals, Inc., Eli Lilly and Company, Bausch & Lomb Incorporated, Regeneron Pharmaceuticals, Inc., Miravant Medical Technologies, and Genaera Corporation. Some of the sponsors of these potential products have announced favorable results from advanced clinical trials. Alcon has filed an NDA for Retaane^® (anecortave acetate) for the treatment of the predominantly classic form of wet AMD, and has initiated studies for the primary prevention of the progression of dry AMD to the neovascular form. Retaane was recently approved by the Australian regulatory authorities for the treatment of wet AMD. The current therapies for the treatment of DME are thermal laser treatment and steroid treatment administered via intravitreous injection, by physicians on an off-label basis. Unless additional therapies are approved, these existing therapies would represent the principal competition for Macugen in wet AMD and, if Macugen is approved for DME, in DME.

      Eli Lilly recently completed a Phase III clinical trial in which its investigational drug, ruboxistaurin mesylate (proposed brand name Arxxant) reduced the occurrence of moderate, sustained vision loss in patients with the non-neovascular form of diabetic retinopathy and has stated that it intends to submit a new drug application to the FDA in early 2006 for ruboxistaurin for the treatment of diabetic retinopathy. An ongoing clinical trial to determine the effect of ruboxistaurin on DME progression in patients with less severe diabetic retinopathy is expected to be completed in 2010. Other laser, surgical or pharmaceutical treatments for AMD and DME may also compete against Macugen in AMD and, if Macugen is approved for DME, in DME. Some physicians are currently using Avastin off-label to treat certain patients with DME who are unresponsive to thermal laser. This off-label use is occurring because of Avastin’s perceived efficacy in the treatment of DME and low acquisition cost, despite the fact that such treatment is generally not reimbursable by private insurers and local Medicare providers.

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A pilot study utilizing Lucentis in DME is also underway at the Wilmer Eye Institute at Johns Hopkins University. Competitive therapies may affect product pricing even if Macugen is otherwise viewed as a preferable therapy. Future competitive products may have superior efficacy, improved safety and convenience or reduced frequency of administration compared to Macugen.

      In the diabetes and obesity arena, a number of pharmaceutical and biotechnology companies are conducting clinical trials of potential drugs in the same areas as our drug discovery and development programs. We are aware of at least five competitors, Merck, Novartis, Bristol-Myers Squibb Company, or BMS, GlaxoSmithKline PLC, and Takeda Pharmaceutical Company Limited, or Takeda, with DPIV inhibitor clinical candidates for the treatment of diabetes. We believe that each of these potential drugs are at a more advanced stage of development than our clinical candidate, PSN9301. No DPIV inhibitors are currently marketed, although in February 2006 Merck announced that the FDA had accepted for review an NDA for Januvia, its DPIV inhibitor, and Novartis has indicated that it expects to file an NDA for its DPIV inhibitor, Galvus, in the first quarter of 2006. In the event that our competitors’ products reach the market earlier than PSN9301, we may be at a competitive disadvantage at the time, if ever, that we receive regulatory approval to commercialize PSN9301. We must therefore clearly distinguish the profile of PSN9301 from other DPIV inhibitors if we are to successfully compete in the marketplace with this product. Additionally, if scientific developments change our understanding of the product differentiation of PSN9301 from that of our competitors’ products, the competitive positioning and market potential of PSN9301 may be detrimentally affected. Our other clinical candidates for diabetes, a glycogen phosphorylase inhibitor, PSN357, and a glucokinase activator, PSN010 face competition from at least three competitors. Roche, Pfizer and Novo Nordisk A/ S, have, at various times, announced similar research and development activities.

Government Regulation

      We and our collaborative partners are subject to, and any potential products discovered and developed by us must comply with, comprehensive regulation by the FDA in the United States and by comparable authorities in other countries. These national agencies and other federal, state, and local entities regulate, among other things, the pre-clinical and clinical testing, safety, effectiveness, approval, manufacture, quality, labeling, distribution, marketing, export, storage, record keeping, advertising and promotion of pharmaceutical and diagnostic products.

      The process required by the FDA before a new drug (pharmaceutical product) or a new route of administration of a pharmaceutical product may be approved for marketing in the United States generally involves:

•  pre-clinical laboratory and animal tests;

•  submission to the FDA of an IND, which must be in effect before clinical trials may begin;

•  adequate and well-controlled human clinical trials to establish the safety and efficacy of the drug for its intended indication(s);

•  FDA compliance inspection and/or clearance of all manufacturers;

•  submission to the FDA of an NDA; and

•  FDA review of the NDA or product license application in order to determine, among other things, whether the drug is safe and effective for its intended uses.

FDA Approval Process

      FDA approval of our own and our collaborators’ products is required before the products may be commercialized in the United States. FDA approval of an NDA will be based, among other factors, on the comprehensive reporting of clinical data, risk/benefit analysis, animal studies and manufacturing processes and facilities. The process of obtaining NDA approvals from the FDA can be costly and time consuming and may be affected by unanticipated delays.

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      New indications or other changes to an already approved product also must be approved by the FDA. A supplemental new drug application, or sNDA, is a supplement to an existing NDA that provides for changes to the NDA and therefore requires FDA approval. Changes to the NDA that require FDA approval are the subject of either the active ingredients, the drug product and/or the labeling and include a new indication or changes to a manufacturing site or manufacturing process. A supplement is required to fully describe the change. There are two types of sNDAs depending on the content and extent of the change. These two types are (i) supplements requiring FDA approval before the change is made and (ii) supplements for changes that may be made before FDA approval. Supplements to the labeling that change the indication section require prior FDA approval before the change can be made to the labeling. Clinical trials are necessary to support sNDAs for new indications.

      Pre-clinical tests include laboratory evaluation of product chemistry and formulation, as well as animal studies, to assess the potential safety and efficacy of the product. Certain pre-clinical tests must comply with FDA regulations regarding current good laboratory practices. The results of the pre-clinical tests are submitted to the FDA as part of an IND to support human clinical trials and are reviewed by the FDA, with patient safety as the primary objective, prior to the commencement of human clinical trials.

      Clinical trials are conducted according to protocols that detail matters such as a description of the condition to be treated, the objectives of the study, a description of the patient population eligible for the study and the parameters to be used to monitor safety and efficacy. Each protocol must be submitted to the FDA as part of the IND. Protocols must be conducted in accordance with FDA regulations concerning good clinical practices to ensure the quality and integrity of clinical trial results and data. Failure to adhere to good clinical practices and the protocols may result in FDA rejection of clinical trial results and data, and may delay or prevent the FDA from approving the drug for commercial use.

      Clinical trials are typically conducted in three sequential Phases, which may overlap.

      During Phase I, when the drug is initially given to human subjects, the product is tested for safety, dosage tolerance, absorption, distribution, metabolism and excretion. Phase I studies are often conducted with healthy volunteers depending on the drug being tested; however, in oncology or other areas where the product may be too inherently toxic to ethically administer to healthy volunteers, Phase I trials are more often conducted in patients.

      Phase II involves studies in a limited patient population, typically patients with the conditions needing treatment, to:

•  evaluate preliminarily the efficacy of the product for specific, targeted indications;

•  determine dosage tolerance and optimal dosage; and

•  identify possible adverse effects and safety risks.

      Pivotal or Phase III adequate and well-controlled trials are undertaken in order to evaluate efficacy and safety in a comprehensive fashion within an expanded patient population for the purpose of registering the new drug.

      Success in early stage clinical trials does not assure success in later stage clinical trials. The FDA may suspend or terminate clinical trials at any point in this process if it concludes that patients are being exposed to an unacceptable health risk or if they decide it is unethical to continue the study.

      Results of pre-clinical and clinical trials, along with descriptions of the manufacturing process, analytical tests conducted on the chemistry of the drug, and results of chemical studies, must be submitted to the FDA as part of an NDA (or sNDA) requesting approval to market the product (or to market the product with the change requested). The FDA reviews all NDAs submitted before it accepts them for filing. It may request additional information rather than accept an NDA for filing. Once an NDA is accepted for filing, the FDA begins an in-depth review of the application. FDA approval of an NDA will

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be based, among other factors, on the comprehensive reporting of clinical data, risk/benefit analysis, animal studies and manufacturing processes and facilities. Data obtained from clinical activities are not always conclusive and may be susceptible to varying interpretations, which could delay, limit or prevent regulatory approval. The process of obtaining NDA approvals from the FDA can be costly and time consuming and may be affected by unanticipated delays. Even if a product receives regulatory approval, the approval may be significantly limited to specific diseases and dosages. Further, even after regulatory approval is obtained, later discovery of previously unknown problems with a product may result in restrictions on the product or even complete withdrawal of the product from the market.

      There is an NDA review process referred to as the Fast Track program which is designed to expedite the approval of new drugs that are intended to treat serious or life-threatening conditions and that demonstrate the potential to address unmet medical needs. Applicants that meet the relevant acceptance criteria may receive Fast Track designation. A clinical claim that has received Fast Track designation is eligible for consideration for certain programs, including the ability to schedule meetings to seek FDA input into development plans, and the option of submitting an NDA in sections on a rolling basis rather than submitting all components simultaneously.

      Both before and after market approval is obtained, a product, its manufacturer and the holder of the NDA for the product are subject to comprehensive regulatory oversight. Any drug products manufactured or distributed pursuant to FDA approvals are subject to continuing regulation by the FDA, including record-keeping requirements, reporting of adverse experiences with the drug, drug sampling and distribution requirements, notifying the FDA and gaining its approval of certain manufacturing or labeling changes, and complying with the FDA’s promotion and advertising requirements. The FDA may also impose certain post-marketing commitments as a condition of product approval, or Phase IV commitments. Phase IV studies are required at the time of approval and involve continued testing of a product and development of data, including clinical data, about the product’s effects in various populations and any side effects associated with long-term use.

      Manufacturing procedures must conform to current good manufacturing practices, which must be followed at all times. In complying with this requirement, manufacturers, including a drug sponsor’s third-party contract manufacturers, must continue to expend time, money and effort in the area of production, quality assurance and quality control to ensure compliance. Manufacturing establishments are subject to periodic inspections by the FDA in order to assess, among other things, compliance with current good manufacturing practices. To supply products for use in the United States, foreign manufacturing establishments also must comply with current good manufacturing practices and are subject to periodic inspection by the FDA or by regulatory authorities in certain countries under reciprocal agreements with the FDA.

      We are required to comply with requirements concerning advertising and promotional labeling. Our advertising and promotional labeling must be truthful and not misleading. We are prohibited from promoting any non-FDA approved or off-label indications of products. Failure to comply with this requirement could result in significant enforcement action by the FDA, including warning letters, orders to pull all promotional materials, and substantial fines. The Department of Justice may also pursue enforcement actions against off-label promotion which could result in criminal and/or civil fines, as well as other restrictions on the future sales of our products.

      We are also required to comply with post-approval safety and adverse event reporting requirements. Adverse events related to our products must be reported to the FDA according to regulatory timelines based on their severity and expectedness. Failure to make required safety reports and to establish and maintain related records could result in withdrawal of a marketing application.

      Violations of regulatory requirements at any stage, including after approval, may result in various adverse consequences, including the FDA’s delay in approving or refusal to approve a product, withdrawal of an approved product from the market and the imposition of criminal penalties against the manufacturer and NDA holder. In addition, later discovery of previously unknown problems may result in restrictions on the product, manufacturer or NDA holder, including withdrawal of the product from

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the market. Furthermore, new government requirements may be established that could delay or prevent regulatory approval of our products under development.

      Under the Drug Price Competition and Patent Term Restoration Act of 1984, also known as the Hatch-Waxman Act, Congress created an abbreviated FDA review process for generic versions of pioneer (brand name) drug products like Tarceva and Macugen. The law also provides incentives by awarding, in certain circumstances, non-patent marketing exclusivities to pioneer drug manufacturers. For example, the Hatch-Waxman Act provides five years of “new chemical entity” exclusivity to the first applicant to gain approval of an NDA for a product that does not contain an active ingredient found in any other approved product. Tarceva’s new chemical entity exclusivity expires on November 18, 2009. Macugen’s new chemical entity exclusivity expires December 17, 2009.

      During these respective periods of marketing exclusivity, the FDA is prohibited from accepting any abbreviated new drug application, or ANDA, for a generic version of Tarceva or Macugen. During these exclusivity periods, the FDA is also prohibited from accepting any NDA for a modified version of Tarceva or Macugen where the applicant does not own or have a legal right of reference to all of the data required for approval, otherwise known as a 505(b)(2) application.

      This exclusivity will not, however, prevent the submission or approval of a full NDA, as opposed to an ANDA or 505(b)(2) application. In addition, an ANDA or a 505(b)(2) application may be submitted after four years, rather than five years, if that ANDA or 505(b)(2) application contains a certification, or a Paragraph IV certification, that, in the opinion of the ANDA or 5059b0(2) applicant, the patents listed with the Tarceva or Macugen NDA are invalid or will not be infringed by the manufacture, use, or sale of the product described in that ANDA or 505(b)(2) application. With regard to Tarceva and Macugen, an ANDA or a 505(b)(2) application with a Paragraph IV certification could not be submitted until late 2008.

      The Hatch-Waxman Act also provides three years of new use exclusivity for applications containing the results of new clinical investigations (other than bioavailability studies) essential to the FDA’s approval of new indications, dosage forms, strengths, or conditions of use of approved products. Tarceva has received this new use exclusivity for its pancreatic cancer indication. However, this exclusivity will not prohibit the FDA from accepting or approving ANDAs or 505(b)(2) applications for other products containing the same active ingredient. It only protects against the approval of ANDAs and 505(b)(2) applications for the covered use of Tarceva.

      The Hatch-Waxman Act also requires an applicant that has submitted an ANDA or a 505(b)(2) application with a certification to notify the owner of each patent that is the subject of the Paragraph IV certification and the holder of the approved NDA of the factual and legal basis for the applicant’s opinion that that patent is invalid or will not be infringed by the manufacture, use, or sale of the proposed product. The NDA holder or patent owner may then sue such an applicant for infringement. If the NDA holder or patent owner files suit within 45 days of receiving notice of the certification, a one-time 30-month stay of the FDA’s ability to approve the application is triggered. However, the FDA may approve the application before the expiration of the 30-month stay if a court finds the patent invalid or not infringed. If a court finds the patent valid and infringed, the ANDA or 505(b)(2) application may not be made until the expiration of the patent. In addition, if the NDA holder or patent owner chooses not to sue such an applicant within the 45-day window, the FDA may approve the ANDA or 505(b)(2) application whenever all of the other requirements for approval are met.

      The FDA Modernization Act of 1997 included a pediatric exclusivity provision that was extended by the Best Pharmaceuticals for Children Act of 2002. Pediatric exclusivity is designed to provide an incentive to manufacturers to conduct research about the safety and effectiveness of their products in children. Pediatric exclusivity, if granted, provides an additional six months of market exclusivity in the United States for new or currently marketed drugs. Under Section 505a of the Federal Food, Drug, and Cosmetic Act, the extra six months of market exclusivity may be granted in exchange for the voluntary completion of pediatric studies in accordance with an FDA-issued “Written Request.” The FDA may issue a Written Request for studies on unapproved or approved indications, where it determines that information relating to the use of a drug in a pediatric population, or part of a pediatric population, may

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produce health benefits in that population. We have not received a Written Request for such pediatric studies for Tarceva, although we may ask the FDA to issue a Written Request for such studies in the future. To receive the six-month pediatric exclusivity, we would have to receive a Written Request from the FDA, conduct the requested studies, and submit reports of the studies in accordance with a written agreement or commonly accepted scientific principles. There is no guarantee that the FDA will issue a Written Request for such studies or accept the reports of the studies.

      Effective January 1, 2006, an expanded prescription drug benefit for all Medicare beneficiaries known as Medicare Part D commenced. This is a voluntary benefit that is being implemented through private plans under contractual arrangements with the federal government. Like pharmaceutical coverage through private health insurance, Part D plans establish formularies that govern the drugs and biologicals that will be offered and the out-of-pocket obligations for such products. Because this program has just commenced, it is difficult to predict its impact on our operations.

Pricing and Reimbursement.

      Insurance companies, health maintenance organizations, other third-party payors and federal and state governments seek to limit the amount we can charge for our drugs. Although there are currently no government price controls over private sector purchases in the United States, federal legislation requires pharmaceutical manufacturers to pay prescribed rebates on certain drugs to enable them to be eligible for reimbursement under certain public health care programs. Various states have adopted mechanisms under Medicaid and otherwise that seek to control drug prices, including by disfavoring certain higher priced drugs and by seeking supplemental rebates from manufacturers. In the absence of new government regulation, managed care has become a potent force in the market place that increases downward pressure on the prices of pharmaceutical products. New federal legislation, enacted in December 2003, has altered the way in which physician-administered drugs covered by Medicare are reimbursed, generally leading to lower reimbursement for physicians. As of January 1, 2005, physicians are reimbursed for physician-administered drugs, such as Macugen, based on the average sales price of the drug plus 6%. The average sales price is the average net price of a drug to all non-federal purchasers. Price discounts will affect the drug reimbursement rates. To date, we have not discounted the sale of Tarceva and Macugen to non-federal purchasers, other than routine prompt payment discounts, although there can be no assurances that market pressures will not require us to provide such discounts in the future.

      Regulatory approval of prices is required in most foreign countries as well. Certain countries will condition their approval of a product on the agreement of the seller not to sell that product for more than a certain price in that country and in the past have required price reductions after or in connection with product approval. Certain foreign countries also require that the price of an approved product be reduced after that product has been marketed for a period of time. Some European governments, notably Germany and Italy, have implemented, or are considering, legislation that would require pharmaceutical companies to sell their products subject to reimbursement at a mandatory discount. Such mandatory discounts would reduce the revenue we receive from our drug sales in these countries.

      We are also subject to various federal and state laws pertaining to health care “fraud and abuse,” including anti-kickback laws and false claims laws. Anti-kickback laws make it illegal for a prescription drug manufacturer to solicit, offer, receive, or pay any remuneration in exchange for, or to induce, the referral of business, including the purchase or prescription of a particular drug. Due to the breadth of the statutory provisions and the absence of guidance in the form of regulations and very few court decisions addressing industry practices, it is possible that our practices might be challenged under anti-kickback or similar laws. False claims laws prohibit anyone from knowingly and willingly presenting, or causing to be presented for payment to third party payors (including Medicare and Medicaid) claims for reimbursed drugs or services that are false or fraudulent, claims for items or services not provided as claimed, or claims for medically unnecessary items or services. Our activities relating to the sale and marketing of our products may be subject to scrutiny under these laws. Violations of fraud and abuse laws may be punishable by criminal and/or civil sanctions, including fines and civil monetary penalties,

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as well as the possibility of exclusion from federal health care programs (including Medicare and Medicaid). If the government were to allege or convict us of violating these laws, our business could be harmed. In addition, there is an ability for private individuals to bring similar actions. Our activities could be subject to challenge for the reasons discussed above and due to the broad scope of these laws and the increasing attention being given to them by law enforcement authorities. Further, there are an increasing number of state laws that require manufacturers to make reports to states on pricing and marketing information. Many of these laws contain ambiguities as to what is required to comply with the laws. Given the lack of clarity in laws and their implementation, our reporting actions could be subject to the penalty provisions of the pertinent state authorities.

Other Regulation.

      In addition to regulations enforced by the FDA, we must also comply with regulations under the Occupational Safety and Health Act, the Environmental Protection Act, the Toxic Substances Control Act, the Resource Conservation and Recovery Act and other federal, state and local regulations. For example, sales, marketing and scientific/educational grant programs must comply with the Medicare-Medicaid Anti-Fraud and Abuse Act, as amended, the False Claims Act, also as amended, the privacy provisions of the Health Insurance Portability and Accountability Act, and similar state laws. If products are made available to authorized users of the Federal Supply Schedule of the General Services administration, additional laws and requirements may apply. All of these activities are also potentially subject to federal and state consumer protection and unfair competition laws. In addition, our research and development activities involve the controlled use of hazardous materials, chemicals and various radioactive compounds the handling and disposal of which are governed by various state and federal regulations.

      In addition to regulations in the United States, we are subject to various foreign regulations governing clinical trials and the commercial sales and distribution of our products, including Tarceva and Macugen. We must obtain approval of a product by the comparable regulatory authorities of foreign countries before we can commence clinical trials or marketing of the product in those countries. The requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement and the regulatory approval process all vary greatly from country to country. Additionally, the time it takes to complete the approval process in foreign countries may be longer or shorter than that required for FDA approval. Foreign regulatory approvals of our products are necessary whether or not we obtain FDA approval for such products. Finally, before a new drug may be exported from the United States, it must either be approved for marketing in the United States or meet the requirements of exportation of an unapproved drug under Section 802 of the Export Reform and Enhancement Act or comply with FDA regulations pertaining to INDs.

      Under European Union regulatory systems, we are permitted to submit marketing authorizations under either a centralized or decentralized procedure. The centralized procedure provides for the grant of a single marketing authorization that is valid for all member states of the European Union. The decentralized procedure provides for mutual recognition of national approval decisions by permitting the holder of a national marketing authorization to submit an application to the remaining member states. Within 90 days of receiving the applications and assessment report, each member state must decide whether to recognize approval.

Our Employees

      We believe that our success is largely dependant upon our ability to attract and retain qualified employees. As of December 31, 2005, we had a total of 655 full time employees worldwide, excluding 79 former Eyetech employees who will be departing during 2006 as a result our integration plans following the acquisition of Eyetech. Of these 655 employees, 185 primarily are involved in research activities, 210 primarily are involved in development and manufacturing activities, 154 primarily are involved in the commercialization of our products, and 106 primarily are involved in executive and administrative functions. Within our executive and administrative group, 25% of the employees are

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assigned to our information management group, many directly working with our research and development groups, and 28% of the employees are assigned to maintain our facilities and/or are part of our safety group, with the remaining 47% of the employees assigned to our finance, human resources, legal and investor relations functions.

Change in Fiscal Year

      In December 2004, we changed our fiscal year end from September 30 to December 31. As a result, this Form 10-K covers the period from October 1, 2004 to December 31, 2005.

Available Information

      We file our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 electronically with the Securities and Exchange Commission, or SEC. The public may read or copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site is http://www.sec.gov.

      You may obtain a free copy of our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and amendments to those reports on the day of filing with the SEC on our website on the World Wide Web at http://www.osip.com or by contacting the Investor Relations Department at our corporate offices by calling (631) 962-2000 or sending an e-mail message to investorinfo@osip.com.

ITEM 1A. RISK FACTORS

      This report contains forward-looking statements that do not convey historical information, but relate to predicted or potential future events, such as statements of our plans, strategies and intentions, or our future performance or goals for our product development programs. These statements can often be identified by the use of forward-looking terminology such as “believe,” “expect,” “intend,” “may,” “will,” “should,” or “anticipate” or similar terminology. The statements involve risks and uncertainties and are based on various assumptions. Stockholders and prospective stockholders are cautioned that these statements are only projections. In addition, any forward-looking statement that we make is intended to speak only as of the date on which we made the statement. Except for our ongoing obligations to disclose material information under the federal securities laws, we will not update any forward-looking statement to reflect events or circumstances that occur after the date on which the statement is made. The following risks and uncertainties, among others, may cause our actual results to differ materially from those described in forward-looking statements made in this report or presented elsewhere by management from time to time.

Risks Related to Our Business

We have incurred losses since our inception, and we expect to incur losses over the near term, which may cause the value of our common stock to decrease.

      We have had net operating losses since our inception in 1983. We expect to continue to incur net operating losses in the near term as a result of our expenses for the continued research, development and commercialization of Tarceva, Macugen and our other pipeline products, as well as due to our general operating expenses. Although our goal is to reach profitability by the end of 2006, there can be no guarantee that we will achieve profitability in this time frame or remain profitable in subsequent periods. If we continue to incur net operating losses, the value of our common stock could decrease.

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We depend heavily on our two marketed products, Tarceva and Macugen to generate revenues in order to fund our operations and, to a lesser extent, potential upfront fees, milestones and royalties from the licensing of our DPIV patent estate.

      We currently derive, and are expected to continue to derive, substantially all of our revenues from our two marketed products, Tarceva and Macugen. We also have the potential to derive revenues from the milestone and royalty obligations under our license agreements for our DPIV patent portfolio, and from upfront, milestone and royalty obligation under any future licenses.

      Our ability to maintain or increase our revenues and overall market share for each of our two marketed products, together with Genentech and Roche, our partners for Tarceva, and Pfizer, our partner for Macugen, will depend on, and may be limited by, a number of factors, including the following:

For Tarceva:

•  We must successfully penetrate the market for second-line and third-line NSCLC and for first-line pancreatic cancer;

•  Physicians may be reluctant to switch from existing treatment methods, including traditional chemotherapy agents, to Tarceva;

•  The market for new oncology products is very competitive, with many products currently in Phase III development that could be competitive with Tarceva; and

•  We must be successful in our clinical trials in additional indications and in receiving approval from the FDA and our foreign counterparts to market and sell Tarceva in such additional indications.

For Macugen:

•  There must be continued acceptance of Macugen in the medical community by patients receiving therapy and by third party payors, including willingness of clinicians and patients to maintain continuous therapy at intervals of every six weeks;

•  Off-label use of unapproved agents for the treatment of wet AMD, such as Avastin, could continue to reduce Macugen’s share of the wet AMD market;

•  We must successfully compete with existing products for wet AMD and new products as they come to market, in particular, Lucentis, a clinical candidate currently in Phase III trials which we anticipate may be launched by Genentech as early as July 2006 and which will adversely impact our market share;

•  Macugen’s efficacy and safety profile must continue to be demonstrated in a broad patient population to be consistent with that shown in its clinical trials, and we must continue to receive positive data from ongoing clinical trials for Macugen;

•  Our ability to establish and demonstrate through clinical trials a new treatment paradigm that positions Macugen as safe and effective in the chronic management of wet AMD — both in sequential regimens, such as following induction therapy with pan-VEGF inhibitors such as Avastin or Lucentis, or PDT or steroids, or as first-line therapy in early-stage wet AMD; and

•  Continued future commercial success for Macugen will depend on our ability to expand the indications for which we can market Macugen.

      In addition to the factors above, information from our competitors or the academic community indicating that current products or new products are more effective than Tarceva or Macugen could, if and when it is generated, impede our market penetration or decrease our existing market share for these products. Our Tarceva and Macugen- derived revenues also would diminish if third-party payors,

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including private health coverage insurers and health maintenance organizations, do not provide adequate coverage or reimbursement for these products.

      Our ability to realize potential milestone and royalty payments from the licenses for our DPIV patent portfolio is dependent on the success of our licensees in developing and registering their DPIV inhibitors. For example, while Merck has filed an NDA for its DPIV inhibitor, Januvia, which filing triggered a milestone payment to us, it is possible that the product may not receive approval from the FDA, in which case we will not receive any royalty revenue.

If our competitors succeed in developing products and technologies that are more effective than our own, or if scientific developments change our understanding of the potential scope and utility of our products, then our products and technologies may be rendered less competitive.

      We face significant competition from industry participants that are pursuing products and technologies that are similar to those we are pursuing and who are developing pharmaceutical products that are competitive with our products and potential products. Some of our industry competitors have greater capital resources, larger overall research and development staffs and facilities, and a longer history in drug discovery and development, obtaining regulatory approval and pharmaceutical product manufacturing and marketing than we do. With these additional resources, our competitors may be able to respond to the rapid and significant technological changes in the biotechnology and pharmaceutical industries faster than we can. Our future success will depend in large part on our ability to maintain a competitive position with respect to these technologies. Rapid technological development, as well as new scientific developments, may result in our compounds, products or processes becoming obsolete before we can recover any of the expenses incurred to develop them.

      The market for new oncology products is very competitive, with many products currently in Phase III development. Most major pharmaceutical companies and many biotechnology companies, including our collaborators for Tarceva, Genentech and Roche, currently devote a portion or all of their operations to the research and development of new oncology drugs or additional indications for oncology drugs which are already marketed. In the second and third line settings for the NSCLC indication, Tarceva currently completes with existing chemotherapy options such as Alimta, and may compete in the future against a number of products in clinical trials, including Avastin. In the pancreatic setting, Tarceva may experience competition from a number of other drugs, including Avastin, Erbitux, Eloxatin and Xeloda. If ongoing Phase III clinical trials for Erbitux have exceptional activity, we would expect that Erbitux would pose a serious competitive threat to Tarceva in as early as 2007.

      Macugen competes against one FDA approved therapy for the treatment of wet AMD, Visudyne, a photodynamic therapy, in combination with thermal laser treatment. However, we believe Macugen faces its most significant competition from two pan-VEGF agents from Genentech: Avastin, and the clinical candidate Lucentis, an antibody fragment of Avastin. Genentech announced Phase III trial results for Lucentis which suggested that pan-VEGF agents may have better efficacy than Macugen. Genentech received priority review for Lucentis from the FDA in February 2006 for its BLA for Lucentis, and we anticipate that Lucentis may launch as early as July 2006, which will adversely impact the market share for Macugen. An additional clinical trial of Lucentis, known as the PIER study, is also underway. The purpose of the trial is to investigate an alternative, less intensive dosing regimen for Lucentis. If this trial demonstrates the same or very similar efficacy to the monthly dosing frequency tested in the pivotal Lucentis trials, it would eliminate the current advantage Macugen enjoys over Lucentis in treatment frequency, as Macugen currently requires administration every six weeks versus every four weeks for Lucentis. Positive results from this study could also undermine our strategy to capitalize on Macugen’s established safety profile and to position Macugen as safe and effective in the chronic treatment of wet AMD.

      The promising clinical date for Lucentis has also resulted in a significant number of ophthalmologists and retinal specialists engaging in the off-label use of the anti-cancer agent Avastin to treat wet

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AMD. We believe that the off-label use of Avastin has resulted, and may continue to result, in a reduction of Macugen’s share of the wet AMD market. We estimate that off-label Avastin use currently accounts for up to a 20% share of patient treatments for wet AMD. To date, no formal clinical trials have been conducted testing Avastin for the treatment of wet AMD. As a result, local Medicare carriers have been declining reimbursement for both Avastin and the injection procedure for the treatment of wet AMD. However, our revenues from Macugen would be adversely affected if the Medicare program, local Medicare carriers or fiscal intermediaries were to subsequently make a determination to reimburse Avastin for the treatment of wet AMD. Furthermore, if clinical trial data, when it becomes available, relating to Avastin treatment for wet AMD does not demonstrate the same or similar types of adverse events highlighted in the prescribing information for Avastin for the treatment of colorectal cancer, we will not be able to capitalize on the established safety profile for Macugen which is a key component of our strategy for stabilizing, maintaining, and ultimately growing Macugen’s share of the wet AMD market. Our inability to implement this strategy would have a negative impact on our results of operations and financial condition.

      In the event that Macugen is approved for the treatment of DME, it would compete against current treatments for DME, including off-label use of intravitreous Avastin, and potentially against a number of clinical trial candidates.

      We expect that our lead clinical candidate for the treatment of type 2 diabetes, PSN9301, will face competition from a number of drugs currently in clinical development. Treatments from Merck, Novartis and GlaxoSmithKline are at a more advanced stage of development than PSN9301 and Takeda, BMS and other pharmaceutical and biotechnology companies have development programs that are competitive with PSN9301.

We depend heavily on our co-development and marketing alliance with Genentech and Roche for Tarceva. If Genentech or Roche terminate these alliances, or are unable to meet their contractual obligations, it would negatively impact our revenues and harm our business.

      Tarceva is being developed and commercialized in an alliance under co-development and marketing agreements with Genentech and Roche. Genentech leads the marketing efforts in the United States and Roche markets the drug in the rest of the world. The OSI/ Genentech collaboration agreement continues until the date on which neither we nor Genentech are entitled to receive a share of the operating profits or losses on any products resulting from the collaboration, that is, until the date that we and Genentech mutually agree to terminate the collaboration or until either party exercises its early termination rights as described as follows. The OSI/ Genentech collaboration agreement is subject to early termination in the event of certain customary defaults, such as material breach of the agreement and bankruptcy. In addition, since January 8, 2003, Genentech has had the right to terminate the OSI/ Genentech collaboration agreement with six months’ prior written notice. The provisions of the amendment allowing us to co-promote are also subject to termination by Genentech upon a material breach of the amendment by us, which remains uncured, or upon a pattern of nonmaterial breaches which remain uncured.

      The OSI/ Roche agreement continues until the date on which we are no longer entitled to receive a royalty on products resulting from the development of Tarceva, that is, until the date of expiration or revocation or complete rejection of the last to expire patent covering Tarceva or, in countries where there is no valid patent covering Tarceva, on the tenth anniversary of the first commercial sale of Tarceva in that country. The OSI/ Roche agreement is subject to early termination in the event of certain customary defaults, such as material breach of the agreement and bankruptcy. In addition, since July 31, 2003, Roche has had the right to terminate the agreement on a country-by-country basis with six months’ prior written notice. We also currently have the right to terminate the agreement on a country-by-country basis if Roche has not launched or marketed a product in such country under certain circumstances.

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      If we do not maintain a successful collaborative alliance with Genentech and Roche for the co-development and commercialization of Tarceva, or if Genentech or Roche are unable to meet their contractual obligations, we may be forced to focus our efforts internally to further commercialize and develop Tarceva without the assistance of a marketing and promotion partner. This would require greater financial resources and would result in us incurring greater expenses and may cause a delay in market penetration while we expand our commercial operations or seek alternative collaborative partners.

We depend heavily on our collaboration with Pfizer for the continued development and commercialization of Macugen. Our relationship with Pfizer involves a complex sharing of control over decisions, responsibilities, and costs and benefits. Any loss of Pfizer as a collaborator, or any adverse development in the collaboration, could harm or cause a delay in the continued development and commercialization of Macugen.

      In December 2002, we entered into our collaboration with Pfizer to develop and commercialize Macugen for the prevention and treatment of diseases of the eye. The collaboration involves a complex sharing of control over decisions, responsibilities and costs and benefits. For example, with respect to the sharing of costs and benefits, Pfizer co-promotes Macugen with us in the United States and shares with us in gross profits and losses. Outside the United States, Pfizer will commercialize Macugen pursuant to an exclusive license and pay us a royalty on net sales.

      In addition, Pfizer generally is required to fund a majority of the ongoing development costs incurred pursuant to an agreed upon development plan. The collaboration is governed by a joint operating committee, consisting of an equal number of representatives of both Pfizer and us who control decisions and responsibilities. There are also subcommittees with equal representation from both parties that have responsibility over development, regulatory, manufacturing and commercialization matters.

      Ultimate decision-making authority is vested in us as to some matters and in Pfizer as to other matters. A third category of decisions requires the approval of both Pfizer and us. Outside the United States, ultimate decision-making authority as to most matters is vested in Pfizer. Pfizer may terminate the collaboration relationship without cause upon six to 12 months’ prior notice, depending on when such notice is given. In addition, until May 14, 2006, Pfizer has the contractual right, due to our acquisition of Eyetech, to terminate a regulatory services agreement and distribution agreement that were entered into at the time of the collaboration agreement. To date, Pfizer has not given notice that it intends to terminate any of these agreements. Any loss of Pfizer as a collaborator in the development or commercialization of Macugen, dispute over the terms of, or decisions regarding, the collaboration or other adverse development in our relationship with Pfizer could harm the continued development and commercialization of Macugen.

Our revenues from our DPIV patent portfolio licenses are contingent upon the ability of the licensees to successfully develop and commercialize their products which are the subject of these licenses.

      We have licensed our DPIV medical use patent portfolio to pharmaceutical companies developing DPIV inhibitor products and expect to receive milestones and royalties in relation to such products. The extent to which we receive revenue under such licenses depends on the progress and success of the licensees’ products. If any of our licensees terminate their DPIV inhibitor programs or do not seek, or fail to receive, regulatory approval for their DPIV inhibitor products, the revenues we receive from such licensees will be reduced.

Our outstanding indebtedness increased substantially with the issuance of our 3.25% convertible senior subordinated notes due 2023, or the 2023 Notes, and the 2025 Notes; we

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may not be able to make the required payments on any of these notes when due and therefore we may face liquidity problems.

      As a result of the issuance of our 2023 Notes and the 2025 Notes, our long-term debt was $265 million as of December 31, 2005. Our 2023 Notes and the 2025 Notes significantly increased our interest expense and related debt service costs. Interest on the 2023 Notes accrues at the rate of 3.25% per annum and interest on the 2025 Notes accrues at a rate of 2% per annum. This amounts to interest payments of $2.4 million due and payable semi-annually on March 8 and September 8 of each year on the outstanding amount of the 2023 Notes. In addition, interest payments of $2.3 million is due and payable semi-annually on June 15 and December 15 of each year on the outstanding amount of the 2025 Notes. Cumulative interest payments of $85.3 million are scheduled to be paid between September 8, 2006 and September 8, 2023 on the 2023 Notes and $46.0 million between June 15, 2006 and December 15, 2025 on the 2025 Notes.

      Our long-term debt may make it more difficult for us to obtain any necessary financing in the future for working capital, capital expenditures, debt service requirements or other purposes and make us more vulnerable in the event of a downturn in our business.

      We currently are not generating sufficient net cash flow in excess of our operating budget to satisfy the annual debt service payments on the 2023 Notes or the 2025 Notes. We may be required to borrow additional funds or sell additional equity to meet our obligations with respect to these notes in the future. If we are unable to satisfy these obligations or repay the 2023 Notes or the 2025 Notes, we will default on our 2023 Notes and the 2025 Notes.

Although we have clinical candidates in the pipeline for oncology, diabetes and obesity and ophthalmology, that appear to be promising at early stages of development, none of these potential products may reach the commercial market for a number of reasons.

      Successful research and development of pharmaceutical products is high risk. Most products and development candidates fail to reach the market. Our success depends on the discovery of new drugs that we can commercialize. Our pipeline for our oncology, diabetes and obesity, and ophthalmology clinical programs is at an early stage. Other than the development of Tarceva for additional indications, there is currently one oncology clinical candidate. This candidate, which is currently in Phase I trials, targets the co-inhibition of c-kit/VEGF receptor. Our lead clinical candidate for diabetes is PSN9301, a DPIV inhibitor that targets type 2 diabetes and is currently in Phase II clinical trials. We are also developing PSN357, a glycogen phosphorylase inhibitor currently in a Phase IIa clinical trial, and PSN010, a glucokinase activator, currently in a Phase I trial. In ophthalmology, we have an anti-PDGF aptamer in pre-clinical development for the treatment of wet AMD, in addition to DME and CRVO clinical programs for further development of Macugen for these indications. Given the early stage of each of these clinical candidates, there can be no assurance at this time that any of them will become a marketed drug.

      The clinical candidates in our pipeline may never reach the market for a number of reasons. They may be found ineffective or may cause harmful side-effects during preclinical testing or clinical trials or fail to receive necessary regulatory approvals. 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. We may find that certain products cannot be manufactured on a commercial scale and, therefore, they may not be economical to produce. Our products could also fail to achieve market acceptance or be precluded from commercialization by proprietary rights of third parties.

      We must provide the FDA and similar foreign regulatory authorities with preclinical and clinical data that demonstrate that our product candidates are safe and effective for each target indication before they can be approved for commercial distribution. The preclinical testing and clinical trials of any

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product candidates that we develop must comply with regulations by numerous federal, state and local government authorities in the United States, principally the FDA, and by similar agencies in other countries. Clinical development is a long, expensive and uncertain process and is subject to delays. We may encounter delays or rejections based on our inability to enroll or keep enrolled enough patients to complete our clinical trials, especially as new competitors are approved to enter into the market. Patient enrollment depends on many factors, including the size of the patient population, the nature of the trial protocol, the proximity of patients to clinical sites and the eligibility criteria for the trial. Although we have not to date experienced any significant delays in enrolling clinical trial patients for our ongoing clinical trials, delays in patient enrollment for future trials may result in increased costs and delays, which could have a harmful effect on our ability to develop products.

      A significant portion of the research that we are conducting involves new and unproven technologies. Research programs to identify disease targets and product candidates require substantial technical, financial and human resources whether or not we ultimately identify any candidates. Our research programs may initially show promise in identifying potential product candidates, yet fail to yield candidates for clinical development for a number of reasons, including difficulties in formulation which cannot be overcome, inadequate intellectual property protection and timing and competitive concerns.

If any of our current or future marketed products, including Tarceva or Macugen, were to become the subject of problems related to their efficacy, safety, or otherwise, or if new, more effective treatments were introduced into the market, our revenues from our marketed products could decrease.

      If Tarceva or Macugen or any of our other current or future marketed products become the subject of problems, including those related to, among others:

•  efficacy or safety concerns with the products, even if not justified;

•  unexpected side-effects;

•  regulatory proceedings subjecting the products to potential recall;

•  publicity affecting doctor prescription or patient use of the product;

•  pressure from competitive products; or

•  introduction of more effective treatments;

our revenues from such marketed products could decrease. For example, efficacy or safety concerns from time to time arise, whether or not justified, that could lead to additional safety warnings on the label or to the recall or withdrawal of such marketed products. In the event of a recall or withdrawal of Tarceva or Macugen, our revenues would decline significantly.

      In late 2005 and early 2006, reports of very infrequent but serious hypersensitivity reactions related to the administration of Macugen have led to changes in the approved label for Macugen in the United States and internationally. While these reports are rare, and their causal relationship to Macugen or other drugs and procedures co-administered with Macugen cannot be determined, the need for additional safety warnings or precautions may alter or delay regulatory decisions related to pending applications for approval to market Macugen in certain territories.

We are responsible for the manufacture and supply of Tarceva and Macugen in the United States. Because we have no commercial manufacturing facilities, we are dependent on two suppliers for the API for Tarceva, a single supplier for the tableting of Tarceva in the United States and third parties for the manufacture of Macugen. If any of these third parties fails to meet its obligations, our revenues from our marketed products could be negatively affected.

      We are responsible for manufacturing and supplying Tarceva in the United States under the terms of a Manufacturing and Supply Agreement entered into with Genentech in 2004. We rely on two third-

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party suppliers to manufacture erlotinib, the API for Tarceva. We also currently rely on a single manufacturer to formulate the Tarceva tablets. We are presently seeking another manufacturer to serve as a back-up provider of Tarceva tablets.

      We do not currently manufacture Macugen or any component of Macugen. We currently rely on separate single sources for the API used in Macugen, pegaptanib sodium, the fill and finish for the finished drug product, and the pegylation reagent. We are presently seeking another manufacturer to serve as a backup provider of API for Macugen.

      If our relationships with any of these manufacturers with respect to Tarceva and Macugen terminate or if these manufacturers are unable to meet their obligations, we would need to find other sources of supply. Such alternative sources of supply may be difficult to find on terms acceptable to us or in a timely manner, and, if found, would require FDA approval which could cause delays in the availability of erlotinib and ultimately Tarceva tablets, or pegaptanib sodium and ultimately Macugen, which, in turn, would negatively impact our revenues derived from Tarceva or Macugen.

A component of our business strategy is to enter into collaborations with third parties to develop and commercialize certain of our products when we believe that doing so will maximize product value. We may not be successful in establishing such collaborations, which could adversely affect our ability to develop and commercialize certain of our products.

      A component of our business strategy is to enter into collaborations with third party collaborators for the development and commercialization of certain of our product candidates, similar to our collaborations with Genentech and Roche for Tarceva and Pfizer for Macugen, when we believe that doing so will maximize the potential for the product. We face significant competition in seeking appropriate collaborators. Moreover, these collaboration arrangements are complex to negotiate and time consuming to document. We may not be successful in our efforts to establish additional collaborations or other alternative arrangements. If we are unable to reach agreements with suitable collaborators, we may fail to meet our business objectives for the affected product or program. The terms of any additional collaborations or other arrangements that we establish for our product candidates may not be as favorable to us than if we had pursued independent development and commercialization. Moreover, these collaborations or other arrangements may not be successful and the termination of these arrangements might adversely affect our ability to develop, commercialize and market certain of our products.

      The success of any of these potential collaboration arrangements will depend heavily on the efforts and activities of our future collaborators. Our collaborators will have significant discretion in determining the efforts and resources that they will apply to these collaborations. The risks that we face in connection with these collaborations include the following:

•  Our collaborators may develop and commercialize, either alone or with others, products and services that are similar to or competitive with the products that are the subject of our collaborations with them; 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.

Our reliance on third parties, such as clinical research organizations, or CROs, may result in delays in completing, or a failure to complete, clinical trials if they fail to perform under our agreements with them.

      In the course of product development, we engage CROs to conduct and manage clinical studies and to assist us in guiding our products through the FDA review and approval process. For example, we

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collaborated with the National Cancer Institute of Canada’s Clinical Trial Group based at Queens University, Ontario, in connection with our Tarceva Phase III trials. Because we have engaged and intend to continue to engage CROs to help us conduct our clinical studies and obtain market approval for our drug candidates, many important aspects of this process have been and will be out of our direct control. If the CROs fail to perform their obligations under our agreements with them or fail to perform their responsibilities with respect to clinical trials in a satisfactory manner, we may face delays in completing our clinical trials, as well as commercialization of our drug candidates. Furthermore, any loss or delay in obtaining contracts with such entities may also delay the completion of our clinical trials and the market approval of drug candidates.

Risks Relating to Regulatory Matters

The manufacture and packaging of pharmaceutical products such as Tarceva and 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 or their product development and commercialization efforts may be materially harmed.

      The manufacture and packaging of pharmaceutical products, such as Tarceva and Macugen and our future product candidates, are regulated by the FDA and similar foreign regulatory bodies and must be conducted in accordance with the FDA’s current good manufacturing practices and comparable requirements of foreign regulatory bodies. There are a limited number of manufacturers that operate under these current good manufacturing practices regulations who are both capable of manufacturing our products, and willing to do so. Our failure or the failure of our third party manufacturers to comply with applicable regulations, requirements, or guidelines could result in sanctions being imposed on us or them, including fines, injunctions, civil penalties, failure of regulatory authorities to grant marketing approval of our products, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect our business. We cannot be certain that we or our present or future suppliers will be able to comply with the pharmaceutical cGMP regulations or other FDA regulatory requirements. If we fail to meet our manufacturing obligations for Tarceva, our partner, Genentech, has the contractual right to take over the supply of Tarceva in the United States.

      Changes in the manufacturing process or procedure, including a change in the location where a product is manufactured or a change of a third party manufacturer, require prior FDA review and/or approval of the manufacturing process and procedures in accordance with the FDA’s current good manufacturing practices. This review may be costly and time consuming and could delay or prevent the launch of a product or the use of a facility to manufacture a product. In addition, if we elect to manufacture products at the facility of another third party, we will need to ensure that the new facility and the manufacturing process are in substantial compliance with good manufacturing practices. Any such change in facility would be subject to a pre-approval inspection by the FDA and the FDA would require us to demonstrate product comparability. Foreign regulatory agencies have similar requirements.

      Any prolonged interruption in the operations of our contractor’s manufacturing facilities could result in cancellations of shipments, loss of product in the process of being manufactured, or a shortfall or stock-out of available product inventory, any of which could have a material adverse impact on our business. A number of factors could cause prolonged interruptions in manufacturing.

      The FDA and similar foreign regulatory bodies may also implement new standards, or change their interpretation and enforcement of existing standards and requirements, for manufacture, packaging or testing of products at any time. If we are unable to comply, we may be subject to regulatory, civil actions or penalties which could significantly and adversely affect our business. For example, with regard to Macugen, as a result of a post-approval commitment to the FDA to improve the control and environment for our finished drug product, we may experience delays or challenges in meeting our

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regulatory commitment, or need to change the final presentation or packaging for Macugen. Such a change may lead to an increase in cost of goods.

If government agencies do not grant us or our collaborative partners required approvals for any of our potential products in a timely manner or at all, we or our collaborative partners will not be able to distribute or sell our products currently under development.

      All of our potential products must undergo extensive regulatory approval processes in the United States and other countries. These regulatory processes, which include preclinical testing and clinical trials of each compound to establish safety and efficacy, can take many years and require the expenditure of substantial resources. The FDA and the other regulatory agencies in additional markets which are material to us and our collaborative partners, including the EMEA and the Japanese Ministry of Health, may delay or deny the approval of our potential products. Although we have been successful in gaining regulatory approval for Tarceva and Macugen in the United States and our collaboration partners have gained approval for Tarceva and Macugen in Canada, the European Union and a number of other territories, there can be no guarantee of subsequent approvals either for Tarceva and Macugen in other territories or for other indications in the United States or for other products in the United States and other territories.

      Delays or rejections may be encountered during any stage of the regulatory process based upon the failure of the clinical data to demonstrate compliance with, or upon the failure of the product to meet, a regulatory agency’s requirements for safety, efficacy and quality. Any such delay could have a negative effect on our business. A drug candidate cannot be marketed in the United States until it has been approved by the FDA. Once approved, drugs, as well as their manufacturers, are subject to continuing and ongoing review, and discovery of previously unknown problems with these products or the failure to adhere to manufacturing or quality control requirements may result in restrictions on their distribution, sale or use, or their withdrawal from the market. The FDA also has the authority, when approving a product, to impose significant limitations on the product in the nature of warnings, precautions and contra-indications that could negatively affect the profitability of a drug. Failure to comply with a Phase IV commitment can lead to FDA action either to withdraw approval of a drug or to limit the scope of approval.

      Furthermore, once a drug is approved, it remains subject to ongoing FDA regulation. Approved drugs can only be marketed for the indications and claims approved by the FDA. If we fail to comply with the FDA regulations prohibiting promotion of off-label uses and the promotion of products for which marketing clearance has not been obtained, the FDA, or the Office of the Inspector General of the U.S. Department of Health and Human Services, or HHS, Department of Justice, or state Attorney Generals could bring an enforcement action against us that would inhibit our marketing capabilities as well as result in significant penalties. Additional post-approval regulation by FDA includes changes to the product label, new or revised regulatory requirements for manufacturing practices, written advisements to physicians or a product recall.

      The current regulatory framework could change or additional regulations could arise at any stage during our product development or marketing, which may affect our ability to obtain or maintain approval of our products or require us to make significant expenditures to obtain or maintain such approvals. The ability to market and sell a drug product outside of the United States is also subject to stringent and, in some cases, equally complex regulatory processes that vary depending on the jurisdiction.

Competitors could challenge our patents and file an ANDA or a 505(b)(2) new drug application for a generic or a modified version of Tarceva or Macugen and adversely affect their competitive position.

      Products approved for commercial marketing by the FDA are subject to the provisions of the Drug Price Competition and Patent Term Restoration Act of 1984, or “Hatch-Waxman Act.” The Hatch-

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Waxman Act provides companies with marketing exclusivity for varying time periods during which generic or modified versions of a drug may not be marketed and allows companies to apply to extend patent protection for up to five additional years. It also provides a means for approving generic versions of a drug once the marketing exclusivity period has ended and all relevant patents have expired. The period of exclusive marketing, however, may be shortened if a patent is successfully challenged and defeated. Competitors with a generic or a modified version of Tarceva or Macugen may attempt to file an ANDA or a 505(b)(2) NDA and challenge our patents and marketing exclusivity. Such applications would have to certify that the patents in the Tarceva or Macugen NDA are invalid or not infringed by the manufacture, use, or sale of the product described in that ANDA or 505(b)(2) application under the Hatch-Waxman Act, or a “Paragraph IV certification.” If successful, a competitor could come to market at an earlier time than expected. Since Tarceva and Macugen have five-year new chemical entity exclusivity, such a Paragraph IV challenge could not commence until at least late 2008. We can provide no assurances that we can prevail in a challenge or litigation related to our patents or exclusivity. Furthermore, regardless of the ultimate outcome of any litigation, the mere submission of such competitor application or the public announcement by a competitor that it intends to submit an application in the future may itself cause our stock price to decrease.

Some of our activities may subject us to risks under federal and state laws prohibiting “kickbacks” and false or fraudulent claims.

      We are subject to the provisions of a federal law commonly known as the Medicare/ Medicaid anti-kickback law, and several similar state laws, which prohibit payments intended to induce physicians or others either to purchase or arrange for or recommend the purchase of healthcare products or services. While the federal law applies only to products or services for which payment may be made by a federal healthcare program, state laws may apply regardless of whether federal funds may be involved. These laws constrain the sales, marketing and other promotional activities of manufacturers of drugs such as us, by limiting the kinds of financial arrangements, including sales programs, with hospitals, physicians, and other potential purchasers of drugs. Other federal and state laws generally prohibit individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payors that are false or fraudulent, or are for items or services that were not provided as claimed. Anti-kickback and false claims laws prescribe civil and criminal penalties for noncompliance that can be substantial, including the possibility of exclusion from federal healthcare programs (including Medicare and Medicaid).

      Pharmaceutical companies have been the target of lawsuits and investigations alleging violations of government regulation, including claims asserting violations of the federal False Claim Act, the federal anti-kickback statute, and other violations in connection with off-label promotion of products and Medicare and/or Medicaid reimbursement, or related to claims under state laws, including state anti-kickback and fraud laws. While we continually strive to comply with these complex requirements, interpretations of the applicability of these laws to marketing practices is ever evolving and even an unsuccessful challenge could cause adverse publicity and be costly to respond to, and thus could have a material adverse effect on our business, results of operations and financial condition.

If we do not receive adequate third-party reimbursement for the sales of our marketed products, we may not be able to sell such products on a profitable basis.

      Sales of our marketed products depend, in part, upon the extent to which the costs of our products are paid by health maintenance organizations, managed care, pharmacy benefit and similar reimbursement sources, or reimbursed by government health administration authorities, private health coverage insurers and other third-party payors. Such third-party payors continue to aggressively challenge the prices charged for healthcare products and services. Additionally, federal and state governments have prioritized the containment of healthcare costs, and drug prices have been targeted in this effort. If these organizations and third-party payors do not consider our products to be cost-effective, they may

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not reimburse providers of our products, or the level of reimbursement may not be sufficient to allow us to sell our products on a profitable basis.

      In some foreign countries, particularly Canada and the countries of the European Union, the pricing of prescription pharmaceuticals is subject to governmental control. In these countries, pricing negotiations with governmental authorities can take six to 12 months or longer after the receipt of regulatory marketing approval for a product. To obtain reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our products to other available therapies.

      Because most persons suffering from wet AMD are elderly, coverage for Macugen in the United States is primarily through the Medicare program. Although drugs that are not usually self-administered are ordinarily covered by Medicare, the Medicare program has taken the position that it can decide not to cover particular drugs if it determines that they are not “reasonable and necessary” for Medicare beneficiaries. Limitations on coverage could also be imposed at the local Medicare carrier level or by fiscal intermediaries. In February 2005, CMS, the agency that administers Medicare, determined that, effective January 1, 2005, Macugen’s Medicare reimbursement will be average sales price plus six percent. By February 28, 2005, Medicare carriers of all 50 states confirmed Macugen reimbursement, according to the FDA label, without restrictions. However, our revenues from Macugen could be significantly negatively affected if the Medicare program, local Medicare carriers or fiscal intermediaries were to subsequently make a determination to deny or limit the reimbursement of Macugen. Our revenues from Macugen also could be negatively affected if physicians are not reimbursed by Medicare for the cost of the procedure in which they administer Macugen on a basis satisfactory to the administering physicians. Also, if the local contractors that administer the Medicare program are slow to reimburse physicians for Macugen, the demand for Macugen may decrease and our revenues from Macugen could be negatively affected.

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 certain of our products, including Macugen, profitably.

      In both the United States and some non-U.S. jurisdictions, there have been a number of legislative and regulatory proposals to change the healthcare system in ways that could affect our ability to sell certain of our products, including Macugen, profitably. In the United States, new legislation may be proposed at the federal and state levels that would result in significant changes to the healthcare system, either nationally or at the state level. Effective January 2004, the MMA changed the methodology used to calculate reimbursement for drugs such as Macugen that are administered in physicians’ offices in a manner intended to reduce the amount that is subject to reimbursement. In addition, the legislation directs the Secretary of HHS to contract with procurement organizations to purchase physician-administered drugs from the manufacturers and to provide physicians with the option to obtain drugs through these organizations as an alternative to purchasing from the manufacturers, which some physicians may find advantageous. These changes may also cause private insurers to reduce the amounts that they will pay for physician-administered drugs. Our revenues from Macugen could be significantly negatively affected if, as a result of the Medicare prescription drug coverage legislation, reimbursement for Macugen were to be reduced and if this legislation affects the amounts that private insurers will pay.

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Risks Related to Intellectual Property and Legal Matters

If we or our collaborative partners are required to obtain licenses from third parties, our revenues and royalties on any commercialized products could be reduced.

      The development of some of our products may require the use of technology developed by third parties. The extent to which efforts by other researchers have resulted or will result in patents and the extent to which we or our collaborative partners are forced to obtain licenses from others, if available, on commercially reasonable terms is currently unknown. If we or our collaborative partners must obtain licenses from third parties, fees must be paid for such licenses, which would reduce the revenues and royalties we may receive on commercialized products.

If we cannot successfully protect, exploit or enforce our intellectual property rights, our ability to develop and commercialize our products will be severely limited.

      We hold numerous U.S. and foreign patents as well as trademarks and trade secrets; we also have many pending applications for additional patents. We intend to continue to seek patent protection for, or maintain as trade secrets, the potentially valuable intellectual property arising from our research and development activities, including commercially promising product candidates that we have discovered, developed or acquired. Our success depends, in part, on our ability and our collaborative partners’ ability to obtain and maintain patent protection for new product candidates, maintain trade secret protection and operate without infringing the valid and enforceable proprietary rights of third parties. As with most biotechnology and pharmaceutical companies, our patent position is highly uncertain and involves complex legal and factual questions. Without patent and other similar protection, other companies could offer the same or substantially identical products for sale without incurring the sizeable discovery and development costs that we have incurred. Our ability to recover these expenditures and realize profits upon the sale of products could be diminished. The process of obtaining patents can be time-consuming and expensive with no certainty of success. Even if we spend the necessary time and money, a patent may not issue or it may insufficiently protect the technology it was intended to protect. Even if issued, such issuance is not conclusive as to a patent’s validity or its enforceability. Patents may be challenged, narrowed, invalidated or circumvented, which could limit our ability to prevent or stop competitors from marketing similar products or limit the length of term of patent protection we may have for our products. For example, our patent which claims the use of DPIV inhibitors for lowering blood glucose levels was revoked by the European Patent Office in May 2004, and is being opposed in the German and Australian patent offices. Although we are currently challenging the revocation of our patent by the European Patent Office and the proceedings in Germany and Australia are at an early stage, if we are unsuccessful in defending these oppositions and the patent is revoked without possibility of appeal, this will potentially reduce the royalty revenue we derive from the non-exclusive licenses we have granted under the revoked patent in these territories where the patent is revoked.

      We can never be certain that we were first to develop the technology or that we were first to file a patent application for the particular technology because most U.S. patent applications are confidential until a patent publishes or issues, and publications in the scientific or patent literature lag behind actual discoveries. If our pending patent applications are not approved for any reason or if we are unable to receive patent protection for additional proprietary technologies that we develop, the degree of future protection for our proprietary rights will remain uncertain. Third parties may independently develop similar or alternative technologies, duplicate some or all of our technologies, design around our patented technologies or challenge our pending or issued patents. Furthermore, the laws of foreign countries may not protect our intellectual property rights effectively or to the same extent as the laws of the United States. In addition, some countries do not offer patent protection for certain biotechnology-related inventions. If our intellectual property rights are not adequately protected, we may not be able to commercialize our technologies, products or services and our competitors could commercialize

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our technologies, which could result in a decrease in our sales and market share that would harm our business and operating results.

      We are also party to a number of licenses that give us rights to third-party intellectual property that is necessary or useful to our business. Our success will depend in part on the ability of our licensors to obtain, maintain and enforce our licensed intellectual property, in particular, those patents to which we have secured exclusive rights. Our licensors may not successfully prosecute the patent applications to which we have licenses. Even if patents issue in respect of these patent applications, our licensors may fail to maintain these patents, may determine not to pursue litigation against other companies that are infringing these patents, or may pursue such litigation less aggressively than we would. Without protection for the intellectual property we license, other companies might to able to offer substantially identical products for sale, which could adversely affect our competitive business position and harm our business prospects.

If we are unable to protect the confidentiality of our proprietary information and know-how, the value of our technology and products could be negatively impacted.

      In addition to patented technology, we rely upon unpatented proprietary technology, trade secrets, processes, and know-how. We seek to protect this information in part by entering into confidentiality agreements with our employees, consultants and third parties. These agreements may be breached, and we may not have adequate remedies for any such breach. In addition, our trade secrets may otherwise become known or be independently developed by competitors.

The failure to prevail in litigation or the costs of litigation, including patent infringement claims, could harm our financial performance and business operations and could cause delays in product introductions.

      We are susceptible to litigation. For example, as a public company, we are subject to claims asserting violations of securities laws and derivative actions. In particular, we currently face a securities class action alleging violations of securities laws which are described in our filings with the SEC. In addition, as a biotechnology company, our processes and potential products may conflict with patents that have been or may be granted to competitors, academic institutions or others. We cannot ensure that our products or methods do not infringe upon the patents or other intellectual property rights of third parties. As the biotechnology and pharmaceutical industries expand and more patents are filed and issued, the risk increases that our patents or patent applications for our product candidates may give rise to a declaration of interference by the U.S. Patent and Trademark Office, or to administrative proceedings in foreign patent offices, or that our activities lead to claims of patent infringement by other companies, institutions or individuals. These entities or persons could bring legal proceedings against us seeking substantial damages or seeking to enjoin us from researching, developing, manufacturing or marketing our products, which could result in substantial costs and harm our reputation. If any of these actions are successful, we may not only be required to pay substantial damages for past use of the asserted intellectual property but we may also be required to cease the infringing activity or obtain the requisite licenses or rights to use the technology, that may not be available to us on acceptable terms, if at all. Litigation and other proceedings may also absorb significant management time.

      Litigation is inherently unpredictable and we may incur substantial expense in defending ourselves or asserting our rights in the litigation to which we are currently subject, or in new lawsuits or claims brought against us. Litigation can be expensive to defend, regardless of whether a claim has merit, and the defense of such actions may divert the attention of our management that would otherwise be engaged in running our business and utilize resources that would otherwise be used for the business. In the event of an adverse determination in a lawsuit or proceeding, or our failure to license essential technology, our sales could be harmed and/or our costs increase, which would harm our financial condition and our stock price may decline. While we currently maintain insurance that we believe is adequate, we are subject to the risk that our insurance will not be sufficient to cover claims.

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The use of any of our potential products in clinical trials and the sale of any approved products exposes us to liability claims.

      The nature of our business exposes us to potential liability risks inherent in the research, development, manufacturing and marketing of drug candidates and products. If any of our drug candidates in clinical trials or our marketed products harm people or allegedly harm people, we may be subject to costly and damaging product liability claims. Many patients who participate in clinical trials are already ill when they enter a trial. The waivers we obtain may not be enforceable and may not protect us from liability or the costs of product liability litigation. While we currently maintain product liability insurance that we believe is adequate, we are subject to the risk that our insurance will not be sufficient to cover claims. There is also a risk that adequate insurance coverage will not be available in the future on commercially reasonable terms, if at all. The successful assertion of an uninsured product liability or other claim against us could cause us to incur significant expenses to pay such a claim, could adversely affect our product development and could cause a decline in our product revenues. Even a successfully defended product liability claim could cause us to incur significant expenses to defend such a claim, could adversely affect our product development and could cause a decline in our product revenues.

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.

      We are party to a number of technology licenses that are important to our business and expect to enter into additional licenses in the future. For example, we hold licenses from Gilead, Nektar and Isis under patents relating to Macugen. These licenses impose various commercialization, milestone payment, royalty, insurance and other obligations on us. If we fail to comply with these obligations, the licensor may have the right to terminate the license, in which event we would not be able to market products that utilize the licensed technology, such as Macugen.

Risks Related to Our Common Stock

Our stock price remains highly volatile which could make it difficult for our stockholders to resell our common stock.

      If our stock price falls, our stockholders may not be able to sell their stock when desired or at desirable prices. When the stock prices of companies in the Nasdaq Biotechnology Index fall, our stock price will most likely fall as well. The stock price of biotechnology and pharmaceutical companies, including our stock price, has been volatile and may remain volatile for the foreseeable future. From January 1, 2004 through December 31, 2004, the range of the closing price of our common stock was between $29.81 and $91.10 and the range of the Nasdaq Biotechnology Index was between 622.19 and 845.11. From January 1, 2005 through December 31, 2005, the range of the closing price of our common stock was between $21.99 and $72.30, and the range of the Nasdaq Biotechnology Index was between 641.35 and 812.65. From January 1, 2006 through March 7, 2006, the range of the closing price of our common stock was between $26.97 and $32.62 and the range of the Nasdaq Biotechnology Index was between 800.97 and 874.18.

      The following factors, among others, some of which are beyond our control, may also cause our stock price to decline:

•  a decline in sales of our marketed products, including Tarceva and Macugen;

•  a decline in our business operating results or prospects;

•  announcement or launching of technological innovations or new therapeutic products by third parties;

•  positive clinical efficacy or safety results from our competitors’ products;

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•  public concern as to the safety of our products and potential products;

•  comments by securities analysts regarding us or our competitors and general market conditions;

•  future sales of substantial amounts of our common stock by us or existing stockholders;

•  negative developments concerning strategic alliance agreements;

•  changes in government regulation, including pricing controls, that impact our products;

•  negative or neutral clinical trial results;

•  delays with the FDA in the approval process for products and clinical candidates; and

•  developments in laws or regulations that impact our patent or other proprietary rights.

We have outstanding options, convertible debt, contingent value rights and warrants, the exercise, conversion or exchange of which could dilute stockholder value and cause our stock price to decline.

      We grant stock options to our employees and other individuals as part of our overall compensation plan which, upon vesting, are exercisable for common stock. In addition, we have issued convertible debt which may be converted into common stock and warrants which may be exercised for common stock as well as contingent value rights which, upon the occurrence of certain events, may be exchanged for common stock. We are not able to estimate when, if ever, the stock options or convertible debt will be exercised or converted into common stock or when, if ever, shares will be issued in connection with the contingent value rights or warrants, but any such conversion or issuance would almost certainly dilute stockholder value.

      Further, if some or all of such shares are registered and sold into the public market over a short time period, the price of our stock is likely to decline, as the market may not be able to absorb those shares at the prevailing market prices. This may also make it more difficult for us to sell equity securities in the future at a time and a price that we deem appropriate.

Our governance documents and state law provide certain anti-takeover measures which will discourage a third party from seeking to acquire us and may impede the ability of stockholders to remove and replace our board of directors and, therefore, our management.

      We have had a shareholder rights plan, commonly referred to as a “poison pill,” since January 1999. The purpose of the shareholder rights plan is to protect stockholders against unsolicited attempts to acquire control of us that do not offer a fair price to our stockholders as determined by our board of directors. Under the plan, the acquisition of 17.5% or more of our outstanding common stock by any person or group, unless approved by our board of directors, will trigger the right of our stockholders (other than the acquiror of 17.5% or more of our common stock) to acquire additional shares of our common stock, and, in certain cases, the stock of the potential acquiror, at a 50% discount to market price, thus significantly increasing the acquisition cost to a potential acquiror. The shareholder rights plan may have the effect of dissuading a potential hostile acquiror from making an offer for our common stock at a price that represents a premium to the then-current trading price. In addition, our certificate of incorporation and by-laws contain certain additional anti-takeover protective devices. For example,

•  no stockholder action may be taken without a meeting, without prior notice and without a vote; solicitations by consent are thus prohibited;

•  special meetings of stockholders may be called only by our board of directors, although the proxy statement for our annual meeting of stockholders will include a proposed amendment to our bylaws that, if adopted by our stockholders, would allow stockholders holding 20% of our outstanding shares to call a special meeting of stockholders upon 90 days prior written notice;

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•  nominations by stockholders of candidates for election to the board of directors at our annual meeting of stockholders must be made at least 45 days prior to the anniversary of the date on which we first mailed our proxy materials for the prior year’s annual meeting of stockholders; and

•  our board of directors has the authority, without further action by the stockholders, to fix the rights and preferences, and issue shares, of preferred stock. An issuance of preferred stock with dividend and liquidation rights senior to the common stock and convertible into a large number of shares of common stock could prevent a potential acquiror from gaining effective economic or voting control.

      Further, we are subject to Section 203 of the Delaware General Corporation Law which, subject to certain exceptions, restricts certain transactions and business combinations between a corporation and a stockholder owning 15% or more of the corporation’s outstanding voting stock for a period of three years from the date the stockholder becomes a 15% stockholder. In addition to discouraging a third party from acquiring control of us, the foregoing provisions could impair the ability of existing stockholders to remove and replace our management and/or our board of directors.

ITEM 1B. UNRESOLVED STAFF COMMENTS

      There are no unresolved staff comments.

ITEM 2. PROPERTIES

      The following is a summary of the principal facilities which we utilize in our operations:

      Melville, New York. On March 15, 2005, we purchased a facility located at 41 Pinelawn Road, Melville, New York, consisting of approximately 60,000 square feet. On March 6, 2006, we relocated our corporate headquarters from our leased premises at 58 South Service Road, Melville, New York to this new location. Our facility at 41 Pinelawn Road houses our principal executive, oncology, finance, legal and administrative offices. We are currently attempting to sublease our 58 South Service Road facility.

      New York, New York. We lease a facility at 3 Times Square, New York, New York, consisting of approximately 62,000 square feet. In March 2006, we subleased approximately 31,000 square feet of this facility to Bain & Co., Inc. Our 3 Times Square facility contains the commercial and development operations for our ophthalmology business.

      Farmingdale, New York. We lease a facility at One BioScience Park Drive, Farmingdale, New York, consisting of approximately 53,000 square feet. Our Farmingdale facility contains our drug discovery and pre-clinical laboratories for oncology.

      Cedar Knolls, New Jersey. We lease a facility at 140 Hanover Avenue, Cedar Knolls, New Jersey, consisting of approximately 25,000 square feet. Our Cedar Knolls facility contains our drug discovery and pre-clinical laboratories for ophthalmology.

      Boulder, Colorado. We occupy two facilities in Boulder, Colorado, which together house our clinical research, regulatory and drug development operations for oncology. The first facility we lease is located at 2860 Wilderness Place, and consists of approximately 60,000 square feet. The second facility we lease is located at 2970 Wilderness Place, and consists of approximately 31,000 square feet.

      Oxford, England. We lease a facility at Windrush Court, Watlington Road, Oxford, England, consisting of approximately 88,000 square feet. This facility houses our diabetes and obesity corporate, research and development operations, as well as certain oncology development operations.

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ITEM 3. LEGAL PROCEEDINGS

      On or about December 16, 2004, several purported shareholder class action lawsuits were filed in the United States District Court for the Eastern District of New York against us, certain of our current and former executive officers, and the members of our Board of Directors. The lawsuits were brought on behalf of those who purchased or otherwise acquired our common stock during certain periods in 2004, which periods differed in the various complaints. The Court has now appointed a lead plaintiff, and on February 17, 2006, the lead plaintiff filed a consolidated amended class action complaint seeking to represent a class of all persons who purchased or otherwise acquired our common stock during the period from April 26, 2004 through November 22, 2004. The consolidated complaint alleges that defendants made material misstatements and omissions concerning the survival benefit associated with our product, Tarceva and the size of the potential market of Tarceva upon FDA approval of the drug. It alleges violations of Sections 11, and 15 of the Securities Act of 1933, as amended, and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder. The consolidated complaint seeks unspecified compensatory damages and other relief. We intend to vigorously defend this action.

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

      There were no matters submitted to a vote of our security holders during the fourth quarter of fiscal 2005.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

      Our common stock is traded in the over-the-counter market and is included for quotation on the NASDAQ National Market under the symbol OSIP. The following is the range of high and low sales prices by quarter for our common stock from October 1, 2004 through December 31, 2005 as reported on the NASDAQ National Market:

	HIGH		LOW
2005 FISCAL YEAR
First Quarter	$	74.90	$	41.25
Second Quarter		50.20		34.57
Third Quarter		47.65		28.15
Fourth Quarter		30.35		20.81

THREE-MONTH TRANSITION PERIOD	HIGH		LOW
October 1, 2004 through December 31, 2004	$	74.95	$	44.34

	HIGH		LOW
2004 FISCAL YEAR
First Quarter	$	34.19	$	24.47
Second Quarter		43.26		29.41
Third Quarter		98.70		33.94
Fourth Quarter		70.41		50.71

Holders and Dividends

      As of March 7, 2006, there were approximately 3,097 holders of record of our common stock. We have not paid any cash dividends since inception and we do not intend to pay any cash dividends in the

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foreseeable future. Declaration of dividends will depend, among other things, upon future earnings, our operating and financial condition, our capital requirements and general business conditions.

Securities Authorized for Issuance Under Equity Compensation Plans

Equity Compensation Plan Information as of December 31, 2005

	Number of			Weighted-		Number of
	securities to be			average		securities
	issued upon			exercise price of		remaining available
	exercise of			outstanding		for future issuance
	outstanding			options,		under equity
	options, warrants			warrants and		compensation
Plan category	and rights			rights		plans
Equity compensation plans approved by security holders		5,870,561	(a)	$	36.03		2,184,546	(c)
Equity compensation plans not approved by security holders		1,050,924	(b)	$	30.96		—
Total		6,921,485		$	35.26		2,184,546

(a)	Consists of five plans: the 1989 Incentive and Non-Qualified Stock Option Plan, the 1993 Incentive and Non-Qualified Stock Option Plan, the 1997 Incentive and Non-Qualified Stock Option Plan, the 1999 Incentive and Non-Qualified Stock Option Plan, and the Amended and Restated Stock Incentive Plan.
(b)	In connection with the acquisition of certain oncology assets from Gilead on December 21, 2001, we adopted a Non-Qualified Stock Option Plan for Former Employees of Gilead Sciences, Inc. We granted ten-year options to purchase an aggregate of 693,582 shares of our common stock at a purchase price of $45.01 per share, which represented the fair value of our stock at the date granted. With respect to each option grant, one-third of the options vest on the first anniversary of the date of grant and the remainder vests ratably monthly thereafter for twenty-four months. In connection with the acquisition of Cadus, we adopted a Non-Qualified Stock Option Plan for Former Employees of Cadus Pharmaceutical Corporation. We granted ten-year options to purchase an aggregate of 415,000 shares of our common stock at a purchase price of $5.00 per share, which represented the fair value of our stock at the date granted. These options became exercisable on July 30, 2000, one year from the date of the grant. In connection with the acquisition of Eyetech, we adopted a Stock Incentive Plan for Pre-Merger Employees of Eyetech Pharmaceuticals, Inc. We granted seven-year options to purchase an aggregate of 625,810 shares of our common stock at a purchase price of $23.83, which represents the fair value of our stock at the date granted. With respect to each option grant, one-fourth of the options vest on the first anniversary and the remainder vest ratably monthly thereafter for 36 months. Also in connection with the acquisition of Eyetech, we assumed Eyetech’s 2001 Stock Plan and. To facilitate such assumption, we adopted the Stock Plan for Assumed Options of Pre-Merger Employees of Eyetech Pharmaceuticals, Inc. The number of shares subject to each assumed option was determined by dividing the assumed Eyetech per share option exercise price by the conversion ratio of 0.491 and rounding that result down to the nearest whole number for a total of 153,290 shares. The exercise price was determined by dividing the assumed Eyetech per share option exercise price by the conversion ratio of 0.491 and rounding up to the nearest whole cent. Includes options established for certain outside consultants related to clinical trial operations.
(c)	Consists of 704,551 shares reserved for issuance under the 1995 Employee Stock Purchase Plan, the stock purchase plan for employees of OSI-UK and the Amended and Restated Stock Purchase Plan for Non-Employee Directors and 1,479,995 shares reserved for issuance under the 1989 Incentive and Non-Qualified Stock Option Plan, the 1993 Incentive and Non-Qualified Stock Option Plan, the 1997 Incentive and Non-Qualified Stock Option Plan, 1999 Incentive and Non-Qualified Stock Option Plan, and the Amended and Restated Stock Incentive Plan.

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      We have a policy of rewarding employees who achieve 10, 15, and 20 years of continued service with OSI with 100, 150, and 200 shares, respectively, of our common stock. We grant such shares of common stock on an annual basis to those individuals who meet the stated requirements.

Purchases of Equity Securities

      On December 21, 2005, we issued $100 million aggregate principal amount of the 2025 Notes to UBS Securities, LLC, or UBS. In addition, on December 28, 2005, we issued an additional $15 million aggregate principal amount of the 2025 Notes pursuant to UBS’s exercise of its option to purchase an additional $15 million aggregate principal amount of the 2025 Notes. The following table summarizes our repurchase of common stock from UBS on December 21, 2005, in connection with our issuance of the 2025 Notes:

					Total Shares		Maximum Number
					Purchased as Part		of Shares That May
	Total Number of		Average Price Paid		of Publicly		Yet be Purchased
Period	Shares Purchased		Per Share		Announced Plans		Under the Plan
December 21, 2005		500,000	$	23.54		N/A		N/A

      In connection with the issuance of the 2025 Notes, we entered into call spread transactions with respect to our common stock with UBS AG, London Branch, an affiliate of UBS. These transactions are intended to reduce the potential dilution upon future conversion of the 2025 Notes. The call spread is a European type option with a lower strike price of $29.425 and an upper strike price of $40.00 and involves an aggregate of 3.4 million shares of our common stock and expires on December 15, 2010. This would have the impact of increasing the effective conversion price of the 2025 Notes from our perspective to $40.00 per share, representing a conversion premium of approximately 70% to the per share closing price on December 15, 2005.

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ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

      Subsequent to the end of our 2004 fiscal year, we changed our fiscal year end to December 31. On February 9, 2005, we filed a transition report on Form 10-QT for the three-month period ended December 31, 2004. The following table sets forth our selected consolidated financial data as of and for the year ended December 31, 2005, the three months ended December 31, 2004, and the years ended September 30, 2004, 2003, 2002 and 2001. The information below should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this report.

							Three
							Months
				Year Ended			Ended
				December 31,			December 31,			Years Ended September 30,
(In thousands, except per share data)				2005(a)			2004(b)			2004(c)			2003(d)			2002(e)			2001(f)
Consolidated Statement of Operations
	Data:
	Revenues			$	174,194		$	12,347		$	42,800		$	32,369		$	21,816		$	26,022
	Expenses:
		Cost of goods sold			18,882			(1,247	)		8,985			157			—			—
		Collaborative profit share			12,312			—			—			—			—			—
		Net expense from unconsolidated joint business			—			7,661			—			—			—			—
		Research and development			125,953			31,913			110,398			102,642			102,202			56,038
		Acquired in-process research and development			64,442			—			32,785			31,451			130,200			—
			Selling, general and administrative		98,393			20,313			98,909			70,532			28,146			16,033
		Impairment of intangible asset			—			—			24,599			—			—			—
		Amortization of intangibles			17,544			3,804			18,606			9,300			1,255			742
	Loss from operations				(163,332	)		(50,097	)		(251,482	)		(181,713	)		(239,987	)		(46,791	)
	Other income (expense) — net				6,209			1,702			(8,889	)		356			7,904			25,661
	Gain on sale of diagnostic business				—			—			—			—			1,000			—
	Gain on early retirement of convertible senior subordinated notes — net business				—			—			—			—			12,604			—
	Loss before cumulative effect of accounting change				(157,123	)		(48,395	)		(260,371	)		(181,357	)		(218,479	)		(21,130	)
	Cumulative effect of the change in accounting for the recognition of upfront fees				—			—			—			—			—			(2,625	)
	Net loss			$	(157,123	)	$	(48,395	)	$	(260,371	)	$	(181,357	)	$	(218,479	)	$	(23,755	)
	Basic and diluted net loss per common share:
	Loss before cumulative effect of change in accounting policy			$	(3.02	)	$	(1.02	)	$	(6.50	)	$	(4.87	)	$	(6.07	)	$	(0.62	)
	Cumulative effect of change in accounting policy				—			—			—			—			—		$	(0.08	)
	Net loss			$	(3.02	)	$	(1.02	)	$	(6.50	)	$	(4.87	)	$	(6.07	)	$	(0.70	)
	Weighted average number of shares of common stock outstanding				52,078			47,375			40,083			37,249			35,978			33,852

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		As of
		December 31,				As of September 30,
(In thousands, except per share data)		2005(a)		2004(b)		2004(c)		2003(d)		2002(e)		2001(f)
Consolidated Balance Sheet Data:
	Cash, cash equivalents and investment securities (unrestricted and restricted)	$	179,606	$	656,239	$	257,229	$	404,147	$	476,277	$	551,479
	Receivables		152,482		14,077		12,112		11,654		6,981		6,633
	Working capital		276,171		630,246		228,223		379,598		445,596		533,761
	Total assets		1,058,582		780,116		388,029		591,502		579,044		591,689
	Long-term liabilities		337,788		195,814		186,574		338,592		169,774		14,387
	Stockholders’ equity		578,466		539,390		154,233		218,057		379,108		549,831

(a)  The calendar 2005 consolidated financial statements include the acquisition of Eyetech for aggregate consideration of $909.3 million, including the cash consideration of $702.1 million ($430.2 million net of cash and investments acquired), the value of 5.6 million of OSI stock issued, value of converted stock options issued, and transaction related costs in November 2005; in-process research and development charge of $60.9 million related to the acquisition of Eyetech; in-process research and development charges of $3.5 million related to the acquisition of the minority interest in Prosidion; the issuance of $115.0 million aggregate principle of convertible notes in a private placement for net proceeds of $111.0 million of which approximately $24.0 million was used to purchase concurrently with the offering 500,000 shares of our common stock and a call spread option with respect to our common stock.

(b)  The three months ended December 31, 2004 includes the sale of 6.9 million shares of common stock for net proceeds of $419.9 million; net expense from unconsolidated joint business of $7.7 million related to our co-promotion and manufacturing agreements with Genentech for Tarceva and a net credit adjustment of $1.4 million to reduce a previously recorded provision for excess Gelclair inventory.

(c)  The fiscal 2004 consolidated financial statements include the acquisition of certain assets from Probiodrug for approximately $36.4 million in cash; the impairment of the Gelclair intangible asset of $24.6 million; the conversion of $160.0 million aggregate principle amount of convertible senior subordinated notes into 3.2 million shares of our common stock; the charge of $8.6 million relating to excess Gelclair inventory; and the recognition of $3.0 million of Tarceva related milestone revenues.

(d)

The fiscal 2003 consolidated financial statements include the acquisition of the marketing and promotion rights to Novantrone for approved oncology indications in the United States for approximately $45.0 million in cash; the acquisition of Cell Pathways for approximately $55.0 million in common stock, contingent value rights and cash; the issuance of $150.0 million of convertible senior subordinated notes for net proceeds of approximately $145.1 million and the purchase of 503,800 shares of our common stock for $19.0 million.

(e)

The fiscal 2002 consolidated financial statements include the acquisition of certain assets from Gilead for approximately $175.7 million in cash and common stock; the receipt of $4.5 million from the phase-down of our collaboration with Anaderm Research Corporation, of which $1.8 million was recognized as revenue in accordance with SAB No. 101; the issuance of $200.0 million of convertible senior subordinated notes for net proceeds of approximately $192.9 million; and the early retirement of $40.0 million aggregate principal amount of convertible senior subordinated notes resulting in a net gain of approximately $12.6 million.

(f)  The fiscal 2001 consolidated financial statements include a cumulative effect of the change in accounting principle of $2.6 million relating to the adoption of SAB No. 101; the acquisition of certain assets from British Biotech plc for $13.9 million; $25.0 million in upfront fees received upon the execution of collaboration agreements with Genentech and Roche; net proceeds of approximately $404.0 million from a public offering of common stock in November 2000; the sale of newly-issued shares of common stock to Genentech and Roche for an aggregate purchase price of $35.0 million each; and a charge to operations of $5.1 million for the estimated cost of closing our Birmingham, England and Tarrytown, New York facilities.

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

Overview

      We are a mid-cap biotechnology company committed to building a scientifically strong and financially successful top tier biopharmaceutical organization that discovers, develops and commercializes innovative molecular targeted therapies addressing major unmet medical needs in oncology, ophthalmology and diabetes.

      The launch in the United States in November 2004 of our flagship anti-cancer product, Tarceva (erlotinib), a small molecule inhibitor of the epidermal growth factor receptor, or HER1/ EGFR, represented a major milestone in the growth of our company. Tarceva was initially approved for the treatment of advanced non-small cell lung cancer, or NSCLC, patients who have failed at least one prior chemotherapy regimen and subsequently, in November 2005, for the treatment of patients with locally advanced and metastatic pancreatic cancer in combination with the chemotherapy agent, gemcitabine. Tarceva was also approved for sale in the European Union, or EU, for the treatment of NSCLC in September 2005. Tarceva was the most successful oncology drug launch in the United States in terms of number of patients treated during the first 12 months of launch, and had the fourth most successful oncology drug launch in terms of sales in the United States. Total U.S. net sales for Tarceva for 2005 were approximately $275 million and worldwide net sales (reflecting a late 2005 launch in the EU) were approximately $309 million.

      In 2005, we set out to define and execute a strategy that would allow us to build upon our initial success with Tarceva and establish a company capable of delivering long term, sustainable growth and value creation to our stockholders. We believe that in order to achieve this goal we need to:

•  Operate in two to three areas of attractive commercial potential that allow us to broadly leverage our core strengths in the discovery and development of novel molecular targeted therapies;

•  Continue to be a scientific innovator enabling us to deliver a novel and differentiated pipeline of products that represent major commercial opportunities by addressing significant unmet medical needs; and

•  Establish sustainable revenue growth allowing the significant reinvestment in research and development programs necessary for the creation of a strong portfolio while delivering the profitability and financial strength anticipated by many stockholders following Tarceva approval.

      The successful execution of this strategy also will allow us to mitigate the risks associated with dependence on a single product and a single disease area while continuing to build on our historical strengths in oncology and broader target-based drug discovery.

      We believe we now have established the strategic and operating framework from which to build a scientifically strong and financially successful biopharmaceutical company. Oncology, ophthalmology and diabetes represent three of the most attractive areas of commercial growth in the biotechnology/pharmaceutical industries. In Tarceva and Macugen we have two scientifically innovative products that are both in the early stages of their product life cycles and which, together with our partners (Genentech and Roche for Tarceva and Pfizer Inc. for Macugen), we believe we can grow into appreciable sources of ongoing revenue. Our emerging pipeline of products in oncology and back of the eye disease, along with our diabetes franchise (with three novel and differentiated agents in clinical development) represents an additional source of future value which, with our assembled research and development infrastructure and established team of scientists and clinicians, we believe we are well equipped to pursue. Our two high quality commercial organizations in the specialty areas of oncology

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and back of the eye disease give us the ability to add significant value to our partners’ efforts to commercialize Tarceva and Macugen in the United States and the future opportunity to commercialize our oncology and ophthalmology pipeline products in the U.S. market on our own. In addition, our patent portfolio around dipeptidyl peptidase IV, or DPIV, the target for our leading diabetes drug candidate, PSN9301, an oral small molecule inhibitor of DPIV, could generate a valuable nearer term flow of royalty revenues from first-in-class competitor products, one of which is currently under review at the U.S. Food and Drug Administration, or FDA, and is scheduled to come to market in the next nine to 12 months if approved, and one of which is scheduled for filing with the FDA in the first quarter of 2006.

      As we move forward our focus will be on executing the core elements of a business plan designed to draw out the growth and value that we believe to be inherent in the strategic framework that we have established. We are committed to achieving this in a disciplined manner and to balance all of our investments in the longer term against the need to deliver revenue growth and profitability for our stockholders in the nearer term.

      2006 will be an important year for us as we begin the transition to a profitable, biopharmaceutical company. Many companies have struggled with the challenge of balancing investment in research and development, or R&D, to create and develop a successful portfolio with the need to become a profitable enterprise. We recognize that this transition will be no less challenging for us. We have already assembled an innovative pipeline with six product candidates in various stages of clinical and pre-clinical development. If we are successful in developing these product candidates into commercial products, they may provide us with significant revenue streams and profitability beyond 2010. However, it will take a great deal of capital and financial resources over the next four to six years to bring these products to the market. In the past few years, we have primarily relied on the capital markets for the financial resources to fund our R&D. While we may continue to access the capital markets from time to time as needed, it is our intention to primarily rely on our ability to generate profits and related cash flows (including the cash flows from potential partnering activities) to fund future R&D.

      Our acquisition of Eyetech Pharmaceuticals, Inc. in November 2005, or the Eyetech Acquisition, was a core part of our strategy to develop into a financially and scientifically diversified biopharmaceutical company. Eyetech’s lead product, Macugen, was the first VEGF inhibitor approved by the FDA to treat age-related macular degeneration, or wet AMD, a disease which left untreated results in vision loss and blindness. In 2005, it achieved approximately $185 million of total U.S. net sales. Based on the sales trajectory in the fourth quarter of 2005 and coupled with the significant cost reductions we put into place in December 2005 after we acquired Eyetech, Macugen was anticipated to generate a significant level of cash flow in 2006, after considering the investment in ophthalmology related R&D and commercial costs. However, the competitive environment for Macugen is rapidly evolving and may be especially challenging in 2006. Macugen is facing serious competition from the off-label use of Avastin^® (bevacizunab) a biological product approved by the FDA to treat some forms of cancer. In addition, we anticipate that Lucentis^tm (ranibizumab), a key competitive agent from Genentech, may launch as early as July 2006, six months sooner that we had anticipated at the time of the Eyetech acquisition. We have developed a strategy that we believe effectively positions Macugen as a safe and effective agent that can be used as chronic maintenance therapy in the long-term treatment of wet AMD and in the primary treatment of patients with high cardiovascular risk. However there is considerable uncertainty in the rapidly changing wet AMD marketplace and this strategy may not be successful. If we are not successful, this will impact our ability to become profitable in 2006 and will also reduce our current level of capital resources.

Critical Accounting Policies

      We prepare our consolidated financial statements in accordance with U.S. generally accepted accounting principles. As such, we are required to make certain estimates, judgments and assumptions that we believe are reasonable based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities as of the date of the consolidated financial

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statements and the reported amounts of revenues and expenses during the periods presented. Actual results could differ significantly from our estimates and the estimated amounts could differ significantly under different assumptions and conditions. We believe that the following discussion addresses our most critical accounting policies, which are those that are most important to the portrayal of our financial condition and results of operations and which require our most difficult and subjective judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Note 1 to the accompanying consolidated financial statements includes a summary of the significant accounting policies used in the preparation of the consolidated financial statements.

Eyetech Purchase Accounting

      The purchase price related to the merger with Eyetech was allocated to tangible and identifiable intangible assets acquired and liabilities assumed based on the estimated fair market values as of the acquisition date. A third party valuation firm was engaged to assist in determining the fair values of in-process research and development, identifiable intangible assets, and certain property, plant and equipment, and in determining the useful lives of such tangible and identifiable intangible assets acquired. Such a valuation requires significant estimates and assumptions including but not limited to: determining the timing and expected costs to complete the in-process projects, determining the product life and term of estimated future cash flows, and developing appropriate costs, expenses, depreciation and amortization assumptions, tax rates, discount rates and probability rates by project. We believe the fair values assigned to the assets acquired and liabilities assumed are based on reasonable assumptions. These assumptions are based on the best available information that we had at the time. Additionally, certain estimates for the purchase price allocation including liabilities associated with restructuring activities may change as subsequent information becomes available.

     Revenue Recognition

Net revenues from unconsolidated joint business

      Net revenues from unconsolidated joint business are related to our co-promotion and manufacturing agreements with Genentech for Tarceva. It consists of our share of the pretax co-promotion profit generated from our co-promotion arrangement with Genentech for Tarceva, the partial reimbursement from Genentech of our sales and marketing costs related to Tarceva and the reimbursement from Genentech of our manufacturing costs related to Tarceva. Under the co-promotion arrangement, all U.S. sales of Tarceva and associated costs and expenses, except for a portion of our sales related costs, are recognized by Genentech. We record our 50% share of the co-promotion pretax profit on a quarterly basis, as set forth in our agreement with Genentech. Pretax co-promotion profit under the co-promotion arrangement is derived by calculating U.S. net sales of Tarceva to third-party customers and deducting costs of sales, distribution and selling and marketing expenses incurred by Genentech and us. The costs incurred during the respective periods represent estimated costs of both parties and are subject to further adjustment based on each party’s final review. Based on past experience, we do not believe that these adjustments, if any, will be significant to our consolidated financial statements. The partial reimbursement of sales and marketing costs related to Tarceva is recognized as revenue as the related costs are incurred. We defer the recognition of the reimbursement of our manufacturing costs related to Tarceva until the time Genentech ships the product to third-party customers at which time our risk of inventory loss no longer exists.

      Our revenue recognition policies for all nonrefundable upfront license fees and milestone arrangements are in accordance with the guidance provided in the Securities and Exchange Commission, or SEC, Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements,” as amended by SEC Staff Accounting Bulletin No. 104, “Revenue Recognition.” In addition, we follow the provisions of Emerging Issues Task Force Issue, or EITF, 00-21, “Revenue Arrangements with Multiple Deliverables” for multiple element revenue arrangements entered into or materially amended after June 30, 2003. As a result of an amendment to our collaboration agreement with Genentech in June 2004, milestone payments received from Genentech after June 2004 and the remaining portion of the

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unearned upfront fee are being recognized in accordance with EITF 00-21. Milestones received from Genentech after June 2004 and the remaining unearned upfront fee are being recognized over the term of our Manufacturing and Supply Agreement with Genentech, under which the last items of performance to be delivered to Genentech are set forth, on a straight line basis, which approximates the expected level of performance under the Manufacturing and Supply Agreement. In March 2005, we agreed to a further global development plan and budget with our partners, Genentech and Roche, for the continued development of Tarceva. For purposes of EITF 00-21, the revised development plan and budget for Tarceva was deemed a material amendment to our Roche agreement and therefore future milestones received from Roche will be recognized in accordance with EITF 00-21. Accordingly, future milestone payments received from Roche after March 2005 will be initially recorded as unearned revenue and recognized over the expected term of the research collaboration on a straight-line basis, which approximates the expected level of performance under the development plan.

Product Sales

      Product sales consists primarily of sales of Macugen, and to a lesser extent, Gelclair^®, a bioadherant oral gel for the relief of pain associated with oral mucositis in the United States and its territories. Macugen is sold primarily to distributors, who, in turn, sell to physicians, a limited number of specialty pharmacy providers and federal government buying groups. We recognize revenue from product sales when there is persuasive evidence of an arrangement, delivery has occurred, the price is fixed and determinable, the buyer is obligated to pay us, the obligation to pay is not contingent on resale of the product, the buyer has economic substance apart from us, we have no obligation to bring about sale of the product, the amount of returns can be reasonably estimated and collectibility is reasonably assured.

      Under an agreement with Pfizer dated February 2003, we share sales and marketing responsibility for sales of Macugen in the United States. We report product revenue on a gross basis for these sales. We have determined that we are qualified as a principal under the criteria set forth in EITF Issue 99-19, “Reporting Gross Revenue as a Principal vs. Net as an Agent,” based on our responsibilities under our contracts with Pfizer, which include manufacture of product for sale in the United States, distribution, ownership of product inventory and credit risk from customers.

      We record allowances for distribution fees, product returns and governmental rebates for all of our products sold in the United States (currently Macugen and Gelclair) at the time of sale, and report revenue net of such allowances. We must make significant judgments and estimates in determining these allowances. For instance:

•  Our distributors have a limited right of return for unopened product during a specified time period based on the product’s labeled expiration date. As a result, in calculating the allowance for product returns, we estimate the likelihood that product sold to distributors might be returned within a specific timeframe. We determine our estimates using actual product data from distributors, industry data on products with similar characteristics and the expiration dates of product sold.

•  Certain government buying groups that purchase our product from wholesalers have the right to receive a discounted price from us. As a result, we estimate the amount of product which will ultimately be sold to these buying groups. We determine our estimates using actual product data from distributors and historical industry trends.

      If actual results differ from our estimates, we will be required to make adjustments to these allowances in the future.

      We defer the recognition of revenue on product shipments of Gelclair to wholesale customers until such time as the product is sold from the wholesale customer to the retail and non-retail outlets. For each reporting period, we monitor shipments from wholesale customers to pharmacies and hospitals’ and wholesale customers’ reorder history based on data from an external third party.

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Collaborative revenue

      Collaborative program revenues represent funding arrangements for Macugen R&D with Pfizer and are recognized when earned in accordance with the terms of the contracts and related research and development activities undertaken.

      Based on the terms of our collaboration agreement with Pfizer Inc., revenues derived from reimbursements of costs associated with the development of Macugen are recorded in compliance with EITF Issue 99-19, “Reporting Revenue Gross as a Principal Versus Net as an Agent”, and EITF Issue 01-14, “Income Statement Characterization of Reimbursements Received For ’Out-of-Pocket’ Expenses Incurred.” According to the criteria established by these EITF Issues, in transactions where we act as a principal, with discretion to choose suppliers, bear credit risk and perform part of the services required in the transaction, we have met the criteria to record revenue for the gross amount of the reimbursements.

Sales commissions

      Sales commissions from Novantrone on net oncology sales are recognized in the period the sales occur based on the estimated split between oncology sales and multiple sclerosis sales, as determined on a quarterly basis by an external third party. The split between oncology and multiple sclerosis sales is subject to further adjustment based on the parties final review in the subsequent quarter. Based on past experience, we do not believe these adjustments, if any, will be significant to the consolidated financial statements.

Inventory

      Included in inventory are raw materials and work in process for Tarceva that may be used in the production of pre-clinical and clinical product, which will be expensed to research and development cost when consumed for these uses. Tarceva is stated at the lower of cost or market, with cost being determined using the weighted average method. Prior to receipt of FDA approval of Tarceva for commercial sale on November 18, 2004, we had expensed all costs associated with the production of Tarceva to research and development expense in our consolidated statements of operations. Effective November 18, 2004, we began to capitalize the costs of manufacturing Tarceva as inventory, including the costs to label, package and ship previously manufactured bulk inventory which costs had already been expensed as research and development.

      At December 31, 2005, the cost reflected in a portion of the finished goods inventory for Tarceva consisted solely of cost incurred to package and label work-in-process inventory that had been previously expensed. As we continue to process the inventory that was partially produced and expensed prior to November 18, 2004, we will continue to reflect in inventory only those incremental costs incurred to complete such inventory into finished goods.

      In November 2005, we recorded finished goods and work-in-process inventory that we acquired from Eyetech at estimated fair value. The estimated fair value was determined based on the estimated selling price of the inventory less costs of disposal and a reasonable selling profit to both complete and sell the product. The increase in fair value of the inventory of $55.3 million will be included in cost of goods when the acquired inventory is sold in the future.

      Macugen inventory is stated at the lower of cost or market, and our inventory costs are determined using the weighted average method. Inventory is comprised of three components: raw materials, which are purchased directly by us, work in process, which is primarily active pharmaceutical ingredient, or API, where title has transferred from our contract manufacturer to us, and finished goods, which is packaged product ready for commercial sale.

      Gelclair inventory is stated at the lower of cost or market, as determined using the first-in, first-out method. During the year ended September 30, 2004, we recorded a provision of $8.6 million for purchase commitments and excess inventory that we considered to be in excess of forecasted future

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demand based on the expiration date of the product on hand. In late October 2004, we exercised our right to terminate our distribution agreement with Helsinn for Gelclair. The termination was effective January 2005, however, we are continuing to sell off our remaining inventory per the agreement. During the three months ended December 31, 2004, we recorded an adjustment of $1.4 million to reduce the previously recorded provision for Gelclair inventory as a result of a settlement agreement with Helsinn.

     Accruals for Clinical Research Organization and Clinical Site Costs

      We make estimates of costs incurred to date but not yet invoiced in relation to external clinical research organizations, or CROs, and clinical site costs. We analyze the progress of clinical trials, including levels of patient enrollment, invoices received and contracted costs when evaluating the adequacy of the accrued liabilities. Significant judgments and estimates must be made and used in determining the accrued balance in any accounting period.

     Goodwill and Other Long-Lived Assets

      We account for goodwill and other intangible assets in accordance with Statements of Financial Accounting Standards, or SFAS No. 141, “Business Combinations” and SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 141 requires that the purchase method of accounting be used for all business combinations. It specifies the criteria which intangible assets acquired in a business combination must meet in order to be recognized and reported apart from goodwill. SFAS No. 142 requires that goodwill and intangible assets determined to have indefinite lives no longer be amortized but instead be tested for impairment at least annually and whenever events or circumstances occur that indicate impairment might have occurred. We completed our annual impairment review of goodwill at December 31, 2005, and determined that no impairment charge was required.

      Our identifiable intangible assets are subject to amortization. SFAS No. 142 requires that intangible assets with estimable useful lives be amortized over their respective estimated useful lives and reviewed for impairment in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” SFAS No. 144 requires, among other things, that long-lived assets be measured at the lower of carrying amount or fair value, less cost to sell, whether reported in continuing operations or in discontinued operations. We review our intangibles with determinable lives and other long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

      Our judgments regarding the existence of impairment indicators are based on historical and projected future operating results, changes in the manner of our use of the acquired assets or our overall business strategy, and market and economic trends. Our most significant intangible asset is for the acquired core and developed technology related to Macugen. We continually monitor sales activity and market and regulatory conditions for Macugen for the existence of any impairment indicators.

      In October 2004, we determined that it was necessary to record an impairment charge as of September 30, 2004 related to our intangible asset for exclusive distribution rights to the marketed product, Gelclair, in North America.

      In the future, events could cause us to conclude that impairment indicators exist and that certain other intangibles with determinable lives and other long-lived assets are impaired which may result in an adverse impact on our financial condition and results of operations.

Years Ended December 31, 2005 and 2004

      In December 2004, we changed our fiscal year end from September 30 to December 31. The first fiscal year (which will henceforth be the calendar year) affected by this change ended on December 31, 2005. Included in Item 8 of this annual report on Form 10-K, or the Form 10-K, are the consolidated balance sheets at December 31, 2005 and 2004 and the consolidated statements of operations,

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consolidated statements of stockholders’ equity and consolidated statements of cash flows for the year ended December 31, 2005, for the three-month transition period ending December 31, 2004, and for the years ended September 30, 2004 and 2003. In order to provide the reader meaningful comparison, the following analysis provides comparison of the audited year ended December 31, 2005 with the unaudited year ended December 31, 2004 derived from the results of operations of the last nine months of fiscal year ended September 30, 2004 and the transition quarter ended December 31, 2004 and the historical analysis for the years ended September 30, 2004 and 2003.

Results of Operations

      Our net losses for the years ended December 31, 2005 and 2004 were $157.1 million and $268.6 million, respectively. Our results of operations for the year ended December 31, 2005 include the results of operations of Eyetech for the period from November 14, 2005, the date of the acquisition, through December 31, 2005. On an overall basis, our net loss declined significantly in 2005 as we recognized the net profits from our Tarceva partnership with Genentech and royalties from international sales of Tarceva from Roche. The 2005 net loss included in-process R&D charges of $64.4 million in connection with the acquisition of Eyetech and the acquisition of the minority interest shares in Prosidion. The 2004 net loss included an in process R&D charge of $32.8 million for the acquisition of certain assets of Probiodrug AG by Prosidion, a charge of $24.6 million related to the impairment of the Gelclair intangible asset and a charge of $7.2 million for excess inventory.

Revenues

	Year Ended December 31,
	(in thousands)
	2005		2004		$ Change
Net revenue from unconsolidated joint business	$	84,727	$	—	$	84,727
Product sales		32,411		1,285		31,126
Royalties on product sales		7,127		—		7,127
Sales commissions		29,684		35,855		(6,171	)
License, milestone and other revenues		16,164		6,616		9,548
Collaborative program revenues		4,081		—		4,081
Total revenues	$	174,194	$	43,756	$	130,438

Net Revenue from Unconsolidated Joint Business

      Net revenue from unconsolidated joint business is related to our co-promotion and manufacturing agreements with Genentech for Tarceva. For the twelve months ended December 31, 2005, Genentech recorded $275 million in net sales of Tarceva in the United States and its territories. Our share of these net sales is reduced by the costs incurred for cost of goods sold and on the sales and marketing of the product. For the year ended December 31, 2005, we reported net revenues of $84.7 million from our unconsolidated joint business for Tarceva. The revenues from our unconsolidated joint business of $29.8 million for the quarter ended December 31, 2005 represents an increase of $8.4 million over the quarter ended September 30, 2005. We continue to be confident in the long-term prospects of Tarceva.

Product Sales

      Product sales for 2005 primarily consists of sales of Macugen, and, to a lesser extent, Gelclair, in the United States and its territories. For the twelve months ended December 31, 2005, Macugen net sales totaled $185 million. Net sales of Macugen from November 14, 2005, the date we acquired Eyetech, through December 31, 2005, totaled $31.5 million, and are included in product sales for the twelve months ended December 31, 2005. Net Macugen sales represents gross product revenue less

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distribution service fees and estimates for allowances and returns. At December 31, 2005, we estimate that our wholesale distribution network had approximately three weeks of Macugen supply on hand based on current product demand. Product sales also includes sales of Gelclair of $917,000 and $1.3 million for years ended December 31, 2005 and 2004, respectively.

Royalties on Product Sales

      We receive royalties on the sales of Tarceva and Macugen outside of the United States and its territories. In September 2005, Roche received approval from the European Commission for the sale of Tarceva in the EU for the treatment of patients with locally advanced or metastatic NSCLC. Tarceva was approved for this indication by the Swiss health authority, Swissmedic, in March 2005 and by Health Canada in July 2005. Our partner, Roche, began selling in Switzerland and Canada in March 2005 and July 2005, respectively. For the twelve months ended December 31, 2005, Roche recorded $34.0 million in net sales of Tarceva outside of the United States and its territories, of which we recorded $7.0 million in royalty revenues. Macugen royalties on rest of world sales were $141,000 from November 14, 2005, to December 31, 2005, and are included in royalties on product sales for the twelve months ended December 31, 2005. Macugen was approved for marketing and sale in the EU in February 2006 and we expect our partner, Pfizer, to launch Macugen in the EU in May 2006.

Sales Commissions

      Sales commissions represent commissions earned on the sales of Novantrone in the United States for oncology indications. Sales commissions for the years ended December 31, 2005 and 2004, were $29.7 million and $35.9 million, respectively. Sales commissions were lower compared to the prior year period and are expected to be significantly lower in 2006 as we approach patent expiration in April 2006. The expiration of a product patent normally results in a loss of market exclusivity for the covered pharmaceutical product; therefore, we expect a significant decrease in our commissions related to Novantrone as we approach patent expiration or shortly thereafter as a result of an expected decrease in oncology sales. We also believe that a worsening reimbursement environment under the Medicare Prescription Drug, Improvement and Modernization Act of 2003 may have contributed to the decrease in the current period.

License, Milestone and Other Revenues

      We recognized $16.2 million of license, milestone and other related revenues for the year ended December 31, 2005, of which $14.2 million related to upfront fees and milestone payments relating to worldwide non-exclusive license agreements entered into by Prosidion under our DPIV patent portfolio covering the use of DPIV inhibitors for treatment of type 2 diabetes and related indications. Also included in license and milestone revenues is the recognition of the ratable portion of the $25.0 million upfront fees from Genentech and the ratable portion of the $42.0 million of milestone payments received from Genentech and Roche to date in connection with various regulatory acceptances and approvals for Tarceva in the United States and Europe. These payments were initially deferred and are being recognized as revenue in accordance with EITF 00-21. The ratable portion of these upfront fees and milestone payments for the years ended December 31, 2005 and 2004 were $1.6 million and $6.3 million, respectively. The unrecognized deferred revenue related to these upfront fees and milestone payments received from Genentech and Roche was $42.0 million and $18.7 million as of December 31, 2005 and 2004, respectively.

      Upon regulatory approvals and filings subsequent to December 31, 2005, additional milestone payments will be due from Genentech, Roche and Pfizer. Future milestone payments will be due from Roche upon the successful approval of Tarceva in a second oncology indication in the EU. Additional milestone payments will be due from Genentech and Roche upon approval of adjuvant indications in the United States and Europe. Additional milestone payments will be paid by Roche upon registration of Tarceva in Japan. Milestone payments will be due from Pfizer based on the launch of Macugen in the EU and future approvals of Macugen for additional indications beyond the treatment of wet AMD. The

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ultimate receipt of these additional milestone payments is contingent upon the applicable regulatory approvals and other future events.

Collaborative Program Revenues

      Collaborative program revenues represents reimbursement of a portion of research and development costs for Macugen under our collaboration agreement with Pfizer for the period November 14, 2005 through December 31, 2005, and totaled $4.1 million.

Expenses

	Year Ended December 31,
	(in thousands)
	2005		2004		$ Change
Cost of goods sold	$	18,882	$	7,627	$	11,255
Collaborative profit share		12,312		—		12,312
Net expense from unconsolidated joint business		—		7,661		(7,661	)
Research and development		125,953		118,204		7,749
Acquired in-process research and development		64,442		32,785		31,657
Selling, general and administrative		98,393		98,403		(10	)
Impairment of intangible asset		—		24,599		(24,599	)
Amortization of intangibles		17,544		17,572		(28	)
	$	337,526	$	306,851	$	30,675

Cost of Goods Sold

      Total cost of goods sold for the years ended December 31, 2005 and 2004 were $18.9 million and $7.6 million, respectively. In 2005, cost of goods sold consisted of $14.0 million related to Macugen for the period between November 14, 2005 through December 31, 2005, $4.5 million related to Tarceva and $500,000 related to Gelclair. In 2004, cost of goods sold consisted of $11,000 related to Tarceva and $7.6 million related to Gelclair.

      In November 2005, in connection with the acquisition of Eyetech, we recorded the acquired Macugen inventory at its estimated fair value in accordance with SFAS No. 141, Business Combinations. Included in cost of product sales in 2005 was approximately $6.8 million of the step-up in fair market value from the purchase accounting adjustments. We expect that approximately $48.0 million in fair market value purchase accounting adjustments related to Macugen will be included in future cost of product sales. The increase to fair market value is being recognized as cost of product sales when the acquired inventory is sold.

      For the years ended December 31, 2005 and 2004, Tarceva cost of goods sold for manufacturing-related expenses associated with the sale of Tarceva to Genentech was $4.5 million and $11,000, respectively. Prior to receipt of approval of Tarceva for commercial sale on November 18, 2004, we had expensed all costs associated with the production of Tarceva to research and development. Effective November 18, 2004, we began to capitalize the costs of manufacturing Tarceva as inventory, including the costs to label, package and ship previously manufactured bulk inventory whose costs had already been expensed as research and development. Although it is our policy to state inventory reflecting full absorption costs until we sell all of our existing inventory for which all or a portion of the costs were previously expensed, certain components of inventory will continue to reflect costs incurred to process into finished goods previously expensed raw materials and work in process. We anticipate that our cost of goods will continue to increase through 2006 from quarter to quarter as we work through our previously expensed inventory and sales of Tarceva increase. Cost of goods sold for the year ended December 31, 2005 and the three months ended December 31, 2004 would have been $4.2 million and $364,000 higher, respectively, if the Tarceva inventory sold had reflected the full absorption

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manufacturing costs. The increased costs presented in this manner are more reflective of our cost of goods sold going forward.

      For the years ended December 31, 2005 and 2004, Gelclair cost of goods sold were $500,000 and $7.6 million, respectively. The decrease in cost of goods for the year ended December 31, 2005 compared to the prior year is primarily related to a provision of $7.2 million for Gelclair inventory that we deemed in excess of forecasted demand, based on the expiration date of the product.

Collaborative Profit Share

      Collaboration profit sharing represents Pfizer’s share of net product sales of Macugen less cost of goods sold within the United States for the period between November 14, 2005 and December 31, 2005. Under our agreements with Pfizer, we will share profits and losses from the commercialization of Macugen in the United States until the later of 15 years after commercial launch in the United States and the expiration of the Unites States patent rights for Macugen.

Net Expense from Unconsolidated Joint Business

      Net expense from unconsolidated joint business is related to our co-promotion and manufacturing agreements with Genentech for Tarceva. It consists of our share of the pretax co-promotion loss generated from our co-promotion arrangement with Genentech for Tarceva, the partial reimbursement from Genentech of our sales and marketing costs related to Tarceva, and the reimbursement from Genentech of our manufacturing costs related to Tarceva. For the period from the product launch on November 22, 2004, through December 31, 2004, Genentech recorded $13.3 million in net sales of Tarceva in the United States and its territories. The resulting net expense from unconsolidated joint business of $7.7 million was due to the significant costs we, along with Genentech, incurred on the sales and marketing of Tarceva during the period. In 2005, this joint business turned profitable, and is reflected in net revenue from unconsolidated joint business.

Research and Development

      We consider the active management and development of our clinical pipeline crucial to the long-term process of getting a clinical candidate approved by the regulatory authorities and brought to market. We manage our overall research, development and in-licensing efforts in a manner designed to generate a constant flow of clinical candidates into development to offset both the advancement of products to the market and the anticipated attrition rate of drug candidates that fail in clinical trials or are terminated for business reasons. The duration of each phase of clinical development and the probabilities of success for approval of drug candidates entering clinical development will be impacted by a variety of factors, including the quality of the molecule, the validity of the target and disease indication, early clinical data, investment in the program, competition and commercial viability. Because we manage our pipeline in a dynamic manner, it is difficult to give accurate guidance on the anticipated proportion of our research and development investments assigned to any one program prior to the Phase III stage of development, or to the future cash inflows from these programs. For the years ended December 31, 2005 and 2004, we invested a total of $48.3 million and $53.6 million, respectively, in research and $77.6 million and $64.6 million, respectively, in pre-clinical and clinical development. We consider this level of investment suitable for a company with our pipeline of clinical and pre-clinical candidates.

      Research and development expenses increased $7.7 million for the year ended December 31, 2005 compared to the year ended December 31, 2004. The increase was primarily due to $9.3 million of research and development expenses related to the programs we acquired from Eyetech on November 14, 2005. These expenses reflect the expenses incurred between November 14, 2005 and December 31, 2005. The increase is also associated with an increase in expenses related to our diabetes research, offset by a decrease in oncology expenses. Development costs associated with our diabetes pre-clinical and clinical pipeline, including PSN9301, PSN357, and PSN010, increased $20.7 million for

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the year ended December 31, 2005 over the prior year. In January 2005, we initiated a Phase II proof-of-concept and dose range finding study for our DPIV inhibitor, PSN9301. Offsetting this increase was a $19.7 million net decrease in our oncology research and development programs primarily associated with the decision to de-prioritize or cease development of our clinical candidates, OSI-7904L and OSI-461, and the consolidation of our U.K.-based oncology activities into our New York locations, and the $4.7 million of related realignment charges recorded in the year ended December 31, 2004.

      We manage the ongoing development program for Tarceva with our partners, Genentech and Roche, through a global development committee under a Tripartite Agreement among the parties. Together with our partners, we have implemented a broad-based global development strategy for Tarceva that implements simultaneous clinical programs currently designed to expand the number of approved indications of Tarceva and evaluate the use of Tarceva in new and/or novel combinations. Our global development plan has included major Phase III clinical trials in lung and pancreatic cancer in the past, and currently includes additional major Phase III clinical trials in lung cancer in the maintenance and adjuvant settings. Since 2001, the partners have committed approximately $600 million combined in the global development plan to be shared equally by the three parties. As of December 31, 2005, we have invested in excess of $141.0 million in the development of Tarceva, representing our share of the costs incurred to date in the tripartite global development plan and additional investments outside of the plan.

      We manage the ongoing development program for Macugen with Pfizer through a collaboration entered into in December 2002 whereby the parties jointly develop Macugen for the prevention and treatment of diseases. Our current development program includes major Phase III clinical trials in age-related macular degeneration and diabetic macular edema. For the period between November 14, 2005, the date of our Eyetech acquisition, and December 31, 2005, we have invested $9.3 million in the development of Macugen, of which $4.1 million has been reimbursed by Pfizer. Together with Pfizer, we have committed a combined $52 million in 2006 for the ongoing development of Macugen.

Acquired In-Process Research and Development

      In connection with the acquisition of Eyetech in November 2005, we recorded an in-process R&D charge of $60.9 million representing the estimated fair value of the acquired in-process technology that had not yet reached technological feasibility and had no alternative future use (see note 2(a) to the accompanying consolidated financial statements).

      We also recognized in-process R&D charges of $3.5 million in connection with the acquisition of the minority interest shares in Prosidion in calendar 2005, and $32.8 million in connection with the acquisition of Probiodrug in calendar 2004.

Selling, General and Administrative

      Selling, general and administrative expenses for the years ending December 31, 2005 and 2004 remained constant at $98.4 million. However, expenses increased by $9.2 million as a result of the Eyetech acquisition on November 14, 2005. These expenses reflect the expenses incurred between November 14, 2005 and December 31, 2005. This increase was primarily offset by our share of Genentech’s commercial expenses relating to Tarceva no longer being included in selling, general and administrative expense and now being included as part of the co-promotion profit and included in the calculation of net revenues from unconsolidated joint business in the accompanying consolidated statement of operations for the year ended December 31, 2005. The year ended December 31, 2005 also included a charge of $4.2 million for estimated facility lease return costs and the remaining rental obligations net of estimated sublease rental income for the unused portion of our Oxford facility resulting from the consolidation of our U.K.-based oncology operations. The year ended December 31, 2004 included a charge of $1.8 million for the remaining rental obligations net of estimated sublease rental income for our Horsham, Pennsylvania facility which we assumed as part of the Cell Pathways acquisition in June 2003.

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Impairment of Intangible Asset

      In connection with our acquisition of Cell Pathways, we assumed the exclusive rights to market and distribute Gelclair in North America. We recorded an identifiable intangible asset of $29.0 million which was being amortized over eight and a half years, representing the remaining term of the agreement. We assess the potential impairment of our long-lived asset under the provisions of SFAS No. 144. In performing the recoverability test prescribed by SFAS No. 144, we determined that the total of the expected future undiscounted cash flows directly related to the Gelclair asset was less than the carrying value of the Gelclair asset. As a result an impairment charge was required. The amount of the impairment charge represents the difference between the fair value of the intangible asset and its associated carrying value. We calculated the fair value of the intangible asset using discounted cash flows. The discounted cash flows calculation was made utilizing various assumptions and estimates regarding future revenues and expenses, cash flow and discount rates. Based on these calculations, we determined that an impairment charge of $24.6 million, which represented the full unamortized balance of the Gelclair intangible asset, was necessary as of September 30, 2004. The impairment charge resulted from both the discontinuance of discussions with a replacement dental partner and slower than originally expected sales growth in the oncology marketplace.

Amortization of Intangibles

      Amortization expense for the year ended December 31, 2005 and 2004 was $17.5 million and $17.6 million, respectively. In 2005, we recorded amortization expense of $2.3 million related to Macugen, and the related technology platform and patent estate of $201.4 million acquired in the Eyetech acquisition. The core technology is being amortized over the estimated useful life of 11 years. Amortization expense for our rights to Novantrone were $14.9 million in each of 2005 and 2004. At December 31, 2005, we revised the future recoverability period of Novantrone intangible asset to extend through the end of 2008, and will amortize the remaining balance on a straight line basis.

Other Income and Expense

	Year Ended December 31,
	(in thousands)
	2005			2004			$ Change
Investment income-net	$	13,322		$	6,152		$	7,170
Interest expense		(5,065	)		(11,835	)		6,770
Other income (expenses)-net		(2,048	)		146			(2,194	)
Total other income (expenses)	$	6,209		$	(5,537	)	$	11,746

      The increase in investment income for the year ended December 31, 2005 over the prior year was primarily due to an increase in the funds available for investment, offset by $2.0 million of previously unrealized losses relating to available-for-sale marketable securities for which the impairment was deemed other than temporary. The increase in funds available for investment was the result of the public offering completed in November 2004 resulting in net proceeds to us of $419.5 million, and the convertible note offering completed in December 2005 for net proceeds of $111.0 million. These cash inflows were significantly offset by net cash outflows of $430.2 million used in the Eyetech acquisition, $11.8 million for treasury stock repurchases, and $12.2 million for the call spread option purchase. Investment income is expected to decline in 2006 due to the lower available funds for investment.

      The decrease in interest expense resulted from the full conversion of the outstanding $160.0 million of our 4% convertible senior subordinated notes due 2009, or the 2009 Notes, in July 2004. As a result of the conversion, interest expense for the year ended December 31, 2005 primarily represented interest expense on our 3.25% convertible senior subordinated notes due 2023, or the 2023 Notes, and one-half month of interest expense on our 2.00% convertible senior subordinated notes due 2025, or the 2025 Notes, which were issued in December 2005. Interest expense for the year ended Decem-

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ber 31, 2004 included interest expense on both the 2009 Notes and 2023 Notes, as well as a charge of $3.7 million representing the guaranteed interest on the 2009 Notes upon the conversion of the 2009 Notes in July 2004. Other income expense-net for the periods include the amortization of debt issuance costs related to the convertible senior subordinated note, losses on derivatives and other miscellaneous income and expense items.

Years Ended September 30, 2004 and 2003

Results of Operations

      Our fiscal 2004 net loss of $260.4 million increased $79.0 million compared to our fiscal 2003 net loss of $181.4 million. The fiscal 2004 net loss included an in-process R&D charge of $32.8 million in connection with the acquisition of certain assets of Probiodrug by Prosidion, a charge of $24.6 million related to the impairment of the Gelclair intangible asset and a charge of $8.6 million for excess inventory. The fiscal 2003 net loss included an in-process R&D charge of $31.5 million in connection with the acquisition of Cell Pathways.

Revenues

	Year Ended September 30,
	(in thousands)
	2004		2003		$ Change
Product sales	$	1,235	$	437	$	798
Sales commissions		34,290		16,289		18,001
License, milestone and other revenues		7,275		6,088		1,187
Collaborative revenues		—		9,555		(9,555	)
Total revenues	$	42,800	$	32,369	$	10,431

      Revenues for fiscal 2004 were primarily comprised of sales commissions as compared to sales commissions and collaborative revenues for fiscal 2003. This shift reflects our transition from a business centered on funded collaborative programs to one which generates our own product revenues in conjunction with the launch of Tarceva.

Product Sales

      We began recording Gelclair product sales upon the close of our acquisition of Cell Pathways in June 2003. Net product sales for fiscal 2004 were $1.2 million compared to $437,000 for fiscal 2003. The increase was due to a full 12 months of sales in fiscal 2004 compared to three and a half months of sales in fiscal 2003. We previously had a marketing agreement with John O. Butler Company, under which Butler marketed Gelclair to the dental market. In April 2004, we agreed with Butler to terminate this agreement. In late October 2004, we exercised our right to terminate our distribution agreement with Helsinn upon 90 days notice. Under the terms of the agreement, Helsinn had the option to purchase any and all of our inventory at cost plus 5% following termination. Helsinn elected to purchase our inventory, and we were permitted to continue to sell off our inventory on hand.

Sales Commissions

      We began recording Novantrone sales commissions upon the execution of our co-promotion agreement with an affiliate of Serono, S.A. in March 2003. Sales commissions for fiscal 2004 of $34.3 million were $18.0 million higher than the fiscal 2003 sales commissions of $16.3 million. The increase was primarily due to a full 12 months of sales commissions in fiscal 2004 compared to six and a half months of sales commissions in fiscal 2003. The increase was also due in part to net oncology sales exceeding a contractual threshold limit in both the first and fourth quarters of fiscal 2004, thus resulting in higher effective commissions.

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License, Milestone and Other Revenues

      License revenues consisted principally of the recognition of the $25.0 million upfront fees from Genentech and Roche over the expected term of the collaboration. We recognized $4.0 million and $5.0 million in license revenue in fiscal 2004 and 2003, respectively, relating to these upfront fees. License fees in fiscal 2003 also included recognition of the remaining $875,000 of the $3.5 million upfront fee received from Tanabe Seiyaku Co., Ltd. relating to the research collaboration that expired on October 1, 2003.

      In the fourth quarter of fiscal 2004, we recognized $3.0 million in milestone revenues from our partner Roche based upon the EMEA’s notice of acceptance for filing and review of our NDA for the use of Tarceva as a monotherapy for the treatment of patients with advanced NSCLC patients who have failed at least one chemotherapy regimen.

      In the fourth quarter of fiscal 2004, we also received a $7.0 million milestone payment from Genentech based upon the FDA’s notice of acceptance for filing and review of our NDA for the use of Tarceva as a monotherapy for the treatment of NSCLC patients who have failed at least one chemotherapy regimen. As a result of the amendment to the OSI/ Genentech agreement in June 2004, we were required to account for the Genentech milestone received and the remaining unearned upfront fee of approximately $1.8 million, in accordance with EITF 00-21, “Revenue Arrangements with Multiple Deliverables”. Milestones received from Genentech and the remaining unearned upfront fee will be recognized over the term of the manufacturing and supply agreement between Genentech and us.

Collaborative Program Revenues

      Collaborative program revenues represent funding arrangements for research and development in the field of biotechnology and are recognized when earned in accordance with the terms of the contracts and the related development activities undertaken. There were no collaborative program revenues in fiscal 2004 due to the completion of our remaining collaborations with Anaderm Research Corporation in March 2003 and Tanabe in October 2003.

Expenses

	Year Ended September 30,
	(in thousands)
	2004		2003		$ Change
Cost of goods sold	$	8,985	$	157	$	8,828
Research and development		110,398		102,642		7,756
Acquired in-process research and development		32,785		31,451		1,334
Selling, general and administrative		98,909		70,532		28,377
Impairment of intangible asset		24,599		—		24,599
Amortization of intangibles		18,606		9,300		9,306
	$	294,282	$	214,082	$	80,200

Cost of Goods Sold

      Cost of goods sales relate to sales of Gelclair and also included a provision for obsolete inventory of $8.6 million. During the fourth quarter of fiscal 2004, we purchased $2.0 million of Gelclair inventory based upon the purchase commitments for Gelclair under our agreement with Helsinn that we assumed in the Cell Pathways acquisition. We were obligated to purchase an additional $1.0 million of inventory by December 31, 2004 and an additional $5.0 million in 2005. During the second quarter of fiscal 2004, we recorded a provision of $2.0 million for obsolete inventory that we considered to be in excess of forecasted future demand based on the expiration date of the product on hand. During the

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fourth quarter of fiscal 2004, we recorded an additional provision of $6.6 million in relation to inventory on-hand and 2004 and 2005 purchase commitments with Helsinn that we deemed in excess of forecasted demand, based on the expiration date of the product. This additional provision related to $1.7 million of inventory on hand and $4.9 million of purchase commitments. This excess inventory relates to the inventory obtained from the Cell Pathways acquisition and the required purchase commitments that we assumed in the Cell Pathways acquisition and the low demand for the product. Excluding the provision for obsolete inventory, cost of product sales were $420,000 and $157,000 in fiscal 2004 and 2003, respectively, or approximately one-third of product sales.

Research and Development

      For fiscal 2004, we invested a total of $52.4 million in research and $58.0 million in pre-clinical and clinical development. For fiscal 2003, we invested a total of $46.5 million in research and $56.1 million in pre-clinical and clinical development. The marginal increase in the research and development expense for fiscal 2004 was primarily due to costs associated with the clinical development of our pipeline, including increases for the development of OSI-7904L, OSI-930, OSI-461 and Aptosyn, of $12.1 million, as well as an increased investment in Prosidion of $5.6 million. R&D expenses related to Prosidion for fiscal 2004 were $12.7 million compared to expenses of $7.1 million in fiscal 2003. Included in Prosidion’s R&D expenses in fiscal 2004 was a $2.0 million termination fee (paid in cash and Prosidion stock) to Tanabe relating to a termination agreement with Tanabe, whereby Prosidion obtained the rights to certain compounds and patents developed under the collaboration. Tanabe retained the rights to develop and commercialize, in certain Asian territories, compounds covered by such patents. Prosidion was also required to make payments to Tanabe upon the achievement of certain milestones. Also included in research and development expense for fiscal 2004 was $3.0 million relating to termination benefits paid to employees and $1.7 million relating to the acceleration of certain leasehold improvements, in connection with our decision to consolidate our U.K.-based oncology research and development activities into our New York locations. These increases to research and development expense in fiscal 2004 were offset by a decrease in the development expense of Tarceva of $8.2 million due to the completion of the Phase III trials in NSCLC and pancreatic cancer, as well as decreased investment in the OSI-211 and OSI-7836 programs of approximately $6.1 million. In fiscal 2004, we decided to halt the further development of OSI-211, since we were unable to differentiate the program from a current competitor’s product, and OSI-7836, since we were unable to overcome certain toxicity issues.

Acquired In-Process Research and Development

      In connection with the acquisition of certain assets from Probiodrug by Prosidion in July 2004, we recorded an in-process R&D charge of $32.8 million in fiscal 2004, representing the estimated fair value of the acquired in-process technology that had not yet reached technological feasibility and had no alternative future use (see note 2(b) to the accompanying consolidated financial statements). The in-process R&D charge was assigned to the development project PSN9301, which is recognized as an important target in diabetes.

      In connection with the acquisition of Cell Pathways in June 2003, we recorded an in-process R&D charge of $31.5 million during fiscal 2003, representing the estimated fair value of the acquired in-process technology that had not yet reached technological feasibility and had no alternative future use (see note 2(d) to the accompanying consolidated financial statements). The in-process R&D charge was assigned to the two development projects and related technology platform and patent estate, Aptosyn ($3.7 million) and OSI-461 ($27.8 million) based on their value on the date of the acquisition.

Selling, General and Administrative

      The increase in selling, general and administrative expenses of $28.4 million during fiscal 2004 reflects increased investment in our commercial infrastructure as we prepared for the launch of Tarceva, as well as our continued investment in supporting our other commercial and pipeline pro-

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grams. For fiscal 2004, our commercial operation expenses increased approximately $17.9 million compared to fiscal 2003. The most significant component of our investment was commercialization and marketing costs relating to Tarceva which were shared with Genentech in accordance with the terms of our collaboration. The increase in commercial cost was also due to additional management and personnel relating to the establishment of a commercial operation to support Tarceva, Gelclair and Novantrone, as well as an additional two quarters of maintenance fees paid to Serono relating to Novantrone. Also included in selling, general and administrative expenses for fiscal 2004 were exit costs of $4.8 million relating to remaining rental obligations for our Horsham, Pennsylvania and Uniondale, New York facilities, termination benefits to employees relating to the consolidation of our U.K.-based oncology research and development activities and the acceleration of depreciation of certain equipment and leasehold improvements at our Oxford and Uniondale facilities. Included in selling, general and administrative expenses for fiscal 2003 were fees paid to Serono for transition services provided by them after our acquisition of the Novatrone rights, fees paid to Celgene Corporation in connection with our recovery of the full rights to market and distribute Gelclair in North America, and subcontracting expenses related to our transitional arrangement with a contract sales organization as we were building our commercial infrastructure.

Impairment of Intangible Asset

      In connection with our acquisition of Cell Pathways, we assumed the exclusive rights to market and distribute Gelclair in North America. We recorded an identifiable intangible asset of $29.0 million, which was being amortized over eight and a half years, the remaining term of the agreement. We assess the potential impairment of our long-lived assets, under the provisions of SFAS No. 144. In performing such recoverability test we determined that the total of the expected future undiscounted cash flows directly related to the Gelclair asset was less than the carrying value of the Gelclair asset. As a result an impairment charge was required. The amount of the impairment charge represents the difference between the fair value of the intangible asset and its associated carrying value. We calculated the fair value of the intangible asset using discounted cash flows. The discounted cash flows calculation was made utilizing various assumptions and estimates regarding future revenues and expenses, cash flow and discount rates. Based on these calculations, we determined that an impairment charge of $24.6 million, which represented the full unamortized balance of the Gelclair intangible asset, was necessary as of September 30, 2004. The impairment charge is non-cash and has not and will not result in future cash expenditures. The impairment charge resulted from discontinuance of discussions with a replacement dental partner, and slower than originally expected sales growth in the oncology marketplace.

Amortization of Intangibles

      The increase of $9.3 million in fiscal 2004 was primarily related to amortization expense related to our rights to Novantrone acquired in March 2003 and to Gelclair acquired in June 2003. As noted above, in the fourth quarter of fiscal 2004, we recorded an impairment charge for the remaining carrying value of the Gelclair rights as of September 30, 2004.

Other Income and Expense

	Year Ended September 30,
	(in thousands)
	2004			2003			$ Change
Investment income-net	$	5,259		$	7,808		$	(2,549	)
Interest expense		(13,436	)		(6,715	)		(6,721	)
Other expenses-net		(712	)		(737	)		25
Total other income (expenses)	$	(8,889	)	$	356		$	(9,245	)

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      The decrease in investment income in fiscal 2004 from fiscal 2003 was primarily due to a decrease in the funds available for investment and a decrease in the average rate of return on our investments during these respective years. The increase in interest expense in fiscal 2004 resulted from interest on the 2023 Notes that we issued in September 2003, as well as the guaranteed interest on the 2009 notes that were converted into common stock in July 2004. Under the terms of the 2009 notes, the note holders were guaranteed the payment of interest for the first three years through February 1, 2005. The note holders became fully entitled to the remainder of this guaranteed interest on June 18, 2004, the date we called the notes for redemption. Upon the conversion of the 2009 notes, we issued 3.2 million shares of our common stock in July 2004 and recorded a charge of $3.7 million representing the guaranteed interest on the 2009 notes. This resulted in an additional interest charge of $2.1 million in fiscal 2004 representing the portion of the guaranteed interest from October 1, 2004 to February 1, 2005. Included in other expenses-net for fiscal 2004 and 2003 were amortization of debt issuance costs of $1.7 million and $834,000, respectively, related to the convertible senior subordinated notes. The increase in the amortization of debt issuance costs related to the 2023 Notes. The debt issuance costs are being amortized over a period of five years, which represents the earliest date that we may redeem the notes. Upon the conversion of the 2009 notes, the unamortized balance of the debt issuance costs of $3.7 million was reclassified to additional paid in capital. Also included in other expenses-net for fiscal 2004 is minority interest in the net losses of Prosidion of $907,000. As of September 30, 2004, the minority interests represented approximately 3% ownership of Prosidion.

Liquidity and Capital Resources

      At December 31, 2005, cash and investments, including restricted securities, was $179.7 million compared to $651.5 million at December 31, 2004. The decrease of $471.8 million was primarily due to the following changes in working capital: (i) net cash of $430.2 million used in the acquisition of Eyetech in November, 2005, net of cash acquired, (ii) net cash of $114.8 million used in operating activities and (iii) capital expenditures of $26.7 million. The decrease in working capital was offset by net proceeds of $111.0 million in connection with the issuance of $115.0 million of convertible senior subordinated notes in December, 2005, of which $24.0 million was used to purchase common stock and call spread options.

      On November 12, 2004, during the transition quarter, we concluded a public offering of 6.0 million shares of our common stock at a price of $64.50 per share. Gross proceeds totaled $387.0 million with net proceeds of approximately $365.0 million after all related fees. In addition, on November 17, 2004, underwriters associated with the offering exercised their over-allotment option to purchase an additional 900,000 shares of our common stock at a price of $64.50 per share. Gross proceeds from the exercise of the over-allotment option totaled $58.1 million with net proceeds of approximately $54.9 million.

      On November 14, 2005, we acquired all outstanding shares of Eyetech common stock at a purchase price of $15.00 in cash and 0.12275 shares of OSI common stock. The acquisition reduced the net cash and cash equivalents and investments by approximately $430.2 million.

      On December 21, 2005, we issued convertible notes (2025 Notes) in a private placement resulting in net proceeds to us of $96.5 million. On December 28, 2005, the investment bankers associated with this convertible debt offering exercised an option to purchase an additional $15.0 million of the 2025 Notes, resulting in an additional net proceeds to us of $14.5 million. The 2025 Notes bear interest at 2.00% per annum, payable semi-annually in arrears, and mature on December 15, 2025. We used a part of the net proceeds to (i) purchase through the initial purchaser or its affiliates, concurrently with the offering, 500,000 shares of our common stock for $11.8 million, and (ii) pay approximately $12.2 million to purchase a call spread option with respect to the our common stock. The call spread is a European type option with a lower strike price of $29.425 and an upper strike price of $40.00 and involves an aggregate of 3.4 million shares of our common stock and expires on December 15, 2010.

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This would have the impact of increasing the effective conversion price of the 2025 Notes from the company’s perspective to $40.00 per share, representing a conversion premium of approximately 70% to the per share closing price on December 21, 2005.

      We estimate that over the next twelve to eighteen months, assuming we are able to execute on our internal plans, including our strategy to position Macugen as a safe and effective agent that can be used as chronic maintenance therapy in the long-term treatment of wet AMD and as primary treatment for patients with high cardiovascular risk, our cash flow will become positive, but will fluctuate on a quarter-by-quarter basis. However, there continues to be risk that we will not be able to execute on our internal plans. Tarceva, while expected to achieve significant revenues on a worldwide basis and therefore generate significant levels of cash flow for us, potentially faces emerging competition in the United States over the long term and is in the early stages of gaining acceptance in markets outside of the United States including the EU and, in 2007, Japan. Macugen is facing intense competition from the continued off-label use of Avastin in the treatment of wet AMD and will face additional competition from Lucentis, which we anticipate will launch as early as July 2006. We believe we have developed a strategy to meet Macugen’s competitive threats. In addition, barriers to the reimbursement of off-label Avastin for the treatment of wet AMD should slow its use. However, if we are unsuccessful in executing this strategy, our ability to generate positive cash flow in 2006 will be impacted and we may not achieve profitability by the end of 2006 as originally expected. We believe that we can manage Macugen and the related eye disease franchise of Eyetech in a cash flow positive manner in 2007 and beyond. However, it is difficult to estimate the impact of competition from Avastin and Lucentis on our future revenues for Macugen.

      If we are able to execute on our internal plans, we expect that our R&D investments and capital requirements over the next twelve to eighteen months can be funded from the generation of cash flow and partnering activities. However, due to the expected fluctuation of cash flow, we may choose to access a borrowing facility on a short-term basis to bridge any difference between cash availability and cash needs. As such, on December 14, 2005, we signed a commitment letter with our commercial banking partner JPMorgan Chase Bank, N.A. for a $75.0 million senior secured revolving credit facility. The terms of the Revolving Credit Facility are currently being negotiated and if negotiations are successful, it is expected that the facility will be available to us in the second quarter of 2006.

      As previously stated, we are currently transitioning from an R&D stage company, fully dependent on the capital markets for liquidity and capital resources, to a fully integrated and profitable biopharmaceutical company. When this transition is complete, we anticipate funding the majority, if not all of our liquidity and capital needs from the generation of cash flow from operations, with the potential exception of strategic acquisitions of products and/or businesses.

Summary of Cash Flows

      The following table summarizes our cash flows for year ended December 31, 2005, the three months ended December 31, 2004, and the years ended September 30, 2004 and September 30, 2003 (in thousands):

				Three Months
	Year Ended			Ended			Year Ended			Year Ended
	December 31,			December 31,			September 30,			September 30,
	2005			2004			2004			2003
Cash provided by (used in):
Operating activities	$	(114,819	)	$	(31,793	)	$	(144,908	)	$	(147,784	)
Investing activities		(148,742	)		(155,961	)		(11,987	)		65,162
Financing activities		99,440			431,007			39,134			132,586
Net (decrease) increase in cash and cash equivalents	$	(164,121	)	$	243,253		$	(117,761	)	$	49,964

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      Included in cash used in operating activities are fluctuations in the timing of cash disbursements and receipts, as well as increases in operating expenses, and increases in revenues. For the year ended December 31, 2005, revenues were significantly higher than prior periods reflecting first year revenues of $84.7 million for Tarceva unconsolidated joint business revenue in the United States, first year Tarceva rest of world royalties of $7.0 million, and Macugen sales for the period November 14, 2005 through December 31, 2005 of $31.5 million.

      Included in cash provided by (used in) investing activities are net payments related to the acquisitions of (i) Eyetech for $430.2 million and the Prosidion minority interest buyback for $0.8 million for the year ended December 31, 2005, (ii) the DPIV assets of Probiodrug for $36.4 million for the year ended September 30, 2004, and (iii) the Novantrone rights for $46.0 million for the year ended September 30, 2003.

      Included in cash provided by financing activities are net proceeds of (i) net proceeds of $111.0 million in connection with the issuance of $115.0 million of convertible senior subordinated notes in December 2005, of which $24.0 million was used to repurchase common stock and a call spread option. (ii) $419.6 million related to the issuance of 6.9 million shares in a public offering for the three months ended December 31, 2004, (iii) $39.3 million relating primarily to the exercise of stock options for the year ended September 30, 2004, and (iv) $131.0 million (net of purchase of treasury stock) relating to the issuance convertible senior subordinated notes for the year ended September 30, 2003.

Commitments and Contingencies

      Our major outstanding contractual obligations relate to our senior subordinated convertible notes and our facility leases. The following table summarizes our significant contractual obligations at December 31, 2005 and the effect such obligations are expected to have on our liquidity and cash flow in future periods (in thousands):

													2011 &
			2006		2007		2008		2009		2010		Thereafter		Total
Contractual Obligations:
	Senior convertible debt(a)		$	7,175	$	7,175	$	7,175	$	7,175	$	7,175	$	362,875	$	398,750
		Operating leases		12,960		12,154		11,800		11,573		9,977		97,266		155,730
		Capital commitments		2,227		—		—		—		—		—		2,227
		Purchase obligations(b)		39,805		22,686		8,485		5,186		4,028		9,800		89,990
	Obligations related to exit activities(c)			—		—		—		2,259		—		780		3,039
Total contractual obligations			$	62,167	$	42,015	$	27,460	$	26,193	$	21,180	$	470,721	$	649,736

(a)	Includes interest payments at a rate of 3.25% per annum relating to the $150.0 million principal amount of the 2023 Notes and at a rate of 2% per annum relating to the $115.0 million principal amount of the 2025 Notes. The holders of the 2023 Notes have the right to require us to purchase, for cash, all of the 2023 Notes, or a portion thereof, in September 2008, and the holders of the 2025 Notes have the right to require us to purchase, for cash, all of the 2025 Notes, or a portion thereof, in December 2010.
(b)	Purchase obligations include inventory commitments, commercial and research commitments and other significant purchase commitments.
(c)	Includes payments for termination benefits and facility refurbishments.

Other significant commitments and contingencies include the following:

•  We are committed to share equally with Genentech and Roche approximately $600.0 million combined amount of certain global development costs for Tarceva, which represents an increase of approximately $300.0 million over the originally committed $300.0 million in 2001. The

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	additional $300.0 million was agreed to by the three parties during 2005. These costs will be shared by the parties pursuant to the terms of our agreement with our partners. As of December 31, 2005, the parties have spent approximately 55% of our commitment under the agreement. We are also committed to share certain commercialization costs relating to Tarceva with Genentech. Under the terms of our agreement, there are no contractually determined amounts for future commercial and development costs.
•	Under agreements with external CROs we will continue to incur expenses relating to clinical trials of Tarceva and other clinical candidates. The timing and amount of these disbursements can be based upon the achievement of certain milestones, patient enrollment, services rendered or as expenses are incurred by the CROs and therefore we cannot reasonably estimate the potential timing of these payments.
•	We have outstanding letters of credit issued by a commercial bank totaling $2.9 million of which the full amounts were available on December 31, 2005. One is an irrevocable letter of credit related to our Oxford, England facility which expires and is renewed annually with a final expiration date of September 27, 2007. Another is an irrevocable letter of credit related to our Horsham, Pennsylvania facility, whose lease we assumed through the acquisition of Cell Pathways. The letter expires and is renewed annually with a final expiration date of September 22, 2008. In connection with the Eyetech Acquisition, we assumed $5.6 million of letters of credit associated with the leases of office and laboratory facilities in New York, New York, Cedar Knolls, New Jersey, Lexington, Massachusetts and Woburn, Massachusetts. These irrevocable letters of credit for our acquired leased facilities expire annually with a final expiration date of 2012. These letters of credit are collateralized by $5.6 million invested in high quality certificates of deposit, which is reflected as restricted investments on our balance sheet at December 31, 2005.
•	We have a retirement plan, which provides post-retirement medical and life insurance benefits to eligible employees, board members and qualified dependents. Eligibility is determined based on age and years of service. We have accrued postretirement benefit costs of $5.4 million at December 31, 2005.
•	In connection with the acquisition of Cell Pathways, we provided additional consideration in the form of five-year contingent value rights through which each share of Cell Pathways’ common stock will be eligible for an additional 0.04 share of our common stock in the event of a filing of a new drug application by June 12, 2008 for either of the two clinical candidates acquired from Cell Pathways, OSI-461 or Aptosyn.
•	Under certain license and collaboration agreements with pharmaceutical companies and educational institutions, we are required to pay royalties and/or milestone payments upon the successful development and commercialization of products. However, successful research and development of pharmaceutical products is high risk, and most products fail to reach the market. Therefore, at this time the amount and timing of the payments, if any, are not known.
•	Under certain license and other agreements, we are required to pay license fees for the use of technologies and products in our research and development activities or milestone payments upon the achievement of certain predetermined conditions. These license fees are not deemed material to our consolidated financial statements and the amount and timing of the milestone payments, if any, are not known due to the uncertainty surrounding the successful research, development and commercialization of the products.
•	In connection with the Eyetech Acquisition, we assumed various contracts related to the in-licensing, development, manufacture and marketing of Macugen. These license agreements represent rights and obligations of OSI Eyetech. Under the terms of the license agreements, we may be required to make additional milestone payments, and may also be required to pay royalties on net sales.

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Accounting Pronouncements

      In December 2004, the Financial Accounting Standards Board, or FASB, issued SFAS No. 123(R), which requires companies to expense the estimated fair value of employee stock options and similar awards. SFAS No. 123(R) replaces SFAS No. 123 and supersedes APB Opinion No. 25. In March 2005, the Securities Exchange Commission (“SEC”) issued Staff Accounting Bulletin No. 107 (“SAB 107”) which generally provides the SEC staff’s views regarding SFAS No. 123(R). SAB 107 provides guidance on how to determine the expected volatility and expected term inputs into a valuation model used to determine the fair value of share-based payments. SAB 107 also provides guidance related to numerous aspects of the adoption of SFAS No. 123(R) such as income taxes, capitalization of compensation costs, modification of share-based payments prior to adoption and the classification of expenses. We will apply the principles of SAB 107 in conjunction with our adoption of SFAS No. 123(R).

      Beginning with the first quarter of fiscal 2006, we will adopt the provisions of SFAS No. 123(R) using a modified prospective application. Under the modified prospective application, SFAS No. 123(R), which provides certain changes to the methodology for valuing share-based compensation among other changes, will apply to new awards and to awards outstanding on the effective date that are subsequently modified or cancelled. Compensation expense for outstanding awards for which the requisite service had not been rendered as of the effective date will be recognized over the remaining service period using the compensation cost calculated for pro forma disclosure purposes under SFAS No. 123.

      In November 2004, the FASB issued SFAS No. 151, “Inventory Costs,” an amendment of ARB No. 43, Chapter 4. SFAS No. 151 requires all companies to recognize a current-period charge for abnormal amounts of idle facility expense, freight, handling costs and wasted materials. This statement also requires that the allocation of fixed production overhead to the costs of conversion be based on the normal capacity of the production facilities. SFAS No. 151 will be effective for fiscal years beginning after June 15, 2005, which is our calendar year 2006. We are currently evaluating the effect that this statement will have on our consolidated financial statements.

      In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections,” effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. SFAS No. 154 supersedes APB Opinion No. 20, “Accounting Changes” and SFAS No. 3, “Reporting Accounting Changes in Interim Financial Statements” and requires retrospective application to prior periods of any voluntary changes to alternatively permitted accounting principles, unless impracticable.

Forward Looking Statements

      A number of the matters and subject areas discussed in this Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in Item 1 “Business” and elsewhere in this report, that are not historical or current facts, deal with potential future circumstances and developments. The discussion of these matters and subject areas, is qualified by the inherent risks and uncertainties surrounding future expectations generally, and these discussions may materially differ from our actual future experience involving any one or more of these matters and subject areas. These forward-looking statements are also subject generally to the other risks and uncertainties that are described in this report in Item 1A “Business — Risk Factors.”

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

      Our cash flow and earnings are subject to fluctuations due to changes in interest rates in our investment portfolio of debt securities, to the fair value of equity instruments held and to foreign currency exchange rates. We maintain an investment portfolio of various issuers, types and maturities. These securities are generally classified as available-for-sale as defined by SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” and, consequently, are recorded on the balance sheet at fair value with unrealized gains or losses reported as a component of accumulated other

70

comprehensive income (loss) included in stockholders’ equity. With respect to the convertible senior subordinated notes issued in September 2003 and February 2002, we pledged U.S. government securities with maturities at various dates through August 2006 and November 2004, respectively. Upon conversion of the 2009 Notes into our common stock in July 2004, we were required to pay the remaining part of the guaranteed interest. Therefore, the restricted investment securities pledged in relation to these notes were liquidated. Upon maturity, the proceeds of the restricted investment securities will be sufficient to pay the first six scheduled interest payments of the 2023 Notes when due. We consider our restricted investment securities to be held-to-maturity as defined by SFAS No. 115. These securities are reported at their amortized cost, which includes the direct costs to acquire the securities, plus the amortization of any discount or premium, and accrued interest earned on the securities. We have not used or held derivative financial instruments in our investment portfolio.

      At December 31, 2005, we maintained a portion of our cash and cash equivalents in financial instruments with original maturities of three months or less. We also maintained an investment portfolio principally comprised of government and government agency obligations and corporate obligations that are subject to interest rate risk and will decline in value if interest rates increase.

      A hypothetical 10% change in interest rates during the twelve months ended December 31, 2005 would have resulted in a $1.3 million change in our net loss for 2005.

      In March 2004, we began to enter into forward exchange contracts to reduce foreign currency fluctuation risks relating to intercompany transactions for the funding of our research activities in the United Kingdom. We account for these derivative financial instruments in accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” which was amended by SFAS No. 137 and SFAS No. 138. Changes in the fair value of a derivative that is designated and documented as a cash flow hedge and is highly effective, are recorded in other comprehensive income until the underlying transaction affects earnings, and then are later reclassified to earnings. We formally assess, both at the inception and at each financial quarter thereafter, the effectiveness of the derivative instrument hedging the underlying forecasted cash flow transaction. Any ineffectiveness related to the derivative financial instruments’ change in fair value will be recognized in the period in which the ineffectiveness was calculated. As of December 31, 2005, there were no foreign exchange contracts.

      Our limited investments in certain biotechnology companies are carried on the equity method or cost method of accounting using the guidance of applicable accounting literature. Other-than-temporary losses are recorded against earnings in the same period the loss was deemed to have occurred.

      Our long-term debt totaled $265.0 million at December 31, 2005 and was comprised of our 2023 Notes which bear interest at a fixed rate of 3.25% and our 2025 Notes which bear interest at a fixed rate of 2.00%. In June 2004, we exercised our provisional redemption right and called for the full redemption of the outstanding $160.0 million of the 2009 Notes which we issued in February 2002. All of the holders of these notes converted their notes into shares of our common stock prior to the redemption date of July 19, 2004. As a result of these conversions, in July 2004, we issued 3.2 million shares of our common stock and paid the remaining portion of the guaranteed interest of $6.4 million.

      Underlying market risk exists related to an increase in our stock price or an increase in interest rates which may make the conversion of the 2023 Notes or 2025 Notes to common stock beneficial to the holders of such notes. Conversion of the 2023 Notes or 2025 Notes would have a dilutive effect on any future earnings and book value per common share.

71

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS

Index to Consolidated Financial Statements:

	Page
	Number
Report of Independent Registered Public Accounting Firm on the Consolidated Financial Statements		73
Consolidated Balance Sheets at December 31, 2005 and 2004		74
Consolidated Statements of Operations for the Year Ended December 31, 2005, the Three Months Ended December 31, 2004 and the Years Ended September 30, 2004 and 2003		75
Consolidated Statements of Stockholders’ Equity for the Year Ended December 31, 2005, the Three Months Ended December 31, 2004 and the Years Ended September 30, 2004 and 2003		76
Consolidated Statements of Cash Flows for the Year Ended December 31, 2005, the Three Months Ended December 31, 2004 and the Years Ended September 30, 2004 and 2003		78
Notes to Consolidated Financial Statements		79

72

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

ON THE CONSOLIDATED FINANCIAL STATEMENTS

To the Stockholders and Board of Directors

OSI Pharmaceuticals, Inc.:

      We have audited the accompanying consolidated balance sheets of OSI Pharmaceuticals, Inc. and subsidiaries as of December 31, 2005 and 2004, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the year ended December 31, 2005, for the three months ended December 31, 2004, and for each of the two fiscal years in the period ended September 30, 2004. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

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

      In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of OSI Pharmaceuticals, Inc. and subsidiaries as of December 31, 2005 and 2004, and the results of their operations and their cash flows for the year ended December 31, 2005, for the three months ended December 31, 2004, and for each of the two fiscal years in the period ended September 30, 2004, in conformity with U.S. generally accepted accounting principles.

      We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of OSI Pharmaceuticals, Inc. and subsidiaries’ internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 15, 2006 expressed an unqualified opinion on management’s assessment of, and the effective operation of, internal control over financial reporting. Such report contains an explanatory paragraph relating to the exclusion from management’s assessment of the effectiveness of and from our evaluation of the Company’s internal control over financial reporting as of December 31, 2005 associated with one entity acquired during 2005.

      As discussed in note 1(b) to the consolidated financial statements, the Company adopted EITF 00-21 “Revenue Arrangements with Multiple Deliverables” in fiscal 2004.

      As discussed in notes 1(j) to the consolidated financial statements, the Company fully adopted the provisions of Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” in fiscal 2003.

/s/ KPMG LLP

Melville, New York

March 15, 2006

73

OSI PHARMACEUTICALS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2005 AND 2004

(In thousands except per share data)

			December 31,
			2005			2004
ASSETS
Current assets:
	Cash and cash equivalents		$	164,084		$	329,556
	Investment securities			5,061			317,103
	Restricted investment securities — short-term			10,461			4,844
	Accounts receivables — net			152,482			14,077
	Inventory — net			75,715			2,122
	Interest receivable			78			1,641
	Prepaid expenses and other current assets			10,618			5,815
		Total current assets		418,499			675,158
Restricted investment securities — long-term				—			4,736
Property, equipment and leasehold improvements — net				61,947			31,762
Debt issuance costs — net				6,667			3,891
Goodwill				359,035			39,162
Other intangible assets — net				207,194			22,911
Other assets				5,240			2,496
			$	1,058,582		$	780,116
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Accounts payable and accrued expenses		$	80,467		$	42,359
	Collaboration profit share payable			49,869			—
	Unearned revenue — current			10,737			2,549
	Other liabilities — current			1,255			4
		Total current liabilities		142,328			44,912
Other liabilities:
	Rent obligations and deferred rent expense			6,337			2,085
	Unearned revenue — long-term			39,051			17,479
	Convertible senior subordinated notes			265,000			150,000
	Contingent value rights			22,047			22,047
	Accrued postretirement benefit cost			5,353			4,203
		Total liabilities		480,116			240,726
Stockholders’ equity:
	Preferred stock, $.01 par value; 5,000 shares authorized; no shares issued at December 31, 2005 and 2004 , respectively			—			—
	Common stock, $.01 par value; 200,000 shares authorized, 58,728 and 52,398 shares issued at December 31, 2005 and 2004, respectively			587			524
	Additional paid-in capital			1,592,155			1,375,486
	Deferred compensation			(7,341	)		(81	)
	Accumulated deficit			(971,469	)		(814,346	)
	Accumulated other comprehensive income			1,755			3,258
				615,687			564,841
Less: treasury stock, at cost; 1,943 and 1,443 shares at December 31, 2005 and 2004, respectively				(37,221	)		(25,451	)
		Total stockholders’ equity		578,466			539,390
Commitments and contingencies (See Note 13)
			$	1,058,582		$	780,116

See accompanying notes to consolidated financial statements.

74

OSI PHARMACEUTICALS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE

YEAR ENDED DECEMBER 31, 2005, THE THREE MONTHS ENDED

DECEMBER 31, 2004 AND YEARS ENDED SEPTEMBER 30, 2004 AND 2003

(In thousands except per share data)

						Three
						Months
			Year Ended			Ended			Year Ended September 30,
			December 31,			December 31,
			2005			2004			2004			2003
Revenues:
	Net revenue from unconsolidated joint business		$	84,727		$	—		$	—		$	—
	Product sales			32,411			360			1,235			437
	Royalties on product sales			7,127			—			—			—
	Sales commissions			29,684			11,396			34,290			16,289
	License, milestone and other revenues			16,164			591			7,275			6,088
	Collaborative program revenues			4,081			—			—			9,555
				174,194			12,347			42,800			32,369
Expenses:
	Cost of goods sold			18,882			(1,247	)		8,985			157
	Collaborative profit share			12,312			—			—			—
	Net expense from unconsolidated joint business			—			7,661			—			—
	Research and development			125,953			31,913			110,398			102,642
	Acquired in-process research and development (note 2)			64,442			—			32,785			31,451
	Selling, general and administrative			98,393			20,313			98,909			70,532
	Impairment of intangible asset			—			—			24,599			—
	Amortization of intangibles			17,544			3,804			18,606			9,300
				337,526			62,444			294,282			214,082
		Loss from operations		(163,332	)		(50,097	)		(251,482	)		(181,713	)
Other income (expense):
	Investment income — net			13,322			2,380			5,259			7,808
	Interest expense			(5,065	)		(1,219	)		(13,436	)		(6,715	)
	Other (expense) income — net			(2,048	)		541			(712	)		(737	)
Net loss			$	(157,123	)	$	(48,395	)	$	(260,371	)	$	(181,357	)
Basic and diluted net loss per common share			$	(3.02	)	$	(1.02	)	$	(6.50	)	$	(4.87	)
Weighted average shares of common stock outstanding				52,078			47,375			40,083			37,249

See accompanying notes to consolidated financial statements.

75

OSI PHARMACEUTICALS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY FOR THE

YEAR ENDED DECEMBER 31, 2005, THE THREE MONTHS ENDED

DECEMBER 31, 2004 AND THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003

(In thousands)

															Accumulated
		Common Stock				Additional									Other						Total
						Paid-In			Deferred			Accumulated			Comprehensive			Treasury			Stockholders’
		Shares		Amount		Capital			Compensation			Deficit			Income (Loss)			Stock			Equity
Balance at September 30, 2002			37,335	$	373	$	708,435		$	(49	)	$	(324,223	)	$	1,005		$	(6,433	)	$	379,108
Comprehensive income (loss):
	Net loss		—		—		—			—			(181,357	)		—			—			(181,357	)
	Unrealized holding loss on investment securities, net of reclassification adjustment		—		—		—			—			—			(991	)		—			(991	)
	Translation adjustment		—		—		—			—			—			1,150			—			1,150
Total comprehensive loss																						(181,198	)
Options exercised			636		6		6,773			—			—			—			—			6,779
Warrants issued			—		—		146			—			—			—			—			146
Issuance of common stock for directors’ annual retainer			31		—		487			(487	)		—			—			—			—
Issuance of common stock for employee purchase plan and other			42		1		803			—			—			—			—			804
Issuance of common stock in connection with acquisition of Cell Pathways			2,246		23		31,223			—			—			—			—			31,246
Issuance of common stock to consultant			8		—		286			—			—			—			—			286
Registration costs in connection with acquisition of Cell Pathways			—		—		(416	)		—			—			—			—			(416	)
Amortization of deferred compensation			—		—		—			320			—			—			—			320
Purchase of treasury stock			—		—		—			—			—			—			(19,018	)		(19,018	)
Balance at September 30, 2003			40,298		403		747,737			(216	)		(505,580	)		1,164			(25,451	)		218,057
Comprehensive income (loss):
	Net loss		—		—		—			—			(260,371	)		—			—			(260,371	)
	Unrealized holding loss on investment securities, net of reclassification adjustment		—		—		—			—			—			(971	)		—			(971	)
	Translation adjustment		—		—		—			—			—			1,204			—			1,204
Total comprehensive loss																						(260,138	)
Options exercised			1,493		15		38,673			—			—			—			—			38,688
Warrants exercised			6		—		—			—			—			—			—			—
Issuance of common stock for directors’ annual retainer			11		—		474			(474	)		—			—			—			—
Issuance of common stock for employee purchase plan and other			22		—		693			—			—			—			—			693
Issuance of common stock in connection with conversion of notes			3,200		32		159,968			—			—			—			—			160,000
Balance of unamortized debt issuance costs in connection with conversion of notes			—		—		(3,723	)		—			—			—			—			(3,723	)
Change in deferred compensation			—		—		(5	)		5			—			—			—			—
Amortization of deferred compensation			—		—		—			479			—			—			—			479
Acceleration of director’s options					—		177			—			—			—			—			177
Balance at September 30, 2004			45,030		450		943,994			(206	)		(765,951	)		1,397			(25,451	)		154,233
Comprehensive income (loss):
	Net loss		—		—		—			—			(48,395	)		—			—			(48,395	)
	Unrealized holding loss on investment securities, net of reclassification adjustment		—		—		—			—			—			(363	)		—			(363	)
	Translation adjustment		—		—		—			—			—			2,224			—			2,224
Total comprehensive loss																						(46,534	)
Options exercised			450		5		11,189			—			—			—			—			11,194
Issuance of common stock for employee purchase plan and other			18		—		806			—			—			—			—			806
Issuance of common stock in connection with conversion of notes			6,900		69		419,497						—			—			—			419,566
Amortization of deferred compensation			—		—		—			125			—			—			—			125
Balance at December 31, 2004			52,398	$	524	$	1,375,486		$	(81	)	$	(814,346	)	$	3,258		$	(25,451	)	$	539,390

76

OSI PHARMACEUTICALS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY FOR THE

YEAR ENDED DECEMBER 31, 2005, THE THREE MONTHS ENDED

DECEMBER 31, 2004 AND THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003 — (Continued)

(In thousands)

															Accumulated
		Common Stock				Additional									Other						Total
						Paid-In			Deferred			Accumulated			Comprehensive			Treasury			Stockholders’
		Shares		Amount		Capital			Compensation			Deficit			Income (Loss)			Stock			Equity
Comprehensive income (loss):
	Net loss		—		—		—			—			(157,123	)		—			—			(157,123	)
	Unrealized holding gain on investment securities, net of reclassification adjustment		—		—		—			—			—			928			—			928
	Translation adjustment		— —		— —		— —			— —			— —			(2,431	) —		— —			(2,431	) (158,626)
Total comprehensive loss			469		5		10,221			—			—			—			—			10,226
Options exercised
Issuance of common stock for employee purchase plan and other			94		—		2,068			—			—			—			—			2,068
Issuance of common stock in connection with buyout of Prosidion minority interest			85		1		4,157			—			—			—			—			4,158
Issuance of common stock for directors’ annual retainer			12 —		— —		527 —			(527	) 1,739		— —			— —			— —			— 1,739
Amortization of deferred compensation			16		—		613			(613	)		—			—			—			—
Issuance of restricted stock to employees			—		—		816			—			—			—			—			816
Acceleration of stock options
Call spread purchased in connection with private offering			—		—		(12,179	)		—			—			—			—			(12,179	)
Issuance of common stock in connection with acquisition of Eyetech			5,654		57		205,336			—			—			—			—			205,393
Issuance of stock options and restricted rights in connection with Eyetech acquisition			—		—		5,110			(7,859	)		—			—			—			(2,749	)
Purchase of treasury stock, 500,000 shares			— 58,728	— $	587	— $	1,592,155		— $	(7,341	)	— $	(971,469	)	— $	1,755			(11,770	) $(37,221)		(11,770	) $578,466
Balance at December 31, 2005

See accompanying notes to consolidated financial statements.

77

OSI PHARMACEUTICALS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE

YEAR ENDED DECEMBER 31, 2005, THE THREE MONTHS ENDED

DECEMBER 31, 2004 AND THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003

(In thousands)

							Three Months			Years Ended
				Year Ended			Ended			September 30,
				December 31,			December 31,
				2005			2004			2004			2003
Cash flow from operating activities:
	Net loss			$	(157,123	)	$	(48,395	)	$	(260,371	)	$	(181,357	)
	Adjustments to reconcile net loss to net cash used in operating activities:
		Loss (gain) on sale of investments			2,188			4			(41	)		(347	)
		Loss on sale and disposals of equipment			809			—			2			86
		Depreciation and amortization			28,712			10,159			34,914			21,434
		Impairment of intangible asset			—			—			24,599			—
		Provision for excess inventory — net			—			(3,368	)		8,565			—
		In-process research and development charge			64,442			—			32,785			31,451
		Non-cash compensation charges			1,211			679			723			862
		Other non-cash charges — net			816			(72	)		493			—
		Changes in assets and liabilities, net of the effects of acquisitions:
			Receivables		(45,062	)		(3,602	)		(459	)		(4,634	)
			Inventory		(8,932	)		2,684			(6,386	)		(514	)
			Prepaid expenses and other current assets		386			3,628			594			(5,505	)
			Other assets		147			2			47			1,077
			Accounts payable and accrued expenses		(34,271	)		(4,014	)		16,037			(2,034	)
			Collaboration profit share payable		949			—			—			—
			Unearned revenue		29,760			10,203			2,795			(8,941	)
			Accrued postretirement benefit cost		1,149			299			795			638
Net cash used in operating activities					(114,819	)		(31,793	)		(144,908	)		(147,784	)
Cash flows from investing activities:
	Payments for acquisitions, net of cash acquired				(430,986	)		—			(36,393	)		(193	)
	Payments for acquisition of Novantrone marketing rights				—			—			—			(46,009	)
	Purchases of investments (restricted and unrestricted)				(447,443	)		(192,104	)		(250,714	)		(412,944	)
	Maturities and sales of investments (restricted and unrestricted)				757,325			37,716			278,748			534,332
	Net additions to property, equipment and leasehold improvements				(26,718	)		(1,787	)		(3,287	)		(8,486	)
	Other				(920	)		214			(341	)		(1,538	)
Net cash provided by (used in) investing activities					(148,742	)		(155,961	)		(11,987	)		65,162
Cash flows from financing activities:
	Net proceeds from issuance of stock				—			419,566			—			—
	Proceeds from the exercise of stock options, stock warrants, employee purchase plan, and other				12,471			11,445			39,315			7,327
	Proceeds from the issuance of convertible senior subordinated notes				115,000			—			—			150,000
	Call spread premium				(12,179	)		—			—			—
	Debt issuance costs				(3,902	)		—			(118	)		(5,177	)
	Payments on loans and capital leases payable				(180	)		(4	)		(63	)		(546	)
	Purchase of treasury stock				(11,770	)		—			—			(19,018	)
Net cash provided by financing activities					99,440			431,007			39,134			132,586
Net (decrease) increase in cash and cash equivalents					(164,121	)		243,253			(117,761	)		49,964
Effect of exchange rate changes on cash and cash equivalents					(1,351	)		1,705			(160	)		(23	)
Cash and cash equivalents at beginning of year					329,556			84,598			202,519			152,578
Cash and cash equivalents at end of year				$	164,084		$	329,556		$	84,598		$	202,519
Non-cash activities:
	Conversion of notes			$	—		$	—		$	160,000		$	—
	Reclassification of debt issuance costs in connection with notes			$	—		$	—		$	3,723		$	—
	Issuance of common stock to employees			$	613		$	556		$	65		$	92
	Issuance of common stock to directors			$	527		$	—		$	475		$	488
	Issuance of common stock to acquire minority interest in Prosidion			$	4,157		$	—		$	—		$	—
	Issuance of Prosidion preferred stock to minority shareholders			$	—		$	—		$	1,400		$	—
	Issuance of common stock to consultant			$	—		$	—		$	—		$	286
	Acceleration of directors and employees’ stock options			$	816		$	—		$	177		$	164
	Issuance of equity securities in connection with Eyetech acquisition costs			$	210,446		$	—		$	—		$	—
	Liabilities assumed in connection with acquisitions			$	124,000		$	—		$	—		$	12,118
	Issuance of common stock in connection with acquisition			$	—		$	—		$	—		$	31,245
	Issuance of contingent value rights in connection with acquisition			$	—		$	—		$	—		$	22,047
	Assumption of warrants in connection with acquisition			$	—		$	—		$	—		$	146
	Cash paid for interest			$	4,869		$	—		$	14,502		$	6,418

See accompanying notes to consolidated financial statements.

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      In this Annual Report on Form 10-K, “OSI,” “our company,” “we,” “us,” and “our” refer to OSI Pharmaceuticals, Inc. and subsidiaries.

(1) Summary of Significant Accounting Policies

(a) Principles of Consolidation

      Our consolidated financial statements include the accounts of OSI Pharmaceuticals, Inc., and our wholly-owned subsidiaries, OSI Eyetech, Inc., Prosidion Limited (Prosidion) and OSI Pharmaceuticals (UK) Limited (OSI-UK). During fiscal 2003, we created Prosidion, into which we transferred our diabetes and obesity research programs. On April 14, 2005, we completed the acquisition of the minority interest shares of Prosidion and as a result, Prosidion became our wholly-owned subsidiary (see note 2(c)). On November 14, 2005, we acquired all outstanding shares of Eyetech Pharmaceuticals Inc., (Eyetech or OSI Eyetech) a biotech company with a focus on eye disease. The accompanying financial statements include Eyetech’s assets and liabilities as of December 31, 2005 and results of operations for the period from November 14, 2005 through December 31, 2005 (see note 2(a)). In December 2004, we changed our fiscal year end from September 30 to December 31. The first fiscal year (which shall henceforth be the calendar year) affected by this change ended on December 31, 2005. This report on Form 10-K includes the statement of operations, statement of cash flows and statement of stockholders’ equity for the year ended December 31, 2005, the three month transition period ended December 31, 2004, and for the twelve months ended September 30, 2004 and 2003. All intercompany balances and transactions have been eliminated in consolidation. We operate in one segment which is the business of development, manufacturing and commercialization of novel therapeutics for human health care.

(b) Revenue Recognition

Net revenue (expenses) from unconsolidated joint business

      Net revenue from unconsolidated joint business is related to our co-promotion and manufacturing agreements with Genentech, Inc., our U.S. partner for Tarceva (erlotinib). It consists of our share of the pretax co-promotion profit (loss) generated from our co-promotion arrangement with Genentech for Tarceva, the partial reimbursement from Genentech of our sales and marketing costs related to Tarceva, and the reimbursement from Genentech of our manufacturing costs related to Tarceva. Under the co-promotion arrangement, all U.S. sales of Tarceva and associated costs and expenses, except for a portion of our sales related costs, are recognized by Genentech. For the year ended December 31, 2005 and the three months ended December 31, 2004, Genentech recorded $275.0 million and $13.0 million, respectively in net sales of Tarceva in the United States and its territories. We record our 50% share of the co-promotion pretax profit on a quarterly basis, as set forth in our agreement with Genentech. Pretax co-promotion profit (loss) under the co-promotion arrangement is derived by calculating U.S. net sales of Tarceva to third-party customers and deducting costs of sales, distribution, selling and marketing expenses, and certain joint development expenses incurred by Genentech and us. The costs incurred during the respective periods represent estimated costs of both parties and are subject to further adjustment based on each party’s final review. Based on past experience, we do not believe that these adjustments, if any, will be significant to our consolidated financial statements. The partial reimbursement of our sales and marketing costs related to Tarceva is recognized as revenue as the related costs are incurred. We defer the recognition of the reimbursement of our manufacturing costs related to Tarceva until the time Genentech ships the product to third-party customers at which time our risk of inventory loss no longer exists. The unearned revenue related to shipments by our third party manufacturers of Tarceva to Genentech that have not been shipped to third-party customers was $7.0 million and $878,000 as of December 31, 2005 and 2004, respectively, and is included in unearned revenue-current in the accompanying consolidated balance sheets.

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      Net revenues (expense) from unconsolidated joint business consist of the following (in thousands):

	Year Ended		Three Months Ended
	December 31,		December 31,
	2005		2004
Co-promotion profit (loss) and reimbursement of sales force and marketing related costs	$	73,715	$	(8,075	)
Reimbursement of manufacturing costs		11,012		414
Net revenue (expense) from unconsolidated joint business	$	84,727	$	(7,661	)

Product Sales

      Product sales primarily consist of sales of Macugen (pegaptinib sodium injection) in the United States and its territories. For the twelve months ended December 31, 2005, Macugen net sales totaled $185 million. Net sales of Macugen from November 14, 2005, the date of our acquisition of Eyetech, through December 31, 2005, totaled $31.5 million, and are included in product sales for the twelve months ended December 31, 2005. Net Macugen sales represents gross product revenue less distribution service fees and estimates for allowances and returns. Macugen is sold primarily to distributors, who, in turn, sell to physicians, a limited number of specialty pharmacy providers and federal government buying groups. We do not recognize revenue from product sales until there is persuasive evidence of an arrangement, delivery has occurred, the price is fixed and determinable, the buyer is obligated to pay us, the obligation to pay is not contingent on resale of the product, the buyer has economic substance apart from us, we have no obligation to bring about sale of the product, the amount of returns can be reasonably estimated and collectibility is reasonably assured.

      Under an agreement dated February 2003 with Pfizer, Inc., we share sales and marketing responsibility with Pfizer for sales of Macugen in the United States. We report product revenue on a gross basis for these sales. We have determined that we are qualified as a principal under the criteria set forth in Emerging Issues Task Force (“EITF”), Issue 99-19, “Reporting Gross Revenue as a Principal vs. Net as an Agent,” based on our responsibilities under our contracts with Pfizer Inc., which include manufacture of product for sale in the United States, distribution, ownership of product inventory and credit risk from customers.

      We record allowances for distribution fees, product returns and governmental rebates for products sold in the United States at the time of sale, and report revenue net of such allowances. We must make significant judgments and estimates in determining these allowances. For instance:

•  Our distributors have a limited right of return for unopened product during a specified time period based on the product’s labeled expiration date. As a result, in calculating the allowance for product returns, we estimate the likelihood that product sold to distributors might be returned within a specific timeframe. We determine our estimates using actual product data from distributors, industry data on products with similar characteristics and the expiration dates of product sold.

•  Certain government buying groups that purchase our product from wholesalers have the right to receive a discounted price from us. As a result, we estimate the amount of product which will ultimately be sold to these buying groups. We determine our estimates using actual product data from distributors and historical industry trends.

      If actual results differ from our estimates, we will be required to make adjustments to these allowances in the future.

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      Gelclair Bioadherent Oral Gel was sold in accordance with an exclusive distribution agreement with Helsinn Healthcare S.A., which allowed us to market and distribute Gelclair in North America. In late October 2004, we exercised our right to terminate the agreement with Helsinn, while continuing to exercise our right to sell off inventory. In accordance with Statements of Financial Accounting Standards, or SFAS No. 48, “Revenue Recognition When Right of Return Exists,” given the limited sales history of Gelclair, we defer the recognition of revenue on product shipments of Gelclair to wholesale customers until such time as the product is sold from the wholesale customer to the retail and non-retail outlets. We monitor estimated shipments from wholesale customers to pharmacies and hospitals, and wholesale customer reorder history based on data from an external third party. The related cost of the product shipped to wholesale customers that has not been recognized as revenue has been reflected as inventory subject to return (see note 1(l)).

Royalties on Product Sales

      We estimate royalty revenue and royalty receivables in the periods these royalties are earned, in advance of collection. Our estimate of royalty revenue and receivables is based upon communication with our collaborative partners. Differences between actual revenues and estimated royalty revenue are adjusted for in the period which they become known, typically the following quarter. Historically, such adjustments have not been material to our consolidated financial condition or results of operations.

Sales Commissions

      Sales commissions represent commissions earned on the sales of the drug, Novantrone, in the United States for oncology indications pursuant to a co-promotion agreement dated March 11, 2003 with Ares Trading S.A., an affiliate of Serono, S.A. (see note 4(c)). Serono markets Novantrone in multiple sclerosis indications and records all U.S. sales for all indications including oncology indications. Sales commissions from Novantrone on net oncology sales are recognized in the period the sales occur based on the estimated split between oncology sales and multiple sclerosis sales, as determined by an external third party. The split between oncology and multiple sclerosis sales is subject to further adjustment based upon the parties’ final review, in the subsequent quarter. Based on past experience, we do not believe these adjustments, if any, will be significant to the consolidated financial condition or results of operations.

Licenses, Milestones and Other Revenues

      Our revenue recognition policies for all nonrefundable upfront license fees and milestone arrangements are in accordance with the guidance provided in the Securities and Exchange Commission’s Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements,” as amended by SEC Staff Accounting Bulletin No. 104, “Revenue Recognition.” In addition, in fiscal 2004 we adopted the provisions of Emerging Issues Task Force Issue 00-21, “Revenue Arrangements with Multiple Deliverables”, or EITF 00-21, for multiple element revenue arrangements entered into or materially amended after June 30, 2003.

      We received a total of $25.0 million in upfront fees from Genentech and Roche in January 2001, which was being recognized on a straight-line basis over the expected term of our required research and development efforts under the terms of a tripartite agreement with Genentech and Roche. As a result of an amendment to our collaboration agreement with Genentech in June 2004, the remaining unearned upfront fee from Genentech of $1.8 million is being recognized in accordance with EITF 00-21, as discussed further below. The upfront fee from Roche was fully recognized as of December 31, 2004.

      Since September 2004, we have received $34.0 million in milestone payments from Genentech based upon certain U.S. Food and Drug Administration, or FDA, filings and approvals of Tarceva in accordance with

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our agreement with Genentech. As a result of the amendment to our collaboration agreement with Genentech in June 2004, these payments are, and any future milestone payments will be, recognized in accordance with EITF 00-21. Milestones which have been received from Genentech after June 2004 and the remaining unearned upfront fee as of June 2004 are being recognized over the term of our Manufacturing and Supply Agreement with Genentech, under which the last items of performance to be delivered to Genentech are set forth, or on a straight line basis, which approximates the expected level of performance under the Manufacturing and Supply Agreement. The unrecognized unearned revenue related to the milestones and upfront payment received from Genentech is $34.2 million as of December 31, 2005 of which $2.3 million is classified as short-term and the balance of $31.9 million is classified as long-term in the accompanying consolidated balance sheet. The unrecognized unearned revenue related to the milestones and upfront payment received from Genentech is $18.7 million as of December 31, 2004 of which $1.2 million is classified as short-term and the balance of $17.5 million was classified as long-term in the accompanying consolidated balance sheet.

      In March 2005, the Tarceva alliance partners, OSI/ Genentech/ Roche, agreed to a further global development plan and budget for the continued development of Tarceva in earlier stage lung cancer, other cancer indications and in a variety of combinations, including Tarceva/ Avastin^® (bevacizumab). The cost of the development plan will continue to be shared equally by the three partners. For purposes of EITF 00-21, the revised development plan and budget for Tarceva was deemed a material amendment to our Roche agreement, and therefore, future milestones received from Roche will be recognized in accordance with EITF 00-21. Accordingly, future milestone payments received from Roche will be initially recorded as unearned revenue and recognized over the expected term of the research collaboration on a straight-line basis, which approximates the expected level of performance under the development plan. In September 2005, we recorded a $4.0 million milestone payment from Roche upon approval of Tarceva by the European Commission for sale in the European Union. In November 2005, we recorded a $4.0 million milestone payment from Roche upon acceptance for review by the EMEA for the application of Tarceva in combination with gemcitabine chemotherapy for the treatment of advanced pancreatic cancer in patients who have not received previous chemotherapy. Both of the payments have been included in deferred revenue. The unearned revenue related to the milestones earned from Roche was $7.8 million as of December 31, 2005 of which $868,000 is classified as short-term and the balance of $6.9 million was classified as long-term in the accompanying consolidated balance sheet.

      During the year ended December 31, 2005, we entered into worldwide non-exclusive license agreements with four pharmaceuticals companies, under our dipeptidyl peptidase IV, or DPIV, patent portfolio covering the use of DPIV inhibitors for the treatment of type 2 diabetes and related indications. In addition to upfront fees received from these agreements, we will receive milestone payments upon the achievement of certain events and royalty payments on net sales. Under the terms of the agreements, we recognized upfront license revenue of $9.2 million for the year ended December 31, 2005. In December 2005, we recognized $5.0 million of milestone payments in connection with the NDA filing in the United States by a licensee pursuant to a worldwide non-exclusive license under our DPIV patent portfolio. All of the payments mentioned above, are included in license and milestone revenues on the accompanying consolidated statement of operations for the year ended December 31, 2005. We recognize revenue from license agreements where we have no future obligations upon the effective date of the agreements and the collection of payments is reasonably assured.

Collaborative Program Revenues

      Collaborative program revenues represent funding arrangements for research and development in the field of biotechnology and are recognized when earned in accordance with the terms of the contracts and related research and development activities undertaken.

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      Based on the terms of our collaboration agreement with Pfizer revenues derived from reimbursements of costs associated with the development of Macugen are recorded in compliance with EITF Issue 99-19, “Reporting Revenue Gross as a Principal Versus Net as an Agent” (“EITF 99-19”), and EITF Issue 01-14, “Income Statement Characterization of Reimbursements Received For ’Out-of-Pocket’ Expenses Incurred” (“EITF 01-14”). According to the criteria established by these EITF Issues, in transactions where we act as a principal, with discretion to choose suppliers, bear credit risk and perform part of the services required in the transaction, we have met the criteria to record revenue for the gross amount of the reimbursements.

(c) Research and Development Costs

      Research and development, or R&D, costs are charged to operations as incurred and include direct costs of R&D scientists and equipment, contracted costs, and an allocation of laboratory facility and other core scientific services. Included in R&D is our proportionate share of development expenses related to the Tripartite Agreement with Genentech and Roche (see note 4(a)).

(d) Acquired In-Process Research and Development

      Costs to acquire in-process research and development projects and technologies which have no alternative future use and which have not reached technological feasibility at the date of acquisition are expensed as incurred (see note 2).

(e) Accounting for Stock-Based Compensation

      We follow the provisions of SFAS No. 123, “Accounting for Stock-Based Compensation.” The provisions of SFAS No. 123 allow us to either expense the estimated fair value of stock options or to continue to follow the intrinsic value method set forth in Accounting Principles Board (“APB”) Opinion No. 25 “Accounting for Stock Issued to Employees,” but disclose the pro forma effect on net income (loss) had the fair value of the options been expensed. We have elected to continue to apply APB Opinion No. 25 in accounting for stock options issued to employees. In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure.” SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value method of accounting for stock-based employee compensation as originally provided by SFAS No. 123. Additionally, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require prominent disclosure in both the annual and interim financial statements about the method of accounting for stock-based compensation and the effect of the method used on reported results.

      Stock option grants are generally set at the closing price of our common stock on the date of grant and the related number of shares granted are fixed at that point in time. Therefore, under the principles of APB Opinion No. 25, we do not recognize compensation expense associated with the grant of stock options. Pro forma information regarding net loss and loss per share shown below was determined as if we had accounted for our employee stock options and shares sold under our stock purchase plan under the fair value method of SFAS No. 123.

      On November 30, 2005, the compensation committee of our Board of Directors approved the forward vesting of all unvested out-of-the-money stock options with an exercise price greater than $30 per share for all of our employees, other than executive officers. Options to purchase approximately 1.6 million shares of common stock were accelerated. Options held by executive officers and non-employee directors were not accelerated. The accelerated options, which are considered fully vested as of November 30, 2005, have grant prices ranging from $30.09 to $82.40 per share and a weighted average grant price of $45.44 per share. The primary purpose of the accelerated vesting is to

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enable us to reduce the future compensation expense associated with our out-of-the-money stock options upon adoption of SFAS No. 123(R) in fiscal 2006.

      Commencing in fiscal 2005, the fair value of the options was estimated at the date of grant using a Black-Scholes option pricing model with the expected option term determined using a Monte Carlo simulation model that incorporates historical employee exercise behavior and post-vesting employee termination rates. The fair value of the options was estimated at the date of grant using a Black-Scholes option pricing model with the following assumptions:

				Three Months			Year Ended
	Year Ended			Ended			September 30,
	December 31,			December 31,
	2005			2004			2004			2003
Risk-free interest rate		4.23	%		3.22	%		2.97	%		1.76	%
Dividend yield		0.00	%		0.00	%		0.00	%		0.00	%
Volatility		60.95	%		80.16	%		78.91	%		81.63	%
Weighted-average expected life of option (years)		4.49			3.00			3.00			3.00
Weighted-average exercise price of stock option grants	$	32.52		$	56.30		$	61.40		$	28.10
Weighted-average fair value of stock option grants	$	17.26		$	29.95		$	32.25		$	14.82

      For purposes of pro forma disclosures, the estimated fair value of the options is amortized over the options’ vesting periods. Our pro forma information for the twelve months ended December 31, 2005, September 30, 2004, September 30, 2003, and for the three months ended December 31, 2004, is as follows (in thousands, except per share information):

					Three Months
		Year Ended			Ended			Year Ended September 30,
		December 31,			December 31,
		2005			2004			2004			2003
Net loss		$	(157,123	)	$	(48,395	)	$	(260,371	)	$	(181,357	)
Add: stock-based compensation included in net loss			3,406			679			723			862
Compensation cost determined under fair value method			(61,714	)		(7,395	)		(25,854	)		(20,690	)
Pro forma net loss		$	(215,431	)	$	(55,111	)	$	(285,502	)	$	(201,185	)
Basic and diluted loss per common share:
	Net loss — as reported	$	(3.02	)	$	(1.02	)	$	(6.50	)	$	(4.87	)
	Net loss — pro forma	$	(4.14	)	$	(1.16	)	$	(7.12	)	$	(5.40	)

      Included in the compensation cost determined under the fair value method for the year ended December 31, 2005 was approximately $35.0 million as a result of the vesting of the out-of-money options as discussed above.

      On December 16, 2004, the FASB issued SFAS No. 123 (revised 2004), “Share-Based Payment” (“SFAS No. 123(R)”), which is a revision SFAS No. 123. SFAS No. 123(R) supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB No. 25”), and amends SFAS No. 95, “Statement of Cash Flows” (“SFAS No. 95”). Generally, the approach in SFAS No. 123(R) is similar to

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the approach described in SFAS No. 123(R). However, SFAS No. 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure will no longer be permitted.

      SFAS No. 123(R) must be adopted no later than January 1, 2006. We will adopt the “modified prospective” method in which compensation cost is recognized beginning with the effective date (a) based on the requirements of SFAS No. 123(R) for all share-based payments granted after the effective date and (b) based on the requirements of SFAS No. 123 for all awards granted to employees prior to the effective date of SFAS No. 123(R) that remain unvested on the effective date.

      As permitted by SFAS No. 123, we currently account for share-based payments to employees using APB No. 25’s intrinsic value method and, as such, generally recognize no compensation cost for employee stock options. Accordingly, the adoption of SFAS No. 123(R)’s fair value method will have a significant impact on our results of operations, although it will have no impact on our overall financial position. The impact of adoption of SFAS No. 123(R) cannot be predicted at this time because it will depend on levels of share-based payments granted in the future. At December 31, 2005, the total unamortized compensation expense related to the 2.6 million unvested options that were outstanding, as determined in accordance with SFAS No. 123(R), was approximately $34.0 million. This amount will be amortized over the remaining vesting periods. Based on the total number of outstanding options (through December 31, 2005), we expect to record amortization of stock compensation expense in calendar 2006 of at approximately $11.4 million for these outstanding options only, of which $3.2 million is expected to be recognized during the first quarter of fiscal 2006.

(f) Net Loss Per Share

      Basic and diluted net loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the respective period. Common share equivalents (convertible senior subordinated notes, stock options and warrants) are not included since their effect would be anti-dilutive. The contingent shares pursuant to the contingent value rights are not included since the contingency condition has not been satisfied.

      Such common share equivalents (convertible senior subordinated notes, stock options and warrants) and contingent shares for the twelve months ended December 31, 2005, September 30, 2004, September 30, 2003 and the three months ended December 31, 2004, amounted to (in thousands):

			Three Months		Year Ended
	Year Ended		Ended		September 30,
	December 31,		December 31,
	2005		2004		2004		2003
Common share equivalents		4,948		4,752		7,152		5,016
Contingent shares		1,585		1,585		1,585		1,585

      If the year ended December 31, 2005, and three months ended December 31, 2004 had resulted in net income and had the common share equivalents for our 2% convertible senior subordinated notes due 2025 (3,908,240 shares) and our 3.25% convertible senior subordinated notes due 2023 (2,998,800 shares) been dilutive, interest expense related to the notes would have been added back to net income to calculate diluted earnings per share. The related interest expense of these notes for year ended December 31, 2005 and the three months ended December 31, 2004 totaled $4.9 million and $1.2 million, respectively. If the years ended September 30, 2004 and 2003 had resulted in net income and had the common share equivalents for our convertible senior subordinated notes due 2009 (3,200,000 shares) and our convertible senior subordinated notes due 2023 (2,998,800 shares) been dilutive, interest expense related to the notes would have been added back to net income to calculate

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diluted earnings per share. The related interest expense of these notes for the years ended September 30, 2004 and 2003 totaled $13.4 million and $6.7 million, respectively. As discussed in note 10(a), the convertible notes due in 2025 were issued in December 2005. As discussed in note 10(b), the convertible senior subordinated notes due in 2023 were issued in September 2003. As discussed in note 10(c), the convertible senior subordinated notes due 2009 were fully converted into shares of our common stock in the fourth quarter of fiscal 2004.

(g) Comprehensive Income (Loss)

      Comprehensive income includes foreign currency translation adjustments and unrealized gains or losses on our available-for-sale securities and derivative instruments (in thousands).

					Three Months			Years Ended
		Year Ended			Ended			September 30,
		December 31,			December 31,
		2005			2004			2004			2003
Net loss		$	(157,123	)	$	(48,395	)	$	(260,371	)	$	(181,357	)
Other comprehensive income (loss):
	Foreign currency translation adjustments		(2,431	)		2,224			1,204			1,150
	Unrealized gains (losses) on derivative instruments arising during period		—			—			131			—
	Unrealized holding gains (losses) arising during period		(1,245	)		(341	)		(995	)		(641	)
	Less: Reclassification adjustment for losses (gains) realized in net loss		2,173			(22	)		(107	)		(350	)
			(1,503	)		1,861			233			159
Total comprehensive loss		$	(158,626	)	$	(46,534	)	$	(260,138	)	$	(181,198	)

      The components of accumulated other comprehensive income (loss) were as follows (in thousands):

	As of December 31,
	2005			2004
Cumulative foreign currency translation adjustment	$	1,828		$	4,259
Unrealized gains (losses) on available-for-sale securities		(73	)		(1,001	)
Accumulated other comprehensive income	$	1,755		$	3,258

(h) Cash and Cash Equivalents

      We include as cash equivalents reverse repurchase agreements, treasury bills, commercial paper and time deposits with original maturities of three months or less. Such cash equivalents amounted to $102.7 million and $276.1 million as of December 31, 2005 and 2004, respectively.

(i) Investments

      Investment securities at December 31, 2005 and 2004 consisted of U.S. government securities, municipal obligations and debt and equity securities of financial institutions and corporations with

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strong credit ratings. We classify our investments as available-for-sale securities, as defined by SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities.” These securities are recorded at their fair value. Unrealized holding gains and losses, net of the related tax effect, if any, on available-for-sale securities are excluded from earnings and are reported in accumulated other comprehensive income (loss), a separate component of stockholders’ equity, until realized. The specific identification basis is utilized to calculate the cost to determine realized gains and losses from the sale of available-for-sale securities. A decline in the market value of any available-for-sale security below cost that is deemed to be other than temporary results in a reduction in carrying amount to fair value. The impairment is charged to earnings and a new cost basis for the security is established. Dividend and interest income are recognized when earned.

      In September 2003, in connection with the issuance of our 3.25% convertible senior subordinated notes (see note 10(b)), we pledged $14.2 million of U.S. government securities, or Restricted Investment Securities, with maturities at various dates through August 2006. We consider our Restricted Investment Securities to be held-to-maturity, as defined by SFAS No. 115. These securities are reported at their amortized cost, which includes the direct costs to acquire the securities, plus the amortization of any discount or premium, and accrued interest earned on the securities. The balance of Restricted Investment Securities decreases as scheduled interest payments are made. The aggregate fair value and amortized cost of the Restricted Investment Securities at December 31, 2005 was $4.9 million, which was classified as short-term. The aggregate fair value and amortized costs of the Restricted Investment Securities at December 31, 2004 was $9.5 million, of which $4.8 million was classified as short-term and the balance of $4.7 million as long-term.

      With respect to our facility leases for Horsham, PA and Oxford, England, we have outstanding letters of credit issued by a commercial bank. The irrevocable letter of credit for our Horsham, PA facility expires annually with a final expiration date of September 22, 2008. This letter of credit is for $400,000, of which the full amount was available at December 31, 2005. The irrevocable letter of credit for our Oxford, England facility expires annually with a final expiration date of September 27, 2007. This letter of credit is for $2.5 million, of which the full amount was available on December 31, 2005. The collateral for these letters of credit are maintained in a restricted investment account. Included in cash and cash equivalents and investments securities as of December 31, 2005 is $14,000 and $3.6 million, respectively, relating to restricted cash and investments to secure these letters of credit. Included in cash and cash equivalents and investment securities as of December 31, 2004 is $144,000 and $3.3 million, respectively, relating to restricted cash and investments to secure these letters of credit.

      In connection with our acquisition of Eyetech, we assumed $5.6 million of letters of credit associated with the leases of office and laboratory facilities in New York, NY, Cedar Knolls, NJ, Lexington, MA and Woburn, MA. These irrevocable letters of credit for our acquired facilities expire annually with a final expiration date of 2012. These letters of credit are collateralized by $5.6 million of cash invested in high quality certificates of deposit, which is reflected as restricted investments on our balance sheet at December 31, 2005.

      We have certain investments in privately-owned companies that are carried on the cost method of accounting. Other than temporary losses are recorded against earnings in the period the decrease in value of the investment is deemed to have occurred.

(j) Goodwill and Intangible Assets

      We account for goodwill and other intangible assets in accordance with SFAS No. 141, “Business Combinations” and SFAS No. 142, “Goodwill and Other Intangible Assets,” which we adopted in fiscal 2003. SFAS No. 141 requires that the purchase method of accounting be used for all business combinations. It specifies the criteria which intangible assets acquired in a business combination must

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meet in order to be recognized and reported apart from goodwill. SFAS No. 142 requires that goodwill and intangible assets determined to have indefinite lives no longer be amortized but instead be tested for impairment at least annually and whenever events or circumstances occur that indicate impairment might have occurred. SFAS No. 142 also requires that intangible assets with estimable useful lives be amortized over their respective estimated useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable (see note 7).

      As a result of our R&D programs, including programs funded pursuant to R&D funding agreements (see note 4), we have applied for a number of patents in the United States and abroad. Costs incurred in connection with patent applications for our R&D programs have been expensed as incurred.

(k) Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of

      In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” we review long-lived assets to determine whether an event or change in circumstances indicates the carrying value of the asset may not be recoverable. We base our evaluation on such impairment indicators as the nature of the assets, the future economic benefit of the assets and any historical or future profitability measurements, as well as other external market conditions or factors that may be present. If such impairment indicators are present or other factors exist that indicate that the carrying amount of the asset may not be recoverable, we determine whether an impairment has occurred through the use of an undiscounted cash flows analysis at the lowest level for which identifiable cash flows exist. If impairment has occurred, we recognize a loss for the difference between the carrying amount and the fair value of the asset. Fair value is the amount at which the asset could be bought or sold in a current transaction between a willing buyer and seller other than in a forced or liquidation sale and can be measured at the asset’s quoted market price in an active market or, where an active market for the asset does not exist, our best estimate of fair value based on discounted cash flow analysis. Assets to be disposed of by sale are measured at the lower of carrying amount or fair value less estimated costs to sell. In the fourth quarter of fiscal 2004, we determined it was necessary to record an impairment charge related to our intangible asset for exclusive distribution rights to the marketed product, Gelclair, in North America (see note 7).

(l) Inventory

      Tarceva is stated at the lower of cost or market, with cost being determined using the weighted average method. Included in inventory are raw materials and work in process for Tarceva that may be used in the production of pre-clinical and clinical product, which will be expensed to research and development cost when consumed for these uses. Prior to receipt of FDA approval of Tarceva for commercial sale on November 18, 2004, we had expensed all costs associated with the production of Tarceva to research and development expense in our consolidated statements of operations. Effective November 18, 2004, we began to capitalize the costs of manufacturing Tarceva as inventory, including the costs to label, package and ship previously manufactured bulk inventory which costs had already been expensed as research and development. Inventory is comprised of three components: raw materials, which are purchased directly by us, work in process, which is primarily active pharmaceutical ingredient (API) where title has transferred from our contract manufacturer to us, and finished goods, which is packaged product ready for commercial sale.

      At December 31, 2005 and 2004, the cost reflected in a portion of the finished goods inventory for Tarceva consisted solely of cost incurred to package and label work-in-process inventory that had been previously expensed. As we continue to process the inventory that was partially produced and ex-

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pensed prior to November 18, 2004, we will continue to reflect in inventory only those incremental costs incurred to complete such inventory into finished goods.

      As part of the acquisition of Eyetech, acquired finished goods and work-in-process was valued at fair value. Included in the finished goods and work in progress at December 31, 2005 is $15.3 million and $33.1 million, respectively of step up in value assigned to Eyetech inventory as part of the acquisition. The carrying value of raw materials acquired on the date of the acquisition and post acquisition Macugen inventory is stated at the lower of cost or market, and our inventory costs are determined by weighted average method. Inventory is comprised of three components: raw materials, which are purchased directly by us, work in process, which is primarily active pharmaceutical ingredient (API) where title has transferred from our contract manufacturer to us, and finished goods, which is packaged product ready for commercial sale.

      Gelclair inventory is stated at the lower of cost or market, as determined using the first-in, first-out method. During the year ended September 30, 2004, we recorded a provision of $8.6 million for purchase commitments and excess inventory that we considered to be in excess of forecasted future demand based on the expiration date of the product on hand. In late October 2004, we exercised our right to terminate the agreement with Helsinn. During the three months ended December 31, 2004, we recorded an adjustment of $1.4 million to reduce the previously recorded provision for Gelclair inventory based on terms at a settlement with Helsinn.

      Inventory, net of the reserve for excess inventory, at December 31, 2005 and 2004, consisted of the following (in thousands):

	December 31, 2005		December 31, 2004
Raw materials		5,905		1,130
Work in progress		44,961		—
Finished goods on hand, net		19,533		836
Inventory subject to return		5,316		156
Total inventory	$	75,715	$	2,122

      Inventory subject to return represents the amount of Tarceva shipped to Genentech and Gelclair shipped to wholesale customers, which has not been recognized as revenue (see note 1(b)).

(m) Depreciation and Amortization

      Depreciation of fixed assets is recognized over the estimated useful lives of the respective asset groups on a straight-line basis. Leasehold improvements are amortized on a straight-line basis over the lesser of the estimated useful lives or the remainder of the lease term.

      Amortization of compounds acquired by us (which are included in other assets on the accompanying consolidated balance sheets) is on a straight-line basis over five years.

(n) Computer Software Costs

      We record the costs of computer software in accordance with the American Institute of Certified Public Accountants, or AICPA, Statement of Position 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use.” SOP 98-1 requires that certain internal-use computer software costs be capitalized and amortized over the useful life of the asset.

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(o) Accrual for Clinical Research Organization and Clinical Site Costs

      We record accruals for estimated clinical study costs. Clinical study costs represent costs incurred by clinical research organizations, or CROs, and clinical sites. These costs are recorded as a component of R&D expenses. We analyze the progress of the clinical trials, including levels of patient enrollment, invoices received and contracted costs when evaluating the adequacy of the accrued liabilities. Significant judgments and estimates must be made and used in determining the accrued balance in any accounting period. Actual costs incurred may or may not match the estimated costs for a given accounting period. Actual results could differ from those estimates under different assumptions.

(p) Foreign Currency Translation

      The assets and liabilities of our non-U.S. subsidiaries, OSI-UK and Prosidion, which operate in their local currency, are translated to U.S. dollars at exchange rates in effect at the balance sheet date with resulting translation adjustments directly recorded as a separate component of accumulated other comprehensive income (loss). Income and expense accounts are translated at the average exchange rates during the year.

(q) Accounting for Derivatives

      We enter into forward exchange contracts to reduce foreign currency fluctuation risks relating to intercompany transactions for the funding of our research activities in the United Kingdom. We account for these derivative financial instruments in accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” which was amended by SFAS No. 137 and SFAS No. 138. When entered into, we designate and document these derivative instruments as a cash flow hedge of a specific underlying exposure, as well as the risk management objectives and strategies for undertaking the hedge transactions. Changes in the fair value of a derivative that is designated and documented as a cash flow hedge and is highly effective are recorded in other comprehensive income until the underlying transaction affects earnings, and then are later reclassified to earnings. We formally assess, both at the inception and at each financial quarter thereafter, the effectiveness of the derivative instrument hedging the underlying forecasted cash flow transaction. Any ineffectiveness related to the derivative financial instruments’ changes in fair value will be recognized in the period in which the ineffectiveness was calculated. There were no foreign exchange contracts as of December 31, 2005 and 2004.

(r) Income Taxes

      Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

(s) Debt Issuance Costs

      Costs incurred in issuing the 2.0% convertible senior subordinated notes and the 3.25% convertible senior subordinated notes are amortized using the straight-line method over a five-year term, which represents the earliest date that we may redeem such notes. Costs incurred in issuing the 4.0% convertible senior subordinated notes were amortized using the straight-line method over a seven-year term. Upon conversion of the 4.0% convertible senior subordinated notes, in July 2004, the remaining

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unamortized costs of $3.7 million were reclassified to additional paid in capital (see note 10(c)). The amortization of the debt issuance costs is included in other expense in the accompanying consolidated statements of operations.

(t) Use of Estimates

      We have made a number of estimates and assumptions related to the reported amounts in our financial statements and accompanying notes to prepare these consolidated financial statements in conformity with U.S. generally accepted accounting principles. Actual results could differ from those estimates and assumptions.

(u) Reclassifications

      We have made certain reclassifications to the prior consolidated financial statements to conform them to the current performance.

(2)  ACQUISITIONS

(a) Eyetech Pharmaceuticals, Inc.

      On November 14, 2005, we completed our acquisition of Eyetech, pursuant to the terms of an Agreement and Plan of Merger dated August 21, 2005, or the merger agreement. The acquisition was structured as a merger of a wholly-owned subsidiary of OSI with and into Eyetech, and Eyetech was renamed (OSI) Eyetech, Inc.

      The assets purchased and liabilities assumed by us included: (a) one marketed product, Macugen, and the related technology platform and patent estate; (b) rights to Eyetech’s leased facilities in New York, New York, Cedar Knolls, NJ, Woburn and Lexington, MA and Boulder, Colorado, as well as leasehold improvements and certain equipment; (c) inventory; and (d) certain other assets and liabilities.

      As consideration for the merger, each share of Eyetech common stock was purchase for $15 cash and 0.12275 shares of our common stock. The aggregate consideration related to the acquisition totaled $909.3 million, including the cash consideration, value of OSI common stock issued, value of converted stock options issued, and deal related costs. We issued a total of approximately 5.65 million shares valued at $205.4 million, which was based on the average four-day closing price of our common stock around the date of the announcement of the acquisition, which occurred on August 21, 2005. In addition, each outstanding option to purchase shares of Eyetech common stock, other than options granted under Eyetech’s 2001 Stock Plan, accelerated in full and became vested and exercisable prior to the closing date of November 14, 2005. Any of these options that remained unexercised as of the effective time of the merger were terminated or cancelled in accordance with their terms. Each outstanding option granted under Eyetech’s 2001 Stock Plan was assumed by OSI at the effective time and became an option to purchase shares of OSI stock. The portion of the valued assigned to options assumed and included in the purchase price was $1.9 million. Options issued to Eyetech employees that were in the money, but not yet vested, were converted into options for our common stock at a ratio of 0.491 OSI shares for each option to purchase Eyetech common. Based on this ratio, we assumed approximately 153,000 options. The valued assigned to options was $4.1 million of which $1.9 million was included in the purchase price and the remainder recognized as deferred compensation. Outstanding unvested restricted shares and options to acquire restricted shares as of the acquisition date are to be converted into cash and shares of OSI common stock (restricted to the same extent as the restricted stock converted) on the same basis as the outstanding stock of Eyetech. The value assigned as of the acquisition date to these rights was $6.1 million and recognized as deferred

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compensation in the accompanying financial statements. The deferred compensation related to the stock options and the restricted stock is being amortized over the remaining vesting period.

      The acquisition was accounted for under the purchase method of accounting. The results of operations of Eyetech have been included in the consolidated statements of operations commencing as of November 14, 2005. The purchase price was allocated to the acquired assets and assumed liabilities based on the preliminary fair values as of the date of the acquisition. In connection with the merger, we committed to and approved an exit plan for consolidation of certain Eyetech facilities. As of December 31, 2005 the final determination for the disposition of equipment and other costs have not been finalized. Once completed, these adjustments could impact the carrying value of property plant and equipment and we may incur additional exit costs. Any adjustment, if necessary, is expected to be recorded as an adjustment to the goodwill. As a result of the exit plan, we have recognized a liability of $5.4 million for rent obligations based upon the present value of the remaining lease payments, after exiting the facilities, offset by the potential sublease rental income. In addition, we recognized $6.1 million of liabilities associated with personnel reductions and relocation costs.

      The preliminary purchase price allocation is as follows (in thousands):

Cash and Investments	$	271,934
Accounts receivable		92,165
Inventory		64,660
Fixed assets		14,688
Prepaid expenses and other assets		7,641
Amortizable intangibles		201,400
Goodwill		320,005
In-process R&D		60,900
Total assets and in-process R&D acquired		1,033,393
Less liabilities assumed		124,000
Purchase price	$	909,393

      The value assigned to the acquired in-process R&D was determined by identifying those acquired in-process research projects for which: (a) technological feasibility had not been established at the acquisition date, (b) there was no alternative future use, and (c) the fair value was estimable based on reasonable assumptions. The acquired in-process R&D was valued at $60.9 million and expensed on the acquisition date, and included in the accompanying consolidated statements of operations for the year ended December 31, 2005. In determining the value of the in-process R&D, the assumed commercialization dates for the products ranged from 2007 to 2021. Given the risks associated with the development of new drugs, the revenue and expense forecasts were probability-adjusted to reflect the risk of advancement through the approval process. The risk adjustments applied were based on the compound’s stage of development at the time of assessment and the historical probability of successful advancement for compounds at that stage. These modeled cash flows were discounted back to their net present value. The projected net cash flows from such projects were based on management’s estimates of revenues and operating profits related to such projects. The value of the in-process R&D was based on the income approach that focuses on the income-producing capability of the assets. The underlying premise of this approach is that the value of an asset can be measured by the present worth of the net economic benefit (cash receipts less cash outlays) to be received over the life of the asset. Significant assumptions and estimates used in the valuation of in-process R&D included: the stage of development for each of the two projects; future revenues; growth rates for each product; product

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sales cycles; the estimated life of a product’s underlying technology; future operating expenses; probability adjustments to reflect the risk of developing the acquired technology into commercially viable products; and a discount rate of 16% to reflect present value.

      The following unaudited pro forma financial information for the year ended September 30, 2004, the three-month transition period ended December 31, 2004 and the year ended December 31, 2005 combine the historical financial information of OSI and Eyetech giving effect to the merger as if it occurred on October 1, 2003, November 1, 2004 and January 1, 2005, reflecting only pro forma adjustments expected to have a continuing impact on the combined results. The unaudited pro forma financial information for the year ended September 30, 2004 combines the historical financial information of OSI for the year ended September 30, 2004 and Eyetech for the year ended December 31, 2004. In December 2004, OSI changed its fiscal year end to December 31 and filed a transition report on Form 10-QT for the three-month period ended December 31, 2004. The unaudited pro forma financial information for the three-month period ended December 31, 2004 combines the historical financial information of OSI and Eyetech for the three-month period ended December 31, 2004. Accordingly, the historical financial information for Eyetech for the three months ended December 31, 2004 are included in the condensed pro forma financial information for both the year ended September 30, 2004 and the three months ended December 31, 2004. The unaudited pro forma financial information for the year ended December 31, 2005 combines the historical financial information of OSI and Eyetech for the year ended December 31, 2005 (in thousands, except per share information):

	Year Ended						Year Ended
	December 31			Three Months Ended			September 30,
	2005			December 31 2004			2004
Revenues	$	355,799		$	22,209		$	86,466
Net loss before non-recurring charge related to the acquisition	$	(161,267	)	$	(92,715	)	$	(406,900	)
Basic and diluted net loss per share before non-recurring charge related to the acquisition	$	(2.83	)	$	(1.75	)	$	(8.90	)

      The pro forma financial information has been prepared for comparative purposes only. The pro forma financial information includes adjustments to the historical results to reflect the issuance of approximately 5.65 million shares of common stock and adjustments for amortization of Eyetech unearned revenue, interest expense related to assumed borrowings, recognition of deferred stock based compensation, and amortization of the purchased intangibles. The pro forma financial information does not include the charge of approximately $60.9 million related to the acquired in-process R&D. The pro forma information does not purport to be indicative of operating results that would have been achieved had the acquisition taken place on the dates indicated or the results that may be obtained in the future.

(b) Probiodrug Assets

      On July 26, 2004, our subsidiary, Prosidion, which is focused on the discovery and development of diabetes and obesity therapeutics, completed the acquisition of certain assets of Probiodrug AG, pursuant to the terms of an asset purchase agreement dated June 17, 2004. Probiodrug is a development company engaged in the research and development of drug candidates for various targets and various indications, including metabolic diseases. The assets acquired included a platform of dipeptidyl peptidase IV (DPIV) technology, which includes PSN9301, a clinical candidate that is in Phase II clinical trials for the treatment of type 2 diabetes, and a portfolio of issued and pending patents and patent applications with claims covering DPIV as a target for anti diabetes therapy and licensed rights to patent applications claming combinations of DPIV inhibitors with other oral anti-diabetes drugs such as

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metformin, that have been non-exclusively licensed to other companies for future milestones and royalty payments. Upon the closing of the acquisition, we paid $36.4 million in cash, including professional fees. The purchase price was allocated to the assets acquired based on the fair values as of the date of the acquisition. Of the $36.4 million purchase price, $32.8 million was assigned to the drug candidate in clinical development, PSN9301, and was expensed at the date of the acquisition and is included in acquired in-process research and development expenses in the accompanying consolidated statement of operations for the year ended September 30, 2004. The non-exclusive licenses issued to other companies as well as the patent estate were valued at $3.6 million and are included in other intangible assets-net on the accompanying consolidated balance sheets as of December 31, 2005 and 2004, and are being amortized on a straight-line basis through the earliest expiration of the related patents in April 2017. We will also be required to pay additional contingent milestone payments upon the achievement of certain milestones related to the development of PSN9301.

      The value assigned to the acquired in-process R&D was determined by identifying the acquired in-process research projects for which: (a) technological feasibility had not been established at the acquisition date, (b) there was no alternative future use, and (c) the fair value was estimable based on reasonable assumptions. The acquired in-process R&D was valued at $32.8 million and was assigned entirely to PSN9301. The value of the acquired in-process R&D and the other identifiable intangible assets was determined by estimating the projected net cash flows, based upon the future revenues to be earned upon commercialization. In determining the value of the in-process R&D, the assumed commercialization date for the product was 2010. Given the risks associated with the development of new drugs, the revenue and expense forecast was probability-adjusted to reflect the risk of advancement through the approval process. The risk adjustments applied were based on the compound’s stage of development at the time of assessment and the historical probability of successful advancement for compounds at that stage. The modeled cash flow was discounted back to the net present value. The projected net cash flows from such project were based on management’s estimates of revenues and operating profits related to such project. The value of the in-process R&D was based on the income approach that focuses on the income-producing capability of the asset. The underlying premise of this approach is that the value of an asset can be measured by the present worth of the net economic benefit (cash receipts less cash outlays) to be received over the life of the asset. Significant assumptions and estimates used in the valuation of in-process R&D included: the stage of development for the project; future revenues; growth rates; product sales cycles; the estimated life of a product’s underlying technology; future operating expenses; probability adjustments to reflect the risk of developing the acquired technology into commercially viable products; and a discount rate of 26% to reflect present value.

      Prosidion also entered into a research agreement with Probiodrug whereby Probiodrug would provide services directed to the research and development of new lead molecules in the area of glucose-dependent insulinotropic peptide receptor, agonism and antagonism and DP-IV modulation and/or inhibition. Prosidion agreed to fund the research and development services to be performed, up to $5.0 million dollars and would also be required to pay Probiodrug milestones on certain events and royalties on the net sales of products that arise from the research and development.

(c) Minority Interest in Prosidion

      On April 14, 2005, we completed the acquisition of the minority interest shares in Prosidion. We issued a total of 84,940 shares of our common stock in exchange for 286,200 shares in Prosidion, representing approximately 2.8% of the Prosidion shares outstanding. In addition, we paid $176,000 in cash to one of the minority shareholders of Prosidion, who is a director of our company, in exchange for 11,000 shares of Prosidion. The 84,940 common shares of our common stock were valued at $4.2 million, which was based on the average five-day closing price of our common stock around the date of

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the announcement of the proposed acquisition, which occurred on March 10, 2005. The acquisition of the minority interest resulted in Prosidion becoming our wholly-owned subsidiary. The acquisition of the minority interest was accounted for under the purchase method of accounting. The purchase price was allocated to the assets acquired and assumed liabilities based on the fair value as of the acquisition date. We incurred direct costs of $650,000 in connection with the acquisition, resulting in a total acquisition cost of approximately $5.0 million.

      The purchase price for the minority interest acquired was allocated as follows (in thousands):

License agreements	$	615
Patent estate		203
Acquired in-process research and development		3,694
Minority interest		322
Goodwill		149
Common stock and cash paid	$	4,983

      In advance of the acquisition of the minority interest, we paid $1.4 million to Prosidion employees in exchange for all outstanding in-the-money Prosidion options. This compensation charge has been reflected in the statement of operations for the year ended December 31, 2005, of which $577,000 is included in research and development expense and $803,000 is included in selling, general and administrative expense.

      The value assigned to the acquired in-process R&D was determined by identifying the acquired in-process research projects for which: (a) technological feasibility had not been established at the acquisition date, (b) there was no alternative future use, and (c) the fair value was estimable based on reasonable assumptions. The acquired in-process R&D was assigned entirely to three clinical candidates. The value of the acquired in-process R&D and the other identifiable intangible assets was determined by estimating the projected net cash flows, based upon the future revenues to be earned upon commercialization. In determining the value of the in-process R&D, the assumed commercialization date for the products ranged from 2010 to 2012. Given the risks associated with the development of new drugs, the revenue and expense forecasts were probability-adjusted to reflect the risk of advancement through the approval process. The risk adjustments applied were based on the compounds’ stage of development at the time of assessment and the historical probability of successful advancement for compounds at that stage. The modeled cash flows were discounted back to the net present value. The projected net cash flows from such projects were based on management’s estimates of revenues and operating profits related to such project. The value of the in-process R&D was based on the income approach that focuses on the income-producing capability of the asset. The underlying premise of this approach is that the value of an asset can be measured by the present worth of the net economic benefit (cash receipts less cash outlays) to be received over the life of the asset. Significant assumptions and estimates used in the valuation of in-process R&D included the stage of development for the project, future revenues, growth rates, product sales cycles, the estimated life of a product’s underlying technology, future operating expenses, probability adjustments to reflect the risk of developing the acquired technology into commercially viable products, and a discount rate of 23.5% to reflect present value.

(d) Cell Pathways

      On June 12, 2003, we completed our acquisition of Cell Pathways, Inc. pursuant to the terms of an Agreement and Plan of Merger dated February 7, 2003. The acquisition was structured as a merger of a

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wholly-owned subsidiary of OSI with and into Cell Pathways. The resulting subsidiary was merged with and into OSI on July 14, 2003.

      The assets purchased and liabilities assumed by us included: (a) two drug candidates in clinical development, Aptosyn^® (exisulind) and OSI-461, and the related technology platform and patent estate; (b) exclusive distribution rights to the marketed product, Gelclair, in North America; (c) rights to Cell Pathways’ leased facility in Horsham, PA, as well as leasehold improvements and certain equipment; (d) inventory; and (e) certain other assets and liabilities. We entered into consulting agreements with former Cell Pathways employees and officers engaged to assist us with the transition. Certain of these agreements also provided for the forgiveness of certain loans to these former officers. As of September 30, 2003, the full amount of these loans were forgiven as a result of such officers’ efforts with the transition.

      Gelclair is a bioadherent oral gel that provides relief for the treatment of pain associated with oral mucositis, a debilitating side effect often seen in patients undergoing chemotherapy or radiation treatment. As part of the Cell Pathways transaction, we assumed the rights and obligations under an exclusive distribution agreement with Helsinn that allowed us to market and distribute Gelclair in North America (United States, Canada and Mexico) through January 2012. Cell Pathways previously had entered into a three-year agreement with Celgene Corporation for the promotion of Gelclair, primarily in the U.S. oncology market. On June 12, 2003, we entered into an agreement with Celgene whereby we recovered full rights to market and distribute Gelclair in the oncology setting in North America. Our payment to Celgene under this agreement for the full return of the rights was expensed in the quarter ended September 30, 2003, upon the return of certain sales and marketing data. We were also required to make a payment to Celgene on the first anniversary of the effective date provided the transition services, as defined in the agreement, had been provided to us. The transition services were expensed ratably over the transition period from July 2003 through December 2003, and the payment was made in June 2004. The agreement also provides for a milestone payment to Celgene upon the achievement of a specified amount of net sales of Gelclair. We previously had a marketing agreement with John O. Butler Company, under which Butler marketed Gelclair to the dental market. In April 2004, we agreed with Butler to terminate this agreement. In the quarter ended September 30, 2004, we recorded an impairment charge related to our intangible asset for the exclusive distribution rights to Gelclair (see note 7). In late October 2004, we exercised our right to terminate the agreement with Helsinn while continuing to exercise our right to sell off inventory.

      As consideration for the merger, each share of Cell Pathways common stock was exchanged for (i) 0.0567 shares of our common stock and (ii) a contingent value right to receive 0.04 shares of our common stock in the event a new drug application is filed with the FDA by June 12, 2008 for either of the two newly acquired clinical candidates, Aptosyn or OSI-461. Based on the exchange ratio of 0.0567, approximately 2.2 million shares of our common stock were issued to Cell Pathways’ stockholders in connection with the merger. The 2.2 million common shares were valued at $31.2 million which was based on the average five-day closing price of our common stock around the date of the announcement of the merger which occurred on February 10, 2003. Any outstanding options that were not exercised prior to the effective date of the merger were, in accordance with their terms, terminated. We assumed approximately 44,000 outstanding and unexercised warrants to purchase shares of Cell Pathways common stock under the same terms and conditions as the original Cell Pathways’ warrants except that the exercise price of the warrants and the number of shares of our common stock for which the warrants are exercisable were adjusted based on the exchange ratio described above.

      The acquisition was accounted for under the purchase method of accounting. The results of operations of Cell Pathways have been included in the consolidated statements of operations commencing as of June 12, 2003. The purchase price was allocated to the acquired assets and assumed

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liabilities based on the fair values as of the date of the acquisition. The excess of the fair value of the net identifiable assets acquired over the purchase price paid represented negative goodwill of approximately $49.2 million. Since a portion of the negative goodwill was a result of not recognizing contingent consideration (i.e., the contingent value rights), the maximum value of the contingent value rights at the date of the acquisition was recorded as if it were a liability, thereby reducing the negative goodwill. The value of the contingent value rights of $22.0 million was based on the average five day closing price of our common stock around the date of the announcement of the merger which occurred on February 10, 2003. The remaining negative goodwill of $27.0 million was allocated proportionately to reduce the value of the non-current assets acquired and the in-process research and development which was charged to operations.

The purchase price was allocated as follows (in thousands):
Acquired in-process R&D	$	31,451
Gelclair rights		28,957
Inventory		3,102
Fixed assets		402
Cash		1,791
Prepaid expenses and other assets		1,420
Total assets and acquired in-process R&D		67,123
Less liabilities assumed		12,118
Purchase price	$	55,005

      The value assigned to the acquired in-process R&D was determined by identifying those acquired in-process research projects for which: (a) technological feasibility had not been established at the acquisition date, (b) there was no alternative future use, and (c) the fair value was estimable based on reasonable assumptions. The acquired in-process R&D was valued at $31.5 million after the allocation of the negative goodwill, expensed on the acquisition date, and included in the accompanying consolidated statements of operations for the year ended September 30, 2003. The portion of the purchase price assigned to the acquired in-process R&D was allocated to the following two clinical candidates: Aptosyn ($3.7 million), which was at that time in a Phase III trial in combination with Taxotere^® for the treatment of advanced non-small cell lung cancer and OSI-461 ($27.8 million).

      The value of the acquired in-process R&D was determined by estimating the projected net cash flows related to products under development, based upon the future revenues to be earned upon commercialization of such products. In determining the value of the in-process R&D, the assumed commercialization dates for these products ranged from 2005 to 2006. Given the risks associated with the development of new drugs, the revenue and expense forecasts were probability-adjusted to reflect the risk of advancement through the approval process. The risk adjustments applied were based on each compound’s stage of development at the time of assessment and the historical probability of successful advancement for compounds at that stage. These modeled cash flows were discounted back to their net present value. The projected net cash flows from such projects were based on management’s estimates of revenues and operating profits related to such projects. The value of the in-process R&D was based on the income approach that focuses on the income-producing capability of the assets. The underlying premise of this approach is that the value of an asset can be measured by the present worth of the net economic benefit (cash receipts less cash outlays) to be received over the life of the asset. Significant assumptions and estimates used in the valuation of in-process R&D included: the stage of development for each of the two projects; future revenues; growth rates for each product; product sales cycles; the estimated life of a product’s underlying technology; future

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operating expenses; probability adjustments to reflect the risk of developing the acquired technology into commercially viable products; and a discount rate of 25% to reflect present value.

(3) Investments

(a)     Investment Securities

      We invest our excess cash in U.S. government securities, municipal obligations and debt and equity instruments of financial institutions and corporations with strong credit ratings. We have established guidelines relative to diversification of our investments and their maturities with the objective of maintaining safety and liquidity. These guidelines are periodically reviewed and modified to take advantage of trends in yields and interest rates.

      The following is a summary of available-for-sale securities as of December 31, 2005 and 2004 (in thousands):

				Gross
				Unrealized
		Cost		Losses			Fair Value
2005
U.S. government securities		$	3,632	$	(77	)	$	3,555
Corporate and financial institutions debt and equity securities			1,514		(8	)		1,506
	Total	$	5,146	$	(85	)	$	5,061

				Gross
				Unrealized
		Cost		Losses			Fair Value
2004
U.S. government securities		$	264,343	$	(829	)	$	263,514
Corporate and financial institutions debt and equity securities			53,756		(167	)		53,589
	Total	$	318,099	$	(996	)	$	317,103

      Our investment securities include mutual funds with a cost basis and fair market value of $828,000 as of December 31, 2004. Net realized gains (losses) on sales of investments during the year ended December 31, 2005, the three months ended December 31, 2004 and the years ended September 30, 2004 and 2003 were ($2.2) million, ($5,700), $5,000 and $350,000, respectively.

      Maturities of securities classified as available-for-sale, excluding mutual funds, were as follows at December 31, 2005 (in thousands):

	Cost		Fair Value
2006	$	3,215	$	3,203
2007		681		655
2008		—		—
2009		—		—
2010		—		—
2011 and thereafter		1,250		1,203
	$	5,146	$	5,061

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(4) Product Development/Commercialization Agreements

(a) Roche and Genentech

      On January 8, 2001, we entered into an alliance with Genentech and Roche for the global co-development and commercialization of Tarceva. We received upfront fees of $25 million related to this alliance, and Genentech and Roche each purchased $35 million of our common stock at $75.66 per share. We are also entitled to up to $92 million upon the achievement of certain milestones under the terms of the alliance of which $42 million was received as of December 31, 2005. We have entered into separate agreements with both Genentech and Roche with respect to the alliance, as well as a Tripartite Agreement.

      Under the Tripartite Agreement, we agreed with Genentech and Roche to optimize the use of each party’s resources to develop Tarceva in certain countries around the world and share certain global development costs on an equal basis; to share information generated under a global development plan; to facilitate attainment of necessary regulatory approval of Tarceva for commercial marketing and sale in the world; and to work together on such matters as the parties agree from time to time during the development of Tarceva. We, as well as Genentech and Roche, may conduct clinical and pre-clinical activities for additional indications for Tarceva not called for under the global development plan, subject to certain conditions. The Tripartite Agreement will terminate when either the OSI/ Genentech collaboration agreement or the OSI/ Roche agreement terminates. Any reimbursement from or additional payments to Genentech or Roche for R&D costs under the cost sharing arrangement of the Tripartite Agreement are recorded as an increase or decrease to R&D expenses in the accompanying consolidated statements of operations.

      Under the OSI/ Genentech collaboration agreement, we agreed to collaborate in the product development of Tarceva with the goals of obtaining regulatory approval for commercial marketing and sale in the United States of products resulting from the collaboration, and, subsequently, supporting the commercialization of the product. Consistent with the development plan and with the approval of a joint steering committee, we agree with Genentech as to who will own and be responsible for the filing of drug approval applications with the FDA other than the first NDA, which we owned and filed, and the first supplemental NDA, which we owned and which we filed. Genentech has primary responsibility for the design and implementation of all product launch activities and the promotion, marketing and sales of all products resulting from the collaboration in the United States, its territories and Puerto Rico.

      We have certain co-promotion rights under the OSI/ Genentech collaboration agreement, which are defined in an amendment to the agreement effective as of June 4, 2004. Pursuant to this amendment, we co-promote Tarceva using a sales force equal to or greater than 25% of the combined OSI/ Genentech sales force. We share equally in the operating profits or losses on products resulting from the collaboration. Under the OSI/ Genentech collaboration agreement, we granted to Genentech a royalty-free non-transferable (except under certain circumstances), non-sublicensable (except under certain circumstances), co-exclusive license under our patents and know-how related to Tarceva to use, sell, offer for sale and import products resulting from the collaboration in the United States, its territories and Puerto Rico. In addition, Genentech granted to us a royalty-free non-transferable (except under certain circumstances), non-sublicensable (except under certain circumstances), co-exclusive license to certain patents and know-how held by Genentech to use, make, have made, sell, offer for sale and import products resulting from the collaboration in the United States, its territories and Puerto Rico. We have primary responsibility for patent filings for the base patents protecting Tarceva and, in addition, we have the right, but not the obligation, to institute, prosecute and control patent infringement claims relating to the base patents.

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      In connection with our collaboration with Genentech, Genentech recognizes all U.S. sales of Tarceva. We recognize revenues and losses from our alliance with Genentech, which consists of our 50% share of the pretax profits (loss) generated from the sales of Tarceva in the United States. We also recognize manufacturing revenue from the sale of inventory to Genentech for commercial sales of Tarceva in the United States and partial reimbursement from Genentech of our Tarceva-related commercial expenses. We receive royalties on sales of Tarceva outside of the United States by Roche.

      The OSI/ Genentech collaboration agreement continues until the date on which neither we nor Genentech are entitled to receive a share of the operating profits or losses on any products resulting from the collaboration, that is, until the date that we and Genentech mutually agree to terminate the collaboration or until either party exercises its early termination rights. The OSI/ Genentech collaboration agreement is subject to early termination in the event of certain customary defaults, such as material breach of the agreement and bankruptcy. The provisions of the amendment allowing us to co-promote are also subject to termination by Genentech upon a material breach by us of the amendment, which remains uncured, or upon a pattern of nonmaterial breaches which remains uncured. In addition, since January 8, 2003, Genentech has had the right to terminate the OSI/ Genentech collaboration agreement with six months’ prior written notice.

      Effective June 4, 2004, we entered into a Manufacturing and Supply Agreement with Genentech that defined each party’s responsibilities with respect to the manufacture and supply of clinical and commercial quantities of Tarceva. Under certain circumstances, if we fail to supply such clinical and commercial quantities, Genentech has the right, but not the obligation, to assume responsibility for such supply. The Manufacturing and Supply Agreement will terminate upon the termination of the OSI/ Genentech collaboration agreement.

      Under the OSI/ Roche agreement, we granted to Roche a license to our intellectual property rights with respect to Tarceva. Roche is collaborating with us and Genentech in the continued development of Tarceva and is responsible for marketing and commercialization of Tarceva outside of the United States in certain territories as defined in the agreement. The grant is a royalty-bearing, non-transferable (except under certain circumstances), non-sublicensable (except under certain circumstances), sole and exclusive license to use, sell, offer for sale and import products resulting from the development of Tarceva worldwide, other than the territories covered by the OSI/ Genentech collaboration agreement. In addition, Roche has the right, which it has exercised, to manufacture commercial supplies of Tarceva for its territory, subject to certain exceptions. Roche will pay us certain milestone payments and royalty payments on sales of products resulting from the collaboration. We have primary responsibility for patent filings for the base patents protecting Tarceva and, in addition, we have the right, but not the obligation, to institute, prosecute and control patent infringement claims relating to the base patents. The OSI/ Roche agreement continues until the date on which we are no longer entitled to receive a royalty on products resulting from the development of Tarceva, that is, until the date of expiration or revocation or complete rejection of the last to expire patent covering Tarceva or, in countries where there is no valid patent covering Tarceva, on the tenth anniversary of the first commercial sale of Tarceva in that country, or until either party exercises early termination rights. The OSI/ Roche agreement is subject to early termination in the event of certain customary defaults, such as material breach of the agreement and bankruptcy. In addition, since July 31, 2003, Roche has had the right to terminate the agreement on a country-by-country basis with six months’ prior written notice. Since such time, we also have had the right to terminate the agreement on a country-by-country basis if Roche has not launched or marketed a product in such country under certain circumstances.

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(b)     Pfizer

      In December 2002, Pfizer and Eyetech entered into several concurrent agreements to jointly develop and commercialize Macugen. The agreement became effective February 3, 2003 when government approval of the transaction was obtained. 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 age-related macular degeneration, or AMD, diabetic macular edema, or DME, central retinal vein occlusion or CRVO and other agreed upon ophthalmic indications. In the United States, we are co-promoting Macugen with Pfizer, we and Pfizer share in profits and losses from the sale of Macugen. Outside the United States, Pfizer markets the product under an exclusive license, for which we receive royalty payments based on net sales.

      Under the agreement, the parties’ sharing of profits and losses from the commercialization of Macugen in the United States extends until the later of 15 years after commercial launch in the United States or the expiration of the United States patent rights licensed to Pfizer. The payment of royalties to us by Pfizer based on net sales of Macugen outside the United States extends, on a country-by-country basis, until the later of 15 years after commercial launch and the expiration of the patent rights licensed to Pfizer in each particular country. The royalty rate on net sales of Macugen outside the United States is reduced on a country-by-country basis to the extent that the patent rights in a particular country expire or a generic form of Macugen is marketed in that country. We commercially launched Macugen in January 2005. The United States patent rights licensed by us to Pfizer expire between 2010 and 2017. The corresponding foreign rights include patents that expire between 2011 and 2017 and patent applications which, if issued as patents, are expected to expire between 2011 and 2020. Pfizer may terminate the collaboration relationship without cause upon six to twelve months’ prior notice, depending on when such notice is given. Either party may terminate the collaboration relationship based upon material uncured breaches by the other party. In addition, we may terminate the collaboration relationship if, during specified periods, net sales of Macugen do not reach specified levels. If we elect to terminate the collaboration in this situation, we would be required to pay royalties to Pfizer based on net sales of Macugen following such termination.

      The collaboration is governed by a joint operating committee, consisting of an equal number of representatives of us and Pfizer. There are also subcommittees with equal representation from both parties that have responsibility over development and regulatory, manufacturing and commercialization matters. In the case of unresolved disagreement, ultimate decision-making authority is vested in us as to some matters and in Pfizer as to other matters. A third category of decisions requires the approval of both us and Pfizer. Outside the United States, ultimate decision-making authority as to most matters is vested in Pfizer.

      Based on the achievement of certain specified worldwide regulatory submission and approvals, we would be eligible to receive up to an additional $90 million in license payments. We also have the potential to receive up to an additional $450 million in milestone payments, which are contingent upon successful commercialization of Macugen and which are based on attainment of agreed-upon sales levels.

(c)     Serono

      On March 11, 2003, we entered into a co-promotion agreement with Ares Trading, an affiliate of Serono, to market and promote Novantrone for approved oncology indications in the United States through December 2017. In consideration for these exclusive rights, we paid $46.0 million in cash, including professional fees. The purchase price and related professional fees, net of related amortization, are included in other intangible assets-net in the accompanying consolidated balance sheets as of December 31, 2005 and 2004, and were initially amortized on a straight-line basis through expiration of

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the Novantrone patent in April 2006. At December 31, 2005, we revised the future recoverability period of Novantrone intangible asset through the end of 2008 based upon revised estimates of future cash flows subsequent to the expiration of that patent. In consideration for certain transition services required to be provided by Serono, we also paid a fee of $10.0 million, which was recognized over the four-month transition period from the effective date of the agreement and is included in selling, general and administrative expense in the accompanying consolidated statement of operations for the year ended September 30, 2003. Under the terms of the agreement, we are also required to pay quarterly maintenance fees until the later of the expiration of the last valid patent claim or the first generic date, as defined in the agreement. Such maintenance fees are expensed as incurred and included in selling, general and administrative expenses on the accompanying consolidated statements of operations. We receive commissions on net sales of the product in the United States for oncology indications. Sales commissions totaled $29.7 million and $11.4 million for the year ended December 31, 2005 and the three months ended December 31, 2004, respectively. Sales commissions totaled $34.3 million and $16.3 million for the years ended September 30, 2004 and 2003, respectively.

(d)     Anaderm

      In connection with our former research agreement with Pfizer and New York University for the discovery and development of novel compounds to treat conditions such as baldness, wrinkles and pigmentation disorders, which was eventually terminated, we received $6.2 million of wind-down fees and collaborative revenues in consideration for transferring all research being performed by us for the year ended September 30, 2003.

(e)     Tanabe

      Effective as of October 1, 1999, we entered into the Collaborative Research and License Agreement with Tanabe Seiyaku Co. Ltd. focused on discovering and developing novel pharmaceutical products to treat diabetes. In April 2003, we assigned our rights and obligations under the collaborative agreement to Prosidion. The contract period under this agreement expired on October 1, 2003 and was not renewed. We recognized $3.4 million of collaborative program revenues from Tanabe in the year ended September 30, 2003. Tanabe had the responsibility for further development and marketing of any lead compound in exchange for milestone and royalty payments to us. In March 2004, Prosidion entered into a termination agreement with Tanabe, whereby Prosidion obtained the rights to certain patents developed under the collaboration, subject to Tanabe’s rights to develop and commercialize, in certain Asian territories, certain compounds covered by such patents. In consideration of the termination, Prosidion paid Tanabe $1.0 million in cash and issued $1.0 million of Prosidion preferred stock. This expense of $2.0 million is included in R&D expenses on the accompanying statement of operations for September 30, 2004. Prosidion is also required to make certain payments to Tanabe upon the achievement of certain milestones.

(f)     Other

      Under the terms of the aforementioned and other collaborative research agreements, with terms similar to the aforementioned agreements, certain collaborative partners will pay us royalties on net sales of products resulting from these research programs in addition to the research revenues described below. We or our collaborative partners may terminate each of the collaborative research programs upon the occurrence of certain events.

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(5) License Agreements

      We have entered into various license agreements with third parties to grant the use of our proprietary assets. These licenses include the use of our patented gene transcription estate as well as the use of our DPIV patent estate acquired from Probiodrug. Licensees may be obligated to pay us license fees, annual fees, and milestones and royalties based on the development and sale of products derived from the licensed patents. Generally, the duration of each license is to be coextensive with the life of the last to expire of the underlying patents. License and milestone payments recognized as revenue for the year ended December 31, 2005 for license of our DPIV patent estate was $14.2 million.

(6) Property, Equipment and Leasehold Improvements

      Property, equipment and leasehold improvements are recorded at cost and consist of the following (in thousands):

			December 31,
	Estimated Life
	(years)		2005			2004
Land		—	$	3,600			—
Building and improvements		10-35		17,447			—
Laboratory equipment		5-15		25,872			29,927
Office furniture and equipment and computer equipment		3- 10		14,004			14,355
Capitalized software		3		6,274			4,631
Manufacturing equipment		7		4,400			97
Leasehold improvements		Life of lease		33,262			33,681
Total				104,859			82,691
Less: accumulated depreciation and amortization				(42,912	)		(50,929	)
Property, equipment and leasehold improvements, net			$	61,947		$	31,762

      Depreciation expense relating to these assets for the year ended December 31, 2005 and the three months ended December 31, 2004 was $10.6 million and $6.1 million, respectively. Depreciation expense relating to these assets for the years ended September 30, 2004 and 2003 was $14.3 million and $11.1 million, respectively. We capitalized $6.3 million and $4.6 million of computer software costs as of December 31, 2005 and December 31, 2004, respectively, of which $3.9 million and $3.2 million was amortized as of December 31, 2005 and 2004, respectively.

(7) Goodwill and Other Intangible Assets

      The carrying amount of goodwill was $359.0 million and $39.2 million as of December 31, 2005 and 2004, respectively. The balance of goodwill as of December 31, 2005 and 2004 includes a $62,000 and $145,000, respectively, effect from foreign currency exchange rate fluctuations during fiscal 2005 and 2004. We completed our annual impairment review of goodwill as of December 31, 2005 and determined that no impairment charge was required.

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      The components of other intangible assets-net are as follows (in thousands):

	December 31,
	2005							2004
			Net							Net
	Carrying		Accumulated			Book		Carrying		Accumulated			Book
	Amount		Amortization			Value		Amount		Amortization			Value
Novantrone technology	$	46,009	$	(41,657	)	$	4,352	$	46,009	$	(26,735	)	$	19,274
Macugen		201,400		(2,263	)		199,137		—		—			—
Acquired patent estate		668		(65	)		603		537		(18	)		519
Acquired licenses issued to other companies		3,458		(356	)		3,102		3,223		(105	)		3,118
Total	$	251,535	$	(44,341	)	$	207,194	$	49,769	$	(26,858	)	$	22,911

      In connection with the acquisition of Eyetech on November 14, 2005, we recognized $201.4 million of intangible assets with determinable lives consisting of core and developed technology related to Macugen. These intangibles are being amortized straight-line over 11 years, the underlying life of the last to expire patent.

      In connection with Prosidion’s acquisition of certain assets of Probiodrug in fiscal 2004, we recorded intangible assets for the acquired patent estate ($515,000) and two non-exclusive issued to Merck and Novartis ($3.1 million). In connection with the acquisition of the minority interest in Prosidion in fiscal 2005, the value of the patent estate and acquired licenses increased by $203,000 and $615,000, respectively. These intangible assets are being amortized on a straight-line basis over the term of the term of the patents. These intangible assets are recorded on the books of Prosidion and fluctuate based on changes in exchange rates.

      We acquired the exclusive rights to market and promote Novantrone for approved oncology indications in the United States from Serono in March 2003. These rights were being amortized over the life of the underlying patent. At December 31, 2005, we revised the future recoverability period of the Novantrone intangible asset through the end of 2008, and will amortize the remaining balance on a straight line basis. In connection with the acquisition of Cell Pathways, we assumed the exclusive rights to market and distribute Gelclair in North America, which Cell Pathways had acquired from Sinclair Pharma plc in January 2002 for a period of ten years. These rights were being amortized over eight and a half years, the remaining term of the agreement. SFAS No. 142 requires that intangible assets with determinable useful lives be amortized over their respective estimated useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. In September 2004, it was determined that the carrying value of the Gelclair rights exceeded the expected future undiscounted cash flows. The impairment charge resulted from both the discontinuance of discussions with a replacement dental partner, and slower than originally expected sales growth in the oncology marketplace. The discounted cash flows calculation was made utilizing various assumptions and estimates regarding future revenues and expenses, cash flow and discount rates. Based upon our analysis, we recognized an impairment loss for the remaining carrying value of the rights as of September 30, 2004. This impairment loss of $24.6 million is included as impairment of intangible asset expense in the accompanying consolidated statement of operations for the year ended September 30, 2004.

      Amortization expense for these intangible assets for the year ended December 31, 2005 and the three months ended December 31, 2004 was $17.5 million and $3.8 million, respectively. Amortization expense for the years ended September 30, 2004 and 2003 was $18.6 million and $9.3 million, respectively. Amortization expense is estimated to be $19.9 million for the years ended 2006 and 2007, $19.8 million for the year 2008 and $18.4 million for the years 2009 through 2010.

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(8) Accounts Payable and Accrued Expenses

      Accounts payable and accrued expenses at December 31, 2005 and 2004 are comprised of (in thousands):

	December 31,
	2005		2004
Accounts payable	$	9,473	$	2,531
Accrued payroll and employee benefits		3,538		7,038
Accrued incentive compensation		3,963		1,142
Accrued exit costs (see note 17)		10,241		4,302
Accrued interest		1,580		1,516
Accrued CRO and site costs		5,248		1,193
Accrued commercial and development costs		5,467		11,663
Accrued royalties		9,060		—
Accrued deferred compensation		3,910		—
Other accrued expenses		27,987		12,974
	$	80,467	$	42,359

      Accrued royalties at December 31, 2005 represents royalties payable to other biopharmaceutical companies for patent licences related to the sales of Macugen.

(9) Collaborative Profit Share Payable

      In connection with the acquisition of Eyetech and our collaborative agreements with Pfizer, Macugen is co-promoted by us and Pfizer in the United States where we have an ophthalmology sales force, maintain the inventory and book all U.S. product sales. Pfizer and we share in profits and losses from the sale of Macugen products in the U.S. As of December 31, 2005 we owed Pfizer $49.9 million related to their share of the Macugen profits.

(10) Convertible Senior Subordinated Notes

(a)     2.0% Convertible Senior Subordinated Notes

      On December 21, 2005, we issued $100.0 million aggregate principal amount of convertible senior subordinated notes, or the 2025 Notes, in a private placement for net proceeds to us of $96.5 million. On December 28, 2005, the bankers associated with this convertible debt offering exercised an option to purchase an additional $15.0 million of the 2025 Notes, for additional net proceeds to us of $14.6 million. The 2025 Notes bear interest at 2.0% per annum, payable semi-annually, and mature on December 15, 2025. The 2025 Notes are convertible into cash, shares of our common stock or a combination of cash and shares of our common stock based on an initial conversion rate, subject to adjustment, of 33.9847 shares per $1,000 principal amount of notes (which represents an initial conversion price of $29.43 per share), only in the following circumstances and to the following extent: (i) prior to December 15, 2020, during any fiscal quarter after the fiscal quarter ending March 31, 2006, if the closing sale price of our common stock for 20 or more trading days in a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter exceeds 120% of the conversion price in effect on the last trading day of the immediately preceding fiscal quarter; (ii) prior to December 15, 2020, during the five business day period after any five consecutive trading day period, or the note measurement period, in which the average trading price per $1,000 principal amount of notes was equal to or less than 97% of the average conversion value of the notes during the

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note measurement period; (iii) upon the occurrence of specified corporate transactions, as described in the indenture for the 2025 notes; (iv) if we call the notes for redemption; or (v) any time on or after December 15, 2020. Upon conversion, we will have the right to deliver, in lieu of shares of common stock, cash or a combination of cash and shares of common stock. At any time before the maturity date, we may irrevocably elect, in our sole discretion, to satisfy our conversion obligation in cash up to 100% of the principal amount of the notes converted, with any remaining amount to be satisfied in shares of our common stock. If certain fundamental changes occur before December 15, 2010, the conversion rate may increase, or under certain circumstances, we may elect to change our conversion obligations to provide for conversion of the notes into the acquiring company’s common stock. We may redeem the 2025 Notes, in whole or in part, for cash, at any time on or after December 15, 2010 for a price equal to 100% of the principal amount of the 2025 Notes to be redeemed, plus any accrued and unpaid interest. The holders of the 2025 Notes have the right to require us to purchase, for cash, all of the 2025 Notes, or a portion thereof, on December 15, 2010, December 15, 2015, on December 15, 2020 and under certain other circumstances as set out in the indenture, for a price equal to 100% of the principal amount of the 2025 Notes plus any accrued and unpaid interest. The related debt issuance costs of $3.9 million were deferred and are being amortized on a straight-line basis over a five-year term, which represents the earliest date that we may redeem the 2025 Notes. Concurrent with the sale of the 2025 Notes, we used $11.8 million of the net proceeds for the purchase of 500,000 shares of our common stock (see note 11(g)) and we purchased a call spread overlay transaction from UBS, AG at a cost of $12.2 million. The call spread is a European type option with a lower strike price of $29.425 and an upper strike price of $40.00 and involves an aggregate of 3.4 million shares of our common stock and expires on December 15, 2010. The call spread overlay agreement has the effect of increasing the effective conversion price of the 2025 Notes from our perspective to $40.00 per share. The agreement calls for settlement using net shares. Under the agreement, UBS will deliver to us the aggregate number of shares we are required to deliver to a holder of 2025 Notes that presents such notes for conversion. If the market price per share of our common stock is above $40.00 per share, we will be required to deliver shares of our common stock representing the value in excess of the strike price. In accordance with Emerging Issues Task Force Issue (“EITF”) No. 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled In, a Company’s Own Stock” (“EITF No. 00-19”) and SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity,” we recorded the purchase of the call spread overlay option agreement as a reduction in additional paid in capital, and will not recognize subsequent changes in fair value of the agreement. At December 31, 2005 the fair value of the outstanding 2025 Notes, was approximately $129.6 million, based on their quoted market value.

(b)     3.25% Convertible Senior Subordinated Notes

      On September 8, 2003, we issued $135.0 million aggregate principal amount of convertible senior subordinated notes, or the 2023 Notes, in a private placement for net proceeds to us of $130.3 million. On September 17, 2003, the bankers associated with this convertible debt offering exercised an option to purchase an additional $15.0 million of the 2023 Notes, for additional net proceeds to us of $14.5 million. The 2023 Notes bear interest at 3.25% per annum, payable semi-annually, and mature on September 8, 2023. The 2023 Notes are convertible into shares of our common stock at a conversion price of $50.02 per share, subject to normal and customary adjustments such as stock dividends or other dilutive transactions. We may redeem the 2023 Notes, in whole or in part, for cash, at any time after September 8, 2008 for a price equal to 100% of the principal amount of the 2023 Notes to be redeemed, plus any accrued and unpaid interest. The holders of the 2023 Notes have the right to require us to purchase all of the 2023 Notes, or a portion thereof, on September 8, 2008, September 8, 2013 and September 8, 2018 for a price equal to 100% of the principal amount of the 2023 Notes plus any accrued and unpaid interest. Upon a change in control, as defined in the indenture governing the

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2023 Notes, the holders of the 2023 Notes will have the right to require us to purchase all of the 2023 Notes, or a portion thereof, not previously called for redemption at a purchase price equal to 100% of the principal amount of the 2023 Notes purchased, plus accrued and unpaid interest. Upon the election by the holders of the right to require us to purchase the 2023 Notes or upon a change of control, we may elect to pay the purchase price in common stock instead of cash. The number of shares of common stock a holder will receive will equal the purchase price divided by 95% of the average of the closing prices of our common stock for the five-trading day period ending on the third business day prior to the purchase date. The related debt issuance costs of $5.2 million were deferred and are being amortized on a straight-line basis over a five-year term, which represents the earliest date that we may redeem the 2023 Notes. In connection with the issuance of the 2023 Notes, we used $19.0 million of the net proceeds for the purchase of 503,800 shares of our common stock (see note 11(g)). At December 31, 2005 and 2004, the fair value of the outstanding 2023 Notes, was approximately $144.3 million and $257.8 million, respectively, based on their quoted market value.

(c)     4.00% Convertible Senior Subordinated Notes

      On February 1, 2002, we issued $200.0 million aggregate principal amount of convertible senior subordinated notes, or the 2009 Notes, in a private placement for net proceeds to us of $192.9 million. The 2009 Notes were convertible into shares of our common stock at a conversion price of $50.0 per share, subject to normal and customary adjustments such as stock dividends. The 2009 Notes were redeemable by us, in whole or in part, at any time before February 1, 2005 if the closing price of our common stock exceeded 150% of the conversion price then in effect for a specified period of time. The related debt issuance costs of $7.1 million were deferred and were being amortized on a straight-line basis over the seven-year term of the 2009 Notes. In August and September 2002, we retired a total of $40.0 million in principal amount of the 2009 Notes for an aggregate purchase price of $26.2 million, including accrued interest of $133,000. The difference between the purchase price and the principal amount of the 2009 Notes retired and accrued interest, resulted in a net gain on the early retirement of the 2009 Notes in the fourth quarter of fiscal 2002 of $12.6 million, including the write off of approximately $1.3 million of the related debt issuance costs. In June 2004, we called for the full redemption of the outstanding $160.0 million of the 2009 Notes. All of the holders of the 2009 Notes converted their notes into shares of our common stock prior to the redemption date of July 19, 2004. As a result of these conversions, we issued 3.2 million shares of our common stock and paid the remaining portion of the guaranteed interest of $6.4 million which is included in interest expense on the accompanying consolidated statement of operations for fiscal 2004. Under the terms of the 2009 Notes, the note holders were guaranteed the payment of interest for the first three years through February 1, 2005. Upon conversion of the 2009 Notes, the remaining balance of the unamortized debt issuance costs of $3.7 million was reclassified to additional paid in capital.

(11) Stockholders’ Equity

(a)     Stock Option Plans

      We have established 10 stock option plans for our employees, officers, directors and consultants, including our Amended and Restated Stock Incentive Plan (formerly, the 2001 Incentive and Non-Qualified Stock Option Plan). The plans are administered by the Compensation Committee of the Board of Directors, which may grant either non-qualified or incentive stock options. The Committee determines the exercise price and vesting schedule at the time the option is granted. Options vest over various periods and expire no later than 10 years from date of grant. The total authorized shares under these plans are 16,359,749.

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      Our Board of Directors adopted the 2001 Incentive and Non-Qualified Stock Option Plan, or the 2001 Stock Option Plan, effective June 13, 2001, which was approved by the stockholders on March 13, 2002. The 2001 Stock Option Plan permitted the grant of stock options to purchase up to 4.0 million shares as well as continuing automatic, formula-based grants of non-qualified stock options to directors who are not are employees. On December 11, 2002, our Board of Directors approved an amendment to the 2001 Stock Option Plan that only affected the automatic, formula-based grants of non-qualified stock options to directors who are not our employees. On March 17, 2004, at the 2004 Annual Meeting of Stockholders, our stockholders approved an amendment and restatement of the 2001 Stock Option Plan in the form of the Amended and Restated Stock Incentive Plan, or the Plan, which was adopted by the Board of Directors on January 23, 2004. On March 16, 2005 at the 2005 Annual Meeting of Stockholders, our stockholders approved an amendment to the Plan, which amendment was adopted by the Board of Directors on January 21, 2005 to increase the number of equity awards issuable under the Plan from 4.0 million shares to 6.8 million. Participation in the Plan is limited to our directors, officers, employees and consultants of our parent or subsidiaries. The Plan permits the issuance of stock options, and the grant of restricted stock, stock appreciation rights and stock bonus awards upon such terms and conditions as the Compensation Committee appointed by the Board of Directors determines. The Plan also provides for automatic, formula-based grants to our directors.

      On November 12, 2005, our Board of Directors adopted the OSI Pharmaceuticals, Inc. Stock Incentive Plan for Pre-Merger Employees of Eyetech Pharmaceuticals, Inc., or the Eyetech Plan. The Eyetech Plan permits the issuance of stock options, and the grant of restricted stock, stock appreciation rights and stock bonus awards upon such terms and conditions as the Compensation Committee appointed by the Board of Directors determines. Persons eligible to receive grants under the Eyetech Plan consist of directors, officers, employees and consultants of OSI or a subsidiary of OSI who were employees of Eyetech immediately prior to the effective date of the acquisition of Eyetech. Under the Eyetech Plan, we may grant incentive stock options and non-qualified stock options to purchase up to 800,000 shares of common stock.

      Pursuant to the Merger Agreement, we assumed Eyetech’s 2001 Stock Plan and, to facilitate such assumption, adopted the OSI Pharmaceuticals, Inc. Stock Plan for Assumed Options of Pre-Merger Employees of Eyetech Pharmaceuticals, Inc., or the Assumed Plan. Pursuant to the terms of the Assumed Plan and the Merger Agreement, we assumed all options and other awards granted to employees, outside directors and consultants outstanding under the Plan. The number of shares of OSI common stock subject to each assumed option was determined by multiplying the number of shares of the Eyetech common stock that were subject to each option prior to the effective time of the Eyetech Acquisition by a conversion ratio of 0.491, and rounding that result down to the nearest whole number of shares of OSI common stock. The per share exercise price for the assumed options was determined by dividing the per share exercise price of the Eyetech common stock subject to each option as in effect immediately prior to the effective time by the conversion ratio of 0.491 and rounding that result up to the nearest whole cent. Under the Plan, we granted incentive stock options and non-qualified stock options to purchase up to 153,000 shares in connection with the Acquisition.

      As discussed in Note 1(e), on November 30, 2005, the Compensation Committee of the Board of Directors approved the forward vesting of all unvested out-of-the-money stock options with an exercise price greater than $30 per share for all of our employees, other than executive officers. Options to purchase approximately 1.6 million shares of common stock were accelerated. Options held by executive officers and non-employee directors were not accelerated. The accelerated options, which are considered fully vested as of November 30, 2005, have grant prices ranging from $30.09 to $82.40 per share and a weighted average grant price of $45.44 per share.

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      The following table summarizes changes in the number of common shares subject to options in the 10 stock option plans, options established for certain outside consultants, options granted to employees of OSI-UK, and options granted to outside directors for the year ended December 31, 2005, the three months ended December 31, 2004, and the years ended September 30, 2004 and 2003, respectively:

					Exercise Price
		Shares							Weighted
		(In thousands)			Low		High		Average
Balance at September 30, 2002 — Unexercised			4,610		$	3.25	$	60.06	$	26.00
	Granted		1,665			15.02		37.16		28.10
	Exercised		(642	)		3.25		31.85		10.60
	Forfeited		(341	)		21.55		51.80		33.57
Balance at September 30, 2003 — Unexercised			5,292		$	3.25	$	60.06	$	28.01
	Granted		1,206			25.21		82.88		61.40
	Exercised		(1,489	)		3.25		60.06		26.21
	Forfeited		(121	)		13.09		67.63		36.97
Balance at September 30, 2004 — Unexercised			4,888		$	3.63	$	82.88	$	36.61
	Granted		32			47.73		63.97		55.06
	Exercised		(454	)		4.25		60.06		25.60
	Forfeited		(220	)		14.20		67.63		49.68
Balance at December 31, 2004 — Unexercised			4,246		$	3.63	$	82.88	$	37.46
	Granted		3,573			22.28		72.30		32.22
	Exercised		(463	)		4.12		51.80		21.76
	Forfeited		(435	)		18.18		78.53		45.93
Balance at December 31, 2005 — Unexercised			6,921		$	3.63	$	82.88	$	35.26

      At December 31, 2005, we have reserved 8.4 million shares of our authorized common stock for all shares issuable under options. At December 31, 2005 and 2004 the number of options exercisable were approximately 4.4 million and 3.4 million, respectively. At September 30, 2004 and 2003, the number of options exercisable were approximately 2.6 million and 2.8 million, respectively.

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      Information regarding stock options outstanding as of December 31, 2005, is as follows:

			Options Outstanding				Options Exercisable
					Weighted
			Weighted		Average				Weighted
			Average		Remaining				Average
	Shares		Exercise		Contractual		Shares		Exercise
	(In thousands)		Price		Life		(In thousands)		Price
Price Range
$ 0.00 - $10.00		247	$	6.62		1.7		247	$	6.62
$10.01 - $20.00		244		16.04		6.6		237		16.06
$20.01 - $30.00		2,466		23.66		6.6		583		22.57
$30.01 - $40.00		2,068		35.51		7.0		1,672		35.12
$40.01 - $50.00		824		45.70		8.0		630		45.38
$50.01 - $60.00		235		52.86		6.2		235		52.86
$60.01 - $70.00		770		66.44		7.9		709		66.34
$70.01 - $80.00		12		76.71		3.6		12		76.71
$80.01 - $90.00		55		82.84		8.4		32		82.80
		6,921	$	35.26		6.9		4,357	$	38.78

(b)     Shareholder Rights Plan

      On September 27, 2000, our Board of Directors adopted a shareholder rights plan, declared a dividend distribution of one Series SRPA Junior Participating Preferred Stock Purchase Right on each outstanding share of its common stock, and authorized the redemption of the rights issued pursuant to our then current shareholder rights plan. We distributed rights to all shareholders of record at the close of business on September 27, 2000, the record date. These rights entitle the holder to buy one one-thousandth of a share of Series SRPA Junior Participating Preferred Stock upon a triggering event as discussed below.

      Upon the actual acquisition of 17.5% or more of our outstanding common stock by a person or group, the rights held by all holders other than the acquiring person or group will be modified automatically to be rights to purchase shares of common stock (instead of rights to purchase preferred stock) at 50% of the then market value of such common stock. Furthermore, such rightholders will have the further right to purchase shares of common stock at the same discount if we merge with, or sell 50% or more of our assets or earning power to, the acquiring person or group or any person acting for or with the acquiring person or group. If the transaction takes the form of a merger of us into another corporation, these rightholders will have the right to acquire at the same percentage discount shares of common stock of the acquiring person or other ultimate parent of such merger party.

      We can redeem the rights at any time before (but not after) a person has acquired 17.5% or more of our common stock, with certain exceptions. The rights will expire on August 31, 2010 if not redeemed prior to such date.

(c)     Authorized Common and Preferred Stock

      We have 200 million shares of authorized common stock, with a par value of $.01 per share, and 5 million shares of preferred stock with a par value of $.01 per share, with such designations, preferences, privileges, and restrictions as may be determined from time to time by our Board of Directors.

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(d)     Employee Stock Purchase Plan

      We have an Employee Stock Purchase Plan under which eligible employees may contribute up to 10% of their base earnings toward the quarterly purchase of our common stock. The employee’s purchase price is derived from a formula based on the fair market value of the common stock. No compensation expense is recorded in connection with the plan. During the year ended December 31, 2005, the quarter ended December 31, 2005 and the fiscal years ended September 30, 2004 and 2003, approximately 22,000, 3,000, 16,000, and 26,000 shares, respectively, were issued with approximately 161, 148, 136, and 118 employees participating in the plan, respectively. At December 31, 2005, we had 542,000 shares of our authorized common stock reserved in connection with this plan.

      We sponsor a stock purchase plan for our UK-based employees. Under the terms of the plan, eligible employees may contribute between £5 and £250 of their base earnings, in 36 monthly installments towards the purchase of our common stock. The employee’s purchase price is determined at the beginning of the 36-month period and compensation expense is recorded over the 36-month period. As a result of our decision in the fourth quarter of fiscal 2004 to consolidate all of our U.K.-based oncology research and development activities into our New York locations (see note 17(b)), we did not offer this plan to UK employees for fiscal 2004. As a result of the minority interest buyout of Prosidion in the second quarter of 2005, we offered this plan to our UK employees in 2005. During fiscal 2003, the maximum shares that could be issued under this plan were increased from 100,000 shares to 200,000 shares. As of December 31, 2005 there were 57 employees and 16 employees in the 2005 and 2003 stock purchase plans, respectively. At December 31, 2005, we had 116,000 shares of our common stock reserved in connection with this plan.

(e)     Stock Purchase Plan for the Non-Employee Directors

      Our Board of Directors approved the adoption of a stock purchase plan for non-employee directors on June 21, 1995 subject to the stockholders’ approval. On March 25, 1996 at the 1996 Annual Meeting of Stockholders, the stockholders approved the Stock Purchase Plan for Non-Employee Directors, or the Directors’ Stock Purchase Plan.

      On December 11, 2002, our Board of Directors approved an amendment to the Directors’ Stock Purchase Plan. Pursuant to the amended Directors’ Stock Purchase Plan, fifty-percent of the annual retainer fee earned by each non-employee director will be paid to the director in the form of a restricted stock award. The restricted stock award will be made as of each annual stockholder meeting at which directors are elected beginning with the 2003 Annual Meeting of Stockholders which occurred on March 19, 2003. Annual restricted stock awards will vest in monthly installments over the one-year term for which the award is made. In the event a director’s membership on the Board terminates prior to the end of such one-year term, any unvested portion of the director’s restricted stock award will be forfeited. Shares of restricted stock awarded annually may not be sold or transferred by the director until the first anniversary of the date of grant of such award. Non-employee directors may elect to receive the remaining fifty-percent of the director’s annual retainer in the form of shares of common stock under the Directors’ Stock Purchase Plan as well.

(f)     Issuance of Common Stock for Acquisitions

      On November 14, 2005, in connection with the acquisition of Eyetech, we issued a total of 5.65 million shares of our common stock valued at $205.4 million (see note 2(a)).

      On April 14, 2005, in connection with the acquisition of the minority interest in Prosidion, we issued 84,940 shares of our common stock valued at $4.2 million (see note 2(c)).

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      On June 12, 2003, in connection with the acquisition of Cell Pathways, we issued approximately 2.2 million shares of our common stock valued at $31.2 million (see note 2(d)).

(g)     Convertible Notes

      On December 21, 2005, we issued $100.0 million aggregate principal amount of the 2025 Notes in a private placement for net proceeds to us of $96.5 million. On December 28, 2005, the bankers associated with this convertible debt offering exercised an option to purchase an additional $15.0 million of the 2025 Notes, for an additional net proceeds to us of $14.6 million. The 2025 Notes bear interest at 2.0% per annum, payable semi-annually, and mature on December 15, 2025. The 2025 Notes are convertible into cash, shares of our common stock or a combination of cash and shares of our common stock based on an initial conversion rate, subject to adjustment, of 33.9847 shares per $1,000 principal amount of notes (which represents an initial conversion price of $29.43 per share) (see note 10(a)). In connection with the issuance of the 2025 Notes, we used $11.8 million of the net proceeds for the purchase of 500,000 shares of our common stock.

      Concurrent with the private placement of the 2025 Notes, we purchased a call spread overlay transaction from UBS AG at a cost of $12.2 million. The call spread is a European type option with a lower strike price of $29.425 and an upper strike price of $40.00 and involves an aggregate of 3.4 million shares of our common stock and expires on December 15, 2010. The call spread overlay agreement has the effect of increasing the effective conversion price of the 2025 Notes from our perspective to $40.00 per share. The agreement calls for settlement using net shares. Under the agreement, UBS will deliver to us the aggregate number of shares we are required to deliver to a holder of 2025 Notes that presents such notes for conversion. If the market price per share of our common stock is above $40.00 per share, we will be required to deliver shares of our common stock representing the value in excess of the strike price. In accordance with EITF No. 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled In, a Company’s Own Stock” and SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity,” we recorded the convertible note hedge in additional paid in capital, and will not recognize subsequent changes in fair value.

      On September 8, 2003, we issued $135.0 million aggregate principal amount of 2023 Notes in a private placement for net proceeds to us of $130.3 million. On September 17, 2003, the bankers associated with this convertible debt offering exercised an option to purchase an additional $15.0 million of 2023 Notes, for additional net proceeds to us of $14.5 million. The 2023 Notes are convertible into shares of our common stock at a conversion price of $50.02 per share, subject to normal and customary adjustments such as stock dividends or other dilutive transactions (see note 10(b)). In connection with the issuance of the 2023 Notes, we used $19.0 million of the net proceeds for the purchase of 503,800 shares of our common stock.

      On February 1, 2002, we issued $200.0 million aggregate principal amount of 2009 Notes in a private placement. In August and September 2002, we retired a total of $40.0 million in principal amount of the 2009 Notes for an aggregate purchase price of approximately $26.2 million. The 2009 Notes were convertible into shares of our common stock at a conversion price of $50.0 per share, subject to normal and customary adjustments such as stock dividends or other dilutive transactions. In June 2004, we called for the full redemption of the outstanding $160.0 million of the 2009 Notes. All of the holders of the 2009 Notes converted their notes into shares of our common stock prior to the redemption date of July 19, 2004. As a result of these conversions, we issued 3.2 million shares of our common stock. Upon conversion of the 2009 Notes the remaining balance of the unamortized debt issuance costs of $3.7 million was reclassified to additional paid in capital (see note 10(c)).

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(h)     Eyetech Merger

      On November 14, 2005, we completed our acquisition of Eyetech pursuant to the terms of an Agreement and Plan of Merger dated August 21, 2005. As consideration for the merger, each share of Eyetech common stock was purchased for $15 cash and 0.12275 shares of our common stock. The aggregate consideration related to the acquisition totaled $909.3 million, including the cash consideration, value of OSI stock issued, value of converted stock options issued, and deal related costs. We issued a total of 5.65 million shares valued at $205.4 million, which was based on the average four-day closing price of our common stock around the date of the announcement of the acquisition, which occurred on August 21, 2005. In addition, each outstanding option to purchase shares of Eyetech common stock, other than options granted under Eyetech’s 2001 Stock Plan, accelerated in full and became vested and exercisable prior to the closing date of November 14, 2005. Any of these options that remained unexercised as of the effective time of the merger were terminated or cancelled in accordance with their terms. Each outstanding option granted under Eyetech’s 2001 Stock Plan was assumed by OSI at the effective time and became an option to purchase shares of OSI stock at a ratio of 0.491. Based on this ratio, we assumed approximately 153,000 options. The valued assigned to options was $4.1 million of which $1.9 million was included in the purchase price and the remainder recognized as deferred compensation. Outstanding unvested restricted shares as of the acquisition date were converted into cash and shares of OSI Common Stock (restricted to the same extent as the restricted stock being converted) on the same basis as the outstanding stock of Eyetech. The value assigned as of the acquisition date was $6.1 million and recognized as deferred compensation in the accompanying financial statements. The deferred compensation related to the stock options and the restricted stock is being amortized over the remaining vesting period.

(i)     Public Offering

      On November 12, 2004, during the transition quarter, we concluded a public offering of 6.0 million shares of our common stock at a price of $64.50 per share. Gross proceeds totaled $387.0 million with net proceeds of approximately $365.0 million after all related fees. In addition, on November 17, 2004, underwriters associated with the offering exercised their over-allotment option to purchase an additional 900,000 shares of our common stock at a price of $64.50 per share. Gross proceeds from the exercise of the over-allotment option totaled $58.1 million with net proceeds of approximately $54.9 million.

(12) Income Taxes

      There is no provision (benefit) for federal or state income taxes, since we have incurred operating losses since inception and have established a valuation allowance equal to the net deferred tax assets.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The tax effect of temporary differences, net operating loss carry forwards and research and development tax credit carry forwards as of December 31, 2005 and 2004 are as follows (in thousands):

	December 31,
	2005			2004
Deferred tax assets:
Net operating loss carry forwards	$	415,413		$	339,242
Research and development tax credit carry forwards		19,819			12,701
Intangible assets		11,092			6,155
Unearned revenue		20,822			8,412
Purchased research and experimental expenditures		53,444			56,449
Capitalized research and experimental expenditures		11,742			14,017
Capitalized start-up costs		3,072			6,022
Other		17,428			15,341
		552,832			458,339
Valuation allowance		(447,663	)		(456,751	)
		105,169			1,588
Deferred tax liability:
Other		(1,186	)		(1,588	)
Inventory fair value adjustment		(20,345	)		—
Macugen intangible		(83,638	)		—
		(105,169	)		(1,588	)
	$	—		$	—

      As of December 31, 2005 and 2004, we have available U.S. federal and foreign net operating loss carry forwards of approximately $916 million and $789 million, respectively, which will expire in various years from 2006 to 2023 and may be subject to certain annual limitations. Our research and development tax credit carry forwards expire in various years from 2006 to 2024. Certain of our net operating loss carry forwards and research and development tax credits may be subject to significant limitations under Section 382 of the Internal Revenue Code. The decrease in the valuation allowance of $9 million in 2005 was primarily attributable to the acquisition of Eyetech.

      Of the $448 million valuation allowance at December 31, 2005, $115 million relates to deductions for employee stock options for which the tax benefit will be credited to additional paid in capital if realized.

(13) Commitments and Contingencies

(a)     Lease Commitments

      We lease office, operating and laboratory space under various lease agreements. Rent expense was $9.1 million for the year ended December 31, 2005, $1.7 million for the three months ended December 31, 2004, and $8.8 million and $7.4 million for the years ended September 30, 2004 and 2003, respectively. Rent expense for fiscal 2005 includes Oxford, England facility leases, Boulder, CO facility leases, Farmingdale, NY facility lease, Melville, NY facility lease, Uniondale, NY facility lease, Horsham, PA facility lease and Eyetech facility leases acquired in November 2005. As further discussed in note 17, we accrued for the remaining net lease rental payments for the Horsham and Uniondale

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facilities in fiscal 2004, and the remaining net lease rental payments for the Oxford, England facility in fiscal 2005. In 2005, we decided that we may utilize the Uniondale facility and adjusted the accrual to reflect this decision. In addition, future lease costs for certain Eyetech facilities which are part of our exit plan were included in the determination of the purchase price of Eyetech.

      The following is a schedule of future minimum rental payments for the next five fiscal years and thereafter required as of December 31, 2005. Also included in the amounts below are commitments for equipment under various operating leases (in thousands).

2006	$	12,960
2007		12,154
2008		11,800
2009		11,573
2010		9,977
2011 and thereafter		97,266
	$	155,730

      Deferred rent expense reflected on the accompanying consolidated balance sheet reflects the expense recorded in excess of the required lease payments in connection with our facility leases.

(b)     Contingencies

      Under certain license and collaboration agreements with pharmaceutical companies and educational institutions, we are required to pay royalties and/or milestones upon the successful development and commercialization of products.

      From time to time, we have received letters from companies and universities advising us that various products under research and development by us may be infringing existing patents of such entities. These matters are reviewed by management, and if necessary, our outside counsel. Where valid patents of other parties are found by us to be in place, management will consider entering into licensing arrangements with the universities and/or companies or modify the conduct of its research. Our future royalties, if any, may be substantially reduced if our licensees or collaborative partners are required to obtain licenses from third parties whose patent rights are infringed by our products, technology or operations. In addition, should any infringement claims result in a patent infringement lawsuit, we could incur substantial costs in defense of such a suit, which could have a material adverse effect on our business, financial condition and results of operations, regardless of whether we were successful in the defense.

(c)     Borrowings

      As of December 31, 2005, we had a line of credit with a commercial bank in the amount of $10 million. This line expires annually on March 31st, and its current rate of interest is prime plus 3/4. There were no amounts outstanding under the line of credit as of December 31, 2005 and 2004.

(d)     Rental obligation and deferred rent

      Included in long-term rental obligations and deferred rent is $2.2 million related to deferred rental payments and $4.1 million for rental obligations assumed in connection with the Eyetech acquisition. In connection with the merger we recognized liabilities for certain leased facilities based upon the present value of the remaining lease payments, after exiting the facilities, offset by the potential sublease rental income.

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(e)     Litigation

      On or about December 16, 2004, several purported shareholder class action lawsuits were filed in the United States District Court for the Eastern District of New York against us, certain of our current and former executive Officers, and the members of our Board of Directors. The lawsuits were brought on behalf of those who purchased or otherwise acquired our common stock during certain periods in 2004, which periods differed in the various complaints. The Court has now appointed a lead plaintiff, and on February 17, 2006, the lead plaintiff filed a consolidated amended class action complaint seeking to represent a class of all persons who purchased or otherwise acquired our common stock during the period from April 26, 2004 through November 22, 2004. The consolidated complaint alleges that defendants made material misstatements and omissions concerning the survival benefit associated with our product, Tarceva and the size of the potential market of Tarceva upon FDA approval of the drug. It alleges violations of Sections 11, and 15 of the Securities Act of 1933, as amended, and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder. The consolidated complaint seeks unspecified compensatory damages and other relief. We intend to vigorously defend this action. Based on the early stage of this litigation, the ultimate outcome cannot be determined and accordingly no provision has been recorded in the consolidated financial statements.

(14) Related Party Transactions

      One member of our Board of Directors is a partner in a law firm which represents us on our patent and license matters. Fees paid to this firm during the twelve months ended December 31, 2005, the three months ended December 31, 2004 and the fiscal years ended September 30, 2004 and 2003 were approximately $299,000, $152,000, $557,000 and $579,000, respectively. In addition, we have compensated other directors for services performed pursuant to consultant arrangements as follows: During the twelve months ended December 31, 2005, the three months ended December 31, 2004 and the fiscal years ended September 30, 2004 and 2003, consulting fees in the amounts of $154,000, $15,000, $139,000, and $150,000, respectively, were paid by us pursuant to these arrangements. One member of our Board of Directors was an officer of Cold Spring Harbor Laboratory through December 2003. In fiscal 2003, we entered into a research agreement with Cold Spring Harbor Laboratory. A director is on the faculty of Vanderbilt with which we had a collaborative research agreement through September 30, 2003, and also has a consulting agreement with our subsidiary, Prosidion. One member of our Board of Directors is an advisor to Roche, with which we have a collaboration agreement.

      In connection with the acquisition of certain assets from Gilead on December 21, 2001, we assumed the loans of one of our officers and one of our vice presidents with an aggregate loan balance of $200,000. As of December 31, 2004 the carrying amount of the loans were $82,000. As of December 31, 2005, the loan balances were satisfied.

(15) Employee Savings and Investment Plan

      We sponsor an Employee Savings and Investment Plan under Section 401(k) of the Internal Revenue Code. The plan allows our U.S. employees to defer from 2% to 20% of their income on a pre-tax basis through contributions into designated investment funds. For each dollar the employee invests, up to 6% of his or her earnings, we will contribute an additional 50 cents into the funds. During the twelve months ended December 31, 2005, the three months ended December 31, 2004 and the years ended September 30, 2004 and 2003, our expenses related to the plan were approximately $848,000, $168,000, $625,000, and $543,000, respectively.

      We also sponsor four pension plans covering the employees of OSI-UK and Prosidion. The Group Personal Pension Plan allows employees to contribute up to 26% (depending on their age) of their

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income on a post-tax basis into designated investment funds. The tax paid on the contribution is then recovered from the Inland Revenue. We will contribute from 4% to 9% depending on the employees’ contributions. The British Biotech Pension Scheme covers employees retained from the acquisition of certain assets from British Biotech, as well as certain former employees of British Biotech hired by us subsequent to the acquisition. The plan allows the employees to defer up to 15% of their income on a pre-tax basis through contributions into designated pension funds. For each period the employee invests, we will contribute up to 9% into the funds. For the year ended December 31, 2005, the three months ended December 31, 2004, and the years ended September 30, 2004 and 2003, respectively, our expenses related to the plans were $560,000, $218,000, $841,000, and $714,000, respectively.

(16) Employee Postretirement Plan

      On November 10, 1992, we adopted a plan which provides postretirement medical and life insurance benefits to eligible employees, board members and qualified dependents. Eligibility is determined based on age and service requirements. These benefits are subject to deductibles, co-payment provisions and other limitations. We follow SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other Than Pensions” as amended by SFAS No. 132(R), “Employers’ Disclosures About Pensions and Other Postretirement Benefits,” to account for and disclose the benefits to be provided by the plan. Under SFAS No. 106, the cost of postretirement medical and life insurance benefits is accrued over the active service periods of employees to the date they attain full eligibility for such benefits. In May 2004, the FASB issued FASB Staff Position, or FSP, No. FAS 106-2, “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003.” FSP No. FAS 106-2 provides guidance on the accounting for the effects of the Medicare Prescription Drug, Improvement and Modernization Act of 2003, or the Act, for employers that sponsor postretirement health care plans that provide prescription drug benefits. It requires those employers to provide certain disclosures regarding the effect of the federal subsidy provided by the Act. The accumulated postretirement benefits obligation or net postretirement benefits cost in the consolidated financial statements accompanying notes reflect the effects of the Act on our postretirement benefit plan.

      Net postretirement benefit cost for the year ended December, 31 2005, the three months ended December 31, 2004 and the years ended September 30, 2004 and 2003 includes the following components (in thousands):

			Three
			Months
	Year Ended		Ended		Year Ended		Year Ended
	December 31,		December 31,		September 30,		September 31,
	2005		2004		2004		2003
Service cost for benefits earned during the period	$	839	$	201	$	572	$	430
Interest cost on accumulated postretirement benefit obligation		352		82		262		235
Amortization of initial benefits attributed to past service		6		1		6		6
Amortization of loss		64		15		39		29
Net postretirement benefit cost	$	1,261	$	299	$	879	$	700

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      The accrued postretirement benefit cost at December 31, 2005 and 2004 was as follows (in thousands):

	2005			2004
Accumulated postretirement benefit obligation	$	7,509		$	6,186
Unrecognized cumulative net loss		(2,071	)		(1,893	)
Unrecognized transition obligation		(85	)		(90	)
Accrued postretirement benefit cost	$	5,353		$	4,203

      The changes in the accumulated postretirement benefit obligation during year ended December 31, 2005 and for the three months ended December 31, 2004 were as follows (in thousands):

					Three
					Months
		Year Ended			Ended
		December 31,			December 31,
		2005			2004
Balance at beginning of year		$	6,186		$	5,776
	Benefit payments		(111	)		(21	)
	Loss experience		243			220
	Service cost		839			145
	Interest cost		352			66
Balance at end of year		$	7,509		$	6,186

      For the year ended December 31, 2005, the health care cost trend was decreased to an initial level of 11% (from an initial level of 12% in fiscal 2004), decreasing to an ultimate rate of 5.5% by 2011 and thereafter. Increasing the assumed health care cost trend rates by one percentage point in each year and holding all other assumptions constant would increase the accumulated postretirement benefit obligation as of December 31, 2005 by $1.8 million and the fiscal 2005 net postretirement service and interest cost by $453,000. Decreasing the assumed health care cost trend rate by one percentage point in each year and holding all other assumptions constant would decrease the accumulated postretirement benefit obligation as of December 31, 2005 by $1.4 million and the fiscal 2005 net postretirement service and interest cost by $332,000. Benefits paid the year ended December 31, 2005, the three months ended December 31, 2004, and the years ended September 30, 2004 and 2003, respectively, were $111,000, $21,000, $83,000 and $60,000, respectively.

      The weighted average assumptions used in determining benefit obligations and net periodic benefits costs are as follows:

	2005			2004			2003
Discount rate		5.50	%		5.75	%		6.00	%
Expected long-term rate of return on plan assets		N/A			N/A			N/A

(17) Consolidation of Facilities

(a) Uniondale, NY

      During the fourth quarter of fiscal 2003, we consolidated operations at our Uniondale, NY facility into our Farmingdale, NY facility. During the three months ended September 30, 2004, we made the decision not to further utilize our Uniondale facility. As a result, we recognized $1.9 million, all of which are included in selling, general and administrative expenses in the accompanying consolidated state-

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ment of operations for year ended September 30, 2004. These exit costs were comprised of the rental obligations for the remainder of the lease (through June 2006) of $994,000, offset by previously accrued rent expense of $180,000, the write down of equipment and leaseholds of $724,000, and costs to restore the facility to its original condition of $350,000. In the quarter ended December 31, 2005 we reevaluated our plans and have decided to extend the leases and may use the facility as part of our future operations. As a result, we reversed $298,000 of the remaining accrual as a credit to selling, general and administrative expense for the year ended December 31, 2005. The activity for the year ended December 31, 2005 and the three months ended December 31, 2004 was as follows:

	December 31,
	2005			2004
Opening liability	$	1,212		$	1,344
Cash paid for rent		(564	)		(132	)
Cash paid for facility refurbishment		(350	)		—
Reversals		(298	)		—
Ending liability	$	—		$	1,212

(b)     Oxford, England

      During the fourth quarter of fiscal 2004, we announced the decision to consolidate all of our U.K.-based oncology research and development activities into our New York locations by approximately November 30, 2004. The consolidation resulted in a reduction in our U.K.-based oncology workforce by approximately 82 employees. The termination benefits provided to employees was estimated at $3.7 million as of September 30, 2004, of which $2.96 million is included in research and development expenses and $767,000 is included in selling, general and administrative expenses in the accompanying consolidated statement of operations for the year ended September 30, 2004. We accelerated the useful lives of certain related leasehold improvements, which resulted in additional depreciation expense of $2.0 million, of which $1.7 million is included in research and development expenses and $277,000 is included in selling, general and administrative expenses in the accompanying consolidated statement of operations for fiscal 2004. During the year ended December 31, 2005, we recorded a charge of $4.4 million for estimated facility lease return costs and the remaining rental obligation net of estimated sublease rental income in accordance with SFAS No. 146 “Accounting for Costs Associated with Exit or Disposal Activities”. Of these costs, $1.8 million and $2.6 million was included in research and development and selling, general and administrative expenses, respectively in the accompanying consolidated statement of operations for the year ended December 31, 2005. The activity for the year ended December 31, 2005 and the three months ended December 31, 2004 was as follows (in thousands):

	December 31,
	2005			2004
Opening liability	$	1,380		$	3,728
Provision for rental obligations		2,027			—
Provision for facility refurbishment		2,359			—
Cash paid for severance		(1,286	)		(2,513	)
Other		(269	)		165
Ending liability	$	4,211		$	1,380

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(c)     Horsham, PA

      During the second quarter of fiscal 2004, we committed to and approved an exit plan for our Horsham, Pennsylvania facility, which we acquired in connection with the acquisition of Cell Pathways in June 2003. We have recognized the rent obligations for the remainder of the lease (through June 2008), offset by the sublease rental income. This resulted in a charge of $1.8 million, which has been included in selling, general and administrative expenses in the accompanying consolidated statement of operations for fiscal 2004. These exit costs are comprised of the net lease obligations of $2.1 million, offset by previously accrued rent expense of $338,000. In May 2004, we entered into a sublease agreement for the Horsham facility. We charge the rental payments less the sublease rental income received against the accrued liability. The consolidation activity for the year ended December 31, 2005 and the three months ended December 31, 2004 was as follows (in thousands):

	December 31,
	2005			2004
Opening liability	$	1,678		$	1,808
Cash paid for rent less sublease income received		(518	)		(130	)
Ending liability	$	1,160		$	1,678

(d)     Eyetech

      In connection with the acquisition Eyetech on November 14, 2005, we plan to consolidate certain facilities and reduce the workforce. Included in the liabilities assumed in the acquisition, we recognized $6.2 million for the termination benefits and relocation cost and $5.4 million for the present value of future lease commitments. The present value of the lease payments was determined based upon the date we plan to exit the facility and the remaining lease expiration, offset by estimated sublease income. Rental payments for the facilities prior to closure will be included in operating expense. Additional planned terminations will occur throughout 2006 for transition employees and is expected to result in $5.8 million of additional termination benefits payments. In accordance with FAS 146 “Accounting for Costs Associated with Exit or Disposal Activities,” these payments were deemed to represent retention bonuses associated with future service and therefore, in the three months ended December 31, 2005, we have recognized $975,000 or the ratable portion of the liability. Of this cost, $712,000 was included in research and development costs and $263,000 included selling and administrative expenses. We will recognize the remaining liability throughout fiscal 2006.

      The activity for the period ended December 31, 2005 is as follows:

	December 31,
	2005
Opening liability	$	—
Accrual for severance, relocation and retention bonuses		7,147
Accrual for rental obligations		5,391
Cash paid for severance		(2,277	)
Ending liability	$	10,261

(18) Accounting Pronouncements

      In March 2005, the Financial Accounting Standards Board, or FASB, issued FASB Interpretation No. 47, “Accounting for Conditional Asset Retirement Obligations,” or FIN No. 47. FIN No. 47 clarifies that an entity must record a liability for a “conditional” asset retirement obligation if the fair value of the

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obligation can be reasonably estimated. The provision is effective for our year ending December 31, 2005. The adoption of this interpretation did not have a material impact on our consolidated financial statements.

      In December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 123(R), which requires companies to expense the estimated fair value of employee stock options and similar awards. SFAS No. 123(R) replaces SFAS No. 123 and supersedes APB Opinion No. 25. In March 2005, the Securities Exchange Commission (“SEC”) issued Staff Accounting Bulletin No. 107 (“SAB 107”) which generally provides the SEC staff’s views regarding SFAS No. 123(R). SAB 107 provides guidance on how to determine the expected volatility and expected term inputs into a valuation model used to determine the fair value of share-based payments. SAB 107 also provides guidance related to numerous aspects of the adoption of SFAS No. 123(R) such as income taxes, capitalization of compensation costs, modification of share-based payments prior to adoption and the classification of expenses. We will apply the principles of SAB 107 in conjunction with our adoption of SFAS No. 123(R).

      Beginning with the first quarter of fiscal 2006, we will adopt the provisions of SFAS No. 123(R) using a modified prospective application. Under the modified prospective application, SFAS No. 123(R), which provides certain changes to the methodology for valuing share-based compensation among other changes, will apply to new awards and to awards outstanding on the effective date that are subsequently modified or cancelled. Compensation expense for outstanding awards for which the requisite service had not been rendered as of the effective date will be recognized over the remaining service period using the compensation cost calculated for pro forma disclosure purposes under SFAS No. 123.

      In November 2004, the FASB issued SFAS No. 151, “Inventory Costs,” an amendment of ARB No. 43, Chapter 4. SFAS No. 151 requires all companies to recognize a current-period charge for abnormal amounts of idle facility expense, freight, handling costs and wasted materials. This statement also requires that the allocation of fixed production overhead to the costs of conversion be based on the normal capacity of the production facilities. SFAS No. 151 will be effective for fiscal years beginning after June 15, 2005, which is our calendar year 2006. We are currently evaluating the effect that this statement will have on our consolidated financial statements.

      In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Correction,” effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. SFAS No. 154 supersedes APB Opinion No. 20, “Accounting Changes” and SFAS No. 3, “Reporting Accounting Changes in Interim Financial Statements” and requires retrospective application to prior periods of any voluntary changes to alternatively permitted accounting principles, unless impracticable.

(19) Quarterly Financial Data (unaudited)

      The tables below summarizes our unaudited quarterly operating results for the year ended December 31, 2005, the three months ended December 31, 2004 and the year ended September 30, 2004.

	Three Months Ended
	(In thousands, except per share data)
	March 31,			June 30,			September 30,			December 31,
	2005			2005			2005			2005
Revenues	$	19,067		$	34,629		$	33,988		$	86,510
Net loss	$	(32,504	)	$	(24,538	)	$	(20,037	)	$	(80,043	)
Basic and diluted net loss per weighted average share of common stock outstanding	$	(.64	)	$	(.48	)	$	(.39	)	$	(1.47	)

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	Three Months Ended
	(In thousands, except per share data)
	December 31,			March 31,			June 30,			September 30,			December 31,
	2003			2004			2004			2004			2004
Revenues	$	11,391		$	7,216		$	11,166		$	13,027		$	12,347
Net loss	$	(40,133	)	$	(49,704	)	$	(47,345	)	$	(123,189	)	$	(48,395	)
Basic and diluted net loss per weighted average share of common stock outstanding:	$	(1.03	)	$	(1.27	)	$	(1.19	)	$	(2.88	)	$	(1.02	)

      The basic and diluted net loss per common share calculation for each of the quarters are based on the weighted average number of shares outstanding in each period. Therefore, the sum of the quarters in a fiscal year does not necessarily equal the basic and diluted net loss per common share for the fiscal year.

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

      Not Applicable.

ITEM 9A. CONTROLS AND PROCEDURES

CEO/CFO CERTIFICATIONS

      Attached to this Annual Report on Form 10-K as Exhibits 31.1 and 31.2, there are two certifications, or the Section 302 Certifications, one by each of our Chief Executive Officer, or CEO, and our Chief Financial Officer, or CFO. This Item 9A contains information concerning the evaluation of our disclosure controls and procedures and internal control over financial reporting that is referred to in the Section 302 Certifications and this information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

      Evaluation of Our Disclosure Controls and Procedures. The Securities and Exchange Commission requires that as of the end of the period covered by this Annual Report on Form 10-K, the CEO and the CFO evaluate the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13(a)-15(e)) under the Securities Exchange Act of 1934, as amended, and report on the effectiveness of the design and operation of our disclosure controls and procedures. Accordingly, under the supervision and with the participation of our management, including our CEO and CFO, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K.

      CEO/ CFO Conclusions about the Effectiveness of the Disclosure Controls and Procedures. Based upon their evaluation of the disclosure controls and procedures, our CEO and CFO have concluded that our disclosure controls and procedures are at the reasonable assurance level to ensure that material information relating to OSI and our consolidated subsidiaries is made known to management, including the CEO and CFO, on a timely basis and during the period in which this Annual Report on Form 10-K was being prepared.

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

      Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13-a-15(f) of the Securities Exchange Act of 1934, as amended, or the Exchange Act).

      Under the supervision of and with the participation of our CEO, and our CFO, our management conducted an assessment of the effectiveness of our internal control over financial reporting based on the framework and criteria established in Internal Control — Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, our management has concluded that, as of December 31, 2005, our internal control over financial reporting was effective.

      We acquired Eyetech Pharmaceuticals, Inc. or OSI Eyetech, during 2005, and management, as permitted, excluded this entity from its assessment of the effectiveness of our internal control over financial reporting as of December 31, 2005. This entity comprises an aggregate total assets of $931 million and total revenues of $36.0 million which are included in our consolidated financial statements as of and for the year ended December 31, 2005.

      KPMG LLP, the independent registered public accounting firm that audits our consolidated financial statements, has issued its attestation report on management’s assessment of internal control over financial reporting. This attestation report appears on page 125. KPMG LLP’s attestation report also excludes an evaluation of the internal control over financial reporting of OSI Eyetech.

123

CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING

      There were no changes in our internal control over financial reporting (as defined in Rule 13(a)-15(f) of the Exchange Act), identified in connection with the evaluation of such internal control over financial reporting that occurred during the fourth quarter of fiscal 2005 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting except for the internal controls implemented in connection with our acquisition of Eyetech for which an assessment as of December 31, 2005 was not made, as permitted.

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Report of Independent Registered Public Accounting Firm

on Internal Control Over Financial Reporting

To the Stockholders and Board of Directors

OSI Pharmaceuticals, Inc.:

      We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control Over Financial Reporting, that OSI Pharmaceuticals, Inc. maintained effective internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). OSI Pharmaceuticals, Inc.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.

      We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

      A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

      Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

      In our opinion, management’s assessment that OSI Pharmaceuticals, Inc. maintained effective internal control over financial reporting as of December 31, 2005, is fairly stated, in all material respects, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Also, in our opinion, OSI Pharmaceuticals, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

      As described in Management’s Report on Internal Control Over Financial Reporting, OSI Pharmaceuticals, Inc. acquired Eyetech Pharmaceuticals, Inc. during 2005, and management excluded from its assessment of the effectiveness of OSI Pharmaceuticals, Inc.’s internal control over financial reporting as of December 31, 2005, internal control over financial reporting associated with this entity comprising aggregate total assets of approximately $931 million and total revenue of approximately $36 million included in the OSI Pharmaceuticals, Inc. consolidated financial statement as of and for the

125

year ended December 31, 2005. Our audit of internal control over financial reporting of OSI Pharmaceuticals, Inc. also excluded an evaluation of the internal control over financial reporting of Eyetech Pharmaceuticals, Inc.

      We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of OSI Pharmaceuticals, Inc. as of December 31, 2005 and 2004, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the year ended December 31, 2005, for the three months ended December 31, 2004 and for each of the two fiscal years in the period ended September 30, 2004, and our report dated March 15, 2006 expressed an unqualified opinion on those consolidated financial statements.

/s/ KPMG LLP

Melville, New York

March 15, 2006

ITEM 9B.     OTHER INFORMATION

      On March 15, 2006, our Compensation Committee of the Board of Directors approved an interim retainer fee to cover service by non-employee directors on the Board (including on any Board committees) for the interim period from March 16, 2006 to June 14, 2006. The purpose of such action is to compensate such board members for service during the interim period between March 16, 2006 and the 2006 Annual Meeting of Stockholders, such service of which would otherwise not have been compensated as a result in the change of our fiscal year end. Details of the interim retainer fee are set forth at Exhibit 10.59 to this annual report on Form 10-K and incorporated herein by reference.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      The information required by this item is incorporated by reference to the similarly named section of our Proxy Statement for our 2006 Annual Meeting to be filed with the Securities and Exchange Commission not later than 120 days after December 31, 2005.

ITEM 11. EXECUTIVE COMPENSATION

      The information required by this item is incorporated by reference to the similarly named section of our Proxy Statement for our 2006 Annual Meeting to be filed with the Securities and Exchange Commission not later than 120 days after December 31, 2005.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      The information required by this item is incorporated by reference to the similarly named section of our Proxy Statement for our 2006 Annual Meeting to be filed with the Securities and Exchange Commission not later than 120 days after December 31, 2005.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      The information required by this item is incorporated by reference to the similarly named section of our Proxy Statement for our 2006 Annual Meeting to be filed with the Securities and Exchange Commission not later than 120 days after December 31, 2005.

126

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

      The information required by this item is incorporated by reference to the similarly named section of our Proxy Statement for our 2006 Annual Meeting to be filed with the Securities and Exchange Commission not later than 120 days after December 31, 2005.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

      (a) (1) The following consolidated financial statements are included in Part II, Item 8 of this report:

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

      (2) All schedules are omitted as the required information is inapplicable or the information is presented in the financial statements or related notes.

      (3) The exhibits listed in the Index to Exhibits are attached and incorporated herein by reference and filed as a part of this report.

127

SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

OSI PHARMACEUTICALS, INC.

By: /s/ COLIN GODDARD, Ph.D.

Colin Goddard, Ph.D.

Chief Executive Officer

Date: March 16, 2006

      Pursuant to the requirements of the Securities and Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the days indicated.

	Signature	Title	Date
/s/ ROBERT A. INGRAM Robert A. Ingram		Chairman of the Board	March 16, 2006
/s/ COLIN GODDARD, Ph.D. Colin Goddard, Ph.D.		Director and Chief Executive Officer (principal executive officer)	March 16, 2006
/s/ MICHAEL G. ATIEH Michael G. Atieh		Executive Vice President and Chief Financial Officer (principal financial and accounting officer)	March 16, 2006
/s/ G. MORGAN BROWNE G. Morgan Browne		Director	March 16, 2006
/s/ DARYL K. GRANNER, M.D. Daryl K. Granner, M.D.		Director	March 16, 2006
/s/ WALTER M. LOVENBERG, Ph.D. Walter M. Lovenberg, Ph.D.		Director	March 16, 2006
/s/ VIREN MEHTA Viren Mehta		Director	March 16, 2006
/s/ HERBERT PINEDO, M.D., Ph.D. Herbert Pinedo, M.D., Ph.D.		Director	March 16, 2006
/s/ SIR MARK RICHMOND, Ph.D. Sir Mark Richmond, Ph.D.		Director	March 16, 2006

128

	Signature	Title	Date
/s/ KATHARINE B. STEVENSON Katharine B. Stevenson		Director	March 16, 2006
/s/ JOHN P. WHITE, ESQUIRE John P. White, Esquire		Director	March 16, 2006

129

EXHIBIT INDEX

Exhibit
	2	.1†+	Asset Purchase Agreement, dated as of June 17, 2004, by and between Probiodrug AG, Halle and Prosidion Limited, filed by the Company as an exhibit to the Form 8-K filed on July 6, 2004 (file no. 000-15190), and incorporated herein by reference.
	2	.2+	Agreement and Plan of Merger, dated August 21, 2005, among OSI Pharmaceuticals, Inc., Merger EP Corporation and Eyetech Pharmaceuticals, Inc., filed by the Company as an exhibit to the Form 8-K filed on August 22, 2005 (file no. 000-15190), and incorporated herein by reference.
	3	.1	Certificate of Incorporation, as amended, filed by the Company as an exhibit to the Form 10-K for the fiscal year ended September 30, 2001 (file no. 000-15190), and incorporated herein by reference.
	3	.2	Amended and Restated Bylaws filed by the Company as an exhibit to the Form 10-K for the fiscal year ended September 30, 2001 (file no. 000-15190), and incorporated herein by reference.
	4	.1	Rights Agreement, dated September 27, 2000, between OSI Pharmaceuticals, Inc. and The Bank of New York as Rights Agent, including Terms of Series SRP Junior Participating Preferred Stock, Summary of Rights to Purchase Preferred Stock and Form of Right Certificate, filed by the Company as an exhibit to the Form 8-A filed on September 27, 2000 (file no. 000-15190), and incorporated herein by reference.
	4	.2	Form of Contingent Value Rights Agreement by and between OSI Pharmaceuticals, Inc. and the Bank of New York, filed by the Company as an exhibit to the registration statement on Form S-4 (file no. 333-103644), and incorporated herein by reference.
	4	.3	Indenture, dated September 8, 2003, by and between OSI Pharmaceuticals, Inc. and The Bank of New York, filed by the Company as an exhibit to the Form 10-K filed on December 2, 2003 (file no. 000-15190) and incorporated herein by reference.
	4	.4	Form of 31/4% Convertible Senior Subordinated Note Due 2023 (included in Exhibit 4.6), filed by the Company as an exhibit to the Form 10-K filed on December 2, 2003 (file no. 000-15190) and incorporated herein by reference.
	4	.5	Registration Rights Agreements, dated September 8, 2003, by and among OSI Pharmaceuticals, Inc., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith, Incorporated, and Morgan Stanley & Co., Incorporated, filed by the Company as an exhibit to the Form 10-K filed on December 2, 2003 (file no. 000-15190) and incorporated herein by reference.
	4	.6	Indenture, dated December 21, 2005, by and between OSI Pharmaceuticals, Inc. and The Bank of New York, filed by the Company as an exhibit to the Form 8-K filed on December 28, 2005 (file no. 000-15190), and incorporated herein by reference.
	4	.7	Form of 2% Convertible Senior Subordinated Note Due 2025 (included in Exhibit 4.9), filed by the Company as an exhibit to the Form 8-K filed on December 28, 2005 (file no. 000-15190), and incorporated herein by reference.
	4	.8	Registration Rights Agreement, dated December 21, 2005, by and between OSI Pharmaceuticals, Inc. and UBS Securities LLC, filed by the Company as an exhibit to the Form 8-K filed on December 28, 2005 (file no. 000-15190), and incorporated herein by reference.
	10	.1*	1989 Incentive and Non-Qualified Stock Option Plan, filed by the Company as an exhibit to the registration statement on Form S-8 (file no. 33-38443), and incorporated herein by reference.
	10	.2*	1993 Incentive and Non-Qualified Stock Option Plan, as amended, filed by the Company as an exhibit to the registration statement on Form S-8 (file no. 33-64713) and incorporated herein by reference.
	10	.3*	Stock Purchase Plan for Non-Employee Directors, filed by the Company as an exhibit to the registration statement on Form S-8 (file no. 333-06861), and incorporated herein by reference.

130

Exhibit
	10	.4*	Amended and Restated Stock Purchase Plan for Non-Employee Directors, filed by the Company as an exhibit to the Form 10-Q for the quarter ended December 31, 2002 (file no. 000-15190), and incorporated by reference herein.
	10	.5*	1995 Employee Stock Purchase Plan filed by the Company as an exhibit to the registration statement on Form S-8 (file no. 333-06861), and incorporated herein by reference.
	10	.6*	1997 Incentive and Non-Qualified Stock Option Plan, filed by the Company as an exhibit to the registration statement on Form S-8 (file no. 333-39509), and incorporated herein by reference.
	10	.7*	1999 Incentive and Non-Qualified Stock Option Plan, filed by the Company as an exhibit to the registration statement on Form S-8 (file no. 333-42274), and incorporated herein by reference.
	10	.8*	Amended and Restated Stock Incentive Plan (formerly, the 2001 Incentive and Non-Qualified Stock Option Plan) (Filed herewith).
	10	.9*	Form of Non-Qualified Stock Option Agreement issued under the Amended and Restated Stock Incentive Plan for employees of OSI Pharmaceuticals, Inc., filed by the Company as an exhibit to the Form 10-Q for the quarter ended June 30, 2005 (file no. 000-15190), and incorporated herein by reference.
	10	.10*	Form of Non-Qualified Stock Option Agreement issued under the Amended and Restated Stock Incentive Plan for employees of Prosidion Limited and OSI Pharmaceuticals (UK) Limited filed by the Company as an exhibit to the Form 10-Q for the quarter ended March 31, 2005 (file no. 000-15190), and incorporated herein by reference.
	10	.11	OSI Pharmaceuticals, Inc. Non-Qualified Stock Option Plan for Former Employees of Cadus Pharmaceutical Corporation, filed by the Company as an exhibit to the Form 10-Q for the quarter ended June 30, 1999 (file no. 000-15190), and incorporated herein by reference.
	10	.12	OSI Pharmaceuticals, Inc. Non-Qualified Stock Option Plan for Former Employees of Gilead Sciences, Inc. filed by the Company as an exhibit to the Form 8-K filed on January 7, 2002 (file no. 000-15190), and incorporated herein by reference.
	10	.13	OSI Pharmaceuticals, Inc. Stock Incentive Plan for Pre-Merger Employees of Eyetech Pharmaceuticals, Inc., filed by the Company as an exhibit to the Form 8-K filed on November 16, 2005 (file no. 000-15190), and incorporated herein by reference.
	10	.14	OSI Pharmaceuticals, Inc. Stock Plan for Assumed Options of Pre-Merger Employees of Eyetech Pharmaceuticals, Inc. filed by the Company as an exhibit to the Form 8-K filed on November 16, 2005 (file no. 000-15190), and incorporated herein by reference.
	10	.15†	Collaborative Research Agreement, dated April 1, 1996, between OSI Pharmaceuticals, Inc. and Pfizer Inc., filed by the Company as an exhibit to the Form 10-Q for the quarter ended March 31, 1996, as amended (file no. 000-15190), and incorporated herein by reference.
	10	.16†	License Agreement, dated April 1, 1996, between OSI Pharmaceuticals, Inc. and Pfizer Inc., filed by the Company as an exhibit to the Form 10-Q for the quarter ended March 31, 1996, as amended (file no. 000-15190), and incorporated herein by reference.
	10	.17*	Employment Agreement, dated April 30, 1998, between OSI Pharmaceuticals, Inc. and Colin Goddard, Ph.D, filed by the Company as an exhibit to the Form 10-Q for the quarter ended June 30, 1998 (file no. 000-15190), and incorporated herein by reference.
	10	.18	Agreement, dated May 23, 2000, by and between OSI Pharmaceuticals, Inc. and Pfizer Inc., filed by the Company as an exhibit to the Form 8-K filed on June 20, 2000 (file no. 000-15190), and incorporated herein by reference.
	10	.19†	Development and Marketing Collaboration Agreement, dated January 8, 2001, between OSI Pharmaceuticals, Inc. and Genentech, Inc., filed by the Company as an exhibit to the Form 8-K filed on February 14, 2001 (file no. 000-15190), and incorporated herein by reference.

131

Exhibit
	10	.20†	Amendment No. 1 to Development and Marketing Collaboration Agreement, dated as of June 4, 2004, between OSI Pharmaceuticals, Inc. and Genentech, Inc., filed by the Company as an exhibit to the Form 8-K filed on June 28, 2004 (file no. 000-15190), and incorporated herein by reference.
	10	.21†	Manufacturing and Supply Agreement, dated as of June 4, 2004, by and between OSI Pharmaceuticals, Inc. and Genentech, Inc., filed by the Company as an exhibit to the Form 8-K filed on June 28, 2004 (file no. 000-15190), and incorporated herein by reference.
	10	.22†	Development Collaboration and Licensing Agreement, dated January 8, 2001, between OSI Pharmaceuticals, Inc. and F. Hoffman — La Roche Ltd., filed by the Company as an exhibit to the Form 8-K filed on February 14, 2001 (file no. 000-15190), and incorporated herein by reference.
	10	.23†	Tripartite Agreement, dated January 8, 2001, by and among OSI Pharmaceuticals, Inc., Genentech, Inc., and F. Hoffman — La Roche Ltd., filed by the Company as an exhibit to the Form 8-K filed on February 14, 2001 (file no. 000-15190), and incorporated herein by reference.
	10	.24†	Manufacturing Agreement, dated December 21, 2001, by and between OSI Pharmaceuticals, Inc. and Gilead Sciences, Inc. filed by the Company as an exhibit to the Form 8-K filed on January 7, 2002 (file no. 000-15190), and incorporated herein by reference.
	10	.25*	Employment Agreement, dated May 16, 2003, between OSI Pharmaceuticals, Inc. and Mr. Gabriel Leung, filed by the Company as an exhibit to the Form 10-K for the fiscal year ended September 30, 2003 (file no. 000-15190), and incorporated herein by reference.
	10	.26*	Addendum to Employment Agreement between OSI Pharmaceuticals, Inc. and Mr. Gabriel Leung, filed by the Company as an exhibit to the Form 10-QT for the transition period ended December 31, 2004 (file no. 000-15190), and incorporated herein by reference.
	10	.27†	Supply Agreement, dated February 2, 2005, by and between Schwarz Pharma Manufacturing, Inc. and OSI Pharmaceuticals, Inc. filed by the Company as an exhibit to the Form 10-Q for the quarter ended March 31, 2005 (file no. 000-15190), and incorporated herein by reference.
	10	.28	Agreement of Sale and Purchase, dated March 15, 2005, by and between Swissair, Swiss Air Transport Co., Ltd. and OSI Pharmaceuticals, Inc. filed by the Company as an exhibit to the Form 10-Q for the quarter ended March 31, 2005 (file no. 000-15190), and incorporated herein by reference.
	10	.29*	Letter of Employment by and between OSI Pharmaceuticals, Inc. and Mr. Robert L. Simon filed by the Company as an exhibit to the Form 10-Q for the quarter ended March 31, 2005 (file no. 000-15190), and incorporated herein by reference.
	10	.30*	Change of Control Arrangement by and between OSI Pharmaceuticals, Inc. and Barbara A. Wood, Esq. filed by the Company as an exhibit to the Form 10-Q for the quarter ended March 31, 2005 (file no. 000-15190), and incorporated herein by reference.
	10	.31*	Compensatory Arrangements for Non-Employee Directors filed by the Company as an exhibit to the Form 10-Q for the quarter ended March 31, 2005 (file no. 000-15190), and incorporated herein by reference.
	10	.32*	Compensatory Arrangements of Executive Officers, as amended. (Filed herewith).
	10	.33*	Purchases of Stock by Executive Officers and Directors, filed by the Company as Item 1.01 to the Current Report on Form 8-K filed on October 31, 2005 (file no. 000-15190) and incorporated herein by reference.
	10	.34*	Consulting Agreement between OSI Pharmaceuticals, Inc. and Edwin A. Gee, Ph.D, dated January 24, 2005, filed by the Company as an exhibit to the Form 8-K filed on January 27, 2005 (file no. 000-15190), and incorporated herein by reference.
	10	.35*	Employment Agreement, dated April 21, 2005, by and between OSI Pharmaceuticals, Inc. and Michael G. Atieh, filed by the Company as an exhibit to the Form 8-K filed on April 22, 2005 (file no. 000-15190), and incorporated by reference herein.

132

Exhibit
	10	.36*	Letter of Employment, dated December 21, 2001, by and between OSI Pharmaceuticals, Inc. and Nicole Onetto, MD, filed by the Company as an exhibit to the Form 10-QT for the transition period ended December 31, 2004 (file no. 000-15190), and incorporated herein by reference.
	10	.37*	Employment Separation Agreement and Release of Legal Rights by and between OSI Pharmaceuticals, Inc. and Nicole Onetto, MD, dated April 20, 2005, filed by the Company as an exhibit to the Form 8-K filed on April 22, 2005 (file no. 000-15190), and incorporated herein by reference.
	10	.38*	Scientific Advisory Board and Consulting Agreement, dated March 8, 2005, between Prosidion Limited and Dr. Daryl Granner, filed by the Company as an exhibit to the Form 8-K filed on March 8, 2005 (file no. 000-15190), and incorporated herein by reference.
	10	.39*	Scientific Advisory Board and Consulting Agreement, dated February 10, 2006, between Prosidion Limited and Dr. Daryl Granner, filed by the Company as an exhibit to the Form 8-K filed on February 13, 2006 (file no. 000-15190), and incorporated herein by reference.
	10	.40*	Share Purchase Deed relating to Shares of Prosidion Limited, dated April 14, 2005, between OSI Pharmaceuticals, Inc. and Dr. Daryl Granner, filed by the Company as an exhibit to the Form 8-K, filed on April 20, 2005 (file no. 000-15190), and incorporated herein by reference.
	10	.41*	Service Contract by and between Prosidion Limited and Anker Lundemose, dated May 1, 2004, filed by the Company as an exhibit to the Form 10-QT, for the transition period ended December 31, 2004 (file no. 000-15190), and incorporated by reference herein.
	10	.42*	Amended and Restated Stock Incentive Plan Stock Award Agreement, dated April 14, 2005, between OSI Pharmaceuticals, Inc. and Dr. Daryl Granner, filed by the Company as an exhibit to the Form 8-K, filed on April 20, 2005 (file no. 000-15190), and incorporated herein by reference.
	10	.43*	Restricted Stock Agreement, dated May 31, 2005, by and between OSI Pharmaceuticals, Inc. and Michael G. Atieh, filed by the Company as an exhibit to the Form 10-Q for the quarter ended June 30, 2005 (file no. 000-15190), and incorporated herein by reference.
	10	.44*	Amended and Restated Employment Agreement, dated May 31, 2005, by and between OSI Pharmaceuticals, Inc. and Michael G. Atieh, filed by the Company as an exhibit to the Form 10-Q for the quarter ended June 30, 2005 (file no. 000-15190), and incorporated herein by reference.
	10	.45*	Letter Agreement, dated August 21, 2005, by and between OSI Pharmaceuticals, Inc. and David R. Guyer, M.D., filed by the Company as an exhibit to the Form 8-K, filed on August 22, 2005 (file no. 000-15190), and incorporated herein by reference.
	10	.46*	Service Contract, dated September 20, 2005, by and between OSI Pharmaceuticals, Inc. and Dr. Anker Lundemose, filed by the Company as an exhibit to the Form 8-K filed on September 26, 2005 (file no. 000-15190), and incorporated herein by reference.
	10	.47*	Change in Control Agreement, dated September 20, 2005, by and between OSI Pharmaceuticals, Inc. and Dr. Neil Gibson, filed by the Company as an exhibit to the Form 8-K filed on September 26, 2005 (file no. 000-15190), and incorporated herein by reference.
	10	.48*	Amended Letter Agreement, dated September 20, 2005, by and between OSI Pharmaceuticals, Inc. and Robert L. Simon, filed by the Company as an exhibit to the Form 8-K filed on September 26, 2005 (file no. 000-15190), and incorporated herein by reference.
	10	.49*	Amended Change in Control Agreement, dated September 20, 2005, by and between OSI Pharmaceuticals, Inc. and Barbara A. Wood, Esq. filed by the Company as an exhibit to the Form 8-K filed on September 26, 2005 (file no. 000-15190), and incorporated herein by reference.
	10	.50	Commitment Letter, dated December 13, 2005, by and among JP Morgan Chase Bank, N.A., J.P. Morgan Securities Inc. and OSI Pharmaceuticals, Inc., as amended and extended (Filed herewith).
	10	.51†	License Agreement, dated December 17, 2002, by and between Pfizer Inc. and Eyetech Pharmaceuticals, Inc. (Filed herewith).

133

Exhibit
	10	.52†	Collaboration Agreement, dated as of December 17, 2002, by and between Pfizer Inc. and Eyetech Pharmaceuticals, Inc. (Filed herewith).
	10	.53†	Licensing Agreement, effective as of March 31, 2000, as amended on May 9, 2000, December 4, 2001 and April 12, 2002, between Gilead Sciences,. Inc. and Eyetech Pharmaceuticals, Inc. (Filed herewith).
	10	.54†	License, Manufacturing and Supply Agreement, dated February 5, 2002, by and between Shearwater Corporation and Eyetech Pharmaceuticals, Inc. (Filed herewith).
	10	.55†	Letter of Understanding, effective as of September 1, 2003, by and between Eyetech Pharmaceuticals, Inc. and Raylo Chemicals, Inc., as amended. (Filed herewith).
	10	.56†	Manufacturing and Supply Agreement, dated as of November 11, 2003, by and between Raylo Chemicals, Inc. and Eyetech Pharmaceuticals, Inc. (Filed herewith).
	10	.57†	License Agreement, effective as of December 31, 2004, between Isis Pharmaceuticals, Inc. and Eyetech Pharmaceuticals, Inc. (Filed herewith).
	10	.58†	Manufacturing and Supply (Fill and Finish) Agreement, dated as of November 26, 2003, between Eyetech Pharmaceuticals, Inc. and Gilead Sciences, Inc. (Filed herewith).
	10	.59*	Summary of Interim Retainer Fee for Non-Employee Directors. (Filed herewith)
	21		Subsidiaries of OSI Pharmaceuticals, Inc. (Filed herewith).
	23		Consent of KPMG LLP, independent registered public accounting firm. (Filed herewith).
	31	.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15(d)-14(a). (Filed herewith).
	31	.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a). (Filed herewith).
	32	.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Filed herewith).
	32	.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Filed herewith).

*  Indicates a management contract or compensatory plan, contract or arrangement in which directors or executive officers participates.

†  Portions of this exhibit have been redacted and are subject to a confidential treatment request filed with the Secretary of the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

+  The schedules to this exhibit have been omitted pursuant to Item 601(b)(2) of Regulation S-K promulgated by the Securities and Exchange Commission. The omitted schedules from this filing will be provided upon request.

134 EX-10.8 2 y18060exv10w8.txt EX-10.8: AMENDED AND RESTATED STOCK INCENTIVE PLAN Exhibit 10.8 OSI PHARMACEUTICALS, INC. AMENDED AND RESTATED STOCK INCENTIVE PLAN (INCLUDING AMENDMENTS NO. 1 AND 2) 1. PURPOSE The purpose of this Amended and Restated Stock Incentive Plan (formerly, the 2001 Incentive and Non-Qualified Stock Option Plan) (the "Plan") is to encourage and enable selected management, other employees, directors (whether or not employees), and consultants of OSI Pharmaceuticals, Inc. (the "Company") or a parent or subsidiary of the Company to acquire a proprietary interest in the Company through the ownership, directly or indirectly, of common stock, par value $.01 per share (the "Common Stock"), of the Company. Such ownership will provide such employees, directors, and consultants with a more direct stake in the future welfare of the Company and encourage them to remain with the Company or a parent or subsidiary of the Company. It is also expected that the Plan will encourage qualified persons to seek and accept employment with, or become associated with, the Company or a parent or subsidiary of the Company. As used herein, the term "parent" or "subsidiary" shall mean any present or future corporation which is or would be a "parent corporation" or "subsidiary corporation" of the Company as the term is defined in Section 424 of the Code (determined as if the Company were the employer corporation). Pursuant to the Plan, the Company may grant: (i) Incentive Stock Options; (ii) Non-Qualified Stock Options; (iii) Stock Appreciation Rights; (iv) Restricted Stock; and (v) Stock Bonuses, as such terms are defined in Section 2. 2. DEFINITIONS Capitalized terms not otherwise defined in the Plan shall have the following meanings: (a) "Award Agreement" shall mean a written agreement, in such form as the Committee shall determine, that evidences the terms and conditions of a Stock Award granted under the Plan. (b) "Fair Market Value" on a specified date means the value of a share of Common Stock, determined as follows: (i) if the Common Stock is listed on any established stock exchange or a national market system, including without limitation The Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, Inc., its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such other source as the Committee deems reliable; (ii) if the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for the Common Stock on the day of determination, as reported in The Wall Street Journal or such other source as the Committee deems reliable; or (iii) in the absence of an established market for the Common Stock, the Fair Market Value shall be determined in good faith by the Committee. (c) "Code" shall mean the Internal Revenue Code of 1986, as amended. (d) "Incentive Stock Option" shall mean an option that is an "incentive stock option" within the meaning of Section 422 of the Code and that is identified as an Incentive Stock Option in the Award Agreement by which it is evidenced. (e) "Non-Qualified Stock Option" shall mean an option that is not an Incentive Stock Option within the meaning of Section 422 of the Code. (f) "Restricted Stock" shall mean an award of shares of Common Stock that is subject to certain conditions on vesting and restrictions on transferability as provided in Section 8 of this Plan. (g) "Stock Appreciation Right" shall mean a right to receive payment of the appreciated value of shares of Common Stock as provided in Section 7 of this Plan. (h) "Stock Award" shall mean an Incentive Stock Option, a Non-Qualified Stock Option, a Restricted Stock award, a Stock Appreciation Right or a Stock Bonus award. (i) "Stock Bonus" shall mean a bonus award payable in shares of Common Stock as provided in Section 9 of this Plan. 3. ADMINISTRATION OF THE PLAN The Plan shall be administered by a committee (the "Committee") as appointed from time to time by the Board of Directors of the Company, which may be the Compensation Committee of the Board of Directors. Except as otherwise specifically provided herein, no person, other than members of the Committee, shall have any discretion as to decisions regarding the Plan. The Company may engage a third party to administer routine matters under the Plan, such as establishing and maintaining accounts for Plan participants and facilitating transactions by participants pursuant to the Plan. In administering the Plan, the Committee may adopt rules and regulations for carrying out the Plan. The interpretations and decisions made by the Committee with regard to any question arising under the Plan shall be final and conclusive on all persons participating or eligible to participate in the Plan. Subject to the provisions of the Plan, the Committee shall determine the terms of all Stock Awards granted pursuant to the Plan, including, but not limited to, the persons to whom, and the time or times at which, grants shall be made, the number of shares to be covered by each Stock Award, and other terms and conditions of the Stock Award. 2 4. SHARES OF STOCK SUBJECT TO THE PLAN Except as provided in Section 10, the number of shares that may be issued or transferred pursuant to Stock Awards granted under the Plan shall not exceed 6,800,000 shares of Common Stock. Such shares may be authorized and unissued shares or previously issued shares acquired or to be acquired by the Company and held in treasury. Any shares subject to a Stock Award which for any reason expires, is cancelled or is unexercised may again be subject to a Stock Award under the Plan. The aggregate Fair Market Value of the shares with respect to which Incentive Stock Options (determined at the time of grant of the option) are exercisable for the first time by an optionee during any calendar year (under the Plan and all plans of the Company and any parent or subsidiary of the Company) shall not exceed $100,000. 5. ELIGIBILITY Stock Awards may be granted to directors, officers, employees and consultants of the Company or a parent or subsidiary of the Company, except that Incentive Stock Options may not be granted to any such person who is not an employee of the Company or a parent or subsidiary of the Company. 6. GRANTING OF OPTIONS The Committee may grant options to such persons eligible under the Plan as the Committee may select from time to time. Such options shall be granted at such times, in such amounts and upon such other terms and conditions as the Committee shall determine, which shall be evidenced under an Award Agreement and subject to the following terms and conditions: (a) Type of Option. The Award Agreement shall indicate whether and to what extent the option is intended to be an Incentive Stock Option or a Non-Qualified Stock Option. (b) Option Price. The purchase price under each Incentive Stock Option and each Non-Qualified Stock Option shall be not less than 100% of the Fair Market Value of the Common Stock at the time the option is granted and not less than the par value of the Common Stock. In the case of an Incentive Stock Option granted to an employee owning, actually or constructively under Section 424(d) of the Code, more than 10% of the total combined voting power of all classes of stock of the Company or of any parent or subsidiary of the Company (a "10% Stockholder") the option price shall not be less than 110% of the Fair Market Value of the Common Stock at the time of the grant. (c) Medium and Time of Payment. Stock purchased pursuant to the exercise of an option shall at the time of purchase be paid for in full in cash, or, upon conditions established by the Committee, by delivery of shares of Common Stock owned by the recipient. If payment is made by the delivery of shares, the value of the shares delivered shall be the Fair Market Value of such shares on the date of exercise of the option. In addition, if the Committee consents in its sole discretion, an "in the money" Non-Qualified Stock Option may be exercised on a "cashless" basis in exchange for the issuance to the optionee (or other person entitled to exercise the option) of the largest whole number of shares having an aggregate value equal to the 3 value of such option on the date of exercise. For this purpose, the value of the shares delivered by the Company and the value of the option being exercised shall be determined based on the Fair Market Value of the Common Stock on the date of exercise of the option. Upon receipt of payment and such documentation as the Company may deem necessary to establish compliance with the Securities Act of 1933, as amended (the "Securities Act"), the Company shall, without stock transfer tax to the optionee or other person entitled to exercise the option, deliver to the person exercising the option a certificate or certificates for such shares. (d) Waiting Period. The waiting period and time for exercising an option shall be prescribed by the Committee in each particular case; provided, however, that no option may be exercised after 10 years from the date it is granted. In the case of an Incentive Stock Option granted to a 10% Stockholder, such option, by its terms, shall be exercisable only within five years from the date of grant. (e) Non-Assignability of Options. No Incentive Stock Option and, except as may otherwise be specifically provided by the Committee, no Non-Qualified Stock Option, shall be assignable or transferable by the recipient except by will or by the laws of descent and distribution. During the lifetime of a recipient, Incentive Stock Options and, except as may otherwise be specifically provided by the Committee, Non-Qualified Stock Options, shall be exercisable only by such recipient. If the Committee approves provisions in any particular case allowing for assignment or transfer of a Non-Qualified Stock Option, then such option will nonetheless be subject to a six-month holding period commencing on the date of grant during which period the recipient will not be permitted to assign or transfer such option, unless the Committee further specifically provides for the assignability or transferability of such option during this period. (f) Effect of Termination of Employment. If a recipient's employment (or service as an officer, director or consultant) shall terminate for any reason, other than death or Retirement (as defined below), the right of the recipient to exercise any option otherwise exercisable on the date of such termination shall expire unless such right is exercised within a period of 90 days after the date of such termination. For Options issued prior to June 15, 2005, the term "Retirement" shall mean the voluntary termination of employment (or service as an officer, director or consultant) by a recipient who has attained the age of 55 and who has completed at least five years of service with the Company. For Options issued on or after June 15, 2005, unless otherwise determined by the Committee and defined in the applicable Award Agreement, the term "Retirement" shall mean the voluntary termination of employment (or service as an officer, director or consultant) by a recipient who has attained the age of 60 and who has completed at least twenty years of service with the Company. If a recipient's employment (or service as an officer, director or consultant) shall terminate because of death or Retirement, the right of the recipient to exercise any option otherwise exercisable on the date of such termination shall be unaffected by such termination and shall continue until the normal expiration of such option. Notwithstanding the foregoing, the tax treatment available pursuant to Section 421 of the Code upon the exercise of an Incentive Stock Option will not be available in connection with the exercise of any Incentive Stock Option more than three months after the date of termination of such option recipient's employment due to Retirement. Option rights shall not be affected by any change of employment as long as the recipient continues to be employed by 4 either the Company or a parent or subsidiary of the Company. In no event, however, shall an option be exercisable after the expiration of its original term as determined by the Committee. The Committee may, if it determines that to do so would be in the Company's best interests, provide in a specific case or cases for the exercise of options which would otherwise terminate upon termination of employment with the Company for any reason, upon such terms and conditions as the Committee determines to be appropriate. Nothing in the Plan or in any Award Agreement shall confer any right to continue in the employ of the Company or any parent or subsidiary of the Company or interfere in any way with the right of the Company or any parent or subsidiary of the Company to terminate the employment of a recipient at any time. (g) Leave of Absence. In the case of a recipient on an approved leave of absence, the Committee may, if it determines that to do so would be in the best interests of the Company, provide in a specific case for continuation of options during such leave of absence, such continuation to be on such terms and conditions as the Committee determines to be appropriate, except that in no event shall an option be exercisable after 10 years from the date it is granted. (h) Sale or Reorganization. In case the Company is merged or consolidated with another corporation, or in case the property or stock of the Company is acquired by another corporation, or in case of a reorganization, or liquidation of the Company, the Board of Directors of the Company, or the board of directors of any corporation assuming the obligations of the Company hereunder, shall either (i) make appropriate provisions for the protection of any outstanding options by the substitution on an equitable basis of appropriate stock of the Company, or appropriate options to purchase stock of the merged, consolidated, or otherwise reorganized corporation, provided only that such substitution of options shall, with respect to Incentive Stock Options, comply with the requirements of Section 424(a) of the Code, or (ii) give written notice to optionees that their options, which will become immediately exercisable notwithstanding any waiting period otherwise prescribed by the Committee, must be exercised within 30 days of the date of such notice or they will be terminated. (i) Restrictions on Sale of Shares. Without the written consent of the Company, no stock acquired by an optionee upon exercise of an Incentive Stock Option granted hereunder may be disposed of by the optionee within two years from the date such incentive stock option was granted, nor within one year after the transfer of such stock to the optionee; provided, however, that a transfer to a trustee, receiver, or other fiduciary in any insolvency proceeding, as described in Section 422(c)(3) of the Code, shall not be deemed to be such a disposition. The optionee shall make appropriate arrangements with the Company for any taxes which the Company is obligated to collect in connection with any such disposition, including any federal, state, or local withholding taxes. No stock acquired by an optionee upon exercise of a Non-Qualified Stock Option granted hereunder may be disposed of by the optionee (or other person eligible to exercise the option) within six months from the date such Non-Qualified Stock Option was granted, unless otherwise provided by the Committee. 5 7. GRANT OF STOCK APPRECIATION RIGHTS The Committee may grant Stock Appreciation Rights to such persons eligible under the Plan as the Committee may select from time to time. Stock Appreciation Rights shall be granted at such times, in such amounts and under such other terms and conditions as the Committee shall determine, which terms and conditions shall be evidenced under an Award Agreement, subject to the terms of the Plan. Subject to the terms and conditions of the Award Agreement, a Stock Appreciation Right shall entitle the award recipient to exercise the Stock Appreciation Right, in whole or in part, in exchange for a payment of shares of Common Stock, cash or a combination thereof, as determined by the Committee and provided under the Award Agreement, equal in value to the excess of the Fair Market Value of the shares of Common Stock underlying the Stock Appreciation Right, determined on the date of exercise, over the base amount set forth in the Award Agreement for shares of Common Stock underlying the Stock Appreciation Right, which base amount shall not be less than the Fair Market Value of such Common Stock, determined as of the date the Stock Appreciation Right is granted. 8. GRANT OF RESTRICTED STOCK The Committee may grant Restricted Stock awards to such persons eligible under the Plan as the Committee may select from time to time. Restricted Stock awards shall be granted at such times, in such amounts and under such other terms and conditions as the Committee shall determine, which terms and conditions shall be evidenced under an Award Agreement, subject to the terms of the Plan. The Award Agreement shall set forth any conditions on vesting and restrictions on transferability that the Committee may determine is appropriate for the Restricted Stock award, including the performance of future services or satisfaction of performance goals established by the Committee. The books and records of the Company shall reflect the issuance of shares of Common Stock under a Restricted Stock award and any applicable restrictions and limitations in such manner as the Committee determines is appropriate. Unless otherwise provided in the Award Agreement, a recipient of a Restricted Stock award shall be the record owner of the shares of Common Stock to which the Restricted Stock relates and shall have all voting and dividend rights with respect to such shares of Common Stock. 9. GRANT OF STOCK BONUS The Committee may grant Stock Bonus awards to such persons eligible under the Plan as the Committee may select from time to time. Stock Bonus awards shall be granted at such times, in such amounts and under such other terms and conditions as the Committee shall determine, which terms and conditions shall be evidenced under an Award Agreement, subject to the terms of the Plan. Upon satisfaction of any conditions, limitations and restrictions set forth in the Award Agreement, a Stock Bonus award shall entitle the recipient to receive payment of a bonus described under the Stock Bonus award in the form of shares of Common Stock of the Company. Prior to the date on which a Stock Bonus award is required to be paid under an Award Agreement, the Stock Bonus award shall constitute an unfunded, unsecured promise by the Company to distribute Common Stock in the future. 6 10. ADJUSTMENTS IN THE EVENT OF RECAPITALIZATION In the event that dividends payable in Common Stock during any fiscal year of the Company exceed in the aggregate five percent of the Common Stock issued and outstanding at the beginning of the year, or in the event there is during any fiscal year of the Company one or more splits, subdivisions, or combinations of shares of Common Stock resulting in an increase or decrease by more than five percent of the shares outstanding at the beginning of the year, the number of shares available under the Plan shall be increased or decreased proportionately, as the case may be, and the number of shares issuable under Stock Awards theretofore granted shall be increased or decreased proportionately, as the case may be, without change in the aggregate purchase price that may be applicable thereto. Common Stock dividends, splits, subdivisions, or combinations during any fiscal year that do not exceed in the aggregate five percent of the Common Stock issued and outstanding at the beginning of such year shall be ignored for purposes of the Plan. All adjustments shall be made as of the day such action necessitating such adjustment becomes effective. 11. WITHHOLDING OF APPLICABLE TAXES It shall be a condition to the performance of the Company's obligation to issue or transfer Common Stock or make a payment of cash pursuant to any Stock Award that the award recipient pay, or make provision satisfactory to the Company for the payment of, any taxes (other than stock transfer taxes) the Company or any subsidiary is obligated to collect with respect to the issuance or transfer of Common Stock or the payment of cash under such Stock Award, including any applicable federal, state, or local withholding or employment taxes. 12. GENERAL RESTRICTIONS Each Stock Award granted under the Plan shall be subject to the requirement that, if at any time the Board of Directors shall determine, in its discretion, that the listing, registration, or qualification of the shares of Common Stock issuable or transferable under the Stock Award upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the granting of the Stock Award or the issue or transfer, of shares of Common Stock thereunder, shares of Common Stock issuable or transferable under any Stock Award shall not be issued or transferred, in whole or in part, unless such listing, registration, qualification, consent, or approval shall have been effected or obtained free of any conditions not acceptable to the Board of Directors. The Company shall not be obligated to sell or issue any shares of Common Stock in any manner in contravention of the Securities Act, the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the rules and regulations of the Securities and Exchange Commission, any state securities law, the rules and regulations promulgated thereunder or the rules and regulations of any securities exchange or over the counter market on which the Common Stock is listed or in which it is included for quotation. The Board of Directors may, in connection with the granting of Stock Awards, require the individual to whom the award is to be granted to enter into an agreement with the Company stating that as a condition precedent to the receipt of shares of Common Stock 7 issuable or transferable under the Stock Award, in whole or in part, he shall, if then required by the Company, represent to the Company in writing that such receipt is for investment only and not with a view to distribution, and also setting forth such other terms and conditions as the Committee may prescribe. Such agreements may also, in the discretion of the Committee, contain provisions requiring the forfeiture of any Stock Awards granted and/or Common Stock held, in the event of the termination of employment or association, as the case may be, of the award recipient with the Company. Upon any forfeiture of Common Stock pursuant to an agreement authorized by the preceding sentence, the Company shall pay consideration for such Common Stock to the award recipient , pursuant to any such agreement, without interest thereon. 13. TERMINATION AND AMENDMENT OF THE PLAN The Board of Directors or the Committee shall have the right to amend, suspend, or terminate the Plan at any time; provided, however, that no such action shall affect or in any way impair the rights of a recipient under any Stock Award theretofore granted under the Plan; and, provided, further, that unless first duly approved by the stockholders of the Company entitled to vote thereon at a meeting (which may be the annual meeting) duly called and held for such purpose, except as provided in Section 10, no amendment or change shall be made in the Plan increasing the total number of shares which may be issued or transferred under the Plan, materially increasing the benefits to Plan participants or modifying the requirements as to eligibility for participation in the Plan. 14. TERM OF THE PLAN The Plan shall terminate on June 12, 2011, or on such earlier date as the Board of Directors or the Committee may determine. Any Stock Award outstanding at the termination date shall remain outstanding until it has either expired or been exercised or cancelled pursuant to its terms. 15. COMPLIANCE WITH RULE 16B-3 With respect to persons subject to Section 16 of the Exchange Act, transactions under this Plan are intended to comply with all applicable conditions of Rule 16b-3 or its successors. To the extent any provision of the Plan or action by the Committee (or any other person on behalf of the Committee or the Company) fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee. 8 16. RIGHTS AS A STOCKHOLDER A recipient of a Stock Award shall have no rights as a stockholder with respect to any shares issuable or transferable thereunder until the date a stock certificate is issued to him for such shares unless otherwise provided in the Award Agreement under the Plan. Except as otherwise expressly provided in the Plan, no adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued. 17. AUTOMATIC GRANT OF OPTIONS TO NON-EMPLOYEE DIRECTORS (a) (i) Each director, who is not also an employee of the Company or any of its affiliates, or the designee of any stockholder of the Company pursuant to a right to designate one or more directors (an "Eligible Director") who first becomes an Eligible Director on or after June 13, 2001 but prior to January 1, 2003, shall automatically be awarded a grant of 30,000 Non-Qualified Stock Options upon his or her initial election to the Board of Directors. An Eligible Director receiving an initial option grant under this Section 17(a)(i) shall not be eligible for an initial grant of option under any other stock option plan maintained by the Company. Such options shall vest and be exercisable solely in accordance with the following schedule: (A) The options may be exercised with respect to a maximum of one-half of the option shares during the twelve-month period beginning after the date of grant. (B) The options may be exercised with respect to all of the option shares upon the Eligible Director's reelection to the Board of Directors for a second consecutive term. (C) The options will expire and will no longer be exercisable as of the tenth anniversary of the date of grant, subject to sooner expiration upon the occurrence of certain events as provided elsewhere in this Plan. (ii) Each Eligible Director who first becomes an Eligible Director on or after January 1, 2003, shall automatically be awarded a grant of 50,000 Non-Qualified Stock Options upon his or her initial election to the Board of Directors. An Eligible Director receiving an initial option grant under this Section 17(a)(ii) shall not be eligible for an initial grant of option under any other stock option plan maintained by the Company. Such options shall vest and be exercisable solely in accordance with the following schedule: (A) The options shall not be exercisable during the twelve-month period beginning after the date of grant. (B) The options may be exercised with respect to one-third of the option shares after the expiration of twelve months from the date of grant. (C) The remaining two-thirds of the options shall vest and become exercisable ratably on a monthly basis over the two-year period commencing one year from the date of grant and ending three years from the date of grant. 9 (D) The options will expire and will no longer be exercisable as of the tenth anniversary of the date of grant, subject to sooner expiration upon the occurrence of certain events as provided elsewhere in this Plan. (b) In addition to the grant provided in subsection (a), each Eligible Director who first became an Eligible Director on or after June 13, 2001 shall automatically be awarded a grant of Non-Qualified Stock Options upon each reelection of such Eligible Director to a subsequent, successive term, in the amount of an option for 7,500 shares. (c) Except to the extent an option is granted under any automatic grant provision of any other stock option plan maintained by the Company, each Eligible Director who first became an Eligible Director prior to June 13, 2001 shall automatically be awarded a grant of Non-Qualified Stock Options upon the reelection of such Eligible Director to a third or subsequent, successive term, in the amount and at the times hereinafter set forth. The number of options to which each Eligible Director shall be entitled pursuant to this subsection (c) shall be as follows: (i) 20,000 on the date of the Eligible Director's reelection to a third one-year term; (ii) 20,000 on the date of the Eligible Director's reelection to a fourth one-year term; (iii) 15,000 on the date of the Eligible Director's reelection to a fifth one-year term; (iv) 15,000 on the date of the Eligible Director's reelection to a sixth one-year term; (v) 10,000 on the date of the Eligible Director's reelection to a seventh one-year term; (vi) 10,000 on the later of the date of the annual meeting of stockholders in 2000, or the date of the Eligible Director's reelection to an eighth one-year term; (vii) 10,000 on the later of the date of the annual meeting of stockholders in 2001, or the date of the Eligible Director's reelection to a ninth one-year term; and (viii) 7,500 on the date of the Eligible Director's reelection to a tenth one-year term and on each successive reelection to a one-year term thereafter. (d) Options granted pursuant to subsections (b) or (c) shall vest and be exercisable solely in accordance with the following schedule: 10 (i) The options shall not be exercisable during the twelve-month period beginning after the date of grant. (ii) The options may be exercised with respect to one-third of the option shares after the expiration of twelve months from the date of grant. (iii) The remaining two-thirds of the options shall vest and become exercisable ratably on a monthly basis over the two-year period commencing one year from the date of grant and ending three years from the date of grant. (iv) The options will expire and will no longer be exercisable as of the tenth anniversary of the date of grant, subject to sooner expiration upon the occurrence of certain events as provided elsewhere in this Plan. (e) The option price for all options awarded under this Section 17 shall be equal to 100% of the Fair Market Value of a share of Common Stock on the date of grant. 18. OPTIONS GRANTED TO EMPLOYEES AND DIRECTORS OF ANY SUBSIDIARY IN THE UK In addition to the provisions above, the provisions of this Section 18 shall apply as herein set out to options granted to employees and directors of any subsidiary in the United Kingdom. The provisions of this Section 18 enable the Plan to be used in a tax efficient manner in the United Kingdom. (a) In this Section 18, the following terms have the meanings ascribed to them: "Election" means an election in the form envisaged in Paragraph 3B(1) of Schedule 1 to SSCBA and acceptable to the UK Subsidiary to the effect that any Secondary NIC arising on the exercise, assignment or release of a UK Option shall be the liability of the recipient and not the liability of the UK Subsidiary "Independent Transfer Agent" means any person (other than the Company or any company affiliated with the Company or any individual affiliated with any such company) who is registered as a broker-dealer with the U.S. Securities and Exchange Commission and who is thereby able to sell and transfer shares in the Company on behalf of the Optionholder "Optionholder" means an employee or director of the UK Subsidiary who is the holder of a UK Option "Secondary NIC" means secondary national insurance contributions as defined in the SSCBA "SSCBA" means the Social Security Contributions and Benefits Act 1992 of the United Kingdom 11 "UK Option" means an option granted to an employee of the UK Subsidiary "UK Subsidiary" means OSI Pharmaceuticals (UK) Limited (a company incorporated in England under company number 1709877) and any other UK Subsidiary of the Company from time to time. (b) To the extent that it is lawful to do so, a UK Option may be granted subject to a condition that any liability of the UK Subsidiary (as employer or former employer of the relevant Optionholder) to pay Secondary NIC in respect of the exercise, assignment or release of that UK Option shall be the liability of the relevant Optionholder and payable by that Optionholder and that the Optionholder shall not be entitled to exercise the UK Option until he has entered into an Election to that effect when required to do so by the UK Subsidiary provided that the Committee may in its discretion at any time or times release the Optionholder from this liability or reduce his liability thereunder unless that Election has been entered into between the UK Subsidiary and that Optionholder and that Election (or the legislation which provides for such an Election to be effective) does not allow for such an Election to be subsequently varied. (c) If a UK Option is granted subject to the condition referred to in paragraph (b) above then the Optionholder shall by completing the Election grant to the UK Subsidiary (as employer or former employer of the relevant Optionholder) the irrevocable authority, as agent of the Optionholder and on his behalf, to appoint an Independent Transfer Agent, to act as agent of the Optionholder and on his behalf, to sell or procure the sale of sufficient of the Stock subject to the UK Option and remit the net sale proceeds to the UK Subsidiary so that the net proceeds payable to the UK Subsidiary are so far as possible equal to but not less than the amount of the Secondary NIC for which the Optionholder is liable under the terms of the Election and the UK Subsidiary shall account to the Optionholder for any balance. No Stock shall be allotted or transferred to the Optionholder by the Company until the UK Subsidiary has received an amount in cash equal to the amount of the Secondary NIC for which the Optionholder is liable under the terms of the Election. (d) If a UK Option is exercised and the Optionholder is liable to tax duties or other amounts on such exercise and the UK Subsidiary (as his employer or former employer) is liable to make a payment to the appropriate authorities on account of that liability, then the Optionholder shall by having completed the option agreement grant to the UK Subsidiary (as employer or former employer of the relevant Optionholder) the irrevocable authority, as agent of the Optionholder and on his behalf, to appoint an Independent Transfer Agent, to act as agent of the Optionholder and on his behalf, to sell or procure the sale of sufficient of the Shares subject to the UK Option and remit the net sale proceeds to the UK Subsidiary so that the net proceeds payable to the UK Subsidiary are so far as possible equal to but not less than the amount payable to the appropriate authorities and the UK Subsidiary shall account to the Optionholder for any balance. No Stock shall be allotted or transferred to the Optionholder by the Company until the UK Subsidiary has received an amount in cash equal to the amount of any liability of the UK Subsidiary referred to in this paragraph (d). 12 EX-10.32 3 y18060exv10w32.txt EX-10.32: COMPENSATORY ARRANGEMENTS OF EXECUTIVE OFFICERS Exhibit 10.32 COMPENSATORY ARRANGEMENTS OF EXECUTIVE OFFICERS On December 8, 2005, the Compensation Committee (the "Committee") of the Board of Directors of OSI Pharmaceuticals, Inc. ("OSI" or the "Company") approved the 2006 annual base salaries and 2005 cash bonuses for OSI's executive officers including the Company's named executive officers (as that term is defined in Item 402 of Regulation S-K) as set forth in OSI's proxy statement dated February 2, 2005. The following table sets forth the annual base salary levels of such officers for 2006 as compared to 2005 as well as the 2005 cash bonuses for each such officer:

2006 BASE NAME AND POSITION SALARY 2005 BONUS - ----------------- --------- ---------- Colin Goddard, Ph.D. $600,000 -- Chief Executive Officer (1) Michael G. Atieh $410,000 $250,000 Executive Vice President, Chief Financial Officer and Treasurer (2) Gabriel Leung $400,000 $160,000 Executive Vice President and President, (OSI) Oncology David Guyer, M.D. $525,000 n/a Executive Vice President and CEO, (OSI) Eyetech (3) Anker Lundemose, M.D., Ph.D., D.Sc. L195,000 L 75,000 Executive Vice President and President, (OSI) Prosidion Robert Simon $347,998 $100,000 Executive Vice President, Pharmaceutical Development and Technical Operations Barbara A. Wood $320,000 $100,000 Vice President, General Counsel and Secretary Neil Gibson, Ph.D. $292,000 $ 90,000 Chief Scientific Officer (4)

(1) Given the performance of the Company's stock in 2005, the Committee concurred with Dr. Goddard's recommendation that he not receive a 2006 bonus or merit increase to his base salary. (2) Mr. Atieh commenced employment as Executive Vice President, Chief Financial Officer and Treasurer on May 31, 2005. Mr. Atieh's bonus for 2005 was guaranteed as part of his employment contract signed in June, 2005. (3) Dr. Guyer became an employee of the Company on November 14, 2005 upon the consummation of the acquisition of Eyetech Pharmaceuticals, Inc. As per contract, the determination of 2005 bonuses for former Eyetech employees will be made by the Committee in February 2006. (4) Dr. Gibson assumed the role of Chief Scientific Officer on September 20, 2005. Bonuses The 2005 bonus awards were computed in accordance with the Committee's policy of awarding annual bonuses for executive officers, as previously disclosed, and are consistent with past practice. For purposes of compensation decisions for 2005, the Committee measured the Company's performance and that of each executive officer in fiscal year 2005 against goals established by the executive officers and ratified by the Committee under the Company's Annual Business Plan prior to the start of the fiscal year. The Company's bonus plan awards executives for performance as individuals against personal goals and for achievement of company goals. Bonus awards for executives are discretionary but generally follow guidelines that recognize both corporate and personal goal attainment. In general, where an individual or corporate bonus is awarded the award ranges between 80 and 150% of the individual's target. For 2005, the Company performance component was set at 80%. The bonus targets for the executive officers are either set in accordance with their employment agreements or are based upon their respective grade levels. The current bonus targets (which represents a percentage of base salary) for the executive officers are:

NAME TARGET - ---- ------ Colin Goddard, Ph.D. * Michael G. Atieh 50% Gabriel Leung 50% David Guyer, M.D. 50% Anker Lundemose, M.D., Ph.D., D.Sc. 50% Robert Simon 40% Barbara Wood 40% Neil Gibson 40%

* No specified target; determined by the Committee in its discretion. Stock Option Grants Executive officers are eligible for awards of stock options or shares of stock pursuant to the Company's Amended and Restated Stock Incentive Plan. Such awards are made at the discretion of the Committee. Annual stock option grants for executive officers are a key element of the executive officer's total compensation. As for all Company employees, the stock option grants made annually to the executive officers are made in accordance with the Company's formula-based policy for granting options. According to the formula, each grade level is assigned a grant multiple. The number of options granted to an executive officer is determined by multiplying the executive officer's salary by the grant multiple and then dividing the product by a stock price which is determined by the CEO and ratified by the Committee and is typically a 3-6 month trailing average. Perquisites The only perquisite granted to executive officers which is not available to other employees relates to the use of automobiles and is in the form of either the payment of a car lease or, in lieu thereof, a monthly cash payment. Currently, Mr. Atieh is the only executive officer who does not receive the perquisites. -2- EX-10.50 4 y18060exv10w50.txt EX-10.50: COMMITMENT LETTER EXHIBIT 10.50 [CHASE LETTERHEAD] December 13, 2005 OSI Pharmaceuticals, Inc. 58 South Service Road Suite 110 Melville, NY 11747 Attention Michael G. Atieh, Executive Vice President & Chief Financial Officer Stephen R. Grillo, Director, Purchasing & Treasury Re: Commitment Letter Ladies and Gentlemen OSI Pharmaceuticals, Inc. ("you" or the "Borrower" has requested that J.P. Morgan Securities Inc. ("JPMorgan"), agree to structure, arrange and syndicate a senior revolving credit facility in an aggregate amount of $75,000,000 for the Borrower, and that JPMorgan Chase Bank, N.A. "Chase") commit to provide the $75,000,000 senior secured credit facility (the "Facility") and to serve as administrative agent for the Facility. JPMorgan is pleased to advise you that it is willing to act as exclusive arranger for the Facility. Furthermore (a) Chase is pleased to advise you of its commitment to provide the entire amount of the Facility, and (b) JPMorgan is pleased to advise you of its agreement to uses commercially reasonable efforts to assemble a syndicate of financial institutions as recommended to JPMorgan and Chase by you and as identified by JPMorgan and Chase in consultation with you, to participate in the Facility, in each case upon the terms and subject to the conditions set forth in this commitment letter (the "Commitment Letter") and in the Term Sheet attached hereto (the "Term Sheet"). It is agreed that Chase will act as the sole and exclusive administrative agent, and that JPMorgan will act as the sole and exclusive Lead Arranger and Bookrunner (in such capacities, the "Lead Arranger") for the Facility: provided that the commitments of Chase to act as administrative agent and to provide a portion of the Facility may be assumed by an affiliated bank and JPMorgan may assign some or all of its rights and delegate some or all of its responsibilities hereunder to one of its affiliates. You agree that no other agents, co-agents or arrangers will be appointed, no other titles will be awarded and no compensation (other than that expressly contemplated by the Term Sheet and the Fee Letter referred to below) will be paid in connection with the Facility unless you and we shall so agree. We intend to syndicate the Facility to a group of financial institutions (together with Chase, the financial institutions becoming lenders under the Facility being collectively referred to herein as the "Lenders") which have been recommended to us by you; provided, that we reserve the right to include additional financial institutions identified by us in consultation with you. JPMorgan intends to commence syndication efforts promptly upon the execution of this Commitment Letter, and you agree actively to assist JPMorgan in completing a syndication satisfactory to it. Such assistance shall include (a) your using commercially reasonable efforts to ensure that the syndication effects benefit materially from your existing banking relationships, (b) direct contact between senior management and advisors of the Borrower and the subsidiaries of the Borrower (including, without limitation, Eyetech Pharmaceuticals, Inc. ("Eyetech")), (c) assistance in the preparation of a Confidential Information Memorandum and other marketing materials to be used in connection with the syndication and (d) the hosting, with JPMorgan, of one or more meetings of prospective Lenders. As the Lead Arranger, JPMorgan will manage all aspects of the syndication, including decisions as to the selection of institutions to be approached (after consultation with you) and when they will be approached, when their commitments will be accepted, which institutions will participate (after consultation with you), the allocations of the commitments among the Lenders (as defined below) and the amount and distribution of fees among the Lenders. In acting as the Lead Arranger, JPMorgan will have no responsibility other than to arrange the syndication as set forth herein and shall in no event be subject to any fiduciary or other implied duties. To assist JPMorgan in its syndication efforts, you agree promptly to prepare and provide to JPMorgan and Chase all information with respect to the Borrower and its subsidiaries and the transactions contemplated hereby, including all financial information and projections (the "Projections"), as we may reasonably request in connection with the arrangement and syndication of the Facility. You hereby represent and covenant that (a) all written information other than the Projections that has been or will be made available to Chase or JPMorgan by you or any of your representatives, all information, whether written or oral, presented by you or any of your representatives to Chase or JPMorgan during any bank meeting or presentation, or any information, whether written or oral, provided to Chase or JPMorgan by any executive officer of the Borrower (collectively, the "Information") when taken together with the information contained in the filings of the Borrower and the Borrower's subsidiaries with the Securities and Exchange Commission made prior to the execution of definitive financing documents, is or will be, when furnished, complete and correct in all material respects and does not or will not, when furnished, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not materially misleading in light of the circumstances under which such statements are made and (b) the Projections that have been or will be made available to Chase or JPMorgan by you, Eyetech or by any of your respective representatives, have been or will be prepared in good faith based upon reasonable assumptions. It is understood that such Projections are not representations and warranties, that the results set forth therein will be achieved, and that actual results may differ and the difference between actual results and those set forth in the Projections may be material. You understand that in arranging and syndicating the Facility we may use and rely on the information and Projections without independent verification thereof. As consideration for Chase's commitment hereunder and JPMorgan's agreement to perform the services described herein, you agree to pay to Chase the nonrefundable fees set forth in Addendum J to the Term Sheet and in the Fee Letter dated the date hereof and delivered herewith (the "Fee Letter"). Chase's commitment hereunder and JPMorgan's agreement to perform the services described herein are subject to (a) there not occurring or becoming known to us any material adverse condition or material adverse change in or affecting the business, operations, property or 2 condition (financial or otherwise) of the Borrower and its subsidiaries and Eyetech and its subsidiaries, taken as a whole, except as disclosed in the Borrower's or Eyetech's unaudited quarterly financial statements for the period ended March 31, 2005, June 30, 2005 and September 30, 2005 or any publicly available press releases or filings with the Securities and Exchange Commission prior to the date hereof, except that fluctuations in the trading prices of the Borrower's stock shall not be deemed to be a material adverse change or condition, (b) our completion of and satisfaction in all respects with a due diligence investigation of the Borrower and the Borrower's subsidiaries, (c) our not becoming aware after the date hereof of any information or other matter affecting the Borrower or any subsidiary of the Borrower, or the transactions contemplated hereby which is inconsistent in a material and adverse manner with any such information or other matter disclosed to us or made publicly available prior to the date hereof, (d) there not having occurred a material disruption of or material adverse change in financial, banking or capital market conditions that, in our reasonable judgment, is reasonably likely to materially impair the syndication of the Facility, (e) our satisfaction that prior to and during the syndication of the Facility there shall be no competing offering, placement or arrangement of any debt securities or bank financing (other than the convertible debt described in Section V(c) of the Term Sheet) by or on behalf of the Borrower or any of the Borrower's affiliates, (f) the negotiation, execution and delivery on or before February 15, 2006 of definitive documentation with respect to the Facility satisfactory to Chase and its counsel, (g) your compliance with the terms of this Commitment Letter and the Fee Letter, and (h) the other conditions set forth or referred to in the Term Sheet. The terms and conditions of Chase's commitment hereunder and of the Facility are not limited to those set forth herein and in the Term Sheet. Those matters that are not covered by the provisions hereof and of the Term Sheet are subject to the approval and agreement of Chase, JPMorgan and the Borrower. You agree (a) to indemnify and hold harmless Chase, JPMorgan and their affiliates and their respective officers, directors, employees, advisors, and agents (each, an "indemnified person") from and against any and all losses, claims, damages and liabilities to which any such indemnified person may become subject arising out of or in connection with this Commitment Letter, the Facility, the use of the proceeds thereof or any related transaction or any claim, litigation, investigation or proceeding relating to any of the foregoing, regardless of whether any indemnified person is a party thereto, and to reimburse each indemnified person upon demand for any reasonable legal or other expenses incurred in connection with investigating or defending any of the foregoing, provided that the foregoing indemnity will not, as to any indemnified person, apply to losses, claims, damages, liabilities or related expenses to the extent they are found by final, non-appealable judgment of a court to arise from the willful misconduct or gross negligence of such indemnified person, and (b) to reimburse Chase, JPMorgan and their affiliates after receipt of invoices for all reasonable out-of-pocket expenses (including reasonable due diligence expenses, reasonable field examination fees and expenses, reasonable syndication expenses, reasonable consultant's fees and expenses (if any), travel expenses, and reasonable fees, charges and disbursements of counsel) incurred in connection with the Facility and any related documentation (including this Commitment Letter, the Term Sheet, the Fee Letter and the definitive financing documentation) or the administration, amendment, modification or waiver thereof. No indemnified person shall be liable for any indirect or consequential damages in connection with its activities related to the Facility. No indemnified person shall be liable for any damages arising from the use by others of information or other materials obtained through 3 electronic, telecommunications or other information transmission systems or for any special, indirect, consequential or punitive damages to connection with the Facility. This Commitment Letter shall not be assignable by you without the prior written consent of Chase and JPMorgan (and any purported assignment without such consent shall be null and void), is intended to be solely for the benefit of the parties hereto and is not intended to confer any benefits upon, or create any rights in favor of, any person other than the parties hereto. This Commitment Letter may not be amended or waived except by an instrument in writing signed by you, Chase and JPMorgan. This Commitment Letter may be executed in any number of counterparts, each of which shall be an original, and all of which, when taken together, shall constitute one agreement. Delivery of an executed signature page of this Commitment Letter by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof. This Commitment Letter, the Term Sheet and the Fee Letter set forth the entire understanding of the parties with respect thereto. This Commitment Letter shall be governed by, and construed in accordance with, the laws of the State of New York. IF THIS COMMITMENT LETTER, THE TERM SHEET, THE FEE LETTER OR ANY ACT, OMISSION OR EVENT HEREUNDER OR THEREUNDER BECOMES THE SUBJECT OF A DISPUTE, YOU, JPMORGAN AND CHASE EACH HEREBY WAIVE TRIAL BY JURY. This Commitment Letter is delivered to you on the understanding that neither this Commitment Letter, the Term Sheet or the Fee Letter nor any of their terms or substance shall be disclosed by you or any of your subsidiaries or representatives, directly or indirectly, to any other person except (a) to your officers, agents and advisors who are directly involved in the consideration of this matter or (b) as may be compelled in a judicial or administrative proceeding or as otherwise required by law, including but not limited to federal and state securities laws, and the rules or regulations of any applicable stock exchange (in which case the parties agree to inform the other parties promptly thereof), provided that, the foregoing restrictions shall cease to apply (except in respect of the Fee Letter and its terms and substance) after this Commitment Letter has been accepted by the Borrower. Officers, directors, employees and agents of JPMorgan and Chase and their affiliates shall at all times have the right to share amongst themselves information received from you and your affiliates and your officers, directors, employees and agents solely for purposes of evaluating and documenting the Facility. You acknowledge that JPMorgan, Chase and any of their affiliates may be providing debt financing, equity capital or other services (including financial advisory services) to other companies in respect of which you may have conflicting interests regarding the transactions described herein and otherwise. Neither JPMorgan nor Chase nor any of their affiliates will use confidential information obtained from you by virtue of the transaction contemplated by this letter or their other relationships with you in connection with the performance by JPMorgan or Chase or any of their affiliates of services for other companies, and neither JPMorgan nor Chase nor any of their affiliates will finish any such information to other companies. You also acknowledge that JPMorgan, Chase and their affiliates have no obligation to use in connection with the transactions contemplated by this letter, or to furnish to you confidential information obtained from other companies. The compensation, reimbursement, indemnification and confidentiality provisions contained herein and in the Fee Letter shall remain in full force and effect regardless of whether 4 definitive financing documentation shall be executed and delivered and notwithstanding the termination of this Commitment Letter or Chase's commitment hereunder. You hereby authorize JPMorgan and Chase, at their respective sole expense, to publish such tombstones and give such other publicity to the Facility as each may from time to time determine with the Borrower's consent which shall not be unreasonably withheld or delayed. The foregoing authorization shall remain in effect unless you notify each of JPMorgan and Chase in writing that such authorization is revoked. If the foregoing correctly sets forth our agreement, please indicate your acceptance of the terms hereof and of the Term Sheet and the Fee Letter by returning to us executed counterparts hereof and of the Fee Letter on or before December 16, 2005. Chase's commitment and JPMorgan's agreements herein will expire at such time in the event Chase has not received such executed counterparts in accordance with the immediately preceding sentence. This Commitment Letter and Term Sheet supersede any and all prior versions hereof and thereof. Chase and JPMorgan are pleased to have been given the opportunity to assist you in connection with this important financing. Very truly yours, JPMORGAN CHASE BANK, N.A. By: /s/ ------------------------------------ Name: ---------------------------------- Title: --------------------------------- J.P. MORGAN SECURITIES, INC. By: /s/ ------------------------------------ Name: ---------------------------------- Title: --------------------------------- Accepted and agreed to as of The date first written above by: OSI PHARMACEUTICALS, INC. By: /s/ --------------------------------- Name: ------------------------------- Title: ------------------------------ 5 [CHASE LETTERHEAD] February 14, 2006 OSI Pharmaceuticals, Inc. 58 South Service Road Suite 110 Melville, NY 11747 Attention: Michael G. Atieh, Executive Vice President & Chief Financial Officer Stephan R. Grillo, Director, Purchasing & Treasury RE: EXTENSION OF COMMITMENT LETTER Ladies and Gentlemen: Reference is hereby made to the Commitment Letter dated December 13, 2005 (including the attached Term Sheet, the "Commitment Letter") between JPMorgan Securities Inc. ("JPMorgan"), JPMorgan Chase Bank, N.A. ("Chase") and OSI Pharmaceuticals, Inc. (the "Borrower"). Capitalized terms used but not defined herein are used with the meanings assigned to them in the Commitment Letter. Chase's commitment under the Commitment Letter and JPMorgan's agreement to perform the services provided in the Commitment Letter currently expire on February 15, 2006 unless the parties otherwise agree in writing. Each of JPMorgan, Chase and the Borrower desires to cause such commitment and agreement to be extended as provided herein. Accordingly, each of JPMorgan and Chase hereby agrees that clause (f) of the seventh paragraph of the Commitment Letter is amended and restated to read as follows: "(f) the negotiation, execution and delivery on or before March 15, 2006 of definitive documentation with respect to the Facility satisfactory to Chase and its counsel". Each of JPMorgan, Chase and the Borrower also agree that the Section V.(m) of the Term Sheet is amended and restated to read as follows: "(m) Minimum Opening Liquidity (as defined below) at Closing of not less than $115,000,000, provided that if the Closing occurs during the period commencing on March 1, 2006 and ending on March 15, 2006, Opening Liquidity shall be not less than $100,000,000." Except as explicitly amended hereby, the Commitment Letter remains in full force and effect. Please indicate your agreement with the foregoing by returning to us an executed counterpart of this letter agreement not later than 4:00 p.m. on February 15, 2006. Very truly yours, JPMORGAN CHASE BANK, N.A. By: /s/ ------------------------------------ Name: ---------------------------------- Title: --------------------------------- JPMORGAN SECURITIES INC. By: /s/ ------------------------------------ Name: ---------------------------------- Title: --------------------------------- Accepted and agreed to as of The date first written above by: OSI PHARMACEUTICALS, INC. By: /s/ ------------------------------------ Name: ---------------------------------- Title: --------------------------------- -2- [CHASE LETTERHEAD] March 14, 2006 OSI Pharmaceuticals, Inc. 58 South Service Road Suite 110 Melville, NY 11747 Attention: Michael G. Atieh, Executive Vice President & Chief Financial Officer Stephan R. Grillo, Director, Purchasing & Treasury RE: EXTENSION OF COMMITMENT LETTER Ladies and Gentlemen: Reference is hereby made to the Commitment Letter dated December 13, 2005 (including the attached Term Sheet, and as each such document has been amended and extended as of February 14, 2006, (the "Commitment Letter") between JPMorgan Securities Inc. ("JPMorgan"), JPMorgan Chase Bank, N.A. ("Chase") and OSI Pharmaceuticals, Inc. (the "Borrower"). Capitalized terms used but not defined herein are used with the meanings assigned to them in the Commitment Letter. Chase's commitment under the Commitment Letter and JPMorgan's agreement to perform the services provided in the Commitment Letter currently expire on March 15, 2006 unless the parties otherwise agree in writing. Each of JPMorgan, Chase and the Borrower desires to cause such commitment and agreement to be extended as provided herein. Accordingly, each of JPMorgan and Chase hereby agrees that clause (f) of the seventh paragraph of the Commitment Letter is amended and restated to read as follows: "(f) the negotiation, execution and delivery on or before March 31, 2006 of definitive documentation with respect to the Facility satisfactory to Chase and its counsel". Each of JPMorgan, Chase and the Borrower also agree that the Section V.(m) of the Term Sheet is amended and restated to read as follows: "(m) Minimum Opening Liquidity (as defined below) at Closing of not less than $100,000,000." Except as explicitly amended hereby, the Commitment Letter remains in full force and effect. Please indicate your agreement with the foregoing by returning to us an executed counterpart of this letter agreement not later than March 14, 2006. Very truly yours, JPMORGAN CHASE BANK, N.A. By: /s/ --------------------------- Name: Title: J.P. MORGAN SECURITIES, INC. By: /s/ --------------------------- Name: Title: Accepted and agreed to as of the date first written above by: OSI PHARMACEUTICALS, INC. By: /s/ --------------------------- Name: Title: EX-10.51 5 y18060exv10w51.txt EX-10.51: LICENSE AGREEMENT EXHIBIT NO. 10.51 CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS. LICENSE AGREEMENT BY AND BETWEEN PFIZER INC. AND EYETECH PHARMACEUTICALS, INC. Dated as of December 17, 2002 Table of Contents

Page ---- ARTICLE 1 DEFINITIONS...................................................................... 1 ARTICLE 2 LICENSES......................................................................... 14 2.1 Eyetech Grants............................................................................ 14 2.2 License Grant to Eyetech.................................................................. 16 2.3 Sublicensing.............................................................................. 16 ARTICLE 3 BASE PAYMENTS AND PERFORMANCE MILESTONES......................................... 17 3.1 Base Payments............................................................................. 17 3.2 Performance Milestones.................................................................... 18 ARTICLE 4 REVENUE SHARE.................................................................... 21 4.1 Revenue Share............................................................................. 21 4.2 Survival of Licenses After Expiration of Royalty Term and After Expiration of Co-Promotion Term......................................................................... 23 4.3 Third Party Royalties..................................................................... 23 ARTICLE 5 ACCOUNTING AND PROCEDURES FOR PAYMENTS........................................... 26 5.1 Sales Subject to Royalty Obligations...................................................... 26 5.2 Royalty Payments; Royalty Reports; Pfizer Operating Profit................................ 26 5.3 Currency Exchange; Late Payments.......................................................... 27 5.4 Withholding Taxes......................................................................... 28 5.5 Audits.................................................................................... 28 5.6 Blocked Payments.......................................................................... 29 ARTICLE 6 TECHNICAL AND OTHER INFORMATION.................................................. 29 6.1 Disclosure of Technical Information....................................................... 29 6.2 Confidentiality........................................................................... 30 6.3 Publicity Related to this Agreement....................................................... 30 6.4 Applicability of Obligations to Affiliates, Employees, Directors, Agents, Independent Contractors and Consultants................................................... 31 ARTICLE 7 PATENTS.......................................................................... 31 7.1 Third Party License Agreements............................................................ 31 7.2 Disclosure of Patent Applications and Proceedings......................................... 32 7.3 Prosecution and Maintenance; Costs........................................................ 33

i Table of Contents (continued)

Page ---- 7.4 Third Party Infringement Actions.......................................................... 34 7.5 Patent Term Extensions.................................................................... 36 7.6 US Territory Intellectual Property Infringement Claims.................................... 37 7.7 ROW Territory Intellectual Property Infringement Claims................................... 37 7.8 Ownership and Prosecution of Patent Rights Included in the Collaboration Intellectual Property..................................................................... 37 ARTICLE 8 REPRESENTATIONS, WARRANTIES AND COVENANTS........................................ 38 8.1 Eyetech Representations and Warranties.................................................... 39 8.2 Pfizer Representations and Warranties..................................................... 44 8.3 Eyetech Covenants......................................................................... 45 8.4 No Consequential or Punitive Damages...................................................... 46 ARTICLE 9 TERM............................................................................. 47 ARTICLE 10 TERMINATION...................................................................... 47 10.1 Termination for Convenience............................................................... 47 10.2 Termination for Breach.................................................................... 48 10.3 Breach of Non-Competition Obligations..................................................... 50 10.4 Effects of Termination.................................................................... 50 10.5 Non-Competition........................................................................... 52 10.6 Acquisitions Involving Competing Products................................................. 54 10.7 Competing Products in the EU.............................................................. 55 ARTICLE 11 DISPUTE RESOLUTION............................................................... 55 11.1 Arbitration............................................................................... 55 11.2 No Limitation............................................................................. 57 ARTICLE 12 MISCELLANEOUS.................................................................... 57 12.1 Force Majeure............................................................................. 57 12.2 Assignment................................................................................ 57 12.3 Governing Law............................................................................. 57 12.4 Jurisdiction.............................................................................. 58 12.5 Notices................................................................................... 58 12.6 Entire Agreements; Amendments............................................................. 59 12.7 Severability.............................................................................. 60 12.8 Waivers................................................................................... 60 12.9 Binding Effect............................................................................ 60 12.10 Further Assurances........................................................................ 60

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Page ---- 12.11 Third Party Beneficiaries................................................................. 61 12.12 Performance by Subsidiaries and Affiliates................................................ 61 12.13 Counterparts.............................................................................. 61 12.14 Headings.................................................................................. 61 12.15 Offset.................................................................................... 62

EXHIBIT 1.8 - COMPOUND EXHIBIT 1.18 - EYETECH PATENT RIGHTS EXHIBIT 8.1(f) - CERTAIN INTELLECTUAL PROPERTY MATTERS EXHIBIT 8.1(i) - FUNDING SOURCES EXHIBIT 8.1(j) - STUDIES iii LICENSE AGREEMENT THIS LICENSE AGREEMENT (this "Agreement") dated as of December 17, 2002 (the "Execution Date") between Pfizer Inc., a corporation organized under the laws of the state of Delaware, 235 East 42nd Street, New York, New York 10017 ("Pfizer"), and Eyetech Pharmaceuticals, Inc. ("Eyetech"), a corporation organized under the laws of the state of Delaware, 500 Seventh Avenue, 18th Floor, New York, New York 10018. WHEREAS, Eyetech owns or licenses or may acquire rights under certain patents and patent applications, licenses to patents and patent applications, know-how, trade secrets and scientific and technical information relating to the aptamer known as Macugen; WHEREAS, the Parties desire to co-promote products containing or based on the Macugen aptamer in the US Territory (as defined below); and WHEREAS, Pfizer desires to acquire from Eyetech exclusive rights to develop and commercialize products containing or based on the Macugen aptamer in the ROW Territory (as defined below). NOW, THEREFORE, the Parties agree as follows: ARTICLE 1 DEFINITIONS Any capitalized terms used herein that are not expressly defined in this Agreement shall have the meanings set forth in the Collaboration Agreement. For purposes of this Agreement, the following definitions shall be applicable: 1.1 "Affiliate" means any Person directly or indirectly controlled by, controlling or under common control with, a Party, but only for so long as such control shall continue. For purposes of this definition, "control" (including, with correlative meanings, "controlled by", "controlling" and "under common control with") means, with respect to a Person, possession, direct or indirect, of (a) the power to direct or cause direction of the management and policies of such Person (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise), or (b) at least 50% of the voting securities (whether directly or pursuant to any option, warrant or other similar arrangement) or other comparable equity interests. For the avoidance of doubt, neither of the Parties shall be deemed to be an "Affiliate" of the other. 1.2 "AMD Product" means a Product developed for use in the treatment of age-related macular degeneration. 1.3 "Approval" means receipt from the applicable Regulatory Authority of approval to market a drug in one or more countries. 1.4 "Bankruptcy Code" means 11 U.S.C Sections 101-1330, as amended. 1.5 "Cash Flow" means, with respect to any Person (or any combination of two or more Persons) for any fiscal period, such Person's (or such combination's) EBITDA for such fiscal period, less any milestone payment amounts received by such Person (or combination) pursuant to Section 3.1(a) of this Agreement included in such EBITDA and less any capital expenditures paid by such Person (or such combination) during such fiscal period. 1.6 "Collaboration Agreement" means the Collaboration Agreement dated as of the date hereof between the Parties. 1.7 "Collaboration Intellectual Property" means Patent Rights and Technical Information developed or acquired by either Party, or jointly by the Parties, or by their respective Affiliates, in the course of the Parties' and their respective Affiliates' activities pursuant to this Agreement or the Collaboration Agreement. 2 1.8 "Compound" means the anti-VEGF aptamer known as Macugen (EYE001), as more specifically described in Exhibit 1.8, including without limitation metabolites or prodrugs thereof, and any hydrates, conjugates, salts, esters, isomers, polymorphs or analogues of any of the foregoing. 1.9 "Control" or "Controlled" means, with respect to any intellectual property right, the possession (whether by ownership or license) by a Party (or by any Subsidiary of a Party) of the ability to grant to the other Party a license under such right without violating the terms of any agreement with any third party. 1.10 "Co-Promote" shall have the meaning ascribed to it in the Collaboration Agreement. 1.11 "DME Product" means a Product developed for use in the treatment of diabetic macular edema. 1.12 "EBITDA" means, with respect to any Person (or combination of two or more Persons) for any fiscal period, an amount equal to the sum of (a) the Net Income of such Person (or such combination) for such fiscal period plus (b) depreciation, amortization, Interest Expense and taxes deducted in calculating such Net Income, plus (c) any extraordinary or nonrecurring losses deducted in calculating such Net Income, minus (d) any extraordinary or nonrecurring gains included in calculating such Net Income, all as determined in accordance with GAAP. 1.13 "Effective Date" means the HSR Clearance Date. 1.14 "EMEA" means The European Agency for the Evaluation of Medicinal Products. 1.15 "Escrow Agent" means the third party financial institution party to, and serving as escrow agent in accordance with, the Escrow Agreement. 3 1.16 "Escrow Agreement" means the escrow agreement entered into by and among the Parties, and a third party financial institution in accordance with Section 3.1(c). 1.17 "EU" means the European Union, as it may be expanded from time to time. 1.18 "Eyetech Patent Rights" means all Patent Rights, now or hereafter during the Term, Controlled by Eyetech or its Subsidiaries relating to, or useful in connection with, the manufacture, use or sale of the Compound or the Products, including, without limitation, the patents and patent applications set forth on Exhibit 1.18, but excluding patents and patent applications claiming drug delivery devices, methods or technology licensed by any third party to Eyetech under any license agreement other than the Gilead License, the Shearwater License or the Isis License. 1.19 "Eyetech Technical Information" means all scientific or technical information and related know-how and trade secrets, now or hereafter during the term of this Agreement, Controlled by Eyetech or its Subsidiaries relating to the Compound or the Products, including but not limited to: (a) medical, clinical, toxicological or other scientific data and (b) processes and analytical methodology useful in the development, testing, analysis, manufacture or packaging of the Compound or the Products (excluding drug delivery know-how and technology licensed by any third party to Eyetech under any license agreement other than the Gilead License, the Shearwater License or the Isis License). 1.20 "Field" means the prevention, treatment or control of all ophthalmic diseases or conditions. 1.21 "Fixed Charge Coverage Ratio" means the ratio of: (a) the aggregate amount of EBITDA for the twelve (12) month period ended on the last day of the most recently completed fiscal quarter referred to in clause (a)(i), (b)(i) or 4 (c)(i), as applicable, of the definition of [**] (such four full fiscal quarter period being referred to herein as the "Prior Quarters") for which financial statements contained in an SEC Report have been filed with the SEC or, where Eyetech or any Person acquiring control of or merging with Eyetech in connection with a Change in Control is not required under applicable law to file SEC Reports, for which financial statements have been delivered to Pfizer, to (b) the aggregate amount of Fixed Charges of such Person for the Prior Quarters. In addition to and without limitation of the foregoing, for purposes of this Section 1.21, in the case of a Change in Control of Eyetech, "EBITDA" and "Fixed Charges" shall be calculated as if such Change in Control occurred during the most recently completed Prior Quarter after giving effect on a pro forma basis for the period of such calculation to, without duplication, Interest Expense with respect to Indebtedness and transaction fees incurred with respect to the transactions related to such Change in Control of Eyetech and any Person that acquires control of Eyetech or with whom Eyetech merges in such Change in Control (and the application of the net proceeds thereof) during the period commencing on the first day of the Prior Quarters to and including the last day of the Prior Quarters (the "Reference Period"), all as if such incurrence (and application) and expense occurred on the first day of the Reference Period. Furthermore, if interest on any Indebtedness incurred with respect to the transactions related to such Change in Control may optionally be determined at an interest rate based upon a factor of a prime, LIBOR, or similar rate, a eurocurrency interbank offered rate, or other rates, then the interest rate in effect on the date of such transactions will be deemed to have been the interest rate in effect on such Indebtedness during the Reference Period. 5 1.22 "Fixed Charges" means, with respect to any Person (or any combination of two or more Persons) for any fiscal period, such Person's (or such combination's) (a) Interest Expenses and (b) dividends paid by such Person (or such combination) during such fiscal period, all as determined in accordance with GAAP. 1.23 "Generic Competition" shall exist during a given calendar quarter with respect to a Product in any country in the ROW Territory if, during such calendar quarter, one or more Generic Products shall be commercially available in such country and shall have, in the aggregate, a [**] percent ([**]%) or more market share of the aggregate of (Products and Generic Products) (based on data provided by IMS International, or if such data is not available, such other reliable data source as reasonably determined by Pfizer and agreed by Eyetech (such agreement not to be unreasonably withheld)) as measured by unit sales. In the event IMS International data (or such other agreed data source) is not sufficient to determine the percentage market share for each country in the EU, the percent market share for the EU countries for which data is not available will be deemed to be the average percent market share for those EU countries in which the data is available. 1.24 "Generic Products" mean, with respect to a Product commercialized by Pfizer in a country, products (other than Products commercialized by Pfizer pursuant to this Agreement) that (a) contain the same active chemical entity(ies) as contained in such Product and (b) have the same therapeutic benefit as such Product. 1.25 "Gilead License" means the Licensing Agreement dated as of March 30, 2000, by and among Eyetech, Gilead Sciences, Inc. ("Gilead") and NeXstar Pharmaceuticals, Inc., as amended from time to time. 6 1.26 "Indebtedness" means (a) indebtedness for borrowed money; (b) the deferred price of property or services (which shall not include ordinary course of business payables); (c) obligations evidenced by notes, bonds, debentures, mortgages or similar instruments; (d) capital or finance lease obligations or hire purchase arrangements; (e) receivables sold or discounted (other than on a non-recourse basis); (f) any amount raised under any other transaction (including any forward sale or purchase agreement) having the commercial effect of a borrowing; and (g) the amount of any balance sheet liability in respect of any guarantee or indemnity for any of the items referred to in paragraphs (a) to (f) above. 1.27 "Interest Expense" means, for any period, without duplication, the sum of (a) the interest expense of such Person for such period as determined on a consolidated basis in accordance with GAAP, including, without limitation, (i) any amortization or accretion of debt discount, (ii) the net cost under any hedge instrument, (iii) the interest portion of any deferred payment obligation, and (iv) all accrued interest; (b) the interest component of capitalized lease obligations determined on a consolidated basis in accordance with GAAP; and (c) that portion of all operating lease rentals representative of an interest factor (which shall be deemed to be equal to 1/3 of all operating lease rentals). 1.28 "Isis License" means the License Agreement dated as of December 31, 2001, by and between Eyetech and Isis Pharmaceuticals, Inc. ("Isis"), as amended from time to time. 1.29 "Law" or "Laws" means all laws, statutes, rules, Codes, regulations, orders, judgments and/or ordinances of any Governmental Authority. 1.30 "Launch" means the initial shipping of a Product as a, or for, commercial sale to an unaffiliated third party, excluding any shipping for test marketing, clinical trial purposes or compassionate or similar use. 7 1.31 "[**]: (a) at any given time, both (i) Eyetech's Quarterly Cash Flow for each of Eyetech's [**] most recently completed fiscal quarters [**] and (ii) [**] for the [**] period ended on the last day of the most recently completed fiscal quarter referred to in clause (i) has been equal to or greater than [**];or (b) on the date of [**], both (i) the Quarterly Cash Flow of the combination of [**] in connection with such [**] for each of such [**] most recently completed fiscal [**] quarters [**] and (ii) the [**] period ended on the last day of the most recently completed fiscal quarter referred to in clause (i) has been equal to or greater than [**]; or (c) at any given time [**], both (i) the Quarterly Cash Flow [**] in connection with such [**] as to periods [**] for each of such [**} most recently completed fiscal quarters [**] and (ii) the [**] as to periods [**] period ended on the last day of the most recently completed fiscal quarter referred to in clause (i) has been equal to or greater than [**]; or (d) [**] pursuant to Section 17.11 of the Collaboration Agreement. As used in this Section 1.31 and the other provisions of this Agreement relating to the defined terms used in this Section 1.31, (x) "fiscal quarters" shall refer to full calendar quarters or successive periods of 13 weeks, as applicable and [**] under this Agreement and the Collaboration Agreement [**] immediately prior to the [**] related to such [**], but otherwise will include only [**] in connection with or as part of [**]. Notwithstanding anything to the contrary contained herein, if any Quarterly Cash Flow [**] referenced above is derived from financial statements for any completed fiscal year ended on or before the last day of the most recently completed fiscal quarter for which the Quarterly Cash Flow [**] is computed for the purpose of [**] and either (a) such financial statements for such completed fiscal year are not accompanied by an audit opinion of a nationally recognized independent accounting firm or (b) the audit opinion accompanying such financial statements contains a going concern qualification, then [**] shall be deemed to exist based upon any such Quarterly Cash Flow [**]. 1.32 "Major Country" means France, Germany, Italy, Spain or the United Kingdom. 1.33 "MEEI/Draper License" means the License Agreement dated as of April 4, 2002, by and among Eyetech, The Massachusetts Eye and Ear Infirmary ("MEEI") and The Charles Stark Draper Laboratory, Inc. ("Draper"), as amended from time to time. 1.34 "NDA" means a New Drug Application filed with the FDA with respect to a Product. 1.35 "Net Income" means, with respect to any Person (or any combination of two or more Persons) for any fiscal period, the consolidated net income (or loss) of such Person (or such combination on a pro forma basis), all as determined in accordance with GAAP. 1.36 "Net Sales" means the gross amounts billed or invoiced by Pfizer, its Affiliates and sublicensees for Products in the ROW Territory, less the following deductions: (a) trade, quantity and cash discounts allowed, but expressly excluding discounts or allowances offered as part of a package of products that includes a Product sold by Pfizer, its Affiliates or sublicensees; 8 (b) refunds, chargebacks and any other allowances which effectively reduce the net selling price; (c) actual product returns, credits and allowances allowed to customers, and actual bad debts; (d) rebates actually paid or credited to any governmental agency (or branch thereof) or to any third party payor, administrator or contractee; (e) discounts mandated by, or granted to meet the requirements of, applicable state, provincial or federal law, wholesaler, including required chargebacks and retroactive price reductions; (f) transportation, freight, postage charges and other charges, such as insurance, relating thereto, in each case included as a specific line item on an invoice to such third parties; and (g) taxes, excises or other governmental charges upon or measured by the production, sale, transportation, delivery or use of goods, in each case included as a specific line item on an invoice to such third parties. If any such sales to third parties are made in transactions that are not at arm's length between the buyer and the seller, then the gross amount to be included in the calculation of Net Sales shall be the amount that would have been invoiced had the transaction been conducted at arm's length. Such amount that would have been invoiced shall be determined, wherever possible, by reference to the average selling price of the relevant Product in arm's-length transactions in the relevant country. If Pfizer, its Affiliate or sublicensee sells a Product in unfinished form to a third party for resale, then the gross amount to be included in the calculation of Net Sales arising from such sale 9 shall be the amount invoiced by the third party upon resale, in lieu of the amounts invoiced by Pfizer, its Affiliates or sublicensee when selling the Product in unfinished form. Otherwise, where Pfizer, its Affiliate or sublicensee sells a Product in finished form to a third party that does not require a sublicense under the Eyetech Patent Rights for further resale (each such third party hereinafter a "Distributor"), the amount to be included in the calculation of Net Sales shall be the price invoiced from Pfizer or its Affiliate or sublicensee to the third party, not the amount invoiced by the third party upon resale. If, in addition to or in lieu of a transfer price paid for quantities of Product supplied, any Distributor provides consideration to Pfizer, its Affiliate or sublicensee in connection with any Product or the Distributor's rights or relationship with Pfizer, its Affiliate or sublicensee in relation thereto, then such consideration shall be included in the calculation of Net Sales in the Quarter in which it becomes due to Pfizer or its Affiliate or sublicensee (as applicable). Notwithstanding the foregoing, amounts received by Pfizer, or its Affiliates or sublicensees, for the sale of Products among Pfizer and its Affiliates or sublicensees for resale shall not be included in the computation of Net Sales hereunder. Net Sales shall be determined from books and records maintained in accordance with GAAP, consistently applied throughout the organization and across all products of the entity whose sales of Product are giving rise to Net Sales. 1.37 "Party" means either Eyetech or Pfizer; "Parties" means both Eyetech and Pfizer. 1.38 "Patent Rights" means the rights and interest in and to all issued patents and pending patent applications in any country in the Territory, including, without limitation, all divisionals, continuations, renewals, continuations-in-part, patents of addition, supplementary protection certificates, extensions, registrations or confirmation patents and reissues thereof. 10 1.39 "Person" means any natural person or any corporation, company, partnership, joint venture, firm or other entity, including without limitation a Party. 1.40 "Pfizer Patent Rights" means all Patent Rights, Controlled by Pfizer or its Subsidiaries as of the Effective Date or developed or acquired by Pfizer or its Subsidiaries in the course of the activities contemplated by this Agreement or the Collaboration Agreement, relating to, or useful in connection with, the manufacture, use or sale of the Compound or the Products. 1.41 "Pfizer Technical Information" means all scientific or technical information and related know-how and trade secrets, Controlled by Pfizer or its Subsidiaries as of the Effective Date or developed or acquired by Pfizer or its Subsidiaries in the course of the activities contemplated by this Agreement or the Collaboration Agreement, including but not limited to: (a) medical, clinical, toxicological or other scientific data and (b) processes and analytical methodology useful in the development, testing, analysis, manufacture or packaging of the Compound or the Products. 1.42 "Product Operating Profit" means Net Sales less the Product-related costs attributable to the following: cost of goods sold; third party royalties; advertising and promotion expenses, including but not limited to Product samples, speaker programs and market research; field force costs, including but not limited to field aids; continuing medical education programs; research and development; destroyed returns, destroyed inventory and other salvage; and other direct expenses relating to the manufacture, promotion and sale of the Product, including but not limited to direct legal expenses. 1.43 "Products" means any product, which (a) contains or is based on the Compound, either alone or in combination with one or more other therapeutically active substances, and (b) is for use in the Field; including for the avoidance of doubt any AMD Product, DME Product or 11 other product developed for any new indication in the Field or as a new un-pegylated formulation of any such AMD Product, DME Product or other product; and which product either (x) if manufactured, used, sold, offered for sale, or imported would, in the absence of the licenses granted hereunder, infringe a Valid Claim, or (y) utilizes Eyetech Technical Information or Collaboration Intellectual Property in its manufacture, use or development. 1.44 "Quarter" means each of the periods ending on each of the four (4) thirteen (13) week periods as used by Pfizer as reported in its filings with the Securities and Exchange Commission, the first commencing on January 1 of any year. For sake of clarification, outside the United States, Net Sales are computed on each of four (4) thirteen (13) week periods, the first commencing on December 1 of any year. 1.45 "Quarterly Cash Flow" means, with respect to any Person (or any combination of two or more Persons) for any fiscal quarter, such Person's (or such combination's) Cash Flow for such fiscal quarter. 1.46 "Regulatory Authority" means any Governmental Authority, including without limitation EMEA or FDA, with responsibility for granting any licenses or approvals (with the exception of price approvals) necessary for the marketing and sale of pharmaceutical products in any country. 1.47 "Royalty Term" means, on a country-by-country and Product-by-Product basis, the period commencing on the Effective Date and ending on the latest date on which such Product is covered by a Valid Claim, or fifteen (15) years from the Launch of such Product in such country, whichever is later. 1.48 "ROW Territory" means all countries in the world outside the US Territory. 12 1.49 "SEC Reports" means all annual, quarterly or periodic reports and registration statements required to be filed with the Securities and Exchange Commission ("SEC") under applicable law. 1.50 "Shearwater License" means the License, Manufacturing and Supply Agreement dated as of February 5, 2002, by and between Eyetech and Shearwater Corporation ("Shearwater"), as amended from time to time. 1.51 "Subsidiary" means, with respect to a Party, a majority or wholly owned direct or indirect subsidiary of such Party. 1.52 "Technical Information" means Eyetech Technical Information or Pfizer Technical Information. 1.53 "Term" means the period commencing on the Effective Date and ending on the expiration of the last-to-expire Royalty Term. 1.54 "Territory" means the US Territory and the ROW Territory. 1.55 "US Territory" means the United States of America, including its territories, possessions and Puerto Rico. 1.56 "Valid Claim" means any claim from (a) an issued and unexpired patent included within the Eyetech Patent Rights or the Collaboration Intellectual Property (other than, in the case of Collaboration Intellectual Property, claims of Patent Rights that claim inventions solely owned by Pfizer or solely licensed by Pfizer) that has not been revoked or held unenforceable or invalid by a decision of a court or other Governmental Authority of competent jurisdiction, and that has not been disclaimed, denied or admitted to be invalid or unenforceable through reissue or disclaimer or otherwise; or (b) a patent application included within the Eyetech Patent Rights or the Collaboration Intellectual Property (other than, in the case of Collaboration Intellectual 13 Property, claims of Patent Rights that claim inventions solely owned by Pfizer or solely licensed by Pfizer) that has not been cancelled, withdrawn or abandoned or been pending for more than [**] years. 1.57 "Year" means a calendar year. ARTICLE 2 LICENSES 2.1 Eyetech Grants. Subject to the terms of this Agreement, Eyetech hereby grants to Pfizer, and Pfizer hereby accepts: (a) an exclusive (even as to Eyetech) license under the Eyetech Patent Rights and Eyetech Technical Information, and under Eyetech's rights in Collaboration Intellectual Property, to develop, make, have made, use, sell, offer for sale, import, and have imported Products in the ROW Territory and a nonexclusive license under the Eyetech Patent Rights and Eyetech Technical Information, and under Eyetech's rights in Collaboration Intellectual Property, to use, make and have made Products in the US Territory solely for export to and sale in countries in the ROW Territory; and (b) an exclusive (even as to Eyetech) license under the Eyetech Patent Rights and Eyetech Technical Information, and under Eyetech's rights in Collaboration Intellectual Property, to develop, make, have made, use, sell, offer for sale, import, and have imported Products in the US Territory, [**] under the Eyetech Patent Rights and Eyetech Technical Information, and under Eyetech's rights in Collaboration Intellectual Property, to develop, make, have made, use, sell, offer for sale, import, and have imported Products in the US Territory [**}; provided that [**], as set forth in this Section 2.1(b) [**] other than in accordance with the Collaboration Agreement; provided further that if, [**] set forth in Section 1.31(b)[**] in this Section 2.1(b)[**] at such time [**] set forth in Section 1.31(d) [**] set forth in Section 1.31(d) [**]. The [**] license set forth in this Section 2.1(b) is subject to all of Pfizer's obligations under the Collaboration Agreement so long as the Collaboration Agreement shall remain in effect. 14 (c) The licenses granted by Eyetech in Sections 2.1(a) and 2.1(b) are subject to a retained right of Eyetech to perform Eyetech's obligations and exercise Eyetech's rights under the Collaboration Agreement and the Other Product-Related Agreements. (d) The licenses granted in Sections 2.1(a) and (b) include sublicenses, as applicable. The sublicenses granted by Eyetech to Pfizer in Sections 2.1(a) and (b) are subject to the following terms of the Gilead Agreement, the Isis Agreement and the Shearwater Agreement, respectively: (i) Sections 2.4, 2.5, 3.6, 3.8, 6.3 and 6.7 of the Gilead Agreement; (ii) Sections 4.3 and 4.4 of the Isis Agreement; and (iii) Sections 2.3, 3.2, 3.5, 4.1, 4.9, 8.1, 8.2.3, 9.1 and 9.6 of the Shearwater Agreement. (e) Any sublicensee obligations required by the Gilead Agreement, the Isis Agreement and the Shearwater Agreement to be included in a sublicense thereunder, including without limitation any required provision making the applicable third party licensor a third party beneficiary of any sublicense thereunder, shall be deemed to be included in this Agreement. (f) The licenses granted by Eyetech in Sections 2.1(a) and 2.1(b) with respect to the patents referenced in the third paragraph of Exhibit 8.1(i) hereof are subject to 35 USC Sections 200-212, 37 CFR Section 401 et seq. and applicable governmental implementing regulations. Any right granted in this Agreement greater than that permitted under 35 USC Sections 200-212 or 37 CFR Section 401 et seq. shall be subject to modification as may be required to conform to the provisions of those statutes. All rights reserved to the United States government and others under 35 USC Sections 200-212 and 37 CFR Section 401 shall remain and shall in no way be affected by this Agreement. 15 2.2 License Grant to Eyetech. Pfizer hereby grants to Eyetech a nonexclusive right and license (and sublicense, as applicable) under the Pfizer Patent Rights and Pfizer Technical Information, and under Pfizer's rights in Collaboration Intellectual Property, solely to Co-Promote the Products in the US Territory and to exercise Eyetech's rights and perform Eyetech's obligations under this Agreement and the Collaboration Agreement. 2.3 Sublicensing. (a) The license in Section 2.1(a) above includes the right by Pfizer to grant sublicenses; provided that, Eyetech's prior written consent, not to be unreasonably withheld or delayed, shall be required for sublicenses to non-Affiliates under such license. The license in Section 2.1(b) above does not include any right by Pfizer to grant sublicenses without Eyetech's prior written consent. (b) Any sublicense granted by Pfizer must be granted pursuant to a written agreement that subjects the sublicensee to all relevant restrictions, limitations and obligations in this Agreement and in the Collaboration Agreement. (c) Pfizer shall be responsible for failure by its sublicensees to comply with, and Pfizer guarantees to Eyetech the compliance by each of its sublicensees with, all relevant restrictions, limitations and obligations in this Agreement and in the Collaboration Agreement. (d) In the event of a material default by any sublicensee under a sublicense agreement, Pfizer will inform Eyetech and take such action, after consultation with Eyetech, that in Pfizer's reasonable business judgment is required to address such default. (e) Pfizer shall provide Eyetech with a copy of each sublicense agreement, in final executed form, that Pfizer enters into in accordance with this Section 2.3 not later than five (5) days after the execution of such sublicense agreement; provided that Pfizer may redact the 16 financial terms from such copies if permitted under the applicable requirements of the Gilead License, the Shearwater License and the Isis License requiring delivery to Gilead, Shearwater or Isis of copies of sublicense agreements. ARTICLE 3 BASE PAYMENTS AND PERFORMANCE MILESTONES In consideration of the licenses granted to Pfizer hereunder and the disclosure to Pfizer of Eyetech Technical Information, and subject to the provisions of this Agreement, Pfizer shall pay to Eyetech Base Payments and Performance Milestones as follows: 3.1 Base Payments. (a) Subject to the terms and conditions of this Agreement, Pfizer shall pay to Eyetech the following payments (the "Base Payments"):

- ------------------------------------------------------------------------------ Event Payment - ------------------------------------------------------------------------------ (i) Signing of this Agreement. $75,000,000 - ------------------------------------------------------------------------------ (ii) Acceptance for filing of [**] Product. $[**] - ------------------------------------------------------------------------------ (iii) Acceptance for filing of [**] Product. $[**] - ------------------------------------------------------------------------------ (iv) Approval of [**]. $[**] - ------------------------------------------------------------------------------ (v) Approval of [**]. $[**] - ------------------------------------------------------------------------------ (vi) Filing of [**]. $[**] - ------------------------------------------------------------------------------ (vii) Launch of [**]. $[**] - ------------------------------------------------------------------------------ (viii) Launch of [**]. $[**] - ------------------------------------------------------------------------------ (ix) Launch of [**]. $[**] - ------------------------------------------------------------------------------ (x) Launch of [**]. $[**] - ------------------------------------------------------------------------------

17 The Parties understand and agree that the payments referenced in this Section 3.1(a) are subject to the terms and conditions set forth in Sections 3.1(b) and (c). (b) The signing fee set forth in Section 3.1(a)(i) shall be made as set forth in Section 3.1(c) below. The payments pursuant to Sections 3.1(a)(ii) through 3.1(a)(v) shall be made within fifteen (15) days after Pfizer's receipt from Eyetech of copies of the written notifications received by Eyetech from [**]. The payments pursuant to Sections 3.1(a)(vi) through 3.1(a)(x) shall be made within fifteen (15) days after the date on which the applicable event has been achieved. (c) Payment of the $75,000,000 signing fee will be made by Pfizer no later than five (5) Business Days after the date of execution of this Agreement to an account of a mutually satisfactory financial institution, which will serve as Escrow Agent, pending occurrence of the Effective Date. All amounts held in such account shall be held for the benefit of Eyetech and Eyetech will receive interest accrued in accordance with the terms of the Escrow Agreement. Upon the occurrence of the Effective Date, such amounts shall be released to Eyetech in accordance with the terms of the Escrow Agreement. 3.2 Performance Milestones. (a) Subject to the terms and conditions of this Agreement, Pfizer shall pay to Eyetech the following payments (each, a "Performance Milestone Payment") in respect of each of the following milestone events (each, a "Performance Milestone"):

- -------------------------------------------------------------------------------------------------------- Milestone Event Payment Amount - -------------------------------------------------------------------------------------------------------- (i) In the event Net Sales in the [**] equal or exceed $[**] in any Year. $[**] - -------------------------------------------------------------------------------------------------------- (ii) In the event Net Sales in the [**] equal or exceed $[**] in any Year. $[**] - -------------------------------------------------------------------------------------------------------- (iii) In the event Net Sales in the [**] equal or exceed $[**] in any Year. $[**] - --------------------------------------------------------------------------------------------------------

18 - -------------------------------------------------------------------------------------------------------- (iv) In the event Net Sales in the [**] equal or exceed $[**] in any Year. $[**] - -------------------------------------------------------------------------------------------------------- (v) In the event Net Sales in the [**] equal or exceed $[**] in any Year. $[**] - -------------------------------------------------------------------------------------------------------- The Parties understand and agree that all of the Performance Milestone Payments referenced in this Section 3.2(a) are subject to the terms and conditions set forth in Sections 3.2(b) and (c). (b) Performance Milestone Payments shall be due and owing, on or before the date sixty (60) days after the end of the applicable Year, commencing with the first full Year following (or commencing concurrently with, if Launch occurs on January 1 of any Year) the first Launch of an AMD Product in the US Territory and for the subsequent [**] Years immediately following such first full Year. (c) Subject to the limitation set forth in Section 3.2(b), each Performance Milestone Payment shall be paid in annual installments of twenty percent (20%) of the total payment amount over five (5) Years, commencing with the first Year in which such Performance Milestone is achieved and continuing for each of the immediately following four (4) Years during which the Performance Milestone is achieved. It is agreed and understood that no Performance Milestone Payment (taking all annual installments as a single Performance Milestone Payment) shall be payable more than once. For the avoidance of doubt, the following examples are provided to illustrate how Performance Milestone Payments might be paid: Example #1

- ------------------------------------------------------------------------------------------------------------ Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 - ------------------------------------------------------------------------------------------------------------ Aggregate Net Sales $[**] $[**] $[**] $[**] $[**] $[**] Level [**] - ------------------------------------------------------------------------------------------------------------

19 - ------------------------------------------------------------------------------------------------------------ Performance Milestone $[**] $[**] $[**] $[**] $[**] $[**] Payment to Eyetech - ------------------------------------------------------------------------------------------------------------ 20 Example #2

- ---------------------------------------------------------------------------------------------- Year 1 Year 2 Year 3 Year 4 Year 5 - ---------------------------------------------------------------------------------------------- Aggregate Net Sales Level [**] >$[**] >$[**] >$[**] >$[**] >$[**] <$[**] <$[**] <$[**] <$[**] - ---------------------------------------------------------------------------------------------- >$[**]>$[**] [**] [**] [**] [**] [**] >$[**] >$[**] >$[**] - ---------------------------------------------------------------------------------------------- Total Performance Milestone $[**] $[**] $[**] $[**] $[**] Payments to Eyetech - ----------------------------------------------------------------------------------------------

For avoidance of doubt, the five (5) consecutive Year period during which each Performance Milestone Payment is payable in increments may be a different five (5) consecutive Year period for each of the respective Performance Milestone Payments (e.g., in Example #2 above, the Performance Milestone Payment for achieving an aggregate annual Net Sales level [**] of $[**] would continue to be payable in installments in years 6 and 7 if the Performance Milestone were achieved in such years notwithstanding the fact that the Performance Milestone Payment for achieving an aggregate annual Net Sales level [**] of $[**] would no longer be payable after year 5). ARTICLE 4 REVENUE SHARE 4.1 Revenue Share. In consideration of the licenses granted to Pfizer hereunder and the disclosure to Pfizer of Eyetech Technical Information, and subject to the terms and conditions of this Agreement, Pfizer shall share revenues with Eyetech based on Net Sales by Pfizer, its Affiliates and sublicensees [**] in accordance with the following: 21 (a) EU. With respect to Net Sales in the EU in each Year, Pfizer shall pay Eyetech the greater of (i) twenty percent (20%) of Product Operating Profit and (ii) (x) for aggregate Net Sales of all Products in such Year below $1 billion, a royalty of fifteen percent (15%) of such Net Sales, and (y) for aggregate Net Sales of all Products in such Year of $1 billion or more, a royalty of twenty percent (20%) of such incremental Net Sales. (b) Rest of ROW Territory. With respect to Net Sales in the ROW Territory, excluding the EU, Pfizer shall pay Eyetech a royalty of ten percent (10%) of aggregate Net Sales of all Products. (c) Royalty Adjustments for Generic Products. If, during a given Quarter, there is Generic Competition in a particular country, then, for each such country in which there is Generic Competition, the royalties set forth in Section 4.1(a) or 4.1(b) shall be reduced by [**] percent ([**]%). Notwithstanding anything to the contrary in this Section 4.1(c) or in Section 4.1(d) or 10.7, in no event shall the aggregate reduction in the royalty payments otherwise payable under Section 4.1(a) or 4.1(b) with respect to any given Net Sales of Products in a country be reduced by more than an aggregate of [**] percent ([**]%) as a result of the royalty reduction provisions of this Section 4.1(c) and Sections 4.1(d) and 10.7. (d) Revenue Share Term. Royalty payments [**] under this Section 4.1 shall continue on a Product-by-Product and country-by-country basis for the applicable Royalty Term; provided that during portions of any Royalty Term in which no Valid Claim exists with respect to a Product in a country, the royalty payments otherwise payable under Section 4.1(a) or 4.1(b) shall, subject to the limitations set forth in Section 4.1(c), be reduced by [**] percent ([**]%). (e) Certain ROW Sales. Pfizer shall not, for the purpose of circumventing the higher royalty payable in respect of EU Net Sales, sell Products to a third party in the ROW 22 Territory outside of the EU in situations in which Pfizer knows that such third party will resell the Products into the EU. 4.2 Survival of Licenses After Expiration of Royalty Term and After Expiration of Co-Promotion Term. Upon expiration of each Royalty Term, on a Product-by-Product and country-by-country basis, the licenses set forth in Section 2.1(a) and, subject to Pfizer continuing to manufacture the Products in accordance with the same quality standards observed by Pfizer with respect to the manufacture of Products during the Royalty Term, the license to Trademarks in the ROW Territory set forth in Section 10.1(d) of the Collaboration Agreement shall become fully paid-up and perpetual with respect to such Product in such country. Upon expiration of the Co-Promotion Term, on a Product-by-Product basis, the licenses set forth in Sections 2.1(b) shall become fully paid-up, perpetual non-exclusive licenses with respect to such Product in the US Territory. For the avoidance of doubt, this Section 4.2 shall not apply with respect to any license set forth in Section 2.1 that is terminated before the applicable Royalty Term or Co-Promotion Term expires, as applicable. 4.3 Third Party Royalties. With respect to royalties payable to third parties payable based on sales of Products: (a) With respect to such Net Sales in the US Territory, Eyetech shall pay such royalties and include all such royalty payments in its Quarterly Expense Reports (as defined in Section 8.6(b) of the Collaboration Agreement) for the purpose of including such royalty payments in calculations of the quarterly payments payable pursuant to Section 8.6(d) of the Collaboration Agreement. (b) With respect to such sales in the ROW Territory, Pfizer shall be responsible for [**] percent ([**]%) of such royalties, except as provided for in subsection (d) 23 below. For the avoidance of doubt, in the event that any withholding or other taxes are payable by Pfizer on any third party royalty payments due with respect to sales in the ROW Territory, then Pfizer shall make such tax payments in addition to making the payments to Eyetech set forth in the immediately preceding sentence. If any withholding or other taxes are payable by Eyetech on any third party royalty payments due with respect to sales in the ROW Territory, and such taxes are not deductible from the royalty payments due to the third parties, then Pfizer shall pay to Eyetech an additional amount equal to such taxes. Pfizer shall indemnify Eyetech and its Affiliates and their respective directors, officers, employees and agents from and against any liability with respect to withholding or other taxes that are payable by Pfizer or Eyetech on any third party royalty payments due with respect to sales in the ROW Territory. The Parties shall establish such procedures as are reasonably necessary to permit them to reconcile Eyetech's actual payments of such third party royalties with Pfizer's payments to Eyetech under this Section 4.3(b). Notwithstanding the foregoing provisions of this Section 4.3(b), Pfizer shall not have any responsibility for withholding taxes that become payable solely as a result of an assignment by Eyetech of Eyetech's rights to receive payments from Pfizer to an Affiliate of Eyetech or other third party. (c) With respect to Pfizer's responsibility for the payments of royalties payable by Eyetech to third parties payable based on Net Sales as set forth in Section 4.3(b), Eyetech shall send Pfizer a quarterly invoice that shall be based on Pfizer's quarterly report of Net Sales pursuant to Section 5.2 and shall reflect the amounts due from Pfizer under Section 4.3(b). Pfizer shall, within fifteen (15) days after its receipt of such invoice, make payment under such invoice by electronic transfer in immediately available funds to the account 24 designated in writing by Eyetech, which designation shall take place at least two (2) Business Days before the payment is due. (d) Pfizer shall be entitled to deduct a portion of third party royalties payable by Pfizer with respect to sales in the EU from royalties otherwise payable to Eyetech pursuant to Section 4.1(a) as follows: (i) With respect to third party royalties payable pursuant to third party agreements, other than the MEEI/Draper License, entered into by Eyetech prior to the Execution Date, on sales of Products in the EU corresponding to increments of aggregate Net Sales of all Products in the EU of greater than $[**] in any Year, Pfizer may deduct [**]percent ([**]%) of such incremental third party royalties. (ii) With respect to third party royalties payable pursuant to any other third party license agreement, other than the MEEI/Draper License, on sales of Products in the EU corresponding to increments of aggregate Net Sales of all Products in the EU of greater than $[**] in any Year, which agreement is necessary to avoid infringement of third party rights with respect to Products in the EU, Pfizer may deduct [**] percent ([**]%) of such incremental third party royalties, up to a maximum aggregate deduction in any Year of [**] percent ([**]%) of such incremental Net Sales. (e) Notwithstanding anything to the contrary contained herein, any and all third party royalties which relate to or otherwise result from any misrepresentation or breach of Eyetech's representations or warranties contained in this Agreement or the Collaboration Agreement shall be excluded from the provisions of this Section 4.3. (f) Nothing in this Section 4.3 shall be construed to limit either Party's indemnification obligations pursuant to the Collaboration Agreement. 25 (g) After the Effective Date, Eyetech shall use commercially reasonable efforts to negotiate and execute any amendments to the Gilead License, Shearwater License and Isis License necessary to conform the definitions of "Net Sales" (or comparable terms thereunder) with the definition of "Net Sales" hereunder, so as to provide for an equivalent basis for calculating royalties due under the Gilead License, Shearwater License and Isis License as is used under this Agreement; provided that Eyetech shall have no obligation to pay any money to obtain such amendments and Eyetech shall have no obligation to enter into any amendment that would increase Eyetech's or its sublicensees' (including Pfizer's) royalty or other obligations under the Gilead License, Shearwater License or Isis License. ARTICLE 5 ACCOUNTING AND PROCEDURES FOR PAYMENTS. Payments hereunder shall be subject to the following provisions: 5.1 Sales Subject to Royalty Obligations. Sales between or among Pfizer, its Affiliates or sublicensees shall not be subject to royalties under Section 4.1; royalties shall only be calculated upon sales by Pfizer, its Affiliates and sublicensees to independent third parties. Pfizer shall be responsible for payment obligations arising from sales by its Affiliates and sublicensees. 5.2 Royalty Payments; Royalty Reports; Pfizer Operating Profit. (a) Pfizer shall provide Eyetech with a report of Net Sales with respect to each Quarter (based on the quarters specified in the second sentence of Section 1.44) within forty-five (45) days after the end of such period, which report shall identify, on a country-by-country basis, the Product, gross sales, Net Sales, deductions from gross sales taken to calculate Net Sales, and the royalty amount payable to Eyetech under Section 4.1, as well as the 26 computation of such royalty amount. Pfizer shall make royalty payments to Eyetech on Net Sales with respect to each Quarter within sixty (60) days after the end of each such period. Royalty reports shall be kept confidential by Eyetech and not disclosed to any other party other than Gilead, Shearwater, Isis and their respective accountants and Boards of Directors. In addition, Eyetech shall be entitled to disclose such information as required for the purposes of preparing and disclosing to third parties Eyetech's financial statements, as required to comply with applicable Laws or requirements imposed by any stock exchange or Nasdaq and to third party lenders in connection with Eyetech's financing activities. (b) Within ninety (90) days of the end of the final Quarter of each Year during the Term, Pfizer will provide Eyetech with a report [**] by which [**] and pay [**] to Eyetech together with such report. 5.3 Currency Exchange; Late Payments. All payments made hereunder shall be made in U.S. dollars and shall be made by electronic transfer in immediately available funds to such bank account as Eyetech shall designate in writing at least five (5) business days before the payment is due. For the purposes of determining the amount of royalties due for the relevant Quarter, the amount of Net Sales in any foreign currency shall be computed by (a) converting such amount for the relevant Quarter into U.S. dollars at the Average Exchange Rate for the Quarter (the "Average Exchange Rate" means, for each Quarter for each currency in which Products sales to third parties are denominated, the average of the prevailing commercial rate of exchange for purchasing U.S. dollars with such currency on the last business day of each Pfizer accounting period in the relevant Quarter as published in The Financial Times), and (b) deducting the amount of any governmental tax, duty, charge or other fee actually paid by Pfizer or its Affiliates in respect of such conversion into and remittance of U.S. dollars. All payments 27 under this Agreement shall bear interest from the date due until paid at a rate equal to the prime rate of Citibank, NA as announced on the date such payment was due plus three percent (3%), compounded on a calendar quarterly basis. In addition, Pfizer shall reimburse Eyetech for all reasonable costs and expenses, including without limitation reasonable attorneys' fees and legal expenses, incurred in the collection of late payments. 5.4 Withholding Taxes. Except as otherwise provided in Section 4.3(b), any taxes required to be paid or withheld by Pfizer, its Affiliates or sublicensees for the account of Eyetech on amounts payable under this Agreement shall be deducted from the amounts payable at the rates specified by applicable Law. In addition, Pfizer shall provide promptly to Eyetech receipts from the government or taxing authority-evidencing payment of such taxes. 5.5 Audits. Pfizer shall, and shall cause its Affiliates and sublicensees to, keep full and accurate books and records setting forth gross sales, Net Sales, Product Operating Profit for the EU and amounts payable to Eyetech. Pfizer shall permit Eyetech, at Eyetech's sole expense, by a nationally recognized independent certified public accountants selected by Eyetech (as to which Pfizer has no reasonable objection), to examine such books and records upon at least thirty (30) days' advance written notice during normal business hours and in a manner that does not materially interfere with Pfizer's business, but not later than three (3) years following the rendering of any such reports, accountings and payments. The foregoing right of review may be exercised only once with respect to each such periodic report and payment. Such accountants may be required by Pfizer to enter into a reasonably acceptable confidentiality agreement, and in no event shall such accountants reveal to Eyetech the details of its review except insofar as is necessary to verify the accuracy of reports and payments made or due hereunder. The results of any such audit shall be delivered in writing to each Party. Any underpayment determined by such audit shall promptly 28 be paid or refunded by Pfizer. If Pfizer has underpaid amounts due under this Agreement by more than five percent (5%) over any reporting period, Pfizer shall also reimburse Eyetech for the cost of such audit (with the cost of the audit to be paid by Eyetech in all other cases), plus interest at the interest rate set forth in Section 5.3, from the date of any such underpayment. Any dispute arising out of any such audit and any other dispute arising out of the Parties' respective payment obligations under this Agreement shall be resolved through binding arbitration in accordance with Article 11, and either party may submit such dispute to such binding arbitration. 5.6 Blocked Payments. In the event that, by reason of applicable Laws or regulations in any country, it becomes impossible or illegal for Pfizer to transfer, or have transferred on its behalf, royalties or other payments to Eyetech, such royalties or other payments shall be deposited in local currency in the relevant country to the credit of Eyetech in a recognized banking institution designated by Eyetech or, if none is designated by Eyetech within a period of thirty (30) days, in a recognized banking institution selected by Pfizer and identified in a notice in writing given to Eyetech. ARTICLE 6 TECHNICAL AND OTHER INFORMATION 6.1 Disclosure of Technical Information. Promptly upon execution and delivery of this Agreement, and thereafter periodically during the Term (periodically shall mean, except as otherwise provided in the Collaboration Agreement, at least calendar quarterly prior to the first Approval of a Product in the Territory, and thereafter at least annually), Pfizer and Eyetech shall each disclose to the other all Eyetech Technical Information and Pfizer Technical Information not previously disclosed. Each report shall be in the format and contain the level of detail to be reasonably agreed upon by the Parties. All Eyetech Technical Information heretofore disclosed 29 by Eyetech to Pfizer shall be deemed to have been disclosed pursuant to this Agreement and shall be subject to the provisions of this Agreement, including but not limited to this Article 6. 6.2 Confidentiality. During the Term and for five (5) years after the expiration or termination of this Agreement, each Party shall maintain Confidential Information (as defined in Section 11.2 of the Collaboration Agreement) provided by the other Party in confidence, and shall not disclose, divulge or otherwise communicate such Confidential Information to others, or use it for any purpose other than as permitted under this Agreement and the Collaboration Agreement. The receiving Party shall have the right to disclose Confidential Information received from the other Party to governmental agencies to the extent reasonably required or desirable to secure Approval for marketing of Products (provided that the receiving Party shall use reasonable efforts to secure confidential treatment thereof), and to preclinical and clinical investigators where reasonably necessary or desirable for their information to the extent normal and usual in the custom of the trade and under a confidentiality agreement with provisions governing confidentiality and non-use substantially the same as those contained herein. 6.3 Publicity Related to this Agreement. The Parties recognize that each Party may from time to time desire to issue press releases and make other public statements or disclosures regarding the subject matter of this Agreement. In such event, the Party desiring to issue an a press release or make a public statement or disclosure shall provide the other Party with a copy of the proposed press release, statement or disclosure for review and approval in advance, which advance approval shall not be unreasonably withheld, conditioned or delayed. No other public statement or disclosure concerning the existence or terms of this Agreement shall be made, either directly or indirectly, by either Party hereto, without first obtaining the written approval of the other Party. Once any public statement or disclosure has been approved in accordance with this 30 Section, then either Party may appropriately communicate information contained in such permitted statement or disclosure. Notwithstanding the foregoing provisions of Section 5.2, Section 6.2 or this Section 6.3, a Party may (a) disclose the existence and terms of the Transaction Agreements (as defined in the Collaboration Agreement) where required, as reasonably determined by the disclosing Party, by applicable Law, by applicable stock exchange or Nasdaq regulation or by order or other ruling of a competent court, (b) disclose the existence and terms of the Transaction Agreements under obligations of confidentiality to agents, advisors, contractors, investors and sublicensees, and to potential agents, advisors, contractors, investors and sublicensees, in connection with such Party's activities hereunder and in connection with such Party's financing activities and (c) publicly announce any of the matters set forth in Exhibit 17.14(c) of the Collaboration Agreement, provided that such announcements do not entail disclosure of non-public technical or scientific information (which for clarity, excludes clinical trial results) and the announcing Party provides the other Party with a copy of the proposed text of such announcement sufficiently in advance of the scheduled release or publication thereof to afford such other Party a reasonable opportunity to review and comment upon the proposed text. 6.4 Applicability of Obligations to Affiliates, Employees, Directors, Agents, Independent Contractors and Consultants. The confidentiality obligations of the Parties under this Article 6 shall be applicable to Parties, as well as their respective Affiliates, employees, directors, agents, independent contractors and consultants. ARTICLE 7 PATENTS 7.1 Third Party License Agreements. The Parties acknowledge that the provisions of this Article 7 are subject in all respects to the provisions of any license agreements between 31 Eyetech and third party licensors of the Eyetech Patent Rights and the obligations of Eyetech and the rights of Pfizer under this Article 7 are limited accordingly. Eyetech and Pfizer shall, within the foregoing constraints, cooperate in the continued prosecution and maintenance by Eyetech or Gilead of the Eyetech Patent Rights listed on Exhibit 1.18 and licensed to Eyetech by Gilead. After the Effective Date, Eyetech shall not, without Pfizer's consent, enter into any third party license agreement relating to material Patent Rights that Eyetech proposes to license from a third party and that Eyetech reasonably foresees would, upon the execution of such third party license agreement, constitute Eyetech Patent Rights, if Pfizer's obligations, pursuant to Section(s) 4.3(a) and/or 4.3(b), to share in or pay the royalties payable under third party license agreements, as applicable, would apply to royalties payable under such third party license agreement; provided that if Eyetech proposes to license Patent Rights from a third party that would, upon the execution of such third party license agreement, constitute Eyetech Patent Rights, and Pfizer withholds its consent for more than thirty (30) days after Eyetech notifies Pfizer that Eyetech proposes to license such Patent Rights, then Eyetech may elect to license such Patent Rights at Eyetech's sole expense, in which case such Patent Rights shall be excluded from the Eyetech Patent Rights. 7.2 Disclosure of Patent Applications and Proceedings. Eyetech shall disclose to Pfizer the complete texts of all patent applications within the Eyetech Patent Rights filed by Eyetech, or by Eyetech's licensors to the extent Eyetech is permitted to provide such texts to Pfizer under the terms of Eyetech's agreements with such licensors, as well as information received concerning the institution or possible institution of any interference, opposition, re-examination, reissue, revocation or any official proceeding involving patents and patent applications within the Eyetech Patent Rights prosecuted and/or maintained by Eyetech, or by 32 Eyetech's licensors to the extent Eyetech receives such information, anywhere in the Territory. Pfizer shall have the right to review all such pending applications and other proceedings and make recommendations to Eyetech, and to Eyetech's licensors if permitted under the terms of Eyetech's agreements with such licensors, concerning such applications and proceedings and their conduct. Eyetech agrees, subject to any limitations set forth in Eyetech's agreements with Eyetech's licensors, to keep Pfizer promptly and fully informed of the course of such patent prosecution and other proceedings including, without limitation, by providing Pfizer with copies of all substantive communications submitted to or received from patent offices throughout the Territory. Pfizer shall provide such patent consultation at no cost to Eyetech or its licensors, and shall hold all information disclosed to it under this Section 7.2 as confidential subject to the provisions of Article 6 of this Agreement. 7.3 Prosecution and Maintenance; Costs. Eyetech shall not abandon any Eyetech Patent Rights with respect to which Eyetech controls prosecution and maintenance activities, either directly or through step-in rights granted to Eyetech in any third party license agreement, without at least 90 days' prior notice of such abandonment to Pfizer. If Eyetech decides to abandon any such Eyetech Patent Rights, Pfizer shall have the option to continue the prosecution and maintenance of such Eyetech Patent Rights in Eyetech's name at Pfizer's expense, subject to any limitations set forth in Eyetech's agreements with Eyetech's licensors. If Pfizer desires that Eyetech file any application for a patent in specific countries, or file any patent applications on improvements and variations upon inventions disclosed in the Eyetech Patent Rights or otherwise relating to the Compound or the Products, Pfizer shall advise Eyetech of such countries or improvements, variations or inventions, as the case may be. Eyetech shall consider Pfizer's request in good faith and shall not unreasonably decline to file the requested patent 33 application and, if Eyetech files the patent applications as requested, Pfizer shall pay all reasonable expenses, including reasonable fees for patent counsel, for filing and for prosecuting such requested patent applications; provided that Eyetech may decline to file the requested patent application if Eyetech does not possess all legal rights necessary to make such filing. Pfizer shall have reasonable access to all documentation, filings and communications to or from the respective patent offices and shall be kept advised as to the status of all pending applications to the extent pertaining to the Compound or any Products and to the extent Eyetech is able to provide such access, it being understood that all such documentation, filings and communications shall constitute Confidential Information of Eyetech. Unless otherwise explicitly set forth above in this Section 7.3, the Parties shall each be responsible for fifty percent (50%) of the Parties' patent prosecution and maintenance costs relating to the Eyetech Patent Rights in the US Territory and Pfizer shall be responsible for one hundred percent (100%) of the Parties' patent prosecution and maintenance costs relating to the Eyetech Patent Rights in the ROW Territory. Eyetech shall include all such US Territory costs in Eyetech's Quarterly Expense Reports pursuant to Section 8.6(b) of the Collaboration Agreement. Pfizer shall reimburse Eyetech for Pfizer's share of all such ROW Territory costs within thirty (30) days after receiving any invoice from Eyetech for such costs. 7.4 Third Party Infringement Actions. If any third party shall in the reasonable opinion of either Party, within any country in the Territory, infringe any Eyetech Patent Rights through infringing activities in the Field, the Party learning of such infringement shall promptly notify the other Party and provide it with any available evidence of such possible infringement. In the ROW Territory, as between Pfizer and Eyetech, and subject to any rights retained by Eyetech's licensors, Pfizer shall have the first right to bring suit and to take action against such infringer in its own name, or in the name of Eyetech (or Eyetech's licensor, to the extent Eyetech 34 possesses the rights necessary to enable Pfizer to join such licensor under the terms of Eyetech's license agreement with such licensor; provided that Eyetech shall have no liability for any failure of such licensor to appear or cooperate in such action) where necessary, in which case Pfizer shall control the prosecution of any such suit or claim, including without limitation the choice of counsel, and shall have the exclusive right to settle or dispose of any such suit or claim. In the US Territory, as between Pfizer and Eyetech, and subject to any rights retained by Eyetech's licensors, Eyetech shall have the first right to bring suit and to take action against such infringer in its own name, or in the name of Pfizer where necessary, in which case Eyetech shall control the prosecution of any such suit or claim, including without limitation the choice of counsel, and shall have the exclusive right to settle or dispose of any such suit or claim. Notwithstanding anything to the contrary in this Section 7.4, but subject to any legal obligations of Eyetech to its licensors with respect to Eyetech Patent Rights, if a Party fails to initiate a suit or take other appropriate action that it has the initial right to initiate or take pursuant to this Section 7.4 within ninety (90) days after becoming aware of the basis for such suit or action, then the other Party may, in its discretion, provide the Party having the initial right with written notice of such other Party's intent to initiate a suit or take other appropriate action. If such other Party provides such notice and the Party having the initial right fails to initiate a suit or take such other appropriate action within thirty (30) days after receipt of such notice from the other Party, then the other Party shall have the right to initiate a suit or take other appropriate action that it believes is reasonably required to protect the intellectual property rights at issue. Notwithstanding the foregoing provisions of this Section 7.4, in the case of an infringement action pursuant to Section 505(b) of the Act, subject to any legal obligations of Eyetech to its licensors with respect to Eyetech Patent Rights, if the Party that has the initial right to initiate such action fails to notify 35 the other Party, at least fifteen (15) days prior to such Party's deadline under the Act for bringing such action, that such Party will bring such action, then the other Party may, in its discretion, initiate such action after giving written notice of such election to the Party with the initial right to initiate such action. The proceeds of any recovery, court award or settlement of such action shall, after any required payments to Eyetech's licensors, first be applied to reimburse the Parties for the costs and expenses of such prosecution and the balance shall be paid, for amounts relating to the US Territory, [**] percent ([**]%) to Pfizer and [**] percent ([**]%) to Eyetech, and for amounts relating to the ROW Territory, [**] percent ([**]%) to Pfizer and [**] percent ([**]%) to Eyetech. 7.5 Patent Term Extensions. The Parties shall cooperate, if necessary and appropriate, with each other in gaining patent term extension wherever applicable to Eyetech Patent Rights. The Parties shall, if necessary and appropriate, use reasonable efforts to agree upon a joint strategy relating to patent term extensions, but, in the absence of mutual agreement with respect to any extension issue, a patent shall be extended if either Party elects to extend such patent. Eyetech shall use commercially reasonable efforts to obtain from Gilead the right to make determinations with respect to patent term extensions pursuant to 35 U.S.C. Paragraph 156 ("Hatch-Waxman Extension") for each Product for which regulatory approval is obtained in the US Territory, it being agreed that such commercially reasonable efforts shall not require Eyetech to pay any money to obtain such right. The Parties shall mutually agree upon the patent for any Hatch-Waxman Extension prior to FDA approval of each Product. If Eyetech has not obtained the right from Gilead to control determinations respecting Hatch-Waxman Extensions, Eyetech will advise Gilead as to the patent selected by the Parties for such extension, and will use commercially reasonable efforts to have Gilead seek a Hatch-Waxman Extension for such patent, it being agreed that such commercially reasonable efforts shall not require Eyetech to pay any money to have Gilead take such action. The Parties shall each be responsible for fifty percent (50%) of the costs of seeking and/or obtaining patent term extensions relating to the Eyetech Patent Rights in the US Territory and Pfizer shall be responsible for one hundred percent (100%) of the costs of seeking and/or obtaining patent term extensions relating to the Eyetech Patent Rights in the ROW Territory. Eyetech shall include all such US Territory costs in Eyetech's Quarterly Expense Reports pursuant to Section 8.6(b) of the Collaboration Agreement. Pfizer shall reimburse Eyetech for all such ROW Territory costs incurred by Eyetech within thirty (30) days after receiving any invoice from Eyetech for such costs. 36 7.6 US Territory Intellectual Property Infringement Claims. Each Party's indemnification obligations to the other Party with respect to any actions, claims, demands, suits or other legal proceedings are brought or threatened to be brought against either Party by a third party for infringement of such third party's trademarks, know-how, Patent Rights or other intellectual property rights relating to the Parties' Co-Promotion of Products by virtue of the Parties' manufacture, use, sale, offer for sale or importation of Products hereunder or under the Collaboration Agreement in furtherance of such Co-Promotion of Products are set forth in Section 12.6 of the Collaboration Agreement. 7.7 ROW Territory Intellectual Property Infringement Claims. Each Party's indemnification obligations to the other Party with respect to any actions, claims, demands, suits or other legal proceedings are brought or threatened to be brought against either Party by a third party for infringement of such third party's trademarks, know-how, Patent Rights or other intellectual property rights relating to Pfizer's commercialization of Products in the ROW Territory by virtue of the Parties' manufacture, use, sale, offer for sale or importation of Products hereunder or under the Collaboration Agreement in furtherance of such commercialization of Products in the ROW Territory are set forth in Section 12.6 of the Collaboration Agreement. 7.8 Ownership and Prosecution of Patent Rights Included in the Collaboration Intellectual Property. As between Eyetech and Pfizer, (a) Eyetech shall solely own all inventions included in the Collaboration Intellectual Property invented solely by Eyetech's employees and agents, (b) Pfizer shall solely own all inventions included in the Collaboration Intellectual Property invented solely by Pfizer's employees and agents, and (c) the Parties shall jointly own all inventions included in the Collaboration Intellectual Property invented by employees and agents of both Parties. Inventorship shall be determined in accordance with United States patent 37 law. Each Party shall have the first right to prosecute and maintain Patent Rights included in the Collaboration Intellectual Property solely owned by such Party and Eyetech shall have the first right to prosecute and maintain Patent Rights included in the Collaboration Intellectual Property jointly owned by the Parties. Neither Party shall abandon any Patent Rights included in the Collaboration Intellectual Property that such Party has the first right to prosecute and maintain without at least 90 days' prior notice of such abandonment to the other Party. If a Party decides to abandon any such Patent Rights, the other Party shall have the option to continue the prosecution and maintenance of such Patent Rights in the name(s) of the Party or Parties owning such Patent Rights and at such other Party's expense. The costs of prosecuting and maintaining Patent Rights included in the Collaboration Intellectual Property shall be shared equally by the Parties in the US Territory and borne entirely by Pfizer in the ROW Territory; provided that either Party may elect not to pay such costs with respect to any given Patent Rights included in the Collaboration Intellectual Property being prosecuted and/or maintained by the other Party incurred from and after such time as such Party notifies the other Party of such election, and thereafter any licenses granted in this Agreement by the other Party to the Party making such election shall exclude such Patent Rights. Such costs of prosecuting and maintaining Patent Rights included in the Collaboration Intellectual Property in the US Territory shall be included in the Parties' Quarterly Expense Reports pursuant to Section 8.6(b) of the Collaboration Agreement. Pfizer shall reimburse Eyetech for all such costs of prosecuting and maintaining Patent Rights included in the Collaboration Intellectual Property in the ROW Territory incurred by Eyetech within thirty (30) days after receiving any invoice from Eyetech for such costs. 38 ARTICLE 8 REPRESENTATIONS, WARRANTIES AND COVENANTS 8.1 Eyetech Representations and Warranties. Eyetech hereby represents and warrants, as of the date hereof, to Pfizer as follows: (a) To the best of Eyetech's knowledge, (i) the issued Eyetech Patent Rights are valid and enforceable patents, (ii) no third party is infringing any such Eyetech Patent Rights and (iii) except for the third party intellectual property rights referred to in the letter from Harsha Murthy to Larry Miller dated December 17, 2002, the manufacture, use, sale, offer for sale or importation by Pfizer or Eyetech of the Compound described in Exhibit 1.8 or the Product being used by Eyetech in clinical trials as of the Execution Date will not infringe any issued patents of third parties and are not covered by third party patent applications containing claims that would, if issued, be infringed. Eyetech has furnished to Pfizer all material information in its possession requested by Pfizer as to the foregoing in the written requests identified in the letter from Larry Miller to Harsha Murthy dated December 17, 2002. Except with respect to patents and patent applications subject to the Isis License, Gilead License and Shearwater License listed on Exhibit 1.18, Eyetech is the legal and beneficial owner of all the Eyetech Patent Rights and all of the Eyetech Technical Information, and, except as set forth in Exhibit 8.1(i), no other person, firm, corporation or other entity has any right, interest or claim in or to, and Eyetech has not entered into any agreement granting any right, interest or claim in or to, the Eyetech Patent Rights or Eyetech Technical Information; provided that Eyetech gives no representation or warranty as to whether any third party has independently developed rights to scientific or technical information or related know-how or trade secrets. Except with respect to patents and patent applications licensed to Eyetech under the MEEI/Draper License, Exhibit 1.18 is a complete and correct list of all patents and patent applications in the Territory owned by or licensed to Eyetech or any of its Subsidiaries (and indicating which are owned and which are licensed) relating to the 39 manufacture, use, sale, offer for sale or importation of the Compound or any Product. Except with respect to the matters set forth in (x) the letter from Harsha Murthy to Larry Miller dated December 17, 2002 and (y) Exhibit 8.1(i), to the best of Eyetech's knowledge, Eyetech or its Subsidiaries own or possess adequate licenses or other valid rights to use all patents, patent rights and know-how (collectively, "Intellectual Property") necessary to manufacture the Compound described in Exhibit 1.8 and the Product being used by Eyetech in clinical trials as of the Execution Date in the Territory and to distribute, use and sell such Compound and such Product in the Territory, all free of any lien, encumbrance, liability or other restriction. (b) Eyetech has disclosed to Pfizer all material information known to Eyetech relating to: (i) the drug quality, including stability, variability, impurities and delivery performance in each case relating to the Product, and (ii) changes made by Eyetech or its Affiliates after the initiation of Phase III Clinical Studies for the Products relating to formulation, packaging and method of manufacture and formulation and to processing parameters, and (iii) the status of discussions with FDA or any Governmental Authorities directly relating thereto, and (iv) clinical trial site and contract research organization compliance with all provisions of the Act governing clinical investigations, and (v) the safety and efficacy of the Products. (c) Eyetech has the corporate power and authority to execute and deliver this Agreement and the Collaboration Agreement and to perform its obligations hereunder and thereunder, and the execution, delivery and performance of this Agreement and the Collaboration Agreement by Eyetech have been duly and validly authorized and approved by proper corporate action on the part of Eyetech, and Eyetech has taken all other action required by Law, its certificate of incorporation or by-laws or any agreement to which it is a party or by which it or its assets are bound required to authorize such execution, delivery and (subject to obtaining all 40 necessary governmental approvals with respect to the manufacture, use, sale, offer for sale or importation of Products and subject to any necessary HSR Clearance) performance. Assuming due authorization, execution and delivery on the part of Pfizer, each of this Agreement and the Collaboration Agreement constitutes a legal, valid and binding obligation of Eyetech, enforceable against Eyetech in accordance with its respective terms. (d) The execution and delivery of this Agreement and the Collaboration Agreement by Eyetech and the performance by Eyetech contemplated hereunder and thereunder will not violate (subject to obtaining all necessary governmental approvals with respect to the manufacture, use, sale, offer for sale or importation of Products and subject to obtaining any necessary HSR Clearance) any ordinance, Law, decree or government regulation or any order of any court or other governmental department, authority, agency or instrumentality therein. (e) Neither the execution and delivery of this Agreement or the Collaboration Agreement nor the performance hereof or thereof by Eyetech requires Eyetech to obtain any permits, authorizations or consents from any governmental body (subject to obtaining all necessary governmental approvals with respect to the manufacture, use, sale, offer for sale or importation of Products and subject to obtaining any necessary HSR Clearance) or from any other person, firm or corporation, and such execution, delivery and performance will not result in the breach of or give rise to any termination of any agreement or contract to which Eyetech may be a party which relates to the Eyetech Patent Rights, Eyetech Technical Information, the Compound or the Products. (f) Except for the matters referred to in Exhibit 8.1(f), there is no action, claim, demand, suit, proceeding, arbitration, grievance, citation, summons, subpoena, inquiry or investigation of any nature, civil, criminal, regulatory or otherwise, in law or in equity, pending 41 or, to the best knowledge of Eyetech, threatened against Eyetech or its Affiliates in connection with the Compound, the Product or any Eyetech Patent Rights or against or relating to the transactions contemplated by this Agreement or the Collaboration Agreement. To the best knowledge of Eyetech, except for the matters referred to in Exhibit 8.1(f), there is no action, claim, demand, suit, proceeding, arbitration, grievance, citation, summons, subpoena, inquiry or investigation of any nature, civil, criminal, regulatory or otherwise, in law or in equity, pending or threatened against, Isis, Gilead, Shearwater or any of their respective Affiliates in connection with the Compound, the Product or any Eyetech Patent Rights or against or relating to the transactions contemplated by this Agreement or the Collaboration Agreement. (g) The Gilead License as heretofore delivered by Eyetech to Pfizer represents the complete agreement and understanding between Gilead and Eyetech relating to the Eyetech Patent Rights and Eyetech Technical Information which are the subject of the Gilead License. The Isis License as heretofore delivered by Eyetech to Pfizer represents the complete agreement and understanding between Isis and Eyetech relating to the Eyetech Patent Rights and Eyetech Technical Information which are the subject of the Isis License. The Shearwater License as heretofore delivered by Eyetech to Pfizer represents the complete agreement and understanding between Shearwater and Eyetech relating to the Eyetech Patent Rights and Eyetech Technical Information which are the subject of the Shearwater License. None of the Gilead License, Isis License or Shearwater License has been modified, supplemented or amended, other than by amendments thereto provided to Pfizer prior to the Execution Date. Except for the Gilead License, the Isis License and the Shearwater License, there are no agreements to which Eyetech or any of its Affiliates is a party pursuant to which Eyetech or any of its Affiliates has a license, or an option to obtain a license, or holds an immunity from suit, with respect to patents which (i) 42 are pending, applied for, granted or registered, and (ii) but for Eyetech's rights under such agreements, could be asserted by third parties to be infringed by the distribution, use, or sale of the Compound, or the Product being used by Eyetech in clinical trials as of the Execution Date, in the Territory. Eyetech has previously delivered to Pfizer all of its agreements with any third parties regarding supply and manufacture of all goods and services relating to the Compound and the Product being used by Eyetech in clinical trials as of the Execution Date (the "Supply Agreements"), none of which have been modified, supplemented or amended. (h) Each of the Gilead License, Isis License and Shearwater License is in full force and effect, all payments to date required to be made thereunder by Eyetech have been made, and Eyetech is in compliance in all material respects with its respective obligations thereunder. (i) Exhibit 8.1(i) sets forth all sources of funding, grants or loans Eyetech has received and, to Eyetech's knowledge, that Gilead or NeXstar Pharmaceuticals, Inc. has received, in connection with the discovery, research and development of the Compound and any Product. (j) Exhibit 8.1(j) sets forth a list of (i) all pre-clinical and clinical studies of the Compound, together with the dates and brief descriptions of such studies, previously or currently undertaken or sponsored by Eyetech or its Affiliates and by any third-party investigator under any contract with Eyetech, data and reports relating to which have been previously provided to Pfizer and (ii) material correspondence and contact information with the FDA and other Regulatory Authorities regarding the Compound and the Products, copies of which have been previously provided to Pfizer. 43 (k) No person owns 50% or more of the voting securities of Eyetech. Eyetech has no subsidiaries other than those whose financial statements are maintained on a consolidated basis with those of Eyetech. 8.2 Pfizer Representations and Warranties. Pfizer hereby represents and warrants, as of the date hereof, to Eyetech as follows: (a) Pfizer has the corporate power and authority to execute and deliver this Agreement and the Collaboration Agreement and to perform its obligations hereunder and thereunder, and the execution, delivery and performance of this Agreement and the Collaboration Agreement by Pfizer have been duly and validly authorized and approved by proper corporate action on the part of Pfizer, and Pfizer has taken all other action required by Law, its certificate of incorporation or by-laws or any agreement to which it is a party or by which it or its assets are bound required to authorize such execution, delivery and (subject to obtaining all necessary governmental approvals with respect to the manufacture, use, sale, offer for sale or importation of Products and subject to any necessary HSR Clearance) performance. Assuming due authorization, execution and delivery on the part of Eyetech, each of this Agreement and the Collaboration Agreement constitutes a legal, valid and binding obligation of Pfizer, enforceable against Pfizer in accordance with its respective terms. (b) The execution and delivery of this Agreement and the Collaboration Agreement and the performance by Pfizer contemplated hereunder and thereunder will not violate (subject to obtaining appropriate governmental health, pricing and reimbursement approvals) any state, federal or other statute or regulation or any order of any court or other governmental department, authority, agency or instrumentality therein. 44 (c) There is no action, claim, demand, suit, proceeding, arbitration, grievance, citation, summons, subpoena, inquiry or investigation of any nature, civil, criminal, regulatory or otherwise, in law or in equity, pending or relating to or, to the knowledge of Pfizer, threatened against Pfizer in connection with or relating to the transactions contemplated by this Agreement or the Collaboration Agreement, and assuming the accuracy of the representations and warranties of Eyetech contained herein, Pfizer is unaware and has no reason to be aware of any basis for the foregoing. (d) Neither the execution and delivery of this Agreement or the Collaboration Agreement nor the performance hereof or thereof by Pfizer requires Pfizer to obtain any permits, authorizations or consents from any governmental body (subject to obtaining all necessary governmental approvals with respect to the manufacture, use, sale, offer for sale or importation of the Product and subject to obtaining any necessary HSR Clearance) or from any other person, firm or corporation and such execution, delivery and performance will not result in the breach of or give rise to any termination of any agreement or contract to which Pfizer may be a party, except that would not reasonably be expected to adversely affect the ability of Pfizer to perform its obligations under this Agreement. 8.3 Eyetech Covenants. Eyetech covenants and agrees as follows: (a) As soon as practicable after the date hereof, Eyetech will provide Pfizer with accurate, complete and final versions of all reports and studies previously submitted to Pfizer to the extent not previously provided, together with access to any related data and files, and to principal investigators and such persons participating in the studies. 45 (b) Subject to Pfizer's and its sublicensees' performance of their obligations under this Agreement and the Collaboration Agreement (including such obligations relating to third party royalties), Eyetech shall use commercially reasonable efforts to maintain the Isis License, Gilead License and Shearwater License in good standing and not to take any actions (or omit or fail to take any actions) which would result in a breach of any of such license agreements. Eyetech agrees that it shall not amend, modify or supplement any of the Isis License, Gilead License or Shearwater License in any manner that would adversely affect Pfizer's rights under this Agreement or the Collaboration Agreement without the consent of Pfizer. In addition, Eyetech shall not sell, assign, convey, pledge, hypothecate or otherwise transfer any of the Isis License, Gilead License or Shearwater License or Eyetech's rights or obligations thereunder, or otherwise make any commitments or offers in a manner that conflicts with Pfizer's rights hereunder without the consent of Pfizer. Eyetech shall immediately notify Pfizer upon receipt by Eyetech or its Affiliates of any notice from Gilead, Isis or Shearwater of such party's intent to terminate Eyetech's rights, exercise its respective rights or remedies thereunder, or otherwise take any action that may adversely affect Pfizer's rights under this Agreement. 8.4 No Consequential or Punitive Damages. (a) NEITHER PARTY HERETO WILL BE LIABLE FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, EXEMPLARY OR PUNITIVE DAMAGES ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT, OR FOR LOST PROFITS ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF ANY NOTICE OF SUCH DAMAGES. NOTHING IN THIS SECTION 8.4 IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION 46 RIGHTS OR OBLIGATIONS OF EITHER PARTY UNDER THIS AGREEMENT WITH RESPECT TO THIRD PARTY CLAIMS. (b) Notwithstanding anything to the contrary contained in this Agreement, in the case of any claim by any party alleging any breach of this Agreement by the other party, any payment obligation pursuant to Articles 3 and 4 of this Agreement (the "Payment Obligations"), will not be considered as constituting special, incidental, indirect or consequential damages under this Agreement (and, accordingly, nothing in Section 8.4(a) shall prevent recovery or inclusion in the definition of "Losses"). ARTICLE 9 TERM 9.1 This Agreement shall be effective as of the date first set forth above and shall remain in effect for the Term. ARTICLE 10 TERMINATION 10.1 Termination for Convenience. This Agreement shall terminate: (a) upon (i) twelve (12) months prior written notice from Pfizer of termination of this Agreement, if such notice is given prior to the first Launch of a Product in the Territory, (ii) nine (9) months prior written notice from Pfizer of termination of this Agreement, if such notice is given prior to the fifth anniversary of the first Launch of a Product in the Territory or (iii) six (6) months prior written notice from Pfizer of termination of this Agreement, if such notice is given after the fifth anniversary of the first Launch of a Product in the Territory, in each case which notice Pfizer shall be entitled to submit in its absolute and sole discretion; and (b) at Eyetech's sole option, exercisable by giving written notice of termination to Pfizer, following termination or expiration 47 of the Collaboration Agreement as provided in Sections 13.1, 13.2(b), 13.4, 13.5, 13.6, 13.8 and 17.11 of the Collaboration Agreement. 10.2 Termination for Breach. Eyetech shall have the rights set forth below in this Section 10.2 by notice to Pfizer, and Pfizer shall have the rights set forth below in this Section 10.2 by notice to Eyetech. (a) Upon Eyetech's notice to Pfizer that a Material Default by Pfizer has occurred, the Parties will meet to discuss in good faith whether a plan to remedy the Material Default can be mutually agreed. If the Parties fail to so agree within thirty (30) days after the date of such notice, Section 10.2(b) below shall apply. Notwithstanding the foregoing provisions of this Section 10.2(a), in the case of a payment default, the provisions of Section 10.2(b) below shall apply without any obligation to meet to discuss remedies pursuant to this Section 10.2(a). (b) Subject to the terms hereof, upon the occurrence of any Material Default by Pfizer, Eyetech may, upon ninety (90) days prior written notice, terminate this Agreement. Eyetech may give the notice specified in this Section 10.2(b) concurrently with the notice specified in Section 10.2(a) and shall not give the notice specified in this Section 10.2(b) later than sixty (60) days after the date of the notice specified in Section 10.2(a). (c) Upon Pfizer's notice to Eyetech that a Material Default by Eyetech has occurred, the Parties will meet to discuss in good faith whether a plan to remedy the Material Default can be mutually agreed. If the Parties fail to so agree within thirty (30) days after the date of such notice, Section 10.2(d) below will apply. Notwithstanding the foregoing provisions of this Section 10.2(c), in the case of a payment default, the provisions of Section 10.2(d) below shall apply without any obligation to meet to discuss remedies pursuant to this Section 10.2(c). 48 (d) Subject to the terms hereof, upon the occurrence of any Material Default by Eyetech, Pfizer may, upon ninety (90) days prior notice, terminate this Agreement. Pfizer may give the notice specified in this Section 10.2(d) concurrently with the notice specified in Section 10.2(c) and shall not give the notice specified in this Section 10.2(d) later than sixty (60) days after the date of the notice specified in Section 10.2(c). (e) "Material Default" means: (i) any default by any Party hereto of its covenants, agreements or other performance obligations under this Agreement or the Collaboration Agreement other than a payment default (which may include any one or more defaults of any specific covenant, agreement or other performance obligations contained herein) that, when aggregated with any other such uncured defaults by such Party, is (a) material to this Agreement and the Collaboration Agreement taken as a whole, and (b) shall have continued for thirty (30) days after written notice thereof was provided to the alleged defaulting Party by the non-defaulting Party (or, if such default cannot be cured within such thirty (30) day period, if the alleged defaulting Party does not promptly commence and diligently continue all reasonable actions to cure such defaults during such thirty (30) day period or does not cure in full such default within sixty (60) days after written notice thereof was provided to the alleged defaulting Party); or (ii) any default by any Party hereto of its payment obligations hereunder that shall have continued for fifteen (15) days after written notice thereof was provided to the alleged defaulting Party by the non-defaulting Party; provided that, in the event of a good faith payment dispute, such fifteen (15) day cure period shall be extended through the fifteenth day following the date on which such dispute is resolved if the alleged defaulting Party paid all undisputed amounts when due and provided the non-defaulting Party with a reasonably 49 detailed written explanation of the alleged defaulting Party's basis for disputing the payment obligation within the fifteen (15) day period following the written notice of the default by the non-defaulting Party. 10.3 Breach of Non-Competition Obligations. If a Party breaches its obligations under Section 10.5, the other Party may terminate this Agreement upon thirty (30) days prior written notice of termination to the breaching Party; provided that, if the breaching Party permanently ceases the activity or eliminates the condition, as applicable, giving rise to the breach of its obligations under Section 10.5 prior to the expiration of such thirty (30) day notice period, such termination shall not take effect. 10.4 Effects of Termination. In the event that this Agreement is terminated in accordance with Section 10.1 or 10.2: (a) the licenses set forth in Sections 2.1 and 2.2 shall terminate; (b) Eyetech's right to receive all payments due and owing under Articles 3 and 4 hereof as of the effective date of such termination shall survive; (c) each Party's right to recover against the other Party for any breaches of any representations, warranties, covenants and agreements of such other Party under this Agreement as of the effective date of such termination shall survive; (d) the provisions of Articles 5 and 11, Section 6.2 and this Section 10.4 shall survive the expiration or termination of this Agreement in accordance with their terms; (e) Pfizer shall promptly and in no event later than sixty (60) days after termination or expiration (i) transfer to Eyetech ownership of all governmental or regulatory filings and approvals (including all INDs and NDAs (and their foreign equivalents)) relating to Products, (ii) deliver to Eyetech all pre-clinical and clinical data and information in Pfizer's 50 possession or control relating to the Products, (iii) deliver to Eyetech copies of all reports, records, regulatory correspondence and other materials in Pfizer's possession or control relating to the pre-clinical and clinical development, regulatory approval, manufacture, distribution and sales of Products, including without limitation all information contained in the centralized global safety database established and maintained by Pfizer in accordance with the Regulatory Services Agreement, and (iv) deliver to Eyetech all data and information relating to process conditions, in-process controls, analytical methodology and formulation, in each case as developed by Pfizer and relating to the manufacturing of Products, solely for use in connection with the Products; (f) Pfizer shall grant to Eyetech a non-exclusive, non-royalty-bearing, perpetual right and license under Pfizer's and its Affiliates' rights in Collaboration Intellectual Property to develop, make, have made, use, sell, offer for sale, import, and have imported Products in the Territory; (g) if Pfizer has taken over responsibility for contracting with API Bulk Drug Substance Supplier(s) and/or Fill and Finish Services Supplier(s), or for performing, either directly or through Affiliates, services that otherwise would be performed by API Bulk Drug Substance Supplier(s) and/or Fill and Finish Services Supplier(s), Pfizer shall continue to manufacture or have manufactured (including filling and finishing) Product being manufactured by Pfizer and/or its Affiliates, on the terms and conditions in effect immediately prior to termination, for worldwide supply to Eyetech during the shorter of (i) the twenty-four (24) month period following termination and (ii) the period following termination and prior to Eyetech's establishment of its own manufacturing capabilities and/or third party manufacturing and supply arrangements with respect to the Products; and Pfizer shall cooperate with Eyetech during such period to assign to Eyetech all third party manufacturing and supply (including fill 51 and finish services) agreements and transfer to Eyetech all manufacturing know-how, and to provide Eyetech with such other assistance as may be requested by Eyetech, reasonably required by Eyetech for the purpose of establishing its own manufacturing capabilities and/or third party manufacturing and supply arrangements with respect to the Products; (h) Pfizer shall permit Eyetech, at Eyetech's option, to purchase, at Manufacturing Cost, all or any part of Pfizer's worldwide unsold inventory of raw materials for Products, work-in-progress Products and finished Products as of the effective date of termination, provided that, Pfizer shall not be required to sell to Eyetech inventories of raw materials for Products and work-in-progress Products that Pfizer needs to satisfy its obligations under Section 10.4(g); and (i) unless this Agreement expressly provides that termination shall be the sole and exclusive remedy for a particular breach hereof, either Party's right to commence an action, suit or other proceeding claiming breach of this Agreement by the other Party shall survive termination. Upon any termination of this Agreement, each Party shall promptly return to the other Party all written Confidential Information, and all copies thereof, of such other Party. 10.5 Non-Competition. During the Term and Co-Promotion Term (as defined in the Collaboration Agreement), neither Pfizer nor Eyetech nor any of their Affiliates shall, directly or indirectly, manufacture commercial quantities of, or market, sell, detail or promote, any Competing Product in the Territory (excluding the EU), except for the Products as provided in this Agreement and in the Collaboration Agreement. If (a) either Party terminates the Collaboration Agreement pursuant to Section 13.2, 13.4 or 13.5 of the Collaboration Agreement or (b) Pfizer terminates this Agreement pursuant to Section 10.1 of this Agreement, then the 52 prohibition set forth in the immediately preceding sentence shall, in the case of a termination described in clause (a) of this sentence, be extended with respect to the other Party and its Affiliates through a period immediately following the effective date of such termination of: (i) [**], if such termination occurs [**], (ii) [**], if such termination occurs [**], or (iii) [**], if such termination occurs [**], and, in the case of a termination described in clause (b) of this sentence, be extended with respect to Pfizer and its Affiliates through a period immediately following the effective date of such termination of: (i) [**], if such termination occurs [**], (ii) [**], if such termination occurs [**], or (iii) [**], if such termination occurs [**]. Notwithstanding the foregoing, Eyetech and its Affiliates, either directly or in collaboration with third parties, shall be entitled to commercialize products that contain or are based on the Compound for use outside the Field ("POF"), provided such products are sold under product trademarks other than the Trademark(s) and are: (a) in a different dosage strength; (b) in a different formulation; or (c) with a different delivery system; in each case not intended or developed for use in the Field. Eyetech and its Affiliates shall not conduct clinical trials or marketing studies with respect to such POF to support use of such POF in the Field, and Eyetech and its Affiliates shall require any third party collaborator to comply with this undertaking with respect to any POF. Subject to the provisions of Section 10.6, any breach of this Section 10.5 shall entitle the non-breaching Party to terminate this Agreement pursuant to Section 10.3. 53 10.6 Acquisitions Involving Competing Products. Notwithstanding the provisions of Section 10.5 above, if during the Term Pfizer or Eyetech or any of their respective Affiliates acquires or agrees to acquire a Competing Product in the Territory through acquisition of or merger with a company or entity, or is acquired or agrees to be acquired by a company or entity that owns a Competing Product in the Territory, Pfizer or Eyetech, as applicable, shall have thirty (30) days from the date of public announcement of the acquisition or merger to notify the other Party as to whether Pfizer or Eyetech or the acquiring company or entity, as applicable, intends to divest its interest in such Competing Product. In the event that Pfizer or Eyetech or the acquiring company or entity, as applicable, elects to divest its interest in such Competing Product, such Party or the acquiring company or entity shall use reasonable efforts to identify a third party purchaser to whom such Party or the acquiring company or entity will divest its interest in such Competing Product and to enter into a definitive agreement with such third party for such divestiture as soon as reasonably practicable under the circumstances. If Pfizer or Eyetech or the acquiring company or entity, as applicable, elects not to divest its interest in such Competing Product or fails to divest its interest in such Competing Product within [**] after the closing of the transaction for which Pfizer or Eyetech, as applicable, has provided the other Party with notice, then the other Party shall have the option, upon written notice to Pfizer or Eyetech, as applicable, given no later than ninety (90) days after the earlier of: (i) Pfizer's or Eyetech's written notice, as applicable, of its election not to divest such Competing Product; and (ii) the end of such [**] period described above, to terminate this Agreement pursuant to Section 10.5, treating such election not to divest or failure to divest such Competing Product as a breach of Section 10.5. Notwithstanding the provisions of Section 10.5 and this Section 10.6, however, neither Party shall have the right to terminate this Agreement based on the other Party's or its 54 Affiliate's or acquiring company's or entity's failure to divest its interest in a Competing Product that is sold only in the EU. 10.7 Competing Products in the EU. Notwithstanding the provisions of Sections 10.5 and 10.6 above, (a) if Pfizer or any of its Affiliates, directly or indirectly, manufactures commercial quantities of, or markets, sells, details or promotes, any Competing Product in the EU, the licenses granted by Eyetech to Pfizer in Section 2.1(a) shall at Eyetech's option, which option shall be exercisable upon notice by Eyetech to Pfizer, convert to nonexclusive licenses, and (b) if Eyetech or any of its Affiliates, directly or indirectly, manufactures commercial quantities of, or markets, sells, details or promotes, any Competing Product in the EU, then with respect to any given Net Sales of Products in the EU, subject to the limitations set forth in Section 4.1(c), the royalties set forth in Section 4.1(a) or 4.1(b) shall thereafter be reduced by [**] percent ([**]%). ARTICLE 11 DISPUTE RESOLUTION 11.1 Arbitration. Any payment dispute or dispute arising out of any audit conducted pursuant to Section 5.5 shall be resolved through binding arbitration as follows: (a) A Party may submit such dispute to arbitration by notifying the other Party, in writing, of such dispute. Within thirty (30) days after receipt of such notice, the Parties shall designate in writing a single arbitrator to resolve the dispute; provided, however, that if the Parties cannot agree on an arbitrator within such 30-day period, the arbitrator shall be selected by the New York, New York office of the American Arbitration Association (the "AAA"). The arbitrator shall be a lawyer knowledgeable and experienced in the law concerning the subject 55 matter of the dispute, and shall not be an Affiliate, employee, consultant, officer, director or stockholder of any Party. (b) Within thirty (30) days after the designation of the arbitrator, the arbitrator and the Parties shall meet, at which time the Parties shall be required to set forth in writing all disputed issues and a proposed ruling on the merits of each such issue. (c) The arbitrator shall set a date for a hearing, which shall be no later than thirty (30) days after the submission of written proposals pursuant to Section 11.1(b), to discuss each of the issues identified by the Parties. The Parties shall have the right to be represented by counsel. Except as provided herein, the arbitration shall be governed by the Commercial Arbitration Rules of the AAA; provided, however, that the Federal Rules of Evidence shall apply with regard to the admissibility of evidence. (d) The arbitrator shall use his or her best efforts to rule on each disputed issue within thirty (30) days after the completion of the hearings described in Section 11.1(c). The determination of the arbitrator as to the resolution of any dispute shall be binding and conclusive upon all Parties. All rulings of the arbitrator shall be in writing and shall be delivered to the Parties. (e) The (i) attorneys' fees of the Parties in any arbitration, (ii) fees of the arbitrator and (iii) costs and expenses of the arbitration shall be borne by the Parties as determined by the arbitrator. (f) Any arbitration pursuant to this Section 11.1 shall be conducted in New York, New York. Any arbitration award may be entered in and enforced by a court in accordance with Section 12.4. 56 11.2 No Limitation. Nothing in Section 11.1 shall be construed as limiting in any way the right of a Party to seek a temporary restraining order or preliminary injunction with respect to any actual or threatened breach of this Agreement from, or to bring an action in aid of arbitration in, a court in accordance with Section 12.4. Should any Party seek a temporary restraining order or preliminary injunction, then for purposes of determining whether to grant such temporary restraining order or preliminary injunction, the dispute underlying the request for such temporary restraining order or preliminary injunction may be heard by a court in accordance with Section 12.4. ARTICLE 12 MISCELLANEOUS 12.1 Force Majeure. No Party shall be liable for failure of or delay in performing obligations set forth in this Agreement, and no Party shall be deemed in breach of its obligations, if such failure or delay is due to natural disasters or any causes reasonably beyond the control of such Party. 12.2 Assignment. Except as otherwise provided herein, neither this Agreement nor any of the rights or obligations hereunder may be assigned by either Party without the prior consent of the other Party, except assignment, in whole or in part, to an Affiliate of the assigning Party so long as such Affiliate agrees in writing to be bound by the terms of this Agreement. The assigning Party shall remain primarily liable hereunder notwithstanding any such assignment. Any attempted assignment in violation hereof shall be void. 12.3 Governing Law. This Agreement shall be governed by the laws of the State of New York without regard to its conflict of laws provisions. 57 12.4 Jurisdiction. Except with respect to disputes arising out of audits conducted pursuant to Section 5.5 or with respect to payment disputes, which shall be resolved through binding arbitration in accordance with Article 11, each Party (a) irrevocably submits to the exclusive jurisdiction in the United States District Court for the Southern District of New York and any State courts sitting in New York, New York (collectively, the "Courts"), for purposes of any action, suit or other proceeding arising out of this Agreement, and (b) agrees not to raise any objection at any time to the laying or maintaining of the venue of any such action, suit or proceeding in any of the Courts, irrevocably waives any claim that such action, suit or other proceeding has been brought in an inconvenient forum and further irrevocably waives the right to object, with respect to such action, suit or other proceeding, that such Court does not have any jurisdiction over such Party. 12.5 Notices. All notices, instructions and other communications hereunder or in connection herewith shall be in writing, shall be sent to the address below and shall be: (a) delivered personally; (b) sent by registered or certified mail, return receipt requested, postage prepaid; (c) sent via a reputable nationwide overnight courier service; or (d) sent by facsimile transmission. Any such notice, instruction or communication shall be deemed to have been delivered upon receipt if delivered by hand, three (3) Business Days after it is sent by registered or certified mail, return receipt requested, postage prepaid, one (1) Business Day after it is sent via a reputable nationwide overnight courier service, or when transmitted with electronic confirmation of receipt, if transmitted by facsimile (if such transmission is on a Business Day; otherwise, on the next Business Day following such transmission). Notices shall be addressed as follows: 58 If to Pfizer: If to Eyetech: PFIZER INC. EYETECH PHARMACEUTICALS, INC. 235 East 42nd Street 500 Seventh Avenue, 18th Floor New York, New York 10017-5755 New York, New York 10018 Fax: 212-808-8652 Fax: 212-997-9251 Attention: President, Pfizer Pharmaceutical Attention: Chief Executive Officer Group with a copy to: with a copy to: PFIZER INC. Hale and Dorr LLP 235 East 42nd Street 60 State Street New York, New York 10017-5703 Boston, Massachusetts 02109 Attn.: Senior Vice President and General Attn.: David E. Redlick, Esq. Counsel Fax: 212-808-8924 Fax: 617-526-5000 Either Party may change its address by giving notice to the other Party in the manner provided above. 12.6 Entire Agreements; Amendments. This Agreement, together with the Collaboration Agreement and the other Other Product-Related Agreements, sets forth the complete understanding of the Parties with respect to the Parties' joint development and commercialization of Products and supersedes all prior understandings and writings relating to such subject matter. None of the terms or this Agreement shall be amended, supplemented or modified except in writing signed by the Parties hereto. The Parties understand and agree that each of this Agreement and the Collaboration Agreement are considered to be a single integrated agreement and contain intellectual property rights and licenses relating to the Products for which Pfizer has bargained and paid consideration. If any applicable court of competent jurisdiction determines this Agreement or the Collaboration Agreement to be executory in nature, such agreements shall otherwise be deemed to be, for purposes of Section 365 (n) of the Bankruptcy 59 Code, licenses of rights to "intellectual property" as defined under Section 101 of the Bankruptcy Code. 12.7 Severability. If and solely to the extent that any provision of this Agreement shall be invalid or unenforceable, or shall render this entire Agreement to be unenforceable or invalid, such offending provision shall be of no effect and shall not effect the validity of the remainder of this Agreement or any of its provisions; provided, however, the Parties shall use their respective reasonable efforts to renegotiate the offending provisions to best accomplish the original intentions of the Parties. 12.8 Waivers. Any term or condition of this Agreement may be waived at any time by the Party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the Party or Parties waiving such term or condition. Neither the waiver by any Party of any term or condition of this Agreement nor the failure on the part of any Party, on one or more instances, to enforce any of the provisions of this Agreement or to exercise any right or privilege, shall be deemed or construed to be a waiver of such term or condition for any similar instance in the future or of any subsequent breach hereof. All rights, remedies, undertakings, obligations and agreements contained in this Agreement shall be cumulative and none of them shall be a limitation of any other remedy, right, undertaking, obligation or agreement. 12.9 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective permitted successors and assigns. 12.10 Further Assurances. Following the date hereof, Eyetech and Pfizer shall and, to the extent this Agreement expressly imposes obligations on its Affiliates, each Party shall cause each of its respective Affiliates to, from time to time, execute and deliver such additional 60 instruments, documents, conveyances or assurances and take such other actions as shall be necessary or otherwise reasonably requested by Pfizer or Eyetech, to confirm and assure the rights and obligations provided for in this Agreement, and render effective the consummation of the transactions contemplated thereby. 12.11 Third Party Beneficiaries. None of the provisions of this Agreement shall be for the benefit of or enforceable by any third party including, without limitation, any creditor of either Party. No third party shall obtain any right under any provision of this Agreement or shall by reasons of any such provision make any claim in respect of any debt, liability or obligation (or otherwise) against either Party hereto. 12.12 Performance by Subsidiaries and Affiliates. To the extent that this Agreement imposes obligations on Subsidiaries and Affiliates of a Party, such Party agrees to cause its Subsidiaries and Affiliates to perform such obligations. 12.13 Counterparts. This Agreement may be executed in any two or more counterparts, each of which, when executed, shall be deemed to be an original and all of which together shall constitute one and the same document. 12.14 Headings. Headings in this Agreement are included herein to ease of reference only and shall have no legal effect. References to Sections and Exhibits are to Sections and Exhibits of this Agreement unless otherwise specified. 61 12.15 Offset. All amounts due and payable from Pfizer to Eyetech pursuant to this Agreement are subject to offset in respect of the amount of any liabilities of Eyetech paid by Pfizer to Gilead pursuant to Section 3 of the Stand-By License Agreement between Pfizer and Gilead dated December 13, 2002. IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed as of the date first written above by their duly authorized officers. PFIZER INC. EYETECH PHARMACEUTICALS, INC. By: /s/ Henry A. McKinnell By: /s/ David R. Guyer __________________________ __________________________ Name: Henry A. McKinnell Name: David R. Guyer __________________________ __________________________ Title: Chairman and CEO Title: CEO __________________________ __________________________ 62 EXHIBIT 1.8 COMPOUND [**] 63 EXHIBIT 1.18 EYETECH PATENT RIGHTS

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67 EXHIBIT 8.1(f) CERTAIN INTELLECTUAL PROPERTY MATTERS [**] which were previously disclosed to Pfizer. 68 EXHIBIT 8.1(i) FUNDING SOURCES With respect to Eyetech, other than general corporate funding, Eyetech has not received any funding, grants or loans in connection with the discovery, research and development of the Compound or any Product. To Eyetech's knowledge, with respect to Gilead or NeXstar Pharmaceuticals, other than general corporate funding received by Gilead or NeXstar Pharmaceuticals, neither Gilead nor NeXstar Pharmaceuticals has received any funding, grants or loans in connection with the discovery, research and development of the Compound or any Product. To Eyetech's knowledge, the following Patent Rights were supported by grants [**]. As a result, the Parties are subject to the provisions of Law referenced in Section 2.1(f) of this Agreement. 69 EXHIBIT 8.1(j) STUDIES 8.1(j)(i): (A) The following is a list of all pre-clinical and clinical studies of the Compound, together with the dates and brief descriptions of such studies, previously or currently undertaken or sponsored by Eyetech or its Affiliates and by any third-party investigator under any contract with Eyetech, data and reports relating thereto which have been previously provided to Pfizer. 1. [**] - Objectives: - Primary: [**] - Design: - [**] - NO-GO Criteria: - [**] - Logistics - [**] 2. [**] - Objectives: - Primary: [**] - Design: - [**] - NO-GO Criteria: - [**] - Logistics - [**] 3. [**] - Objectives: - Primary: [**] - Design: - [**] - NO-GO Criteria: - [**] - Logistics - [**] 4. [**] - Objectives: - Primary: [**] - Design: - [**] - NO-GO Criteria: - [**] - Logistics - [**] 5. [**] - Objectives: - Primary: [**] - Design: - [**] - NO-GO Criteria: - [**] - Logistics - [**] 70 6. [**] -Objectives: -Primary: [**] -Design: -[**] -NO-GO Criteria: -[**] -Logistics -[**] 7. [**] -Objectives: -Primary: [**] -Design: -[**] -NO-GO Criteria: -[**] -Logistics -[**] 8. [**] -Objectives -Primary: [**] -Design: -[**] -NO-GO Criteria: -[**] -Logistics -[**] 8.1(j)(i): (B) In addition, Eyetech plans to undertake the following clinical studies of the Compound: 1. [**] -Objectives: -Primary: [**] -Design: -[**] -NO-GO Criteria: -[**] -Logistics -[**] 2. [**] -Objectives: -Primary: [**] -Design: -[**] -NO-GO Criteria: -[**] -Logistics -[**] 3. [**] -Objectives: -Primary: [**] -Design: -[**] -NO-GO Criteria: -[**] -Logistics -[**] 71 4. [**] - Objectives: - Primary:[**] - Design: - [**] - NO-GO Criteria: - [**] - Logistics - [**] 5. [**] - Objectives: - Primary:[**] - Design: - [**] - NO-GO Criteria: - [**] - Logistics - [**] 6. [**] - Objectives: - Primary:[**] - Design: - [**] - NO-GO Criteria: - [**] - Logistics - [**] 7. [**] - Objectives: - Primary:[**] - Design: - [**] - NO-GO Criteria: - [**] - Logistics - [**] 8. [**] - Objectives: - Primary:[**] - Design: - [**] - NO-GO Criteria: - [**] - Logistics - [**] 9. [**] - Objectives: - Primary:[**] - Design: - [**] - NO-GO Criteria: - [**] - Logistics - [**] 8.1(j)(ii): The following is a list of all material correspondence and contact information with the FDA and other Regulatory Authorities regarding the Compound and the Products, copies of which have been previously provided to Pfizer. 72 1. EYE001 - [**] - FDA Correspondence (Updated 9/24/02)

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2. [**] Correspondence (Updated 7/26/02)

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3. [**] Correspondence (Updated 6/19/02)

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4. [**] Correspondence (Updated 7/26/02)

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5. [**] Correspondence (Updated 7/26/02)

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76 - ---------------------------------------------------- [**] [**] - ---------------------------------------------------- [**] [**] - ---------------------------------------------------- [**]6. [**]Correspondence (Updated 6/19/02)

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7. [**] Correspondence (Updated 8/29/01)

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8. [**] Correspondence (Updated 7/26/02)

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77 - ---------------------------------------------------- - ---------------------------------------------------- [**] [**] - ---------------------------------------------------- [**] [**] - ---------------------------------------------------- [**] [**] - ---------------------------------------------------- [**] [**] - ---------------------------------------------------- [**] [**] - ---------------------------------------------------- [**] [**] - ---------------------------------------------------- [**] [**] - ---------------------------------------------------- [**] [**] - ---------------------------------------------------- 9. [**] Correspondence (Updated 6/19/02)

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10. [**] Correspondence (Updated 6/19/02)

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11. [**] Correspondence (Updated 6/19/02)

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12. [**] Correspondence

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14. [**] Correspondence (Updated 6/19/02)

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78 15. [**] Correspondence (Updated 7/26/02)

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16. [**] Correspondence

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[**] 79 17. [**] Correspondence (Updated 6/19/02)

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80 EX-10.52 6 y18060exv10w52.txt EX-10.52: COLLABORATION AGREEMENT EXHIBIT 10.52 CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS. COLLABORATION AGREEMENT BY AND BETWEEN PFIZER INC. AND EYETECH PHARMACEUTICALS, INC. DATED AS OF DECEMBER 17, 2002 TABLE OF CONTENTS

PAGE ---- ARTICLE 1 DEFINITIONS......................................................................................... 2 ARTICLE 2 CO-PROMOTION OF PRODUCTS IN THE US TERRITORY........................................................ 18 2.1 Co-Promotion........................................................................................ 18 2.2 License Grants...................................................................................... 18 2.3 Compliance With Law................................................................................. 18 2.4 Detailing Obligations............................................................................... 18 2.5 Training............................................................................................ 18 2.6 Promotional Materials and Call Center Communications................................................ 20 2.7 Samples............................................................................................. 20 2.8 Distribution and Booking of Sales................................................................... 21 2.9 Contract Sales Forces............................................................................... 21 2.10 Delivery Technology Development Agreement.......................................................... 21 ARTICLE 3 MANAGEMENT OF ALLIANCE.............................................................................. 22 3.1 Committee/Subcommittees............................................................................. 22 3.2 Meetings............................................................................................ 22 3.3 Clinical Development/Regulatory Subcommittee........................................................ 23 3.4 Commercialization Subcommittee...................................................................... 26 3.5 Manufacturing Subcommittee.......................................................................... 27 3.6 Joint Operating Committee........................................................................... 29 3.7 Deadlocks........................................................................................... 30 3.8 Limitation on Decision-Making Authority............................................................. 30 ARTICLE 4 CLINICAL AND REGULATORY MATTERS..................................................................... 31 4.1 Clinical and Regulatory Matters in the US Territory................................................. 31 4.2 Clinical and Regulatory Matters in the ROW Territory................................................ 33 4.3 Inquiries, Adverse Events, etc. .................................................................... 35 4.4 Pfizer's Performance of Regulatory Services Agreement Obligations................................... 36 ARTICLE 5 PRODUCT DEVELOPMENT................................................................................. 37 5.1 Development Plan and Budget......................................................................... 37 5.2 AMD Product and DME Product Development............................................................. 38 5.3 Development of Products for Additional Indications in the Field..................................... 38 ARTICLE 6 LAUNCH, CO-PROMOTION AND DETAILING................................................................. 39 6.1 Co-Promotion of Products............................................................................ 39 6.2 Marketing Plan and Budget........................................................................... 39 6.3 Detailing........................................................................................... 40 6.4 Detailing Reports................................................................................... 40 6.5 Detail Shortfalls................................................................................... 41

i 6.6 Sales Force Responsibilities........................................................................ 44 6.7 Product Information................................................................................. 45 6.8 Orders.............................................................................................. 45 6.9 Audit............................................................................................... 45 6.10 Third Party Reports................................................................................ 45 6.11 Medical Claims..................................................................................... 45 6.12 Manufacturing...................................................................................... 46 6.13 Customer Support................................................................................... 50 ARTICLE 7 PAYMENT PROVISIONS.................................................................................. 50 7.1 Payment Currency.................................................................................... 50 7.2 Payments............................................................................................ 50 ARTICLE 8 EXPENSE SHARING AND COMPENSATION.................................................................... 51 8.1 Sharing of Development Costs........................................................................ 51 8.2 Responsibility for Regulatory Costs................................................................. 53 8.3 Responsibility for Cost of Goods Sold............................................................... 53 8.4 Responsibility for Marketing Expenses............................................................... 54 8.5 Net Sales Reports................................................................................... 54 8.6 Quarterly Reconciliation of Net Sales and Expenses.................................................. 54 8.7 Offset.............................................................................................. 56 ARTICLE 9 ACCOUNTING AND REPORTS.............................................................................. 56 9.1 Books and Records................................................................................... 56 9.2 Audits.............................................................................................. 56 9.3 Sales Force Efforts................................................................................. 57 ARTICLE 10 INTELLECTUAL PROPERTY RIGHTS AND LABELING......................................................... 58 10.1 Trademark and Corporate Logos...................................................................... 58 10.2 Copyrights and Proprietary Programs................................................................ 61 10.3 Developments....................................................................................... 62 10.4 Third Party Agreements............................................................................. 62 ARTICLE 11 CONFIDENTIAL INFORMATION.......................................................................... 63 11.1 Treatment of Confidential Information.............................................................. 63 11.2 Confidential Information........................................................................... 64 ARTICLE 12 REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION................................................... 65 12.1 Eyetech's Representations.......................................................................... 65 12.2 Pfizer's Representations........................................................................... 66 12.3 No Warranties...................................................................................... 67 12.4 General Indemnification in Favor of Pfizer......................................................... 67 12.5 General Indemnification in Favor of Eyetech........................................................ 68 12.6 Product Liability and Intellectual Property Infringement Indemnification........................... 69 12.7 "Losses"........................................................................................... 72 12.8 No Consequential or Punitive Damages............................................................... 73 12.9 General Indemnification Procedures................................................................. 73 ii ARTICLE 13 TERM AND TERMINATION.............................................................................. 77 13.1 Term............................................................................................... 77 13.2 Termination for Breach............................................................................. 77 13.3 HSR Denial......................................................................................... 79 13.4 Detail Shortfalls.................................................................................. 79 13.5 Breach of Non-Competition Obligations.............................................................. 80 13.6 Changes of Control................................................................................. 80 13.7 Termination of License Agreement................................................................... 80 13.8 Sales Threshold Termination........................................................................ 81 13.9 Survival of Obligations............................................................................ 81 ARTICLE 14 NON-COMPETITION; DETAILING SERVICES AGREEMENT..................................................... 84 14.1 Non-Competition.................................................................................... 84 14.2 Acquisitions Involving Competing Products.......................................................... 86 14.3 Detailing Services Agreement; Additional Agreements................................................ 87 ARTICLE 15 DISPUTE RESOLUTION................................................................................ 88 15.1 Arbitration........................................................................................ 88 15.2 No Limitation...................................................................................... 89 ARTICLE 16 HSR MATTERS....................................................................................... 90 16.1 HSR Filings........................................................................................ 90 16.2 HSR Cooperation; Further Assurances................................................................ 90 16.3 Activities Prior to the Effective Date............................................................. 91 ARTICLE 17 MISCELLANEOUS...................................................................................... 91 17.1 Governing Law...................................................................................... 91 17.2 Jurisdiction....................................................................................... 91 17.3 Waiver............................................................................................. 91 17.4 Notices............................................................................................ 92 17.5 Entire Agreement................................................................................... 93 17.6 Headings........................................................................................... 93 17.7 Severability....................................................................................... 93 17.8 Registration and Filing of the Agreement........................................................... 94 17.9 Assignment......................................................................................... 94 17.10 Successors and Assigns............................................................................. 94 17.11 Divestiture by Pfizer.............................................................................. 95 17.12 Counterparts....................................................................................... 96 17.13 Force Majeure...................................................................................... 96 17.14 Non-Solicitation of Employees...................................................................... 97 17.15 Press Releases and Other Disclosures.............................................................. 97 17.16 Third-Party Beneficiaries......................................................................... 98 17.17 Relationship of the Parties....................................................................... 98 17.18 Performance and Compliance by Affiliates.......................................................... 100 iii EXHIBIT 1.20 - Group/Joint Details EXHIBIT 1.52 - Call Center Costs EXHIBIT 2.5 - Sales Force Training Program EXHIBIT 3.4(d) - Matters where Eyetech Possesses Special Expertise or has Special Relationships EXHIBIT 3.4(e) - Initially Planned Phase III(b)/IV Product Studies EXHIBIT 5.1(a) - Development Programs for the AMD Product and the DME Product EXHIBIT 5.1(b) - AMD Agreed Development Costs and the DME Agreed Development Costs EXHIBIT 6.2 - Marketing Budgets and Detailing Requirements EXHIBIT 6.12(a) - Pre-Existing Clinical Supply Agreements EXHIBIT 10.4 - Third Party Agreements EXHIBIT 12.6(a)(iii) - Certain Product Liability Matters EXHIBIT 12.6(b)(iii)(A) - Eyetech 2002 Clinical Supply Costs EXHIBIT 12.6(b)(iii)(B) - Certain Third Party Intellectual Property EXHIBIT 17.15 - Joint Press Release EXHIBIT 17.15(c) - Permitted Disclosures iv COLLABORATION AGREEMENT THIS COLLABORATION AGREEMENT dated as of December 17, 2002 (the "Execution Date"), between Pfizer Inc. ("Pfizer"), a corporation organized under the laws of the State of Delaware, having a business address at 235 East 42nd Street, New York, New York 10017-5755, and Eyetech Pharmaceuticals, Inc. ("Eyetech"), a corporation organized under the laws of the State of Delaware, having a business address at 500 Seventh Avenue, 18th Floor, New York, New York 10018. WHEREAS, the Parties have executed the Other Product-Related Agreements (as defined below) with respect to the aptamer known as Macugen; WHEREAS, the Parties have also executed the Equity Agreements (as defined below) with respect to purchases of shares of Eyetech capital stock that have been and/or will be made from Eyetech by Pfizer, Pfizer Ireland Pharmaceuticals, a Pfizer Affiliate organized under the laws of the Republic of Ireland ("Pfizer Ireland"), and/or another Pfizer Affiliate designated by Pfizer; WHEREAS, the Parties have also executed the Detailing Services Agreement (as defined below); and WHEREAS, the Parties would like to set forth the terms and conditions pursuant to which they will collaborate in connection with the worldwide development and commercialization of products containing or based on the Macugen aptamer and with respect to certain other matters as described in this Agreement and in the Other Product-Related Agreements. NOW, THEREFORE, the Parties agree as follows: ARTICLE 1 DEFINITIONS The following terms, whether used in the singular or plural, shall have the following meanings: 1.1 "Act" means both the United States Food, Drug and Cosmetic Act, as amended, and the regulations promulgated under the foregoing. 1.2 "Affiliate" means any Person directly or indirectly controlled by, controlling or under common control with, a Party, but only for so long as such control shall continue. For purposes of this definition, "control" (including, with correlative meanings, "controlled by", "controlling" and "under common control with") means, with respect to a Person, possession, direct or indirect, of (a) the power to direct or cause direction of the management and policies of such Person (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise), or (b) at least 50% of the voting securities (whether directly or pursuant to any option, warrant or other similar arrangement) or other comparable equity interests. For the avoidance of doubt, neither of the Parties shall be deemed to be an "Affiliate" of the other. 1.3 "AMD Product" means a Product developed for use in the treatment of age-related macular degeneration. 1.4 "API Bulk Drug Substance Supplier" means a third-party supplier of active pharmaceutical ingredient bulk drug substance for Products with which Eyetech or Pfizer enters into a supply agreement pursuant to Section 6.12. 1.5 "Approval" means receipt from FDA of approval to market a drug product in the US Territory. 2 1.6 "Bankruptcy Code" means 11 USC Sections 101-1330, as amended. 1.7 "beneficial ownership" (and other correlative terms) by a Person means, with respect to any security: (a) such Person or any of such Person's Affiliates directly or indirectly owns such security; (b) such Person or any of such Person's Affiliates has the right to acquire such security (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; or (c) ownership, direct or indirect, by any other Person with which such Person or any of such Person's Affiliates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of such security; provided, however, that a Person shall not be deemed to have beneficial ownership of any security by virtue of an agreement, arrangement or understanding to vote such security that arises solely from a revocable proxy or consent given to such Person in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations of the Securities Exchange Act of 1934, as amended. 1.8 "Business Day" means a day that is not a Saturday, Sunday or a day on which banking institutions in New York, New York are authorized by Law to remain closed. 1.9 "Call Center" means the call center to be established by Pfizer and substantially dedicated to receiving and answering Product-related inquiries and complaints from or on behalf of, as applicable, Product-users, physicians, managed care organizations, and others residing in the US Territory. 3 1.10 "Change in Control" means, with respect to a Party, an event where: (a) any Person or group of Persons (as the term "group" is interpreted pursuant to Rule 13d-5 under the Securities Exchange Act of 1934, as amended) acquires beneficial ownership of capital stock of the Party (other than (x) directly from such Party or (y) from underwriter(s) of such Party's capital stock in a public offering) entitling the holder(s) thereof to at least a majority of the voting power of the then outstanding capital stock of such Party with respect to the election of directors of such Party, or (b) the Party enters into a merger, consolidation, reorganization or similar transaction with another Person (the "Acquiring Corporation") in which less than a majority of the voting power of the outstanding capital stock of such Party (if it is the surviving entity) or of the Acquiring Corporation (if it is the surviving entity) with respect to the election of directors following such transaction is held by Persons who were shareholders of such Party immediately prior to such transaction, or (c) the Party sells to any Person(s) in one or more related transactions properties or assets representing all or substantially all of the properties and assets of such Party. 1.11 "CMC" means the chemistry, manufacturing and controls section of the Product NDA. 1.12 "Code" or "Codes" means the Code on Interactions with Healthcare Professionals promulgated by the Pharmaceutical Research and Manufacturers of America (PhRMA), the American Medical Association Guidelines on Gifts to Physicians, and the PhRMA Principles on Conduct of Clinical Trials and Communication of Clinical Trial Results, as any of the foregoing may be amended. 4 1.13 "Commercially Reasonable Efforts" means, with respect to a Product, commercially reasonable efforts, which in no event will be less than the efforts the Party required to make such efforts generally uses (as applicable in the context used in this Agreement) in developing, seeking Approvals, manufacturing, promoting, detailing and marketing its other pharmaceutical products (if any) that are comparable to such Product, taking into account product labeling or anticipated labeling, market potential, past performance (if any), economic return potential, medical and clinical considerations, the regulatory environment, and competitive market conditions in the therapeutic area, all as measured by the facts and circumstances at the time such efforts are due. 1.14 "Competing Product" means [**]. 1.15 "Consumer Price Index" or "CPI" means the Consumer Price Index - - Urban Wage Earners and Clerical Workers, U.S. City Average, All Items, 1982-84 = 100, published by the United States Department of Labor, Bureau of Statistics (or its successor equivalent index). 1.16 "Co-Promotion" means the joint marketing and promotion (including without limitation Detailing) of the Products in the US Territory as described in Article 6. "Co-Promote" when used as a verb shall mean to engage in the activities described in Article 6. 1.17 "Co-Promotion Budget" is defined in Section 6.2. 1.18 "Co-Promotion Term" means the period from the Effective Date until the later of (a) the expiration of the last to expire Valid Claim (as such term is defined in the License Agreement) in the United States of America and (b) 15 years after Launch of the last Product in the US Territory, unless sooner terminated as provided in this Agreement. 1.19 "Cost of Goods Sold" means Manufacturing Costs plus or minus an adjustment to be mutually agreed by the Parties from time to time for variances between the standard cost 5 component(s) of Manufacturing Costs and the actual costs incurred by the Parties that such standard cost component(s) are intended to cover. 1.20 "Detail" means a face-to-face contact of either an Eyetech or Pfizer Sales Representative, as the case may be, with a medical professional with prescribing authority during which scientific and/or medical information about a Product is discussed. A Detail does not include a reminder or sample drop. With respect to certain group or institutional presentations, or joint details by Sales Representatives of both parties, Exhibit 1.20 sets forth how such presentations will be counted for determination of the number of Details. Details shall be measured by each Party's internal recording of such activity, provided that such measurement shall be on the same basis as the recording Party's measurement for its sales representatives detailing of such recording Party's other products (if any), consistently applied throughout the Co-Promotion Term. When used as a verb, the term "Detailing" means to engage in the activity of a Detail. 1.21 "Detailing Services Agreement" means the Detailing Services Agreement dated as of the Execution Date between the Parties relating to an arrangement by which Eyetech may, at its option, detail for Pfizer on a contract basis Xalatan, Xalcom, and any other products approved for use in the Field containing latanoprost as an active ingredient, including without limitation Xalatan and Xalcom life-cycle products, that are owned by Pfizer or its Affiliates. 1.22 "Detailing Report" is defined in Section 6.4. 1.23 "Detail Requirement" means the number of Details that each Party's Sales Representatives are required to perform in the US Territory pursuant to a Marketing Plan. 1.24 "Development Costs" means the costs, including without limitation Out-of-Pocket Costs in relation to the preclinical and clinical development of Products and the conduct 6 of Product Studies and direct and identifiable variable personnel costs in relation to preclinical development of Products and the conduct of preclinical Product Studies, as set forth in each relevant Development Plan; provided, however, Development Costs shall not include any (a) Out-of-Pocket Costs paid by either Party prior to December 1, 2002, (b) [**], or (c) except for direct and identifiable variable personnel costs explicitly provided for in this Section 1.24, Internal Costs. In addition, Development Costs shall include Out-of-Pocket Costs and direct and identifiable variable personnel costs of (w) manufacturing clinical supplies of Products, (x) process development for clinical and commercial scale manufacture of Products, including without limitation manufacturing process optimization in accordance with Section 6.12(h), (y) stability studies and (z) providing manufacturing transition support in accordance with Section 6.12. 1.25 "Development Plan" is defined in Section 5.1. 1.26 "Distribution Agreement" means the Distribution Agreement dated as of the Execution Date between the Parties relating to the provision by Pfizer of Product distribution services in the US Territory on a contract basis for Eyetech. 1.27 "DME Product" means a Product developed for use in the treatment of diabetic macular edema. 1.28 "DOJ" means the United States Department of Justice. 1.29 "Effective Date" means the HSR Clearance Date. 1.30 "Equity Agreements" means (a) the Series D Preferred Stock Purchase Agreement dated as of the Execution Date, to which the Parties and Pfizer Ireland are parties, and (b) the Amended and Restated Investors' Rights Agreement, the Amended and Restated Right of First 7 Refusal and Co-Sale Agreement and the Amended and Restated Voting Agreement, each to be entered into by Eyetech and Pfizer Ireland after the Execution Date in accordance with the aforementioned Series D Preferred Stock Purchase Agreement. 1.31 "FDA" means the United States Food and Drug Administration and any successor agency thereto. 1.32 "Field" means the prevention, treatment or control of all ophthalmic diseases or conditions. 1.33 "Fill and Finish Services Supplier" means a third party supplier of fill and finish services necessary to produce Products in finished (i.e., ready for administration to patients) form for sale in the US Territory with which Eyetech or Pfizer enters into an agreement pursuant to Section 6.12. 1.34 "First Approval" means the first Approval of a Product. 1.35 "FTC" means the United States Federal Trade Commission. 1.36 "Funded Inventory Build Costs" means the amount of pre-Launch Manufacturing Costs funded by each of the Parties pursuant to Section 6.12(f). Each Party's Funded Inventory Build Costs shall be increased by amounts funded pursuant to Section 6.12(f) and reduced by the Inventory Build Credit applied pursuant to Section 8.3. 1.37 "GAAP" means accounting principles generally accepted in the United States of America. 1.38 "GMP" means the Good Manufacturing Practices regulations promulgated by the FDA under the Act as of the time of manufacture of the applicable Products. 1.39 "Governmental Authority" means any court, agency, department or other instrumentality of any foreign, federal, state, county, city or other political subdivision. 8 1.40 "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (15 U.S.C. Sec. 18a), and the rules and regulations promulgated thereunder. 1.41 "HSR Clearance" means either (a) early termination of the applicable waiting period under the HSR Act with respect to the HSR Filings or (b) expiration of the applicable waiting period under the HSR Act with respect to the HSR Filings. 1.42 "HSR Clearance Date" means the earlier of (a) the date on which the FTC or DOJ shall notify Eyetech and Pfizer of early termination of the applicable waiting period under the HSR Act or (b) the day after the date on which the applicable waiting period under the HSR Act expires. 1.43 "HSR Filings" means the filings by Pfizer and Eyetech with the FTC and the Antitrust Division of the DOJ of a Notification and Report Form for Certain Mergers and Acquisitions (as that term is defined in the HSR Act) with respect to the matters set forth in the Transaction Agreements, together with all required documentary attachments thereto. 1.44 "IND" means an investigational new drug application filed with the FDA with respect to a Product. 1.45 "Internal Costs" means a Party's and/or its Affiliate's costs and expenses for overhead, personnel, rent, depreciation and amortization, utilities, equipment leases, general and administrative expenses and similar items. 1.46 "Know-How" means unpatented technical and other information which is not known to the public, including information comprising or relating to concepts, discoveries, data, designs, formulae, methods, models, assays, research plans, procedures, designs for experiments and tests and results of experimentation and testing (including results of research or development), together with processes, including manufacturing processes, specifications, 9 techniques, chemical, pharmacological, toxicological, clinical, analytical and quality control data, trial data, case report forms, data analyses, reports or summaries, including documents (which shall include paper, notebooks, books, files, ledgers, records, tapes, discs, diskettes, CD-ROM and any other media on which the foregoing information can be permanently stored) containing any of the foregoing information. The fact that an item is known to the public shall not be taken to exclude the possibility that a compilation including the item, and/or a development related to the item, is (or remains) not known to the public. 1.47 "Launch" means the initial shipping of a Product as a, or for, commercial sale to an unaffiliated third party, excluding any shipping for test marketing, clinical trial purposes or compassionate or similar use. 1.48 "Law" or "Laws" means all laws, statutes, rules, Codes, regulations, orders, judgments and/or ordinances of any Governmental Authority. 1.49 "License Agreement" means the License Agreement dated as of the Execution Date between the Parties. 1.50 "Major Country" means France, Germany, Italy, Spain or the United Kingdom. 1.51 "Manufacturing Costs" means costs that relate to (a) Products supplied by a non-Affiliate third party, or (b) Products manufactured directly by a Party or an Affiliate of a Party. In the case of (a), Manufacturing Costs shall be a "standard cost" per unit, which standard cost shall include (i) the amount paid to such a third party, plus (ii) the manufacturing Party's (i.e., the Party then responsible for manufacturing pursuant to Section 6.12) direct and identifiable Internal Costs and Out-of-Pocket Costs, which amounts shall be subject to the other Party's reasonable approval, incurred or accrued by the manufacturing Party in connection with quality assurance, supply chain management, and similar activities comprising the manufacturing 10 Party's oversight of the manufacturing process of the non-Affiliate third party. In the case of (b), Manufacturing Costs shall be a "standard cost" per unit, which standard cost shall include the cost of raw materials, labor, and other direct and identifiable variable costs and appropriate costs for equipment pools, plant operations and plant support services. The costs for plant operations and support services would include utilities, maintenance, engineering, safety, human resources, finance, plant management and other similar activities. The plant operations and support services costs would be allocated on a mutually agreed basis consistent with GAAP. Costs which cannot be identified to a specific activity supporting product manufacturing, such as charges for corporate overhead which are not controllable by the manufacturing plant, shall not be included in standard cost. 1.52 "Marketing Expenses" means all Out-of-Pocket Costs paid or accrued by a Party pursuant to a Marketing Plan and directly related to the Co-Promotion of the Products in the US Territory, including those in connection with: (a) [**] (b) [**] for the Products [**]; (iii) [**] the Products [**]; (iv) [**]; (v) [**] the Products [**]; and (vi) [**] the Products [**]. With respect to [**] as determined in accordance with [**] subject to [**]; and (c) [**] the Products. Notwithstanding the foregoing, Marketing Expenses shall not include any costs or expenses incurred prior to the Execution Date, and shall include (i) Eyetech's Out-of-Pocket Costs and direct and identifiable variable personnel costs incurred pursuant to Section 6.13 and amounts paid by Eyetech to Pfizer pursuant to the Distribution Agreement and (ii) filing or other user fees or maintenance fees paid to the FDA in order for Eyetech or Pfizer, as the case may be, to obtain or maintain regulatory approval for the Products. 11 All other Out-of-Pocket Costs incurred in the Co-Promotion of the Products in the US Territory, but not specifically identified above, but which have been approved by the CSC or provided for in the Marketing Plan, shall be accounted for and deemed Marketing Expenses for all purposes of this Agreement. 1.53 "Marketing Plan" is defined in Section 6.2. 1.54 "NDA" means a New Drug Application filed with the FDA with respect to a Product. 1.55 "Net Sales" means the gross amounts billed or invoiced by Eyetech and its Affiliates for Products in the US Territory, less the following deductions: (a) trade, quantity and cash discounts allowed, but expressly excluding discounts or allowances offered as part of a package of products that includes a Product sold by Eyetech or its Affiliates; (b) refunds, chargebacks and any other allowances which effectively reduce the net selling price; (c) actual product returns, credits and allowances allowed to customers, and actual bad debts; (d) rebates actually paid or credited to any governmental agency (or branch thereof) or to any third party payor, administrator or contractee; (e) discounts mandated by, or granted to meet the requirements of, applicable state, provincial or federal law, wholesaler, including required chargebacks and retroactive price reductions; 12 (f) transportation, freight, postage charges and other charges, such as insurance, relating thereto, in each case included as a specific line item on an invoice to such third parties; and (g) taxes, excises or other governmental charges upon or measured by the production, sale, transportation, delivery or use of goods, in each case included as a specific line item on an invoice to such third parties. If any such sales to third parties are made in transactions that are not at arm's length between the buyer and the seller, then the gross amount to be included in the calculation of Net Sales shall be the amount that would have been invoiced had the transaction been conducted at arm's length. Such amount that would have been invoiced shall be determined, wherever possible, by reference to the average selling price of the relevant Product in arm's-length transactions in the US Territory. If Eyetech or its Affiliate sells a Product in unfinished form to a third party for resale, then the gross amount to be included in the calculation of Net Sales arising from such sale shall be the amount invoiced by the third party upon resale, in lieu of the amounts invoiced by Eyetech or its Affiliates when selling the Product in unfinished form. Otherwise, where Eyetech or its Affiliate sells a Product in finished form to a third party that does not require a sublicense under the Eyetech Patents for further resale (each such third party hereinafter a "Distributor"), the amount to be included in the calculation of Net Sales shall be the price invoiced from Eyetech or its Affiliate to the third party, not the amount invoiced by the third party upon resale. If, in addition to or in lieu of a transfer price paid for quantities of Product supplied, any Distributor provides consideration to Eyetech or its Affiliate in connection with any Product or the Distributor's rights or relationship with Eyetech or its Affiliate in relation thereto, then such 13 consideration shall be included in the calculation of Net Sales in the Quarter in which it becomes due to Eyetech or its Affiliate (as applicable). Notwithstanding the foregoing, amounts received by Eyetech or its Affiliates (x) for the sale of Products among Eyetech and its Affiliates for resale or (y) for the sale of Products by Eyetech or its Affiliates to Pfizer or its Affiliates or sublicensees for resale in the ROW Territory, shall not be included in the computation of Net Sales hereunder. Net Sales shall be determined from books and records maintained in accordance with GAAP, consistently applied throughout the organization and across all products of the entity whose sales of Product are giving rise to Net Sales. 1.56 "Other Product-Related Agreements" means the License Agreement, the Distribution Agreement and the Regulatory Services Agreement. 1.57 "Out-of-Pocket Costs" means costs and expenses paid to third parties (or payable to third parties and accrued in accordance with GAAP), other than Affiliates or employees, by either Party after the Execution Date (or, in the case of Development Costs, after December 1, 2002). 1.58 "Party" means either Eyetech or Pfizer; "Parties" means both Eyetech and Pfizer. 1.59 "Person" means any natural person or any corporation, company, partnership, joint venture, firm or other entity, including without limitation a Party. 1.60 "Pharmacia Merger" means the merger contemplated by the Agreement and Plan of Merger dated as of July 13, 2002 among Pfizer, Pilsner Acquisition Sub Corp., a wholly owned Subsidiary of Pfizer, and Pharmacia Corporation ("Pharmacia") (as the same may be amended or supplemented or restated from time to time, the "Pharmacia Merger Agreement") providing for the merger of Pilsner Acquisition Sub Corp. with and into Pharmacia. 14 1.61 "Phase III Clinical Study" means a Product Study with study design and statistical power intended to meet the requirement for Approval by the FDA. 1.62 "Phase III(b)/IV Product Study" means a clinical study designed to support or profile a Product or intended to be the basis of a post-approval Product filing, including without limitation proposed label changes not explicitly described in Section 1.64 below, but not including any clinical study intended to be the basis of any regulatory filing for initial FDA or other Governmental Authority approval for marketing of Products or conducted as a condition to the prior receipt of any regulatory approval for marketing of Products. Phase III(b)/IV Product Studies shall include, without limitation, epidemiological studies and modeling and pharmacoeconomic studies. 1.63 "Product" means any product, that (a) contains or is based on the anti-VEGF aptamer known as "Macugen" or "EYE001", including any metabolites or prodrugs of such aptamer or any hydrates, conjugates, salts, esters, isomers, polymorphs or analogues of any of the foregoing, either alone or in combination with one or more other therapeutically active substances, and (b) is for use in the Field; including for the avoidance of doubt any AMD Product, DME Product or other product developed in accordance with the terms of this Agreement for any indication in the Field other than AMD or DME, or as a new un-pegylated formulation of any such AMD Product, DME Product or other product (each such other product, an "Additional Developed Product"). 1.64 "Product Studies" means clinical, preclinical, safety, and other studies that are designed to support FDA or other Governmental Authority approval for marketing of Products. For the avoidance of doubt, Product Studies shall not include [**], but shall include [**]. 1.65 "PSURs" means periodic safety update reports. 15 1.66 "Quarter" means (i) with respect to Eyetech, each of the periods ending on March 31, June 30, September 30 and December 31, and (ii) with respect to Pfizer each of the periods ending at the end of each of the four (4) thirteen (13) week periods as used by Pfizer as reported in its filings with the Securities and Exchange Commission, the first such period commencing on January 1 of any year, and the terms "Eyetech Quarter" and "Pfizer Quarter" shall be construed accordingly. 1.67 "Regulatory Costs" means the costs, including without limitation the Out-of-Pocket Costs and direct and identifiable variable personnel costs, in relation to making or supporting regulatory filings in the US Territory; provided, however, Regulatory Costs shall not include any (a) Out-of-Pocket Costs paid by either Party prior to the Execution Date, (b) costs of making or supporting regulatory filings in the ROW Territory, or (c) except for direct and identifiable variable personnel costs explicitly provided for in this Section 1.67, Internal Costs. In addition, Regulatory Costs shall include amounts paid by Eyetech to Pfizer under the Regulatory Services Agreement. 1.68 "Regulatory Services Agreement" means the Regulatory Services Agreement dated as of the Execution Date between the Parties relating to the provision by Pfizer of specified regulatory services in the US Territory on a contract basis for Eyetech. 1.69 "ROW Territory" means all countries in the world other than the US Territory. 1.70 "Sales Representative" means an individual who engages in Detailing and other promotional efforts in the Field with respect to the Products and who has been trained and is employed by either Pfizer or Eyetech or their respective Affiliates. 1.71 "Senior Executive" means, with respect to Eyetech, the Chief Executive Officer of Eyetech, and with respect to Pfizer, a corporate officer of Pfizer with senior decision-making 16 authority; "Senior Executives" means both such officers. Pfizer shall initially designate Karen Katen as its Senior Executive. 1.72 "Specifications" means the specifications for the manufacture and packaging of the Products consistent with the NDA. 1.73 "Subsidiary" means, with respect to a Party, a majority or wholly-owned direct or indirect subsidiary of such Party. 1.74 "Territory" means the US Territory and the ROW Territory. 1.75 "Trademark" means (i) MACUGEN and (ii) any other trademark associated with the Products that may be selected by the Parties in accordance with Section 10.1(e), excluding the respective corporate names and logos of the Parties. 1.76 "Transaction Agreements" means this Agreement, the Other Product-Related Agreements, the Equity Agreements and the Detailing Services Agreement. 1.77 "US Territory" means the United States of America, including its territories, possessions and Puerto Rico. 1.78 "Xalatan" means latanoprost ophthalmic solution which is presently sold by Pharmacia under the trademark Xalatan(R) as a single entity. 1.79 "Xalcom" means product containing as active ingredients latanoprost and timolol and which is presently sold by Pharmacia under the trademark Xalcom(R) as a single entity. 1.80 "Year" means each calendar year during the Co-Promotion Term. 17 ARTICLE 2 CO-PROMOTION OF PRODUCTS IN THE US TERRITORY 2.1 Co-Promotion. Subject to the terms of this Agreement, the Parties shall Co-Promote Products in the US Territory co-exclusively with each other as provided in this Agreement. 2.2 License Grants. Each Party's rights under intellectual property rights owned or controlled by the other Party, with respect to the development, manufacture and Co-Promotion of Products in the US Territory, are as set forth in the License Agreement. 2.3 Compliance With Law. Both Pfizer and Eyetech shall Co-Promote the Products in the US Territory in accordance with applicable Law, the terms of this Agreement and the then-current Marketing Plan. Neither Party shall be required to undertake any action or inaction, or to incur expenditures in connection with any such action or inaction under this Agreement that it believes, in good faith, may violate any Law. 2.4 Detailing Obligations. Subject to Exhibit 6.2, the Detailing obligations of the Parties in respect of the Products shall be as set out in the then-current Marketing Plan. 2.5 Training. (a) Pfizer shall, at its sole expense, provide initial sales and product training in connection with the first Product Detailed by Eyetech Sales Representatives in the US Territory pursuant to this Agreement for up to forty (40) Eyetech Sales Representatives. Eyetech may also elect to have Pfizer provide such initial sales and product training to an additional fifteen (15) Eyetech Sales Representatives, in which case Eyetech shall reimburse Pfizer for Pfizer's Out-of-Pocket Costs and direct and identifiable variable personnel costs incurred in connection with such training for such additional Sales Representatives. Such training shall, at Eyetech's option, 18 be conducted in multiple program sessions; provided that Pfizer shall not be required to provide more than four (4) separate program sessions, the first three (3) of which shall be for not less than ten (10) Eyetech Sales Representatives each. A description of Pfizer's current initial sales force training program is described in Exhibit 2.5. Such program is subject to revision from time to time by Pfizer, provided that the initial training provided by Pfizer to Eyetech from time to time shall be the same as the initial training that Pfizer contemporaneously provides to Pfizer's Sales Representatives that Detail Products. Pfizer will provide ongoing training relating to Products for the trainers of Eyetech's Sales Representatives. All training programs for Eyetech's Sales Representatives other than the initial sales and product training will be the responsibility of Eyetech, at its sole expense; provided, however, that Pfizer will provide follow-up training for such Eyetech Sales Representatives at Eyetech's reasonable request, provided that Eyetech reimburses Pfizer for the reasonable costs and expenses incurred by Pfizer in connection with such follow-up training. In order to coordinate the training of Eyetech Sales Representatives with training of Pfizer Sales Representatives, any training provided by Pfizer to Eyetech Sales Representatives pursuant to this Section 2.5(a) shall take place at times and at locations reasonably selected by Pfizer in consultation with Eyetech. (b) Pfizer and Eyetech shall, each at its own expense (except as otherwise set forth in Section 2.5(a)), comply with any training plan for the Products contained in the applicable Marketing Plan. (c) If a Party organizes Co-Promotion-related meetings of its employees (such as periodic briefings of its Sales Representatives), it will make reasonable efforts to keep the Product-related portions of such meetings independent from other matters and to give the other Party advance notice of such meetings. If requested by the other Party, the Party organizing such 19 meeting will permit Sales Representatives of the other Party to attend and participate in such meetings or such portions thereof which relate to the Co-Promotion of Products. 2.6 Promotional Materials and Call Center Communications. The Parties will only utilize promotional, advertising, communication and educational materials relating to the Products in the US Territory (collectively "Promotional Materials") and only conduct promotional activities for the Products which, in each case, have been approved in the Marketing Plan or otherwise by the CSC (as defined in Section 3.1). All Promotional Materials shall name and feature both Parties with equal prominence. All promotional activities conducted by the Parties shall be consistent with the Promotional Materials so approved and the then-current Marketing Plan. Promptly after the Effective Date, the Parties will mutually agree upon procedures whereby designated representatives of each of them representing the marketing, medical, regulatory and legal functions, will meet, whether in person, by telephone or by videoconference, in order to discuss all promotional activities (except for Detailing) and Promotional Materials prior to final approval thereof by the CSC. In addition, as a prominent part of each communication with customers and other third parties, the Call Center shall clearly identify the Products as joint products of Eyetech and Pfizer. Eyetech shall own all rights to all Promotional Materials, including all copyrights thereto, and Pfizer hereby assigns to Eyetech all rights, title and interests of Pfizer in and to such Promotional Materials, including without limitation all copyright interests of Pfizer therein. Unless and until Promotional Materials are approved by the CSC for publication or other general dissemination, each Party shall maintain them in confidence pursuant to the terms of Article 11. 2.7 Samples. The Parties, through the CSC, shall determine whether it is necessary and appropriate to undertake a sampling program for the first Product and, if so, the appropriate 20 terms and allocation of responsibilities for satisfying such sampling program; provided that any samples will be allocated fairly between the Parties' respective Sales Representatives in accordance with the Detailing arrangements set forth in the Marketing Plan; and provided further that each Party shall be responsible, at its sole expense, for (a) accounting for samples held, disposed of or distributed by such Party or its Sales Representatives, (b) destroying and disposing of samples after the latest date on which such samples are usable and (c) complying with the requirements of all applicable Laws, including without limitation the requirements of the Prescription Drug Marketing Act of 1987, as amended. 2.8 Distribution and Booking of Sales. Eyetech shall be responsible for distribution, invoicing, credit and collection for the Products in the US Territory. Eyetech will book all sales of Products in the US Territory; provided that this Section 2.8 shall not be construed as an assurance by Pfizer to Eyetech regarding the appropriate accounting treatment of such sales. 2.9 Contract Sales Forces. Without the consent of the other Party, neither Pfizer nor Eyetech may use any contract sales force to Co-Promote or Detail any Product. 2.10 Delivery Technology Development Agreement. Promptly after the Effective Date, the Parties shall in good faith discuss entering into a separate agreement to provide for the development by the Parties of additional Product delivery technology. The Parties intend to provide in such agreement for a sharing between the Parties of the costs and benefits of developing and commercializing such additional delivery technology on the same basis as development costs and commercialization benefits are shared under this Agreement and the License Agreement; provided that, for the avoidance of doubt, it is agreed that neither Party would be required to make any upfront license fee payments to the other Party in connection with such separate agreement. 21 ARTICLE 3 MANAGEMENT OF ALLIANCE 3.1 Committee/Subcommittees. In order to fulfill the objectives of this Agreement, the Parties agree to establish a Joint Operating Committee ("JOC"), a Commercialization Subcommittee ("CSC"), a Clinical Development/Regulatory Subcommittee ("CDRSC"), and a Manufacturing Subcommittee ("MSC"), and such other committees and subcommittees as may be established by mutual consent of Eyetech and Pfizer. Each committee and subcommittee shall have two co-chairpersons, one designated by each of Eyetech and Pfizer. All decisions of the committees and subcommittees shall be by a vote of the co-chairpersons, each co-chairperson having one vote, and all decisions shall be by unanimous consent of the co-chairpersons. 3.2 Meetings. The chairpersons of the JOC, CSC, CDRSC, MSC, or any other committee or subcommittee, shall call meetings quarterly, or as otherwise requested by one of the Parties. Meetings may be held in person, by telephone, or by video conference call, and the location of each meeting shall alternate between sites located in New York, New York selected by each co-chairperson. Additional participants may be invited by any representative to attend meetings where appropriate. The Parties shall cause their respective representatives on the committees and subcommittees to use diligent efforts, acting in good faith, to resolve all matters presented to them as expeditiously as possible. 22 3.3 Clinical Development/Regulatory Subcommittee. (a) The CDRSC shall consist of research and development, commercial, regulatory and marketing/medical managers (as needed) from each of Eyetech and Pfizer, each of which shall confirm to the other its designees. The CDRSC will establish a clinical development working group that shall be responsible for: (i) Preparing annual Development Plans; (ii) Monitoring progress of all Product Studies in the Territory (including reviewing costs and activities against the annual Development Plan); (iii) Facilitating the exchange of all development information and data relating to all Product Studies in the Territory; (iv) Review and approval of statistical analysis plans and protocols for all Product Studies in the Territory and revising any investigator's brochure(s); and (v) Providing updates on its activities and achievements to the JOC. (b) The CDRSC will also establish a regulatory working group that will be responsible for: (i) Overseeing, monitoring and coordinating all regulatory (FDA) aspects of the US Territory Product Approval program, including all US Territory regulatory actions, communications and filings (including matters pertaining to Product labeling) and submissions (including filings and submissions of supplements and amendments to FDA with respect to the Products); (ii) Establishing the schedule and implementation strategy for all FDA filings; 23 (iii) Coordinating preparation for and attendance at FDA advisory committee meetings; (iv) Coordinating responses to additional FDA requirements and FDA inquiries; (v) Proposing, overseeing and agreeing upon a regulatory strategy and plan for obtaining regulatory approvals for the Products in the Territory; (vi) Facilitating the exchange of all regulatory information and data relating to Products in the Territory; (vii) Facilitating the exchange of information in conjunction with Section 4.3 of this Agreement in order to ensure that significant issues concerning adverse event information and safety issues are addressed consistently among Governmental Authorities in the Territory; and (viii) Providing updates on its activities and achievements to the JOC. (c) Neither Party shall make any change to any annual Development Plan without the prior approval of the CDRSC, and all Development Plans and Development Costs provided therein shall be consistent with the terms of this Agreement. If the CDRSC is unable to reach a decision on any issue within fifteen (15) Business Days after presentation, either Party may refer the issue to the JOC for resolution. (d) Following a referral to the Senior Executives of the Parties pursuant to Section 3.7 below, the final decision-making authorities set out in Sections 3.3 (e), (f), (g) and (h) shall apply. (e) [**] shall have the final decision-making authority for matters relating to [**] for such Product [**] to such Product [**]; provided, however, that [**] shall have the final 24 decision-making authority as to [**], provided that [**]. For purposes of the previous sentence, [**]; provided, however, that [**]. (f) [**] shall have final decision-making authority with respect to [**] the Parties shall [**]. Except as otherwise set forth in this Agreement, [**] shall have final decision-making authority with respect to [**]. (g) Notwithstanding the Parties' joint approval rights set forth in Section 3.3(f), [**] may not prevent [**] from [**] for the applicable Product, [**]. (h) Subject to Pfizer's fulfillment of its obligations under the Regulatory Services Agreement, which shall require Pfizer to perform its obligations thereunder in a commercially reasonable manner, in the event that Eyetech materially fails to discharge its regulatory obligations in the US Territory in a commercially reasonable manner applying accepted pharmaceutical industry standards, and in compliance with all Laws, and fails to cure such failure following written notice thereof from Pfizer and a reasonable opportunity to cure, then the final decision-making authority with respect to [**] the Products [**] shall be transferred to Pfizer for the balance of the Co-Promotion Term; provided that in the event that after such transfer (x) Pfizer closes a Divestiture Transaction pursuant to Section 17.11 or (y) materially fails to discharge its regulatory obligations in the US Territory in a commercially reasonable manner applying accepted pharmaceutical industry standards, and in compliance with all Laws, and fails to cure such failure following written notice thereof from Eyetech and a reasonable opportunity to cure, then the final decision-making authority with respect to [**] the Products [**] shall thereafter be exercised jointly by the Parties for the balance of the Co-Promotion Term. 25 3.4 Commercialization Subcommittee. (a) The CSC shall consist of members from each of Eyetech and Pfizer, each of which shall confirm to the other its designees. The CSC shall be responsible with respect to the US Territory for: (i) Preparing and implementing annually the Marketing Plan; (ii) Monitoring progress under and compliance with the Marketing Plan; (iii) Coordinating with the CDRSC with respect to regulatory issues and future Product development activities to be undertaken pursuant to the Development Plans; (iv) Developing positioning and market strategies consistent with the Marketing Plan, including decisions to seek or include any new indication, formulation or usage for the Products, such as for life cycle management; (v) Developing advertising material and strategies and promotional materials for the Parties' Sales Representatives for the Products, designing packaging, and planning and overseeing educational and professional symposia and speaker and activity programs for the Products in the US Territory; (vi) Providing updates on the CSC's activities and achievements to the JOC; and (vii) Discussing the prices at which the Products will be sold to unaffiliated third parties throughout the Territory. (b) Following a referral to the Senior Executives of the Parties pursuant to Section 3.7 below, the final decision-making authorities set out in Sections 3.4(c), (d) and (e) shall apply. 26 (c) Subject to Sections 3.4(d), (e) and (f) below, Pfizer shall have final decision-making authority with respect to [**]: (i) activities [**]; (ii) [**] (iii) [**] the Products; and (iv) [**], including [**], (d) [**] shall have final decision-making authority with respect to: (i) [**] Eyetech shall [**]; and (ii) [**] Eyetech [**] (e) The Parties shall mutually agree upon [**] Products [**] covered by [**] shall have [**]. (f) Notwithstanding the provisions of Section 3.4(c), but subject to the provisions of Section 3.4(g), in the event that Pfizer closes a Divestiture Transaction pursuant to Section 17.11, the final decision-making authority with respect to all US Territory marketing and other commercial activities for the Products pursuant to this Section 3.4, [**] Eyetech [**] pursuant to [**] shall thereafter be exercised jointly by the Parties for the balance of the Co-Promotion Term. (g) All Marketing Plans shall be consistent with the terms of this Agreement. If the CSC is unable to reach a decision on any issue within fifteen (15) Business Days after presentation, either Party may refer the issue to the JOC for resolution. 3.5 Manufacturing Subcommittee. (a) The MSC shall consist of members from each of Eyetech and Pfizer, each of which shall confirm to the other its designees. The MSC shall be responsible for: (i) Overseeing manufacturing activities underway as of the Effective Date, including formulation development, product characterization studies, stability studies, and management of clinical supplies of the Products; 27 (ii) Overseeing the manufacturing of registration batches of Product; (iii) Overseeing process development plans; (iv) Monitoring worldwide quality assurance efforts and ensuring that all Products are manufactured in accordance with the Parties' quality standards; (v) Overseeing supply relationships with any third party manufacturers; (vi) Subject to Section 4.1(c), review of the CMC section of the NDA for each Product, provided that the time period for reviewing any such CMC section shall, notwithstanding the provisions of Section 4.1(c), be thirty (30) days from the date on which Eyetech, through the CDRSC, provides Pfizer with a draft of the NDA pursuant to Section 4.1(c); (vii) Overseeing manufacture of the Products; (viii) Reviewing and approving Specifications for purposes of the NDA and for Launch; (ix) Commencing and overseeing any new manufacturing activities, including Product manufacturing process validation prior to NDA approval and any pre-approval inspection of the Product manufacturing subcontractors; (x) Coordinating with the CSC and CDRSC as appropriate; (xi) Preparation for FDA inspections and ensuring adherence to compliance standards; (xii) Evaluating the forecasts provided in each Marketing Plan as well as inventory levels for the Product and future logistic strategies and capacity planning; 28 (xiii) Reviewing quality-related issues concerning the Product or any component thereof; and (xiv) Providing updates on the MSC's activities and achievements to the JOC. (b) If the MSC is unable to reach a decision on any issue within fifteen (15) Business Days after presentation, either Party may refer the issue to the JOC for resolution. Following a referral to the Senior Executives of the Parties pursuant to Section 3.7 below, [**]shall have final decision-making authority with respect to [**]; provided that: (i) Pfizer shall [**] any agreement [**] entered into [**] (ii) [**] Pfizer [**] and/or [**] that otherwise would [**], and Pfizer [**] pursuant to this Section 3.5 [**], (iii) [**] Pfizer [**] pursuant to Section 17.11, [**], (iv) [**] the Parties, and (v) [**] all Products [**]. 3.6 Joint Operating Committee. (a) The Joint Operating Committee ("JOC") shall consist of an equal number of members from each of Eyetech and Pfizer. Each of Eyetech and Pfizer shall confirm to the other its designees. At least one of Pfizer's designees shall be the Vice President in Pfizer's Pharmaceuticals Group with global responsibility for the therapeutic area covering the Products. The JOC shall address all of the significant and strategic issues within the purview of the various subcommittees, and shall be responsible for resolving any issues referred by the subcommittees. The JOC will be presented with updates on the activities and achievements of the subcommittees. All decisions of the JOC will be unanimous votes of the co-chairpersons. 29 (b) If the JOC is unable to resolve any issue within ten (10) Business Days after presentation, either Party may refer the issue to the Senior Executives for resolution pursuant to Section 3.7. 3.7 Deadlocks. If for any reason the JOC cannot resolve any matter properly referred to it, either Party may refer the matter to the Senior Executives for resolution. If after discussing the matter in good faith and attempting to find a mutually satisfactory resolution to the issue, the Senior Executives fail to come to consensus within five (5) Business Days of the date on which the matter is referred to the Senior Executives, the provisions of Sections 3.3(d), 3.4(b), and 3.5(b), as applicable, shall apply and resolutions reached through such provisions shall be binding on the Parties; provided that such decisions are made in good faith and are consistent with the provisions of this Agreement. 3.8 Limitation on Decision-Making Authority. Notwithstanding anything to the contrary, none of the committees or subcommittees contemplated by this Article 3 nor any Senior Executive pursuant to this Article 3 shall be entitled to determine any matters for which: (a) one or more of the Parties is allocated decision-making authority elsewhere in this Agreement; or (b) such determination would violate or permit the violation of any express provision of this Agreement, including, without limitation, the provisions of Sections 3.3(f), 3.3(g), 3.3(h), 3.4(e) and 3.5(b) that provide explicitly for mutual or joint decision-making; or (c) this Agreement provides that neither Party shall have final decision-making authority or provides that a decision shall not be made without the approval or consent of a particular Party. 30 ARTICLE 4 CLINICAL AND REGULATORY MATTERS 4.1 Clinical and Regulatory Matters in the US Territory. This Section 4.1 shall apply to clinical and regulatory matters relating to Products in the US Territory. (a) Subject to Section 3.3, [**]FDA for the Products [**] for each of the Products. (b) All NDAs and Approvals within the US Territory relating to the Products shall be the property of Eyetech and held in the name of Eyetech or its designated Affiliates. Eyetech's designated representative shall serve as the designated regulatory official for Products in the US Territory for purposes of receiving communications from the FDA. (c) Eyetech will provide Pfizer with copies, which copies may be in draft form, of the following submissions to the FDA through the CDRSC. If reasonably practicable, Eyetech will provide Pfizer with such copies at least fifteen (15) days prior to planned submission to the FDA by Eyetech, whereupon Pfizer shall provide comments to Eyetech regarding such submission at least ten (10) days prior to such planned submission, and, Eyetech shall reasonably consider the comments given by Pfizer prior to making such submission: (i) all annual reports regarding a Product prior to First Approval of such Product, including without limitation the annual reports required under 21 C.F.R. 312.33 as it may be amended; and (ii) all other filings that are not subject to a deadline imposed by the Act of less than twenty-one (21) days after discovery of an event that triggers the filing requirement and that are not otherwise required to be jointly agreed upon pursuant to Section 4.1(d). 31 (d) Eyetech shall provide notice to Pfizer within two (2) Business Days of discovery by Eyetech of any event that triggers an FDA filing requirement that is subject to a deadline imposed by the Act of less than twenty-one (21) days after the discovery of such an event. Eyetech shall promptly provide copies of any correspondence or other submission subject to this Section 4.1(d) to Pfizer, and the chairpersons of the CDRSC shall discuss in good faith and on a timely basis determine the most effective and expeditious means of responding to such FDA filing requirement. (e) Eyetech shall provide notice to Pfizer of any additional FDA requirements which FDA may impose with respect to the First Approval, (including without limitation, additional clinical studies) and of all FDA inquiries requiring a response within two (2) Business Days of receipt thereof by Eyetech. Eyetech will promptly provide Pfizer with copies of all correspondence between Eyetech and FDA and copies of all FDA contact reports produced by Eyetech. (f) In connection with Sections 4.1(a), (b) and (c) above, Eyetech shall provide Pfizer with notice of all meetings, conferences, and discussions (including without limitation, advisory committee meetings and any other meeting of experts convened by FDA concerning any topic relevant to the Products) scheduled with FDA concerning any pending NDA or other regulatory matters relating to the Products within two (2) Business Days after Eyetech receives notice of the scheduling of such meeting, conference, or discussion. Pfizer shall be entitled to have reasonable representation present at all such meetings. Eyetech and Pfizer, through the CDRSC, shall use reasonable efforts to agree (subject to Section 3.3(f)(i) to the extent applicable) in advance on the scheduling of such meetings and on the objectives to be 32 accomplished at such meetings, conferences, and discussions and the agenda for the meetings, conferences, and discussions with FDA. (g) Each Party shall provide to the other Party, through the CDRSC, on a timely basis copies of all material pre-clinical and clinical data compiled in support of an NDA or other regulatory filings in the US Territory with respect to the Products. (h) Any decision to initiate a recall or withdrawal of Product in the US Territory shall be made by the CDRSC. Before the CDRSC initiates a recall or withdrawal, and upon the request for a recall or withdrawal by either Party, the Parties shall promptly and in good faith discuss the reasons therefor. Under no circumstances shall either Party unreasonably object to a recall or withdrawal requested by the other Party, and neither Party shall have any right to object to a recall or withdrawal requested by the other Party for failure of a Product to meet the Specifications, for material safety concerns or for noncompliance with the Act. In the event of any recall or withdrawal, Pfizer shall implement any necessary action, with assistance from Eyetech as reasonably requested by Pfizer. 4.2 Clinical and Regulatory Matters in the ROW Territory. This Section 4.2 shall apply to clinical and regulatory matters relating to Products in the ROW Territory. (a) After the Effective Date, Pfizer will assume sole ownership, control of and responsibility for all regulatory filings in the ROW Territory, and Eyetech shall cooperate with Pfizer in connection with such filings as reasonably requested by Pfizer and at Pfizer's sole cost and expense. Prior to Pfizer taking over responsibility for contracting with API Bulk Drug Substance Supplier(s) and/or Fill and Finish Services Supplier(s) or performing, either directly or through Affiliates, services that otherwise would be performed by API Bulk Drug Substance Supplier(s) and/or Fill and Finish Services Supplier(s) in accordance with Section 6.12, Eyetech 33 shall be responsible for providing Pfizer with Product samples for use in connection with regulatory filings relating to Products in the ROW Territory at Pfizer's sole cost and expense. (b) All regulatory approvals in the ROW Territory relating to the Products shall be deemed the property of Pfizer and held in Pfizer's or its Affiliate's name. (c) Pfizer's rights under Sections 4.2(a) and (b) above are subject to the following: Pfizer shall provide Eyetech with notice of all meetings, conferences, and discussions (including without limitation, any meeting of experts convened by regulatory authorities concerning any topic relevant to the Products) scheduled with Governmental Authorities concerning any material regulatory matters relating to the Products within two (2) Business Days after the scheduling of such meeting, conference, or discussion. Eyetech shall be entitled to have reasonable representation present at all such meetings. In addition, with respect to clinical and regulatory matters in the ROW Territory, Pfizer shall promptly provide Eyetech with (i) copies of all pre-clinical and clinical data compiled in support of regulatory filings in the ROW Territory, (ii) copies of all material regulatory correspondence with EMEA, as defined in the License Agreement, (or any Governmental Authority in a Major Country) and with Japanese Governmental Authorities, (iii) advance copies of material submissions to EMEA (or any Governmental Authority in a Major Country) and to Japanese Governmental Authorities, and the same opportunity to comment in advance on such submissions (and to have its comments reasonably taken into account) as Pfizer is provided with respect to the submissions to FDA under Section 4.1(c), provided, however, that an inadvertent failure by Pfizer to submit Eyetech advance copies pursuant to this Section 4.2(c)(iii) shall not be considered a material breach of this Agreement if Pfizer has implemented procedures reasonably designed to avoid any such failure and cures any such failure promptly after its discovery, (iv) notices of any revocations of 34 Product marketing approvals and any Product recalls, and (v) reasonable responses to inquiries by Eyetech regarding the regulatory approval and commercialization processes for each Product in the ROW Territory, including without limitation reasonable access to Pfizer personnel, documents and files in connection with such inquiries. 4.3 Inquiries, Adverse Events, etc. (a) Eyetech and Pfizer shall be responsible for the surveillance, receipt, evaluation, and reporting of product complaints and reports of adverse drug experiences, for the Products in the US Territory and the ROW Territory, respectively; provided, however, during the term of the Regulatory Services Agreement, Pfizer shall perform certain of such US Territory responsibilities on behalf of Eyetech under the terms of the Regulatory Services Agreement. (b) Eyetech shall be responsible for promptly investigating Product complaints and reports of adverse drug experiences and other required safety information (e.g., PSURs and annual safety reports) associated with the use of any Product in the US Territory. As to each Product, Eyetech shall submit reports of all adverse drug experiences associated with the use of the Product(s) and other required safety information to the FDA in accordance with applicable Law. Eyetech shall submit a copy of each such report to Pfizer contemporaneously with its submission of the report to FDA, or in advance of such submission if, and as, reasonably necessary to permit Pfizer to comply with legal requirements applicable to it, if practicable. (c) Pfizer shall promptly investigate Product complaints and reports of adverse drug experiences and other required safety information (e.g., PSURs and annual safety reports) associated with the use of any Product in the ROW Territory. As to each Product, Pfizer shall submit reports of all adverse drug experiences associated with the use of the Product(s) and other required safety information to the applicable Governmental Authorities in the ROW 35 Territory in accordance with applicable Law. Pfizer shall submit a copy of each such report to Eyetech contemporaneously with its submission of the report to the applicable Governmental Authority in the ROW Territory, or in advance of such submission if, and as, reasonably necessary to permit Eyetech to comply with legal requirements applicable to it, if practicable. (d) Eyetech shall have the sole responsibility for revising the Product labeling for the US Territory, and Pfizer for the ROW Territory, as needed, to adequately warn of the potential risks identified by reports of adverse drug experiences associated with the use of the Product and from Product complaints. In addition, the Parties agree to jointly develop additional written procedures including the mechanics for the surveillance, receipt, evaluation, and reporting of Product complaints and adverse drug experiences, including the possible maintenance of a worldwide safety database, in accordance with this Article 4 and subject to the oversight of the CDRSC. (e) Each Party shall notify the other Party within two (2) Business Days after it receives information about the initiation of any investigation, review or inquiry by FDA or other Governmental Authority concerning the distribution, promotion or sale of the Product, not otherwise described above. 4.4 Pfizer's Performance of Regulatory Services Agreement Obligations. During the term of the Regulatory Services Agreement, all of Eyetech's regulatory obligations under this Agreement are subject to Pfizer's performance of its obligations under the Regulatory Services Agreement to the extent Eyetech's performance of Eyetech's obligations depends on Pfizer's performance of Pfizer's obligations under the Regulatory Services Agreement. 36 ARTICLE 5 PRODUCT DEVELOPMENT 5.1 Development Plan and Budget. The CDRSC shall develop an annual development plan, which shall include preclinical and clinical plans and a budget (a "Development Plan") in respect of the Products consistent with the terms of this Agreement for each Year during the Co-Promotion Term. The CDRSC shall meet to discuss the first Development Plan within ninety (90) days after the Execution Date. A description of the overall development programs for development of the AMD Product and DME Product is attached as Exhibit 5.1(a), and a summary of the budgets for agreed upon Development Costs for such programs (respectively, the "AMD Agreed Development Costs" and the "DME Agreed Development Costs") are attached as Exhibit 5.1(b) to this Agreement. Each annual Development Plan may be updated throughout the Year as deemed appropriate by the CDRSC. Cumulative Development Costs for each of the AMD Product and DME Product shall not exceed the AMD Agreed Development Costs and the DME Agreed Development Costs, respectively, for such Products absent mutual consent of the Parties. The Parties' respective obligations with respect to Development Costs shall be as set forth in Section 8.1, provided that, unless otherwise agreed by the Parties, neither Party shall be obligated to pay for any Development Costs in excess of the AMD Agreed Development Costs or the DME Agreed Development Costs, respectively, except to the extent a Party exercises its final decision-making authority in accordance with Article 3 to approve such excess Development Costs over the objection of the other Party or otherwise unilaterally incurs such excess Development Costs, in which case the Party exercising such final decision-making authority or unilaterally incurring excess Development Costs shall be solely responsible for such excess Development Costs. The Parties 37 acknowledge that the budgets set forth in Exhibit 5.1(b) do not cover preclinical Development Costs for periods after the end of 2003 and do not cover Development Costs for manufacturing process development and optimization. With respect to such Development Costs not covered by the budgets set forth in Exhibit 5.1(b), the Parties shall discuss reasonably necessary preclinical Development Costs for subsequent periods and Development Costs for manufacturing process development and optimization, and amend Exhibit 5.1(b) to cover such additional Development Costs. 5.2 AMD Product and DME Product Development. Each of the Parties shall, during the Co-Promotion Term, use Commercially Reasonable Efforts to develop and obtain Approvals for at least one AMD Product and one DME Product as provided in this Agreement. In the event that a party fails to exercise such Commercially Reasonable Efforts, such Party's sole liability and the other Party's sole remedy for such failure shall be termination of this Agreement in accordance with Section 13.2. 5.3 Development of Products for Additional Indications in the Field. At the request of either Party, the Parties shall in good faith meet and discuss jointly developing Additional Developed Products where preclinical and/or clinical results provide a reasonable basis for pursuing such additional development or the pursuit of such additional development is otherwise potentially commercially attractive. If the Parties agree to pursue such additional development, the Parties shall amend the applicable Development Plan(s) accordingly. If the Parties do not agree to pursue such additional development, either Party shall have the right to pursue development of such Additional Developed Products at its sole expense, subject to the other Party's rights under this Agreement with respect to the Co-Promotion of Products (including Additional Developed Products); provided, however, that such additional development would 38 not, based on the best available scientific evidence, be reasonably likely to have a materially adverse effect on the Co-Promotion of the Products. ARTICLE 6 LAUNCH, CO-PROMOTION AND DETAILING 6.1 Co-Promotion of Products. Eyetech and Pfizer shall be jointly responsible for the Co-Promotion of Products in the US Territory, with each Party participating (except as otherwise expressly provided in this Agreement) in all types of marketing activity in the US Territory. Each of the Parties shall Co-Promote the Products in the US Territory during the Co-Promotion Term in accordance with the terms of this Agreement and the applicable Marketing Plan, and in compliance with all Laws. In conducting Co-Promotion activities, each Party shall use Commercially Reasonable Efforts to Co-Promote the sale of the Products in the US Territory. In the event that a Party fails to exercise such Commercially Reasonable Efforts, such Party's sole liability and the other Party's sole remedy for such failure shall be (a) termination of this Agreement in accordance with Section 13.2 and (b) if applicable to such failure, the remedies set forth in Section 6.5 below. All aspects of each Marketing Plan will be determined pursuant to the committee system set forth in Article 3. 6.2 Marketing Plan and Budget. (a) The CSC shall, subject to the provisions of Sections 3.4(c), (d), (e) and (f), develop a Marketing Plan (a "Marketing Plan") and a marketing budget (a "Co-Promotion Budget") for the period from the Effective Date through Launch of the first Product in the US Territory and for each Year thereafter during the Co-Promotion Term consistent with Exhibit 6.2 and the other terms of this Agreement. The first Marketing Plan shall be a pre-Launch Marketing Plan, such Marketing Plan to be as approved by the JOC within six (6) months of the 39 Effective Date (the "Pre-Launch Marketing Plan"). The Pre-Launch Marketing Plan shall contain a pre-Launch Co-Promotion Budget covering the period of time from the Effective Date through the Launch of the first Product in the US Territory of up to $[**] or such higher amount as is agreed between the Parties. The pre-Launch Co-Promotion Budget shall not exceed $[**] unless otherwise agreed by both Parties, and neither Party's election to withhold such agreement shall be subject to the other Party's decision-making authority. Neither Party shall engage in any Co-Promotion activities except as provided in the applicable Marketing Plan. Subsequent annual Marketing Plans will describe the plan for commercialization of the Products in the US Territory, including: (a) general strategies for the Detailing and marketing of the Products and allocation of responsibilities for marketing activities; (b) Detail Requirements and sampling activities, if any; (c) market and sales forecasts; (d) pricing and discounting analysis; (e) advertising, public relations and other promotional programs, including professional symposia and speaker and activity programs to be used in the Co-Promotion of the Products; and (f) [**]. Each Marketing Plan and the Co-Promotion Budget may, subject to the provisions of Sections 3.4(c), (d), (e) and (f), be updated from time to time as deemed appropriate by the CSC. (b) Exhibit 5.1(b) also includes [**], which Product Studies will be performed absent mutual agreement by the Parties to the contrary. [**] these [**] of Products, [**]. 6.3 Detailing. The Parties shall be responsible for performing the Detail Requirements specified in each then-current Marketing Plan. 6.4 Detailing Reports. Each Party shall provide the other Party and the CSC with a report as soon as practicable but in no event later than forty-five (45) days following the end of each Quarter during the Co-Promotion Term setting forth, in such detail and form as the Parties shall agree, the number of Details made by such Party's Sales Representatives of Products in the 40 US Territory during such Quarter (each, a "Detailing Report"), provided, however, that the Detailing Report for the fourth such Quarter in each Year shall be cumulative and reflect the number of Details made by such Party's respective Sales Representatives in the US Territory during such Year. Eyetech covenants that it shall develop an internal system for the purpose of reporting the number of Details of its Sales Representatives, and that it shall have such system implemented by the time it begins Detailing the Products. 6.5 Detail Shortfalls. (a) In the event that either Party fails to perform (such Party, a "Shortfall Party") at least [**] percent ([**]%) of its Detail Requirement in any Year as reported pursuant to Section 6.4 or verified pursuant to Section 9.3, the Shortfall Party shall pay to the other Party as liquidated damages an amount equal to the Detail Cost (as hereinafter defined), multiplied by the applicable factor set forth below (the "Shortfall Factor") multiplied by the total number of Details in the shortfall (the Detail Cost, multiplied by the number of Details in the shortfall, multiplied by the Shortfall Factor, the "Detail Shortfall Payment Amount"), on an incremental basis as set forth below: 41

- ----------------------------------------------------------------------------------------- Shortfall Detail Shortfall Level Factor - ----------------------------------------------------------------------------------------- For such portion of shortfall which is: > or = [**]% but < [**]% of Detail [**] Requirement - ----------------------------------------------------------------------------------------- For such portion of shortfall which is: > or = [**]% but < [**]% of Detail [**] Requirement - ----------------------------------------------------------------------------------------- For such portion of shortfall which is: < [**]% of Detail Requirement [**] - -----------------------------------------------------------------------------------------

For purposes of this Section 6.5, "Detail Cost" means $[**]. If a Party wishes to verify the Details performed by the other Party in any Year, such Party shall give notice to the other Party that the notifying Party wishes to verify Details pursuant to Section 9.3 within forty-five (45) days after receipt of the other Party's last Detailing Report set forth in Section 6.4 for such Year. (b) With respect to any Year in which only one of the Parties was a Shortfall Party, the Shortfall Party shall, within one-hundred twenty (120) days after the end of such Year (or within thirty (30) days after completion of any verification(s) of Details pursuant to Section 9.3 conducted pursuant to Section 6.5(a) for such Year, if such verification(s) have not been completed within ninety (90) days after the end of such Year), pay the Detail Shortfall Payment Amount to the other Party. (c) With respect to any Year in which both Parties are Shortfall Parties, the Party having performed the highest percentage of its Detail Requirement in such Year (the "Highest Performing Party") shall be deemed not to be a Shortfall Party and the percentage of such Party's Detail Requirement performed by such Party shall be deemed to equal [**] percent ([**]%) of that Party's Detail Requirement in such Year. The other Party shall continue to be required to pay a Detail Shortfall Payment Amount in accordance with Section 6.5(b); provided, however, such Detail Shortfall Payment Amount to be paid by such other Party shall be reduced 42 by (i) multiplying such other Party's Detail Requirement for such Year by the percentage of the Highest Performing Party's Detail Requirement actually performed by the Highest Performing Party during such Year and (ii) recalculating such other Party's Detail Shortfall Payment Amount using the reduced Detail Requirement for such other Party calculated in accordance with the immediately preceding clause (i). (d) In the event that either Party fails to perform at least [**] percent ([**]%) of its aggregate Detail Requirement (such Party, the "Detail Breaching Party") for [**] during the Co-Promotion Term (a "Detail Shortfall Period"), then: (i) If Pfizer is the Detail Breaching Party, Eyetech shall have the right, in addition to the remedies provided for in Sections 6.5(b) and 6.5(c) above, exercisable upon notice to Pfizer given within ninety (90) days after the end of such Detail Shortfall Period (or within thirty (30) days after completion of any verification of Pfizer's Details pursuant to Section 9.3 conducted at Eyetech's request pursuant to Section 6.5(a) for such Detail Shortfall Period, if such verification has not been completed within sixty (60) days after the end of such Detail Shortfall Period), such notice to be effective ninety (90) days after the date of such notice to Pfizer (or thirty (30) days after completion of any verification of Pfizer's Details for such Detail Shortfall Period requested by Eyetech, if later), to terminate this Agreement; and (ii) If Eyetech is the Detail Breaching Party, Pfizer shall have the right, in addition to the remedies provided for in Sections 6.5(b) and 6.5(c) above, exercisable upon notice to Eyetech given within ninety (90) days after the end of such Detail Shortfall Period (or within thirty (30) days after completion of any verification of Eyetech's Details pursuant to Section 9.3 conducted at Pfizer's request pursuant to Section 6.5(a) for such Detail Shortfall Period, if such verification has not been completed within sixty (60) days after the end of such 43 Detail Shortfall Period), such notice to be effective ninety (90) days after the date of such notice to Eyetech (or thirty (30) days after completion of any verification of Eyetech's Details for such Detail Shortfall Period requested by Pfizer, if later), to elect to adjust, for the balance of the Co-Promotion Term, the percentage of Net Sales that Pfizer would be entitled to receive under Section 8.6(a), and the percentage of costs and expenses included in the calculation of net payment amounts in Section 8.6(c) for which Pfizer would be responsible would be increased from [**] percent ([**]%) to [**] percent ([**]%), Eyetech's corresponding percentage would be decreased from [**]percent ([**]%) to [**] percent ([**]%) and Eyetech would not have any further Detailing responsibilities under this Agreement (the "Elective Remedy"); and (iii) The Parties understand and agree that the Detail Shortfall Payment Amount shall be paid as liquidated damages and not as a penalty and that such sum represents a genuine pre-estimate of the loss the Parties believe would be suffered as a result of Detail shortfalls. In the event of any Detail shortfall under Section 6.5, the remedies and compensation as provided herein shall govern, and neither Party shall have any further claim for breach of this Agreement on account of such Detail shortfall; provided that nothing in this sentence shall preclude either Party from using a Detail shortfall as a basis for termination of this Agreement for breach by the other Party of such other Party's obligations under Section 6.1; and provided that a failure to give or election not to give a notice by a Party prior to a deadline set forth in Section 6.5(d)(i) or 6.5(d)(ii) with respect to a Detail shortfall during any Detail Shortfall Period shall not constitute a waiver by such Party with respect to the remedies and compensation under this Section 6.5 with respect to a Detail shortfall during any subsequent Detail Shortfall Period. 6.6 Sales Force Responsibilities. Each Party shall be solely responsible for all costs and expenses incurred in providing the personnel necessary to provide the services to be 44 performed by it as described in this Article 6. During the Co-Promotion Term, Pfizer shall, in a manner determined at Pfizer's sole reasonable discretion, (a) maintain and support a professional sales force in the US Territory; and (b) ensure that sales of the Product will constitute a factor in the variable compensation of Pfizer's Sales Representatives. 6.7 Product Information. During the Co-Promotion Term, each Party will provide the other with all material information relevant to the Detailing and promotion of the Product within a reasonable time after such information becomes known to the Party, provided such information is not received under a secrecy obligation. 6.8 Orders. Eyetech shall, subject to Pfizer's performance of Pfizer's obligations under the Distribution Agreement, process and fulfill all orders for Products from customers in the US Territory. Except as otherwise provided in the Distribution Agreement, in the event that an order for Products from a customer in the US Territory is received by Pfizer, Pfizer shall promptly forward such order to Eyetech for processing and fulfillment. 6.9 Audit. The number of Details shall be subject to external audit as provided in Article 9. 6.10 Third Party Reports. From time to time during the term hereof the CSC shall agree upon the third party reports (such as those from IMS), to the extent permitted by such third party, which the Parties wish to receive in connection with the Co-Promotion of the Products (and the determinations to be made under Section 6.2 with respect to the Marketing Plan and Co-Promotion Budgets). The expenses of such reports shall be Marketing Expenses. 6.11 Medical Claims. Neither Party shall make any medical claim for the Products beyond the scope of the relevant regulatory approval(s) then in effect for the Products; provided that, both Parties may distribute any information concerning the Products or their use, including 45 but not limited to scientific articles, reference publications, and healthcare economic information, in accordance with applicable Laws and subject to the oversight of the CSC. 6.12 Manufacturing. (a) After the Effective Date, Eyetech shall use commercially reasonable efforts to enter into an agreement with an API Bulk Drug Substance Supplier to supply the Parties with a supply of the active pharmaceutical ingredient for the Products in the Territory. The selection of such API Bulk Drug Substance Supplier and the terms and conditions of the agreement to be entered into with the API Bulk Drug Substance Supplier shall be subject to approval by the MSC. In addition, prior to the Execution Date, Eyetech entered into the agreements set forth in Exhibit 6.12(a) with respect to the supply of Products for clinical trials, and such agreements are hereby deemed approved by the MSC. [**] shall be responsible for day-to-day management of such API Bulk Drug Substance Supplier on behalf of the Parties. (b) After the Effective Date, Eyetech shall also use commercially reasonable efforts to enter into an agreement with a Fill and Finish Services Supplier to provide fill and finish services for the Products in the US Territory. The selection of such Fill and Finish Services Supplier and the terms and conditions of the agreement to be entered into with the Fill and Finish Services Supplier shall be subject to approval by the MSC. [**] shall be responsible for day-to-day management of such Fill and Finish Services Supplier on behalf of the Parties. (c) The MSC shall not take any action or direct Eyetech to take any action that would result in a breach of any agreement set forth on Exhibit 6.12(a), or of any agreement between Eyetech and an API Bulk Drug Substance Supplier or between Eyetech and a Fill and Finish Services Supplier, including without limitation any minimum purchase obligation or non-cancelable order obligation, entered into by Eyetech and approved by the MSC. 46 (d) Subject to the provisions of Sections 2.8 and 6.12(c), the MSC may decide to have Pfizer (i) enter into agreement(s) with API Bulk Drug Substance Supplier(s) and/or Fill and Finish Services Supplier(s) and/or (ii) supply active pharmaceutical ingredient and/or fill and finish services for the Products, in either case to replace the agreement(s) referred to in Sections 6.12(a) and/or 6.12(b) or to provide a second source of supply for active pharmaceutical ingredient and/or fill and finish services for the Products; provided that the terms and conditions of any such agreements or arrangements involving Pfizer shall be subject to Eyetech's prior approval and, if such agreements or arrangements involving Pfizer relate to the supply of active pharmaceutical ingredient and/or fill and finish services for the Products in the US Territory, such agreements or arrangements shall be entered into pursuant to agreements between Eyetech and Pfizer for such supply on terms to be mutually agreed by the Parties; provided further that any such agreements or arrangements shall be structured so that Eyetech acquires and maintains title to all inventory of Products supplied for sale in the US Territory. From and after such time, if any, as responsibility for manufacturing the Products has been transitioned to Pfizer, Pfizer shall use Commercially Reasonable Efforts to manufacture and supply sufficient quantities of the Products to enable Eyetech to respond on a timely basis to all customer demand for Product in the US Territory. (e) During any period in which Eyetech is the contracting Party with API Bulk Drug Substance Supplier(s), Eyetech shall supply active pharmaceutical ingredient for the Products to be sold by Pfizer in the ROW Territory in accordance with terms and conditions to be mutually agreed by the Parties, including resale pricing from Eyetech to Pfizer equal to Eyetech's Manufacturing Costs incurred in providing such supply. Such terms and conditions shall provide for an equitable allocation of supply between the US Territory and the ROW 47 Territory in the event that the supply of active pharmaceutical ingredient for the Products at any time is not sufficient to meet worldwide demand, such allocation to be based on the orders placed by the Parties during the six-month period preceding the shortfall in supply or, if sales have not been made in both the US Territory and the ROW Territory during such preceding six-month period, on the Parties' reasonable sales forecasts for the period affected by such shortfall. In addition, such terms and conditions shall impose on Pfizer all of Eyetech's obligations to the API Bulk Drug Substance Supplier(s) with respect to the active pharmaceutical bulk drug substance so supplied by Eyetech to Pfizer for the ROW Territory, shall be structured so that Eyetech shall have no obligations to such API Bulk Drug Substance Supplier(s) with respect to the active pharmaceutical bulk drug substance so supplied by Eyetech to Pfizer for the ROW Territory greater than Pfizer's obligations to Eyetech with respect to the active pharmaceutical bulk drug substance so supplied by Eyetech to Pfizer for the ROW Territory, and shall not require Eyetech to give any warranties or otherwise assume any liability for the performance of the API Bulk Drug Substance Supplier(s) or for any active pharmaceutical ingredient bulk drug substance so supplied by Eyetech to Pfizer. (f) Following the Effective Date, Eyetech shall, at least thirty (30) days prior to the commencement of each Quarter commencing prior to the first Launch of a Product in the US Territory in which Eyetech anticipates incurring Manufacturing Costs for pre-Launch inventory of Products intended for sale in the US Territory, prepare and deliver to Pfizer a statement of such Manufacturing Costs (the "Manufacturing Costs Statement") projected to be incurred by Eyetech during such Quarter. Within fifteen (15) days after Eyetech's delivery of such statement of projected pre-Launch inventory Manufacturing Costs, Pfizer shall pay Eyetech [**] percent ([**]%) of such projected Manufacturing Costs for inventory, projected for sale in 48 the US Territory if the first Launch of a Product is expected to occur in the US Territory and no substantially concurrent Launch of a Product in the ROW Territory is expected. Each Manufacturing Costs Statement shall contain an adjustment as necessary to reflect any variance between the projected Manufacturing Costs included by Eyetech in prior Manufacturing Cost Statements and Eyetech's actual Manufacturing Costs for pre-Launch inventory of Products projected for sale in the US Territory. For the avoidance of doubt, Eyetech shall not have any financial responsibility for Manufacturing Costs for any inventory of Products projected for sale in the ROW Territory, and Pfizer shall be solely responsible for making all necessary payments for any such inventory. Notwithstanding the foregoing provisions of this Section 6.12(f), the first Quarter for which the Parties shall provide the statements of projected pre-Launch inventory Manufacturing Costs shall be the second Quarter of 2003, and adjustments shall be included the Parties' first statements of such projected Manufacturing Costs for any pre-Launch inventory Manufacturing Costs incurred by the Parties between the Execution Date and the end of the first Quarter of 2003 as if such Manufacturing Costs were variances over previously projected pre-Launch inventory Manufacturing Costs. (g) In the event an API Bulk Drug Substance Supplier or Fill and Finish Services Supplier requires that Eyetech pay for capital expenditures required for the manufacture of the Products other than as part of the per-unit purchase price of the Products, Pfizer shall pay [**] percent ([**]%) of such expenditures and Eyetech shall pay [**] percent ([**]%) of such expenditures; provided that any agreement obligating Eyetech to pay for such capital expenditures shall be subject to the approval of the MSC as set forth in Sections 6.12(a) and 6.12(b). Pfizer shall reimburse Eyetech for Pfizer's share of all such expenditures incurred by Eyetech within thirty (30) days after receiving any invoice from Eyetech for such expenditures. 49 (h) The Parties shall cooperate, through the MSC, to obtain mutually agreeable second sources for the supply of active pharmaceutical ingredient bulk drug substance and fill and finish services for the Products. The Parties shall also cooperate, through the MSC, to optimize, or cause the API Bulk Drug Substance Supplier(s) and/or Fill and Finish Services Supplier(s) to optimize, the manufacturing process used to manufacture the Products in order to achieve improved quality and efficiency. (i) Subject to the provisions of Sections 6.12(f) and 6.12(g), the Parties' respective obligations with respect to Manufacturing Costs relating to Products manufactured for sale in the US Territory shall be as set forth in Section 8.3. 6.13 Customer Support. Eyetech will, subject to Pfizer's performance of its obligations under the Distribution Agreement, be responsible for distribution and invoicing of Products in the US Territory and providing customer service representatives to handle customer inquiries and service related to the Products. The number of these customer service representatives will be sufficient to reasonably handle calls and inquiries related to the Products. Such distribution, invoicing and customer service expenses shall be Marketing Expenses. ARTICLE 7 PAYMENT PROVISIONS 7.1 Payment Currency. All amounts due under this Agreement shall be paid to the designated Party in United States dollars. 7.2 Payments. All payments under this Agreement shall be made on or before the due date by electronic transfer in immediately available funds to the respective account designated in writing by each Party at least two (2) Business Days before the payment is due. Pfizer shall notify Eyetech's Treasurer, or such other Eyetech representative as Eyetech's treasurer shall 50 designate in writing, by facsimile transmission as to the date and amount of any payment that Pfizer shall make at least two (2) Business Days prior to such transfer. Eyetech shall notify Pfizer's treasurer, or such other Pfizer representative as Pfizer's treasurer shall designate in writing, by facsimile transmission as to the date and amount of any payment that Eyetech shall make at least two (2) Business Days prior to such transfer. All payments under this Agreement shall bear interest from the date due until paid at a rate equal to the prime rate of Citibank, NA as announced on the date such payment was due plus three percent (3%), compounded on a calendar quarterly basis. In addition, the Party liable for late payment shall reimburse the other Party for all reasonable costs and expenses, including without limitation reasonable attorneys' fees and legal expenses, incurred in the collection of late payments. ARTICLE 8 EXPENSE SHARING AND COMPENSATION 8.1 Sharing of Development Costs. (a) Subject to Sections 8.1(b) and (c), Pfizer shall pay seventy-five percent of all Development Costs and Eyetech shall pay twenty-five percent (25%) of all Development Costs (including Development Costs incurred for clinical studies performed to support regulatory filings in both the US Territory and the ROW Territory). (b) Subject to Section 8.1(e), with respect to Development Costs incurred for clinical studies performed solely to support a regulatory filing, or solely as a condition of receiving regulatory approval, in a country in the ROW Territory: (i) Pfizer shall pay ** and Eyetech shall pay ** of the first ** of such Development Costs; and (ii) Pfizer shall pay all of such Development Costs in excess of xxx. 51 (c) The Parties shall each pay fifty percent (50%) of Development Costs incurred for clinical studies performed solely to support a regulatory filing in the US Territory, or solely as a condition of receiving regulatory approval in the US Territory. (d) Following the Effective Date, (i) Eyetech shall, at least thirty (30) days prior to the commencement of each Quarter in which Eyetech anticipates incurring Development Costs, prepare and deliver to Pfizer a statement of Development Costs projected to be incurred by Eyetech during such Quarter in accordance with Section 5.1 above and the annual Development Plan applicable to such Quarter and (ii) Pfizer shall, at least thirty (30) days prior to the commencement of each Quarter in which Pfizer anticipates incurring Development Costs, prepare and deliver to Eyetech a statement of Development Costs projected to be incurred by Pfizer during such Quarter in accordance with Section 5.1 above and the annual Development Plan applicable to such Quarter. Each Party shall include in such statement an adjustment for variances between projected Development Costs included in prior such statements delivered by such Party and actual Development Costs incurred by such Party in the periods covered by such prior statements. After delivery by each Party of its statement of projected Development Costs, Eyetech shall, at least fifteen (15) days prior to the commencement of such Quarter, prepare and deliver to Pfizer a combined statement of projected Development Costs to be incurred by both Parties for such Quarter, which shall provide a net amount to be advanced by the Party projected to incur less than its share of the combined Development Costs for such Quarter to the Party projected to incur more than its share of such combined Development Costs, such net amount to equal the difference between each Party's share of the combined Development Costs for such Quarter as determined in accordance with Sections 8.1(a), (b) and (c) and the Development Cost amount such Party is projected to incur during such Quarter. Within fifteen (15) days after 52 Eyetech's delivery of such combined statement of projected Development Costs, the Party required to advance the net amount reflected in such combined statement shall pay the other Party such net amount. Notwithstanding the foregoing provisions of this Section 8.1(e), the first Quarter for which the Parties shall provide the statements of projected Development Costs shall be the second Quarter of 2003, and adjustments shall be included the Parties' first statements of projected Development Costs for any Development Costs incurred by the Parties between December 1, 2002 and the end of the first Quarter of 2003 as if such Development Costs were variances over previously projected Development Costs. (e) For purposes of Section 8.1(b) above, a clinical study shall not be treated as performed solely to support a regulatory filing in one or more countries in the ROW Territory if such clinical study is also performed to support a regulatory filing in the US Territory; provided, however, that the mere fact that a clinical study performed to support a regulatory filing in the ROW Territory is required to be filed with FDA (pursuant to FDA regulations requiring that any clinical study conducted anywhere in the world be filed with FDA regardless of whether such clinical study is performed as a condition to receiving regulatory approval from FDA), does not in and of itself mean that such clinical study is also performed to support a regulatory filing in the US Territory. 8.2 Responsibility for Regulatory Costs. [**] be responsible for [**] of all Regulatory Costs. Such Regulatory Costs shall be reflected in the Parties' Quarterly Expense Reports pursuant to Section 8.6(b). [**] shall be solely responsible for all Out-of-Pocket Costs and other costs solely related to making or supporting regulatory filings in the ROW Territory. 8.3 Responsibility for Cost of Goods Sold. [**] be responsible for [**] of all Cost of Goods Sold for Products sold in the US Territory. Such Cost of Goods Sold shall be reflected in 53 the Parties' Quarterly Expense Reports pursuant to Section 8.6(b); provided that Pfizer and Eyetech shall each receive a credit (the "Inventory Build Credit") against the amount otherwise to be paid by it with respect to Cost of Goods Sold pursuant to this Section 8.3 equal to the lesser of (a) its share of the Cost of Goods Sold for such Quarter and (b) the previously un-credited portion of its Funded Inventory Build Costs. 8.4 Responsibility for Marketing Expenses. [**] responsible for [**] of all Marketing Expenses for the Products in the US Territory. Such Marketing Expenses shall be reflected in the Parties' Quarterly Expense Reports pursuant to Section 8.6(b). Pfizer shall be solely responsible for all Out-of-Pocket Costs and other costs solely related to the marketing and promotion of Products in the ROW Territory. In the event that any Out-of-Pocket Costs related to both the marketing and promotion of Products in the US Territory and the marketing and promotion of Products in the ROW Territory are incurred by either Party, the Parties shall in good faith discuss an equitable sharing of such Out-of-Pocket Costs. 8.5 Net Sales Reports. Subject to Pfizer's performance of its obligations under the Distribution Agreement, Eyetech shall deliver electronically to Pfizer daily (if practicable, but in any event not less than weekly) a report of gross sales of the Products in the US Territory on a daily (if practicable, but in any event not less than weekly) and Year-to-date basis. 8.6 Quarterly Reconciliation of Net Sales and Expenses. (a) During the Co-Promotion Term and subject to the terms and conditions hereof, Eyetech shall pay to Pfizer fifty percent (50%) of Net Sales in the US Territory. Payments by Eyetech to Pfizer of such amounts shall be made in accordance with the reconciliation procedures set forth below in this Section 8.6. 54 (b) Within thirty (30) days after the end of each Quarter during the Co-Promotion Term, each Party shall provide the other Party with a statement of the expenses described in Sections 8.2, 8.3 and 8.4 relating to the Co-Promotion of Products, if any, incurred by such Party during such Quarter, as well as the details of any adjustments to be made to the amounts submitted by such Party for previous Quarters (such reports, "Quarterly Expense Reports"). The Quarterly Expense Reports shall be in a form to be mutually agreed by the Parties within ninety (90) days after the Execution Date. (c) Within forty (40) days after the end of each Quarter during the Co-Promotion Term, Eyetech shall prepare and deliver to Pfizer a report setting forth (i) the Net Sales of the Products in the US Territory during said Quarter, (ii) adjustments (including reimbursements or recoupment of prior deductions), if any, to Net Sales reported for any previous Quarter, (iii) each Party's share of the amounts set forth in the Quarterly Expense Reports for such Quarter, (iv) a calculation of the net amount payable and the Party owing such net amount after subtracting each Party's share of the amounts set forth in the Quarterly Expense Reports from each Party's share of Net Sales for such Quarter and (v) a statement of the net amount payable and the Party owing such net amount based on the foregoing calculation. The report prepared and delivered by Eyetech pursuant to this Section 8.6(c) shall be in a form to be mutually agreed by the Parties within ninety (90) days after the Execution Date. Notwithstanding the foregoing provisions of Section 8.6(b) and this Section 8.6(c), the first Quarter for which the Parties shall provide Quarterly Expense Reports and for which Eyetech shall provide a report pursuant to this Section 8.6(c) shall be the second Quarter of 2003, and adjustments shall be included in the Parties' first Quarterly Expense Reports for any Regulatory Costs, Cost of Goods Sold and Marketing Expenses incurred by the Parties between the 55 Execution Date and the end of the first Quarter of 2003 as if such costs and expenses were adjustments to be made to amounts previously reported in Quarterly Expense Reports. (d) The net amount payable, if any, as set forth in the report prepared and delivered in accordance with Section 8.6(c) shall be paid by the Party owing such net amount to the other Party within fifteen (15) days after such report is delivered by Eyetech. 8.7 Offset. Any amount payable by either Party pursuant to Section 8.6 may be offset against any other amounts then payable to such Party under Section 8.1. ARTICLE 9 ACCOUNTING AND REPORTS 9.1 Books and Records. Each Party shall keep comprehensive books and records relating to this Agreement in accordance with GAAP. Such books and records shall document all Detailing Reports and Net Sales, authorized expenses incurred or paid and any other costs incurred (including Marketing Expenses, Manufacturing Costs, third party royalty expenses, product liability and product recall expenses and Development Costs) or revenues earned relating to this Agreement and include all information subject to audit pursuant to Section 9.2. All such books and records shall be maintained for three (3) Years following the relevant Year or such longer period as is required by Law. 9.2 Audits. These audit and adjustment provisions apply with respect to all payments due from one Party to another pursuant to this Agreement, including without limitation amounts payable pursuant to Article 8 and the number of Details performed under Section 6.4. Each Party shall have the right to have the applicable books and records of the other Party audited by a nationally recognized independent certified public accountant, selected by a Party (as to which firm the other Party has no reasonable objection), under appropriate confidentiality provisions 56 reasonably acceptable to the accounting firm conducting the audit, for the sole purpose of verifying the accuracy of all financial, accounting and numerical information and calculations under this Agreement. Any such audit shall be conducted no more than once each Year during the Co-Promotion Term, shall be limited to payments due within the prior three (3) Years, and shall be conducted upon at least thirty (30) days' advance notice during normal business hours and in a manner that does not interfere unreasonably with the business of the audited entity. The results of any such audit shall be delivered in writing to each party. Any underpayment or overbilling determined by such audit shall promptly be paid or refunded by the audited Party. If the audited Party has underpaid or overbilled amounts due under this Agreement by more than five percent (5%) over any reporting period, the audited Party shall also reimburse the other Party for the cost of such audit (with the cost of the audit to be paid by the auditing Party in all other cases), plus interest at the interest rate set forth in Section 7.2, from the date of any such underpayment or overpayment. If the audited party is shown to be a Shortfall Party, the provisions of Section 6.5 of this Agreement shall control. Such accountants shall not reveal to the party seeking verification the details of its review, except insofar as is necessary to describe the underpayment, overbilling or level of Details. Any dispute arising out of any audit conducted pursuant to this Section 9.2 and any other dispute arising out of the Parties' respective payment obligations under this Agreement shall be resolved through binding arbitration in accordance with Article 15, and either party may submit such dispute to such binding arbitration. 9.3 Sales Force Efforts. For two (2) Years following each Year, each Party shall keep records relating to Details made by its Sales Representatives, and Detailing Reports, during or for such Year, including sampling of the Products. Such records shall be available for inspection and audit in accordance with Section 9.2 above to determine compliance with the terms hereof. 57 ARTICLE 10 INTELLECTUAL PROPERTY RIGHTS AND LABELING 10.1 Trademark and Corporate Logos. (a) Subject to the provisions of this Section 10.1, each Party shall retain all right, title and interest in and to its respective corporate name and logo. (b) In the Territory, the Products shall be promoted and sold solely under the MACUGEN Trademark and shall use a trade dress mutually agreed by the Parties that includes Pfizer's and Eyetech's logos; provided that, on a country-by-country basis in the ROW Territory, the Parties may jointly agree that Pfizer shall promote and sell the Products in the ROW Territory under Trademarks other than the MACUGEN Trademark in accordance with Section 10.1(e). In the Territory, subject to the requirements of Law, Eyetech and Pfizer shall be identified and given equal exposure and prominence on all Product package inserts, trade packages, packaging, samples, and promotional materials; provided that Eyetech acknowledges that in the ROW Territory such identification of Eyetech shall be as the licensor or developer of the Products; and provided, further, that if Eyetech or Pfizer cannot be given equal exposure and prominence on all Product package inserts, trade packages, packaging, samples, and promotional materials in the Territory as a result of the requirements of Law, then Eyetech or Pfizer, as the case may be, shall be given as close to equal exposure and prominence as possible, consistent with applicable Law. (c) For the Co-Promotion Term, (i) Pfizer grants to Eyetech the non-exclusive right, free of charge, to use the Pfizer name and logo in the US Territory solely for the purpose of Co-Promotion of the Products in accordance with the terms of this Agreement and (ii) Eyetech grants to Pfizer the non-exclusive right, free of charge, to use the Eyetech name and logo and the 58 Trademark(s) in the US Territory solely for the purpose of Co-Promotion of the Products in accordance with the terms of this Agreement; provided that such rights shall be exercised, and all Products bearing such names and/or logos and/or such Trademark shall be manufactured, in accordance with the quality standards established by the MSC. (d) For the Term (as defined in the License Agreement), Eyetech grants to Pfizer the non-exclusive right, free of charge, to use the Eyetech name and logo and the Trademark(s) in the ROW Territory solely for purposes of marketing and promoting Products in the ROW Territory in accordance with the License Agreement; provided that such right shall be exercised, and all Products bearing such names and/or logos and/or such Trademark(s) shall be manufactured, in accordance with the quality standards established by the MSC. (e) Eyetech shall remain the owner of the Eyetech name and logo and the Trademark(s) and the goodwill pertaining thereto. Eyetech shall be solely responsible for registering and maintaining the Trademark(s) in the Territory and shall remain the owner thereof. Except as contemplated herein, Eyetech shall have no rights in or to the Pfizer name or logo or the goodwill pertaining thereto. Except as contemplated herein, Pfizer shall have no rights in the Trademark(s) in the Territory or to the Eyetech name or logo, or the goodwill pertaining thereto. It is the Parties' intention to utilize a single trademark for the Product throughout the Territory. Accordingly, Pfizer agrees to use the MACUGEN Trademark for the Products in the ROW Territory, provided, however, if any Governmental Authority in the EMEA or Japan fails to approve MACUGEN as the trademark for the Product, or if either Party reasonably determines that use of the MACUGEN Trademark may violate the rights of any third party in the ROW Territory, then the Parties shall jointly select an alternative Trademark for the Product in the ROW Territory. In either event, Eyetech shall be solely responsible for registering and 59 maintaining such alternative Trademark in the ROW Territory and shall be the owner thereof. Pfizer shall not register or seek to register the MACUGEN Trademark or any alternative Trademark selected by the Parties in any country of the Territory. [**] responsible for [**] of the cost of registering and maintaining the Trademark(s) in the US Territory and [**] shall be responsible for [**] percent ([**]%) of the cost of registering and maintaining the Trademark(s) in the ROW Territory. Eyetech shall include all such US Territory costs in Eyetech's Quarterly Expense Reports pursuant to Section 8.6(b). Pfizer shall reimburse Eyetech for all such ROW Territory costs incurred by Eyetech within thirty (30) days after receiving any invoice from Eyetech for such costs. (f) Eyetech shall inform Pfizer promptly of any infringement of or challenge to the Trademark(s) in the Territory, whether actual or threatened, which comes to the notice of Eyetech. In respect of the defense and infringement of the Trademark(s) in the ROW Territory, as between Pfizer and Eyetech, Pfizer shall have the first right, at its sole cost and expense, to bring suit and to take action against such infringer or challenger, in which case Pfizer shall control the prosecution or defense of any such suit or claim, including without limitation, the choice of counsel, and shall have the exclusive right to settle or dispose of any such suit or claim. Eyetech shall provide reasonable assistance and co-operation as Pfizer may reasonably request, at Pfizer's sole cost and expense. (g) Pfizer shall inform Eyetech promptly of any infringement of or challenge to the Trademark(s) in the Territory, in each case whether actual or threatened, which comes to the notice of Pfizer. In respect of the defense and infringement of the Trademark(s) in the US Territory, as between Eyetech and Pfizer, Eyetech shall have the first right to bring suit and to take action against such infringer or challenger, in which case Eyetech shall control the 60 prosecution or defense of any such suit or claim, including without limitation, the choice of counsel, and shall have the exclusive right to settle or dispose of any such suit or claim. Pfizer shall provide reasonable assistance and co-operation as Eyetech may reasonably request. (h) Notwithstanding anything to the contrary in Sections 10.1(f) and 10.1(g) above, if a Party fails to initiate a suit or take other appropriate action that it has the initial right to initiate or take pursuant to Section 10.1(f) or Section 10.1(g), as applicable, within ninety (90) days after becoming aware of the basis for such suit or action, then the other Party may, in its discretion, provide the Party having the initial right with written notice of such other Party's intent to initiate a suit or take other appropriate action. If such other Party provides such notice and the Party having the initial right fails to initiate a suit or take such appropriate action within thirty (30) days after receipt of such notice from the other Party, then the other Party shall have the right to initiate a suit or take other appropriate action that it believes is reasonably required to protect the intellectual property rights at issue. The proceeds of any recovery, court award or settlement of such action shall first be applied to reimburse the Parties for the costs and expenses of such prosecution and the balance shall be paid, for amounts relating to the US Territory, [**] percent ([**]%) to Pfizer and [**] percent ([**]%) to Eyetech, and for amounts relating to the ROW Territory, [**] percent ([**]%) to Pfizer and [**] percent ([**]%) to Eyetech. 10.2 Copyrights and Proprietary Programs. Eyetech shall own all copyrights relating to Promotional Materials developed for use in the US Territory for the Products. Pfizer and Eyetech shall each retain all rights including, without limitation, copyrights and trademarks, to all of their respective existing programs and materials in all formats (print, video, audio, digital, computer, etc.) regarding sales training, patient education and disease management programs owned by each of them as of the Execution Date, as well as any modifications each may develop 61 in the future which are not specific to the Product. Eyetech and Pfizer shall, from time to time, endeavor to each notify the other as to the identity of such existing programs and materials. In addition, all new programs regarding sales training, patient education and disease management jointly developed by Eyetech and Pfizer pursuant to this Agreement shall be jointly owned by Eyetech and Pfizer, and each Party shall have the right to use and exploit such developed programs freely without any need to obtain the consent of the other Party and without any duty to account to the other Party for such use or exploitation. Each Party hereby assigns to the other Party all rights, title and interests, including all intellectual property rights, in and to such Promotional Materials and programs as necessary to give effect to the provisions of this Section 10.2. 10.3 Developments. All ideas, inventions, Know-How, writings, data and technical information (whether patentable or copyrightable or not) arising out of any development or Product Study of any AMD Product or DME Product, whether such development or study is sponsored and/or conducted by Eyetech or Pfizer or their respective Affiliates or any third party shall be owned by Eyetech. Pfizer hereby assigns to Eyetech all rights, title and interests, including all intellectual property rights, in and to such ideas, inventions, Know-How, writings, data and technical information as necessary to give effect to the provisions of this Section 10.3. 10.4 Third Party Agreements. Subject to Pfizer's performance of its material obligations under this Agreement and under the License Agreement with respect to its exercise of rights sublicensed to Pfizer by Eyetech and with respect to third party royalties payable by Pfizer, Eyetech covenants and agrees with Pfizer that, except where a failure by Eyetech to comply with the following would not have a material adverse effect on the Co-Promotion of the Products, Eyetech: (a) shall not execute any amendment, modification or waiver of any of the 62 licenses and agreements listed on Exhibit 10.4 ("Third Party Agreements") without the prior written consent of Pfizer, (b) shall not make any election or exercise any right or option (or omit to take any action) that would terminate or relinquish in whole or in part any Third Party Agreement, (c) shall comply with all of its obligations under the Third Party Agreements in all material respects, (d) shall take such reasonable actions as shall be necessary to keep in full force and effect the Third Party Agreements, and (e) shall give prompt notice to Pfizer, together with a summary of outstanding issues if Pfizer so requests and subject to any obligations of confidentiality owed by Eyetech to the other parties to such Third Party Agreements, of any actual or alleged defaults, breaches, violations, proposed amendments or proposed modifications of, or any proposed waivers under, any of the Third Party Agreements by any of the parties to the Third Party Agreements. ARTICLE 11 CONFIDENTIAL INFORMATION 11.1 Treatment of Confidential Information. During the Co-Promotion Term and for five (5) years after the expiration or termination of this Agreement, each Party shall maintain Confidential Information (as defined in Section 11.2) of the other Party in confidence, and shall not disclose, divulge or otherwise communicate such Confidential Information to others (except for agents and advisors under obligations of confidentiality) or use it for any purpose other than in connection with the development, manufacture, marketing, promotion, distribution or sale of the Products as provided in this Agreement, and each Party agrees to exercise reasonable efforts to prevent and restrain the unauthorized disclosure of such Confidential Information by any of its directors, officers, employees, consultants, subcontractors, licensees or agents, which reasonable 63 efforts shall be at least as diligent as those generally used by such Party in protecting its own confidential and proprietary information. 11.2 Confidential Information. "Confidential Information" means all trade secrets or other proprietary information, including without limitation any proprietary data and materials (whether or not patentable or protectable as a trade secret), regarding a Party's technology, products, business or objectives or regarding the Products, which is disclosed by a Party to the other Party. All information disclosed prior to the Effective Date by Eyetech to Pfizer under or pursuant to the confidentiality agreement between the Parties dated as of April 22, 2002, as amended, shall be deemed "Confidential Information" of Eyetech. Notwithstanding the foregoing, there shall be excluded from the foregoing definition of Confidential Information any of the foregoing that: (a) was known by the receiving Party prior to its date of disclosure to the receiving Party as shown by the receiving Party's written records; or (b) either before or after the date of the disclosure to the receiving Party is lawfully disclosed to the receiving Party by third parties not in violation of any obligation to the other Party; or (c) either before or after the date of the disclosure to the receiving Party becomes published or generally known to the public through no fault or omission on the part of the receiving Party or its Affiliates; or (d) is independently developed by or for the receiving Party without reference to or reliance upon the Confidential Information as demonstrated by contemporaneous written records of the receiving Party; or 64 (e) is required to be disclosed by the receiving Party to comply with applicable Laws, to defend or prosecute litigation or to comply with governmental regulations or the regulations or requirements of any stock exchange or Nasdaq, provided that the receiving Party provides prior notice of such disclosure to the other Party and takes reasonable and lawful actions to avoid and/or minimize the degree of such disclosure. ARTICLE 12 REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION 12.1 Eyetech's Representations. Eyetech hereby represents and warrants as of the date hereof as follows: (a) Eyetech has the corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder, and the execution, delivery and performance of this Agreement has been duly and validly authorized and approved by proper corporate action on the part of Eyetech, and Eyetech has taken all other action required by law, its certificate of incorporation or by-laws or any agreement to which it is a party or by which it or its assets are bound required to authorize such execution, delivery and (subject to obtaining all necessary governmental approvals with respect to the manufacture, use, sale, offer for sale, or importation of Products and subject to any necessary HSR Clearance) performance. Assuming due authorization, execution and delivery on the part of Pfizer, this Agreement constitutes a legal, valid and binding obligation of Eyetech, enforceable against Eyetech in accordance with its terms. (b) All manufacturing operations conducted by Eyetech (or by third parties on its behalf) relating to the manufacturing of the Products are being conducted in material 65 compliance with applicable requirements and standards of any Governmental Authority in the jurisdiction(s) in which such manufacturing is being conducted. (c) The representations and warranties of Eyetech contained in the License Agreement are true and correct in all respects. (d) Eyetech has disclosed to Pfizer all material information known to Eyetech relating to: (i) the drug quality, including stability, variability, impurities and delivery performance in each case relating to the Product, and (ii) changes made by Eyetech or its Affiliates after the initiation of Phase III Clinical Trials for the Products relating to formulation, packaging and method of manufacture and formulation and to processing parameters, and (iii) the status of discussions with FDA or any Governmental Authorities directly relating thereto, and (iv) clinical trial site and contract research organization compliance with all provisions of the Act governing clinical investigations, and (v) the safety and efficacy of the Products. 12.2 Pfizer's Representations. Pfizer hereby represents and warrants as of the date hereof as follows: (a) Pfizer has the corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder, and the execution, delivery and performance of this Agreement has been duly and validly authorized and approved by proper corporate action on the part of Pfizer, and Pfizer has taken all other action required by law, its certificate of incorporation or by-laws or any agreement to which it is a party or by which it or its assets are bound required to authorize such execution, delivery and (subject to obtaining all necessary governmental approvals with respect to the manufacture, use, sale, offer for sale, or importation of Products and subject to any necessary HSR Clearance) performance. Assuming due authorization, execution and delivery on the part of Eyetech, this Agreement constitutes a 66 legal, valid and binding obligation of Pfizer, enforceable against Pfizer in accordance with its terms. (b) The representations and warranties of Pfizer contained in the License Agreement are true and correct in all respects. 12.3 No Warranties. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN, THE PARTIES MAKE NO REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED. 12.4 General Indemnification in Favor of Pfizer. (a) Eyetech shall indemnify, defend and hold Pfizer Parties (as hereinafter defined) harmless from and against any and all Losses (as hereinafter defined) incurred, suffered or sustained by Pfizer Parties or to which Pfizer Parties become subject, arising out of or resulting from: (i) any misrepresentation or breach of any representation, warranty, covenant or agreement made by Eyetech in this Agreement or the Other Product-Related Agreements; or (ii) any violation of the Act by Eyetech; or (iii) any third party claims, actions, suits, proceedings, liabilities or obligations ("Third Party Claims") arising out of or resulting from: (aa) any misrepresentation or breach of any representation, warranty, covenant or agreement made by Eyetech in this Agreement or the Other Product-Related Agreements; or (bb) the manufacture, use or sale of a Product, including without limitation all Third Party Claims involving death or bodily injury caused or 67 allegedly caused by the use of the Product (any all such Losses, "Product Liability"), where Eyetech is the manufacturer of Product (but not where Eyetech is the contracting Party with API Bulk Drug Substance Supplier(s) and/or Fill and Finish Services Supplier(s) pursuant to Section 6.12) and where such Product fails to meet Specifications or is not manufactured in accordance with GMP, if applicable; or (cc) the gross negligence, recklessness or willful misconduct (other than as to Product Liability matters) of Eyetech Parties in connection with Eyetech's performance of this Agreement or the Other Product-Related Agreements. For purposes of this Article 12, "Pfizer Parties" means Pfizer and its Affiliates and their respective agents, directors, officers and employees. (b) None of the indemnities in Section 12.4(a) shall apply to the extent that any Loss is the result of any breach of this Agreement or the Other Product-Related Agreements by Pfizer or of any gross negligence, recklessness or willful misconduct of Pfizer Parties. 12.5 General Indemnification in Favor of Eyetech. (a) Pfizer shall indemnify, defend and hold Eyetech Parties (as hereinafter defined) harmless from and against any and all Losses incurred, suffered or sustained by Eyetech Parties or to which Eyetech Parties become subject, arising out of or resulting from: (i) any misrepresentation or breach of any representation, warranty, covenant or agreement made by Pfizer in this Agreement or the Other Product-Related Agreements; or (ii) any violation of the Act by Pfizer; or 68 (iii) any Third Party Claims arising out of or resulting from: (aa) any misrepresentation or breach of any representation, warranty, covenant or agreement made by Pfizer in this Agreement or the Other Product-Related Agreements; or (bb) Product Liability, where Pfizer is the manufacturer of Product (but not where Pfizer is the contracting Party with API Bulk Drug Substance Supplier(s) and/or Fill and Finish Services Supplier(s) pursuant to Section 6.12) and where such Product fails to meet Specifications or is not manufactured in accordance with GMP, if applicable; or (cc) the gross negligence, recklessness or willful misconduct (other than as to Product Liability matters) of Pfizer Parties in connection with Pfizer's performance of this Agreement or the Other Product-Related Agreements. For purposes of this Article 12, "Eyetech Parties" means Eyetech and its Affiliates and their respective agents, directors, officers and employees. (b) None of the indemnities in Section 12.5(a) shall apply to the extent that any Loss is the result of any breach of this Agreement or the Other Product-Related Agreements by Eyetech or of any gross negligence, recklessness or willful misconduct of Eyetech Parties. 12.6 Product Liability and Intellectual Property Infringement Indemnification. (a) Product Liability. (i) US Territory. Eyetech shall indemnify, defend and hold the Pfizer Parties harmless from and against [**] percent ([**]%) of the amount of any and all Losses arising out of or resulting from any Third Party Claim involving Product Liability in the US 69 Territory (other than Product Liability Losses for which one Party is obligated to indemnify the other Party pursuant to Section 12.4 or 12.5); Pfizer shall indemnify, defend and hold the Eyetech Parties harmless from and against [**] percent ([**]%) of the amount of any and all Losses arising out of or resulting from any Third Party Claim involving Product Liability in the US Territory (other than Product Liability Losses for which one Party is obligated to indemnify the other Party pursuant to Section 12.4 or 12.5). (ii) ROW Territory. Pfizer shall indemnify, defend and hold Eyetech Parties harmless from and against [**] percent ([**]%) of the amount of any and all Losses arising out of or resulting from any Third Party Claim involving Product Liability in the ROW Territory (other than Product Liability Losses for which Eyetech is obligated to indemnify Pfizer pursuant to Section 12.4). (iii) Certain Product Liability Claims. Notwithstanding Sections 12.6(a)(i) and 12.6(a)(ii) above, Eyetech shall indemnify, defend and hold the Pfizer Parties harmless from and against [**] percent ([**]%) of the amount of any and all Losses arising out of or resulting from any Third Party Claims involving the Product Liability matters described in Exhibit 12.6(a)(iii). (b) Intellectual Property Infringement. (i) US Territory. Eyetech shall indemnify, defend and hold the Pfizer Parties harmless from and against [**] percent ([**]%) of the amount of any and all Losses arising out of or resulting from any Third Party Claims involving any actual or alleged infringement of any trademarks, patent rights or other intellectual property rights, or misappropriation of trade secrets, of any Person in connection with the manufacture, use, sale or importation of the Product in the US Territory or in connection with the manufacture or use of 70 the Product in the ROW Territory for subsequent importation and/or sale in the US Territory (other than Losses for which one Party is obligated to indemnify the other Party pursuant to Section 12.4 or 12.5 and other than Losses relating to Products ultimately sold outside the US Territory, which are governed by Section 12.6(b)(ii)); Pfizer shall indemnify, defend and hold the Eyetech Parties harmless from and against [**] percent ([**]%) of the amount of any and all Losses arising out of or resulting from any Third Party Claims involving any actual or alleged infringement of any trademarks, patent rights or other intellectual property rights, or misappropriation of trade secrets, of any Person in connection with the manufacture, use, sale or importation of the Product in the US Territory or in connection with the manufacture or use of the Product in the ROW Territory for subsequent importation and/or sale in the US Territory (other than Losses for which one Party is obligated to indemnify the other Party pursuant to Section 12.4 or 12.5 and other than Losses relating to Products ultimately sold outside the US Territory, which are governed by Section 12.6(b)(ii)). (ii) ROW Territory. Pfizer shall indemnify, defend and hold the Eyetech Parties harmless from and against [**] percent ([**]%) of the amount of any and all Losses arising out of or resulting from any Third Party Claims involving any actual or alleged infringement of any trademarks, patent rights or other intellectual property rights, or misappropriation of trade secrets, of any Person in connection with the manufacture, use, sale or importation of the Product in the ROW Territory or in connection with the manufacture or use of the Product in the US Territory for subsequent importation and/or sale in the ROW Territory (other than Losses for which Eyetech is obligated to indemnify Pfizer pursuant to Section 12.4 and other than Losses relating to Products ultimately sold by Eyetech in the US Territory, which are governed by Section 12.6(b)(i)). 71 (iii) Certain Third Party Intellectual Property. Notwithstanding Sections 12.6(b)(i) and 12.6(b)(ii) above, Eyetech shall indemnify, defend and hold the Pfizer Parties harmless from and against [**] percent ([**]%) of the amount of any and all Losses arising out of or resulting from any Third Party Claims based on the matters set forth in: (A) the letter from Harsha Murthy to Larry Miller dated December 17, 2002 in connection with the manufacture, use, sale or importation of Products in the Territory; provided that such indemnity shall not apply to (I) Losses for which Pfizer is obligated to indemnify Eyetech pursuant to Section 12.5, (II) Losses arising out of Third Party Claims [**] such Losses or (III) royalties or other amounts payable [**]; or (B) Exhibit 12.6(b)(iii)(B). 12.7 "Losses". For purposes of this Article 12, "Losses" shall mean, subject to Section 12.8, any and all (a) claims, losses, liabilities, damages, fines, royalties, governmental penalties or punitive damages, deficiencies, interest, awards, and judgments, and (b) with respect to third parties, settlement amounts and all of the items referred to in clause (a) above which, in accordance with Section 12.8, include third party special, indirect, incidental, consequential damages (including without limitation lost profits) and third party punitive and multiple damages, and (c) in connection with all of the items referred in clauses (a) and (b) above, any and all costs and expenses (including reasonable attorneys' fees and all other expenses reasonably incurred in investigating, preparing or defending any litigation or proceeding, commenced or threatened). 72 12.8 No Consequential or Punitive Damages. (a) NEITHER PARTY HERETO WILL BE LIABLE FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, EXEMPLARY OR PUNITIVE DAMAGES ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT, OR FOR LOST PROFITS ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF ANY NOTICE OF SUCH DAMAGES. NOTHING IN THIS SECTION 12.8 IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF EITHER PARTY UNDER THIS AGREEMENT WITH RESPECT TO THIRD PARTY CLAIMS. (b) Notwithstanding anything to the contrary contained in this Agreement, in the case of any claim by any Party alleging any breach of this Agreement by the other Party, any payment obligation pursuant to Sections 8.1 and 8.6 of this Agreement (the "Payment Obligations"), will not be considered as constituting special, incidental, indirect or consequential damages under this Agreement (and, accordingly, nothing in Section 12.8(a) shall prevent the recovery or inclusion of Payment Obligations in the definition of "Losses"). 12.9 General Indemnification Procedures. (a) A Party seeking indemnification pursuant to this Article 12 (an "Indemnified Party") shall give prompt notice to the Party from whom such indemnification is sought (the "Indemnifying Party") of the commencement or assertion of any Third Party Claim (which in no event includes any claims by any Pfizer Parties or any Eyetech Parties) in respect of which indemnity may be sought hereunder, shall give the Indemnifying Party such information with respect thereto as the Indemnifying Party may reasonably request, and shall not make any admission concerning such Third Party Claim, unless such admission is required by applicable 73 Law or legal process, including in response to questions presented in depositions or interrogatories. Any admission made by the Indemnified Party, except for an admission required by applicable Law or legal process, or the failure to give such notice shall relieve the Indemnifying Party of any liability hereunder only to the extent that the ability of the Indemnifying Party to defend such Third Party Claim is prejudiced thereby. The Indemnifying Party shall have the right, exercisable by written notice to the Indemnified Party within thirty (30) days of receipt of notice from the Indemnified Party of the commencement or assertion of a Third Party Claim, to assume and conduct the defense of such Third Party Claim, with counsel selected by the Indemnifying Party and reasonably acceptable to the Indemnified Party. The Indemnified Party shall not settle such Third Party Claim within such thirty (30) day period. Subject to the initial and continuing satisfaction of the terms and conditions of this Article 12, the Indemnifying Party shall have full control of such Third Party Claim, including settlement negotiations and any legal proceedings. If the Indemnifying Party does not assume the defense of such Third Party Claim in accordance with this Section 12.9, the Indemnified Party may defend the Third Party Claim. If both Parties are Indemnifying Parties pursuant to co-indemnification obligations under Section 12.6 with respect to the same Third Party Claim, the Parties shall determine by mutual agreement, within twenty (20) days following their receipt of notice of commencement or assertion of such Third Party Claim (or such lesser period of time as may be required to properly respond to such claim), which Party shall assume the lead role in the defense thereof. Should the Parties be unable to mutually agree on which Party shall assume the lead role in the defense of such Third Party Claim, both Parties shall be entitled to participate in such defense through counsel of their respective choosing; provided that in the case of any Third Party Claim with respect to which (i) both Parties are Indemnifying Parties pursuant to co- 74 indemnification obligations under Section 12.6(b) and (ii) more than [**] percent ([**]%) of the Products involved in the infringement or misappropriation alleged in such Third Party Claim were sold or intended for sale in the ROW Territory, Pfizer may defend the Third Party Claim in accordance with this Section 12.9 (without giving effect to the immediately preceding sentence), but may not enter into any settlement or consent to any judgment with respect to such Third Party Claim without Eyetech's prior written consent if either (x) such settlement or judgment would, taking into account the indemnification provisions of Section 12.6(b), impose more than $[**] in liability on Eyetech or (y) such settlement or judgment would, taking into account the indemnification provisions of Section 12.6(b), impose more monetary liability on Eyetech than on Pfizer or include non-monetary conditions with respect to Eyetech. (b) The Indemnifying Party or the Indemnified Party, as the case may be, shall have the right to participate in (but not control), at its own expense (subject to the immediately succeeding sentence), the defense of any Third Party Claim which the other is defending as provided in this Agreement. The Indemnifying Party shall not be liable for any litigation costs or expenses incurred, without its consent, by the Indemnified Party where the action or proceeding is under the control of the Indemnifying Party; provided, however, that if the Indemnifying Party fails to take reasonable steps necessary to defend such Third Party Claim, the Indemnified Party may assume its own defense, and the Indemnifying Party will be liable for all reasonable costs or expenses paid or incurred in connection therewith. (c) The Indemnifying Party, if it shall have assumed the defense of any Third Party Claim as provided in this Agreement, shall not consent to a settlement of, or the entry of any judgment arising from, any such Third Party Claim to the extent such Third Party Claim involves equitable or other non-monetary relief from the Indemnified Party. No Party shall, 75 without the prior written consent of the other Party, enter into any compromise or settlement which commits the other Party to take, or to forbear to take, any action. (d) Whether the Indemnifying Party chooses to defend or prosecute any Third Party Claim, all the Parties hereto shall cooperate in the defense or prosecution thereof and shall furnish such records, information and testimony, and attend such conferences, discovery proceedings, hearings, trials and appeals, as may be reasonably requested in connection therewith. (e) The Indemnified Party shall use commercially reasonable efforts to pursue all rights and remedies available in order to minimize the Losses for which indemnification is provided to the Indemnified Party under this Article 12. Any indemnification hereunder shall be made net of any insurance proceeds recovered by the Indemnified Party from unaffiliated third parties; provided, however, that if, following the payment to the Indemnified Party of any amount under this Article 12, such Indemnified Party recovers any such insurance proceeds in respect of the claim for which such indemnification payment was made, the Indemnified Party shall promptly pay an amount equal to the amount of such proceeds (but not exceeding the amount of such indemnification payment) to the Indemnifying Party. (f) The Parties agree and acknowledge that the provisions of this Article 12 represent the Indemnified Party's exclusive recourse with respect to any Losses for which indemnification is provided to the Indemnified Party under this Article 12. 76 ARTICLE 13 TERM AND TERMINATION 13.1 Term. This Agreement shall be effective as of the Effective Date and shall continue in force until the expiration of the Co-Promotion Term, unless sooner terminated as provided herein. 13.2 Termination for Breach. Eyetech shall have the rights set forth below in this Section 13.2 by notice to Pfizer, and Pfizer shall have the rights set forth below in this Section 13.2 by notice to Eyetech. (a) Upon Eyetech's notice to Pfizer that a Material Default by Pfizer has occurred, the Parties will meet to discuss in good faith whether a plan to remedy the Material Default can be mutually agreed. If the Parties fail to so agree within thirty (30) days after the date of such notice, Section 13.2(b) below shall apply. Notwithstanding the foregoing provisions of this Section 13.2(a), in the case of a payment default, the provisions of Section 13.2(b) below shall apply without any obligation to meet to discuss remedies pursuant to this Section 13.2(a). (b) Subject to the terms hereof, upon the occurrence of any Material Default by Pfizer, Eyetech may, upon ninety (90) days prior written notice, terminate this Agreement and the other Product-Related Agreements. Eyetech may give the notice specified in this Section 13.2(b) concurrently with the notice specified in Section 13.2(a) and shall not give the notice specified in this Section 13.2(b) later than sixty (60) days after the date of the notice specified in Section 13.2(a). (c) Upon Pfizer's notice to Eyetech that a Material Default by Eyetech has occurred, the Parties will meet to discuss in good faith whether a plan to remedy the Material Default can be mutually agreed. If the Parties fail to so agree within thirty (30) days after the 77 date of such notice, Section 13.2 (d) below shall apply. Notwithstanding the foregoing provisions of this Section 13.2(c), in the case of a payment default, the provisions of Section 13.2(d) below shall apply without any obligation to meet to discuss remedies pursuant to this Section 13.2(c). (d) Subject to the terms hereof, upon the occurrence of any Material Default by Eyetech, Pfizer may, upon ninety (90) days prior notice, terminate this Agreement and the other Product-Related Agreements. Pfizer may give the notice specified in this Section 13.2(d) concurrently with the notice specified in Section 13.2(c) and shall not give the notice specified in this Section 13.2(d) later than sixty (60) days after the date of the notice specified in Section 13.2(c). (e) "Material Default" means: (i) any default by any Party hereto of its covenants, agreements or other performance obligations under this Agreement or the License Agreement other than a payment default (which may include any one or more defaults of any specific covenant, agreement or other performance obligations contained herein) that, when aggregated with any other such uncured defaults by such Party, is (x) material to this Agreement and the License Agreement taken as a whole, and (y) shall have continued for thirty (30) days after written notice thereof was provided to the alleged defaulting Party by the non-defaulting Party (or, if such defaults cannot be cured within such 30-day period, if the alleged defaulting Party does not promptly commence and diligently continue all reasonable actions to cure such defaults during such 30-day period or does not cure in full such defaults within sixty (60) days after written notice thereof was provided to the alleged defaulting Party); or 78 (ii) any default by any Party hereto of its payment obligations hereunder that shall have continued for fifteen (15) days after written notice thereof was provided to the alleged defaulting Party by the non-defaulting Party; provided that, in the event of a good faith payment dispute, such fifteen (15) day cure period shall be extended through the fifteenth day following the date on which such dispute is resolved if the alleged defaulting Party paid all undisputed amounts when due and provided the non-defaulting Party with a reasonably detailed written explanation of the alleged defaulting Party's basis for disputing the payment obligation within the fifteen (15) day period following the written notice of the default by the non-defaulting Party. (f) In the event of a Material Default by Eyetech described in Section 13.2(c), Pfizer may, in its sole discretion, elect by written notice to Eyetech of such election not later than sixty (60) days after the date of the notice specified in Section 13.2(c), as an alternative to terminating this Agreement and the other Product-Related Agreements, the Elective Remedy. 13.3 HSR Denial. Either Party may terminate all of the Transaction Agreements effective upon notice to the other Party if the HSR Clearance Date shall not have occurred on or prior to the date sixty (60) days after the Parties make their respective HSR Filings pursuant to Section 16.1. In the event of any termination pursuant to this Section 13.3, the Transaction Agreements, including without limitation Section 13.9 of this Agreement, shall terminate; provided, however, the confidentiality agreement between the Parties dated as of April 22, 2002, as amended, shall remain in full force and effect notwithstanding any termination of the Transaction Agreements in accordance with this Section 13.3. 13.4 Detail Shortfalls. Either Party may terminate this Agreement as provided in Section 6.5. 79 13.5 Breach of Non-Competition obligations. If a Party breaches its obligations under Section 14.1, the other Party may terminate this Agreement upon thirty (30) days prior written notice of termination to the breaching Party; provided that, if the breaching Party permanently ceases the activity or eliminates the condition, as applicable, giving rise to the breach of its obligations under Section 14.1 prior to the expiration of such thirty (30) day notice period, such termination shall not take effect. 13.6 Changes of Control. In the event of any Change in Control, the Party subject to such Change of Control shall promptly notify the other Party of such Change in Control, and the Party not subject to such Change of Control shall have the right upon sixty (60) days notice, to terminate this Agreement and the other Product-Related Agreements where the Acquiring Corporation has not agreed to assume all obligations of an Affiliate of the Party subject to the Change of Control under this Agreement and the License Agreement. In the event of any Change in Control of Eyetech, Pfizer shall have the right upon one hundred twenty (120) days notice, to terminate either or both of the Regulatory Services Agreement and the Distribution Agreement. If the Change of Control of Eyetech is an acquisition of Eyetech by a third party that, together with its Affiliates, had annual revenues from the sale of prescription pharmaceutical products in the US in excess of US$1 billion during its most recently reported fiscal year, then the acquiring Person shall have the right upon one hundred twenty (120) days written notice, to terminate either or both of the Regulatory Services Agreement and the Distribution Agreement. In either event, each of Pfizer or the acquiring Person must exercise its right of termination with six (6) months of the date of such Change of Control. 13.7 Termination of License Agreement. In the event that the License Agreement is terminated or expires for any reason, either Party may, at its option, terminate this Agreement and the other Product-Related Agreements upon written notice of termination to the other Party. 80 13.8 Sales Threshold Termination. If, during the [**] period commencing with the Year following the earlier of (a) the implementation of a National Coverage Determination for the first Product from the United States Department of Health and Human Services (Centers for Medicare and Medicaid Services) and (b) the [**] of such Product in the US Territory, the Net Sales in the US Territory for any [**] during such [**] period are less than [**], for the [**], and such failure to achieve such Net Sales targets is not a result of Eyetech's material breaches of its representations, warranties, covenants and agreements contained in this Agreement and the License Agreement (such failure to achieve Net Sales, the "Net Sales Failure"), then Eyetech may, at any time within [**] following determination of Net Sales for the [**], elect to terminate this Agreement upon 180 days notice to Pfizer; provided that such termination shall be Eyetech's sole and exclusive remedy and Pfizer's sole and exclusive liability in the event of termination by Eyetech pursuant to this Section 13.8. In the event of any termination of this Agreement pursuant to this Section 13.8, Eyetech shall thereafter pay to Pfizer (x) a royalty of [**] percent ([**]%) of the first [**] of annual Net Sales in the US Territory and (y) a royalty of [**] percent ([**]%) of annual Net Sales in the US Territory [**], for each Year of the [**] Years of the Co-Promotion Term immediately following such termination, as if this Agreement had not been terminated. 13.9 Survival of obligations. Notwithstanding any termination or expiration of this Agreement, (a) neither Party shall be relieved of any obligations incurred prior to such termination or expiration, including without limitation payment obligations accrued prior to such termination or expiration; (b) the obligations of the Parties with respect to accounts and reports (Article 9), ownership of intellectual property (Article 10), the protection and nondisclosure of Confidential Information (Article 11), dispute resolution (Article 15), indemnification (Sections 12.4, 12.5, 12.6, 12.7, 12.8 and 12.9), this Section 13.9 and non-competition (Section 14.1), as well as any other provision of this Agreement which by its terms survives termination or which is required to give effect to such termination or the consequences of such termination, shall survive termination and remain in effect in accordance with their respective terms; (c) If the License Agreement remains in effect after such termination or expiration of this Agreement (a "License Survival Event"), the provisions of this Agreement that relate to Products in the RoW Territory shall survive such termination for so long as the License Agreement remains in effect. If a License Survival Event takes place, the Parties recognize that adjustments may need to be made to certain of such surviving provisions relating to Products in the RoW Territory, such as the arrangements respecting the governance provisions set forth in Article 3. Without limiting the foregoing, the Parties acknowledge that the following rights shall survive termination or expiration of this Agreement in the case of a License Survival Event: (a) the rights granted to Pfizer in Sections 10.1 and 10.2 of this Agreement; (b) Eyetech's rights with 81 respect to the MSC's responsibilities for ensuring that all Products are manufactured in accordance with the Parties' quality standards pursuant to Section 3.5; and (c) Eyetech's rights with respect to Pfizer's regulatory activities in the RoW Territory pursuant to Section 4.2(c) of this Agreement. After a License Survival Event, for so long as the License Agreement remains in effect, Pfizer shall have rights with respect to Eyetech's regulatory activities in the US Territory commensurate with the rights Eyetech has with respect to RoW Territory regulatory matters under Section 4.2(c); (d) Pfizer's obligations under Section 8.1 with respect to Development Costs during the following periods immediately following termination shall survive any termination pursuant to Section 13.2 based on Material Default(s) by Pfizer or any termination pursuant to Section 13.7: (i) if such termination occurs prior to the first Launch of a Product in the US Territory, twelve (12) months, (ii) if such termination occurs after the first Launch of a Product in the US Territory but prior to the fifth anniversary of such Launch, nine (9) months, and (iii) if such termination occurs after the fifth anniversary of the first Launch of a Product in the US Territory, six (6) months; (e) Pfizer shall promptly and in no event later than sixty (60) days after termination or expiration (i) transfer to Eyetech ownership of all governmental or regulatory filings and approvals (including all INDs and NDAs (and their foreign equivalents)) relating to Products, (ii) deliver to Eyetech all pre-clinical and clinical data and information in Pfizer's possession or control relating to Products, (iii) deliver to Eyetech copies of all reports, records, regulatory correspondence and other materials in Pfizer's possession or control relating to the pre-clinical and clinical development, regulatory approval, manufacture, distribution and sales of Products, including without limitation all information contained in the centralized global safety 82 database established and maintained by Pfizer in accordance with the Regulatory Services Agreement, and (iv) deliver to Eyetech all data and information relating to process conditions, in-process controls, analytical methodology and formulation, in each case as developed by Pfizer and relating to the manufacturing of Products, solely for use in connection with the Products; (f) Pfizer shall grant to Eyetech a non-exclusive, non-royalty-bearing, perpetual right and license under Pfizer's and its Affiliates' rights in Collaboration Intellectual Property (as defined in the License Agreement) to develop, make, have made, use, sell, offer for sale, import, and have imported Products in the Territory; (g) if Pfizer has contracted with API Bulk Drug Substance Supplier(s) or with Fill and Finish Services Supplier(s), or if Pfizer has taken over responsibility for performing, either directly or through Affiliates, services that otherwise would be performed by API Bulk Drug Substance Supplier(s) and/or Fill and Finish Services Supplier(s), Pfizer shall continue to manufacture or have manufactured (including filling and finishing of) Products being manufactured by Pfizer and/or its Affiliates, on the terms and conditions in effect immediately prior to the applicable notice of termination, for worldwide supply to Eyetech during the shorter of (i) the twenty-four (24) month period following termination and (ii) the period following termination and prior to Eyetech's establishment of its own manufacturing capabilities and/or third party manufacturing and supply arrangements with respect to the Products; and Pfizer shall cooperate with Eyetech during such period to assign to Eyetech all third party manufacturing and supply (including fill and finish services) agreements and transfer to Eyetech all manufacturing know-how, and to provide Eyetech with such other assistance as may be requested by Eyetech, reasonably required by Eyetech for the purpose of establishing its own manufacturing 83 capabilities and/or third party manufacturing and supply arrangements with respect to the Products; (h) Pfizer shall permit Eyetech, at Eyetech's option, to purchase, at Manufacturing Cost, all or any part of Pfizer's worldwide unsold inventory of raw materials for Products, work-in-progress Products and finished Products as of the effective date of termination, provided that, Pfizer shall not be required to sell to Eyetech inventories of raw materials for Products and work-in-progress Products that Pfizer needs to satisfy its obligations under Section 13.9(g); and (i) unless this Agreement expressly provides that termination shall be the sole and exclusive remedy for a particular breach hereof, either Party's right to commence an action, suit or other proceeding claiming breach of this Agreement by the other Party shall survive termination. Upon any termination of this Agreement, each Party shall promptly return to the other Party all written Confidential Information, and all copies thereof, of such other Party and Pfizer shall have no further right with respect to, and shall cease all activities related to Co-Promotion of the Products. ARTICLE 14 NON-COMPETITION; DETAILING SERVICES AGREEMENT 14.1 Non-Competition. During the Co-Promotion Term and during the Term (as defined in the License Agreement), neither Pfizer nor Eyetech nor any of their Affiliates shall, directly or indirectly, manufacture commercial quantities of, or market, sell, detail or promote, any Competing Product in the Territory (excluding the EU, as defined in the License Agreement), except for the Products as provided in this Agreement and in the License 84 Agreement. If (a) either Party terminates this Agreement pursuant to Section 13.2, 13.4 or 13.5 of this Agreement or (b) Pfizer terminates the License Agreement pursuant to Section 10.1 of the License Agreement, then the prohibition set forth in the immediately preceding sentence shall, in the case of a termination described in clause (a) of this sentence, be extended with respect to the other Party and its Affiliates through a period immediately following the effective date of such termination of: (i) [**], if such termination occurs [**], (ii) [**], if such termination occurs [**], or (iii) [**], if such termination occurs [**], and, in the case of a termination described in clause (b) of this sentence, be extended with respect to Pfizer and its Affiliates through a period immediately following the effective date of such termination of: (i) [**], if such termination occurs [**], (ii) [**], if such termination occurs [**], or (iii) [**], if such termination occurs [**]. Notwithstanding the foregoing, Eyetech and its Affiliates, either directly or in collaboration with third parties, shall be entitled to commercialize products that contain or are based on the Compound (as defined in the License Agreement) for use outside the Field ("POF"), provided such products are sold under product trademarks other than the Trademark(s) and are: (a) in a different dosage strength; (b) in a different formulation; or (c) with a different delivery system; in each case not intended or developed for use in the Field. Eyetech and its Affiliates shall not conduct clinical trials or marketing studies with respect to such POF to support use of such POF in the Field, and Eyetech and its Affiliates shall require any third party collaborator to comply 85 with this undertaking with respect to any POF. Subject to the provisions of Section 14.2, any breach of this Section 14.1 shall entitle the non-breaching Party to terminate this Agreement and the Other Product-Related Agreements pursuant to Section 13.5. 14.2 Acquisitions Involving Competing Products. Notwithstanding the provisions of Section 14.1 above, if during the Co-Promotion Term Pfizer or Eyetech or any of their respective Affiliates acquires or agrees to acquire a Competing Product in the Territory through acquisition of or merger with a company or entity, or is acquired or agrees to be acquired by a company or entity that owns a Competing Product in the Territory, Pfizer or Eyetech, as applicable, shall have thirty (30) days from the date of public announcement of the acquisition or merger to notify the other Party as to whether Pfizer or Eyetech or the acquiring company or entity, as applicable, intends to divest its interest in such Competing Product. In the event that Pfizer or Eyetech or the acquiring company or entity, as applicable, elects to divest its interest in such Competing Product, such Party or the acquiring company or entity shall use reasonable efforts to identify a third party purchaser to whom such Party or the acquiring company or entity will divest its interest in such Competing Product and to enter into a definitive agreement with such third party for such divestiture as soon as reasonably practicable under the circumstances. If Pfizer or Eyetech or the acquiring company or entity, as applicable, elects not to divest its interest in such Competing Product or fails to divest its interest in such Competing Product within [**] after the closing of the transaction for which Pfizer or Eyetech, as applicable, has provided the other Party with notice, then the other Party shall have the option, upon written notice to Pfizer or Eyetech, as applicable, given no later than ninety (90) days after the earlier of: (i) Pfizer's or Eyetech's written notice, as applicable, of its election not to divest such Competing Product; and (ii) the end of such [**] period described above, to terminate this Agreement and the Other Product- 86 Related Agreements pursuant to Section 14.1, treating such election not to divest or failure to divest such Competing Product as a breach of Section 14.1. Notwithstanding the provisions of Section 14.1 and this Section 14.2, however, neither Party shall have the right to terminate this Agreement and the Other Product-Related Agreements based on the other Party's or its Affiliate's or acquiring company's or entity's failure to divest its interest in a Competing Product that is sold only in the EU (as defined in the License Agreement). 14.3 Detailing Services Agreement; Additional Agreements. (a) The Detailing Services Agreement shall become effective only upon the completion of the Pharmacia Merger. (b) The Parties shall in good faith undertake to identify an additional Pfizer product for ophthalmic use and potential sale to retinal specialists, in addition to the products covered by the Detailing Services Agreement (an "Additional Pfizer Product"). If the Parties are able to identify and mutually agree upon such Additional Pfizer Product, the Parties will attempt to negotiate in good faith the terms and conditions of an agreement to allow Eyetech to detail, co-develop or license such Additional Pfizer Product. (c) If for any reason (i) the Pharmacia Merger Agreement is terminated or (ii) Pfizer determines that the Pharmacia Merger cannot be closed, then, in either event, Pfizer and Eyetech will undertake in good faith to identify a Pfizer product for ophthalmic use and sale to retinal specialists to substitute for the products covered by the Detailing Services Agreement (a "Substitute Product"). If the Parties are able to identify and mutually agree upon such Substitute Product, the Parties will attempt to negotiate in good faith the terms and conditions of an agreement to allow Eyetech to detail, co-develop or license such Substitute Product. 87 (d) Notwithstanding the foregoing, neither Party is obligated to enter into any agreement with the other pursuant to subsections 14.3(b) or 14.3(c). Accordingly, if the Parties are unable to enter into an agreement respecting an Additional Pfizer Product or Substitute Product, Eyetech shall have no rights to any such product, and Pfizer shall have no obligations to Eyetech with respect to any such product or resulting from the Parties' inability to enter into an agreement pursuant to subsections 14.3(b) or 14.3(c). ARTICLE 15 DISPUTE RESOLUTION 15.1 Arbitration. Any payment dispute or dispute arising out of any audit conducted pursuant to Section 9.2 shall be resolved through binding arbitration as follows: (a) A Party may submit such dispute to arbitration by notifying the other Party, in writing, of such dispute. Within thirty (30) days after receipt of such notice, the Parties shall designate in writing a single arbitrator to resolve the dispute; provided, however, that if the Parties cannot agree on an arbitrator within such 30-day period, the arbitrator shall be selected by the New York, New York office of the American Arbitration Association (the "AAA"). The arbitrator shall be a lawyer knowledgeable and experienced in the law concerning the subject matter of the dispute, and shall not be an Affiliate, employee, consultant, officer, director or stockholder of any Party. (b) Within thirty (30) days after the designation of the arbitrator, the arbitrator and the Parties shall meet, at which time the Parties shall be required to set forth in writing all disputed issues and a proposed ruling on the merits of each such issue. (c) The arbitrator shall set a date for a hearing, which shall be no later than thirty (30) days after the submission of written proposals pursuant to Section 15.1(b), to discuss 88 each of the issues identified by the Parties. The Parties shall have the right to be represented by counsel. Except as provided herein, the arbitration shall be governed by the Commercial Arbitration Rules of the AAA; provided, however, that the Federal Rules of Evidence shall apply with regard to the admissibility of evidence. (d) The arbitrator shall use his or her best efforts to rule on each disputed issue within thirty (30) days after the completion of the hearings described in Section 15.1(c). The determination of the arbitrator as to the resolution of any dispute shall be binding and conclusive upon all Parties. All rulings of the arbitrator shall be in writing and shall be delivered to the Parties. (e) The (i) attorneys' fees of the Parties in any arbitration, (ii) fees of the arbitrator and (iii) costs and expenses of the arbitration shall be borne by the Parties as determined by the arbitrator. (f) Any arbitration pursuant to this Section 15.1 shall be conducted in New York, New York. Any arbitration award may be entered in and enforced by a court in accordance with Section 17.2. 15.2 No Limitation. Nothing in Section 15.1 shall be construed as limiting in any way the right of a Party to seek a temporary restraining order or preliminary injunction with respect to any actual or threatened breach of this Agreement from, or to bring an action in aid of arbitration in, a court in accordance with Section 17.2. Should any Party seek a temporary restraining order or preliminary injunction, then for purposes of determining whether to grant such temporary restraining order or preliminary injunction, the dispute underlying the request for such temporary restraining order or preliminary injunction may be heard by a court in accordance with Section 17.2. 89 ARTICLE 16 HSR MATTERS 16.1 HSR Filings. Each of Eyetech and Pfizer shall as promptly as possible and not later than January 22, 2003 file with the FTC and the Antitrust Division of the DOJ, any HSR Filing required of it under the HSR Act with respect to the transactions contemplated by the Transaction Agreements. The Parties shall cooperate with one another to the extent necessary in the preparation of any HSR Filing required to be filed under the HSR Act. Each Party shall be responsible for its own costs, expenses, and filing fees associated with any HSR Filing. 16.2 HSR Cooperation; Further Assurances. Eyetech and Pfizer agree, and shall cause each of their respective Affiliates, to cooperate and to use their respective commercially reasonable efforts to obtain any HSR Clearance required for the consummation of the transactions contemplated under the Transaction Agreements and to respond to any government requests for information under the HSR Act. The Parties will consult and cooperate with one another, and consider in good faith the views of one another, in connection with any analyses, appearances, presentations, memoranda, briefs, arguments, opinions and proposals made or submitted by or on behalf of either Party in connection with proceedings under or relating to the HSR Act. For the avoidance of doubt, it is agreed that neither Party shall be obligated in any way to (a) sell, transfer or otherwise dispose of (including without limitation by way on any "hold separate" or similar arrangement) any asset or product or business, (b) terminate any contractual relationship, or (c) amend, terminate or otherwise modify any licenses or other intellectual property agreements, in order to obtain HSR Clearance with respect to the transactions contemplated by the Transaction Agreements. 90 16.3 Activities Prior to the Effective Date. The Parties shall not engage in any of the activities contemplated by this Agreement and the Other Product-Related Agreements, other than seeking to obtain HSR Clearance, prior to the Effective Date. ARTICLE 17 MISCELLANEOUS 17.1 Governing Law. This Agreement shall be governed by and interpreted in accordance with the internal laws of the State of New York, without regard to its conflicts of laws rules. 17.2 Jurisdiction. Except with respect to disputes arising out of audits conducted pursuant to Section 9.2 or with respect to payment disputes, which shall be resolved through binding arbitration in accordance with Article 15, each Party (a) irrevocably submits to the exclusive jurisdiction in the United States District Court for the Southern District of New York and any State courts sitting in New York, New York (collectively, the "Courts"), for purposes of any action, suit or other proceeding arising out of this Agreement, and (b) agrees not to raise any objection at any time to the laying or maintaining of the venue of any such action, suit or proceeding in any of the Courts, irrevocably waives any claim that such action, suit or other proceeding has been brought in an inconvenient forum and further irrevocably waives the right to object, with respect to such action, suit or other proceeding, that such Court does not have any jurisdiction over such Party. 17.3 Waiver. Waiver by a Party of a breach hereunder by the other Party shall not be construed as a waiver of any succeeding breach of the same or any other provision. No delay or omission by a Party to exercise or avail itself of any right, power or privilege that it has or may have hereunder shall operate as a waiver of any right, power or privilege by such Party. No 91 waiver shall be effective unless made in writing with specific reference to the relevant provision(s) of this Agreement and signed by a duly authorized representative of the Party granting the waiver. 17.4 Notices. All notices, instructions and other communications hereunder or in connection herewith shall be in writing, shall be sent to the address below and shall be: (a) delivered personally; (b) sent by registered or certified mail, return receipt requested, postage prepaid; (c) sent via a reputable nationwide overnight courier service; or (d) sent by facsimile transmission. Any such notice, instruction or communication shall be deemed to have been delivered upon receipt if delivered by hand, three (3) Business Days after it is sent by registered or certified mail, return receipt requested, postage prepaid, one (1) Business Day after it is sent via a reputable nationwide overnight courier service, or when transmitted with electronic confirmation of receipt, if transmitted by facsimile (if such transmission is on a Business Day; otherwise, on the next Business Day following such transmission). Notices to Pfizer shall be addressed to: PFIZER INC. 235 East 42nd Street New York, New York 10017-5755 Telecopy: (212) 808-8652 Attention: President, Pfizer Pharmaceutical Group with a copy to: PFIZER INC. 235 East 42nd Street New York, New York 10017-5703 Telecopy: (212) 808-8924 Attention: Senior Vice President and General Counsel Notices to Eyetech shall be addressed to: EYETECH PHARMACEUTICALS, INC. 500 Seventh Avenue 92 18th Floor New York, New York 10018 Telecopy: (212) 997-9251 Attention: Chief Executive Officer with a copy to: Hale and Dorr LLP 60 State Street Boston, Massachusetts 02109 Telecopy: (617) 526-5000 Attention: David E. Redlick, Esq. Either Party may change its address by giving notice to the other Party in the manner provided above. 17.5 Entire Agreement. This Agreement (including Exhibits), together with the Other Product-Related Agreements, contains the complete understanding of the Parties with respect to the Parties' joint development and commercialization of Products and supersedes all prior understandings and writings relating to such subject matter. The Parties understand and agree that this Agreement and the License Agreement are considered to be a single integrated agreement and contain intellectual property rights and licenses relating to the Products for which Pfizer has bargained and paid consideration. If any applicable court of competent jurisdiction determines this Agreement and/or the License Agreement to be executory in nature, such Transaction Agreements shall be deemed to be, for purposes of Section 365(n) of the Bankruptcy Code, licenses of rights to "intellectual property" as defined under Section 101 of the Bankruptcy Code. 17.6 Headings. Headings in this Agreement are for convenience of reference only and shall not be considered in construing this Agreement. 17.7 Severability. If any provision of this Agreement is held unenforceable by a court or tribunal of competent jurisdiction because it is invalid or conflicts with any law of any 93 relevant jurisdiction, the validity of the remaining provisions shall not be affected. In such event, the Parties shall negotiate a substitute provision that, to the extent possible, accomplishes the original business purpose. 17.8 Registration and Filing of the Agreement. To the extent, if any, that a Party concludes in good faith that it is required to file or register this Agreement or a notification thereof with any Governmental Authority, including without limitation the US Securities and Exchange Commission, or the US Federal Trade Commission, in accordance with applicable Laws, such Party may do so. The other Party shall cooperate in such filing or notification and shall execute all documents reasonably required in connection therewith. In such situation, the Parties will request confidential treatment of sensitive provisions of the Agreement, to the extent permitted by Law. The Parties shall promptly inform each other as to the activities or inquiries of any such Governmental Authority relating to this Agreement, and shall cooperate to respond to any request for further information therefrom. 17.9 Assignment. Except as otherwise provided herein, including without limitation in Section 17.11, neither this Agreement nor any of the rights or obligations hereunder may be assigned by either Party without the prior consent of the other Party, except assignment, in whole or in part, to an Affiliate of the assigning Party so long as such Affiliate agrees in writing to be bound by the terms of this Agreement. The assigning Party shall remain primarily liable hereunder notwithstanding any such assignment. Any attempted assignment in violation hereof shall be void. 17.10 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective permitted successors and assigns. 94 17.11 Divestiture by Pfizer. (a) If (i) Pfizer enters into a definitive agreement to acquire or merge with another company (the "Target") involving a purchase price in excess of $[**] (which amount shall be increased on January 1 of each year to reflect increases in the Consumer Price Index on each such January 1 over the level of the Consumer Price Index on January 1, 2003), (ii) Pfizer reasonably believes that a "Divestiture Requirement" exists, namely that the Governmental Authorities with responsibility for antitrust or competition review and approval of such acquisition or merger for either the United States or the EU, as defined in the License Agreement (each an "Antitrust Authority" and, together, the "Antitrust Authorities") will not grant the requisite clearance or approval for the consummation of the acquisition or merger unless (x) Pfizer assigns, sublicenses or otherwise transfers (any such assignment, sublicense or transfer, a "Divestiture Transaction") Pfizer's rights and obligations under this Agreement or the License Agreement to a non-Affiliate third party or (y) the Target divests the business, product line or agreement(s) of the Target (the "Target's Competitive Business") giving rise to the Divestiture Requirement, (iii) Pfizer has used commercially reasonable efforts to avoid any requirement of having to enter into a Divestiture Transaction, including without limitation if reasonably practicable in Pfizer's good faith business judgment by undertaking, or causing the Target to undertake, to the relevant Antitrust Authorities to divest the Target's Competitive Business giving rise to the antitrust or competition concern and (iv) the Target's Competitive Business comprised less than [**] percent ([**]%) of the Target's revenues for the Target's last fiscal year and less than [**] percent ([**]%) of the Target's fair market value (as determined by Pfizer's Board of Directors in good faith based on written advice and analysis of a nationally recognized investment bank), Pfizer shall so notify Eyetech (a "Notice of Divestiture"), which Notice of Divestiture shall include a detailed description of the Divestiture Requirement, a certification to 95 Eyetech by Pfizer of the accuracy of such description and a copy of the written advice and analysis of the investment bank. Pfizer may not give more than one Notice of Divestiture in any twenty-four (24) month period. 17.11 (b) If Pfizer gives a Notice of Divestiture, Eyetech may, at its option (the "Acquisition Option"), elect to acquire Pfizer's rights under this Agreement and the License Agreement by giving Pfizer notice of such election (a "Preliminary Acquisition Notice") at any time within ten (10) Business Days following the date of the Notice of Divestiture. If Eyetech exercises its Acquisition Option, Pfizer shall promptly discuss with [**] Eyetech [**] under this Agreement and the License Agreement and [**] referred to in Section 17.11(c) [**] (as defined below) would be acceptable, with or without [**] referred to in clause (i) of Section 17.11(d). Promptly after Eyetech gives a Preliminary Acquisition Notice, the Parties will then jointly select an investment bank to determine the fair market value of Pfizer's rights under this Agreement and the License Agreement (the "FMV"). If the Parties are unable to jointly select an investment bank within [**] Business Days after Eyetech gives a Preliminary Acquisition Notice, the Parties shall select by a random drawing an investment bank from among the top ten (10) investment banks from Thomson Financial's then current listing of top financial advisors for worldwide completed mergers and acquisitions or, if such directory is not then available, from an alternative listing of investment banks for mergers and acquisitions to be mutually agreed by the Parties, to determine the FMV. The investment bank shall complete its valuation within [**] Business Days of its appointment, and shall provide its results in writing to both Pfizer and Eyetech. The purchase price to be paid by Eyetech to Pfizer shall be equal to [**] percent ([**] %) of the FMV (the "Eyetech Purchase Price"). The results of the valuation shall be binding on the Parties, and the fees of the investment bank shall be borne [**]. (c) If Eyetech wishes to acquire Pfizer's rights under this Agreement and the License Agreement at the Eyetech Purchase Price, Eyetech shall provide Pfizer with written notice (the "Confirmatory Acquisition Notice") to that effect within [**] Business Days of the determination of the FMV; provided that Eyetech may elect not to purchase Pfizer's rights under this Agreement and the License Agreement, and if Eyetech does not provide Pfizer with a Confirmatory Acquisition Notice within such [**] Business Day period after the determination of FMV, Eyetech shall be deemed to have elected not to purchase such rights. If Eyetech provides Pfizer with a Confirmatory Acquisition Notice and [**] indicated that [**] of the [**], (i) Eyetech shall be required [**] of the [**] at the time [**] between Eyetech and Pfizer, and (ii) Eyetech may [**]; provided that Eyetech may [**] and to [**]. If Eyetech provides Pfizer with a Confirmatory Acquisition Notice and [**] indicated that such [**], then Eyetech shall be [**] of the [**] at the time [**] between Eyetech and Pfizer. The closing of the acquisition transaction shall not occur prior to the later of (x) closing of Pfizer's acquisition of or merger with the Target and (y) [**] days after the relevant Notice of Divestiture. Such acquisition transaction shall be entered into pursuant to an acquisition agreement [**] to such [**], which acquisition agreement shall contain [**] after the relevant Notice of Divestiture; provided that such provision shall expire, and Eyetech's obligations under such acquisition agreement shall no longer be [**], if Eyetech does not provide Pfizer with a notice of [**] of such [**] within such [**] day period. (d) If [**] to the [**] referred to in Section 17.11(c), Eyetech shall [**] to Pfizer [**]. The [**] shall: (i) be [**] to such [**], shall be [**] by Eyetech in the [**] between Eyetech and Pfizer, and if [**] by Eyetech, shall be [**] by such [**] as the Parties shall mutually agree, (ii) [**] at an [**] based on [**] at the time of the transaction, (iii) be [**] (with Eyetech having the [**] for any or all [**], which accrued interest shall compound and be added to principal on the date of [**]), (iv) [**] of the date of issuance, at which time [**] shall be [**], and (v[**] at any time [**]. (e) If Eyetech does [**] Pfizer with, [**], its Confirmatory Acquisition Notice, or is [**] to be [**], then Pfizer may, concurrently with the [**] with the Target, close a Divestiture Transaction with a [**] so long as the [**] executes and delivers to Eyetech an agreement to be bound by this Agreement and the License Agreement. [**] means [**] that is [**] in terms of [**] in the calendar year most recently completed as of the date [**]. (f) If (x) Pfizer consummates a Divestiture Transaction or (y) Eyetech acquires Pfizer's rights under this Agreement and the License Agreement pursuant to this Section 17.11, Pfizer shall, as requested by Eyetech, either (i) subject to any necessary approval by the Antitrust Authorities, maintain either or both of the Distribution Agreement and the Regulatory Services Agreement in effect for such period of time, up to twelve (12) months following the effective date of the Divestiture Transaction or acquisition by Eyetech, as Eyetech may request, or (ii) terminate such agreements on the date or dates specified by Eyetech. 17.12 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. 17.13 Force Majeure. No Party shall be liable for failure of or delay in performing obligations set forth in this Agreement, and no Party shall be deemed in breach of its obligations, if such failure or delay is due to natural disasters or any causes reasonably beyond the control of such Party. 96 17.14 Non-Solicitation of Employees. During the Co-Promotion Term, neither Party shall, directly or indirectly, recruit, or solicit any employee of the other Party with whom such Party has come into contact or interacted for the purposes of performing this Agreement, without the prior consent of the other Party, except pursuant to general solicitations not targeted specifically at such employees or in response to unsolicited employment inquiries by such employees. 17.15 Press Releases and Other Disclosures. The Parties hereby each approve the form of joint press release set forth in Exhibit 17.15 hereto and will cooperate in the release thereof as soon as practicable after the signature of this Agreement by the Parties. The Parties also recognize that each Party may from time to time desire to issue additional press releases and make other public statements or disclosures regarding the subject matter of this Agreement. In such event, the Party desiring to issue an additional press release or make a public statement or disclosure shall provide the other Party with a copy of the proposed press release, statement or disclosure for review and approval in advance, which advance approval shall not be unreasonably withheld, conditioned or delayed. No other public statement or disclosure concerning the existence or terms of this Agreement shall be made, either directly or indirectly, by either Party hereto, without first obtaining the written approval of the other Party. Once any public statement or disclosure has been approved in accordance with this Section, then either Party may appropriately communicate information contained in such permitted statement or disclosure. Notwithstanding the foregoing provisions of this Section 17.15 or of Article 11, a Party may (a) disclose the existence and terms of the Transaction Agreements where required, as reasonably determined by the disclosing Party, by applicable Law, by applicable stock exchange or Nasdaq regulation or by order or other ruling of a competent court, (b) disclose the existence 97 and terms of the Transaction Agreements under obligations of confidentiality to agents, advisors, contractors, investors and sublicensees, and to potential agents, advisors, contractors, investors and sublicensees, in connection with such Party's activities hereunder and in connection with such Party's financing activities and (c) publicly announce any of the matters set forth in Exhibit 17.15(c), provided that such announcements do not entail disclosure of non-public technical or scientific information (which, for clarity, excludes clinical trial results) and the announcing Party provides the other Party with a copy of the proposed text of such announcement sufficiently in advance of the scheduled release or publication thereof to afford such other Party a reasonable opportunity to review and comment upon the proposed text. 17.16 Third-Party Beneficiaries. None of the provisions of this Agreement shall be for the benefit of or enforceable by any third party, including, without limitation, any creditor of either Party. No such third party shall obtain any right under any provision of this Agreement or shall by reason of any such provision make any claim in respect of any debt, liability or obligation (or otherwise) against either Party. 17.17 Relationship of the Parties. Each Party shall bear its own costs incurred in the performance of its obligations hereunder without charge or expense to the other, except as expressly provided in this Agreement. Neither Party shall have any responsibility for the hiring, termination or compensation of the other Party's employees or for any employee compensation or benefits of the other Party's employees. No employee or representative of a Party shall have any authority to bind or obligate the other Party to this Agreement for any sum or in any manner whatsoever, or to create or impose any contractual or other liability on the other Party without said other Party's approval. For all purposes, and notwithstanding any other provision of this Agreement to the contrary, Pfizer's legal relationship under this Agreement to Eyetech shall be 98 that of independent contractor. Nothing in this Agreement shall be construed to establish a relationship of partners or joint venturers between the Parties. 99 17.18 Performance by Subsidiaries and Affiliates. To the extent that this Agreement imposes obligations on Subsidiaries and Affiliates of a Party, such Party agrees to cause its Subsidiaries and Affiliates to perform such obligations. IN WITNESS WHEREOF, the Parties have signed this Agreement as of the Execution Date. PFIZER INC. EYETECH PHARMACEUTICALS, INC. By: /s/ Henry A. McKinnell By: /s/ David R. Guyer ______________________ ______________________ Name: Henry A. McKinnell Name: David R. Guyer ______________________ ______________________ Title: Chairman and CEO Title: CEO ______________________ ______________________ 100 EXHIBIT 1.20 GROUP/JOINT DETAILS Pfizer or Eyetech personnel, as the case may be, may make Product presentations to medical professionals with prescribing authority in group situations (each, a "Detailee"). Such presentations maybe be through speaker programs, dinner and lunch programs, symposia, and other programs the nature of which has been approved by the CSC. [**] such a presentation will be considered [**]. It is understood that [**], as the case may be, [**] For such group presentations conducted by either Eyetech or Pfizer [**] conducting such presentation. [**] a group presentation, [**] such a group presentation, [**] If, however, prior to such presentation, [**] It is understood that for symposia and other group presentations [**] as provided above. [**] EXHIBIT 1.52 Call Center Costs For purposes of calculating Marketing Expenses, monthly Call Center expenses shall equal the sum of: (i) $[**]/month* multiplied by the number of full-time equivalent Call Center Representatives (as defined below); and (ii) Out-of-Pocket Costs paid by Pfizer for Call Center services outsourced by Pfizer to non-employee third parties. A "Call Center Representative" shall mean a Pfizer employee whose primary responsibility is to handle calls from or to Product-users, physicians and other health care professionals, and managed care organizations concerning questions about the Product and Product reimbursement, or a supervisor of any such individual. - ------------------------------------ * Adjusted annually, with the first such adjustment taking place for the first full calendar year following the calendar year in which the Product is initially Launched in the US Territory, according to changes in the Consumer Price Index for All Urban Consumers (CPI U): U.S. city average, for the preceding Year. 101 EXHIBIT 2.5 Sales Force Training Program The initial training Pfizer will offer to Eyetech field force representatives will be Pfizer's typical training, i.e. "AS IS" program. [**] various training phases [**]. Pfizer may also update the training program from time to time. [**] [**] training time is [**] during the field time. The program includes training [**] subsequent training activities. Typical content covered during training consists of: - [**] - [**] - [**] - [**] - [**] The program includes material [**] [**] appropriate training materials, [**] weeks prior to the training program commencement. The training of Eyetech Sales Representatives will be scheduled to coincide with regularly scheduled Pfizer training sessions. [**] These include (but are not limited to) topics such as the ones listed below: - [**] - [**] - [**] - [**] - [**] - [**] 102 EXHIBIT 3.4(d) Matters where Eyetech Possesses Special Expertise or has Special Relationships [**] 103 EXHIBIT 3.4(e) - [**]Objectives: - Primary: [**]. - Design: - [**]NO-GO Criteria: - [**]LOGISTICS - INITIATION DATE: [**]DURATION: [**] - ESTIMATED COST: [**] - [**] [**]Objectives: - Primary: [**] - Design: - [**]NO-GO Criteria: - [**]. - LOGISTICS - INITIATION DATE: [**]DURATION: [**] ESTIMATED COST: [**]. [**]. - Objectives: - [**]Design: - [**]NO-GO Criteria: - [**]LOGISTICS INITIATION DATE: [**]DURATION: [**]ESTIMATED COST: [**] 104 [**] Development Programs [**]The Completed and Planned Clinical Studies Include: - [**]Objectives: - [**]Design: - [**]NO-GO Criteria: - [**]LOGISTICS [**] Cost: [**] [**] . [**] - Objectives: - [**]Design: - [**]NO-GO Criteria: - [**]LOGISTICS - [**]. [**]Objectives: - [**]Design: - [**]NO-GO Criteria: - [**]LOGISTICS - [**]Cost: 2.0 MM - EOP1002 (COMPLETED): Phase I/II. [**]Objectives: - [**]Design: - [**]NO-GO Criteria: - [**]LOGISTICS - [**]Objectives: - [**]Design: - [**]NO-GO Criteria: - [**]Logistics - Initiation Date: Ongoing[**]Duration: [**] 3Q04 completion - Estimated Cost: [**]. [**]Objectives: - [**]Design: - [**]NO-GO Criteria: - [**]LOGISTICS - INITIATION DATE: [**]DURATION: [**] - ESTIMATED COST: [**] [**] [**] - Objectives - Primary: [**]Design: - [**]NO-GO Criteria: - [**]LOGISTICS - INITIATION DATE: [**] - DURATION: [**] - ESTIMATED COST: [**] 105 - [**] [**]Objectives - [**]Design: - [**]NO-GO Criteria: - [**]. - LOGISTICS - INITIATION DATE: [**]DURATION: [**] - ESTIMATED COST: [**]. [**]Objectives: - [**]Design: - [**]NO-GO Criteria: - [**]LOGISTICS - INITIATION DATE: [**]DURATION: [**]ESTIMATED COST: [**] [**]. [**] - Objectives: - [**]. - Design: - [**]NO-GO Criteria: - [**]LOGISTICS - INITIATION DATE: [**] - DURATION: [**] - ESTIMATED COST: [**] - [**] [**] - Objectives: - Primary: [**] - Design: - [**]NO-GO Criteria: - [**]. - LOGISTICS - INITIATION DATE: [**]DURATION: [**] - ESTIMATED COST: [**] - [**] [**]Objectives: - [**]Design: - [**] - NO-GO Criteria: - [**]LOGISTICS 106 - INITIATION DATE: [**]DURATION: [**] [**] [**] - Objectives - [**]Design: - [**]NO-GO Criteria: - [**]LOGISTICS - INITIATION DATE: [**]DURATION: [**]. - ESTIMATED COST: [**]. [**]Objectives - [**]Design: - [**]NO-GO Criteria: - [**]LOGISTICS - INITIATION DATE: [**]DURATION: [**] - ESTIMATED COST: [**] 107 EXHIBIT 5.1(b) [**] Note: all numbers in Millions of US dollars

REMAINING STUDY NUMBER/NAME COSTS IN CDP [**] - ----------------------------------------- [**] [**] - ----------------------------------------- [**] [**] - ----------------------------------------- [**] [**] - ----------------------------------------- [**] [**] - ----------------------------------------- [**] [**] [**] - ----------------------------------------- [**] [**] [**] - ----------------------------------------- [**] [**] [**] - ----------------------------------------- [**] $[**] [**] - ----------------------------------------- [**] $[**] [**] - ----------------------------------------- [**] $[**] [**] - ----------------------------------------- [**] $[**] [**] - ----------------------------------------- [**] $[**] [**] - ----------------------------------------- [**] $[**] [**] - ----------------------------------------- [**] $[**] [**] - ----------------------------------------- [**] $[**] [**] - ----------------------------------------- [**] $[**] - ----------------------------------------- [**] $[**] - ----------------------------------------- [**] $[**] - ----------------------------------------- [**] $[**] - -----------------------------------------

[**] REMAINING STUDY NUMBER/NAME COSTS IN CDP [**] - ----------------------------------------- - ----------------------------------------- [**] $[**] [**] - ----------------------------------------- [**] $[**] [**] - ----------------------------------------- [**] $[**] - ----------------------------------------- [**] $[**] - ----------------------------------------- [**] $[**] - ----------------------------------------- [**] $[**] [**] [**] - -----------------------------------------

108 - ----------------------------------------- [**] $[**] - ----------------------------------------- 109 EXHIBIT 6.2 Marketing Budgets and Detailing Requirements Marketing Budgets. After Launch of the first AMD Product in the US Territory, the following shall apply: Eyetech shall [**] set forth below. Pfizer shall [**] - ------------------------------------ [**] [**] [**] [**] [**] - ------------------------------------ [**] [**] [**] [**] [**] - ------------------------------------ *Beginning with the [**] and thereafter [**] Marketing Expenses shall be calculated as follows: [**] Detailing Requirements. The following principles shall apply to the allocation of Detailing responsibilities between the Parties: (i) [**] Eyetech shall [**] Detailing [**] of the Details [**] in performing Details [**] (ii) Pfizer shall [**] in performing Details [**] (iii) Eyetech shall [**] detailing responsibilities. (iv) [**] Eyetech shall [**] detailing responsibilities [**] under this Agreement. [**] (v) Detailing assignments shall be consistent with the principles set forth in (i) to (iv) above, shall be set forth in each applicable Marketing Plan [**] - ------------------------------------ [**] [**] [**] [**] - ------------------------------------ [**] - ------------------------------------ [**] [**] [**] [**] [**] - ------------------------------------ [**] [**] [**] [**] - ------------------------------------ [**] - ------------------------------------ [**] [**] [**] [**] - ------------------------------------ [**] [**] [**] [**] - ------------------------------------ 110 EXHIBIT 6.12(a) Pre-Existing Clinical Supply Agreements 1. [**] Agreement dated [**] between Eyetech and [**] 2. Purchase Order dated [**] between Eyetech and [**] 3. Purchase Order dated [**] between Eyetech and [**] 4. [**] between Eyetech and [**] 5. [**] dated [**] between Eyetech and [**] 6. Purchase Order dated [**] between Eyetech [**] 111 EXHIBIT 10.4 Third Party Agreements 1. Licensing Agreement dated as of March 30, 2000, by and among Eyetech, Gilead Sciences, Inc. and NeXstar Pharmaceuticals, Inc., as amended by Amendment No. 1 dated May 9, 2000 and as subsequently amended by Amendment No. 2 dated December 4, 2001 and as subsequently amended by Amendment No. 3 dated August 30, 2002. 2. License Agreement dated as of December 31, 2001, by and between Eyetech and Isis Pharmaceuticals, Inc. 3. License, Manufacturing and Supply Agreement dated as of February 5, 2002, by and between Eyetech and Shearwater Corporation. 112 EXHIBIT 12.6(a)(iii) Certain Product Liability Matters Product Liability arising out of any claim by a patient enrolled as of the Execution Date in an ongoing Eyetech clinical trial based on safety issues related to Eyetech's pre-clinical testing program (other than reproductive studies). 113 EXHIBIT 12.6(b)(iii)(A) Eyetech 2002 Clinical Supply Costs Direct Cost Estimate API Current (2002) Clinical Product API Yield per Run (grams) from [**] [**]mM Batch Size

$/Batch $/gram ----------------- Raw Material (critical) [**] [**] Contract Cost [**] $[**] $[**] Release Cost (QC/QA) $[**] $[**] Total Direct Cost (API) $[**] $[**]

Cost/gram = $[**] Cost/mg = $[**] Cost of [**]mg fill = ([**])*[**]*$[**] = $[**] Note: [**]mg dose has a [**]% overfill 114 EXHIBIT 12.6(b)(iii)(B) Certain Third Party Intellectual Property [**] 115 EXHIBIT 17.15 Joint Press Release For immediate release: Contacts: Justin Jackson December 18, 2002 212-213-0006 (Burns McClellan on behalf of Eyetech) Geoffrey Cook 212-733-5244 (Pfizer) PFIZER, EYETECH PHARMACEUTICALS ENTER GLOBAL COLLABORATION FOR POTENTIAL TREATMENT FOR BLINDNESS New York, NY, December 18, 2002 - Pfizer Inc and Eyetech Pharmaceuticals, Inc. today announced they have entered into an agreement to jointly develop and commercialize Eyetech's Macugen(TM) (pegaptanib sodium), a potential treatment for age-related macular degeneration (AMD) and diabetic macular edema (DME), both leading causes of blindness. Under terms of the deal, which is subject to government approval, Pfizer will make initial payments of $100 million, with the potential for an additional $195 million in milestone payments based on worldwide regulatory submission and approvals. Eyetech also has the potential to receive up to an additional $450 million in milestone payments, which are contingent upon successful commercialization of Macugen(TM) and based on attainment of agreed-upon sales levels. Pfizer will also fund the majority of the ongoing development costs for both the AMD and DME indications. Further, if approved, Macugen(TM) will be co-promoted by Eyetech and Pfizer in the United States where Eyetech will have an ophthalmology sales force and record sales. Outside of the United States, Pfizer will market the product exclusively under a royalty-bearing license. Additional payments are subject to worldwide Macugen(TM) sales. Further terms of the deal were not disclosed. This is a landmark accomplishment for a young biotechnology company. We are excited to partner with the world's leading pharmaceutical company to bring a potentially innovative 116 therapy to so many patients who are at risk of losing their sight," said Dr. David Guyer, Eyetech Pharmaceuticals' co-founder and chief executive officer. The U.S. Food and Drug Administration has granted Macugen(TM) "fast-track" status for the treatment of exudative, or "wet" form of AMD as well as for DME because of the product's expected potential to fulfill a significant unmet medical need. "We are very pleased to partner with Eyetech on what we believe will be a breakthrough treatment for a devastating medical condition," said Pfizer President Karen Katen. "As the world's population ages, there will be an increasing number of people at risk for macular degeneration." Administered by intravitreal injection, Macugen(TM) is an aptamer that selectively binds to and neutralizes Vascular Endothelial Risk Factor (VEGF). In early clinical studies, Macugen(TM) was shown to inhibit abnormal blood vessel growth and stabilize and/or reverse blood vessel leakage in the back of the eye resulting in improved vision by three lines or more on standard eye charts in 26 percent of patients. Eyetech's Phase III development program for wet AMD involves nearly 1,200 patients at 117 investigational sites in the United States, Canada, South America, Europe, Israel and Australia, the largest clinical development program of its kind. Macugen(TM) is being developed as monotherapy as well as in combination with photodynamic therapy. WET AGE-RELATED MACULAR DEGENERATION (AMD) The leading cause of irreversible vision loss among Americans over the age of 55, AMD occurs in two different forms: dry AMD and wet AMD. The wet form accounts for approximately 200,000 new cases annually, with a prevalence of 1.2 million cases in the United States alone. Wet AMD is characterized by the growth of abnormal blood vessels into the area beneath the retina. This process, known as angiogenesis or neovascularization, results in fragile blood vessels that leak fluid and blood into the macula, the center portion of the retina. This leakage damages the area and results in a rapid loss of central vision, which is critical for tasks such as reading, driving, watching television and recognizing faces. 117 Laser photocoagulation and photodynamic therapy are the only current treatments for certain types of patients. DIABETIC MACULAR EDEMA (DME) DME affects roughly 135,000 Americans with diabetes each year and is the leading cause of blindness in adults under the age of 55. The decreased vision that characterizes DME results from fluid and lipids leaking from retinal blood vessels Eyetech Pharmaceuticals (www.eyetk.com) is dedicated to the discovery, development and commercialization of novel therapeutics and delivery systems to combat the vision loss associated with ophthalmic diseases. Founded in 2000, the privately-held, New York City-based company is focused on meeting the medical needs of patients with diseases that affect the back of the eye. Its investors include partners and affiliates of JP Morgan, BB Biotech, MPM Capital, Alta Partners, Schroder Ventures, Life Sciences and International BioTechnology Trust plc, and Merrill Lynch KECALP. Pfizer Inc discovers, develops, manufactures and markets leading prescription medicines, for humans and animals, and many of the world's best-known consumer brands. DISCLOSURE NOTICE: The information contained in this document is as of December 18, 2002. Pfizer assumes no obligation to update any forward-looking statements contained in this document as a result of new information or future events or developments. This document contains forward-looking information about a product in development that involves inherent uncertainties. The success of this research and development project and the speed with which regulatory authorizations and the launch of the product may be achieved, as well as competitive factors, could affect the actual outcome of this collaboration. A further list and description of the risks, uncertainties and other matters that could cause the Pfizer's description contained herein to differ materially can be found in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2001, and in its periodic reports on Forms 10-Q and 8-K (if any). 118 EXHIBIT 17.15(c) Permitted Disclosures[**] 119 EX-10.53 7 y18060exv10w53.txt EX-10.53: LICENSE AGREEMENT EXHIBIT 10.53 CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS. EXECUTION COPY LICENSING AGREEMENT This LICENSING AGREEMENT ("Agreement"), effective as of March 31, 2000 (the "Effective Date"), by and among GILEAD SCIENCES, INC., a Delaware corporation with its principal office located at 333 Lakeside Drive, Foster City, CA 94404 ("Gilead Sciences"), and its wholly-owned subsidiary, NEXSTAR PHARMACEUTICALS, INC., a Delaware corporation (collectively with Gilead Sciences, "Gilead"), and EYETECH PHARMACEUTICALS, INC., a Delaware corporation with its principal offices located at 300 East 42nd Street, Third Floor, New York, New York 10017 ("EyeTech"). Unless otherwise defined in this Agreement, all capitalized terms shall have the meanings given to them in Section 1.1 of this Agreement. RECITALS 1. WHEREAS, Gilead owns certain patents and patent applications and related know-how for NX1838, and has made certain filings for regulatory approvals with respect to NX1838; and 2. WHEREAS, Gilead and EyeTech desire to enter into this Agreement and certain other agreements, including an agreement providing for the fill-and-finish manufacture of quantities of Product sufficient for the completion of Phase Ib clinical trials; and 3. WHEREAS, subject to the terms and conditions set forth in this Agreement, Gilead wishes to license to EyeTech and EyeTech wishes to license from Gilead all of Gilead's rights under patents, patent applications and know-how related to NX1838, and have access to all regulatory approvals with respect to NX1838; and 4. WHEREAS, subject to the terms and conditions set forth in this Agreement, Gilead also wishes to sell to EyeTech and EyeTech wishes to purchase from Gilead its inventory of NX1838. NOW, THEREFORE, the Parties hereto, intending to be legally bound, hereby agree as follows: SECTION 1 DEFINITIONS 1.1 Definitions. For purposes of this Agreement, the following terms shall have the meanings set forth below: 1. "Affiliate" shall mean any Person that, directly or indirectly, through one or more intermediaries, Owns, is Owned by or is under common Ownership with, a Party, where "Own" or "Ownership" means (a) direct or indirect possession of at least fifty percent (50%) of the outstanding voting securities of a corporation or a comparable ownership in any other type of Person, provided, however, that if the law of the jurisdiction in which such entity operates does not allow fifty percent (50%) or greater ownership by a Party, such ownership interest shall be at least forty percent (40%) or (b) that a Person or group of Persons otherwise has the unilateral ability to control and direct the management of the entity, whether by contract or otherwise. "Business Day" shall mean any day other than a Saturday, Sunday or banking holiday in New York City or San Francisco, California. "Calendar Quarter" shall mean a calendar quarter (i.e., period of three (3) consecutive months) ending on March 31, June 30, September 30 or December 31. "Calendar Year" shall mean any period of twelve (12) consecutive months ending on December 31. "Competitive Product" shall mean a product competitive with a Product. "Compulsory License" means a compulsory license under the Licensed Patents obtained by a Third Party through the order, decree, or grant of a governmental authority of competent jurisdiction, authorizing such Third Party to manufacture, use, sell, offer for sale or import a Competitive Product in one or more countries within the Territory. "Control", "Controls", and "Controlled" shall mean, with respect to a particular item of information or intellectual property right, that the applicable Party owns or has a license to such item or right and has the ability to grant to the other Party access to and a license or sublicense (as applicable) under such item or rights as provided for in this Agreement without violating the terms of any agreement or other arrangement with any Third Party. "Damages" shall mean any and all costs, losses, claims, liabilities, fines, penalties, damages and expenses, court costs, and reasonable fees and disbursements of counsel, consultants and expert witnesses incurred by a Party hereto (including any interest payments which may be imposed in connection therewith). "Delivery Date" shall mean the date that is ten (10) days after the Effective Date. "Effective Date" shall have the meaning given such term in the first sentence of this Agreement. "EU" shall mean Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, The Netherlands, Portugal, Spain, Sweden and the United Kingdom, and future members of the European Union (or its successor), upon their admission for full membership (with commercial rights and privileges substantially comparable to those of the foregoing countries). 2. "EyeTech Rights" shall mean any invention or inventions, patentable or not, know-how, information and/or data relating to the Product, including, without limitation, pre-clinical studies and clinical trial information, manufacturing processes, formulations, modes of delivery and/or data necessary for the manufacture, use or sale of the Product, which are Controlled by EyeTech during the term of this Agreement, and all Patents covering any of the foregoing which are Controlled by EyeTech during the term of this Agreement. "FDA" shall mean the United States Food and Drug Administration, or any successor thereto. "Field" shall mean the prevention and treatment of all human and other animal diseases and conditions, and expressly excluding in vivo and in vitro diagnostic applications. "First Commercial Sale" shall mean, with respect to any particular country, the first sale of a Product in such country by EyeTech, or any of its Affiliates or sublicensees, after Regulatory Approvals in such country have been granted from the relevant Regulatory Authority in such country for such Product. "GAAP" shall mean United States generally accepted accounting principles, consistently applied. "Indemnified Party" shall have the meaning given in Section 7.2 hereof. "Indemnifying Party" shall have the meaning given in Section 7.2 hereof. "Know-How" shall mean all ideas, materials, inventions (whether patentable or not), trade secrets, data, instructions, processes, formulas, expert opinion and information, including, without limitation, the Manufacturing Information and biological, chemical, pharmacological, toxicological, physical and analytical, safety, manufacturing and quality control data and information, in each case within the Field, that, as of the Effective Date are (i) existing, and (ii) Controlled by Gilead as of the Effective Date, in each case which is necessary or useful for the development, manufacture, use, sale or commercialization of the Product in the Field. Excluded from Know-How are any Patents, the Licensed Patents and the Transferred Assets. "License" shall mean the license granted by Gilead to EyeTech pursuant to Section 2.1. "Licensed Patents" shall mean any Patents listed in Exhibit D (as updated from time to time pursuant to Section 5.6) which claim the manufacture, use, import, offer for sale or sale of Products in accordance with this Agreement and which now or at any time during the term of this Agreement are Controlled by Gilead or any Affiliate of Gilead. "Major Countries" shall mean Canada, France, Germany, Italy, Japan, Spain, United Kingdom and the United States. "Manufacturing Information" shall mean copies of all existing information in written and electronic form in Gilead's possession or control as of the Effective Date, with respect to any Product existing as of the Effective Date, that relates to, in the Field: (1) processes for the production of NX1838, and intermediates in the preparation of a Product; (2) the in-process 3. analytical controls for production of each of: (a) NX1838; and (b) a Product; (3) the process, formulation and development reports generated for the preparation of a Product; (4) the analytical methods and validation for the quality control release of each of: (a) NX1838; and (b) a Product; and (5) the stability protocols, stability indicating methods and stability data for each of: (a) NX1838; and (b) a Product. "NDA" shall mean a New Drug Application filed with the FDA requesting market approval for a new drug product. "Net Sales" shall mean, with respect to the Product, the gross amount billed or invoiced by EyeTech, its Affiliates or sublicensees, to unrelated Third Parties for the Products in finished product form, less the following deductions: (a) trade, quantity and cash discounts allowed, but expressly excluding discounts or allowances offered as part of a package of products that includes a Product sold by EyeTech, its Affiliates or sublicensees; (b) refunds, chargebacks and any other allowances which effectively reduce the net selling price; (c) actual product returns, credits and allowances; (d) rebates actually paid or credited to any governmental agency (or branch thereof) or to any Third Party payor, administrator or contractee; (e) discounts mandated by, or granted to meet the requirements of, applicable state, provincial or federal law, wholesaler, including required chargebacks and retroactive price reductions; (f) transportation, freight, postage charges and other charges such as insurance, relating thereto, in each case included as a specific line item on an invoice to such Third Parties; and (g) taxes, excises or other governmental charges upon or measured by the production, sale, transportation, delivery or use of goods, in each case included as a specific line item on an invoice to such Third Parties. Notwithstanding the foregoing, amounts received by EyeTech, or its Affiliates or sublicensees, for the sale of Products among EyeTech and its Affiliates or sublicensees for resale shall not be included in the computation of Net Sales hereunder. Net Sales shall be determined from books and records maintained in accordance with GAAP. In the event the Product is sold as part of a combination product, or as part of bundled products or as part of a delivery system, the Net Sales from the combination product, bundled product or delivery system, for the purposes of determining royalty payments, shall be determined by multiplying the Net Sales (as defined without regard to this paragraph) of the combination product by the fraction, A/(A+B) where A is the average sale price of the Product when sold separately in finished form and B is the average sale price of the other product(s) or system sold separately in finished form, or, only if the value of B cannot be determined, where A+B is the average sales price of the product(s) and 4. the delivery system together. If the value of B can be determined, in no event will the sales price of any combination product, bundled product or delivery system product be less than the sum of A and B. In the event that such average sale price cannot be determined for both the Product and such other product(s) or system in combination, the following calculation shall be substituted for the calculation recited in (ii) of the preceding sentence: the Net Sales (as defined without regard to this paragraph) of the combination products shall be multiplied by the fraction C/(C+D) where C is EyeTech's cost of goods of the Product and D is EyeTech's cost of goods for the other product(s) or system, determined in accordance with the method of accounting normally employed by EyeTech in computing cost of goods, provided, however, that the minimum value of such fraction as used in the calculation of Net Sales shall be 0.9. "NX1838" shall mean Gilead's proprietary compound known as NX1838, as described in Exhibit A. "Party" shall mean either Gilead or EyeTech, and "Parties" shall mean both of Gilead and EyeTech. "Patents" shall mean patents and patent applications, both foreign and domestic, including without limitation, all extensions, reissues, renewals, reexaminations, patents of addition, supplementary protection certificates and inventors' certificates thereof, substitutions, provisionals, divisionals, continuations and continuations-in-part. "Person" shall mean a natural person, a corporation, a partnership, a trust, a joint venture, a limited liability company, any governmental authority or any other entity or organization. "Pivotal Clinical Trial" shall mean either (a) a trial on sufficient numbers of patients that is designed to establish that a pharmaceutical product is safe and efficacious for its intended use, and to define warnings, precautions and adverse reactions that are associated with the pharmaceutical product in the dosage range to be prescribed, and to support Regulatory Approval of such pharmaceutical product or label expansion of such pharmaceutical product, or (b) a clinical trial that began as a trial on sufficient numbers of patients that is designed to establish the safety and biological activity of a pharmaceutical product for its intended use, and to define warnings, precautions and adverse reactions that are associated with the pharmaceutical product in the dosage range to be prescribed, after such date as the U.S. Food and Drug Administration or its successor (or equivalent regulatory authority) has indicated that the applicable Party may reasonably continue such trials with the intention to establish that a pharmaceutical product is safe and efficacious for its intended use, and to define warnings, precautions and adverse reactions that are associated with the pharmaceutical product in the dosage range to be prescribed, and to support Regulatory Approval of such pharmaceutical product or label expansion of such pharmaceutical product. "Product" shall mean any pharmaceutical composition containing NX1838 in any formulation, dosage concentration or volume, together with all label expansions, line extensions and improvements thereon, which may be included in any supplement, modification or addition to the filings for Regulatory Approval of the foregoing compound. 5. "Product Data Package" shall include the following information and data related to the Product in the possession or control of Gilead as of the Effective Date: (a) the Regulatory Documents; (b) pre-clinical and clinical development protocols, data, and reports; (c) manufacturing development technical reports; (d) toxicology reports; and (e) such other information and data specifically identified in Exhibit B attached hereto. "Product Inventory" shall mean the NX1838 and Product inventory, in bulk or finished form, which Gilead Controls as of the Effective Date, as identified in Exhibit C attached hereto. "Reasonable Diligence" shall mean commercially reasonable efforts to develop, obtain Regulatory Approval, and/or commercialize, as applicable, a Product in a country in the Territory, consistent with accepted business practices and legal requirements, and comparable to efforts in the pharmaceutical industry applicable to development, obtaining of Regulatory Approval for, or commercialization of human pharmaceutical products at an equivalent stage of development and similar market potential, profit potential and strategic value in view of conditions then prevailing. "Regulatory Approval" shall mean (a) in the United States, approval by the FDA of an NDA, or equivalent application, for marketing approval and satisfaction of any related applicable FDA registration and notification requirements (if any) and (b) in any country other than the United States, all approvals (including any required marketing, pricing and reimbursement approvals) by the Regulatory Authority in such country of a single application or set of applications comparable to an NDA, enabling legal sale of a product in such country. "Regulatory Authority" shall mean the FDA in the United States or the equivalent governmental agency having jurisdiction in any other country in the Territory. "Regulatory Documents" shall mean the (a) United States investigational new drug application (the "IND") #56503 (dated July 12, 1998), and all amendments and annual reports to same; (b) any pediatric data package or other exclusivity extensions relating to Products; and (c) any other regulatory filings with Regulatory Authorities relating to the Product. "Royalty Term" shall mean, with respect to each country in which Product is sold, the period of time equal to the longer of (i) ten (10) years from the date of First Commercial Sale of the Product in such country, or (ii) the expiration of the last-to-expire Licensed Patent in such country that claims the manufacture, use, and or sale of such Product as such activities are carried out pursuant to this Agreement. "Territory" shall mean the world, unless the License terminates with respect to a country pursuant to Section 6.7, in which case the Territory shall exclude any country in which the License has so terminated. "Third Party" shall mean a Person other than EyeTech, Gilead or their Affiliates. "Transferred Assets" shall mean the Product Inventory and the Product Data Package. 6. SECTION 2 GRANT OF LICENSES AND TRANSFER AND DELIVERY OF TRANSFERRED ASSETS AND MANUFACTURING INFORMATION 2.1 Grant of License. Subject to the terms and conditions of this Agreement, during the term of this Agreement, Gilead hereby grants to EyeTech an exclusive license under the Licensed Patents and Know How to make, have made, use, sell, offer to sell, import and export the Product within the Field throughout the Territory, with a right to sublicense to its Affiliates or (subject to Section 2.4) to any other Person. 2.2 Transferred Assets. As of the Effective Date, Gilead hereby assigns, transfers and conveys to EyeTech all of Gilead's right, title and interest in and to the Transferred Assets (subject to Section 4.5(c)), and EyeTech hereby accepts such assignment, transfer and conveyance. On or before the Delivery Date, Gilead shall have delivered to EyeTech all of the Transferred Assets and the Manufacturing Information. EyeTech shall have up to ten (10) days after such delivery to inventory the delivered Transferred Assets and Manufacturing Information and to give notice to Gilead of any Transferred Assets and Manufacturing Information that were not so delivered. If Gilead receives notice or otherwise learns after the Delivery Date that it has failed to deliver any Transferred Assets or Manufacturing Information to EyeTech, Gilead shall provide to EyeTech any such Transferred Assets or Manufacturing Information no later than five (5) Business Days after receipt of such notice or knowledge (or within such longer time as is mutually agreed by EyeTech and Gilead). The clinical data portion of the Product Data Package shall be provided to EyeTech in computer-readable format, where available, and otherwise in printed format. Gilead shall be under no obligation to convert to electronic format any portion of the Product Data Package that currently is available only in printed format. In the event that EyeTech is unwilling or unable to assume physical possession of the Transferred Assets and Manufacturing Information by the Effective Date, Gilead shall be entitled to charge EyeTech a reasonable fee for storage of the Transferred Assets and Manufacturing Information beyond the Effective Date. Gilead shall ship the Transferred Assets to EyeTech F.O.B. to EyeTech's designated facilities. For a period of 90 days following the receipt by EyeTech of the Transferred Assets and Manufacturing Information, Gilead personnel shall be reasonably available during Gilead's normal business hours to respond to technical inquiries of EyeTech regarding Products as is reasonably requested by EyeTech. EyeTech acknowledges that Gilead makes no representations or warranties with respect to the Transferred Assets or Manufacturing Information (other than as expressly set forth in Section 5 below) and that it accepts such Transferred Assets and Manufacturing Information "as is." 2.3 Negative Covenant of EyeTech. EyeTech shall not use or practice Licensed Patents or Know-How outside the Field or outside the Territory or for any other purpose except activities that it conducts in compliance with this Agreement. 2.4 Sublicenses. EyeTech shall have the right to sublicense the licenses granted to it by Gilead under this Agreement without the consent of Gilead; provided that (i) prompt notice and a copy of such sublicense shall be given by EyeTech to Gilead pursuant to Section 8.2 of this Agreement; (ii) EyeTech shall remain obligated at all times under this Agreement without regard to whether it has sublicensed its rights or whether EyeTech's sublicensee has performed; (iii) 7. such sublicense shall name Gilead as a third party beneficiary of such sublicense; and (iv) any such sublicenses granted by EyeTech shall contain provisions providing for its termination or assignment to Gilead, at the option of Gilead, of EyeTech's interest therein upon termination of this Agreement, and shall further contain provisions which obligate such sublicensee to comply with such terms, conditions, agreements and obligations that are consistent with the terms, conditions, agreements and obligations to which EyeTech is subject under this Agreement. 2.5 Gilead Right of First Negotiation. Except as otherwise provided in this Section 2.5, Gilead shall have a right of first negotiation with respect obtaining all rights with respect to any Product which is, or which can reasonably be expected to be, [**] (a "Reversion Product") as follows: Eyetech shall notify Gilead in writing if Eyetech intends to seek, negotiate, or solicit offers to license a Third Party to commercialize the Reversion Product for the treatment or prevention [**] (the "Reversion Field") and a specific territory (the "Reversion Territory"), prior to contacting any such potential Third Party licensees. Such written notice shall include sufficient detailed technical information concerning the Reversion Product as Gilead may reasonably require to evaluate its interest in such Reversion Product. Within thirty (30) days after receiving Eyetech's notice as to the Reversion Product, Gilead shall notify Eyetech whether it is interested in negotiating with Eyetech the terms under which Gilead shall obtain a license from Eyetech to research, develop and commercialize Reversion Products as described herein. If Gilead provides such notice, the Parties shall negotiate exclusively and in good faith for a period of up to ninety (90) days after Eyetech receives Gilead's notice of interest (the "Negotiation Period") the terms of an agreement pursuant to which Eyetech will grant to Gilead and its Affiliates an exclusive, royalty-bearing, sublicensable license, under all Eyetech Know-How and Eyetech Patents relating to such Reversion Product, to research, develop, make, have made, use, import, offer for sale, sell and otherwise commercialize such Reversion Product within the Reversion Field within the Reversion Territory, and which agreement shall include commercially reasonable provisions for transfer of or access to relevant regulatory filings and technology to Gilead. Neither Gilead nor Eyetech shall have any obligation to actually enter into a license agreement with respect to such Reversion Product. If either Gilead does not respond to Eyetech's notice of intent to license the Reversion Product within thirty (30) days after Gilead's receipt thereof, or Gilead and Eyetech fail to agree upon the terms of a license under rights to the Reversion Product during the Negotiation Period, Eyetech shall be free to commercialize such Reversion Product by itself or through its Affiliates or Third Parties without further obligation to Gilead. SECTION 3 PAYMENTS AND DELIVERIES In consideration of the exclusive license granted herein and the transfer of ownership of the Transferred Assets, EyeTech shall pay the following amounts to Gilead: 3.1 Initial Payments and Deliveries. (a) On Monday, April 3, 2000, EyeTech shall pay to Gilead the sum of seven million United States Dollars (US$7,000,000) by Federal Reserve electronic wire transfer in immediately available funds to an account designated by Gilead. Such amount shall be non-refundable and non-creditable, and shall not be subject to any counterclaim or set-off. 8. (b) On or before the Effective Date, EyeTech and Gilead Sciences shall enter into a Warrant Agreement (the "Warrant Agreement") mutually satisfactory to both Parties pursuant to which EyeTech shall issue to Gilead Sciences a warrant to purchase EyeTech Series B Preferred Stock. (c) On or before the Delivery Date, Gilead shall deliver to EyeTech (i) all of the Transferred Assets pursuant to Section 2.2 of this Agreement; (ii) all of the Manufacturing Information pursuant to Section 2.2 of this Agreement; and (iii) a schedule ("Schedule of Transferred Assets and Manufacturing Information") setting forth each of the Transferred Assets and Manufacturing Information being delivered to EyeTech at such time. (d) Within ten (10) days of delivery of the Transferred Assets and the Manufacturing Information and of the Schedule of Transferred Assets and Manufacturing Information pursuant to Section 3.1(c) above, EyeTech shall inventory the delivered Transferred Assets and Manufacturing Information pursuant to Section 2.2 and shall either (i) deliver to Gilead a receipt acknowledging the receipt of each of the Transferred Assets and the Manufacturing Information set forth on the Schedule of Transferred Assets and Manufacturing Information or (ii) notify Gilead of any Transferred Assets or Manufacturing Information that Gilead did not deliver. If Gilead receives notice or otherwise learns after the Delivery Date that it has failed to deliver any Transferred Assets or Manufacturing Information to EyeTech, Gilead shall provide to EyeTech any such Transferred Assets or Manufacturing Information no later than five (5) Business Days after receipt of such notice or knowledge (or within such longer time as is mutually agreed by EyeTech and Gilead). Within ten (10) days of Gilead delivering such missing items to EyeTech following notice given by EyeTech pursuant to clause (ii) of this Section 3.1(d), EyeTech shall deliver the receipt described in clause (i) of this Section 3.1(d). 3.2 Milestone Payments. Within five (5) Business Days of EyeTech and/or its Affiliates or sublicensees achieving the first occurrence of each of the milestone events listed below with respect to any Product, EyeTech shall notify Gilead of such achievement and the date thereof, and within thirty (30) days of the date of such achievement, pay the one-time non-refundable fees specified below to Gilead by Federal Reserve electronic wire transfer in immediately available funds to an account designated by Gilead; provided, however, that in no event shall the following fees be payable more than once with respect to Products for any particular geographical area or Milestone:

Milestone Fee - ------------------------------------ ----- First [**] with respect to a Product $[**] First [**] with respect to a Product $[**] First [**] with respect to a Product $[**] First [**] with respect to a Product $[**] First [**] with respect to a Product $[**] First [**] with respect to a Product $[**]

9. 3.3 Royalties. (a) Royalty on Products. EyeTech shall pay Gilead a royalty payment on Net Sales of Products that are made or sold during the Royalty Term and that are sold by EyeTech, its Affiliates or sublicensees (the "Royalty") according to the following rates, as adjusted in accordance with Sections 3.3(b) below: (i) [**] percent ([**]%) of Net Sales in the United States for the first [**] million dollars ($[**]) in Net Sales in the United States in a given Calendar Year; (ii) [**] percent ([**]%) of Net Sales in the United States for the next [**] dollars ($[**]), up to and including, [**] dollars ($[**]) in Net Sales during the same Calendar Year; (iii) [**] percent ([**]%) of Net Sales in the United States in excess of [**] dollars ($[**]) during the same Calendar Year; and (iv) [**] percent [**]%) of Net Sales outside the United States in the same Calendar Year. By way of example, if, in the year 2005, EyeTech Net Sales in the United States were equal to [**] dollars ($[**]), and [**] dollars ($[**]) outside the United States, then the Royalty payable to Gilead hereunder would equal [**] dollars ($[**]), calculated in the following manner:

AMOUNT OF NET SALES ROYALTY RATE ROYALTY - ---------------------------- ------------ ------- First $[**] (United States) [**]% $ [**] Next $[**] (United States) [**]% $ [**] Next $[**] (United States) [**]% $ [**] $[**] (outside United States) [**]% $ [**] - ---------------------------- ------ Total Royalty $ [**]

By way of further example, if, through the second Calendar Quarter in the year 2005, EyeTech Net Sales in the United States were equal to [**] dollars ($[**]), and [**] dollars ($[**]) outside the United States, then the Royalty payable to Gilead hereunder after such Calendar Quarter would equal [**] dollars ($[**]), calculated in the following manner:

AMOUNT OF NET SALES ROYALTY RATE ROYALTY ------------ ------- First $[**] (United States) [**]% $ [**] Next $[**] (United States) [**]% $ [**] $[**] (outside United States) [**]% $ [**] - ---------------------------- ------ Total Royalty $ [**]

10. (b) Offset. Notwithstanding the forgoing, on a country by country and Product by Product basis, EyeTech may credit against Net Sales [**] percent ([**]%) of any royalties it must pay to any Third Party on any Product: (1) pursuant to any licenses necessary to practice the License; or (2) resulting from any litigation (including settlement thereof) under Section 6.16; provided, however, for purposes of this Section 3.3(b) that the applicable royalty rates used for calculation of Royalties payable to Gilead shall not be reduced to less than [**] percent ([**]%) of the royalty rates(s) otherwise applicable pursuant to Section 3.3(a). 3.4 Payment; Report. All Royalties payable to Gilead under this Agreement shall be paid in U.S. dollars within sixty (60) days of the end of each Calendar Quarter or as otherwise specifically provided herein by Federal Reserve electronic wire transfer in immediately available funds to an account designated by Gilead. At the time of payment of Royalties, EyeTech shall send to Gilead a statement with respect to the applicable Calendar Quarter, country by country and Product by Product, for EyeTech, its Affiliates and sublicensees, of the amount of aggregate worldwide gross sales and Net Sales, the amount of gross sales during such Calendar Quarter, an itemized calculation of Net Sales showing deductions provided for in the definition of Net Sales and in Section 3.3(b), and, on a cumulative basis for the current Calendar Year, the amount of Royalties or other payments due on such sales. 3.5 Exchange Rate; Manner and Place of Payment. (a) All payments due hereunder from time to time shall be paid in U.S. Dollars. For purposes of computing such payments, the Net Sales of Product in countries other than the United States shall be converted into U.S. Dollars as computed using the average monthly rate of exchange at the time for such currencies as the rate applicable to the transfer of funds arising from payments as published in the Wall Street Journal (New York edition). The currency conversion system used by EyeTech shall be subject to audit by Gilead as described in Section 3.6 and, if not determined to be a system reflecting the fair market value of the currencies in question, shall be modified as necessary to effect currency conversion at fair market value. (b) Notwithstanding the provisions of Section 3.5(a), if by reason of any restrictive exchange laws or regulations, EyeTech shall be unable to convert to U.S. Dollars the amount, determined as above, equivalent to the amount due by EyeTech hereunder, then EyeTech shall so notify Gilead promptly and provide an explanation of the circumstances. In such event, EyeTech shall make all such payments or the balance thereof due hereunder and which is not paid in foreign currency as provided below, in U.S. Dollars as soon as reasonably possible after and to the extent that such restrictive exchange laws or regulations are lifted so as to permit EyeTech to pay amounts due under this Section 3.5 in U.S. Dollars. EyeTech shall promptly notify Gilead if such restrictions are so lifted. At its option Gilead shall meanwhile have the right to request the payment (to it or to its nominee), and, upon request, EyeTech shall pay or cause to be paid amounts due (or such portions thereof as are specified by Gilead) in the currency of any other country designated by Gilead and legally available to EyeTech under the then-existing laws of regulations. Any payments shall be payable to Gilead by wire transfer at such bank in the United States as Gilead Sciences shall specify from time to time. Not less than one (1) Business Day prior to such wire transfer, the remitting party shall telefax the receiving party advising it of the amount and of the payment to be made. 11. 3.6 Audits. EyeTech and its Affiliates and sublicensees shall keep full and accurate books and records relating to the financial performance of the Product. During the term of this Agreement plus four (4) years after termination or expiration of this Agreement, Gilead shall have the right, during regular business hours and upon reasonable advance notice, to have such books and records audited by an independent certified accountant so as to verify the accuracy of the information previously reported to Gilead. Such information shall be deemed to be Proprietary Information of EyeTech and, as such, subject to confidentiality obligations pursuant to Section 6.3. The independent certified account shall keep confidential any Proprietary Information obtained during such audit and shall report to Gilead only the amounts of Royalties due and payable. The cost of such audit shall be borne by Gilead; however, in the event such audit reveals that the Royalties to Gilead constitute an underpayment of five percent (5%) or more from that revealed by the audit to be actually owed, the cost of the audit shall be borne by EyeTech. EyeTech shall include in all sublicenses granted as permitted under Section 2.4 an audit provision substantially similar to the foregoing requiring the sublicensee to keep full and accurate books and records relating to the Product and granting Gilead the right to audit the accuracy of the information reported by the sublicensee in connection therewith on the same terms as apply to an audit of EyeTech's records hereunder. The terms of this Section 3.6 shall survive any termination or expiration or termination of this Agreement for a period of four (4) years. 3.7 Withholding Taxes. Any and all taxes levied on account of royalty payments paid or owed from a country in which provision is made in the law or by regulation for withholding will be deducted from royalty payments paid Gilead hereunder. EyeTech shall cooperate with Gilead to claim exemption from such deductions or withholdings under any double taxation or similar agreement in force from time to time. 3.8 Sublicensee Obligations. In the event EyeTech sublicenses its right to sell a Product, such sublicense shall include an obligation for the sublicensee to account for and report its Net Sales of Products and provide that Gilead shall have audit rights therefor pursuant to this Section 3 on the same basis as if such sales were Net Sales of Products by EyeTech, and EyeTech shall pay royalty payments to Gilead as if the Net Sales of the sublicensee were Net Sales of EyeTech. 3.9 Late Payments. Any amounts not paid by EyeTech when due under this Agreement shall be subject to interest from and including the date payment is due through and including the date upon which Gilead has collected immediately available funds in an account designated by Gilead at a rate equal to the sum of two percent (2%) plus the prime rate of interest quoted in the Money Rates section of The Wall Street Journal, calculated daily on the basis of a 360-day year, or similar reputable data source. No special notice by Gilead to EyeTech of such interest due shall be required. 3.10 Compulsory License. If either Party learns that a Third Party has obtained a Compulsory License in any country in the Territory, such Party shall promptly notify the other Party of such occurrence. If the royalty rate payable by the grantee of the Compulsory License is less than the royalty rates applicable in such country set forth in Section 3.3 of this Agreement, then the applicable royalty rates set forth in Section 3.3 of this Agreement shall be reduced to the lower royalty rates applicable in such country pursuant to such Compulsory License for so long 12. as sales of a Competitive Product are made by any Third Party pursuant to the Compulsory License. SECTION 4 TERM OF AGREEMENT; TERMINATION 4.1 Term. The term of this Agreement shall commence upon the Effective Date and, unless sooner terminated as provided in this Section 4, expire on the expiration of all Royalty Terms for all Products. 4.2 Licenses upon Expiration. In the event that the Agreement expires as set forth in Section 4.1 above without early termination, the License shall automatically become, at EyeTech's election made at least 90 days prior to such expiration, either (i) an exclusive, irrevocable, royalty-bearing license, subject to the surviving provisions of the Agreement, to use and/or sublicense the use of Know How to make, have made, use, import, have imported, offer for sale, sell, and have sold Product(s) in the Field in the Territory as it exists at the time of such expiration, subject to payment by EyeTech to Gilead of a royalty equal to [**] percent ([**]%) of Net Sales of Products made pursuant to the license under this Section 4.2(i) after the expiration of this Agreement, or (ii) a non-exclusive, irrevocable, royalty-free, paid-up license, subject to the surviving provisions of this Agreement, to use and/or sublicense the use of Know How to make, have made, use, import, have imported, offer for sale, sell, and have sold Product(s) in the Field in the Territory as it exists at the time of such expiration. 4.3 Termination for Breach. Each Party shall have the right to terminate this Agreement and its obligations hereunder for material breach by the other Party, which breach remains uncured for sixty (60) days after written notice is provided to the breaching Party, or in the case of an obligation to pay royalty payments or other amounts owing under this Agreement, which breach remains uncured for thirty (30) days after written notice to the breaching Party; provided, however, that non-payment of any royalty amounts or other payments owing under this Agreement, for which the non-paying Party reasonably disputes the obligation or amounts not paid, shall not be deemed a breach of an obligation to pay royalty payments or other amounts owing under this Agreement, provided that the non-paying Party has paid all such amounts not in reasonable dispute. 4.4 Termination in Event of Patent Challenge. Gilead shall have the right to terminate this Agreement if EyeTech challenges the validity of the Licensed Patents within any country in the Territory, effective thirty (30) days after EyeTech's receipt of written notice of such termination by Gilead. 4.5 Reversion of Product Rights. (a) Termination of Agreement. In the event that this Agreement is terminated pursuant to Sections 4.3 or 4.4 above, other than for Gilead's material breach of this Agreement, the License shall terminate immediately upon such termination. (b) Loss of License Rights in Country. In the event that EyeTech permanently loses its right to use and sell Products in any country other than by reason of any 13. action or failure to act on the part of Gilead or any party acting on behalf of Gilead, the License shall terminate with respect to such country. (c) Transfer of Rights. With respect to any and all countries in which EyeTech's license rights are terminated pursuant to Sections 4.5(a), 4.5(b), or 6.7(b): (i) such country(ies) shall automatically be removed from the Territory; (ii) EyeTech hereby grants to Gilead an exclusive, freely sublicensable license under the EyeTech Rights, which license shall be royalty-free and paid-up, subject to Section 4.5(d), to make, have made, use, import, offer for sale, sell and otherwise research, develop and commercialize formulations of the NX1838 in such countries, and Gilead covenants not to practice such license until the actual termination of EyeTech's license rights as to such countries pursuant to Sections 4.5(a) or (b); (iii) EyeTech shall assign all of its right, title and interest in and to, and shall cooperate in the transfer of all of, the following related to Products to the extent that EyeTech Controlled such during the term of this Agreement: (A) INDs and Regulatory Approvals, (B) all pre-clinical and clinical development protocols, data, and reports and other information and data (with any clinical data to be in computer-readable format, where available, and otherwise in printed format, with no obligation of EyeTech to convert to electronic format any portion of such clinical data that currently is available only in printed format), (C) manufacturing development technical reports, (D) toxicology reports, and (E) such other information and data specifically identified in Exhibit B or of such type (the preceding (A), (B), (C), (D) and (E) constituting the "Updated Product Data Package"), (iv) EyeTech shall deliver to Gilead copies of all information, records and data that it Controls that are reasonably necessary for the research, development and commercialization of Products, including without limitation all clinical data relating to Products, forward to Gilead samples of all chemical and biological materials acquired, made, cloned, synthesized, first discovered or collected as a result of research development or commercialization of Products and reasonable necessary to continue the research, development and commercialization of Products, and take such other actions and execute such other instruments, assignments and documents as may be necessary to effect the transfer of rights and materials hereunder to Gilead; and (v) EyeTech shall provide assistance reasonably requested by Gilead for a period of ninety (90) days following the date of notice of termination to facilitate the exercise of the license granted to Gilead in Section 4.5(c)(ii). (d) Royalties. Any license granted to Gilead pursuant to Section 4.5(c) shall be subject to payment of a royalty to EyeTech on a country-by-country basis at a rate equal to: (i) if such license is granted after initiation of Pivotal Clinical Trials for a Product applicable to such country, [**] percent ([**]%) of Gilead's net sales of Products in such country, or (ii) if such license is granted on or after the first Regulatory Approval of Product in such country, [**] percent ([**]%) of Gilead's net sales of Products in such country. 4.6 Accrued Rights and Obligations; Survival. Termination or expiration of this Agreement for any reason shall be without prejudice to any rights which shall have accrued to the benefit of either Party prior to such termination or expiration, including damages arising from any breach hereunder. The following provisions of this Agreement shall survive the expiration or termination of this Agreement: Sections 2.3, 4.2, 4.6, 5, 6.3, 6.4, 6.5, 6.9, 6.11(a), 6.12, 6.18, 7, 8. The following provisions of this Agreement shall survive the expiration of this Agreement to the extent that the license granted to EyeTech pursuant to Section 4.2 is in effect: Sections 3.4 through 3.9, 4.3, 4.5, 6.2, 6.7(d), 6.7(f), 6.8, 6.11(b), 6.11(c), 6.11(d), 6.13, 6.16 and 6.17(a). 14. SECTION 5 REPRESENTATIONS AND WARRANTIES 5.1 Corporate Existence and Power. As of the Effective Date, each Party represents and warrants to the other that it (a) is a corporation duly organized, validly existing and in good standing under the laws of the state in which it is incorporated, and (b) has full corporate power and authority and the legal right to own and operate its property and assets and to carry on its business as it is now being conducted and as contemplated in this Agreement, including, without limitation, the right to grant the licenses granted hereunder. 5.2 Authority and Binding Agreement. As of the Effective Date, each Party represents and warrants to the other that it (a) has the corporate power and authority and the legal right to enter into this Agreement and perform its obligations hereunder, (b) has taken all necessary corporate action on its part required to authorize the execution and delivery of the Agreement and the performance of its obligations hereunder, and (c) the Agreement has been duly executed and delivered on behalf of such Party, and constitutes a legal, valid and binding obligation of such Party and is enforceable against it in accordance with its terms. 5.3 Title. As of the Effective Date, each Party represents and warrants to the other that it has sufficient legal and/or beneficial title under its intellectual property rights necessary to perform activities contemplated under this Agreement and to grant the licenses contained in this Agreement and other ownership rights conveyed pursuant to this Agreement 5.4 No Conflict. Each Party represents and warrants to the other that it has not entered, and will not enter, into any agreement with any Third Party which is in conflict with the rights granted to the other Party under this Agreement, and has not taken and will not take any action that would in any way prevent it from granting the rights granted to the other Party under this Agreement, or that would otherwise materially conflict with or adversely affect the rights granted to the other Party under this Agreement. 5.5 No Approvals or Consents Required. Each Party represents and warrants to the other that all necessary consents, approvals and authorizations of all governmental authorities and other persons or entities required to be obtained by such Party in order to enter into this Agreement have been obtained. 5.6 Patents. Gilead represents and warrants to EyeTech that in Exhibit D, Gilead has in good faith supplied a complete list of all Patents it Controls as of the Effective Date, that, but for the grant of the License, would be infringed by the manufacture, use or sale of Products in the Field. If EyeTech reasonably determines that any Patent Controlled by Gilead or any Affiliate of Gilead as of the Effective Date should be added to Exhibit D because EyeTech's manufacture, use or sale of Products would infringe such Patent, then there shall be no deemed breach of Gilead's representations and warranties in this Section 5.6 until after the parties negotiate in good faith regarding the addition of any such Patent to Exhibit D without any additional financial obligation and are unable to reach agreement on such addition of such Patent. 5.7 No Conflict. Each Party represents and warrants to the other that the execution and delivery of the Agreement by such Party and the performance of such Party's obligations 15. hereunder (a) do not conflict with or violate any requirement of applicable law or regulation or any provision of articles of incorporation or bylaws of such Party in any material way, and (b) do not conflict with, violate or breach or constitute a default or require any consent under, any contractual obligation or court or administrative order by which such Party is bound. 5.8 Regulatory Documents. Gilead represents and warrants to EyeTech that: (a) Gilead has furnished EyeTech with access to a complete copy of the United States Regulatory Documents for the Product, including all material amendments and supplements thereto; (b) the Regulatory Documents have been accepted by, and Gilead has received no notice that the Regulatory Documents are not in good standing with, the relevant Regulatory Authorities; (c) to its knowledge, Gilead has filed with the relevant Regulatory Authorities all required notices, supplemental applications and annual or other reports, including adverse experience reports, with respect to the Regulatory Documents which are material; (d) Gilead has received no written notice of any regulatory action by the relevant Regulatory Authorities which may reasonably be expected to have a material adverse effect on the ability of a Party to obtain Regulatory Approval for Products based upon the Regulatory Documents. 5.9 Manufacturing Information. Gilead represents and warrants that, it has delivered or shall by the Delivery Date deliver to EyeTech all of the Transferred Assets and the Manufacturing Information. 5.10 Product Quality. Gilead hereby represents and warrants that all Product Inventory that is provided to EyeTech pursuant to the terms of this Agreement has been manufactured in compliance with all laws, rules and regulations (including without limitation, all applicable IND applications) applicable to the conduct of Gilead's Phase I clinical trial for a Product. 5.11 Implied Warranties. EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION 5, GILEAD MAKES NO REPRESENTATION OR WARRANTY AS TO THE PATENTS, LICENSED PATENTS, KNOW-HOW, THE TRANSFERRED ASSETS, PRODUCTS, ITS INVENTORY OF PRODUCTS OR NX1838, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT OF THIRD PARTY RIGHTS, OR OTHERWISE, AND GILEAD SPECIFICALLY DISCLAIMS ANY AND ALL IMPLIED OR STATUTORY WARRANTIES. Without limiting the foregoing, EyeTech acknowledges that it has not and is not relying upon any implied warranty, including without limitation implied warranties of merchantability, fitness for a particular purpose, non-infringement of third party rights, or upon any representation or warranty whatsoever as to the prospects (financial, regulatory or otherwise), or the validity or likelihood of success, of any Product after the Effective Date. 16. SECTION 6 ADDITIONAL COVENANTS AND AGREEMENTS OF THE PARTIES 6.1 Governmental Filings. Gilead and EyeTech each agree to prepare and file whatever filings, requests or applications are required to be filed with any governmental authority in connection with this Agreement and to cooperate with one another as reasonably necessary to accomplish the foregoing. Without limiting the generality of the foregoing, prior to, or within five (5) Business Days following, the assignment, transfer and conveyance by Gilead to EyeTech of the Transferred Assets pursuant to Section 2.2, Gilead shall have submitted to the relevant Regulatory Authorities the information required of a former owner of regulatory filings with respect to the Product, and EyeTech shall submit to the relevant Regulatory Authorities the information required of a new owner of regulatory filings with respect to the Product. 6.2 Compliance with Law. EyeTech shall comply with all supranational, national, federal, state, provincial and other local laws and regulations applicable to EyeTech's manufacture, use, development, marketing and sale of the Product. Without limiting the generality of the foregoing sentence, EyeTech shall not promote the Product in any manner in conflict with any applicable laws or regulations. 6.3 Proprietary Information; Exceptions. Each Party will maintain all Proprietary Information received by it under this Agreement in trust and confidence and will not disclose any such Proprietary Information to any Third Party or use any such Proprietary Information for any purposes other than those necessary or permitted for performance under this Agreement. In particular, EyeTech shall not use any Know How for the manufacture or sale of any product other than a Product in the Field. Each Party may use such Proprietary Information only to the extent required to accomplish the purposes of this Agreement. Proprietary Information shall not be used for any purpose or in any manner that would constitute a violation of any laws or regulations, including without limitation the export control laws of the United States. Proprietary Information shall not be reproduced in any form except as required to accomplish the intent of this Agreement. No Proprietary Information shall be disclosed to any employee, agent, consultant, Affiliate, or sublicensee who does not have a need for such information. To the extent that disclosure is authorized by this Agreement, the disclosing Party will obtain prior agreement, from its employees, directors, agents, consultants, Affiliates, sublicensees or clinical investigators to whom disclosure is permitted to be made, to obligations to hold in confidence and not make use of such information for any purpose other than those permitted by this Agreement, that are at least as restrictive as those of this Section 6.3. Each Party will use at least the same standard of care as it uses to protect its own Proprietary Information of a similar nature to ensure that such employees, agents, consultants and clinical investigators do not disclose or make any unauthorized use of such Proprietary Information, but no less than reasonable care. Each Party will notify the other within two (2) Business Days upon discovery of any unauthorized use or disclosure of the Proprietary Information. Proprietary Information shall not include any information which, as shown by competent proof: (a) is now, or hereafter becomes, through no act or failure to act on the part of the receiving Party, its employees or contractors in breach hereof, generally known or available; 17. (b) is known by the receiving Party at the time of receiving such information, as evidenced by its contemporaneous written records; (c) is hereafter furnished to the receiving Party by a Third Party, as a matter of right and without restriction on disclosure; (d) is independently developed by the receiving Party without any breach of this Agreement, as shown by independent, contemporaneous, written records; or (e) is the subject of a prior, express, written permission to disclose provided by the disclosing Party. Notwithstanding any other provision of this Section 6.3, (i) the Parties agree that they shall issue a press release in the form attached hereto as Exhibit F, and (ii) either Party may disclose such terms to bona fide potential corporate partners, to the extent required or contemplated by this Agreement, and to financial underwriters and other Third Parties with a need to know such information, provided that all such disclosures shall be made only to such Third Parties under an obligation of confidentiality and appropriately limited use. 6.4 Authorized Disclosure. Notwithstanding any other provision of this Agreement, each Party may disclose Proprietary Information if such disclosure: (a) is in response to a valid order of a court or other governmental body of the United States or a foreign country, or any political subdivision thereof; provided, however, that the receiving Party shall first have given notice to the other Party hereto and shall have made a reasonable effort to obtain a protective order requiring that the Proprietary Information so disclosed be used only for the purposes for which the order was issued; (b) is otherwise required by governmental law, rule or regulation, including without limitation rules or regulations of the U.S. Securities and Exchange Commission, or by rules of the National Association of Securities Dealers; or (c) is otherwise necessary to file or prosecute patent applications, prosecute or defend litigation or comply with applicable governmental regulations or otherwise establish rights or enforce obligations under this Agreement, but only to the extent that any such disclosure is necessary. Under no circumstances will EyeTech disclose publicly proprietary features of Gilead manufacturing technology for NX1838; provided, however, that Gilead shall cooperate with EyeTech to disclose such information to the extent required to provide EyeTech with reasonable protection from liability by reason of this prohibition on disclosure. 6.5 Return of Proprietary Information. In the event that the License terminates or expires, EyeTech shall promptly return all Proprietary Information received by it from Gilead. 6.6 Expenses. Gilead and EyeTech shall each bear their own direct and indirect expenses incurred in connection with the negotiation and preparation of this Agreement and, except as set forth in this Agreement, the performance of the obligations contemplated hereby. 18. 6.7 Efforts. (a) EyeTech shall use Reasonable Diligence to develop, obtain Regulatory Approval for, and commercialize Product(s) in the Territory and shall be solely responsible for all related development, regulatory and commercialization efforts and costs; provided, however, with respect to countries in the Territory that are not Major Countries (such countries, "Non-Major Countries"), EyeTech shall have the right to determine, on a country by country basis using its reasonable discretion not to pursue Regulatory Approval in such Non-Major Country because commercialization of the Product is not economically feasible for EyeTech. EyeTech shall provide Gilead with written notice of all decisions by EyeTech to not pursue development, Regulatory Approval or commercialization in a country in the Territory for a Product in the Field for any reason within thirty (30) days of such decision. (b) In the event EyeTech or its sublicensees fail to undertake Reasonable Diligence in developing, obtaining Regulatory Approval of, and/or commercializing Products in one or more Major Countries in the Territory, such failure shall (i) automatically cause the License to terminate with respect to such Major Country(ies) and have the consequences set forth in Section 4.5(c) with respect to any such Major Country(ies); and (ii) shall entitle Gilead to terminate this Agreement for material breach under Section 4.3 if there have been such failures of diligence applying to four (4) or more Major Countries, with the consequences set forth in Section 4.5(c); provided in each case that EyeTech (or its sublicensee) does not cure such failure within ninety (90) days of written notice from Gilead specifying its belief that such failure has occurred and the reasons therefor. Gilead shall not be entitled to exercise the foregoing termination rights if EyeTech reasonably disputes Gilead's contention that EyeTech has failed in such Reasonable Diligence until after the Parties have first completed dispute resolution procedures pursuant to Section 8.9. (c) EyeTech's Responsibilities. EyeTech shall be responsible, at its sole expense, for all development of, regulatory activities relating to, and commercialization of Products in the Territory beginning on the Effective Date, including performing clinical development of Products within the Territory using standard pharmaceutical industry practices, and making all regulatory filings necessary to obtain Regulatory Approvals of Products in the Territory. Within thirty (30) days of the Effective Date, EyeTech shall provide to Gilead a formal clinical development plan for Products in the Field in the Territory (the "Development Plan"), pursuant to which EyeTech will carry out development of Products under this Agreement, which shall be reasonably satisfactory to Gilead. The Development Plan shall be subject to amendment by EyeTech from time to time, with notice and copy of such amended Development Plan to Gilead; provided, however, (i) Gilead shall have the right to review such proposed amendment prior to its adoption; (ii) EyeTech shall in good faith consider any reasonable comments and considerations raised by Gilead within five (5) Business Days of Gilead's receipt of such proposed amendment; and (iii) such proposed amendment is consistent with EyeTech's obligations of Reasonable Diligence pursuant to Sections 6.7(a) and (b). (d) Regulatory Filings and Matters. EyeTech will file such regulatory filings as may be necessary to obtain Regulatory Approvals of Products within the Territory. EyeTech will be responsible for all communications with all supranational, regional, federal, state, provincial or other local regulatory agencies, department, bureaus and other governmental 19. authorities with jurisdiction over Regulatory Approvals in connection with such filings. EyeTech will keep Gilead informed of the status of such filings in each country, and will provide Gilead with at least sixty (60) days advance notice of the final submission of an application for Regulatory Approval in any country of the Territory. EyeTech will promptly advise Gilead each time that it obtains Regulatory Approval of Products in a country of the Territory. EyeTech shall be responsible for the reporting of adverse events related to the use of Products marketed by EyeTech, its Affiliates or sublicensees in the Territory. (e) Reporting; Meetings. Prior to February 1, May 1, August 1 and November 1 of each Calendar Year, EyeTech will submit to Gilead, written reports summarizing the status and progress of the clinical development, marketing and commercialization efforts for each Product in sufficient detail so as to allow Gilead to monitor EyeTech's compliance with Section 6.7(a). During March and September of each Calendar Year, senior executive and scientific personnel of EyeTech will meet with Gilead representatives to report on the status of development and commercialization of Products and to consult as to modifications in the development plan referenced in Section 6.7(c). 6.8 Pricing. EyeTech shall determine, in its sole discretion, the pricing, discounting policy and other commercial terms relating solely to Products. EyeTech agrees that EyeTech, its Affiliates and its sublicensees shall not subject the selling price of Products to abnormal discounts taken against Products in order to achieve sales of other products. 6.9 Export Control. This Agreement is made subject to any restrictions concerning the export of products or technical information from the United States of America or other countries which may be imposed upon or related to Gilead or EyeTech from time to time. Each Party agrees that it will not export, directly or indirectly, any technical information acquired from the other Party under this Agreement or any products using such technical information to a location or in a manner that at the time of export requires an export license or other governmental approval, without first obtaining the written consent to do so from the appropriate agency or other governmental entity. 6.10 Inability to Develop or Commercialize. EyeTech represents that it has, and covenants that it will maintain adequate resources and expertise to fulfill its obligations under this Agreement. During the term of this Agreement, EyeTech shall provide such information that Gilead may request that is reasonably necessary for Gilead to verify that EyeTech has adequate resources and expertise to fulfill its obligations under this Section 6.10. 20. 6.11 Compliance with Laws; Cooperation; Maintenance of Original Documents. (a) Each Party shall carry out its activities pursuant to this Agreement in compliance with all applicable supranational, national, state, provincial and local laws, rules, regulations and guidances. (b) Gilead and EyeTech each agree to use all commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary or proper to make effective the transactions contemplated by this Agreement, including such actions as may be reasonably necessary to obtain approvals and consents of governmental Persons and other Persons (including, without limitation, all applicable drug listing and notifications to the relevant Regulatory Authority identifying EyeTech as the licensee of the Product), in each case as reasonably necessary to allow EyeTech to develop, obtain Regulatory Approvals for, and commercialize Products as provided in this Agreement; provided that no Party shall be required in connection with such activities to (1) make any payment (other than as expressly required pursuant to this Agreement), or (2) assume any other material obligation not otherwise required to be assumed by this Agreement. (c) For so long as EyeTech, its Affiliates or sublicensees is making, using or selling Products, Gilead shall store and maintain all original Manufacturing Information in a secure location in accordance with practices customary for Gilead and the pharmaceutical industry for regulatory documents and in compliance with applicable laws and regulations, and, upon proper notice from a Regulatory Authority of competent jurisdiction over Products, shall make such Manufacturing Information reasonably available to such Regulatory Authority. (d) EyeTech shall store and maintain all original Updated Product Data Package in a secure location in accordance with practices customary for EyeTech and the pharmaceutical industry for regulatory documents and in compliance with applicable laws and regulations. 6.12 Cooperation. If either Party shall become engaged in or participate in any investigation, claim, litigation or other proceeding with any Third Party, including any proceeding before a Regulatory Authority, relating in any way to the Product or any of the Licensed Patents the other Party shall cooperate in all reasonable respects with such Party in connection therewith, including, without limitation, using its reasonable efforts to make available to the other Party such Party's employees who may be helpful with respect to such investigation, claim, litigation or other proceeding, provided that, for purposes of this provision, reasonable efforts to make available any employee shall be deemed to mean providing a Party with reasonable access to any such employee at no cost for a period of time not to exceed 24 hours (e.g., three 8-hour Business Days). Thereafter, any such employee shall be made available for such time and upon such terms and conditions (including, but not limited to, compensation) as the Parties may mutually agree. 6.13 Exclusive Rights. The licenses granted under this Agreement to EyeTech are exclusive, and no Person, including without limitation Gilead, shall have any right with respect to such licenses during the term of this Agreement, except as otherwise permitted under this Agreement. Except as otherwise permitted by this Agreement, Gilead shall refrain from granting 21. any right to any Third Party relating to NX1838, the Licensed Patents or the Transferred Assets that would, in any manner, violate the terms of or conflict with the rights granted to EyeTech pursuant to this Agreement. 6.14 Patent Prosecution and Maintenance. (a) Prosecution of Patents. Licensed Patents shall be prosecuted and maintained in the Territory by Gilead using diligent efforts, at Gilead's expense, except as otherwise provided in this Section 6.14(a). If Gilead reasonably determines that it has no material or commercially useful application for a Licensed Patent, then EyeTech shall have the right to have Gilead prosecute and maintain such Licensed Patents or file for such patent term extension therefor at EyeTech's sole expense. EyeTech shall bear all reasonable costs of any inter partes patent proceeding, including without limitation oppositions, interferences or contested re-examinations, which proceeding shall be conducted under the control of Gilead. (b) EyeTech shall assist Gilead in obtaining patent extensions and supplementary protection certificates, and provide such other assistance as reasonably requested by Gilead in connection with the prosecution and maintenance of the Licensed Patents in any part of the Territory at EyeTech's sole expense. 6.15 Infringement of Licensed Patents. (a) Notice. Each Party shall promptly notify the other in writing of any alleged infringement by Third Parties of any Licensed Patent within the Territory and provide any information available to that Party relating to such alleged infringement or misappropriation. EyeTech shall have no rights with respect to any infringement of Licensed Patents that occurs outside of the Field and/or outside the Territory except the right to receive notice pursuant to this Section 6.15(a). (b) Enforcement of Licensed Patents against Competitive Products. If any Licensed Patent is infringed by a Third Party in connection with the manufacture, use, sale, offer for sale or import of a Competitive Product within the Field and within the Territory ("Competitive Product Infringement"), EyeTech shall have the primary right, but not the obligation, to initiate, prosecute and control any action with respect to such infringement in the Territory, by counsel of its own choice, to secure the cessation of the infringement or to enter suit against the infringer. Gilead shall have the right to participate in any such action with respect to the Licensed Patents and to be represented by counsel of its own choice. If EyeTech fails to bring an action or proceeding to enforce a Licensed Patent within a period of one hundred twenty (120) days after having knowledge of infringement of such Licensed Patent, then Gilead shall have the right to bring and control any such action by counsel of its own choice, and EyeTech shall have the right to participate in such action and be represented by counsel of its own choice. If a Party brings any such action or proceeding under this Section 6.15(b), the other Party agrees to be joined as a party plaintiff and to give the first Party reasonable assistance and authority to control, file and prosecute the suit as necessary. The costs and expenses of the Party bringing suit under this Section 6.15(b) (including the internal costs and expenses specifically attributable to such suit) shall be reimbursed first out of any damages or other monetary awards recovered in favor of the Parties, and any remaining damages shall be treated as Net Sales of 22. EyeTech in its Territory if EyeTech controlled the action or allocated between the parties in accordance with their economic interest in the profitability of Products if Gilead controlled the action. No settlement or consent judgment or other voluntary final disposition of a suit under this Section 6.15(b) relating to a Licensed Patent may be entered into without the consent of Gilead, not to be unreasonably withheld. (c) Enforcement of Licensed Patents against Non-Competitive Products. With respect to any infringement of Licensed Patents within the Field and within the Territory that is not a Competitive Product Infringement, Gilead shall have the primary right, but not the obligation, to initiate, prosecute and control any action with respect to such infringement, by counsel of its own choice, to secure the cessation of the infringement or to enter suit against the infringer and shall be the "Lead Party" and EyeTech shall be the "Secondary Party". The Secondary Party shall have the right to participate in any such action with respect to its Patents and to be represented by counsel of its own choice. If the Lead Party fails to bring an action or proceeding to enforce a Licensed Patent within a period of one hundred twenty (120) days after having knowledge of infringement of such Licensed Patent, then the Secondary Party shall have the right to bring and control any such action by counsel of its own choice, and the Lead Party shall have the right to participate in such action and be represented by counsel of its own choice. If a Party brings any such action or proceeding hereunder, the other Party agrees to be joined as a party plaintiff and to give the first Party reasonable assistance and authority to control, file and prosecute the suit as necessary. The costs and expenses of the Party bringing suit under this Section 6.15(c) (including the internal costs and expenses specifically attributable to such suit) shall be reimbursed first out of any damages or other monetary awards recovered in favor of the Parties, and any remaining damages shall be paid to Gilead if Gilead controlled the action, or paid to each Party in proportion to their expenditures in such action, if EyeTech controlled the action. No settlement or consent judgment or other voluntary final disposition of a suit under this Section 6.15(c) relating to a Licensed Patent may be entered into without the consent of Gilead, not to be unreasonably withheld. 6.16 Infringement of Third Party's Rights. (a) If the practice of the Licensed Patents through the manufacture, use or sale of Products by EyeTech, its Affiliates or sublicensees results in a claim for patent infringement against EyeTech, its Affiliates or sublicensees, the Party to this Agreement first having notice of that claim shall promptly notify the other Party in writing. The notice shall set forth the facts of the claim in reasonable detail. (b) If a Third Party asserts that a patent or other right owned by or licensed to it is infringed by the practice of the Licensed Patents through the manufacture, use or sale of Products by EyeTech, its Affiliates or sublicensees pursuant to the License, EyeTech may attempt to resolve the problem raised by the asserted infringement. The matter shall be deemed resolved if EyeTech obtains: (a) a license permitting EyeTech to manufacture, use and sell Products in that country on a royalty-free or royalty-bearing basis; (b) a statement or representation from the Third Party that: (1) no action will be taken against EyeTech, its Affiliates or its sublicensees, or (2) that the patent or other right is not infringed by the manufacture, use or sale of Products by EyeTech, its Affiliates or its sublicensees; or (c) a final judgment by a court of competent jurisdiction from which no appeal has or can be taken that the 23. Third Party's patent(s) alleged to be infringed is invalid, or the Third Party's patent(s) or other right(s) are unenforceable or not infringed by the manufacture, use or sale of Products by EyeTech, its Affiliates or sublicensees. EyeTech shall have the primary right to defend any such claim. Gilead shall have the right, but not the obligation, to participate in any such suit at its sole option and at its own expense. Each Party shall reasonably cooperate with the Party conducting the defense of the claim. Neither Party shall enter into any settlement that affects the other Party's rights or interests without such other Party's prior written consent, not to be unreasonably withheld. If EyeTech makes a payment to any Third Party in the course of defending or settling any claim brought by a Third Party pursuant to this Section 6.16, EyeTech shall be entitled to offset a percentage of all such amounts against royalties due to Gilead hereunder as provided in Section 3.3(b). 6.17 Manufacturing. (a) EyeTech shall be solely responsible for the manufacture of Product following the Effective Date, including without limitation for clinical trials and commercialization. (b) The Parties shall enter into an agreement dated as of the Effective Date (the "Manufacturing Agreement") obligating the Parties to enter into a clinical supply agreement providing for the fill and finish of sufficient quantities of Product Inventory to complete a Phase Ib trial investigating the use of NX1838 for the treatment of age-related macular degeneration. 6.18 Use of Names, Logos or Symbols. No Party hereto shall use the name, trademarks, logos, physical likeness, employee names or owner symbol of the other Party hereto for any purpose, including, without limitation, in connection with any private or public securities placements, without the prior written consent of the affected Party, such consent not to be unreasonably withheld or delayed so long as such use of name is limited to objective statements of fact, rather than for endorsement purposes. Nothing contained herein shall be construed as granting either Party any rights or license to use any of the other Party's trademarks or trade names without separate, express written permission of the owner of such trademark or trade name. SECTION 7 INDEMNIFICATION 7.1 Indemnification. (a) Gilead shall indemnify, defend and hold EyeTech (and its directors, officers, employees, consultants, Affiliates and sublicensees) (each, an "EyeTech Indemnitee") harmless from and against any and all Damages incurred or suffered by an EyeTech Indemnitee as a result of Third Party claims, actions or proceedings (collectively, "EyeTech Claims") to the extent such EyeTech Claims are a consequence of: (1) the breach or alleged breach of any representation or warranty by Gilead hereunder, or 24. (2) the negligence or misconduct of Gilead in connection with its activities under this Agreement; except to the extent such EyeTech Claims are a consequence any of the items in Sections 7.1(b)(1), (2) or (3). (b) EyeTech shall indemnify, defend and hold Gilead (and its directors, officers, employees, consultants and Affiliates) (each, a "Gilead Indemnitee") harmless from and against any and all Damages incurred or suffered by a Gilead Indemnitee as a result of Third Party claims, actions or proceedings (collectively, "Gilead Claims") to the extent such Gilead Claims are a consequence of: (1) the breach or alleged breach of any representation or warranty by EyeTech hereunder; (2) the negligence or willful misconduct of EyeTech in connection with its activities under this Agreement; (3) the possession, research, development, manufacture, use, offer for sale, sale, administration, storage or transport of NX1838 or Products by EyeTech or its Affiliates or sublicensees; except to the extent such Gilead Claims are a consequence any of the items in Sections 7.1(a)(1) or (2). 7.2 Mechanics. If a Party or its Affiliate has a right to be indemnified under this Section 7 (the "Indemnified Party"), such Party or Affiliate (i) shall give prompt notice of such EyeTech Claim or Gilead Claim, as the case may be (as applicable, a "Claim"), to the other Party (the "Indemnifying Party") and (ii) subject to Sections 6.15 and 6.16 of this Agreement, will have the first right to defend any Claims for which it is entitled to indemnification from the other Party under Section 7.1, with the cooperation and at the expense of such other Party, provided that it will not settle any such Claim without the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld. If the Indemnified Party is defending a Claim, the Indemnifying Party shall have the right to be present in person or through counsel at substantive legal proceedings. In the event that the Parties cannot agree as to the application of Section 7.1 to any Damages or Claim, the Parties may conduct separate defenses of such claim. Each Party further reserves the right to claim indemnity from the other in accordance with Section 7.1 upon resolution of the underlying claim. 7.3 Insurance Coverage. Each Party represents and warrants that it is covered and will continue to be covered by a comprehensive general liability insurance program which covers all of each Party's activities and obligations hereunder in accordance with reasonable pharmaceutical industry standards. Each Party will provide the other Party with written notice at least fifteen (15) days prior to any cancellation or material change in such insurance program. Each Party will maintain such insurance program, or other program with comparable coverage, beyond the expiration or termination of this Agreement during the period in which any Product is being commercially distributed or sold, and for a commercially reasonable period thereafter. 25. 7.4 Indemnification Payment Adjustments. The amount of any Damages for which indemnification is provided under this Section 7 shall be reduced to take account of any net tax benefit and shall be increased to take account of any net tax detriment arising from the incurrence or payment of any such Damages or from the receipt of any such indemnification payment and shall be reduced by the insurance proceeds received and any other amount recovered, if any, by the Indemnified Party with respect to any Damages; provided, however, that an Indemnified Party shall not be subject to an obligation to pursue an insurance claim relating to any Damages for which indemnification is sought hereunder. If any Indemnified Party shall have received any payment pursuant to this Section 7 with respect to any Damages and shall subsequently have received insurance proceeds or other amounts with respect to such Damages, then such Indemnified Party shall pay to the Indemnifying Party an amount equal to the difference (if any) between (1) the sum of the amount of those insurance proceeds or other amounts received and the amount of the payment by such Indemnifying Party pursuant to this Section 7 with respect to such Damages and (2) the amount necessary to fully and completely indemnify and hold harmless such Indemnified Party from and against such Damages; provided, however, in no event will such Indemnified Party have any obligation pursuant to this sentence to pay to such Indemnifying Party an amount greater than the amount of the payment by such Indemnifying Party pursuant to this Section 7 with respect to such Damages. 7.5 Indemnification Payment. Upon the final determination of liability and the amount of the indemnification payment under this Section 7, the appropriate Party shall pay to the other in immediately available funds, within thirty (30) Business Days after such determination, the amount of any claim for indemnification made hereunder. 7.6 Survival. The provisions of this Section 7 shall survive any termination of this Agreement with respect to actions of the Parties during the term of the Agreement or the term of any license to EyeTech, whichever occurs later. Each Indemnified Party's rights under this Section 7 shall not be deemed to have been waived or otherwise affected by such Indemnified Party's waiver of the breach of any representation, warranty, agreement or covenant contained in or made pursuant to this Agreement, unless such waiver expressly and in writing also waives any or all of the Indemnified Party's right under Section 7. SECTION 8 MISCELLANEOUS 8.1 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the Parties hereto and their respective successors and assigns; provided, however, that neither Gilead nor EyeTech may assign any of its rights, duties or obligations hereunder without the prior written consent of the other, which consent may be withheld in the other's sole discretion, except that no prior written consent shall be required in the event that a Third Party acquires substantially all of the assets or outstanding shares of, or merges with, EyeTech or Gilead, as the case may be. No assignment of this Agreement or of any rights hereunder shall relieve the assigning Party of any of its obligations or liability hereunder. Any attempted assignment not in compliance with this Section 8.1 shall be of no force or effect. 8.2 Notices. All notices or other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given if delivered by hand, 26. prepaid telex, cable, telegram or facsimile and confirmed in writing, or mailed first class, postage prepaid, by registered or certified mail, return receipt requested (mailed notices and notices sent by telex, cable or telegram shall be deemed to have been given on the date received) as follows: If to Gilead, as follows: Gilead Sciences, Inc. 333 Lakeside Drive, Foster City, CA 94404 Facsimile: (650) 522-5488 Attn: Chief Executive Officer With a copy to: Gilead Sciences, Inc. 333 Lakeside Drive, Foster City, CA 94404 Facsimile: (650) 522-5537 Attn: General Counsel If to EyeTech, as follows: EyeTech Pharmaceuticals, Inc. 300 East 42nd Street Third Floor New York, N.Y. 10017 Facsimile: (212) 883-8883 Attn: Chief Executive Officer With a copy to: Duval & Stachenfeld LLP 300 East 42nd Street Third Floor New York, N.Y. 10017 Facsimile: (212) 883-8883 Attn: Harsha Murthy or in any case to such other address or addresses as hereafter shall be furnished as provided in this Section 8.2 by any Party hereto to the other Party. 8.3 Waiver; Remedies. Any term or provision of this Agreement may be waived at any time by the Party entitled to the benefit thereof by a written instrument executed by such Party. No delay on the part of Gilead or EyeTech in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of either Gilead or EyeTech of any right, power or privilege hereunder operate as a waiver of any other right, power or privilege hereunder nor shall any single or partial exercise of any right, power or privilege 27. hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder. 8.4 Survival of Representations. Each of the representations and warranties made in this Agreement shall survive the expiration or termination of this Agreement only with respect to activities conducted or events occurring prior to the expiration or termination of the Agreement. 8.5 Entire Agreement. This Agreement, together with all exhibits hereto and the Warrant Agreement and the Manufacturing Agreement, constitute the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior agreements or understandings of the Parties relating thereto. 8.6 Amendment. This Agreement may be modified or amended only by written agreement of the Parties hereto. 8.7 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute a single instrument. 8.8 Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of California, excluding its choice of law rules, except for the application of the Federal Arbitration Act pursuant to Section 8.9(c)(ii). 8.9 Dispute Resolution. (a) The Parties recognize that disputes as to certain matters may from time to time arise during the term of this Agreement which relate to either party's rights and/or obligations hereunder or thereunder. It is the objective of the Parties to establish procedures to facilitate the resolution of disputes arising under this Agreement in an expedient manner by mutual cooperation and without resort to litigation. To accomplish this objective, the Parties agree to follow the procedures set forth in this Section 8.9 if and when a dispute arises under this Agreement. In the event of disputes between the Parties, a Party seeking to resolve such dispute will, by written notice to the other Party, have such dispute referred to their respective executive officers designated below or their successors, for attempted resolution by good faith negotiations within fourteen (14) days after such notice is received. Said designated officers are as follows: For EyeTech: Chief Executive Officer For Gilead: Chief Executive Officer In the event the designated executive officers are not able to resolve such dispute, either party may at any time after the 14 day period invoke the provisions of Section 8.9(b) hereinafter. (b) Following settlement efforts pursuant to Section 8.9(a), any dispute, controversy or claim arising out of or relating to the validity, construction, enforceability or performance of this Agreement, including disputes relating to alleged breach or to termination of this Agreement under Section 4, other than disputes which are expressly prohibited herein from 28. being resolved by this mechanism, shall be settled by binding Alternative Dispute Resolution ("ADR") in the manner described below: (i) If a party intends to begin an ADR to resolve a dispute, such party shall provide written notice (the "ADR Request") to counsel for the other party informing such other party of such intention and the issues to be resolved. From the date of the ADR Request and until such time as any matter has been finally settled by ADR, the running of the time periods contained in Section 4.3 as to which party must cure a breach of this Agreement shall be suspended as to the subject matter of the dispute. (ii) Within ten (10) business days after the receipt of the ADR Request, the other party may, by written notice to the counsel for the party initiating ADR, add additional issues to be resolved. (iii) Disputes regarding the scope, validity and enforceability of Patents shall not be subject to this Section 8.9, except for Section 8.9(a), and shall be submitted to a court of competent jurisdiction. (c) The ADR shall be conducted pursuant to Comprehensive Rules for Commercial, Real Estate and Construction Disputes then in effect, except that notwithstanding those rules, the following provisions shall apply to the ADR hereunder: (i) The arbitration shall be conducted by a panel of three arbitrators (the "Panel"). The Panel shall be selected from a pool of retired independent federal judges to be presented to the Parties by JAMS. (ii) The time periods set forth in the JAMS rules shall be followed, unless a party can demonstrate to the Panel that the complexity of the issues or other reasons warrant the extension of one or more of the time tables. In such case, the Panel may extend such time tables, but in no event shall the time tables being extended so that the ADR proceeding extends more than 18 months from its beginning to the Award. In regard to such time tables, the Parties (i) acknowledge that the issues that may arise in any dispute involving this Agreement may involve a number of complex matters and (ii) confirm their intention that each party will have the opportunity to conduct complete discovery with respect to all material issues involved in a dispute within the framework provided above. Within such time frames, each party shall have the right to conduct discovery in accordance with the Federal Rules of Civil Procedure. The Panel shall not award punitive damages to either party and the Parties shall be deemed to have waived any right to such damages. The Panel shall, in rendering its decision, apply the substantive law of the State of California, without regard to its conflict of laws provisions, except that the interpretation of and enforcement of this Section 8.9(c)(ii) shall be governed by the Federal Arbitration Act. The Panel shall apply the Federal Rules of Evidence to the hearing. The proceeding shall take place in San Francisco, San Mateo or Santa Clara Counties, California. The fees of the Panels and JAMS shall be paid by the losing Party which shall be designated by the Panel. If the Panel is unable to designate a losing party, it shall so state and the fees shall be split equally between the Parties. 29. (iii) The Panel is empowered to award any remedy allowed by law, including money damages, multiple damages, prejudgment interest and attorneys' fee, and to grant final, complete, interim, or interlocutory relief, including injunctive relief but excluding punitive damages. (iv) Except as set forth in Section 8.9(c)(ii), above, each party shall bear its own legal fees. The Panel shall assess its costs, fees and expenses against the party losing the ADR unless it believes that neither party is the clear loser, in which case the Panel shall divide such fees, costs and expenses according to the Panel's sole discretion. (v) The ADR proceeding shall be confidential and the Panel shall issue appropriate protective orders to safeguard each party's Proprietary Information. Except as required by law, no party shall make (or instruct the Panel to make) any public announcement with respect to the proceedings or decision of the Panel without prior written consent of each other party. The existence of any dispute submitted to ADR, and the award, shall be kept in confidence by the Parties and the Panel, except as required in connection with the enforcement of such award or as otherwise required by applicable law. (d) The Parties agree that judgment on any arbitral award issued pursuant to this Section 8.9 shall be entered in the United States District Court for the Northern District of California or, in the event such court does not have subject matter jurisdiction over the dispute in question, such judgment shall be entered in the Superior Court of the State of California, in the County of San Mateo, and each Party agrees to the co-exclusive personal jurisdiction of such courts for the purpose of entry of such a judgment. 8.10 Captions. All section titles or captions contained in this Agreement, in any Exhibit referred to herein and the table of contents, if any, to this Agreement are for convenience only, shall not be deemed a part of this Agreement and shall not affect the meaning or interpretation of this Agreement. 8.11 No Third Party Rights or Obligations. Except as expressly provided in Section 7, no provision of this Agreement shall be deemed or construed in any way to result in the creation of any rights or obligation in any Person not a Party to this Agreement. 8.12 Severability. If any provision of this Agreement is found or declared to be invalid or unenforceable by any court or other competent authority having jurisdiction, such finding or declaration shall not invalidate any other provision hereof, and this Agreement shall thereafter continue in full force and effect. In the event any such provision is so declared invalid or unenforceable, the Parties shall negotiate an alternative provision that closely approximates the Parties' intent, to the extent allowable under law. 8.13 Attachments. All Exhibits and other attachments to this Agreement are by this reference incorporated herein and made a part of this Agreement. 8.14 Disclaimer of Agency. This Agreement shall not constitute any Party the legal representative or agent of another, nor shall any Party have the right or authority to assume, create, or incur any Third Party liability or obligation of any kind, express or implied, against or in the name of or on behalf of another except as expressly set forth in this Agreement. 30. 8.15 Interpretation. This Agreement has been jointly prepared by the Parties and their respective legal counsel and shall not be strictly construed against either Party. 8.16 Force Majeure. Each of the Parties hereto shall be excused from the performance of its obligations hereunder (except the payment of money) in the event such performance is prevented by force majeure, provided that the non-performing Party promptly provides notice of the prevention to the other Party. Such excuse shall be continued so long as the condition constituting force majeure continues and the non-performing Party makes and continues to make reasonable efforts to remove or overcome the condition. For the purposes of this Agreement, force majeure shall mean any act of God, fire, casualty, flood, war, earthquake, strike, failure of public utilities, any act, exercise, assertion or requirement of governmental authority, accident, epidemic, destruction of facilities, or such other similar occurrences beyond the control of the Party whose performance is affected. 8.17 Limitation of Liability. IN NO EVENT SHALL EITHER PARTY OR ITS RESPECTIVE AFFILIATES AND PERMITTED SUBLICENSEES BE LIABLE FOR SPECIAL, EXEMPLARY, CONSEQUENTIAL OR PUNITIVE DAMAGES, WHETHER IN CONTRACT, WARRANTY, TORT, STRICT LIABILITY OR OTHERWISE, EXCEPT TO THE EXTENT SUCH PARTY MAY BE REQUIRED TO INDEMNIFY THE OTHER PARTY FROM SUCH DAMAGES CLAIMED BY THIRD PARTIES UNDER SECTION 7. 8.18 No Assumption of Obligations. Except as expressly provided in this Agreement: (i) neither Party is assuming any of the other Party's responsibilities, duties (including, without limitation, compliance with all applicable laws and regulations), obligations (including payment obligations), claims, Damages, liabilities, burdens and problems of any nature whatsoever (collectively, "Obligations"), whether by operation of law or otherwise, and (ii) without limiting the foregoing, EyeTech is not assuming any of Gilead's Obligations with respect to Transferred Assets. 31. IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed and delivered as of the day and year first above written. GILEAD SCIENCES, INC. EYETECH PHARMACEUTICALS, INC. By: /s/Mark L. Perry By: /s/David Guyer --------------------------------- ------------------------------- Mark L. Perry David Guyer Senior Vice President, Operations Chief Executive Officer NEXSTAR PHARMACEUTICALS, INC. By: /s/Mark L. Perry --------------------------------- Mark L. Perry Chief Financial Officer 32. EXHIBIT A NX1838 The compound NX1838, is [**] A-1. EXHIBIT B PRODUCT DATA PACKAGE INFORMATION AND DATA Regulatory IND Pre-IND submissions IND correspondence IND supplements Clinical Case Report Forms by site 1838 Project Files Investigator Files by Site Manufacturing (API) Synthesis Batch Records Accompanying Analytical Data Records of Failed Lots Manufacturing (DP) Master Production Records Bills of Materials Assay methods Finished Product Specifications B-1. EXHIBIT C PRODUCT INVENTORY NX1838 PHYSICAL COUNT SHEET DATE: 03/23/00 COUNTED BY: Felicia Yu, Judy Liou

Expiration Date Physical Count --------------- -------------- NX1838 Lots LOT# 131901E 3MGS IN 100 MICROLITERS 2/29/00 16 LOT# 141901E 4MGS IN 100 MICROLITERS 04/13/99 50 LOT# 251901E 3MGS IN 200 MICROLITERS 7/14/99 149 Ingredients 1106510911 NX 1838 APTAMER LOT# 97000690 10/14/99 792.8 1106510911 NX 1838 APTAMER LOT# 98000122 10/28/99 5441 1100500911 SODIUM PHOSP MONOBASIC LOT# 97000299 7/3/02 11527.1 1100600911 SODIUM PHOSP DIBASIC LOT# 97000649 12/18/02 11435 1200110911 SODIUMCHLORIDI 0.9% INJECTION 5/31/00 20 1645080911 SYRINGES 1 ML W/NEEDLE 03/01 1100 Other clinical batches 101804E 1/2 MG DOSE EXPIRE 10/99 10/99 12 111803E 1 MG DOSE EXPIRE 10/99 10/99 12 201901E 1.5 MG PER SYRINGES EXPIRE 07/00 7/00 21 211901E 2.5 MG PER SYRINGES EXPIRE 06/00 6/00 25 151805E 91599400000 EXPIRE 03/99 3/99 3 121802E 91299400000 EXPIRE 05/99 5/99 2

C-1. EXHIBIT D LICENSED PATENTS [**] [**] D-1. "[AMENDMENT NO. 1]" TO LICENSING AGREEMENT THIS AMENDMENT NO. 1 (the "Amendment") is entered into as of the 9th day of May, 2000, by and among GILEAD SCIENCES, INC., a Delaware corporation, NEXSTAR PHARMACEUTICALS, INC., a Delaware corporation (these two parties collectively referred to herein as "Gilead") and EYETECH PHARMACEUTICALS, INC., a Delaware corporation (hereinafter "EyeTech"), to amend the Licensing Agreement made effective as of March 31, 2000 (the "Agreement") by and among Gilead and EyeTech, whereby Gilead licensed EyeTech to further clinically develop and commercialize Gilead's proprietary compound NX 1838. Capitalized terms used and not otherwise defined herein shall have the meanings given them in the Agreement. RECITALS WHEREAS, the Parties desire to amend the Agreement to define the term "Proprietary Information" which was employed but not defined in the Licensing Agreement, and to set the term of survival for the confidentiality, nondisclosure and nonuse obligations pertaining to such Proprietary Information. NOW, THEREFORE, in consideration of the foregoing and the covenants and promises contained in this Amendment, and the Parties hereby amend the Agreement as follows: 1. Section 1.1 is hereby amended to insert the following defined term and definition immediately following the definition for Product Inventory: "Proprietary Information" shall mean, subject to Section 6.3 of the Agreement, any Know-How, patent applications or other confidential information of a Party disclosed by such Party to another Party in the course of negotiating or performing under this Agreement or any other written agreement between the Parties entered into on or prior to May 9, 2000. Proprietary Information shall be deemed to include the terms of this Agreement and the terms of any other written agreement between the Parties entered into on or prior to May 9, 2000. 2. Section 6.3 is hereby amended to add the following new paragraph to the end of such section: The obligations of confidentiality, nondisclosure and nonuse contained in this Section 6.3 shall survive any expiration or termination of this Agreement for a period of five (5) years. 3. The Agreement, as amended by this Amendment, shall remain in full force and effect according to its terms. 4. This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, and all of which taken together shall constitute one and the same instrument. 5. This Amendment shall be effective as of the date first written above. IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment effective as of the date first written above. GILEAD SCIENCES, INC. EYETECH PHARMACEUTICALS, INC. By: /s/ Mark L. Perry By: /s/ David Guyer --------------------------------- ---------------------------------- Name: Mark L. Perry Name: David Guyer Title: Senior Vice President, Title: Chief Executive Officer Operations NEXSTAR PHARMACEUTICALS, INC. By: /s/ Mark L. Perry --------------------------------- Name: Mark L. Perry Title: Chief Financial Officer "[AMENDMENT NO. 2]" TO LICENSING AGREEMENT THIS AMENDMENT NO. 2 ("the Second Amendment") is entered into as of December 4, 2001, by and between EyeTech Pharmaceuticals, Inc. a Delaware corporation ("EyeTech") and Gilead Sciences, Inc., a Delaware corporation ("Gilead"), to amend that certain Licensing Agreement dated as of March 31, 2000, as amended by Amendment No. 1 to Licensing Agreement dated as of May 9, 2000 (the "Agreement") by and between EyeTech and Gilead (as successor in interest to NeXstar Pharmaceuticals, Inc.). Capitalized terms used and not otherwise defined herein shall have the meanings given them in the Agreement. WHEREAS, EyeTech desires to obtain access to notebooks of Gilead relating or potentially relating to the compound NX1838; WHEREAS, Gilead is willing to provide such access to EyeTech personnel if the information in such notebooks is kept confidential by EyeTech and its personnel under the terms of the Agreement; WHEREAS, in support of EyeTech's activities under the Agreement, Gilead would like to provide to EyeTech, and EyeTech would like to receive from Gilead, certain of Gilead's inventory of VEGF aptamer and potentially a reference standard possessed by Gilead, as determine by Gilead ("Materials"). NOW, THEREFOR, in consideration of the foregoing and the covenants herein, EyeTech and Gilead hereby agree, and the Agreement is hereby amended, as follows: 1. All information learned, received, extracted or copied by EyeTech from notebooks or other documents or records of Gilead, or excerpts thereof, that Gilead provides or makes available to EyeTech after the date hereof shall be deemed to be Proprietary Information of Gilead and subject to provisions in the Agreement pertaining to Proprietary Information of Gilead. 2. Nothing in this Second Amendment shall be construed as creating any obligation of Gilead to provide or make available to EyeTech any notebooks or other documents or records of Gilead, or excerpts thereof, beyond any such obligation of Gilead currently existing under the Agreement. 3. Gilead will deliver the materials to EyeTech within fifteen (15) days after the date hereof. 4. EyeTech shall not and shall not permit any person or entity to (a) administer any Materials to humans under any circumstances; or (b) administer any Materials to animals except in compliance with U.S. National Institutes of Health guidelines and all other applicable laws, rules, and regulations. 5. Nothing in this Amendment shall be construed to grant either Party any right or license beyond those set forth in the Agreement. 6. GILEAD PROVIDES THE MATERIALS "AS IS", WITH NO WARRANTY, EXPRESS, IMPLIED OR STATUTORY, INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY, TITLE, NON-INFRINGEMENT, EXCLUSIVITY, OR FITNESS FOR A PARTICULAR PURPOSE. 7. Solely for purposes of Section 7.1(b) of the Agreement, the Materials will deemed to included within NX1838. 8. The Agreement, as amended by this Second Amendment, shall remain in full force and effect according to its terms. 9. This Second Amendment may be executed in any number of counterparts, each of which shall be deemed an original, and all of which taken together shall constitute one and the same instrument. 10. This Second Amendment shall be effective as of the date first written above. IN WITNESS WHEREOF, the parties hereto have duty executed this Second Amendment effective as of the date first written above. EYETECH PHARMACEUTICALS, INC. GILEAD SCIENCES, INC. By: /s/ Harsha Murthy By: /s/ Nicole Onetto ---------------------- ------------------------- Name: Harsha Murthy Name: Nicole Onetto Title: V.P. - Business Development & Title: SVP Medical Affairs General Counsel 1 AMENDMENT NO. 3 TO LICENSING AGREEMENT This Amendment No. 3 to Licensing Agreement (the "Third Amendment") amends, effective August, 2002, the LICENSING AGREEMENT, itself effective as of March 30, 2002 and previously amended first as of May 9, 2000 and second as of December 4, 2001 (as so twice amended, the "Agreement") originally by and among GILEAD SCIENCES, INC., a Delaware corporation with its principal office located at 333 Lakeside Drive, Foster City, CA 94404 ("Gilead"), and its wholly-owned subsidiary, NEXSTAR PHARMACEUTICALS, INC., a Delaware corporation, on the one hand, and EYETECH PHARMACEUTICALS, INC., a Delaware corporation with its principal office as of the date hereof located at 500 Seventh Avenue, 18th Floor, New York, New York 10018 ("EyeTech"), on the other hand, and currently between Gilead and EyeTech. All capitalized terms used herein and not otherwise defined shall have the meanings given in the Agreement. All references to "Sections" and "Articles" are to sections and articles of the Agreement unless otherwise specified below. The Parties hereby amend the Agreement as follows: 1. The definition of Net Sales is deleted in its entirety and replaced with the following: "`Net Sales' shall mean, with respect to the Product, the gross amount billed or invoiced by EyeTech, its Affiliates or sublicensees to Third Parties for Products and Combination Products (defined below), less the following deductions to the extent included in such billed or invoiced or credited amounts: (a) trade, quantity and cash discounts allowed, but expressly excluding discounts or allowances offered as part of a package of products that includes a Product sold by EyeTech, its Affiliates or sublicensees; (b) refunds, chargebacks and any other allowances which effectively reduce the net selling price; (c) actual product returns, credits and allowances allowed to customers; (d) rebates actually paid or credited to any governmental agency (or branch thereof) or to any Third Party payor, administrator or contractee; (e) discounts mandated by, or granted to meet the requirements of, applicable state, provincial or federal law, wholesaler, including required chargebacks and retroactive price reductions; (f) transportation, freight, postage charges and other charges such as insurance, relating thereto, in each case included as a specific line item on an invoice to such Third Parties; and (g) taxes, excises or other governmental charges upon or measured by the production, sale, transportation, delivery or use of goods, in each case included as a specific line item on an invoice to such Third Parties. 2. If any such sales to Third Parties are made in transactions that are not at arm's length between the buyer and the seller, then the gross amount to be included in the calculation of Net Sales shall be the amount that would have been invoiced had the transaction been conducted at arm's length. Such amount that would have been invoiced shall be determined, wherever possible, by reference to the average selling price of the relevant Product in arm's-length transactions in the relevant country. If EyeTech, its Affiliate or sublicensee sells a Product in unfinished form to a Third Party for resale, then the gross amount to be included in the calculation of Net Sales arising from such sale shall be the amount invoiced by the Third Party upon resale, in lieu of the amount invoiced by EyeTech, its Affiliates or sublicensee when selling the Product in unfinished form. Otherwise, where EyeTech, its Affiliate or sublicensee sells a Product in finished form to a Third Party that does not require a sublicense under the Licensed Patents for further resale (a distributor) (each such Third Party hereinafter a "Distributor"), the amount to be included in the calculation of Net Sales shall be the price invoiced from EyeTech or its Affiliate or sublicensee to the Third Party, not the amount invoiced by the Third Party upon resale. If, in addition to or in lieu of a transfer price paid for quantities of Product supplied, any Distributor provides consideration to EyeTech, its Affiliate or sublicensee in connection with any Product or the Distributor's rights or relationship with EyeTech, its Affiliate or sublicensee in relation thereto, then such consideration shall be included in the calculation of Net Sales in the calendar quarter in which it becomes due to EyeTech or its Affiliate or sublicensee (as applicable). Notwithstanding the foregoing, amounts received by EyeTech, or its Affiliates or sublicensees, for the sale of Products among EyeTech and its Affiliates or sublicensees for resale shall not be included in the computation of Net Sales hereunder. Net Sales shall be determined from books and records maintained in accordance with GAAP, consistently applied throughout the organization and across all products of the entity whose sales of Product are giving rise to Net Sales. If any Product (i) contains or is sold with a therapeutically active ingredient other than NX1838 (such therapeutically active ingredient an "Other Active"), regardless of whether they are coformulated or physically packaged together, or (ii) is sold with a mechanical or pharmacological delivery system for the delivery of such Product (such system, a "Delivery System), (such a Product including and together with the Other Active or Delivery System, a "Combination Product") then Net Sales from the Combination Product shall be determined by multiplying the Net Sales of the Combination Product (as determined without reference to the calculations of this paragraph) by the fraction A/(A+B), where A is the average sale price of a Product of the same formulation and dosage when not sold as part of a Combination Product, and B is the average sale price of the Other Active or Delivery System when sold separately, or, only if the value of B cannot be determined, where A+B is the average sales price of the Combination Product. If A and B can be determined, in no event will the sales price of the Combination Product be less than the sum of A and B. If both A and B, and A+B, cannot be determined, then C/(C+D) shall be substituted for A/(A+B) in such calculation, where C is EyeTech's cost of goods of the Product and D is EyeTech's cost of goods for the Other Active or Delivery System, determined in accordance with the method of accounting normally employed by EyeTech in computing cost of goods sold (which must be in accordance with GAAP consistently applied throughout EyeTech), provided, however, that the minimum value of 3. such fraction as used in the calculation of Net Sales shall be 0.9. All average prices, for purposes of this paragraph, shall be determined on a country-by-country and product-by-product basis. For clarity and without limiting the generality of the foregoing, the inclusion of PEG (polyethylene gylcol) in a Product, because PEG is not a therapeutically active molecule, will not in itself be deemed to result in a Combination Product for purposes of the foregoing paragraph." 2. The phrase "with a right to sublicense to its Affiliates or (subject to Section 2.4) to any other Person" in Section 2.1 is deleted and replaced with the following: "with a right (subject to Section 2.4) to sublicense to its Affiliates or to any other Person." 3. In Section 2.5, the phrase "EyeTech Know-How and EyeTech Patents" in the nineteenth (19th) line is deleted and replaced with the following: "EyeTech Rights." 4. The following words are included in the sentence that is the text of Section 2.3, at the end of the sentence: "within the scope of the license granted EyeTech in Section 2.1." 5. Section 3.3(b) is deleted in its entirety and replaced with the following: "Offset. Notwithstanding the foregoing, on a country-by-country and Product-by-Product basis, EyeTech may credit against Royalties otherwise due hereunder on Net Sales of such Product in such country [**] percent in any calendar quarter ([**]%) of any royalties it must pay to any Third Party on sales of such Product in such country in such calendar quarter: (1) pursuant to any licenses necessary to practice the License; or (2) resulting from any litigation (including settlement thereof) under Section 6.16; provided, however, for purposes of this Section 3.3(b) that the applicable royalty rates used for calculation of Royalties payable to Gilead shall not be reduced to less than [**]percent ([**]%) of the royalty rate(s) otherwise applicable pursuant to Section 3.3(a)." 6. The following is inserted between the first and second sentences of Section 3.7: "EyeTech shall promptly remit any amounts so withheld to the appropriate governmental authority and provide Gilead with written evidence of such payment." 7. Section 4.6 is deleted in its entirety and replaced with the following: "Accrued Rights and Obligations; Survival. Termination or expiration of this Agreement for any reason shall be without prejudice to any rights which shall have accrued to the benefit of either Party prior to such termination or expiration, including damages arising from any breach hereunder. The following provisions of this Agreement shall survive any expiration or termination of this Agreement: Sections 2.3, 3.6, 4.2, 4.6, 5, 6.3, 6.4, 6.5, 6.9, 6.11(a), 6.12, 6.18, 7, and 8. In addition, the following provisions of this Agreement shall survive the expiration of this Agreement to the extent that the license granted to EyeTech pursuant to Section 4.2 is in effect: Sections 3.4 through 3.9, 4.3, 4.5, 6.2, 6.7(c)-(e), 6.8, 6.9, 6.11(b), 6.11(c), 6.11(d), 6.13, 6.16 and 6.17(a)." 8. The last sentence of Section 6.13 is deleted in its entirety and changed to read as follows: "Except as otherwise permitted by this Agreement or required by law, Gilead shall refrain from granting any right to any Third Party relating to NX1838, the Licensed Patents or the 4. Transferred Assets that would, in any manner, violate the terms of or conflict with the rights granted to EyeTech pursuant to this Agreement. 9. The phrase "distribution," is inserted immediately prior to "administration" in the second (2nd) line of Section 7.1(b)(3). 10. Section 8.2, "Notices" is changed to show EyeTech's address as follows: EyeTech Pharmaceuticals, Inc., 500 Seventh Avenue, 18th Floor, New York, New York 10018, Facsimile: 212-997-9251, attn: Chief Executive Officer. 11. The Agreement, as amended by this Third Amendment, remains in full force and effect according to its terms. 12. Article 18 shall apply to this Third Amendment as if set forth herein in its entirety. IN WITNESS WHEREOF, the Parties have caused this Third Amendment to be duly executed and delivered as of the day and year first above written. GILEAD SCIENCES, INC. EYETECH PHARMACEUTICALS, INC. By: /s/Gregg Alton By: /s/David Guyer --------------------------------------- -------------------------------- Name: Gregg Alton David Guyer Title: Vice President and General Counsel Chief Executive Officer NEXSTAR PHARMACEUTICALS, INC. By: ___________________________________ Name: _________________________________ Title: ________________________________ 5. EX-10.54 8 y18060exv10w54.txt EX-10.54: LICENSE, MANUFACTURING AND SUPPLY AGREEMENT EXHIBIT 10.54 CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS. LICENSE, MANUFACTURING AND SUPPLY AGREEMENT This Agreement ("AGREEMENT") is made and entered into on February 5, 2002 (the "EFFECTIVE DATE") by and between: 1. Shearwater Corporation, having its principal place of business at 490 Discovery Drive, Huntsville, Alabama, 35806, U.S.A. ("SHEARWATER"); and 2. Eyetech Pharmaceuticals, Inc., 666 Fifth Avenue, 35th Floor, New York, New York, 10103, U.S.A. ("EYETECH"). WHEREAS A. EYETECH is in the business of developing pharmaceutical products, including in particular a vascular endothelial growth factor antagonist designated as EYE001, as defined below. B. SHEARWATER has PEGylation technology, including in particular the LICENSED TECHNOLOGY, for the formulation of pharmaceutical products for the treatment of human and animal disease which typically, among other benefits, have increased circulating lifetimes and enhanced therapeutic utility. C. SHEARWATER has certain rights and rights to sublicense under ENZON PATENTS to make, have made, use, sell, have sold and import products pursuant to a Cross-License Agreement ("CROSS-LICENSE AGREEMENT") entered into with Enzon, Inc. ("ENZON") on January 7, 2002. D. EYETECH wishes to use the LICENSED TECHNOLOGY and may wish to practice technology covered by SHEARWATER'S rights under the CROSS-LICENSE AGREEMENT in order to apply the REAGENT to EYE001 to produce the formulation of the PRODUCT. E. EYETECH desires to obtain an exclusive license to the LICENSED TECHNOLOGY from SHEARWATER to develop, market and sell the PRODUCT throughout the Page 1 of 40 TERRITORY, and SHEARWATER desires to grant such license to EYETECH under the terms and conditions specified herein. F. Furthermore, SHEARWATER is also engaged in the business of manufacturing bulk quantities of pharmaceutical raw materials, and possesses the requisite plant, equipment and personnel to produce the REAGENT in accordance with the SPECIFICATIONS and all applicable governmental regulations, including, without limitation, U.S. Food and Drug Administration regulations, and consistent with EYETECH'S requirements. G. EYETECH desires SHEARWATER to manufacture and supply bulk quantities of the REAGENT to EYETECH for the sole purpose of permitting EYETECH to make, use and sell the PRODUCT, and SHEARWATER agrees to undertake the manufacture and supply of the REAGENT specified under this AGREEMENT in accordance with all of the terms and conditions specified below. AGREEMENT 1. Definitions 1.1. "ACTIVE MOLECULE" shall mean any molecule that has not been conjugated to polyethylene glycol, and that has potential or actual preventive or therapeutic activity. 1.2. "AFFILIATE" shall mean, with respect to any PERSON, any other PERSON which controls, is controlled by, or is under common control with, such PERSON. A PERSON shall be regarded as in control of another PERSON if it owns, or controls, at least fifty percent (50%) of the voting stock or other ownership interest of the other PERSON, or if it possesses the power to direct or cause the direction of the management and policies of the other PERSON by any means whatsoever. 1.3. "BEST EFFORTS" shall mean that EYETECH shall act in a manner reasonably calculated to obtain MARKETING AUTHORIZATION and commercialize and market the PRODUCT, but shall not be required to: (a) act in a manner inconsistent with EYETECH'S overall business strategy; (b) take action which Page 2 of 40 results in a materially adverse change to this AGREEMENT; (c) act in a manner contrary to its normal commercial practices; or (d) commence any litigation. 1.4. "BIOLOGICS LICENSE APPLICATION" shall mean a Biologics License Application, as defined in the U.S. Federal Food, Drug, and Cosmetics Act, as amended, and the regulations promulgated thereunder, and any corresponding supranational, foreign or domestic MARKETING AUTHORIZATION application, registration or certification, necessary or useful to market the PRODUCT in the TERRITORY. 1.5. "CONTROLLED" shall mean the ability to grant a license or sublicense as contemplated herein without violating the terms of any agreement or other arrangement with any THIRD PARTY. 1.6. "DOLLARS" shall mean U.S. dollars. 1.7. "EMEA" shall mean the European Medicines Evaluation Agency, and any successor agency thereto, having the administrative authority to regulate the marketing of human pharmaceutical products or biological therapeutic products, delivery systems and devices in the European Union. 1.8. "ENZON PATENTS" shall mean (a) all patent applications owned or CONTROLLED by Enzon, Inc. ("ENZON") or its AFFILIATES that [**]) all patents owned or CONTROLLED by ENZON or the ENZON AFFILIATES that [**]). For clarity, excluded from ENZON PATENTS are patents and patent applications [**]. Further excluded from ENZON PATENTS are [**]. The ENZON PATENTS include those listed on Schedule IV. 1.9. "EYE001" shall mean EYETECH'S lead compound as of the EFFECTIVE DATE, known to EYETECH as "EYE001," an anti-VEGF aptamer. 1.10. "FDA" shall mean the U.S. Food and Drug Administration, and any successor agency thereto, having the administrative authority to regulate the marketing of human pharmaceutical products or biological therapeutic products, delivery systems and devices in the United States. Page 3 of 40 1.11. "FIRST COMMERCIAL SALE" shall mean, with respect to any PRODUCT, the first sale for use or consumption by the general public of such PRODUCT. A transfer of the PRODUCT by EYETECH, its AFFILIATES or its SUBLICENSEES (a) solely for research and development purposes and for the purpose of directly enabling EYETECH, its AFFILIATES and its permitted SUBLICENSEES to research and develop PRODUCTS under this AGREEMENT and (b) prior to EYETECH'S receipt of MARKETING AUTHORIZATION from the FDA (or from the governing health authority of any other country) for use of such PRODUCT in humans, shall not be considered a FIRST COMMERCIAL SALE, except in the case of (b) to the extent such PRODUCT is purchased for sale to a THIRD PARTY end user after such Marketing Authorization is obtained. 1.12. "GOOD MANUFACTURING PRACTICES" or "GMP" shall mean the current good manufacturing practices required by the FDA and set forth in the Food, Drug and Cosmetics Act or FDA regulations, policies or guidelines in effect at a particular time for the manufacturing and testing of pharmaceutical materials. 1.13. "ICH" shall mean the International Conference on Harmonization. 1.14. "LAW" means any local, state or federal rule, regulation, statute or law in any jurisdiction relevant to the activities undertaken pursuant to this AGREEMENT or applicable to either of the parties with respect to any matters set forth herein. 1.15. "LICENSED TECHNOLOGY" shall mean, collectively, the SHEARWATER PATENT RIGHTS and the SHEARWATER KNOW-HOW. 1.16. "MARKETING AUTHORIZATION" shall mean such governmental approval for the marketing of the PRODUCT in a country or countries in the TERRITORY as is necessary to enable EYETECH, its AFFILIATES, or its SUBLICENSEES to sell and distribute lawfully the PRODUCT to such countries in the TERRITORY. 1.17. "NET INVOICED SALES" means the actual amount invoiced for PRODUCT sold less (a) [**]; (b) [**]; (c) [**]; (d) [**], (to the extent separately stated on the invoice and billed to the purchaser); (e) [**] the PRODUCT to the extent identified specifically on the invoice, (f) [**] , provided that where the PRODUCT is: Page 4 of 40 1.17.1. sold by EYETECH [**]; or 1.17.2. sold to any AFFILIATE of EYETECH; the NET INVOICED SALES amount of each such PRODUCT shall be [**]. For sales made by SUBLICENSEES of EYETECH, the NET INVOICED SALES amount shall be [**] the PRODUCT, which shall also be subject to Sections 1.17.1 and 1.17.2. 1.18. "NET SALES" shall mean the aggregate of the NET INVOICED SALES of all PRODUCT sold by EYETECH, its AFFILIATES and SUBLICENSEES. 1.19. "PEG" shall mean poly (ethylene glycol). 1.20. "PEGYLATION", with a correlative meaning for "PEGYLATED", shall mean [**] bonding of polyethylene glycol [**] with or to other materials, including but not limited to proteins, peptides, biomolecules, small molecules, therapeutic agents, diagnostic agents, imaging agents, implanted devices, and equipment. "PEGYLATION" shall include the synthesis, derivatization, characterization, and modification of polyethylene glycol for such purposes, together with the synthesis, derivatization, characterization, and modification of the raw materials and intermediates for the manufacture of the REAGENT or PRODUCT by means of [**] bonding, and all methods of making and using each and all of the foregoing. For clarity, PEGYLATION shall [**]. 1.21. "PERSON" shall mean an individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock company, joint venture, pool, syndicate, sole proprietorship, unincorporated organization, governmental authority, or any other form of entity not specifically listed herein. 1.22. "PRODUCT" shall mean a product produced by linking EYE001 to the REAGENT. 1.23. "REAGENT" shall mean [**]. 1.24. "ROYALTY TERM" shall mean, with respect to each PRODUCT in each country in the TERRITORY, the period of time equal to the longer of (a) [**] years from Page 5 of 40 the date of the FIRST COMMERCIAL SALE of such PRODUCT in such country, or (b) if the manufacture, use or sale of such PRODUCT in such country is covered in whole or in part by a VALID PATENT CLAIM, the term for which such VALID PATENT CLAIM remains in effect. 1.25. "SHEARWATER CORE TECHNOLOGY" shall mean technology relating to the [**], including, without limitation, the SHEARWATER KNOW-HOW and the SHEARWATER PATENT RIGHTS. 1.26. "SHEARWATER KNOW-HOW" shall mean (a) all technical, scientific and other know-how, information, trade secrets, knowledge, technology, ideas, concepts, formulae, procedures, methods, processes, protocols, techniques, materials and results of experimentation and testing, including samples, data, results and other materials, (whether or not patented or patentable) in written, electronic or any other form, in which SHEARWATER has an ownership or licensable interest; and (b) which are necessary or useful for EYETECH to make, use, develop, sell or seek MARKETING AUTHORIZATION to market a PRODUCT, or otherwise necessary or useful to practice the licenses granted under this AGREEMENT. 1.27. "SHEARWATER PATENT RIGHTS" shall mean all of the legal rights conferred upon SHEARWATER under the patents and patent applications listed in Schedule III in the TERRITORY and all provisionals, converted provisionals, non-provisional U.S. applications, continuations, divisionals, continuations-in-part, or substitutes thereof and all patents issuing therefrom or reexamination, reissues or extensions of said patents and all foreign counterparts of said applications and patents, and which are necessary or useful to produce and sell the PRODUCT. Schedule III sets forth the status of the patents included in the SHEARWATER PATENT RIGHTS as of the time this AGREEMENT is executed. Schedule III may be updated from time to time to list any other patents or patent applications which become included in the SHEARWATER PATENT RIGHTS. 1.28. "SHEARWATER'S MANUFACTURING COST" shall mean the sum of the following costs incurred by SHEARWATER, [**] to the REAGENT sold to EYETECH by SHEARWATER, and to other services performed by SHEARWATER for EYETECH: [**] relating to the [**], including, without limitation, [**] related to the [**] pursuant to Section 4, and the [**]. Page 6 of 40 1.29. "SPECIFICATIONS" shall mean the specifications of the REAGENT set forth in Schedule I hereto. The SPECIFICATIONS and test methods listed in Schedule I may be modified at any time but only by the mutual agreement of both parties as set forth in Section 5.3. Any such modification to the SPECIFICATIONS shall be rendered into writing and appended at Schedule I. 1.30. "SUBLICENSEE" shall mean any PERSON, including AFFILIATES, to which EYETECH grants a sublicense to develop, make, have made, use, import, export, offer for sale and sell the PRODUCT. SUBLICENSEE shall not include distributors or other parties to which EYETECH sells the PRODUCT in the ordinary course of business, or manufacturers or contract synthesis facilities which produce the active molecule in EYE001 for EYETECH. 1.31. "TERRITORY" shall mean the world. 1.32. "THIRD PARTY" shall mean any party other than SHEARWATER, EYETECH and their respective AFFILIATES. 1.33. "VALID PATENT CLAIM" shall mean either (a) a claim of an issued and unexpired patent included within the SHEARWATER PATENT RIGHTS or ENZON PATENTS which has not been held unenforceable, unpatentable or invalid by a decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reexamination, reissue, disclaimer or otherwise, or (b) a claim of a pending patent application included within the SHEARWATER PATENT RIGHTS or ENZON PATENTS, which claim has not been abandoned or finally disallowed without the possibility of appeal or refiling of such application. 1.34. The following schedules are attached hereto and incorporated in and are deemed to be an integral part of this AGREEMENT: Schedule I THE SPECIFICATIONS Schedule II REMUNERATION AND INITIAL FORECAST Schedule III SHEARWATER PATENT RIGHTS Page 7 of 40 Schedule IV ENZON PATENTS 2. Representations and Warranties 2.1. By Both Parties. Each party represents and warrants to the other that: (a) it has the full right and power to enter into and perform this AGREEMENT; (b) this AGREEMENT constitutes its legal, valid and binding obligation; (c) to the best of its knowledge, there are no agreements or arrangements between such party and any THIRD PARTY which could prevent it from, or conflict with such party's carrying out all of its obligations hereunder, including (without limitation), in the case of SHEARWATER, its grant to EYETECH of the licenses described in Section 3.1 below; (d) to the best of its knowledge, it has sufficient legal and/or beneficial title under its intellectual property rights necessary for the purposes contemplated under this AGREEMENT and to grant the licenses contained in this AGREEMENT; (e) to the best of its knowledge, it is not aware of any material communications alleging that it has violated or, by conducting its obligations as currently proposed under this AGREEMENT, it would violate any of the intellectual property rights of any THIRD PARTY; and (f) all of its employees, officers and consultants have executed agreements requiring assignment to the party of all inventions made during the course of and as a result of their association with such party and obligating the individual to maintain as confidential the CONFIDENTIAL INFORMATION of such party, as set forth in Section 9 herein. 2.2. By SHEARWATER. In addition to the representations and warranties set forth in Section 5.2, SHEARWATER represents and warrants to EYETECH that: 2.2.1. As of the EFFECTIVE DATE, SHEARWATER is not aware of: (A) any existing claims or litigation brought by a THIRD PARTY under any THIRD PARTY patent, trade secret or other THIRD PARTY proprietary right in respect of SHEARWATER'S exploitation of the LICENSED TECHNOLOGY; (B) any basis upon which practice of the inventions described in the SHEARWATER PATENT RIGHTS or KNOW-HOW would infringe on the rights of THIRD PARTIES; or Page 8 of 40 2.2.2. any licenses or restrictions other than those included herein on its or its licensees' ability to practice the LICENSED TECHNOLOGY. 2.2.3. SHEARWATER has made or will make available to EYETECH all material technical information in its possession of which it is aware that is pertinent to the development, manufacture, commercialization or use of the PRODUCT, and useful or necessary to enable EYETECH to exercise its rights under this AGREEMENT. 2.2.4. SHEARWATER shall comply with all applicable present and future LAWS applicable to the transportation, storage, use handling and disposal of hazardous materials. SHEARWATER has and will maintain during the term of this AGREEMENT all government permits, including without limitation health, safety and environmental permits necessary for the conduct of the activities that SHEARWATER undertakes pursuant to this AGREEMENT. 2.3. By EYETECH. EYETECH warrants to SHEARWATER that it will use its BEST EFFORTS to seek MARKETING AUTHORIZATION, and develop, commercialize and market the PRODUCT by [**]. If EYETECH believes that it cannot, within the exercise of reasonable business judgment, commercialize the PRODUCT in one or more countries in the TERRITORY by [**], then EYETECH may request from SHEARWATER an extension of time, and the parties shall negotiate in good faith to determine a time extension that is mutually acceptable. In the event that EYETECH does not use BEST EFFORTS in this regard, the licenses granted to EYETECH in Section 3.1 [**]. In the event that the licenses granted to EYETECH in Section 3.1 [**] of the TERRITORY as provided for herein above, EYETECH'S obligations to pay milestones and royalties to SHEARWATER, as provided for in this AGREEMENT, shall continue. Notwithstanding the foregoing, in the event EYETECH does not use at least reasonable efforts to develop, seek MARKETING AUTHORIZATION, commercialize and market the PRODUCT in [**] in the TERRITORY by [**] or such later date as mutually agreed to by the parties, it shall be deemed a material breach of this AGREEMENT by EYETECH and SHEARWATER may terminate this AGREEMENT under Section 11.4. Page 9 of 40 2.4. Limitation of Liability. EXCEPT AS EXPRESSLY PROVIDED ELSEWHERE IN THIS AGREEMENT, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES ARISING OUT OF ANY OF THE TERMS OR CONDITIONS OF THIS AGREEMENT OR WITH RESPECT TO ITS PERFORMANCE HEREUNDER, EXCEPT WHERE SUCH DAMAGES WERE CAUSED BY NEGLIGENCE OR WILLFUL MISCONDUCT OF A PARTY. Notwithstanding the foregoing, each party shall be liable to the other for special, indirect, incidental, consequential, punitive or exemplary damages arising out a breach of the non-disclosure and non-use obligations under Section 9. Nothing in this Section 2.4 is intended to limit either party's obligations under Section 10. 2.5. EXCEPT AS SET FORTH IN THIS AGREEMENT, SHEARWATER AND EYETECH DISCLAIM ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. 3. Grant of Licenses 3.1. Grant. (A) Subject to the terms and conditions of this AGREEMENT, SHEARWATER hereby grants to EYETECH, for the term of this AGREEMENT, an exclusive license (with the right to grant sublicenses as set forth in Section 3.2 below) under the LICENSED TECHNOLOGY to develop, make, have made, use, import, offer for sale and sell the PRODUCT in the TERRITORY. (B) Subject to the terms and conditions of this AGREEMENT, SHEARWATER shall grant to EYETECH, until the last-to-expire VALID PATENT CLAIM of ENZON PATENTS, a sole license (with the right to grant sublicenses as set forth in Section 3.2 below) under those rights SHEARWATER has to the ENZON PATENTS, solely to develop, make, have made, use, import, offer for sale and sell in the TERRITORY that version of the PRODUCT that [**]. Such license shall be subject to the retained rights of ENZON and the ENZON AFFILIATES to practice all the Page 10 of 40 inventions described and claimed in the ENZON PATENTS for the conduct of research and development (such purposes not including in connection with human clinical trials) of pharmaceutical products that it is developing either itself, with its AFFILIATE, or in conjunction with a THIRD PARTY. (C) Subject to the terms and conditions of this AGREEMENT, SHEARWATER shall grant to EYETECH, for the sole purpose of, and with respect to and only with respect to, the manufacture, use, sale, offer for sale, and importation in the TERRITORY of that version of the PRODUCT that [**], a non-exclusive license under those rights SHEARWATER has: (I) to patents or patent applications (other than the ENZON PATENTS) owned or CONTROLLED by ENZON or the ENZON AFFILIATES; and (II) all patent claims owned or CONTROLLED by ENZON or the ENZON AFFILIATES that (x) are not within the ENZON PATENTS or the PATENTS in subclause (i) above; (y) [**]; and (z) claim the composition, manufacture, or use of that version of [**]. The license granted under this Section 3.1(c) excludes [**]. The license granted under this Section 3.1(c) shall remain in effect on a country-by-country basis until the longer of (1) the [**] anniversary of the FIRST COMMERCIAL SALE of the PRODUCT in a particular country, or (2) the expiration of the last-to-expire VALID PATENT CLAIM of the ENZON PATENTS claiming the composition, manufacture, or use of such PRODUCT in such country. 3.2. Sublicenses. EYETECH shall have the right to grant sublicenses under the licenses in Section 3.1 above to any THIRD PARTY or AFFILIATE, provided that, under each sublicense, each SUBLICENSEE shall be subject to terms and conditions that are consistent with the terms and conditions of this AGREEMENT as applicable; provided, however, that [**] this AGREEMENT. Page 11 of 40 3.3. ENZON Patent Rights. 3.3.1. EYETECH agrees and acknowledges that the availability of the licenses to be granted under Sections 3.1(b) and 3.1(c) are subject to the following condition precedent: EYETECH must [**] with the [**]PRODUCT: [**] in the PRODUCT[**] and the [**] to be [**] to be used to [**] of the [**], to the extent known[**], to the extent known[**] PRODUCT with [**]; so that [**] the PRODUCT and that such license [**]. In the event that [**] product [**] as the PRODUCT and that the [**], the licenses under Sections 3.1(b) and 3.1(c) shall be [**]. If, at anytime during the term of this AGREEMENT, EYETECH wishes to make, use, import, export, offer for sale and sell in the TERRITORY [**] EYETECH shall [**] of the PRODUCT, [**] of PRODUCT based on those terms provided in this AGREEMENT. 3.3.2. EYETECH agrees and acknowledges that any such licenses to be granted under Sections 3.1(b) and 3.1(c) are subject to the following limitations and conditions: (A) Such licenses shall [**]; (B) Such licenses shall [**]; (C) Such licenses shall [**] the PRODUCT (D) [**]Such licenses shall [**] a product with the [**] (E) Such licenses shall [**] the PRODUCT [**]; (F) Such licenses shall [**] the PRODUCT [**]; (G) EYETECH shall [**] for such PRODUCT, [**]; (H) [**]EYETECH shall [**]; (I) Subject to any prior termination, such licenses shall [**]; and (J) Such licenses shall [**]. 3.4. SHEARWATER Covenant. SHEARWATER covenants that, during the term of this AGREEMENT, and subject to the terms of this AGREEMENT, it will not grant Page 12 of 40 any THIRD PARTY a license under the LICENSED TECHNOLOGY or its rights under the ENZON PATENTS to, and shall not itself, make, have made, use, sell or have sold the PRODUCT in the TERRITORY. Furthermore, SHEARWATER covenants that, during the term of this AGREEMENT, it will not enter into any agreement with a THIRD PARTY in which it licenses the LICENSED TECHNOLOGY to such THIRD PARTY for use in making, using, selling or importing products which [**]. Notwithstanding the foregoing, the parties understand and agree that any agreement existing as of the EFFECTIVE DATE between SHEARWATER and a THIRD PARTY, under which SHEARWATER grants a license, a license option or other rights under SHEARWATER'S LICENSED TECHNOLOGY, is not subject to the foregoing indication limitation. 3.5. EYETECH Covenant. 3.5.1. EYETECH hereby covenants that it will refrain from judicially challenging the validity or enforceability of any ENZON PATENTS and will contractually restrict its SUBLICENSEES from similarly challenging the validity or enforceability of the ENZON PATENTS. In the event EYETECH or its SUBLICENSEES so challenge the ENZON PATENTS: (a) EYETECH shall pay for all attorney's fees, costs of suit, and other out-of-pocket expenses incurred by ENZON and/or SHEARWATER in resisting or opposing such challenge in the event that such challenge is not successful; and (b) EYETECH'S and its SUBLICENSEES' sublicense rights to such ENZON PATENTS shall terminate. 3.5.2. EYETECH hereby covenants that it will refrain from judicially challenging the validity or enforceability of any SHEARWATER PATENT RIGHTS and will contractually restrict its SUBLICENSEES from similarly challenging the validity or enforceability of the SHEARWATER PATENT RIGHTS. In the event EYETECH or its SUBLICENSEES so challenge the SHEARWATER PATENT RIGHTS: (a) EYETECH shall pay for all attorney's fees, costs of suit, and other out-of-pocket expenses incurred by SHEARWATER in resisting or opposing such challenge in the event that such challenge is not successful; and (b) EYETECH'S and its SUBLICENSEES' sublicense rights to such SHEARWATER PATENT RIGHTS shall terminate. 4. Manufacture and Supply of the Reagent 4.1. Exclusivity. SHEARWATER will manufacture and supply one hundred percent (100%) of EYETECH'S, its AFFILIATES' and SUBLICENSEES' purchase requirements of the REAGENT for the manufacturing of the PRODUCT. Page 13 of 40 EYETECH, its AFFILIATES and SUBLICENSEES will purchase the REAGENT exclusively from SHEARWATER for the manufacture of the PRODUCT, subject to Sections 4.7 and 4.8. 4.2. Audit. During the term of this AGREEMENT, SHEARWATER shall supply the REAGENT for use in manufacturing PRODUCT exclusively to EYETECH, its AFFILIATES and SUBLICENSEES. Upon reasonable advance notice, EYETECH shall grant to SHEARWATER reasonable access to EYETECH'S books and records during normal business hours for the purpose of verifying EYETECH'S compliance with the purchase requirement in Section 4.1 above. 4.3. Minimum Purchases and Rolling Forecast. As soon as practicable after the EFFECTIVE DATE the parties shall mutually agree upon the contents of Schedule II which shall set forth the minimum purchase requirements of EYETECH for the REAGENT for the [**] calendar quarters immediately following the EFFECTIVE DATE. EYETECH shall, at least thirty (30) days prior to the commencement of the [**] each successive calendar quarter following the EFFECTIVE DATE, furnish SHEARWATER with a rolling forecast of its requirements of the REAGENT during the forthcoming [**] calendar quarters, with the required quantities for the first [**] calendar quarters to be a binding order for supply of the REAGENT and the forecast for the remaining [**]) calendar quarters to be an estimate only. Notwithstanding the foregoing, (i) SHEARWATER shall only be bound to supply up to [**] percent ([**]%) of the initial forecast for any calendar quarter. In the event that EYETECH'S forecast exceeds [**] percent ([**]%) of the initial forecast for any calendar quarter, then the parties will meet in good faith to discuss how SHEARWATER can meet the revised forecast, and (ii) in no event shall EYETECH purchase less than [**] percent ([**]%) of the initial forecast for any calendar quarter. 4.4. Purchase Orders. EYETECH will order the REAGENT from SHEARWATER by means of a standard EYETECH purchase order and SHEARWATER shall ship or cause the REAGENT to be shipped pursuant to its standard shipping documents; provided, however, that all terms and conditions respecting any orders of REAGENT other than quantity and delivery dates shall be governed exclusively by the terms of this AGREEMENT. Such EYETECH purchase order Page 14 of 40 shall specify the quantity and delivery date of the REAGENT. However, in case of inconsistency between the purchase order or the standard shipping documents and the terms and conditions of this AGREEMENT, the terms and conditions of this AGREEMENT or any modification of this AGREEMENT agreed to in writing by the parties shall govern as to matters dealt with in this AGREEMENT, any such inconsistent terms in such purchase order or shipping documents are hereby expressly rejected. EYETECH shall, at least thirty (30) days prior to the commencement of the third and each successive calendar quarter following the EFFECTIVE DATE, provide SHEARWATER with a written purchase order for such calendar quarter. Any such purchase order shall be sent to the attention of SHEARWATER'S Sales Manager. 4.5. Fulfillment. To the extent that any orders for REAGENT do not exceed [**] percent ([**]%) of EYETECH'S forecast for a respective calendar quarter, and to the extent forecasts and purchase orders are submitted as provided hereunder, SHEARWATER shall commence fulfilling these orders no later than: (a) [**] of the date an order is placed; or (b) any other mutually agreed upon delivery date. If SHEARWATER determines that it cannot commence fulfilling an order by the later of [**] of the date an order is placed or any other agreed upon delivery date, then SHEARWATER will promptly notify EYETECH in writing within [**] hours of such determination. To the extent that such order for REAGENT does not exceed [**] percent ([**]%) of EYETECH'S forecast for a respective calendar quarter, and to the extent that such purchase order is submitted as provided hereunder, the provisions of Section 4.7 apply. 4.6. Payment of Invoices. SHEARWATER shall send invoices to EYETECH for the REAGENT shipped to EYETECH no earlier than the date on which the REAGENT is placed aboard the carrier at the point of shipment from the place of manufacture or storage owned or controlled by SHEARWATER. All shipments of REAGENT will be delivered to EYETECH at the address first set forth above. All risk of loss or damage to REAGENT shall transfer upon delivery to such destination. All invoices will be in DOLLARS, payable to SHEARWATER, at the address provided above or such other address as SHEARWATER may from time to time advise EYETECH. Payment will be due thirty (30) days from receipt of invoice unless acceptance is delayed pursuant to Sections 6.2, 6.3 and 6.4, in Page 15 of 40 which case they shall be due as provided thereunder. Amounts past due shall bear interest at the rate of one and a quarter percent (1.25%) per month, compounded daily, or the maximum rate allowed under law, whichever is less. 4.7. Failure to Supply. Subject to Section 15.1, if SHEARWATER cannot supply at least seventy-five percent (75%) of the amount of the REAGENT consistent with and at the times specified by Sections 4.3 and 4.4 and does not cure the deficiency within ninety (90) days after EYETECH so notifies SHEARWATER in writing that a portion of the REAGENT due for delivery has not been delivered, after using all reasonable efforts, then SHEARWATER will be considered as being unable to manufacture and sell to EYETECH the REAGENT under this AGREEMENT ("FAILURE"). In the case of a FAILURE for any reason, SHEARWATER shall, subject to this Section 4.7, immediately work with EYETECH and grant to one THIRD PARTY contract manufacturer (the "CONTRACT MANUFACTURER" such CONTRACT MANUFACTURER being subject to approval by EYETECH, such approval to not be unreasonably withheld) a personal, non-assignable, non-exclusive right and license under the LICENSED TECHNOLOGY to make the amount of REAGENT, for the sole purpose of EYETECH producing the PRODUCT, in accordance with EYETECH'S order for the relevant calendar quarter as well as during the following three (3) calendar quarters or such longer period if required to fully address the FAILURE in accordance with Section 4.8. Such FAILURE by SHEARWATER to supply EYETECH with the REAGENT will not be taken as a refusal by SHEARWATER to supply EYETECH with the REAGENT for subsequent calendar quarters unless SHEARWATER so indicates. With respect to such subsequent calendar quarters, if SHEARWATER has demonstrated that it has the ability to supply all of EYETECH'S REAGENT requirements hereunder, EYETECH will resume purchases of the REAGENT from SHEARWATER in the manner provided for by this AGREEMENT. Payments made by EYETECH to the CONTRACT MANUFACTURER for REAGENT supplied during a FAILURE shall be recognized by SHEARWATER, and SHEARWATER shall not seek payment for such supply. Notwithstanding the foregoing, all of EYETECH'S milestone and royalty obligations shall remain in effect during the period of any FAILURE. If SHEARWATER, for any reason, shall on two (2) separate occasions FAIL under this Section 4.7 to supply EYETECH with the REAGENT, EYETECH shall thereafter be allowed to purchase from the CONTRACT MANUFACTURER all of its future requirements of the REAGENT without regard to SHEARWATER'S willingness and ability to supply EYETECH with its requirements of the REAGENT. 4.8. Technology Transfer. In the event that SHEARWATER grants to the CONTRACT MANUFACTURER, as contemplated in Section 4.7, a personal, non-assignable, non-exclusive right and license under the LICENSED Page 16 of 40 TECHNOLOGY to make, have made and use the REAGENT for the sole purpose of manufacturing for EYETECH the PRODUCT, SHEARWATER shall, at its expense, transfer sufficient of its technology, including required SHEARWATER KNOW-HOW and training of personnel, to enable the CONTRACT MANUFACTURER to manufacture the REAGENT for the sole purpose of EYETECH producing the PRODUCT. Such CONTRACT MANUFACTURER shall be bound to treat all such SHEARWATER KNOW-HOW as SHEARWATER CONFIDENTIAL INFORMATION, subject to the obligations of Section 9. 4.9. Intellectual Property. Any and all rights to any improvement, modification, application or invention discovered, conceived or reduced to practice by either party or both (or by such CONTRACT MANUFACTURER, EYETECH, its AFFILIATES or its SUBLICENSEES ) in the course of the manufacture of the PRODUCT (but not EYE001 alone) and which relate to SHEARWATER CORE TECHNOLOGY shall be solely owned by SHEARWATER ("CORE TECHNOLOGY INVENTIONS"). EYETECH, its CONTRACT MANUFACTURER, AFFILIATES and SUBLICENSEES shall each assign to SHEARWATER all of its interests in such CORE TECHNOLOGY INVENTIONS and in all intellectual property rights therein. Such CORE TECHNOLOGY INVENTIONS shall be included in the LICENSED TECHNOLOGY and subject to the license granted to EYETECH pursuant to this AGREEMENT. SHEARWATER shall be responsible, at its sole expense and discretion, and with the cooperation of EYETECH, for the filing, prosecution and maintenance of foreign and domestic patent applications and patents covering such CORE TECHNOLOGY INVENTIONS. Any and all rights to any inventions discovered, conceived or reduced to practice by either party or both in the course of the manufacture of PRODUCTS (but not EYE001 alone) which relate solely to EYE001 and that are not SHEARWATER CORE TECHNOLOGY or CORE TECHNOLOGY INVENTIONS, shall belong solely to EYETECH ("EYETECH INVENTIONS"). SHEARWATER shall assign to EYETECH all of its interests in such EYETECH INVENTIONS and in all intellectual property rights therein. EYETECH shall be responsible, at its sole expense and discretion, and with the cooperation of SHEARWATER if requested by EYETECH, for the filing, prosecution and maintenance of foreign and domestic patent applications and patents covering such EYETECH INVENTIONS. Except as otherwise provided in this Section, all inventions made solely by employees of a party during the course of the manufacture of PRODUCTS shall be the property of such party. Further, also except as otherwise provided in this Section, if employees of SHEARWATER and EYETECH jointly develop any invention during the manufacture of PRODUCT ("JOINT INVENTION"), SHEARWATER and Page 17 of 40 EYETECH shall each own an undivided one-half (1/2) interest, without a duty of accounting to the other party, in and to such JOINT INVENTION. With respect to patent applications on a JOINT INVENTION, the parties shall determine which party shall be responsible for filing, prosecuting, maintaining and defending patent applications and patents on behalf of both parties, based on a good faith determination of the relative contributions of the parties to the invention and the relative level of interest of the parties in the invention. 5. Specifications, GMP and Manufacturing Process 5.1. Specifications. The quality of the REAGENT is defined in the SPECIFICATIONS as per Schedule I attached hereto. 5.2. Warranty. SHEARWATER warrants that the REAGENT will be manufactured in compliance with the current GMP requirements of the FDA and the ICH. SHEARWATER warrants that the REAGENT will, upon delivery to the carrier, be in conformity with said SPECIFICATIONS. Except as provided in Sections 2.1 and 2.2, SHEARWATER provides no other warranties, express or implied, regarding the REAGENT and disclaims all other express and implied warranties, including the implied warranties of merchantability and fitness for a particular purpose. SHEARWATER'S liability for breach of the foregoing warranty shall be limited to the actions and procedures required in Sections 4.7 and 4.8 above and Section 6 below. 5.3. Modifications. Any modifications of the SPECIFICATIONS will require reasonable prior written approval of EYETECH and SHEARWATER. Each party may propose a change to the SPECIFICATIONS to the other party for evaluation considering the relative costs, benefits and technical ability to make such change. EYETECH shall bear any and all costs of developing and implementing revised SPECIFICATIONS. Page 18 of 40 6. Quality and Complaints 6.1. Analysis. Promptly after arrival of a shipment of the REAGENT at EYETECH, EYETECH shall analyze the REAGENT using methods approved by both parties according to the analytical procedures in Schedule I. 6.2. Complaints. Any complaints by EYETECH that a shipment of the REAGENT does not comply with the requirements of Section 5.1 or Section 5.2 shall be delivered to SHEARWATER in writing at the latest within [**] days after arrival of the shipment of the REAGENT and shall include full details of such complaint including supporting data for purposes of consideration and verification by SHEARWATER. If no such written complaint is received by SHEARWATER within the above [**] day period, EYETECH will be deemed to have accepted the applicable shipment of REAGENT, which shall conclusively be presumed to be without defect and to meet all SPECIFICATIONS and warranties hereunder. 6.3. Complaints Procedure. If SHEARWATER receives a complaint under Section 6.2 the following procedures shall apply: 6.3.1. Within [**] days from the date on which such details of EYETECH'S complaint are received by SHEARWATER, or if such quantity is not then available, as soon as SHEARWATER has the necessary quantities available, provided it is not later than [**] days after SHEARWATER'S receipt of the details of EYETECH'S complaint, SHEARWATER shall supply EYETECH the replacement quantity of the REAGENT that was allegedly missing or defective from the original shipment. 6.3.2. If the alleged defect concerns the quality of the REAGENT delivered and SHEARWATER accepts the details submitted by EYETECH as to the non-compliance of the REAGENT, the replacement material described in Section 6.3.1 will be provided to EYETECH at no additional cost. 6.3.3. If the alleged defect concerns the quality of the REAGENT delivered and SHEARWATER, acting reasonably and in good faith, does not accept the details submitted by EYETECH, then within [**] days from the date on which the details of EYETECH'S complaint are received by Page 19 of 40 SHEARWATER, SHEARWATER and EYETECH will agree upon and appoint an independent scientific and technical expert to review EYETECH'S details supporting its complaint of non-compliance. EYETECH shall not unreasonably withhold acceptance of the independent scientific and technical expert. The findings of the expert shall be final and conclusively binding on the parties as to whether the REAGENT complies with the requirements of Sections 5.1 and 5.2 as to defects in quality. If the analysis of the expert does not confirm EYETECH'S complaint, EYETECH shall be obligated to pay for any replacement quantities shipped by SHEARWATER. If the expert holds that the REAGENT does not meet requirements of Sections 5.1 and 5.2, all the fees of the expert and the laboratory shall be paid by SHEARWATER and EYETECH shall have no obligation to pay for the quantities of defective REAGENT, but shall be responsible for payment of replacement quantities which are in conformance with Sections 5.1 and 5.2 within [**] days after EYETECH'S receipt of such replacement shipment. On the other hand, if the expert does not confirm EYETECH'S complaint, all of the fees of the laboratory and the expert will be paid by EYETECH, EYETECH shall be obligated to pay for any replacement quantities shipped by SHEARWATER in addition to the original quantities shipped, and EYETECH shall be considered to have finally and completely accepted such allegedly defective shipment of the REAGENT. 6.4. Compliance. SHEARWATER warrants that it will perform regular self-inspections in order to assure compliance with GMP requirements and submit to inspections by EYETECH and/or regulatory authorities such as the FDA. Upon thirty (30) days prior written notice, EYETECH shall have the right once in each twelve (12) month period and at reasonable hours to audit the quality systems of SHEARWATER. Such audits shall be performed to verify, among other things: (1) the quality of the facilities providing the REAGENT; (2) the general controls and security practices and procedures at any facility or part of a facility used by SHEARWATER to provide the REAGENT; and (3) SHEARWATER'S compliance with all applicable laws. In addition, EYETECH will have the option to designate an independent THIRD PARTY, subject to confidentiality obligations to Page 20 of 40 SHEARWATER, to verify that all proprietary manufacturing operations and associated technologies relating to the manufacture of the REAGENT are in compliance with GMP and all other equivalent governmental requirements in the TERRITORY. If SHEARWATER becomes aware that any shipment of the REAGENT to EYETECH does not meet all of the requirements of Section 5.1 and Section 5.2, SHEARWATER will promptly notify EYETECH. 7. Remuneration 7.1. Milestone Payments. The parties hereto agree that in partial consideration for the rights acquired by EYETECH under this AGREEMENT, EYETECH will pay to SHEARWATER milestone payments in accordance with and at the times set out in Schedule II herein. Such payments shall be in addition to any royalty or other payments due under this AGREEMENT. The payment of the milestone due upon the grant of MARKETING AUTHORIZATION shall be [**] [**] DOLLARS ($[**]) [**] due SHEARWATER under Section 7.2.1 [**] DOLLARS ($[**]) amount equal to [**] the amount due to SHEARWATER[**] a royalty on NET SALES of PRODUCT under Section 7.2.1, [**] DOLLARS ($[**]) [**]. 7.2. Royalties. In partial consideration for the licenses granted to EYETECH herein, during the ROYALTY TERM, EYETECH shall pay the following royalties: 7.2.1. SHEARWATER. EYETECH shall pay a royalty to SHEARWATER in an amount equal to [**] percent ([**]%) of the portion of annual NET SALES of all PRODUCT sold in each country in the TERRITORY in which the manufacture, use or sale of such PRODUCT is covered by a VALID PATENT CLAIM that is less than [**] DOLLARS ($[**]), and in an amount equal to [**] percent ([**]%) of the portion of annual NET SALES of all PRODUCT sold in each country in the TERRITORY in which the manufacture, use or sale of such PRODUCT is covered by a VALID PATENT CLAIM that is equal to or greater than [**] DOLLARS ($[**]). EYETECH shall pay a royalty to SHEARWATER in an amount equal to [**] percent ([**]%) of the portion of annual NET SALES of all PRODUCT sold in each country in the TERRITORY in which the manufacture, use or sale of such PRODUCT is not covered by a VALID PATENT CLAIM, but uses SHEARWATER KNOW-HOW that is less than [**] dollars ($[**]). Page 21 of 40 EYETECH shall pay a royalty to SHEARWATER in an amount equal to [**] percent ([**]%) of the portion of annual NET SALES of all PRODUCT sold in each country in the TERRITORY in which the manufacture, use or sale of such PRODUCT is not covered by a VALID PATENT CLAIM, but uses SHEARWATER KNOW-HOW that is equal to or more than [**] dollars ($[**]). 7.3. Accrual of Royalties. No royalties shall be payable on a PRODUCT distributed to THIRD PARTIES solely for marketing and advertising purposes or as a sample for testing or evaluation purposes. No royalties shall be payable on sales among EYETECH, its AFFILIATES and its SUBLICENSEES, but royalties shall be payable on subsequent sales by EYETECH, its AFFILIATES or its SUBLICENSEES to a THIRD PARTY. No multiple royalty shall be payable on a PRODUCT because the manufacture, use or sale of such PRODUCT is covered by more than one SHEARWATER PATENT RIGHT or ENZON PATENT or is subject to both SHEARWATER KNOW-HOW and a VALID PATENT CLAIM. 7.4. Third Party Royalties. If EYETECH, its AFFILIATES or its SUBLICENSEES are required to pay royalties to any THIRD PARTY because the manufacture, use or sale of the PRODUCT infringes any patent rights of such THIRD PARTY in any country of the TERRITORY (but only with respect to the use or the manufacture of the REAGENT or use of the REAGENT or LICENSED TECHNOLOGY in the manufacture of the PRODUCT), EYETECH, its AFFILIATES or its SUBLICENSEES may deduct from royalties thereafter due with respect to the NET INVOICED SALES of such PRODUCT in such country, an amount equal to up to [**] percent ([**]%) of the royalties or such other fees paid to such THIRD PARTY, subject to the limitation in the immediately following sentence. In no event shall the royalties due on the NET INVOICED SALES of the PRODUCT on account of any reduction pursuant to this Section 7.4 be reduced by means of such deductions by more than [**] percent ([**]%) of the royalties which otherwise would have been due SHEARWATER hereunder on the NET INVOICED SALES of the PRODUCT. 7.5. Manufacturing and Supply of the REAGENT. Page 22 of 40 7.5.1. In addition, EYETECH shall pay to SHEARWATER for the supply of the REAGENT complying with the SPECIFICATIONS and GMP the prices in DOLLARS per unit of REAGENT set forth in Schedule II. 7.5.2. The DOLLARS per unit prices provided for in Section 7.5.1 shall remain in full force and effect for a period ending [**] years after the EFFECTIVE DATE of the AGREEMENT. Thereafter, the price at which EYETECH purchases the REAGENT from SHEARWATER may be increased by SHEARWATER in each succeeding [**] period in accordance with [**]. 7.5.3. If based on EYETECH'S projected forecast of the REAGENT, SHEARWATER determines that improvement to or expansion of its manufacturing capabilities are required, then SHEARWATER shall provide written notification thereof within [**] days of receipt of any EYETECH forecast. EYETECH and SHEARWATER shall agree on the scope of the work required and shall prepare an estimated budget for the SHEARWATER MANUFACTURING COSTS attributed to such work before any work is performed, for which EYETECH must pay SHEARWATER hereunder. EYETECH agrees to pay all SHEARWATER'S MANUFACTURING COSTS of [**] SHEARWATER [**] including, but not limited to, [**] including, but not limited to, [**] for any particular use. In the event that any governmental or regulatory agency requests information regarding the REAGENT or requires that any further work or testing be performed on the current GMP manufacturing process of the REAGENT, such information shall be obtained, or such work shall be done, at the expense of EYETECH, as provided herein. 8. Royalty Reports and Accounting 8.1. Reports, Exchange Rates. EYETECH shall notify SHEARWATER in writing promptly upon the FIRST COMMERCIAL SALE of a PRODUCT by EYETECH, its AFFILIATES or its SUBLICENSEES. During the portion of the term of this AGREEMENT following the FIRST COMMERCIAL SALE of a PRODUCT, EYETECH shall furnish to SHEARWATER a quarterly written report showing in reasonably specific detail, on a country by country basis: (a) the gross sales of each PRODUCT sold by EYETECH, its AFFILIATES and its SUBLICENSEES Page 23 of 40 during the reporting period and the amounts deducted therefrom to determine NET INVOICED SALES from such gross sales; (b) the royalties payable in DOLLARS, if any, which shall have accrued hereunder based upon the NET INVOICED SALES of each PRODUCT; (c) the withholding taxes, if any, required by LAW to be deducted in respect of such sales; (d) the date of the FIRST COMMERCIAL SALE of each PRODUCT in each country during the reporting period; and (e) the exchange rates used in determining the amount of DOLLARS. With respect to sales of PRODUCTS invoiced in DOLLARS, the gross sales, NET INVOICED SALES, and royalties payable shall be expressed in DOLLARS. With respect to sales of PRODUCTS invoiced in a currency other than DOLLARS, the gross sales, NET INVOICED SALES and royalties payable shall be expressed in the domestic currency of the party making the sale together with the DOLLAR equivalent of the royalty payable. The DOLLAR equivalent shall be calculated using the average exchange rate (local currency per DOLLAR) published in The Wall Street Journal, Western Edition, under the heading "Currency Trading", on the last business day of each month during the applicable calendar quarter. Reports shall be due on the thirtieth (30th) day following the close of each quarter. EYETECH, its AFFILIATES and its SUBLICENSEES shall keep complete and accurate records in sufficient detail to properly reflect all gross sales and NET INVOICED SALES of each PRODUCT and to enable the royalties payable hereunder to be determined. 8.2. Audits. 8.2.1. Upon at least ten (10) business days of the written request of SHEARWATER, and not more than once in each calendar year, EYETECH shall permit an independent certified public accounting firm of nationally recognized standing, selected by SHEARWATER and reasonably acceptable to EYETECH, at SHEARWATER'S expense, to have access during normal business hours to such of the records of EYETECH as may be reasonably necessary to verify the accuracy of the royalty reports hereunder for any year ending not more than twenty-four (24) months prior to the date of such request. The accounting firm shall disclose to each party whether the NET INVOICED SALES or NET SALES are correct or incorrect and the specific details concerning any discrepancies. No other information shall be provided to SHEARWATER. Page 24 of 40 8.2.2. If such accounting firm concludes that additional royalties were owed during such period, EYETECH shall pay the additional royalties within thirty (30) days of the date SHEARWATER delivers to EYETECH such accounting firm's written report so concluding. The fees charged by such accounting firm shall be paid by SHEARWATER; provided however, that if the audit discloses that the royalties payable by EYETECH for the audited period are more than one hundred five percent (105%) of the royalties actually paid for such period, then EYETECH shall pay the reasonable fees and expenses charged by such accounting firm. 8.2.3. EYETECH shall include in each sublicense granted by it pursuant to this AGREEMENT a provision requiring the SUBLICENSEE to make reports to EYETECH, to keep and maintain records of sales made and deductions taken pursuant to such sublicense, and to grant access to such records by SHEARWATER'S independent accountant to the same extent required of EYETECH under this AGREEMENT. Upon the expiration of [**] months following the end of any calendar year, the calculation of royalties payable with respect to such calendar year shall be binding and conclusive upon SHEARWATER and EYETECH, its AFFILIATES and SUBLICENSEES. 8.3. Payment Terms. Royalties shown to have accrued by each royalty report provided for under Section 8.2 above shall be due and payable on the date such royalty report is due. Payment of royalties in whole or in part may be made in advance of such due date. 8.4. Payment Method. Except as provided for in this Section 8.4, all royalty payments by EYETECH under this AGREEMENT shall be paid in DOLLARS, and all such payments shall be originated from a United States bank located in the United States and made by bank wire transfer in immediately available funds to such account as SHEARWATER shall designate before such payment is due. Upon the election of SHEARWATER made in writing not less than thirty (30) days prior to any payment date, EYETECH shall pay all royalties owing to SHEARWATER hereunder in the currency in which such royalties accrued, without conversion into DOLLARS. Page 25 of 40 8.5. Exchange Control. If at any time legal restrictions prevent the prompt remittance of part or all royalties with respect to any country of the TERRITORY where the PRODUCT is sold, payment shall be made through such lawful means or methods as SHEARWATER reasonably shall determine. 9. Confidentiality 9.1. Confidential Information. During the term of this AGREEMENT, and for a period of ten (10) years following the expiration or earlier termination hereof, each party shall maintain in confidence all information of the other party (including samples) disclosed by the other party and identified as, or acknowledged to be, confidential (the "CONFIDENTIAL INFORMATION"), and shall not use, disclose or grant the use of the CONFIDENTIAL INFORMATION except as permitted under this AGREEMENT or necessary to perform its obligations hereunder, except on a need-to-know basis to those directors, officers, AFFILIATES, employees, permitted SUBLICENSEES, permitted assignees and agents, the CONTRACT MANUFACTURER, INDEPENDENT COUNSEL, consultants, lawyers, bankers, clinical investigators or contractors, to the extent such disclosure is reasonably necessary in connection with such party's activities as expressly authorized by this AGREEMENT. Each party shall advise the foregoing who have access to the CONFIDENTIAL INFORMATION of the other party of its confidential and proprietary nature, and shall impose on the foregoing the duties of non-use and non-disclosure as stated in the Section 9.1. SHEARWATER KNOW-HOW is hereby deemed to be SHEARWATER CONFIDENTIAL INFORMATION. Each party shall notify the other promptly upon discovery of any unauthorized use or disclosure of the other party's CONFIDENTIAL INFORMATION. 9.2. Permitted Disclosures. 9.2.1. The non-disclosure obligations contained in Section 9.1 shall not apply to the extent that any receiving party (the "RECIPIENT") is required (a) to disclose information by LAW, order, or regulation of a government agency or a court of competent jurisdiction, or by the rules of a securities exchange; (b) to disclose information to a patent office for the purposes of filing a patent on RECIPIENT'S method or invention; (c) to disclose information to any governmental agency for purposes of obtaining Page 26 of 40 approval to test or market a PRODUCT, provided in either case that the RECIPIENT shall provide written notice thereof to the other party and sufficient opportunity to object to any such disclosure or to request confidential treatment thereof. 9.2.2. The non-disclosure and non-use obligations contained in Section 9.1 shall not apply to the extent that the RECIPIENT can demonstrate that (a) the disclosed information was public knowledge at the time of such disclosure to the RECIPIENT, or thereafter became public knowledge, other than as a result of action or omission of the RECIPIENT in violation hereof; (b) the disclosed information was rightfully known by the RECIPIENT without the obligation of confidentiality (as shown by its written records) prior to the date of disclosure to the RECIPIENT by the other party hereunder; (c) the disclosed information was disclosed to the RECIPIENT on an unrestricted basis from a source unrelated to any party to this AGREEMENT and not under a duty of confidentiality to the other party; or (d) the disclosed information was independently developed by the RECIPIENT (as shown by its written records) without use of CONFIDENTIAL INFORMATION disclosed by the other party. 9.3. Return of Confidential Information. Within ten (10) days following a request from either party or upon the expiration or termination of this AGREEMENT by either party, for any reason, each party shall deliver to the other party or, at the other party's election, destroy any and all CONFIDENTIAL INFORMATION, together with any and all copies thereof, provided that each party may keep one copy of such CONFIDENTIAL INFORMATION for purposes of complying with its contractual obligations under this AGREEMENT. 9.4. Terms of this Agreement. Except as otherwise provided in Section 9.2 above and subject to either party's reporting obligations under applicable state and federal LAWS, (a) SHEARWATER and EYETECH shall not disclose any terms or conditions of this AGREEMENT to any THIRD PARTY without the prior written consent of the other party, such consent not to be unreasonably withheld or delayed, and (b) SHEARWATER and EYETECH shall not use the other party's name in publicity materials without the prior written consent of the other party, Page 27 of 40 such consent not to be unreasonably withheld or delayed. Notwithstanding the foregoing, SHEARWATER and EYETECH shall prepare and issue a joint press release reasonably acceptable to both parties announcing the relationship created under this AGREEMENT. 9.5. Publication. After an AFFIRMATIVE DETERMINATION by the INDEPENDENT COUNSEL pursuant to Section 3.3.1. it may be to the mutual interest of the parties to publish articles relating to data generated or analyzed as a part of this AGREEMENT. Neither party shall submit for written or oral publication or presentation any manuscript, abstract, writing, printed material or the like which includes data or any other CONFIDENTIAL INFORMATION of the other party without first obtaining the prior written consent of the other party, which consent shall not be unreasonably withheld or delayed; provided however, that valid commercial reasons may exist for withholding such consent. Nothing contained herein shall be construed as precluding either party from making, in its discretion, any disclosures of information of any type which relate to the safety, efficacy, toxicology, or pharmacokinetic characteristics of the PRODUCT to the extent that either party may be required by LAW to make disclosures of such information. 9.6. Data. Any data which arises from testing of the PRODUCT by EYETECH, its AFFILIATES or its SUBLICENSEES which is reasonably necessary for SHEARWATER to monitor the quality and/or performance of the REAGENT, including, without limitation, the results of animal studies, toxicological testing and human clinical trials, shall be deemed CONFIDENTIAL INFORMATION and shall be shared with SHEARWATER, within a reasonable time of EYETECH receiving or deriving such data. 10. Indemnification 10.1. Indemnity. 10.1.1. By SHEARWATER. SHEARWATER shall defend, indemnify and hold EYETECH, EYETECH'S AFFILIATES, and EYETECH'S directors, officers, employees and agents harmless from and against all claims, actions, losses, liabilities, damages and expenses (including reasonable attorney's fees and costs) resulting from all claims, demands, actions and other proceedings by any THIRD PARTY to the extent arising from (a) the Page 28 of 40 breach of any representation, warranty or covenant of SHEARWATER under this AGREEMENT or (b) the negligence, recklessness or willful misconduct of SHEARWATER in the performance of its obligations and its permitted activities under this AGREEMENT. 10.1.2. By EYETECH. EYETECH shall defend, indemnify and hold SHEARWATER, SHEARWATER'S AFFILIATES, and SHEARWATER'S officers, employees and agents harmless from and against all losses, liabilities, damages and expenses (including reasonable attorney's fees and costs) resulting from all claims, demands, actions and other proceedings by any THIRD PARTY to the extent arising from (a) the breach of any representation, warranty or covenant of EYETECH under this AGREEMENT, (b) the research, development, manufacturing, commercialization or marketing of the PRODUCT (without regard to culpable conduct), or (c) the negligence, recklessness or willful misconduct of EYETECH or its AFFILIATES or SUBLICENSEES in the performance of its or their obligations and its or their permitted activities under this AGREEMENT. 10.2. Indemnification Procedures. A party seeking indemnification under this Section 10 (the "INDEMNIFIED PARTY") shall give prompt notice of the claim to the other party (the "INDEMNIFYING PARTY") and, provided that the INDEMNIFYING PARTY is not contesting the indemnity obligation, shall permit the INDEMNIFYING PARTY to control any litigation relating to such claim and disposition of any such claim, provided that the INDEMNIFYING PARTY shall act reasonably and in good faith with respect to all matters relating to the settlement or disposition of any claim as the settlement or disposition relates to the parties being indemnified under this Section 10, and the INDEMNIFYING PARTY shall not settle or otherwise resolve any claim without prior notice to the INDEMNIFIED PARTY and the consent of the INDEMNIFIED PARTY, if such settlement involves any remedy other than the payment of money by the INDEMNIFYING PARTY. The INDEMNIFIED PARTY shall cooperate with the INDEMNIFYING PARTY in its defense of any claim for which indemnification is sought under this Section 10. Page 29 of 40 10.3. Insurance. EYETECH, at its own expense, shall maintain comprehensive general liability insurance, including product liability insurance, against claims regarding the research, development, manufacture, commercialization or marketing of the PRODUCT under this AGREEMENT in the minimum amount of one million DOLLARS ($1,000,000) per occurrence, and five million DOLLARS ($5,000,000) in the aggregate, with SHEARWATER named as an additional insured, such policies shall include a provision that coverage will not be terminated unless SHEARWATER has been given at least thirty (30) days written notice. EYETECH shall maintain such insurance for so long as it continues to research, develop, manufacture, commercialize, or market the PRODUCT, and shall from time to time provide copies of certificates of such insurance to SHEARWATER upon its request. 11. Term and Termination 11.1. Expiration. This AGREEMENT comes into effect on the EFFECTIVE DATE and will remain in force until the last to expire of any VALID PATENT CLAIM included in the SHEARWATER PATENT RIGHTS or ENZON PATENTS (such date, the "INITIAL TERM DATE"). 11.2. Renewal of Term. At least one hundred twenty (120) days before the expiration of the INITIAL TERM DATE under Section 11.1, the parties shall discuss in good faith whether and on what terms to extend the term of this AGREEMENT. 11.3. Termination by EYETECH. EYETECH shall have the right to terminate this AGREEMENT in the following circumstances: 11.3.1. If the MARKETING AUTHORIZATION for the PRODUCT is withdrawn or suspended by the regulatory authorities (the FDA and the EMEA) in both the major markets (both the United States and Europe) of the TERRITORY; 11.3.2. If scientific or medical findings, which clearly indicate serious hazards associated with the PRODUCT, prohibit further marketing of the PRODUCT; 11.3.3. If significant changes in competitiveness seriously inhibit the effective marketing of the PRODUCT; or Page 30 of 40 11.3.4. In the event EYETECH is unable to market the PRODUCT in the TERRITORY due to valid patent infringement claims of THIRD PARTIES. 11.4. Termination for Cause. Each party shall have the right to terminate this AGREEMENT for failure to comply with the material terms of this AGREEMENT by the other party, provided such failure to comply is not corrected by the failing party within twenty (20) days of written notice of any failure to make timely payment of royalties or any other amount, when due hereunder, or within ninety (90) days of receipt of written notice of any other failure from the non-failing party. The right of either party to terminate this AGREEMENT as provided herein above shall not be affected in any way by such party's waiver of or failure to take actions with respect to any previous default. 11.5. Bankruptcy. In case of the filing of a voluntary petition for bankruptcy, the failure to cause an involuntary petition in bankruptcy to be dismissed within sixty (60) days after the filing thereof, suspension of payment, assignment for the benefit of creditors, voluntary liquidation or otherwise of one party then the other party shall be entitled to terminate this AGREEMENT by giving thirty (30) days written notice. 11.6. Effect of Termination. 11.6.1. The provisions of Sections 2, 3.5, 4.9, 5.2, 9 and 10 shall survive termination of this AGREEMENT for any reason whatsoever. 11.6.2. In the event of termination of this AGREEMENT by EYETECH pursuant to Section 11.2, EYETECH shall continue to be obligated to purchase REAGENT pursuant to any issued purchase orders. If EYETECH terminates this AGREEMENT prior to the end of the first [**] quarters after the EFFECTIVE DATE, it shall be obligated to purchase the minimum quantities specified for such first [**] quarters pursuant to Section 4.3. 11.6.3. If EYETECH terminates this AGREEMENT pursuant to Section 11.4, the following shall occur so long as EYETECH continues to develop, make, have made, use, import, offer for sale or sell the PRODUCT: (a) the licenses granted pursuant to Section 3.1 shall survive such termination, Page 31 of 40 subject to the terms and conditions of the CROSS-LICENSE AGREEMENT; and (b) EYETECH shall continue to pay SHEARWATER royalties and milestones payments and make reporting obligations pursuant to Sections 7 and 8. During the period in which EYETECH is obligated to pay SHEARWATER royalties for use of the REAGENT, the SHEARWATER covenant of Section 3.4 shall survive. In addition, EYETECH shall pay SHEARWATER other payments which have accrued hereunder prior to such termination. 11.6.4. In the event this AGREEMENT is terminated by either party for any other reason, all licenses granted to EYETECH in Section 3.1 shall immediately terminate. Termination of this AGREEMENT by either party shall not terminate EYETECH'S obligation to pay all milestone payments, royalties, and other payments which shall have accrued hereunder prior to such termination. 12. Assignment 12.1. Unless otherwise expressly permitted hereunder, except as part of the sale of the entire business to which this AGREEMENT relates, a merger, consolidation, reorganization or other combination with or into another PERSON, or the transfer or assignment to an AFFILIATE, pursuant to which the surviving entity or assignee assumes the assigning or merging parties obligations hereunder, neither party may assign any of its rights or delegate any of its duties under this AGREEMENT unless the other party has given specific written approval thereto, with such approval not to be unreasonably withheld. Any purported assignment not in accordance with this Section 12.1 shall be void and of no effect. 12.2. This AGREEMENT shall not only be binding upon each party signatory hereto but also to its successors by consolidation, combination, acquisition or merger, and assignees. 13. Notices 13.1. Any notice or document required or permitted hereunder shall be deemed to have been served properly if personally delivered, delivered by facsimile transmission, or mailed by registered or certified United States mail, postage Page 32 of 40 prepaid and properly addressed, to the respective party to whom such notice relates at the applicable address set forth in the caption of this AGREEMENT or at such alternate address as shall be specified by notice given in the manner herein provided. Facsimile transmission shall be deemed received on the first business day following a confirmed transmission, and a mailed notice or document shall be deemed received on the fourth (4th) business day following the date of posting. 14. Re-negotiation 14.1. In the event the CROSS-LICENSE AGREEMENT terminates or expires while this AGREEMENT is still in effect, the parties agree to meet to discuss in good faith any resulting changes to be made in the terms of this AGREEMENT, including but not limited to, financial terms. 15. Miscellaneous 15.1. Force Majeure. Neither party shall be held liable or responsible to the other party nor be deemed to have defaulted under or breached this AGREEMENT for failure or delay in fulfilling or performing any term of this AGREEMENT to the extent, and for so long as, such failure or delay is caused by or results from causes beyond the reasonable control of the affected party including but not limited to fire, floods, embargoes, war, acts of war (whether war is declared or not), insurrections, riots, civil commotions, strikes, lockouts or other labor disturbances, acts of God or acts, omissions or delays in acting by any governmental authority or other party; provided, however, that the foregoing shall not be applied to excuse or delay any royalty or other payment obligation of either party under this AGREEMENT. When such circumstances arise, the parties shall discuss what, if any modification of the terms of this AGREEMENT may be required to arrive at an equitable solution. 15.2. Severability. All the terms and provisions of this AGREEMENT are distinct and severable, and if any term or provision is held unenforceable, illegal or void in whole or in part by any court, regulatory authority or other competent authority it shall to that extent be deemed not to form part of this AGREEMENT, and the enforceability, legality and validity of the remainder of this AGREEMENT will not Page 33 of 40 be affected, provided that, in any case where as a result of the operation of this Section 15.2 the rights or obligations of a party are materially altered to the detriment of that party, that party may terminate this AGREEMENT within thirty (30) days from the date of the relevant decision of the relevant court, regulatory authority or other competent authority. 15.3. Variation. This AGREEMENT may not be released, discharged, supplemented, amended, varied or modified in any manner except by an instrument in writing signed by a duly authorized officer or representative of each of the parties hereto. 15.4. Forbearance and Waiver. No waiver by a party in respect of any breach will operate as a waiver in respect of any subsequent breach. No failure or delay by a party in exercising any right or remedy will operate as a waiver thereof, nor will any single or partial exercise or waiver of any right or remedy prejudice its further exercise or the exercise of any other right or remedy. 15.5. Counterparts. This AGREEMENT may be executed in more than one counterpart, each of which constitutes an original and all of which together shall constitute one enforceable agreement. 15.6. No Partnership. The relationship of the parties is that of independent contractors and this AGREEMENT will not operate so as to create a partnership or joint venture of any kind between the parties. 15.7. Construction. The parties have participated jointly in the negotiation and drafting of this AGREEMENT. In the event that an ambiguity or question of intent or interpretation arises, this AGREEMENT shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this AGREEMENT. 15.8. Entire Agreement. This AGREEMENT constitutes the entire understanding between the parties and supersedes any prior understanding and agreements between and among them respecting the subject matter hereof. There are no representations, agreements, arrangements or understandings, oral or written, between the parties relating to the subject matter of this AGREEMENT which are Page 34 of 40 not fully expressed in this AGREEMENT. This AGREEMENT shall be binding upon, and inure to the benefit of, the parties and their respective successors and assigns. 15.9. Governing Law. This AGREEMENT shall be governed by and construed in accordance with the LAWS of the State of California, U.S.A., without regard to its choice of law rules. IN WITNESS WHEREOF, the parties hereto have caused their authorized representatives to execute this AGREEMENT by signing below: SIGNED: For and on behalf of: For and on behalf of: Shearwater Corporation Eyetech Pharmaceuticals, Inc. Signature /s/ Stephen A. Charles Signature /s/ Harsha Murthy ---------------------------- ---------------------------- Name: Stephen A. Charles, Ph.D. Name: Harsha Murthy Title: Vice President, Corporate Title: Vice President, Business Development Strategy & General Counsel Page 35 of 40 SCHEDULE I THE SPECIFICATIONS [**][**]

PROCEDURE NUMBER TEST SPECIFICATION [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**]

ALL FORMS PRESENTING THE ABOVE RESULTS MUST BE ATTACHED [**] Page 36 of 40 SCHEDULE II REMUNERATION AND INITIAL FORECAST Pursuant to Section 7.1 the following milestone payments will be payable by EYETECH to SHEARWATER:

MILESTONE MILESTONE PAYMENT (US DOLLARS) Within ten (10) days from the INDEPENDENT COUNSEL'S AFFIRMATIVE DETERMINATION $1,500,000 Within [**] of [**] $[**] Within [**] of [**] $[**]

The above payments shall be made only upon the first time achieved for the PRODUCT. Pursuant to Section 4.3, EYETECH shall purchase the following amounts of REAGENT from SHEARWATER:

CALENDAR QUARTER FOLLOWING THE EFFECTIVE DATE AMOUNT OF REAGENT REQUIRED (KG) 1 2 3 4 5 6 7 8

Page 37 of 40 Pursuant to Section 7.5.1, EYETECH will pay to SHEARWATER the following prices for the REAGENT manufactured according to cGMP and the SPECIFICATIONS.

TOTAL AMOUNT OF REAGENT PURCHASED OVER 12 PRICE PER GRAM (DOLLARS) MONTH PERIOD (KG) Less than [**] kg $[**] Equal to or greater than [**] kg and less than [**] kg $[**] Equal to or greater than [**] kg and less than [**] kg $[**] Equal to or greater than [**] kg $[**]

Page 38 of 40 SCHEDULE III SHEARWATER PATENT RIGHTS

SC REFERENCE PATENT NUMBER PRIORITY DATE STATUS [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**]

Page 39 of 40 SCHEDULE IV ENZON PATENTS [**] Page 40 of 40 EX-10.55 9 y18060exv10w55.txt EX-10.55: LETTER OF UNDERSTANDING EXHIBIT NO. 10.55 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. EYETECH PHARMACEUTICALS 500 Seventh Avenue 18(th) Floor New York, New York 10018 August 29, 2003 Raylo Chemicals Inc. 8045 Argyll Road Edmonton, Alberta Canada Attn: Matt Colomb Greg Klak Robin Nicol Gentlemen: This Letter of Understanding ("LOU") is agreed to and accepted by and between Eyetech Pharmaceuticals, Inc., a Delaware corporation ("Eyetech") and Raylo Chemicals, Inc., a company organized and existing under the laws of Canada ("Raylo"), and sets forth the intentions, terms and conditions pursuant to which Eyetech and Raylo will undertake actions to allocate between themselves control of the technical and operational aspects of the manufacture of Eyetech's proprietary compound Macugen(TM) during the period that this LOU remains in effect. This LOU shall take effect on September 1, 2003 and remain in effect until the earlier of such time as (a) this LOU is terminated by joint agreement between Eyetech and Raylo after satisfaction of certain mutually agreed to performance targets for the Macugen(TM) production at Raylo or (b) the parties discontinue any relationship between them whereby Raylo manufactures Eyetech's Macugen(TM) compound for Eyetech at Raylo's facility. During the period that this LOU is in effect, the parties hereto envision entering into a definitive Manufacturing and Supply Agreement (the "Proposed Agreement") setting forth certain agreements between them relating to a proposed long term manufacturing relationship whereby Raylo would manufacture the Macugen(TM) compound for Eyetech. Eyetech and Raylo agree as follows: 1. Allocation of Responsibility and Authority for Production of Macugen(TM) - Eyetech will assume responsibility for and have full authority over all operational and technical decisions relating to the manufacture of Macugen(TM) at Raylo's facility. - Eyetech will assign a sufficient number of its own employees, not to exceed 8, (the "Eyetech Staff") to work on the Macugen(TM) production on-site at Raylo's facility at Eyetech's sole cost. - Raylo shall take all reasonable steps to facilitate Eyetech's decision-making regarding the Macugen(TM) production. - Raylo shall direct its supervisors to follow all reasonable instructions concerning the Macugen(TM) production issued by the Eyetech Staff designated to oversee such production. - Raylo shall direct its shift supervisors to report all technical problems related to the Macugen(TM) production to the Eyetech Staff as well as keeping Raylo management informed. - Raylo will maintain full responsibility for cGMP compliance, safety and all administrative matters, including batch records and other production documentation related to the production of Macugen(TM). - Eyetech will assist Raylo in establishing the inventory control and raw material tracking system for the Macugen(TM) production unit, but Raylo will be responsible for the implementation of such system. - Eyetech will execute a confidentiality agreement covering all its employees which will prohibit the disclosure of any information obtained by Eyetech or its employees concerning proprietary information belonging to Raylo and/or Raylo's customers. - Eyetech shall have the right to designate staff that will have access at all times to the Macugen(TM) production area and the office area assigned to Eyetech. - A joint committee consisting of 2 Raylo and 2 Eyetech personnel will be established to handle HR, scheduling and other non-process related issues as they arise; this committee will meet weekly. 2. Dedication of Production Areas and Raylo Support at Raylo's Facility - Eyetech will pay Raylo for all Macugen(TM) batches manufactured at its facility, including rejected batches for the term of this agreement. Payment will be made as follows: - Monthly rate of $[**] US, invoiced in Canadian dollars at an exchange rate to be agreed between Raylo and Eyetech - This rate covers resources equivalent to what have been employed to date on this project, and changes in scope (i.e. additional staff) will have to be negotiated independently - This rate will be fixed for the first six months of the project, starting September 1, 2003. If the current plan (i.e. Eyetech operational control) is to be extended at this point, the rate will be reviewed and revised if necessary - Variable charges (non-key raw materials and consumables) associated with manufacturing will be charged separately, and are expected to be approximately $[**] US per batch. This figure can be confirmed and reviewed as necessary. - In terms of batch 8P, which will not be progressed, it is proposed that Raylo invoice Eyetech for $[**] US for this batch, with the understanding that there will be no reimbursement for Eyetech supplied raw materials that were utilized in this run. - In exchange for the considerations given above no later than by September 5, 2003 Raylo will dedicate exclusively to Macugen(TM) production, and give Eyetech Staff full access to the following production areas: 1. One Synthesis Suite 2. One Purification Suite 3. One Lyophilization Suite - Eyetech will have certain process equipment dedicated to Macugen and will be used solely for Macugen production. - Eyetech will be responsible for maintenance of an inventory of spare parts and any upgrades for equipment used in the production of Macugen(TM). 3. Quality Control - Operators will be trained to run the in-process Macugen(TM) assays. Additional equipment to perform the in-process Macugen (TM) assays may be purchased and installed at Eyetech's expense, if agreed by Raylo and Eyetech 4. Quality Assurance - Eyetech Staff will assume responsibility for streamlining batch records including review of batch records and "clean up" of the batch record process. - Eyetech will make recommendations to Raylo as to new systems/processes and will work with Raylo to see if they can be implemented in Raylo systems. - Raylo personnel shall provide QA oversight, batch record review, and Macugen related documentation to Eyetech upon Eyetech's request. Neither Party shall make any press release or other public presentation or disclosure with respect to this LOU nor the transactions contemplated hereby without the prior written consent and approval of the other Party, except to the extent required under applicable law or regulation or under the rules of any stock exchange or NASDAQ. If the foregoing terms are acceptable, please sign both originals of this LOU below, return to us one fully-signed original to acknowledge your agreement to and acceptance of this LOU, and retain one fully-signed original for your files. We look forward to the execution of this LOU and the continuation of our relationship with regard to Macugen(TM). Very truly yours, EYETECH PHARMACEUTICALS, INC. By: /s/ Chuck Williams --------------------------------- Name: Chuck Williams Title: Senior VP, Manufacturing ACCEPTED AND AGREED: RAYLO CHECMICALS, INC. By: /s/Robin H. Nicol ------------------ Name: Robin H. Nicol Title: Manager, Research, Development and Oligo Unit ADDENDUM TO LOU DATED AS OF SEPTEMBER 1, 2003 Raylo Chemicals, Inc ("Raylo") and Eyetech Pharmaceuticals, Inc. ("Eyetech") hereby agree to add the provisions set forth below to their Letter of Understanding effective dated as of September 1, 2003 (the "LOU"). This Addendum shall be effective as of November 1, 2003. 1. Additional Space In addition to the exclusively dedicated production areas at the Raylo listed in the LOU Clause 2., Raylo will dedicate exclusively to the Macugen(TM) production for a period not to exceed 180 days the following production areas: 1. One Synthesis Suite 2. One Purification Suite 3. One Area currently used for Glass Washing 2. Additional Payment In addition to the monthly rate payable by Eyetech to Raylo, Eyetech shall pay to Raylo for the Additional Space listed under clause 1 of this Addendum $ [**] CDN per month. 3. Currency Rate For the monthly payments of the $ [**]US under the LOU, which as of the Effective date of this addendum will be paid in the amount of $ [**]CDN. For any other payments denominated in US. Dollars it is agreed that Eyetech will pay Raylo, at Raylo's option, in US. Dollars or at the exchange rate reported in the Wall Street Journal Eastern Edition on the date the payment becomes due. 4. Outstanding Payments An outstanding amount of $ [**]US invoiced to Eyetech by Raylo shall be paid to Raylo before the end of calendar year 2003. 5. Renewal Option Eyetech shall have the option to renew the LOU for an additional term of 180 days, but not beyond completion of the process validation. [SIGNATURE NEXT PAGE] Accepted by: Accepted by: Raylo Chemicals, Inc. Eyetech Pharmaceuticals, Inc. /s/ T. Matthew Colomb /s/ Paul G. Chaney - --------------------------------- ------------------------------- Signature Signature T. Matthew Colomb Paul G. Chaney - --------------------------------- ------------------------------- Printed Name Printed Name President C.O.O. - --------------------------------------------- ------------------------------- Title Title EX-10.56 10 y18060exv10w56.txt EX-10.56: MANUFACTURING AND SUPPLY AGREEMENT EXHIBIT 10.56 CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS. MANUFACTURING AND SUPPLY AGREEMENT This MANUFACTURING AND SUPPLY AGREEMENT (the "Agreement") dated as of November 11, 2003 (the "Effective Date") is made by and between Raylo Chemicals Inc., a Canadian corporation ("Raylo") and Eyetech Pharmaceuticals, Inc., a Delaware corporation ("Eyetech"). RECITALS WHEREAS, Eyetech develops and commercializes new drugs to reduce and prevent serious vision loss caused by eye disease and to develop new technologies to safely deliver drugs to the back of the eye; WHEREAS, Raylo is a contract manufacturer of chemical compounds for human drugs; WHEREAS, Raylo and Eyetech wish to enter into an agreement describing the terms and conditions upon which Raylo will manufacture and supply to Eyetech, and Eyetech will purchase from Raylo, the active pharmaceutical ingredient in Eyetech's Macugen(TM) product; WHEREAS, Raylo and Eyetech wish to set forth certain license terms pursuant to which Raylo will license and sublicense its intellectual property to permit Eyetech to manufacture for itself or have manufactured by a third party manufacturer the same product; WHEREAS, Raylo and Eyetech are parties to a certain Letter of Understanding dated September 1, 2003 (the "LOU") that, during the effectiveness of such LOU, will supersede and/or modify certain terms of this Agreement; and WHEREAS, Raylo and Eyetech are parties to a certain Quality Agreement dated November 11, 2003 (the "Quality Agreement"), which sets forth certain agreements of the Parties regarding quality control and quality assurance; NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises, covenants and agreements hereinafter set forth the parties hereto agree as follows: 1. DEFINITIONS 1.1 "15mM Process" shall mean the process for manufacturing API established, validated and documented through the 15mM Process Validation Procedures. 1.2 "15mM Process Validation Procedures" shall mean the procedures for validation of the 15mM Process set forth in the Quality Agreement. 1.3 "Affiliate" shall mean, with respect to a Party, any Person that controls, is controlled by, or is under common control with such Party. For purposes of this Section 1.3, "control" shall refer to (a) in the case of a Person that is a corporate entity, direct or indirect ownership of fifty percent (50%) or more of the stock or shares having the right to vote for the election of directors of such Person and (b) in the case of a Person that is an entity, but is not a corporate entity, the possession, directly or indirectly, of the power to direct, or cause the direction of, the management or policies of such Person, whether through the ownership of voting securities, by contract or otherwise. 1.4 "Agreement" shall mean this Manufacturing and Supply Agreement between Raylo and Eyetech together with the recitals and all exhibits, schedules and attachments hereto. 1.5 "Amgen License Fee" shall mean a fee in the amount of US$[**] payable by Eyetech to Raylo upon exercise by Eyetech of its option to license the Amgen Patents in accordance with Section 2.3(a). 1.6 "Amgen Patents" shall mean U.S. Patent No. 4,762,779 and Canadian Patent No. 1,303,526 and all Patent Rights based on such patents, and all counterparts of any of the foregoing in any country. 1.7 "API" shall mean active pharmaceutical ingredient bulk drug substance manufactured for use in the Eyetech Product, as described in the Specifications. 1.8 "Applicable Legal Requirements" shall mean: (a) any and all federal, national, supranational, state and local laws, regulations, ordinances, orders and requirements applicable to the activities under this Agreement; and (b) any other specifications, guidelines, procedures and directives mutually agreed to by the Parties, applicable to the API or Eyetech Product, or activities under this Agreement, including, without limitation, cGMP. 1.9 "Batch" shall mean a batch of API resulting from the 15mM Process. 1.10 "[**]" shall mean [**]. 1.11 "Binding Order" shall have the meaning set forth in Section 3.2(b) hereof. 1.12 "Business Day" shall mean a day on which banks are open for business in both New York, New York and Edmonton, Alberta. 2 1.13 "Certificates" means, with respect to the API, all necessary certificates of analysis and/or certificates of compliance. 1.14 "CFR" shall mean the United States Code of Federal Regulations. 1.15 "cGMP" shall mean applicable current Good Manufacturing Practices as described, without limitation, in ICHQ7A as specified in the Quality Agreement. 1.16 "Confidential Information" shall mean all Know How or other information (whether or not patentable) regarding a Party's technology, products, business information or objectives, and all biological materials of a Party. Notwithstanding the foregoing, Confidential Information shall not include Know-How or other information that: (a) was known or used by the receiving Party or its Affiliates prior to its date of disclosure to the receiving Party; or (b) either before or after the date of the disclosure to the receiving Party is lawfully disclosed to the receiving Party or its Affiliates by sources other than the disclosing Party rightfully in possession of such Know-How or other information and not bound by confidentiality obligations to the disclosing Party; or (c) either before or after the date of the disclosure to the receiving Party or its Affiliates is or becomes published or otherwise is or becomes part of the public domain through no breach hereof on the part of the receiving Party or its Affiliates; or (d) is independently developed by or for the receiving Party or its Affiliates without reference to or reliance upon the Confidential Information of the disclosing Party as demonstrated by written records. 1.17 "Delivery" and all variations of this term means the delivery to Eyetech of API, FCA (Incoterms 2000) the Facility, together with all applicable Certificates, that meets the Specifications and has been manufactured in accordance with cGMP. 1.18 "Dollars" or "$" shall mean Canadian Dollars unless expressly provided otherwise. 1.19 "Effective Date" shall have the meaning set forth in the introduction hereto. 1.20 "Eyetech Intellectual Property" shall mean all Eyetech Know-How and Eyetech Patent Rights. 1.21 "Eyetech Know-How" shall mean any Know-How that (a) either (i) is in Eyetech's and/or its Affiliates' possession on the Effective Date or (ii) Eyetech and/or its Affiliates develop or acquire during the Term and (b) is owned or controlled by, or licensed to, Eyetech and/or its Affiliates and to which Eyetech and/or its Affiliates have 3 the right to grant licenses or sublicenses without violating the terms of any agreement with a third party. 1.22 "Eyetech Materials" shall mean the raw materials to be supplied to Raylo by Eyetech pursuant to Section 3.3 hereof. A list of all Eyetech Materials is attached hereto as Exhibit B. 1.23 "Eyetech Patent Rights" shall mean Patent Rights that (a) cover Eyetech Know-How and (b) are owned or controlled by, or licensed to, Eyetech and/or its Affiliates and to which Eyetech and/or its Affiliates have the right to grant licenses or sublicenses without violating the terms of any agreement with a third party. 1.24 "Eyetech Product" shall mean Eyetech's product named "Macugen(TM)" delivered by intravitreal injection. 1.25 "Facility" shall mean Raylo's facility at 1021 Hayter Road, Edmonton, Alberta, Canada or such other manufacturing facility of Raylo or its Affiliates as may be approved by Eyetech. 1.26 "FD&C Act" shall mean the United States Federal Food, Drug, and Cosmetic Act, as amended, and the regulations promulgated thereunder. 1.27 "FDA" shall mean the United States Food and Drug Administration. 1.28 "Forecast" shall have the meaning set forth in Section 3.2(a) hereof. 1.29 "Improvement" shall mean any upgrade, new version, adaptation, change, redesign, improvement, derivative work, modification or development of or to the API, the Specifications, or the method or process of manufacture, production or use of the API, conceived or reduced to practice, or otherwise created, in the course of the Parties' activities pursuant to this Agreement. 1.30 "Initial Term" shall have the meaning set forth in Section 9.1. 1.31 "Know-How" shall mean all information, inventions, discoveries, copyrights, trade secrets, data or materials, whether proprietary or not, and all Improvements. 1.32 "LOU" shall have the meaning set forth in the recitals hereto. 1.33 "LOU Termination Date" shall mean the date that the interim provisions of the LOU relating to the processing of API at the Facility and responsibility for rejected Batches shall, by agreement of the Parties in accordance with Section 4.1(c), terminate. 1.34 "Material Safety Data Sheet" means the material safety data sheet used to comply with the United States Occupational Safety and Health Administration's Hazard Communication Standard, 29 CFR Section 1910.120, as amended from time to time. 4 1.35 "Minimums" shall mean the percentages of Eyetech's requirements for API used in the Eyetech Product set forth on Exhibit C hereto. 1.36 "mM" shall mean one-thousandth of a Mole. 1.37 "Negotiated Per Gram Cost" shall mean the cost per gram of API to be paid by Eyetech to Raylo set forth on Exhibit D, as adjusted from time to time in accordance with Section 4.2. 1.38 "PAI" shall mean a pre-approval inspection of the Facility to demonstrate the requirements of Section 505 of the FD&C Act are met with regard to the methods used in, and the facilities and controls used for, the manufacture and processing of a drug. 1.39 "Parties" shall mean Raylo and Eyetech together and "Party" shall mean either Raylo or Eyetech individually. 1.40 "Patent Rights" shall mean all patents and patent applications (including any continuations and continuations-in-part of any such patent applications, and any divisionals, provisionals or substitute applications with respect to any such patent applications), any patent issued with respect to any such patent applications, any reissue, reexamination, renewal or extension (including any supplemental patent certificate) of any such patent, and any confirmation patent or registration patent or patent of addition based on any such patent, and all counterparts of any of the foregoing in any country. 1.41 "Person" shall mean any natural person or any corporation, company, partnership, joint venture, firm or other entity, including without limitation a Party. 1.42 "Quality Agreement" shall have the meaning set forth in the recitals hereto. 1.43 "Raw Materials" means ingredients, additives, purification resins, and reagents, and any other components or in-process materials as defined in 21 CFR Section 210.3, which are purchased by Raylo for use in the manufacture of the API, but not including the Eyetech Materials. 1.44 "Raylo Intellectual Property" shall mean all Raylo Know-How and Raylo Patent Rights. 1.45 "Raylo Know-How" shall mean any Know-How that (a) either (i) is in Raylo's and/or its Affiliates' possession on the Effective Date or (ii) Raylo and/or its Affiliates develop or acquire during the Term and (b) is owned or controlled by, or licensed to, Raylo and/or its Affiliates and to which Raylo and/or its Affiliates have the right to grant licenses or sublicenses without violating the terms of any agreement with a third party. 1.46 "Raylo Patent Rights" shall mean Patent Rights that (a) cover Raylo Know-How and (b) are owned or controlled by, or licensed to, Raylo and/or its Affiliates 5 and to which Raylo and/or its Affiliates have the right to grant licenses or sublicenses without violating the terms of any agreement with a third party. 1.47 "Services" shall have the meaning set forth in Section 3.6. 1.48 "Specifications" shall mean the initial specifications for the API set forth on Exhibit A hereto, and any subsequent changes or modifications to the initial specifications as determined by Eyetech from time to time. 1.49 "Term" shall mean the Initial Term as it may be extended pursuant to Section 9.1 hereof. 1.50 "Validation Batches" shall mean Batches of API submitted by Raylo to Eyetech for validation of the 15mM Process pursuant to the Quality Agreement. 2. VALIDATION; REGULATORY COMPLIANCE; LICENSES 2.1 Validation. Validation of the 15mM Process shall be conducted as set forth in the Quality Agreement. All post-validation changes to the 15mM Process shall require the prior written approval of Eyetech. 2.2 Regulatory Compliance and Records. (a) Regulatory Inspections and Notices. Raylo is responsible for passing any required PAI in connection with Eyetech's application for regulatory approval of the Eyetech Product. Eyetech shall provide a third party consultant, at its cost, to advise Raylo on what steps are necessary for Raylo to pass any such PAI with respect to the API in the Facility. Raylo shall provide Eyetech with a copy of all inspection results, including a copy of any inspection report and/or observations from the regulatory authority (or its designee) for any regulatory inspection; provided that Raylo may redact any third party confidential information from such inspection results if such third party confidential information is not relevant to a complete understanding of the impact of the regulatory inspection on Raylo's ability to manufacture and supply API in accordance with this Agreement. Raylo shall notify Eyetech within two (2) Business Days after receiving formal notice about the initiation of any compliance or enforcement action, investigation, inspection, review or inquiry by the FDA or other regulatory authority concerning the API, including any Form 483, recall, seizure, warning letter, or court complaint. In addition, Eyetech shall have the right to have, at Eyetech's option, up to two (2) Eyetech representatives present at the Facility for any regulatory inspection that relates to the manufacture of the API. (b) Access to Records. Eyetech shall have access to all records, documents and materials of Raylo relating to this Agreement and the manufacture of the API. Upon Eyetech's request and at Eyetech's cost, Raylo shall promptly deliver to Eyetech a single copy of any such records, documents and materials that Eyetech may request. 6 (c) Regulatory Submissions and Support. Raylo shall cooperate with Eyetech and provide Eyetech with any information in Raylo's possession that Eyetech requires in order to make submissions to regulatory authorities relating to the API and/or the Eyetech Product. Eyetech will advise Raylo from time to time of any regulatory submissions relating to the API and/or the Eyetech Product requiring responses from Raylo. Raylo shall respond to any such inquiry and provide all requested information promptly after Raylo's receipt of the inquiry, and Raylo shall provide Eyetech with notice of any inquiry from a regulatory authority within two (2) Business Days from Raylo's receipt of the inquiry. 2.3 Licenses; Covenants. (a) License Under Amgen Patents. Raylo hereby grants to Eyetech an irrevocable, perpetual, non-exclusive, worldwide, royalty-free license, with the right to grant sublicenses to Eyetech's Affiliates and to Pfizer Inc. and Pfizer Inc.'s affiliates, under the Amgen Patents, solely to make, have made, use, sell, offer for sale and import the API and Eyetech Product, effective upon written notice from Eyetech to Raylo that it is exercising its option to license the Amgen Patents and payment by Eyetech to Raylo of the Amgen License Fee. Raylo hereby agrees not to transfer or grant to any third party any rights in the Amgen Patents that would prevent or are inconsistent with the foregoing license grant to Eyetech. (b) License Under Eyetech Intellectual Property. Eyetech hereby grants to Raylo a non-exclusive, worldwide, non-sublicensable, royalty-free license under the Eyetech Intellectual Property during the Term solely to perform Raylo's obligations under this Agreement. (c) License Under Raylo Intellectual Property. In order to ensure that Eyetech will be free to continue using, or having used, its manufacturing processes and other technology relating to the API and the Eyetech Product both during the Term and after the expiration or termination of this Agreement, Raylo hereby grants to Eyetech an irrevocable, perpetual, non-exclusive, worldwide, royalty-free license, with the right to grant sublicenses to Eyetech's Affiliates and to Pfizer Inc. and Pfizer Inc.'s Affiliates, under the Raylo Intellectual Property, solely to make, have made, use, sell, offer for sale and import the API and Eyetech Product. (d) Covenants Regarding [**]. Raylo hereby agrees (i) to [**] in full force and effect during the Term and thereafter for a period of [**], (ii) agrees not to take any action or omit to take any action, which action or omission could result in [**] and (iii) agrees to notify Eyetech within two (2) Business Days of receiving any communication from or on behalf of [**]. Upon request by Eyetech, and at Eyetech's expense or [**], Raylo shall exercise its right under Section 2.02 of the [**] that are [**] those of the [**] designated by Eyetech. 2.4 Ownership of and Licenses to Improvements. Each Party shall own all Improvements made by it or its employees. Raylo hereby grants to Eyetech an irrevocable, perpetual, exclusive, worldwide, royalty-free license, with the right to grant 7 sublicenses, to all Improvements made by Raylo and its employees, solely to make, have made, use, sell, offer for sale and import the API and Eyetech Product. Eyetech hereby grants to Raylo an irrevocable, perpetual, non-exclusive, worldwide, royalty-free license, with the right to grant sublicenses, to manufacturing method or process Improvements made by Eyetech and its employees, solely for purposes unrelated to the making, having made, using, sale, offer for sale or importation of the API or the Eyetech Product. 2.5 Upgrade to Manufacturing Process. If Eyetech requests that Raylo upgrade its manufacturing process for the API from the 15mM Process to a higher volume process (e.g., to a 100mM process), the Parties shall in good faith cooperate to make any operational changes necessary to implement such upgrade and to amend this Agreement, including without limitation the validation and pricing provisions hereof, as reasonably necessary to accommodate such necessary changes. 3. SUPPLY OF PRODUCT; EYETECH MATERIALS; SERVICES; ADVERSE EXPERIENCE REPORTING; FACILITY 3.1 Supply and Purchase of API. Raylo shall manufacture API exclusively for and sell API exclusively to Eyetech and its Affiliates and, if requested by Eyetech, to Pfizer Inc. and its affiliates, and Eyetech (together with its Affiliates, Pfizer Inc. and Pfizer Inc.'s affiliates) shall purchase from Raylo quantities of the API sufficient to meet Eyetech's Minimum obligations; provided that Eyetech shall not be obligated to purchase such Minimums from Raylo if its failure to do so is related to Raylo's failure to accept Eyetech's Binding orders or to Deliver API to Eyetech by the requested delivery dates in Eyetech's Binding Orders. If Eyetech requests that Raylo sell API to Pfizer Inc. and Pfizer Inc.'s affiliates, Eyetech hereby guarantees to Raylo payment by Pfizer Inc. and Pfizer Inc.'s affiliates for API Delivered by Raylo in accordance with written orders placed by Pfizer Inc. and Pfizer Inc.'s affiliates. 3.2 Production Planning; Forecasts. (a) Forecast. During the Term, Eyetech shall provide to Raylo, within the first month of each quarter, on a quarterly basis, a rolling forecast for orders of API with respect to the following four (4) quarters (each, a "Forecast"). Eyetech shall be obligated to purchase at least [**] of the amount of API forecast for the first quarter of any Forecast, and shall execute a binding purchase order to that effect. The forecast for the remaining three (3) quarters of any Forecast shall be non-binding. (b) Binding Orders. The binding portions of the Forecasts and Eyetech's purchase orders for quantities in excess of such binding portions shall be binding (each, a "Binding Order" and, collectively, "Binding Orders"). (c) Obligation to Supply (1) Raylo shall (A) fill all Binding Orders, (B) Deliver API ordered thereunder, (C) use best efforts to accommodate Eyetech's requested Delivery dates, and (D) in any case Deliver such API within the quarter, for up to [**]% of Eyetech's requirements 8 forecasted for the first quarter in the most recent Forecast preceding such Binding Orders, provided that Eyetech submits purchase orders for such Binding Orders at least [**] days preceding the requested Delivery date and provided further that Eyetech acknowledges that if, despite Raylo's best efforts to accommodate Eyetech's requested Delivery dates, Raylo is unable to fully accommodate such requested Delivery dates due to [**], then Raylo shall not be in breach of its obligations pursuant to clause (C) above as long as Raylo continues to use its best efforts to Deliver the API ordered by Eyetech as close as reasonably practicable to Eyetech's requested Delivery dates. In addition, Raylo shall use best efforts to fill all Binding Orders, and Deliver API ordered thereunder by the requested Delivery date, for quantities in excess of [**]% of Eyetech's requirements forecasted for the first quarter in the most recent Forecast preceding such Binding Orders, provided that Eyetech submits purchase orders for such Binding Orders at least [**] days preceding the beginning of the quarter in which Delivery is requested. (2) If Raylo is unable to supply the API ordered by Eyetech hereunder and Raylo is unable to remedy the problem within [**] days after its initial failure to supply, then thereafter Eyetech's Minimum obligations hereunder shall no longer apply; provided that Eyetech shall in good faith discuss with Raylo alternative minimum commitments to substitute for Eyetech's Minimum obligations if Raylo's failure to supply is due to causes that Raylo eliminates and Raylo gives Eyetech assurances to Eyetech's reasonable satisfaction that Raylo will reliably satisfy any orders placed by Eyetech to meet such alternative minimum commitments. 3.3 Supply and Use of Eyetech Materials. Eyetech shall supply Raylo, at least [**] days prior to the beginning of the first binding forecast period., with Eyetech Materials in sufficient amounts and adequate quality to permit Raylo to meet its obligations above. The Parties acknowledge that failures by Eyetech to meet such Eyetech Materials supply obligations may cause increases in Raylo's costs of manufacturing API, and therefore the Parties agree to negotiate in good faith adjustments to the API purchase price as necessary to compensate Raylo for any such cost increases. Eyetech shall be responsible for shipping and delivery of Eyetech Materials to Raylo. With respect to all Eyetech Materials, Raylo shall: (a) at all times keep the Eyetech Materials secure and safe from loss, damage, theft, misuse and unauthorized access in such manner as Raylo stores its own proprietary materials of a similar nature, (b) maintain, store, and handle the Eyetech Materials according to Eyetech's specifications and current good manufacturing practice requirements (cGMP) and (c) dispose of Eyetech Materials only in connection with Raylo's responsibilities under this Agreement and otherwise follow Eyetech's instructions with regard to the handling and disposition 9 of the Eyetech Materials. Title in and to the Eyetech Materials shall at all times remain with Eyetech. 3.4 Raw Materials; Annual List from Eyetech. Raylo shall be responsible for the planning, procurement, testing, storage and release of the Raw Materials. All Raw Materials purchased by Raylo shall meet cGMP and shall conform to the specifications for such Raw Materials set forth in the Specifications. 3.5 cGMP Manufacture. Raylo will manufacture all API using the 15mM Process in accordance with cGMP, the Specifications, Applicable Legal Requirements, and all terms and conditions contained in the applicable Binding Order (to the extent such terms and conditions are not inconsistent with this Agreement), at the Facility. 3.6 Raylo Services. Raylo shall diligently carry out the following services (the "Services") in a professional and workmanlike manner: (a) Prepare, maintain and review all documents and records relating to the manufacture of API, including without limitation all production records, including master production and control records, and Batch production and control records, in each case as required by and consistent with cGMP and the Specifications. (b) Maintain a quality control unit in compliance with the FD&C Act, including 21 CFR Section 211.22, and establish a procedure for communications and interactions with Eyetech's quality control unit with respect to the manufacture of the API. (c) Operate the Facility, including the supply of utilities, and manufacture the API in conformance with the Specifications. (d) Provide, in accordance with a sampling plan to be established by Eyetech and subject to the purchase price provisions of Section 4.1, API samples and in-process samples for analysis and Batch release by Eyetech. (e) Review requirements (if any) for modifications to the 15mM Process in order to meet the Specifications for manufacture of subsequent API and notify Eyetech of such proposed modifications. Any such modifications to the 15mM Process are subject to approval by Eyetech. (f) Issue all Certificates. 3.7 Facility. (a) Interim Cooperation at the Facility. In accordance with the LOU, the Parties have agreed that Eyetech shall have certain supervisory involvement relating to the processing of API at the Facility during an interim period that commenced prior to the Effective Date. During such interim period, which shall end on the LOU Termination Date, certain obligations of the Parties under this Agreement shall be superseded and/or modified as set forth in the LOU. 10 (b) Onsite Representative. Subsequent to the LOU Termination Date, Raylo shall permit up to four (4) Eyetech employees, consultants and/or representatives (which, at Eyetech's option, may include representatives of Pfizer Inc.) to have reasonable access to the Facility during the manufacture of the API, for the purpose of observing, reporting on, and consulting as to such manufacturing efforts, including without limitation access to the review of all batch records and documents. Raylo agrees to consider, in good faith, any suggestions that Eyetech, or its onsite consultants/representatives, may have regarding the design or operation of the Facility and shall, in all cases, promptly respond to Eyetech regarding such suggestions. 4. PAYMENT AND PRICING TERMS 4.1 API Purchase Price; Amendment of LOU. Raylo shall sell API to Eyetech for the following prices and fees: (a) Prior to LOU Termination Date. Prior to the LOU Termination Date, Eyetech shall pay Raylo the amounts set forth in the LOU. (b) After the LOU Termination Date. After the LOU Termination Date, Raylo shall sell API manufactured using the 15mM Process to Eyetech at the Negotiated Per Gram Cost as described in Exhibit D; provided that if, after the LOU Termination Date, Eyetech determines that a change in the Specifications is required, and such change increases Raylo's cost of production, the Parties shall in good faith negotiate an amendment to this Agreement to compensate Raylo for such increase to Raylo's cost of production. (c) Amendment of LOU. The Parties hereby amend the LOU to reflect that the LOU shall terminate upon the completion of validation of the 15mM Process pursuant to the Quality Agreement. 4.2 Invoices. Invoices for the purchase price for API shall be delivered to Eyetech no earlier than at the time of Delivery of such API. All properly delivered invoices shall be paid by Eyetech within [**] days after Eyetech's receipt thereof. In order to facilitate timely invoicing by Raylo, Eyetech agrees that it will use commercially reasonable efforts to provide QC reports to Raylo no later than [**] days after Raylo's delivery of samples to Eyetech for testing. 4.3 Amgen License Fee. If Eyetech exercises its option to obtain a license under the Amgen Patents as set forth in Section 2.3(a), Eyetech shall pay to Raylo [**]. 4.4 [**]License Fees. Eyetech shall reimburse Raylo for any license fees and royalties paid by Raylo to [**] that are attributable to Raylo's supply of API to Eyetech hereunder. Raylo shall invoice Eyetech for such license fees and royalties after Raylo has paid them and shall include with such invoices evidence of payment. Eyetech shall pay all such invoices within [**]) days after Eyetech's receipt thereof. 11 4.5 Currency. Raylo shall invoice Eyetech, and Eyetech shall pay Raylo, all amounts hereunder in Canadian Dollars; provided that the [**], if payable, shall be invoiced and paid in United States dollars. 4.6 Taxes. All prices and charges are inclusive of all taxes, levies, imposts, duties and fees of whatever nature imposed by or under the authority of any government or public authority in respect of the Services and delivery of API shall be paid by Raylo (other than any taxes on the income of Eyetech, which shall be paid by Eyetech); provided that Eyetech shall be responsible for all taxes, levies, imposts, duties and fees imposed by or under the authority of any government or public authority in respect of the API (including any exportation from Canada or importation into any other country) after Eyetech takes title to API from Raylo. 5. REPRESENTATIONS, WARRANTIES AND COVENANTS 5.1 Of Both Parties. Each Party warrants and represents as of the Effective Date that such Party: (1) has the corporate power and authority to enter into this Agreement; (2) is aware of no legal, contractual or other restriction, limitation or condition that might affect adversely its ability to perform hereunder; and (3) is in good standing under the laws of each jurisdiction in which it is incorporated or engages in business activities. 5.2 Of Raylo. Raylo represents, warrants and covenants to Eyetech that: (a) the Services shall be performed in accordance with this Agreement and the Quality Agreement; (b) all API provided to Eyetech under this Agreement shall meet the Specifications and shall be manufactured in accordance with cGMP; (c) unencumbered title to all API will be conveyed to Eyetech upon payment by Eyetech of any invoices relating to such API; (d) the facilities (including, without limitation, the Facility) and practices that shall be used in the performance of the Services and the manufacture of the API shall conform to all Applicable Legal Requirements; (e) to the best of Raylo's knowledge and belief, Raylo has not, does not and will not employ any individual who is debarred under Section 306 of the FD&C Act and will provide a certification that it has not, does not and will not use in any capacity the services of any person debarred under Section 306 of the FD&C Act in connection with the manufacture of the API; (f) Raylo has obtained, and shall maintain during the term of this Agreement, all required government permits, including but not limited to health, safety and environmental permits, necessary for the conduct of the Services; 12 (g) to the best of Raylo's knowledge and belief, Raylo's performance of the Services and manufacture of the API will not infringe any rights (including, without limitation, any intellectual property rights) of any third party; (h) the information provided by Raylo to Eyetech pursuant to Section 2.2 shall be a complete and accurate in all material respects; (i) Raylo shall comply with any and all environmental requirements in the performance of the Services and the manufacture of the API; (j) Raylo is the sole owner of the [**] Patents and has all rights necessary to grant Eyetech the license set forth in Section 2.3(a); and (k) [**], as provided by Raylo to Eyetech prior to the Effective Date, remains in full force and effect as of the Effective Date. 5.3 Of Eyetech. Eyetech represents and warrants to Raylo that, to the best of Eyetech's knowledge and belief, the Eyetech Materials provided by Eyetech for use by Raylo in the manufacturing of API will not infringe or violate any valid intellectual property rights of any third party. 5.4 No Other Warranties. THE WARRANTIES CONTAINED IN THIS SECTION 5 ARE EXPRESSLY IN LIEU OF AND EXCLUDE, AND THE PARTIES HEREBY EXPRESSLY DISCLAIM AND NEGATE, ALL OTHER WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, ARISING BY OPERATION OF LAW OR OTHERWISE, INCLUDING BUT NOT LIMITED TO, IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE AND NON-INFRINGEMENT. 6. COMPLAINTS 6.1 Complaints Regarding API. In the event Eyetech has a complaint with respect to API supplied to Eyetech, then: (a) If Eyetech's complaint concerns the quantity of such API, Eyetech shall provide Raylo written notice of its complaint and provide sufficient evidence to substantiate the short quantity. Upon receipt of such written notice and substantiating evidence, Raylo shall supply to Eyetech as promptly as practicable the said short quantity of such API. Such replacement quantity shall be provided by Raylo at no additional cost to Eyetech, assuming that Eyetech has already paid for such replacement quantity. (b) If Eyetech's complaint concerns the quality of such API (non-compliance with the warranties set forth in Section 5 hereof), Eyetech shall provide Raylo written notice of its complaint and provide sufficient analytical evidence to substantiate the impairment. Upon receipt of such written notice and substantiating evidence, the impaired amount of API shall be replaced by Raylo with an equal amount of API conforming with the Specifications, as promptly as practicable. Such replacement 13 quantity shall be provided by Raylo at no additional cost to Eyetech, assuming that Eyetech has already paid for such replacement quantity. (c) Should Raylo disagree with the substantiating evidence provided by Eyetech, Raylo shall supply the replacement quantity of API in accordance with the terms of paragraphs (a) and (b) of this Section 6.1, and then both Parties shall immediately and jointly carry out the necessary analysis to verify whether Eyetech's complaint is justified. Should said analysis confirm the validity of the complaint by Eyetech, then the matter shall be deemed conclusively resolved. Should said analysis confirm the invalidity of the complaint by Eyetech, then Raylo shall invoice Eyetech for the replacement quantity provided in accordance with the terms of this Agreement. 6.2 Recalls. If Eyetech undertakes a recall related to the API, Eyetech shall notify Raylo. Raylo shall cooperate with and provide assistance to Eyetech in connection with any such recall as reasonably requested by Eyetech. 7. INDEMNIFICATION AND INSURANCE 7.1 Indemnification. (a) By Raylo. Raylo shall indemnify, defend and hold harmless Eyetech, its Affiliates, its sublicensees and distributors and their respective directors, officers, employees and agents, from and against any and all liabilities, damages, losses, costs or expenses whatsoever (including reasonable legal fees and disbursements) arising out of or resulting from claims, demands, or actions by third parties to the extent such liabilities, damages, losses, costs or expenses arise from: (1) any breach of Raylo's representations, warranties and covenants set forth in Section 5; or (2) personal injury (including death) or property damage relating to or arising out of the failure by Raylo to manufacture the API in accordance with cGMP and/or the Specifications; or (3) Raylo's violation of any environmental requirements in the manufacture of API or performance of the Services. (b) By Eyetech. Eyetech shall indemnify, defend and hold harmless Raylo, its Affiliates and their subcontractors, and their respective directors, officers, employees and agents, from and against any and all liabilities, damages, losses, costs or expenses whatsoever (including reasonable legal fees and disbursements) arising out of or resulting from claims, demands, or actions by third parties to the extent such liabilities, damages, losses, costs or expenses arise from: (1) any breach of Eyetech's representations and warranties set forth in Section 5; or 14 (2) personal injury (including death) or property damage relating to or arising out of any manufacture, use, distribution or sale of the Eyetech Product by Eyetech, its Affiliates or its sublicensees; except, in each case, to the extent that Raylo is indemnifying Eyetech in accordance with Section 7.1(a)(2) above. 7.2 Procedure for Indemnification. In the event that any person (an "Indemnified Party") entitled to indemnification under Section 7.1(a) or 7.1(b) is seeking such indemnification, such Indemnified Party shall promptly notify the indemnifying Party (the "Indemnitor") in writing of the claim (and in reasonable detail); provided, however, that failure to give such notification shall not affect the indemnification to be provided hereunder except to the extent the Indemnitor shall have been actually prejudiced as a result of such failure. The Indemnitor shall manage and control, at its sole expense, the defense of the claim and its settlement. The Indemnified Party shall provide the Indemnitor, at the Indemnitor's cost, with reasonable assistance and relevant information to support the defense of any such claim. The Indemnitor shall not accept any settlement which imposes liability not covered by this indemnification or impose any obligation on, or otherwise adversely affect, the Indemnified Party or other Party without the prior written consent of such Indemnified Party or other Party, as applicable. Nothing contained in this Section 7.2 shall oblige the Indemnified Party to take any action or steps in its own name in defending any claim, action or proceedings; however, the Indemnified Party, at is option and expense, may review and comment on the defense of any claim through its own counsel; provided that the Indemnitor shall be responsible for the fees and costs of the Indemnified Party's counsel if: (1) the Indemnitor and the Indemnified Party shall have mutually agreed to the retention of such counsel; (2) the Indemnified Party shall have reasonably concluded that there may be one or more legal defenses available to it which are different from or additional to those available to the Indemnitor; or (3) the named parties to any such proceeding (including the impleaded parties) include both the Indemnitor and the Indemnified Party, and representation of both parties by the same counsel would be inappropriate in the opinion of the Indemnified Party's counsel due to actual or potential differing interests between them; in any such case, one (1) firm of attorneys separate from the Indemnitor's counsel may be retained to represent the Indemnified Party at the Indemnitor's expense. As the Parties intend complete indemnification, all costs and expenses incurred by an Indemnified Party in connection with enforcement of Sections 7.1(a) or (b) shall also be reimbursed by the Indemnitor. 7.3 Insurance. Raylo shall obtain and maintain during the term of this Agreement: (1) comprehensive general liability insurance on a claims made basis, with coverage limits of not less than US$5 million per claim and US$20 million aggregate and (2) property insurance which includes business interruption coverage. Raylo shall name Eyetech as an additional insured on its policies. The minimum level of insurance set forth herein shall not be construed to create a limit on Raylo's liability hereunder. Within thirty (30) days after the Effective Date, Raylo shall furnish to Eyetech a certificate of insurance evidencing such coverage. Each such certificate of insurance, as well as any certificates evidencing new or modified coverages of Raylo, shall include a provision whereby thirty (30) days written notice must be received by Eyetech prior to coverage modification, and ten (10) days written notice must be received by Eyetech prior to 15 coverage cancellation, by either Raylo or the insurer. In addition, Raylo shall promptly notify Eyetech of any cancellation or modification of such insurance coverage and of any new or modified coverage. In the case of a modification or cancellation of such coverage, Raylo shall promptly provide Eyetech with a new certificate of insurance evidencing that Raylo's coverage meets the requirements in the first sentence of this Section 7.3. 8. LIMITATION OF LIABILITY; LIQUIDATED DAMAGES. 8.1 EXCEPT WITH RESPECT TO (i) RAYLO BREACHING ITS CONFIDENTIALITY OBLIGATIONS UNDER SECTION 10 HEREOF, AND (ii) EYETECH'S COSTS OF PROCURING ALTERNATE SUPPLY OF API IF RAYLO FAILS TO MEET ITS OBLIGATIONS TO SUPPLY API HEREUNDER, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR SPECIAL, INCIDENTAL, CONSEQUENTIAL, EXEMPLARY, PUNITIVE, MULTIPLE OR OTHER INDIRECT DAMAGES, OR FOR LOSS OF PROFITS, LOSS OF DATA OR LOSS OF USE DAMAGES, ARISING OUT OF THE MANUFACTURE, SALE, SUPPLYING OR FAILURE OR DELAY IN SUPPLYING OF THE API OR EYETECH PRODUCT OR OTHERWISE ARISING OUT OF THIS AGREEMENT, WHETHER BASED UPON WARRANTY, CONTRACT, TORT, STRICT LIABILITY OR OTHERWISE, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR LOSSES. 8.2 NOTHING IN THIS SECTION 8 IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION OBLIGATIONS OF RAYLO UNDER THIS AGREEMENT WITH RESPECT TO THIRD PARTY CLAIMS UNDER SECTION 7. 9. TERMINATION. 9.1 Initial Term; Extensions. This Agreement shall take effect as of the Effective Date and shall, unless sooner terminated pursuant to this Section 9, remain in effect until November 11, 2008 (the "Initial Term"). Upon written notice from Eyetech to Raylo on or before six (6) months prior to the expiration of the Initial Term, Eyetech shall have the right to extend the term of this Agreement for a period of up to three (3) years, as determined by Eyetech in its discretion. Eyetech shall specify the number of years for such extension in the notice provided to Raylo under this Section 9.1. Upon written notice to Raylo not later than six (6) months prior to the expiration of the term as extended by Eyetech pursuant to this Section 9.1, Eyetech shall have the further right to extend of the term of this Agreement for an additional period of up to three (3) years. Eyetech shall specify the number of years for such extension in the notice provided to Raylo under this Section 9.1. 9.2 Termination by Eyetech. (a) Eyetech Product Failure. Eyetech shall have the right to terminate this Agreement immediately, upon written notice, if Eyetech elects to abandon its efforts to commercialize the Eyetech Product. 16 (b) Failure to Obtain Licenses to Third Party Patent Rights. Eyetech shall have the right to terminate this Agreement immediately, upon written notice, if Raylo has not obtained all licenses to third party Patent Rights necessary to enable Eyetech to use and offer for sale the API in, and to import the API into, the United States and any other country in which the Amgen Patents [**] are in force. (c) Nonoccurrence of the LOU Termination Date. Eyetech shall have the right to terminate this Agreement and the LOU immediately, upon written notice, if the LOU Termination Date has not occurred on or before January 1, 2005. (d) Regulatory Changes and Infractions. Eyetech shall have the right to terminate this Agreement if the (i) United Stated Food and Drug Administration imposes requirements that require a change in the Specifications that, in Eyetech's judgment, Raylo cannot accommodate to Eyetech's reasonable satisfaction or (ii) Raylo is unable to Deliver Eyetech's requirements of API due to violation of any Applicable Legal Requirements. (e) Change in Control of Raylo. In the event that any Person (other than Raylo, any trustee or other fiduciary holding securities under an employee benefit plan of Raylo, or any corporation owned directly or indirectly by the stockholders of Raylo in substantially the same proportion as their ownership of stock of Raylo) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended), directly or indirectly, of securities of Raylo representing greater than 50% of the combined voting power of Raylo's then outstanding securities (a "Change in Control"), Eyetech may terminate this Agreement upon thirty (30) days' written notice given to Raylo at any time within six (6) months after such Change in Control. (f) Competitive Pricing. In the event that at any time during the Term after December 31, 2005, a third party other than Pfizer Inc. or an affiliate of Pfizer Inc. is able to manufacture API in accordance with the Specifications and cGMP, in at least the same quantities as those manufactured by Raylo hereunder and at a cost that is less than the price for the API currently charged Eyetech by Raylo, then Raylo shall have [**] days in which to reduce its price for the API to the price to be charged Eyetech by such third party; provided that if the third party with which Eyetech proposes to enter into such lower-cost arrangement would use a higher volume or different process than a 15mM process and Raylo agrees in writing to develop a higher volume or different process in order to achieve the required cost reduction, then Raylo shall have an additional [**] days (i.e., a total of [**] days) in which to reduce its price for the API to the price to be charged Eyetech by such third party. If Raylo fails to lower its prices, Eyetech shall have the right to terminate this Agreement immediately, upon written notice; provided that orders made by Eyetech prior to such termination would be filled by Raylo, and paid for by Eyetech, in accordance with the terms of this Agreement. 9.3 Termination for Breach; Insolvency. Either Raylo or Eyetech may terminate this Agreement immediately, without prejudice to any other remedies available 17 to it at law or in equity, by notice in writing to the other upon the occurrence of any of the following events: (a) If the other Party (the "Breaching Party") materially breaches this Agreement, and such breach is not remedied within sixty (60) days after receipt by the Breaching Party of notice identifying the breach; or (b) If the other Party ceases for any reason to carry on business, dissolves, liquidates, winds up, or files or is petitioned into bankruptcy, liquidation, rehabilitation or dissolution or becomes insolvent or fails generally to pay its debts or obligations or a petition is filed seeking the appointment of or the taking possession by a receiver, custodian, trustee or similar official. 9.4 Effect of Expiration or Termination. Upon the expiration of this Agreement at the end of the Term, or upon the termination of this Agreement by either Party pursuant to this Section 9: (a) Raylo shall promptly: (i) return to Eyetech all relevant records, materials or Eyetech Confidential Information (to the extent legal or regulatory requirements permit), including, without limitation, all manufacturing records relating to the API; (ii) return to Eyetech the Eyetech Materials then in the possession or control of Raylo or its Affiliates; and (iii) discontinue all manufacture of the API; (b) Eyetech shall promptly return to Raylo all Raylo Confidential Information (to the extent legal or regulatory requirements permit); (c) The licenses granted under Section 2.3(a) and (c) shall survive termination and the licenses granted under Section 2.3(b) shall not; (d) At Eyetech's request, and at Eyetech's expense or the expense of Eyetech's designated second or alternative source manufacturer of API, Raylo shall exercise its right under Section 2.02 of the [**] to grant a license on terms [**] designated by Eyetech at any time prior to the first anniversary of the expiration or termination of this Agreement; (e) At Eyetech's request and at Eyetech's expense, Raylo shall provide Eyetech with reasonable assistance in transferring the manufacturing activities covered by this Agreement to a third party contract manufacturer; and (f) At Eyetech's request, Raylo shall sell to Eyetech all (i) inventory of Raw Materials then in Raylo's possession, at Raylo's out-of-pocket costs incurred in the procurement of such Raw Materials, (ii) work-in-process then in Raylo's possession, at a pro rated portion of the Negotiated Per Gram Cost reflecting Raylo's out-of-pocket costs and the work performed by Raylo prior to transfer, and (iii) API then in Raylo's possession, at the Negotiated Per Gram Cost. 9.5 Survival. The expiration or prior termination of this Agreement for whatever reason shall not affect the accrued rights of either Raylo or Eyetech arising 18 under this Agreement and Sections 2.3(a), 2.3(c), 2.3(d), 6, 7, 8, 9, 10 and 11 shall survive such expiration or termination. 10. CONFIDENTIALITY 10.1 Confidential Information. Each Party agrees that all Confidential Information disclosed to it or its Affiliates by the other Party (a) shall not be used by the receiving Party or its Affiliates except in connection with the activities contemplated by this Agreement or in order to further the purposes of this Agreement and, for the avoidance of doubt, shall not be used by the receiving Party in connection with products or services other than the API or the manufacture thereof, (b) shall be maintained in confidence by the receiving Party and its Affiliates, and (c) shall not be disclosed by the receiving Party or its Affiliates to any third party who is not an Affiliate or consultant of, or an advisor to, the receiving Party or its Affiliates without the prior written consent of the disclosing Party. Notwithstanding the foregoing provisions of this Section 10.1, (x) either Party may disclose Confidential Information of the other Party if such Party is required to make such disclosure by applicable law, regulation or legal process, including without limitation by the rules or regulations of the United States Securities and Exchange Commission (the "SEC") or similar regulatory agency in a country other than the United States or of any stock exchange or Nasdaq, in which event such Party shall provide prior notice of such intended disclosure to such other Party if possible under the circumstances and shall disclose only such Confidential Information of such other Party as is required to be disclosed and (y) the Parties (and each employee, representative, or other agent of the Parties) may disclose to any and all Persons, without limitation of any kind, the United States federal tax treatment and tax structure of the transactions set forth in this Agreement and all materials of any kind (including opinions or other tax analyses) that are provided to the Parties relating to such tax treatment and tax structure. 10.2 Disclosures to Employees, Consultants, Advisors, Agents and Subcontractors. Each Party agrees that it and its Affiliates shall provide Confidential Information received from the other Party only to the receiving Party's respective employees, consultants, advisors, agents and subcontractors and to the employees, consultants, advisors, agents and subcontractors of the receiving Party's Affiliates, who have a need to know such Confidential Information to assist the receiving Party in fulfilling its obligations under this Agreement, provided that Eyetech and Raylo shall each remain responsible for any failure by its and its Affiliates' respective employees, consultants, advisors, agents and subcontractors to treat such information and materials as required under Section 10.1. 10.3 Term. All obligations of confidentiality imposed under Sections 10.1 and 10.2 shall expire upon the later of (a) expiration or termination of this Agreement and (b) five (5) years after the date the applicable Confidential Information is disclosed. 11. GENERAL PROVISIONS 11.1 Independent Status of Parties. Each Party shall act as an independent contractor and shall not bind nor attempt to bind the other Party to any contract, or any 19 performance of obligations outside of this Agreement. Nothing contained or done under this Agreement shall be interpreted as constituting either Party the agent, partner or joint venturer of the other in any sense of the term whatsoever unless expressly so stated. 11.2 Subcontracting. Raylo shall have the right to wholly or partly subcontract the activities to be performed by Raylo hereunder, provided, however, that (a) said subcontractor shall be approved in advance by Eyetech, such approval not to be unreasonably withheld, and (b) Raylo shall remain fully responsible for all of its obligations hereunder. 11.3 Publicity. Neither Party shall originate any publicity, news release or other public announcement, written or oral, relating to this Agreement without the prior written approval of the other Party except as otherwise required by law. Such approval shall not be unreasonably withheld. Upon approval and launch of the Eyetech Product, Eyetech will allow Raylo to publicly announce that Raylo is a manufacturer of API for Eyetech. 11.4 Governing Law. This Agreement shall be governed by and interpreted in accordance with, and any arbitration or court action hereunder shall apply, the laws of the State of New York, excluding (i) its conflicts of laws principles, (ii) the United Nations Convention on Contracts for the International Sale of Goods, (iii) the 1974 Convention on the Limitation Period in the International Sale of Goods (the "1974 Convention"); and (iv) the protocol amending the 1974 Convention, done at Vienna April 11, 1980. 11.5 Dispute Resolution. Any dispute arising out of or relating to this Agreement shall be resolved through binding arbitration as follows: (a) A Party may submit such dispute to arbitration by notifying the other Party, in writing, of such dispute. Within thirty (30) days after receipt of such notice, the Parties shall designate in writing a single arbitrator to resolve the dispute; provided, however, that if the Parties cannot agree on an arbitrator within such 30-day period, the arbitrator shall be selected by the Minneapolis, Minnesota, USA office of the American Arbitration Association (the "AAA"). The arbitrator shall be a lawyer with biotechnology and/or pharmaceutical industry legal experience, and shall not be an Affiliate, employee, consultant, officer, director or stockholder of any Party. (b) Within thirty (30) days after the designation of the arbitrator, the arbitrator and the Parties shall meet, at which time the Parties shall be required to set forth in writing all disputed issues and a proposed ruling on the merits of each such issue. (c) The arbitrator shall set a date for a hearing, which shall be no later than forty-five (45) days after the submission of written proposals pursuant to Section 11.5(b), to discuss each of the issues identified by the Parties. The Parties shall have the right to be represented by counsel. Except as provided herein, the arbitration shall be governed by the Commercial Arbitration Rules of the AAA; provided, however, that the Federal Rules of Evidence shall apply with regard to the admissibility of evidence and the arbitration shall be conducted by a single arbitrator. 20 (d) The arbitrator shall use his or her best efforts to rule on each disputed issue within thirty (30) days after the completion of the hearings described in Section 11.5(c). The determination of the arbitrator as to the resolution of any dispute shall be binding and conclusive upon all Parties. All rulings of the arbitrator shall be in writing and shall be delivered to the Parties. (e) The (i) attorneys' fees of the Parties in any arbitration, (ii) fees of the arbitrator and (iii) costs and expenses of the arbitration shall be borne by the Parties as determined by the arbitrator. (f) Any arbitration pursuant to this Section 11.5 shall be conducted in Minneapolis, Minnesota, USA. Any arbitration award may be entered in and enforced by any court of competent jurisdiction. 11.6 No Limitation. Nothing in Section 11.5 shall be construed as limiting in any way the right of a Party to seek an injunction or other equitable relief with respect to any actual or threatened breach of this Agreement or to bring an action in aid of arbitration. Should any Party seek an injunction or other equitable relief, or bring an action in aid of arbitration, then for purposes of determining whether to grant such injunction or other equitable relief, or whether to issue any order in aid of arbitration, the dispute underlying the request for such injunction or other equitable relief, or action in aid of arbitration, may be heard by the court in which such action or proceeding is brought. 11.7 Notices. All notices, instructions and other communications hereunder or in connection herewith shall be in writing and shall be (a) delivered personally, (b) sent by registered or certified mail, return receipt requested, postage prepaid, (c) sent via a reputable nationwide overnight courier service, or (d) sent by facsimile transmission, in each case to an address set forth below. Any such notice, instruction or communication shall be deemed to have been delivered upon receipt if delivered by hand, three Business Days after it is sent by registered or certified mail, return receipt requested, postage prepaid, one Business Day after it is sent via a reputable nationwide overnight courier service, or when transmitted with electronic confirmation of receipt, if transmitted by facsimile with confirmed answerback (if such transmission is on a Business Day; otherwise, on the next day following such transmission). Notices to Raylo shall be addressed to Raylo Chemicals, Inc. 8045 Argyll Road Edmonton, Alberta Canada T6C 4A9 Phone: (780) 468-6060 Fax: (780) 472-8189 Attn: Matt Colomb Notices to Eyetech shall be addressed to Eyetech Pharmaceuticals, Inc. 500 Seventh Avenue, 18th Floor New York, New York 10018 21 Phone: (212) 997-9241 Fax: (212) 997-9251 Attn: Chief Executive Officer With a copy to: Eyetech Pharmaceuticals, Inc. 500 Seventh Avenue, 18th Floor New York, New York 10018 Phone: (212) 997-9241 Fax: (212) 997-9251 Attn: General Counsel Either Party may change its address by giving notice to the other Party in the manner herein provided. 11.8 Entire Agreement. This Agreement, the LOU and the Quality Agreement collectively contain the full understanding of the Parties with respect to the subject matter hereof and supersede all prior understandings and writings relating thereto. No waiver, alteration or modification of any of the provisions of such agreements shall be binding unless made in writing and signed by the Parties. 11.9 Headings. The headings contained in this Agreement are for convenience of reference only and shall not be considered in construing this Agreement. 11.10 Severability. If, under applicable law or regulation, any provision of this Agreement is invalid or unenforceable, or otherwise directly or indirectly affects the validity of any other material provision(s) of this Agreement (such invalid or unenforceable provision, a "Severed Clause"), this Agreement shall endure except for the Severed Clause. The Parties shall consult one another and use reasonable efforts to agree upon a valid and enforceable provision that is a reasonable substitute for the Severed Clause in view of the intent of this Agreement. 11.11 Assignment. Neither this Agreement nor any of the rights or obligations hereunder may be assigned by either Party without the prior written consent of the other Party, except to an Affiliate of the assigning Party or to any party who acquires all or substantially all of the capital stock or assets of the assigning Party related to the transactions contemplated in this Agreement by merger, consolidation, sale of assets or otherwise, so long as such Affiliate or other party agrees in writing to be bound by the terms of this Agreement. 11.12 Performance by Affiliates. To the extent that this Agreement imposes obligations on Affiliates of a Party, such Party agrees to cause its Affiliates to perform such obligations. Either Party may use one or more of its Affiliates to perform its obligations and duties hereunder, provided that the Parties shall remain liable hereunder for the prompt payment and performance of all their respective obligations hereunder. 11.13 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their successors and permitted assigns. 22 11.14 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of such together shall constitute one and the same instrument. 23 IN WITNESS WHEREOF, the Parties hereto have caused this Manufacturing and Supply Agreement to be executed in their names by their properly and duly authorized officers or representatives as of the date first above written. RAYLO CHEMICALS, INC. EYETECH PHARMACEUTICALS, INC. By: /s/ J. Matthew Colomb By: /s/Paul G. Chaney ------------------------------------ ----------------------------------- Name: J. Matthew Colomb Name: Paul G. Chaney Title: President Title: Chief Operating Officer November 11, 2003 24 Exhibit A Specifications - -------------------------------------------------------------------------------- 2880 ---- RAYLO Form No A009 CHEMICALS [**] Issue 6 Product/Intermediate Supercedes Effective Date Page 1 of 2 Specification None June 18, 2002 - -------------------------------------------------------------------------------- Test Test Method Limit - -------------------------------------------------------------------------------- [**] Sampling Instructions: [**] Sample Size: [**] Reserve Sample: [**] Biosample Size: [**] Storage Conditions: [**] Sample Retention Time: [**] Release Validity Period: [**] Sample Disposal: [**] - -------------------------------------------------------------------------------- APPROVED BY SIGNATURE DATE QUALITY CONTROL GROUP [ILLEGIBLE] May 29, 2002 LABORATORY GROUP [ILLEGIBLE] May 31, 2002 MANUFACTURING GROUP [ILLEGIBLE] May 31, 2002 QUALITY ASSURANCE GROUP [ILLEGIBLE] June 18, 2002 - -------------------------------------------------------------------------------- 25 - -------------------------------------------------------------------------------- 2880 ---- RAYLO Form No A009 CHEMICALS [**] Issue 6 Product/Intermediate Supercedes Effective Date Page 2 of 2 Specification None June 18, 2002 - -------------------------------------------------------------------------------- CHEMICAL FORMULA STRUCTURAL FORMULA [**] [**] PHYSICAL DATA [**] [**] ================================================================================ 26 Exhibit B Eyetech Materials

- --------------------------------------------------------------------------------------------------------------- Raylo Spec Number Company Specification Name Common u/m Quantity Breaks Name - --------------------------------------------------------------------------------------------------------------- [**]

27 Exhibit C Minimums

2004 2005 2006 2007 2008 100% 100% [**]% [**]% [**]%

28 Exhibit D Negotiated Per Gram Cost Per gram pricing shall be based on the following assumptions and formula: Maximum [**]: Will be based on the [**]. [**]: Will be the [**] during the life of this agreement [**]. [**]: Will initially be the [**] [**]: Will be [**] hereunder. [**]: Will initially be [**]. [**]. However, should Eyetech [**]. [**] Raylo will [**]. [**]: Will initially be [**]. [**]: Shall be [**]: 1- In calculation of [**]. 2- In calculation for [**]. 3- In calculation of [**]. 4- In calculation of [**]. The Formula for Per Gram Cost [**] will be in $ per gram: [**] - -------------------------------------------------------------------------------- [**] 29 Exhibit D-1 Areas of Facility Dedicated to Production for Eyetech [Floor plan of the area divided into work and office space] 30 EX-10.57 11 y18060exv10w57.txt EX-10.57: LICENSE AGREEMENT EXHIBIT 10.57 CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS. LICENSE AGREEMENT This License Agreement (the "Agreement") is effective as of December 31, 2001 (the "Effective Date") between ISIS PHARMACEUTICALS, INC., a Delaware corporation having an address at 2292 Faraday Avenue, Carlsbad, CA ("Isis") and EYETECH PHARMACEUTICALS, INC., a corporation having an address at 666 Fifth Avenue, 35th Floor, New York, NY 10103 ("EyeTech"). Isis and Eyetech may be referred to herein as the "Parties," or each individually as a "party." ARTICLE 1 DEFINITIONS Capitalized terms used herein have the meaning set forth in Exhibit A. ARTICLE 2 SCOPE OF LICENSE 2.1 Grant. Subject to the terms of this Agreement and during the Term, Isis grants to EyeTech a non-exclusive license under the Licensed Patent Rights to make, have made, use and sell EYE001 worldwide. The license is sublicensable. ARTICLE 3 LICENSE FEES AND ROYALTIES 3.1 Fees and Royalties. EyeTech will pay to Isis the fees, milestones and royalties set forth in this Article 3. 3.1.1 License Fees. EyeTech will pay an initial, irrevocable and non-refundable license fee of $2,000,000 (the "License Fee") to Isis, $1,000,000 of which will be paid upon execution of this Agreement and $1,000,000 of which will be paid upon the earlier of (i) the date of the AMD Completed Patient Enrollment, or (ii) July 31, 2002. 3.1.2 Milestones. EyeTech will pay the following milestones to Isis: a. For the initial indication of age-related macular degeneration for EYE001: [**] b. For each additional therapeutic indication for EYE001: [**] 2 [EXECUTION COPY] 3.1.3 Royalties on EYE001. EyeTech will pay Isis a royalty of [**] on Net Sales of EYE001 when the manufacture, use or sale of EYE001 would infringe the Licensed Patent Rights. ARTICLE 4 PAYMENTS AND REPORTS 4.1 Payment. Royalty payments will be due every three (3) months beginning with the first commercial sale of EYE001 (each such 3-month period a "Reporting Period") and will be paid within sixty (60) days of the close of each Reporting Period. Each royalty payment will be accompanied by a statement of the amount of Net Sales and all adjustments thereto during such Reporting Period. 4.2 Mode of Payment. EyeTech will make all payments required under this Agreement in U.S. Dollars. The payments due on the sale of EYE001 received outside the United States will be translated using exchange rates published in the Wall Street Journal on the last day of the Reporting Period in question. 4.3 Records Retention. EyeTech and its sublicensees will keep complete and accurate records pertaining to the sale of EYE001 and covering all transactions from which the Net Sales are derived for a period of thirty-six (36) months after the year in which such Net Sales were received, and in sufficient detail to permit Isis to confirm the accuracy of royalty calculations hereunder. 4.4 Audit Request. No more than once each calendar year and at the request of Isis, EyeTech will permit an independent, certified public accountant appointed by Isis and acceptable to EyeTech, at reasonable times and upon reasonable notice, to examine those records and all other material documents relating to or relevant to Net Sales in the possession or control of EyeTech, for a period of two (2) years after such royalties have accrued, as may be necessary to: (a) determine the correctness of any report or payment made under this Agreement; or (b) obtain information as to the royalties payable for any Reporting Period in the case of EyeTech's failure to report or pay pursuant to this Agreement. Said accountant will not disclose to Isis any information other than information relating to said reports, royalties, and payments and will disclose such information in a format agreed upon by the parties that will ensure that no confidential information of EyeTech is disclosed. Results of any such examination will be made available to both parties. The fees charged by the public accountant conducting the audit will be paid for by Isis, provided that, if the audit determines that the additional royalties payable by EyeTech for an audited period exceed [**] of the royalties actually paid for such period, then EyeTech will pay the fees and expenses charged by such accounting firm. 3 [EXECUTION COPY] ARTICLE 5 PATENTS, INFRINGEMENT AND ENFORCEMENT 5.1 Patent Prosecution and Maintenance. Isis will have the right and responsibility to prosecute and/or maintain the Licensed Patent Rights in any country at its own expense. If ISIS decides to discontinue the prosecution or maintenance of any Licensed Patent Right entirely or in a particular country, it will inform EyeTech thereof with sufficient time for EyeTech to assume the prosecution or maintenance of such Licensed Patent Right, and EyeTech may assume such prosecution or maintenance if such Licensed Patent Right provides a substantial competitive advantage to EyeTech with respect to EYE001 in the applicable country. If Isis has granted similar rights to third parties, EyeTech's rights under this section 5.1 will be shared equally with such third parties. ARTICLE 6 REPRESENTATIONS AND WARRANTIES 6.1 Isis Representation and Warranty. Isis warrants that it has the lawful right to grant the license made the subject of this Agreement. Except as expressly stated in this section, Isis makes no other representations of any kind or nature whatsoever. ISIS MAKES NO WARRANTIES OR REPRESENTATIONS, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE OR MERCHANTABILITY OR NONINFRINGEMENT REGARDING OR WITH RESPECT TO THE LICENSED PATENTS. Without limiting the generality of the foregoing, nothing in this Agreement will be construed as (a) a warranty or representation by Isis as to validity or scope of the Licensed Patent Rights or (b) a warranty or representation that anything made, used, sold or otherwise disposed of under the license is or will be free from infringement of third party rights. 6.2 EyeTech Representations and Warranties. EyeTech represents and warrants to Isis that EyeTech has the power and authority to execute, deliver and perform this Agreement, and this Agreement is a valid and binding obligation of EyeTech, enforceable in accordance with its terms. ARTICLE 7 INDEMNITY 7.1 EyeTech agrees to indemnify, hold harmless and defend Isis, its officers, directors, employees and agents, from and against any and all claims, suits, losses, damages, costs, fees and expenses (collectively, "Claims") resulting from or arising out of (a) the development, manufacture, storage, sale or other distribution or any other use of EYE001 by EyeTech, its affiliates, sublicensees, agents and representatives or use by end users and other third parties of EYE001; and (b) EyeTech's breach of any representation or warranty herein. 7.2 In all cases where Isis seeks indemnification from EyeTech under this Article 7, Isis will promptly notify EyeTech of receipt of any claim or lawsuit covered by 4 [EXECUTION COPY] such indemnification obligation and will cooperate fully with EyeTech in connection with the investigation and defense of such claim or lawsuit. EyeTech will have the right to control the defense, with counsel of its choice, provided that Isis will have the right to be represented by advisory counsel at its own expense. Neither party will settle or dispose of the matter in any matter that could negatively and materially affect the rights or liability of the other party without the prior written consent of such party, which will not be unreasonably withheld or delayed. ARTICLE 8 TERM AND TERMINATION 8.1 Term. This Agreement will commence as of the Effective Date and continue until the last Licensed Patent Rights expire (the "Term"). 8.2 Termination for Breach. Notwithstanding anything to the contrary herein, a party may terminate this Agreement in the event that the other party (the "Defaulting Party") materially breaches its obligations hereunder and fails to cure such breach within ninety (90) days of receipt of written notice thereof (which notice will specify the breach in reasonable detail and demand it be cured) (or, if such breach cannot be cured in such ninety (90) day period, if the Defaulting Party does not commence and diligently continue (until completed) actions to cure such default). Such termination will be without prejudice to the non-Defaulting Party's other rights under this Agreement, or any of its other rights or remedies available to it by law or in equity. 8.3 Termination by EyeTech. Notwithstanding anything contained herein to the contrary, EyeTech has the right to terminate this Agreement at any time in its sole discretion by giving ninety (90) days advance written notice to ISIS; provided, that at the time of such termination EyeTech is not conducting (and does not intend to conduct) itself in a manner that would, but for the license granted in Article 2 of this Agreement, infringe the Licensed Patent Rights. In the event of such termination by EyeTech, EyeTech will still be obligated to pay any amounts due to Isis hereunder which, but for the lapse of time, will be owed to Isis, including the unpaid portion of the License Fee. Notwithstanding Section 3.1.1 above, any unpaid portion of the License Fee will be immediately due and payable upon such termination. 8.3 Effect of Termination. Upon the termination of this Agreement for any reason, all rights licensed to EyeTech will revert to Isis. 8.4 Accrued Rights, Surviving Rights and Obligations. Termination or expiration of this Agreement for any reason will be without prejudice to any rights that will have accrued to the benefit of either party prior to such termination or expiration. Such termination or expiration will not relieve either party from obligations that are expressly indicated to survive termination or expiration of this Agreement including, without limitation, EyeTech's obligation to pay all royalties that will have accrued hereunder. Without limiting the foregoing, the parties' rights and obligations under Articles 4, 6 and 7, and section 8.3 will likewise survive termination or expiration of this Agreement. 5 [EXECUTION COPY] ARTICLE 9 MISCELLANEOUS 9.1 Relationship of the Parties. Nothing in this Agreement is intended to create, or creates, a partnership or joint venture relationship between the parties. The relationship between the parties hereunder is that of independent contractors. 9.2 Successors and Assigns. Except as otherwise provided herein, this Agreement may not be assigned by a party without the prior written consent of the other, provided, however, that either party may assign this Agreement to any successor by merger or to the purchaser of all or substantially all of its assets provided that the party will remain liable and responsible for the performance and observance of all of its duties and obligations hereunder. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective permitted successors and assigns any rights, remedies, obligations or liabilities under this Agreement. 9.3 Governing Law. This Agreement will be governed by and construed under the laws of the State of Delaware without giving effect to its conflict of laws rules. 9.4 Counterparts. This Agreement may be executed in two or more counterparts, each of which will be decreed an original, but all of which together will constitute one and the same instrument. 9.5 Compliance With Laws. Both parties will comply with all applicable laws, rules and regulations pertaining to the development, testing, manufacture, marketing and import or export of EYE001 and will, as appropriate, include similar provisions in any sublicense agreements requiring sublicensees to do the same. 9.6 Notices. Unless otherwise provided, any notice required or permitted under this Agreement will be given in writing and will be deemed effectively given upon personal delivery to the party to be notified or five (5) days after upon deposit with the United States Post Office by registered or certified mail, postage prepaid or through a major courier (such as Federal Express, DHL or UPS), or sent by facsimile, and addressed to the party to be notified at the address set forth below. To Isis: Isis Pharmaceuticals, Inc. 2292 Faraday Avenue Carlsbad, CA 92008 Attn: Executive Vice President Fax: 760-931-3861 Phone: 760-603-2707 with copies to: General Counsel Fax: 760-603-3820 6 [EXECUTION COPY] To EyeTech: EyeTech Pharmaceuticals, Inc. 666 Fifth Avenue 35th Floor New York, NY 10103 Attn: Chief Executive Officer Fax: 212-582-2645 Phone: 212-582-8376 with copies to: General Counsel 9.7 Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of Isis and EyeTech. The waiver by either of the parties of any breach of any provision hereof by the other party shall not be construed to be a waiver of any succeeding breach of such provision or a waiver of the provision itself. 9.8 Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision will be excluded from this Agreement and the balance of the Agreement will be interpreted as if such provision were so excluded and will be enforceable in accordance with its terms. 9.9 Force Majeure. No party will be deemed to be in default of this Agreement to the extent the performance of its obligations or attempts to cure any breach are delayed or prevented by reason of any act of God, war, fire, natural disaster, accident, act of government, or any other cause beyond the reasonable control of such party, if the party affected will give prompt notice of any such event to the other party. In the event of such a force majeure event, the time for performance or cure will be extended for the period equal to the duration of such force majeure event but not in excess of six (6) months. 9.10 Entire Agreement. This Agreement is the entire agreement of the parties with respect to the subject matter hereof, and any previous agreements, discussions or understandings, whether written or oral, are hereby merged herein. 9.11 Press Release. EyeTech and Isis agree that each Party may issue a press release. The Parties will confer on such press releases, to review and comment and incorporate the other Party's reasonable comments and suggestions prior to issuance of such press release. 7 [EXECUTION COPY] IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date. ISIS PHARMACEUTICALS, INC. EYETECH PHARMACEUTICALS, INC. By: /s/ B. Lynne Parshall By: /s/David Guyer --------------------------------- ------------------------------- Name: B. Lynne Parshall Name: David Guyer Title: Executive Vice President Title: Chief Executive Officer 8 [EXECUTION COPY] EXHIBIT A DEFINITIONS 1. "AMD Completed Patient Enrollment" means the completion of enrollment of that number of patients in EyeTech's Pivotal Phase II/III clinical trial program that is necessary to gain Food and Drug Administration regulatory approval of EYE001 for the treatment of the wet form of age-related macular degeneration. 2. "Major Market" means Canada, any European Community member country, Japan or the United States. 3. "Manufacturing Process" means the process steps [**] set forth in master batch records for EYE001 in the version existing as of the Effective Date, including reasonable minor variants and extensions of process steps thereof. 4. "Net Sales" will mean the gross invoice price of EYE001 sold by EyeTech, its affiliates and sublicensees to a third party less the following items: (i) trade discounts, credits or allowances, (ii) credits or allowances additionally granted upon returns, rejections or recalls (except where any such recall arises out of EyeTech's or sublicensee's gross negligence, willful misconduct or fraud), (iii) freight, shipping and insurance charges, (iv) taxes, duties or other governmental tariffs (other than income taxes) and (v) government-mandated rebates. EyeTech, its affiliates or sublicensees will be treated as having sold EYE001 for an amount equal to the fair market value of EYE001 if: (a) EYE001 is used by EyeTech, its affiliates or sublicensees without charge or provision of invoice, or (b) EYE001 is provided to a third party by EyeTech, its affiliates or sublicensees without charge or provision of invoice and used by such third party. 5. "EYE001" means EyeTech's EYE001 NX1838 non-antisense therapeutic product (or any product containing EyeTech's EYE001 NX1838 non-antisense therapeutic product for the treatment of ophthalmic conditions. EYE001 will also include any minor chemical modification to EYE001 NX1838. 6. "Patent" or "Patents" means (a) patent applications (including provisional applications and applications for certificates of invention); (b) any patents issuing from such patent applications (including certificates of invention); (c) all patents and patent applications based on, corresponding to, or claiming the priority date(s) of any of the foregoing; and (d) any substitutions, extensions (including supplemental protection certificates), registrations, confirmations, reissues, divisionals, continuations, re-examinations, renewals and foreign counterparts thereof. 7. "Licensed Patent Rights" means all Patents owned by Isis or controlled by Isis through the Term which Isis has the right to sublicense and such sublicense does not create any obligation to any third party, which claim or cover [**]. 8. "Reporting Period" has the meaning set forth in Section 4.1. 9. "Term" has the meaning set forth in Section 8.1. EX-10.58 12 y18060exv10w58.txt EX-10.58: MANUFACTURING AND SUPPLY AGREEMENT EXHIBIT NO. 10.58 CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS. MANUFACTURING AND SUPPLY (FILL AND FINISH) AGREEMENT BETWEEN EYETECH PHARMACEUTICALS, INC. AND GILEAD SCIENCES, INC. DATED AS OF NOVEMBER 26, 2003 TABLE OF CONTENTS 1. DEFINITIONS......................................................................................... 1 1.1 Affiliate...................................................................................... 1 1.2 Agreement...................................................................................... 1 1.3 Annual Minimum Volume.......................................................................... 1 1.4 API............................................................................................ 2 1.5 Applicable Law................................................................................. 2 1.6 Business Day................................................................................... 2 1.7 cGMP........................................................................................... 2 1.8 Claim or Proceeding............................................................................ 2 1.9 Commercial Launch.............................................................................. 2 1.10 Controlt...................................................................................... 2 1.11 Environmental Laws............................................................................ 2 1.12 Environmental Losses.......................................................................... 2 1.13 Eyetech Indemnified Party..................................................................... 2 1.14 Eyetech Product Intellectual Property......................................................... 2 1.15 Facility...................................................................................... 3 1.16 FDA........................................................................................... 3 1.17 FDA Act....................................................................................... 3 1.18 Gilead Indemnified Party...................................................................... 3 1.19 Governmental Authority........................................................................ 3 1.20 Hazardous Materials........................................................................... 3 1.21 Hazardous Waste............................................................................... 3 1.22 Information................................................................................... 3 1.23 Initial Term.................................................................................. 3 1.24 Inspection Period............................................................................. 3 1.25 Intellectual Property......................................................................... 3 1.26 Laws.......................................................................................... 3 1.27 Losses........................................................................................ 4 1.28 Manufacturing................................................................................. 4 1.29 Purchase Order................................................................................ 4 1.30 Person........................................................................................ 4 1.31 Price......................................................................................... 4 1.32 Product....................................................................................... 4 1.33 Product Materials............................................................................. 4 1.34 Product Supplement............................................................................ 4 1.35 Product Warranty.............................................................................. 5 1.36 Quality Agreement............................................................................. 5 1.37 Quantitative Defects.......................................................................... 5 1.38 Recall........................................................................................ 5 1.39 Regulatory Approvals.......................................................................... 5 1.40 Specifications................................................................................ 5 1.41 Release....................................................................................... 5 1.42 Sublicensee................................................................................... 5 1.43 Term.......................................................................................... 5 1.44 Territory..................................................................................... 5 1.45 Waste......................................................................................... 5 2. SUPPLY REQUIREMENTS; ORDERS; SHIPMENT AND DELIVERY TERMS; REPORTS; ALTERNATIVE SUPPLY............... 6 2.1. Agreement to Supply........................................................................... 6 2 2.2. Use of Facility, Equipment, Molds and Tooling................................................. 6 2.3. Current Production Guidelines; Capacity....................................................... 7 2.4 Forecasts and Orders.......................................................................... 8 2.5. Standard Forms................................................................................ 10 2.6. Procurement and Approval of Raw Materials..................................................... 10 2.7. Supply of API................................................................................. 11 2.8. Product Samples............................................................................... 11 2.9. Alternative Supply............................................................................ 11 2.10. Start Up Activities........................................................................... 12 3. SHIPMENT AND DELIVERY TERMS; REPORTS................................................................ 14 3.1. Shipment Reports.............................................................................. 14 3.2. Delivery/Shipping Instructions/Risk of Loss................................................... 14 4. PRICE; PAYMENT; PRICE ADJUSTMENTS; TAXES............................................................ 15 4.1. Purchase Price; Yield Adjustments............................................................. 15 4.2. Price Adjustments............................................................................. 15 4.3. Invoices...................................................................................... 15 4.4. Payment....................................................................................... 16 4.5. Taxes......................................................................................... 16 5. MANUFACTURING STANDARDS AND QUALITY ASSURANCE....................................................... 16 5.1. Manufacturing Standards....................................................................... 16 5.2. Modifications in Specifications............................................................... 16 5.3. Pest Control.................................................................................. 17 5.3. Storage and Handling.......................................................................... 17 5.5. Maintenance of Facility, Equipment and Molds.................................................. 18 5.6. Legal and Regulatory Filings and Requests..................................................... 18 5.7. Analysis of Materials......................................................................... 18 5.8. Quality Tests and Checks...................................................................... 19 5.9. Non-complying Product......................................................................... 19 5.10. Responsibility for Rejected and Non-Complying Product......................................... 19 5.11. Disposal of Rejected and Non-Complying Product and Product Materials.......................... 19 5.12. Maintenance and Retention of Records.......................................................... 20 5.13. Quantitative Defects; Rejection of Product; Disposal of Rejected Shipments.................... 20 5.14. Customer Complaints and Inquiries............................................................. 22 5.15. Government Inspections, Seizures and Recalls.................................................. 22 5.16. Quality Agreement............................................................................. 23 5.17. Manufacturing Committee....................................................................... 23 5.18 Audits and Inspections........................................................................ 25 5.19. Diversion Issues.............................................................................. 25 5.20. Notice of Material Events..................................................................... 25 5.21. Survival...................................................................................... 25 6. REPRESENTATIONS AND WARRANTIES; DISCLAIMERS......................................................... 25 6.1. Representations and Warranties of Gilead...................................................... 25 6.2. Representations and Warranties of Eyetech..................................................... 27 6.1. No Other Waranties............................................................................ 28 6.4. Survival...................................................................................... 28 7. ENVIRONMENTAL REPRESENTATIONS, WARRANTIES AND COVENANTS............................................. 28 7.1. Compliance with Environmental Laws............................................................ 28 7.2. Permits, Licenses and Authorization........................................................... 29 7.3. Hazardous Materials and Waste................................................................. 29 3 7.4. Generation of Hazardous Wastes................................................................ 29 7.5. Diversion Issues.............................................................................. 29 7.6. Health and Safety Procedure................................................................... 29 7.7. Training...................................................................................... 30 7.8. Survival...................................................................................... 30 8. OWNERSHIP; TRADEMARKS; PROPRIETARY INFORMATION...................................................... 30 8.1. Eyetech's Ownership of Intellectual Property; Eyetech Technology and Information.............. 30 8.2. Ownership of Other Property................................................................... 31 8.3. Limited Right to Use.......................................................................... 31 8.4. License....................................................................................... 31 8.5. Survival...................................................................................... 31 9. INDEMNIFICATION; LIMITATIONS OF LIABILITY........................................................... 32 9.1. Indemnification of Eyetech.................................................................... 32 9.2. Eyetech's Indemnification of Gilead........................................................... 32 9.3. Assertion of Claim............................................................................ 32 9.4. Limitation of Liability....................................................................... 33 9.5. Survival...................................................................................... 33 10. INSURANCE.......................................................................................... 33 10.1. Insurance.................................................................................... 33 10.2. Coverage..................................................................................... 33 10.3. Certificates of Insurance; Maintenance of Coverage........................................... 34 11. Title, Risk of Loss and Reimbursement.............................................................. 34 11.1. Testing...................................................................................... 34 11.2. Title and Risk of Loss....................................................................... 34 11.3. Reimbursement for Loss of API; Non-Complying Product......................................... 34 12. CONFIDENTIAL INFORMATION.......................................................................... 35 12.1. Confidential Information..................................................................... 35 12.2. Exceptions................................................................................... 36 12.3. Return or Destruction........................................................................ 36 12.4. Terms of Agreement........................................................................... 36 12.5. Survival..................................................................................... 37 13. TERM, TERMINATION.................................................................................. 37 13.1. Initial Term; Term........................................................................... 37 13.2. Termination by Eyetech....................................................................... 37 13.3. Termination by Gilead........................................................................ 38 13.4. Effect of Termination........................................................................ 38 13.5. Return of Materials, etc. Supplied by Eyetech................................................ 38 14. FORCE MAJEURE; COMPETING PRODUCT................................................................... 39 14.1. Force Majeure................................................................................ 39 14.2. Competing Product............................................................................ 39 15. MISCELLANEOUS...................................................................................... 40 15.1. Relationship of the Parties.................................................................. 40 15.2. Successors and Assigns....................................................................... 40 15.3. Notice....................................................................................... 40 15.4. Entire Agreement............................................................................. 41 4 15.5. Severability................................................................................. 41 15.6. Waiver....................................................................................... 42 15.7. Headings..................................................................................... 42 15.8. Counterparts................................................................................. 42 15.9. Governing Law................................................................................ 42 5 MANUFACTURING AND SUPPLY AGREEMENT MANUFACTURING AND SUPPLY AGREEMENT dated as of November 26, 2003 ("Effective Date"), by EYETECH PHARMACEUTICALS, INC., a Delaware corporation having its principal office located at 500 Seventh Avenue, 18th Floor, New York, NY 10018 (hereinafter "Eyetech") and GILEAD SCIENCES, INC., a Delaware corporation having its principal place of business at 333 Lakeside Drive, Foster City, CA 94404 (hereinafter "Gilead"). WITNESSETH: WHEREAS, Eyetech desires to have Gilead manufacture and supply Eyetech with certain quantities of Product; WHEREAS, Gilead desires to manufacture and supply to Eyetech with such quantities of Product; and WHEREAS, the parties are willing to carry out the foregoing pursuant to the terms and conditions set forth in this Agreement; NOW, THEREFORE, in consideration of these premises and the covenants, agreements, representations and warranties herein contained, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows.: SECTION 1. DEFINITIONS. As used in this Agreement, the following defined terms shall have the meanings set forth below. 1.1 "Affiliate" shall mean, with respect to any Person other than a natural person, any corporation or other business entity that either directly or indirectly, controls such Person, is controlled by such Person, or is under common control with such Person. For purposes of this definition, the term "control" means the possession of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of more than fifty percent (50%) of voting securities, by contract or otherwise. 1.2 "Agreement" shall mean this Manufacturing and Supply Agreement and all attachments hereto as the same may be amended, supplemented or otherwise modified from time to time. 1.3 "Annual Minimum Percentage" shall mean, subject to Sections 2.3(b), 2.4(f)(iii) and 2.9(b), the minimum percentage of Eyetech's total orders (on a unit basis) from all sources for Product for distribution in the Territory that are scheduled for delivery during a calendar year that Eyetech is obligated to order from Gilead, for any calendar years that such minimum percentage is set forth in the Product Supplement. 1.4 "API" shall mean the bulk active substances specified in clauses (a) and (b) of the definition of "Product", as used to Manufacture the Product. 1.5 "Applicable Laws" shall mean all Laws applicable to Manufacture of Products for the Territory by Gilead at the Facility (including ingredients, testing, storage, handling, intermediates, bulk and finished products), including without limitation cGMP and any Environmental Laws. 1.6 "Business Day" shall mean any day other than Saturday, Sunday or any day on which banks located in New York, New York are authorized or obligated to be closed. 1.7 "cGMP" shall mean all applicable current good manufacturing practices for pharmaceutical products promulgated by any Governmental Authority having jurisdiction in the form of laws, regulations, (as applicable to pharmaceutical products and ingredients) as the same may be updated, supplemented or amended from time to time, as applicable to Products. 1.8 "Claim or Proceeding" shall mean any third party claim, demand, action, suit, proceeding or arbitration including any Governmental Authority investigation. 1.9 "Commercial Launch" shall mean the first day which Eyetech, the Sublicensee, or one of their respective Affiliates makes a commercial sale of the Product following Regulatory Approval in the Territory. 1.10 "Control", "Controls" and "Controlled" mean, with respect to a particular item of information or intellectual property right, that the applicable party owns or has a license to such item or right and has the ability to grant to the other party access to and a license or sublicense (as applicable) under such item or rights as provided for herein without violating the terms of any agreement or other arrangement with any third party existing as of the Effective Date. 1.11 "Environmental Laws" shall mean all Laws whether currently in existence or hereafter promulgated, enacted, adopted or amended, relating to safety, preservation or protection of human health and the environment and/or relating to the handling, treatment, transportation or disposal of Waste including any matters related to Spills and threatened Spills of materials and substances. 1.12 "Environmental Losses" shall mean any and all fines, penalties, costs, liabilities, damages or losses incurred by Eyetech, an Affiliate of Eyetech, or the Sublicensee, or for which Eyetech, an Affiliate of Eyetech, or the Sublicensee is liable or obligated pursuant to any Environmental Laws arising out of any violation of any Environmental Laws by Gilead that occurs in the course of or results from the Manufacture of Product. 1.13 "Eyetech Indemnified Party" shall have the meaning set forth in Section 9.1. 1.14 "Eyetech Product Intellectual Property" shall mean any Intellectual Property Controlled by Eyetech that covers the Manufacture of Product by Gilead pursuant to this Agreement or that is otherwise necessary or useful for such Manufacture. 2 1.15 "Facility"" shall mean Gilead's manufacturing facilities located at 502 Covina Boulevard, San Dimas, California and (for storage only) 542 Covina Boulevard, San Dimas California, and, subject to Eyetech's prior written approval, such other facilities of Gilead used in (a) the Manufacture of Product or (b) storage of Product Materials and Product. 1.16 "FDA" shall mean the United States Food and Drug Administration or any successor agency. 1.17 "FDA Act" shall mean the United States Food, Drug and Cosmetic Act, as amended. 1.18 "Gilead Indemnified Party" shall have the meaning set forth in Section 9.2. 1.19 "Governmental Authority" shall mean any duly authorized court, tribunal, arbitrator, agency, commission, official or other instrumentality of any federal, state, province, county, city or other political subdivision, domestic or foreign. 1.20 "Hazardous Materials" shall mean any pollutant, contaminant, hazardous or toxic substance, constituent or material, including petroleum products and their derivatives, or other substances generated or utilized in the course of Manufacture, whether or not regulated under or pursuant to any Environmental Law. 1.21 "Hazardous Waste" shall mean waste arising from the Manufacture of the Product, that is defined in, or which may be determined to be hazardous waste under, any Environmental Laws. 1.22 "Information" shall have the meaning set forth in Section 12.1. 1.23 "Initial Term" shall have the meaning set forth in Section 13.1. 1.24 "Inspection Period" shall have the meaning set forth in Section 5.13(b). 1.25 "Intellectual Property" shall mean (a) any processes, trade secrets, inventions, know-how, industrial models, designs, methodologies, drawings, formulae, procedures, techniques, clinical data or technical or other information or data, manufacturing, engineering and technical drawings, and (b) registered trade marks, trade mark applications, unregistered marks, trade dress, trade names, brand names, copyrights, patents, patent applications, and any and all provisionals, divisions, continuations, continuations in part, extensions, substitutions, renewals, registrations, revalidations, reissues or additions, including supplementary certificates of protection, of or to any of the aforesaid patents and patent applications, and all foreign counterparts of any, or to any, of the aforesaid patents and patent applications. 1.26 "Laws" shall mean any law, statute, rule, regulation, ordinance or other pronouncements of any Governmental Authority having the effect of law, promulgated by any Governmental Authority having jurisdiction in the Territory. 3 1.27 "Losses" shall mean any and all damages, judgments, liabilities, fines, fees, settlements, payments, obligations, penalties, deficiencies, losses, costs and expenses (including Environmental Losses, interest, court costs, reasonable fees of attorneys, accountants and other experts and other reasonable expenses of litigation or other proceedings or of any claim, default or assessment). 1.28 "Manufacturing" shall mean the warehousing of Product Materials and API after receipt thereof, compounding, component preparation, incoming and outgoing quality control and other procedures, or any part thereof, involved in manufacturing Product from the Product Materials and API and packing such Product in accordance with the Specifications, which shall include the procedures of filling, inspecting, individual and/or bulk syringe container labeling, individual and/or bulk syringe container packaging (e.g. bagging, sealing, primary and/or secondary packaging) and shipping of individual and/or bulk syringes, and warehousing such Product in accordance with the Specifications, until delivery by Gilead in accordance with this Agreement. The terms "Manufacture", "Manufactured", "Manufacturing", in this Agreement shall have the identical meaning. 1.29 "Order" shall mean a written form submitted by Eyetech pursuant to Sections 2.4(b) and (e) and in accordance with the terms of this Agreement to Gilead authorizing the Manufacture of Product. 1.30 "Person" shall mean any natural person, entity, corporation, general partnership, limited partnership, proprietorship, other business organization, trust, union, association or Governmental Authority. 1.31 "Price" shall mean the price set forth in the relevant Product Supplement to be charged by Gilead for Product Manufactured and supplied hereunder as delivered to Eyetech. 1.32 "Product" shall mean a filled syringe intended to be used for injections directly into a patient's eye (i.e., not for use with any drug delivery system not requiring direct injections into a patient's eye) and packaged as set forth in the applicable Specifications that contains a quantity of either (a) the anti-VEGF aptamer know as "Macugen" or "EYE001", or (b) any metabolite or prodrug of such aptamer or any hydrate, conjugate, salt, ester, isomer, polymorph or analogue of any of the foregoing, either alone or in combination with one or more other therapeutically active substances, that is added to this Agreement as a "Product" pursuant to Section 2.1(b), in each of case (a) or (b) as stated in the applicable Specifications. 1.33 "Product Materials" shall mean the excipients with which API is combined to manufacture Product, syringes, plungers, packaging (e.g. bagging, sealing, primary and/or secondary packaging) and miscellaneous bulk shipping materials. 1.34 "Product Supplement" shall mean the mutually agreed Product-specific supplement attached to this Agreement as Attachment 1 that specifies requirements for Manufacture of such Product in addition to the Specifications and cGMP. Attachment 1 may be amended in writing from time to time upon written agreement of both parties, including without 4 limitation to add requirements for Manufacture, Specifications and cGMP requirements for additional Products. 1.35 "Product Warranty" shall have the meaning given such term in Section 6.1(a)(i)(B). 1.36 "Quality Agreement" shall mean those supplemental quality provisions set forth in the Quality Agreement between Gilead and Eyetech relating to the Product executed prior to or concurrently with this Agreement and incorporated herein by reference, as the same may be amended or modified from time to time as set forth therein. 1.37 "Quantitative Defects" shall mean defects in a shipment of Product such that the shipment (as delivered pursuant to Section 3.2) has less than the invoiced amount of Product for such shipment. 1.38 "Recall" shall mean a "recall", "correction" (i.e. a field or market correction) or "market withdrawal" (i.e. a withdrawal from the market not requiring notification to the FDA) and shall include any post-sale warning or mailing of information. 1.39 "Regulatory Approval" shall mean approval of a New Drug Application (or equivalent thereof) issued by the FDA as required for marketing of the Product in the Territory. 1.40 "Specifications" shall mean the specifications for the Manufacture and shipping, of the Product, including all formulae, Product Materials requirements, analytical procedures and standards of quality control and quality assurance, which are attached hereto as Exhibit A to Attachment 1, and as such Specifications may be amended, supplemented or otherwise modified by the parties in accordance with Section 5.2 hereof. 1.41 "Spill" shall mean any spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration into the indoor or outdoor environment, including the movement of Hazardous Materials through the ambient air, soil, subsurface water, groundwater, wetlands, lands or subsurface strata. 1.42 "Sublicensee" shall mean Eyetech's co-promotion partner, Pfizer Inc. and its Affiliates. 1.43 "Term" shall have the meaning set forth in Section 13.1. 1.44 "Territory" shall mean the United States of America, including its territories, possessions and Puerto Rico. 1.45 "Waste" shall mean all wastes that arise from Manufacture of Product hereunder, including Hazardous Waste. The definitions in this Section 1 shall apply equally to both the singular and plural forms of the terms defined. As used in this Agreement, (i) the words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation"; (ii) the words 5 "hereof", "herein", "hereby" and derivatives or similar words refer to this entire Agreement; (iii) all references to Sections and Attachments shall be deemed references to Sections of this Agreement and Attachments to this Agreement unless the context shall otherwise require; and (iv) whenever this Agreement refers to a number of days, such number shall refer to calendar days unless otherwise specified. SECTION 2. SUPPLY REQUIREMENTS; ORDERS; ALTERNATIVE SUPPLY. 2.1. Agreement to Supply. (a) During the Term of this Agreement and subject to the provisions of this Agreement, including the forecasting and ordering provisions, Gilead shall Manufacture and supply, exclusively to Eyetech, quantities of the Product identified in Section 1.32 for the Territory that are covered by Orders submitted by Eyetech in accordance with the terms of this Agreement. (b) Upon mutual agreement, the parties may include additional Products under this Agreement by executing and delivering additional Product Appendices, whereupon the definition of "Product" shall be expanded to include the product(s) included in such new Product Appendix. Any such additional Product Appendices shall be governed by and made a part of this Agreement. Gilead shall Manufacture and supply, exclusively to Eyetech, quantities of such additional Products for the Territory that are covered by Orders submitted by Eyetech in accordance with the terms of this Agreement. (c) Both Gilead and Eyetech acknowledge the fact that the Product is in the developmental phase of the product life cycle and there is no certainty that the Product will be commercialized, as certain data and information will become available as the project progresses which may cause Eyetech, or the Sublicensee, to decide that the Product is not commercially viable in the United States or the FDA to decide the Product is not sufficiently safe or efficacious enough for its intended use to satisfy requirements for issuance of a Regulatory Approval therefor in the Territory. For the avoidance of doubt, nothing in this agreement obligates Eyetech to proceed with any commercial activities if Eyetech should chose not to commercialize the Product in the Territory, provided that it exercises its right to terminate this Agreement in compliance with Section 13.2(f). 2.2. Use of Facility, Equipment, Molds and Tooling. (a) All Manufacturing shall be carried out by Gilead, at its Facility utilizing equipment, molds and tooling in the manner set forth in the Specifications. (b) Eyetech will purchase and pay for the equipment to be used for Manufacture of the Product that Gilead does not currently own or lease (such equipment, which is identified in Attachment 2 hereto, together with any additional equipment so designated as set forth below in this Section 2.2(b), the "Critical Equipment"). Any such Critical Equipment will be delivered to the Facility and placed as designated by Gilead and dedicated to Manufacture of the Product, 6 provided, however, that Eyetech will retain title to the Critical Equipment. Eyetech will fund the acquisition of replacement parts necessary for the repair of the Critical Equipment and Gilead will fund and provide routine maintenance, upkeep, cleaning and requalifications of the Critical Equipment. Gilead will provide the space for the Critical Equipment rent free in Facility and will be responsible for costs associated with the operation of the space. The parties acknowledge that certain expansions to the Facility, and the acquisition of certain additional equipment, which upon such acquisition and delivery to the Facility shall be designated "Critical Equipment" for purposes of this Agreement, that are the subject of the building and equipment improvement plan and budget attached to this Agreement as Attachment 2-A will be necessary for Gilead's performance under this Agreement and that Eyetech shall fund such Facility expansions and equipment acquisitions as determined by the Manufacturing Committee in accordance with Section 5.17(d)(iii). Upon termination of this Agreement, or upon Gilead's ceasing to use the Critical Equipment for production of the Product, Gilead will cooperate reasonably with Eyetech to arrange for the prompt removal on a reasonable schedule of such Critical Equipment and to take such other steps as reasonably necessary for Eyetech to protect its ownership of the Critical Equipment (and as agreed to in that certain Master Security Agreement No. 4134080 dated July 26, 2002 among General Electric Capital Corporation, Eyetech and Gilead with respect to the Syringe Filler referred to therein). 2.3. Current Production Guidelines; Capacity. (a) The Product Supplement sets forth Eyetech's initial good faith non-binding (except as otherwise set forth in Section 2.4(i)) five (5) year forecast of its Orders for Product from Gilead on a calendar year basis (as updated annually, the "Planning Forecast"). The first year of each Planning Forecast will include planned Orders on a unit basis and a monthly basis. During the Term, Eyetech shall update such Planning Forecast on an annual basis on or before July 1 of the first year of such Planning Forecast and shall include in each such update a forecast for an additional year commencing at the end of the existing Planning Forecast (if such additional year would fall within any portion of the Term then remaining). Subject to the terms hereof, Gilead shall devote adequate manufacturing capacity to be capable of producing and supplying Eyetech (and/or its Affiliates or designees) during a calendar year [**] percent ([**]%) of the quantity of Product stated in the Planning Forecast for such calendar year ("Order Limit"). (b) Eyetech will promptly notify Gilead of any potential increases in Eyetech's Orders for Product over the quantities stated in the Planning Forecast. If requested by Eyetech at least one (1) year in advance of the applicable calendar year, the parties will discuss in good faith any potential adjustment of manufacturing capacity at Gilead necessary to accommodate Orders for Product in a calendar year in excess of the applicable Order Limit for such calendar year. Gilead will make any capacity adjustment to accommodate such increased Orders in accordance with the parties' agreement as to the process, schedule, and appropriate compensation, investment or payment by Eyetech therefor. If the parties fail to agree on such a potential increase of Manufacturing capacity, then Eyetech's Annual Minimum Percentage obligation shall be limited to purchasing a quantity of Product that is equal to or greater than the Annual Minimum Percentage of Eyetech's Orders excluding amounts in excess of the agreed Order Limit. 7 (c) The parties acknowledge that the Commercial Launch of the Product will constitute the launch of a new pharmaceutical product in the Territory and, therefore, actual demand may vary considerably from forecasted demand. Accordingly, the parties each agree to use best efforts to cooperate with one another in a manner that enables Gilead to accommodate changing demand. 2.4. Forecasts and Orders. (a) Forecast Schedule. Eyetech shall provide Gilead with a rolling forecast schedule of demand for Product ("Forecast Schedule") for the following twelve (12) calendar months. Each Forecast Schedule shall be expressed in integer multiples of the current batch size agreed by the parties and shall be compiled and updated on or before the first day of every month. The initial Forecast Schedule is set forth in the Product Supplement. Eyetech shall also keep Gilead updated through monthly review meetings involving the relevant staff from each party as to its revised forecasts in order to enable capacity planning and other such activities to be carried out. (b) Order Quantities. The quantities of Product detailed in the first three (3) months of each Forecast Schedule will be quantities for which Eyetech shall place a firm order ("Order") that, subject to Section 2.4(f), Gilead shall accept, confirm and fulfill in accordance with this Section 2.4. The required delivery dates for each such Order shall be specified in the Order. Required delivery dates shall be no sooner than twelve (12) weeks after delivery of the first Forecast Schedule and Order including such delivery dates, unless otherwise mutually agreed in writing by the parties. (c) Non-binding Forecast. The last 9 months of the Forecast Schedule shall constitute a good faith estimate by Eyetech of its future Product requirements and does not constitute any minimum purchase requirement or any binding commitment by Eyetech to purchase such Product requirements, subject to Section 2.4(i). (d) Terms. Eyetech shall place Orders for Product in whole numbers of batches. Gilead shall Manufacture Product only in whole numbers of batches and shall have no obligation to accept or meet any Orders for Product that are for other than whole numbers of Batches. (e) Placement and Confirmation. Eyetech shall place Orders for Product by sending an Eyetech Order form to Gilead by facsimile or in any other written or electronic form. Gilead shall respond to each Order received from Eyetech within five (5) Business Days of receipt and accept or reject the Order; provided, however, that (i) Gilead shall only reject an Order for quantities covered by the binding portion of any Forecast Schedule in accordance with the limitation set forth in Section 2.4(f)(i) and (ii) if Gilead fails to respond within such time period, it shall be deemed to have accepted such Order. If Gilead receives any Eyetech Order, Planning Forecast or Forecast Schedule after the close of business on a Business Day, then Gilead will not be deemed to have received such Order, Planning Forecast or Forecast Schedule until the start of the next Business Day. Any acceptance of an Order shall include confirmation of the delivery dates, delivery site and quantity as set out in the Order. 8 (f) Limitations. (i) If any Order covering a one month period is for a quantity greater than the quantity for such period as provided in the Forecast Schedule in which that month was the fourth month of the previous such forecast ("Forecast Quantity"), Gilead shall not be obligated to supply Eyetech with any quantities that are in excess of [**] percent ([**]%) of the Forecast Quantity, with any amounts in such Order in excess of such amount being the "Excess Amount", unless mutually agreed in writing by Gilead and Eyetech. If Eyetech submits an Order that includes an Excess Amount, then promptly after Eyetech receives Gilead's response to Eyetech's Order that includes such Excess Amount, Gilead and Eyetech shall discuss the possibility of Gilead supplying Eyetech with all or a portion of such Excess Amount. If discussion is required on the amount or timing of production and delivery, then the relevant planning personnel from both parties will agree upon and confirm any agreed amended forecast within three Business Days of Gilead's first receipt of the relevant Forecast Schedule. (ii) If any Order covering any one month period would make the total Orders for such calendar year exceed the applicable Order Limit (as defined in Section 2.3(a)), Gilead shall not be obligated so supply Eyetech with any portion of such Order that would cause such Order Limit to be exceeded. If Eyetech submits an Order that if fulfilled would cause the Order Limit to be exceeded for such calendar year, then promptly after Eyetech receives Gilead's response to such Order, Gilead and Eyetech shall discuss the possibility of Gilead supplying Eyetech with all or a portion of such Excess Amount. (iii) If Gilead rejects any Order(s) or any portion(s) of Order(s) in accordance with this Section 2.4(f), then Eyetech's Annual Minimum Percentage obligation shall be limited to purchasing a quantity of Product that is equal to or greater than the Annual Minimum Percentage of Eyetech's Orders excluding such Order(s) or portion(s) of Order(s). (g) Acceptance of Orders and Fulfillment. Subject to the terms of this Agreement, including the limitations in Section 2.4(f), Gilead shall accept, confirm and fulfill Orders submitted by Eyetech in accordance with this Section 2.4 in accordance with their terms (including without limitation with respect to quantities ordered and delivery dates specified in such Orders). Gilead shall use commercially reasonable efforts to fulfill other Orders and to satisfy any changes in quantity, delivery phasing or dates requested by Eyetech in respect of any Order accepted by Gilead, provided that Gilead shall not be required to incur any additional costs to satisfy such changes, unless the amount of such costs has been agreed upon in writing in advance between the parties, and Eyetech has agreed in writing to reimburse all such costs. (h) Order Non-Satisfaction. If Gilead becomes aware that any Order previously accepted or confirmed in accordance with Section 2.4(g) will not be satisfied as to quantity or delivery date, then Gilead shall inform Eyetech as soon as reasonably practicable and in any event within two (2) Business Days. 9 (i) Annual Minimum Percentage. Subject to Sections 2.3(b), 2.4(f)(iii) and 2.9(b), Eyetech shall order quantities of Product from Gilead in any calendar year that equal or exceed the Annual Minimum Percentage for such calendar year, if any. The quantities in any Order cancelled by Eyetech and any quantities by which any Order is reduced shall not be counted toward satisfaction of this obligation; provided that such cancellation or reduction is not due to a failure by Gilead to accept, confirm and fulfill Orders in accordance with this Section 2.4 (in which case the cancelled or reduced quantities shall be counted toward satisfaction by Eyetech of this obligation, whether or not Gilead informs Eyetech as required under Section 2.4(h)). Eyetech shall keep or cause to be kept records relating to the volume of Product ordered from Gilead and any other supplier for a period of four years after the time period to which such records relate. Gilead shall be entitled to inspect such records at least once per year. For the avoidance of doubt, Gilead hereby acknowledges that Eyetech Annual Minimum Percentage obligations do not apply to the manufacture of products other than the Product. If Eyetech fails to order quantities of Product from Gilead in any calendar year that equal or exceed the Annual Minimum Percentage for such calendar year, then Eyetech acknowledges and agrees that the difference between (i) the amount Eyetech would have paid Gilead had it ordered the Annual Minimum Percentage for such calendar year and (ii) the amount Eyetech actually paid Gilead for Product for such year constitute an appropriate measure of Gilead's damages resulting from such failure and Gilead acknowledges and agrees that such damages shall constitute Gilead's sole and exclusive remedy for such failure to purchase Annual Minimum Percentages. 2.5. Standard Forms. Any Orders for Product submitted by Eyetech shall reference this Agreement. In ordering and delivering the Product, Eyetech and Gilead may employ their standard forms, but nothing in those forms shall be construed to modify, amend or supplement the terms of this Agreement and, in the case of any conflict herewith, this Agreement shall control. Any term or condition in any Order, confirmation or other document furnished by Eyetech or Gilead with respect to orders or deliveries of Product that is in any way inconsistent with the terms or conditions of this Agreement is hereby expressly rejected. 2.6. Procurement and Approval of Product Materials. Subject to Sections 5.4(c) and 2.4(f), Gilead shall order sufficient quantities of all Product Materials to enable Gilead to Manufacture, and to deliver, the Product in accordance with Orders placed by Eyetech and accepted by Gilead pursuant to Section 2.4(e). All Product Materials used in the Manufacture of the Product and the supplier(s) thereof shall have been approved in writing by Eyetech. Gilead shall issue and pay all purchase orders for such Product Materials. Gilead may not substitute or otherwise replace any Product Materials and/or any supplier thereof without the prior written consent of Eyetech. Gilead agrees to provide Eyetech, on a timely basis, all information that Eyetech may reasonably request in order to comply with internal Eyetech procedures regarding approval of a change in Product Materials and/or any supplier thereof. The costs of Product Materials and the management and procurement of such Product Materials shall be included in the Price in accordance with the terms of Section 4.1 hereof. If Eyetech designates certain suppliers, Gilead shall obtain Product Materials from such suppliers and the Price shall be 10 adjusted to account for any cost savings or increased costs resulting from obtaining Product Materials from such suppliers. 2.7 Supply of API. Gilead will not purchase API. Eyetech will supply API at its own expense on a schedule sufficient to permit Gilead to Manufacture the quantity of Product specified in the Forecast Schedule and Orders. Gilead shall not be obligated to supply Product to fulfill Orders if Eyetech does not supply Gilead with sufficient quantities of API in a timely manner. At Eyetech's election, the API may be delivered directly from Eyetech's vendor to Gilead at the vendor's or Eyetech's expense. Eyetech or its vendor shall supply Gilead with a copy of the certificate of analysis for the API no later than the date of delivery of the API to Gilead. Gilead shall provide Eyetech with monthly reports of Gilead's usage of API supplied by Eyetech, which reports shall account for all used and unused API in a manner that provides Eyetech with a reasonable basis for anticipating Gilead's needs for API for fulfillment of pending and subsequent Orders. 2.8. Product Samples. Gilead shall provide Eyetech (or any such other Person as Eyetech shall designate) with representative lot samples of each production batch of Product promptly upon request. Eyetech shall be entitled to review, upon reasonable prior written notice and during normal business hours, all manufacturing records relating to such samples including all analytical procedures and cleaning validation relating to the equipment used in connection with the Manufacture of the Product. Such Product samples shall be delivered and shipped to Eyetech (or such other Person as Eyetech shall designate) in accordance with the provisions set forth in Section 3.2 hereof, or as otherwise instructed by Eyetech. Eyetech shall pay for such samples when invoiced in accordance with Section 4.3 hereof. 2.9. Alternative Supply. (a) Nothing in this Agreement shall prevent Eyetech, the Sublicensee or any of its Affiliates from manufacturing, or engaging third parties to manufacture on their behalf, Products for the Territory, provided that Eyetech satisfies its Annual Minimum Percentage obligations pursuant to Section 2.4(i) for each Product. Gilead shall cooperate with all reasonable requests by Eyetech to assist at Eyetech's expense in the transfer qualification activities undertaken by Eyetech or any such third party, provided that Eyetech satisfies its Annual Minimum Percentage obligations for the applicable Product pursuant to Section 2.4(i). Gilead will provide such technology transfer activities at the agreed upon technical rate and mutually approved work plan. (b) Subject to the limitations set forth below in this Section 2.9(b), if (i) there is a failure by Gilead to accept Orders submitted by Eyetech in accordance with Section 2.4 in any [**] consecutive calendar quarters or a failure by Gilead to fulfill Orders accepted by Gilead in any [**] consecutive calendar quarters, such that Gilead has not delivered at least [**] percent ([**]%) of the Product quantities ordered by Eyetech during such consecutive calendar quarters within [**] days of the delivery dates specified in the relevant Orders, or (ii) Gilead gives notice 11 to Eyetech pursuant to Section 2.4(h) that clause (i) will be true, then Eyetech shall have the right reduce the Annual Minimum Percentage for the remaining term of this Agreement by up to the greater of [**] percent ([**]%) or the reasonably anticipated amount of shortfall in timely, conforming supply by Gilead, and have such quantities of Product supplied by other suppliers qualified pursuant to Section 2.9(a); provided that, if the occurrence as described in clause (i) or (ii) results primarily from events outside the reasonable control of Gilead and Gilead subsequently provides Eyetech with commercially reasonable assurances that it can resume supply of Product to Eyetech in a timely manner in compliance with this Agreement, then Eyetech's Annual Minimum Percentage obligation shall thereafter be restored to its prior level. If an occurrence as described in clause (i) or (ii) occurs, the Manufacturing Committee (as defined in Section 5.17) will use good faith efforts to resolve any such supply failures as soon as commercially practicable; provided that, Eyetech shall have the termination right set forth in Section 13.2(b) unless both (A) the occurrence as described in clause (i) or (ii) results primarily from events outside the reasonable control of Gilead and (B) Gilead subsequently provides Eyetech with commercially reasonable assurances that it can resume supply of Product to Eyetech in a timely manner in compliance with this Agreement. In addition, if the FDA imposes requirements on the Manufacture of the Product that requires Eyetech to modify the Specifications, the Manufacturing Committee will use good faith efforts to resolve any resulting issues (including costs increases resulting from such FDA-imposed requirements) that would prevent Gilead from Manufacturing the Product in accordance with this Agreement. If the Manufacturing Committee is not able to resolve such issues, Eyetech shall have the termination right set forth in Section 13.2(b). 2.10 Start Up Activities. In addition to quantities of Product ordered and supplied pursuant to Section 2.4, Eyetech will purchase and Gilead will supply Product as set forth in this Section 2.10: (a) Registration (or Clinical) Batches: The parties acknowledge that prior to the Effective Date Gilead provided Eyetech with certain batches of Product to support Product registration or for use in clinical trials (collectively, the "Registration Batches"). Each Registration Batch consists of approximately [**] units (i.e., single dose units) of Product that Gilead has tested in-process in accordance with the Specifications in the Product Supplement. Each Product in a Registration Batch consists of 0.3 mg, 1 mg or 3mg of Macugen as requested by Eyetech. To the extent that Eyetech has not already made such payments prior to the Effective Date, Eyetech will pay Gilead batch charges at $[**] (i.e., $[**] per single shift of aseptic filling) plus an additional filling charge of $[**] for each unit of Product (i.e., $[**] per single dose unit), as invoiced by Gilead. For Registration Batches packaged by Gilead, Eyetech will pay (to the extent not already paid prior to the Effective Date) Gilead an additional packaging charge of $[**] (i.e., $[**] per single shift of packaging activities) per lot. For Registration Batches tested by Gilead, Eyetech will pay (to the extent not already paid prior to the Effective Date) an additional testing batch charge of $[**] per lot. This price will be adjusted for increases due to changes to the Specifications or changes to the Product Supplement provided to Gilead after the Effective Date. Gilead will deliver entire Registration Batches of the Product, bulk packaged only, CPT to the finished packaging site designated by Eyetech (Incoterms 2000) and will deliver 12 partial Registration Batches of the Product FCA Gilead's San Dimas facility (Incoterms 2000). Gilead will provide for storage up to 90 days following completion of production (i.e., the Batch is packaged and ready for shipment to Eyetech), with a provision for longer storage as follows:

Days over 90 days: [**] [**] Room Temperature Storage per pallet/day $[**] $[**] Refrigerated Storage per pallet/day $[**] $[**]

(b) Process Validation Batches: Gilead will provide Eyetech with at least 3 batches (anticipated) of Product of each strength (i.e. 0.3 mg, 1 mg or 3mg of Macugen) that Eyetech has plans to commercialize, for purposes of process validation ("Process Validation Batches"). Each Process Validation Batch will consist of approximately [**] units of Product. Each Product in a Process Validation Batch will consist of 0.3 mg, 1 mg or 3mg of Macugen as requested by Eyetech. Eyetech will pay Gilead batch charges at $[**] (i.e., $102,000.00 per single shift of aseptic filling) plus an additional filling labor charge of $[**] for each unit of Product (i.e., $[**] per single dose unit), as invoiced by Gilead. For Validation Batches packaged by Gilead, Eyetech will pay Gilead an additional packaging charge of $[**] for each unit of Product (i.e., $[**] per single dose unit), as invoiced by Gilead. Also for Validation Batches packaged by Gilead, Gilead will charge for additional support services/handling requirements/materials purchasing as it relates to all aspects (except the packaging labor charge identified above) of primary (i.e., the pouch/bag/tray directly containing the filled syringe) and of secondary (i.e., product shelf cartoning) labeling and packaging materials, on a cost plus [**]% basis. For process Validation Batches tested by Gilead, Eyetech will pay an additional testing charge of $[**] per lot. This price will be adjusted for increases due to changes to the Specifications or changes to the Product Supplement provided to Gilead after the Effective Date. Gilead will deliver entire Process Validation Batches of the Product, bulk packaged only, CPT to the finished packaging site designated by Eyetech (Incoterms 2000) and will deliver partial Process Validation Batches of the Product FCA Gilead's San Dimas facility (Incoterms 2000). Gilead will provide for storage up to 90 days following completion of production (i.e. the Batch is packaged and ready for shipment to Eyetech), with a provision for longer storage as follows:

Days over 90 days: [**] [**] Room Temperature Storage per pallet/day $[**] $[**] Refrigerated Storage per pallet/day $[**] $[**]

(c) Additional Charges: The following charges will not be included in the cost/price of the Registration or Process Validation Batches and shall be separately invoiced by Gilead, provided that Eyetech has approved such charges in advance and such charges are reasonably documented by Gilead: (i) third party contractor costs for installation of and support for Critical Equipment; (ii) travel, accommodation, and FTE costs for Gilead employees and other Gilead out of pocket expenses in support of the technology transfer to a third party, which shall be covered under the work plan as specified in Section 2.9(a), (iii) acquisition and repair of Critical 13 Equipment (iv) other unique/non-routine requirements associated with the Product, including but not limited to additional (i.e., other than the one annual Product stability lot) stability studies, costs for project start-up including process validation activities (e.g., writing, executing and approval of respective validation documents), development of expanded regulatory documentation and/or filings and the Product's technology transfer to Gilead's QC laboratory that will be provided upon request after requirements are mutually agreed upon by Gilead and Eyetech pursuant to a "work plan" as contemplated in Attachment 1. In addition, Eyetech will pay Gilead's costs incurred in accordance with Attachment 4 (as modified from time to time by mutual agreement of the parties, which shall not be unreasonably withheld) for project start-up including process validation activities and the Product's technology transfer to Gilead's QC laboratory for Product to be ordered and supplied pursuant to Section 2.4. 2.11 Stability Work Plan. Promptly after the Effective Date, the parties shall use good faith efforts to agree upon a stability work plan, which will be incorporated into and made a part of this Agreement. The stability work plan shall include a description of services relating to stability and other tests to be performed by Gilead at Eyetech's request and additional compensation terms relating to Gilead's performance of such services. SECTION 3: SHIPMENT AND DELIVERY TERMS; REPORTS 3.1. Shipment Reports. On the date of each shipment of Product, Gilead shall submit to Eyetech, via e-mail in the manner detailed above, a report detailing the branch order number, ship date, container/trailer number and contents of each such shipment. 3.2. Delivery/Shipping Instructions/Risk of Loss. Gilead shall deliver Product and any Product samples requested by Eyetech pursuant to Section 2.8 hereof FCA (Incoterms 2000) the Facility and otherwise in accordance with this Section 3.2. With the initial shipment of Product from a specific batch, Gilead shall include a certificate of compliance and a certificate of analysis with such shipment. The Price reflects shipping terms of FCA (Incoterms 2000) from the Facility for an entire batch. Partial batch shipments will be subject to additional charges if such partial shipments are requested by Eyetech and are not due to failures by Gilead to deliver Product in accordance with accepted Orders. Gilead shall coordinate with Eyetech for the shipment of the Product with a common carrier from Gilead's Facility to Eyetech's designated facilities in accordance with shipment instructions provided by Eyetech. Eyetech will provide a list of common carriers and will pay the outbound freight delivery costs. Gilead will schedule freight pick up, load the carrier's trailer and complete documentation all in accordance with Eyetech's requirements. Gilead will communicate storage and transit requirements provided by Eyetech to selected carriers. 14 SECTION 4. PRICE; PAYMENT; PRICE ADJUSTMENTS; TAXES. 4.1. Purchase Price; Yield Adjustments. (a) Eyetech shall purchase the Product from Gilead at prices as set forth in Attachment 1. (b) After Gilead Manufactures the [**] batches of Product having the same concentration and the same process/equipment trains, the Manufacturing Committee will establish an average yield ("Average Yield") for the Manufacture of Product from API and Product Materials and, based on such Average Yield, the Manufacturing Committee will allocate savings for batch yields that are more than [**] percentage points above such Average Yield equally between the parties. 4.2 Price Adjustments. (a) Subject to Sections 2.3(b), 2.9(b), 4.1(b), 4.2(b), (c) and (d) and 5.2(b), the prices shall be fixed for the Initial Term of this Agreement. In addition to the adjustments provided for in Sections 2.3(b), 2.9(b), 4.1(b), 4.2(b), (c) and (d) and 5.2(b), after the expiration of the Initial Term of this Agreement, Gilead may adjust the prices set forth in Attachment 1 based on and consistent with mutually acceptable industry indices. (b) Cost savings from any Improvements in Manufacturing implemented by Gilead shall be applied as of the date of implementation by Gilead and shall be [**] by the parties. (c) If the price of a Product Material increases or decreases by more than [**] percent ([**]%) during a calendar year, the parties will increase or decrease the relevant Price to reflect such increased or decreased costs. (d) If the Product Specifications or the Product Supplement are changed during the term of this Agreement, the parties agree to negotiate in good faith an adjustment to the Price. 4.3 Invoices. Gilead shall submit invoices for all shipments of Product hereunder to Eyetech upon delivery thereof. Each invoice issued by Gilead hereunder shall specify, at a minimum, the Price in respect of the Product delivered, or, for Registration Batches and Process Validation Batches, the applicable charges; and the quantity of the Product delivered. Gilead shall also be entitled to invoice Eyetech or any such Affiliate of Eyetech in respect of all import duties and similar charges incurred by Gilead in delivering any Batch of Product, if relevant, and the cost of carriage, freight and insurance if at any time Eyetech has requested Gilead to arrange the delivery transportation . 15 4.4 Payment. Subject to Section 5.13(a), all invoices under this Agreement shall be payable by Eyetech in U.S. Dollars within forty-five (45) days of date of delivery of the Products to Eyetech's representative to which such invoice pertains. Any amounts not paid by Eyetech when due under this Agreement shall be subject to interest from and including the date payment is due up to and including the date upon which Eyetech has made a wire transfer of immediately available funds into an account designated (and notified to Eyetech) by Gilead at a rate equal to the sum of two percent (2%) plus the prime rate of interest quoted in the "Money Rates" section of the West Coast edition of The Wall Street Journal calculated daily on the basis of a 365-day year, or, if lower, the highest rate permitted under applicable law. Any amounts paid [**] or more days prior to being due shall be subject to a discount of [**] percent of the invoiced amount. 4.5 Taxes. The Prices will be exclusive of, and Eyetech will be responsible for, all tariffs, duties and use, consumption, sales, or excise taxes of any taxing authority on Product delivered by Gilead under this Agreement excluding taxes based upon the income of Gilead. If Gilead is required to pay any such tax or other similar charge, Eyetech shall promptly reimburse Gilead for payment of such amount. SECTION 5. MANUFACTURING STANDARDS AND QUALITY ASSURANCE. 5.1. Manufacturing Standards. Gilead shall Manufacture, and supply, the Product (including disposing of all Waste and other materials) strictly in accordance with the Specifications, Applicable Laws, and the Quality Agreement. Nothing in this Agreement shall obligate Gilead to take any action that would or is likely to result in a violation of any Environmental Law. 5.2. Modifications in Specifications. (a) Gilead shall not make any revisions to the Specifications without the prior written consent of Eyetech. (b) If the Specifications are proposed to be modified, the party seeking to make such modification shall notify the other party to this Agreement as far in advance as is practicable prior to the proposed effectiveness of such modification, and the parties shall jointly agree on whether and/or when to implement such modification; provided that if the parties are unable to agree on the implementation of any modification after engaging in good faith negotiations for [**] days, Eyetech shall be entitled to use third party manufacturers as provided in Section 2.9(b). To the extent that such modification results in an increase or decrease in the cost of Manufacturing the Product, the parties shall jointly examine and mutually agree upon the consequences thereof and shall adjust the Price by the amount of such increase or decrease. Gilead shall promptly notify Eyetech of the date of implementation of any such modification. 16 5.3. Pest Control. Gilead shall Manufacture the Product, and Gilead shall store all API, Product Materials and Product, in a clean, dry area, free from insects and rodents, in a manner to prevent entry of foreign materials and contamination of Product. Pest control measures will include the adequate cleaning of the Facility, control of food and drink, protection of Product from environmental conditions that may adversely affect the quality of the Product, monitoring of flying and crawling pests and logs detailing findings and actions taken. 5.4 Storage and Handling. (a) Gilead shall store and handle all Product Materials and Product strictly in accordance with the provisions of all Applicable Laws, the Quality Agreement, and the Specifications. In addition, at any given time Gilead shall store quantities of API provided by Eyetech, provided that such quantities do not exceed quantities necessary for the Manufacture of quantities of Product covered any binding Orders then in effect plus the quantities of Product forecasted by Eyetech for the following [**] months, strictly in accordance with the provisions of all Applicable Laws, the Quality Agreement, and the Specifications. Gilead shall use API and Product Materials utilized for the Manufacture of the Product on a first in, first out basis and before the expiration date as required under Applicable Laws and the terms of the Quality Agreement. (b) For Batches of Product other than Registration Batches and Process Validation Batches, Gilead will provide storage of Product for 60 days following completion of production (i.e., the Batch is packaged and ready for shipment to Eyetech) without charge. The charge for storage after such 60 day period shall be as follows:

Days over 60 days: [**] [**] Room Temperature Storage per pallet/day $[**] $[**] Refrigerated Storage per pallet/day $[**] $[**]

(c) The parties will mutually agree on quantities of Product Materials to be held by Gilead in inventory at its expense. At Eyetech's request, Gilead will use reasonable efforts to store additional quantities of Product Materials at Eyetech's expense. (d) Gilead shall notify Eyetech of its need to use a third party warehouse for storage of any Product, API or Product Materials beyond the periods or levels referenced in Sections 5.4(b) or (c), and any such storage at such third party warehouse shall be subject to prior written approval by Eyetech and shall be at the cost of Eyetech. Subject to the terms of any agreement between Gilead and such third party approved by Eyetech, Eyetech shall have the right to audit 17 any such third party warehouse upon reasonable prior written notice and during normal business hours. 5.5. Maintenance of Facility, Equipment and Molds. Gilead shall maintain all equipment, tooling and molds utilized in the Manufacture of Product under this Agreement in good operating condition and shall maintain its Facility and such equipment, tooling and molds in accordance with, or in a manner that shall exceed the requirements of (i) all Applicable Laws, and (ii) all requirements set forth in the Specifications and the Quality Agreement. In the event that Gilead has knowledge that it has failed to, or anticipates it will fail to, meet any of the foregoing requirements relating to the maintenance of its Facility or any equipment, tooling or molds utilized in connection herewith, or in the event that Gilead receives any notice from any Governmental Authority relating to its maintenance of, or failure to maintain, its Facility or any equipment, tooling or molds utilized in connection herewith, Gilead shall promptly contact Eyetech (or such other department or person as Eyetech may direct), provide copies of such notice to Eyetech and, if such notice relates specifically to the Product, the parties will work together in good faith to address the problem. 5.6. Legal and Regulatory Filings and Requests. Gilead shall cooperate and be diligent in making all required responses to all requests for information from, and in making all legally required responses to, Governmental Authorities having jurisdiction in the Territory to make such requests, pertaining to Manufacture of the Product, and shall provide Eyetech with copies of all such responses. If additional work is required to prepare such information, Gilead shall cooperate with Eyetech in preparing such information at Eyetech's expense, based on agreed to hourly fees established for out-of-scope services. For the avoidance of doubt, Eyetech acknowledges that for responding to requests involving but not limited to non-routine information, development protocols and studies, or additional regulatory documentation or filings, Gilead will be compensated based on the hourly rates set forth in Attachment 1, Section 2.2. Gilead shall (a) obtain and comply with all licenses, consents and permits it is required to have pursuant to Applicable Laws, and (b) comply with all Applicable Laws. 5.7. Analysis of Materials. Prior to use in production, Gilead shall have shipments of API and Product Materials analyzed for such matters as Eyetech may require in accordance with the Specifications, Quality Agreement, attached Product Supplements and Gilead standard operating procedures, and Gilead shall ensure that all API and Product Materials conform to the Specifications as determined by such required analysis. Such analyses may be conducted by Gilead internally or by an outside laboratory retained by Gilead and reasonably approved by Eyetech. For purposes of this Agreement, such tests shall be considered routine and shall be performed at Gilead's expense. All test results are to be documented in accordance with cGMP and available for inspection at Eyetech's request upon reasonable notice during reasonable business hours. Eyetech will be responsible for the costs of replacement and disposition for all API, except to the extent that such 18 API fails to conform to Specifications due to Gilead's non-compliance with Section 5.4(a) or this Section 5.7. Gilead will be responsible for the costs of replacement and disposition of Product Materials that fail to conform to Specifications subject to the limitation set forth in Section 11.3(b). 5.8. Quality Tests and Checks. Quality tests and checks for the Product will be conducted in accordance with the Quality Agreement and the Product Supplement (Attachment 1). 5.9. Non-Complying Product. No Product shall be released for delivery and shipment by Gilead unless such Product strictly complies with the Product Warranty as is determined by any testing and analysis of Product that Gilead is required to perform under this Agreement. 5.10. Responsibility for Rejected and Non-Complying Product. Product rejected pursuant to Section 5.13(b) hereof shall be quarantined and shall be properly tagged and isolated and shall not be released without the prior written approval of Eyetech. Eyetech will promptly submit to Gilead a report specifying the bases for its rejection of such Product. Promptly after receipt of such report, Gilead will submit to Eyetech a response on the rejected Product, including the investigation and testing done and recommend either disposition or acceptance and release of the Product shipment as being in compliance with the Product Warranty. Eyetech shall review such report and notify Gilead that Eyetech disputes Gilead's conclusion, accepts Gilead's conclusion and therefore approves the recommended disposition or release of the Product, or requests additional data from Gilead. With respect to rejections pursuant to Section 5.13(b), in the event the parties do not agree on whether the Product complies with the Product Warranty, the parties shall submit samples of the non-complying Product to one (1) mutually agreed upon independent third party laboratory and such party's determinations as to whether the Product complies with the Product Warranty shall be final and binding upon the parties. The cost of such independent laboratory analysis shall be paid for by the party who is determined to be incorrect with respect to the rejected Product's compliance with the Product Warranty. If it is determined by either Eyetech's agreement or an independent third party laboratory determination, that Product rejected pursuant to Section 5.13(b) complies with the Product Warranty, then Eyetech will promptly pay Gilead's invoice therefor in accordance with its terms. 5.11. Disposal of Rejected and Non-Complying Product and Product Materials. All Product rejected pursuant to Section 5.10 and all non-conforming Product Materials not able to be used in the Manufacture of the Product pursuant to Section 5.7 shall be removed (if applicable) and disposed of by the party in possession thereof, as the case may be, in a manner consistent with Applicable Laws and as approved in advance by Eyetech (such disposal to be at a reasonable cost in the circumstances and at the expense of the party deemed to be responsible for 19 such Product pursuant to the terms of Sections 5.10 or such Product Materials pursuant to Section 5.7) and all documentation relating to such disposition shall be made available to the other party upon request. The non-disposing party, at its discretion and cost, may be present to witness the destruction of rejected or non-complying Product Materials, Product or Product in process. No rejected or non-complying Product Materials, Product or Product in process shall be sold as salvage or for any other purpose by either party or designees or agents thereof without the prior written approval of the other party. Gilead shall be responsible for ensuring that all printed packaging waste materials bearing Eyetech or Sublicensee names or logos are destroyed and shall not rely on any third party for such destruction unless Gilead personnel actually witness such destruction by the third party. 5.12. Maintenance and Retention of Records. (a) Gilead shall maintain detailed records with respect to Product Materials and API usage and Manufacturing, which records shall include production code dates, and Gilead shall maintain detailed records with respect to shipping information relating to the Product, in each case according to Gilead operating procedures and so that Product can be easily traced in case of a Recall or rejection of Product or Product Materials. Such records shall also be maintained and retained in accordance with the Quality Agreement and the Specifications. Such records shall be sufficient such that Gilead shall under normal circumstances be capable of responding to inquiries by Eyetech within one (1) Business Day of notification and shall be able to provide the production code date and the location of the Product in question. (b) Gilead shall provide to Eyetech on an annual basis a production record, including control charts, trend analysis, consumer complaints, deviations and reworks, and any other information, in each case as mutually agreed, for purposes of preparing an Annual Report as required by cGMP. 5.13. Quantitative Defects; Rejection of Product; Disposal of Rejected Shipments. (a) Rejection for Quantitative Defects. Eyetech shall notify Gilead in writing of any claim relating to Quantitative Defects in shipments of the Product within thirty (30) days following actual receipt of such shipments by Eyetech, including Eyetech's bases for concluding that any shortage in quantity is a Quantitative Defect. If Gilead disputes Eyetech's conclusion, the parties will work in good faith to determine whether such shortage was due to a Quantitative Defect. At Eyetech's request, Gilead shall, at its own expense, provide Eyetech with any missing quantities of such Product promptly after receipt of notice from Eyetech, but in no event later than forty-five (45) days following receipt of notice. Eyetech shall be obligated to pay only for actual quantities of Product delivered in the initial shipment (irrespective of the invoiced amount) in accordance with Section 4.3 hereof and shall pay for any quantities subsequently delivered by Gilead to Eyetech as replacements for missing quantities in accordance with Section 4.3 hereof and, if Eyetech has paid for quantities of Product not delivered in the initial shipment at the time that Eyetech discovers the Quantitative Defect, Gilead shall, at Eyetech's option, either reimburse Eyetech for the amount paid for such non-delivered quantities or credit such payment against Eyetech's obligations with respect to future delivered quantities. If it is determined any shortage 20 in the original shipment was not due to a Quantitative Defect, Eyetech will promptly pay unpaid amounts of the invoice therefor in accordance with this Agreement. If Gilead does not receive any notice of rejection on the basis of a Quantitative Defect within forty-five (45) days of Eyetech's receipt of the relevant shipment, Eyetech shall be deemed to have accepted such shipment of Product with respect to adequacy of Product quantities in such shipment. (b) Rejection for Product Warranty Defects. Within forty-five (45) days following receipt by Eyetech (or its designee) of any shipment of Product hereunder ("Inspection Period"), Eyetech shall have the right to give Gilead notice of rejection of any part of such shipment of Product that fails to comply with the Product Warranty; provided, however, that the only time restriction applicable to Eyetech's provision of notice of rejection of any shipments of Product where failure of Products to comply with the Product Warranty in a manner that would not reasonably have been discovered by any inspection, testing or analysis of such Product conducted by Eyetech or its designees, shall be that such notice must be provided prior to the end of the shelf life for such batch of Product. Determination as to the propriety of any rejection for non-compliance with the Product Warranty shall be made pursuant to Section 5.10. If Gilead does not receive within the Inspection Period any notice of rejection based on non-compliance with the Product Warranty, Eyetech shall be deemed to have accepted such shipment of Product with respect to compliance with the Product Warranty as may be reasonably determined by such inspection, analysis or testing; provided that nothing in this Section 5.13(b) shall limit Gilead's obligations under Section 9.1 with respect to Losses arising out of or resulting from third party claims or Gilead's gross negligence or intentional misconduct. Subject to the last sentence of Section 5.10, Eyetech shall not be obligated to pay the Price for Product rejected pursuant to this Section 5.13(b) and if Eyetech has paid for quantities of Product rejected pursuant to this Section 5.13(b) at the time Eyetech rejects such quantities, Gilead shall, in addition to reimbursing Eyetech for API in accordance with Section 11.3, at Eyetech's option either reimburse Eyetech for the amount paid for such quantities of Product rejected pursuant to this Section 5.13(b) or credit such payment against Eyetech's obligations with respect to future Orders. (c) Replacement of Product Rejected for Non-Compliance with Product Warranty. If requested by Eyetech, Gilead shall replace any Product rejected pursuant to Section 5.13(b) as soon as practicable and in no case later than forty-five (45) days following receipt of Eyetech's notice of rejection with respect thereto, and Eyetech will pay the applicable Price therefor in accordance with this Agreement. In addition to any other rights or remedies of Eyetech hereunder, Eyetech shall have the right to set off any refund relating to paid invoices for any rejected shipped Product for which it has been finally determined pursuant to Section 5.10 that such rejection was proper against invoices otherwise due or that become due to Gilead. (d) The provisions of this Section 5.13 shall survive termination or expiration of this Agreement with respect to shipments of Product Manufactured by Gilead that are delivered to or sold by Eyetech subsequent to the termination or expiration of this Agreement; provided, that (i) for any Product rejected subsequent to the termination or expiration of this Agreement, Eyetech, in lieu of having Gilead replace such rejected and/or missing quantities of Product, may elect in its sole discretion to have Gilead reimburse Eyetech for the last applicable Price for the quantity of Product to be replaced (including any reasonable applicable freight charges) by Eyetech or a 21 third party selected by Eyetech, and (ii) for any Product rejected subsequent to the termination or expiration of this Agreement, Eyetech shall permit Gilead to replace such rejected and/or missing quantities of Product unless Gilead no longer has the capabilities to do so and shall have the right to require Gilead to reimburse Eyetech for the last applicable Price for the quantity of Product to be replaced (including any reasonable applicable freight charges) by Eyetech or a third party selected by Eyetech if Gilead does not have such capabilities or if Gilead fails to replace such rejected and/or missing quantities in accordance with Section 5.13(c). 5.14. Customer Complaints and Inquiries. Eyetech or Gilead, as the case may be, shall give the other party written notice within forty-eight (48) hours of initial receipt of any information it receives regarding the safety of the Product, including any confirmed or unconfirmed information on adverse events possibly associated with the use of the Product; provided that Eyetech's obligation to provide Gilead with such notices shall be limited to information received by Eyetech that Eyetech determines relates to, or is reasonably likely to relate to, the Specifications or Gilead's Manufacturing activities under this Agreement. Eyetech or Gilead, as the case may be, shall notify the other party of any complaint or investigation relating to the Product promptly upon receipt; provided, that, all complaints concerning suspected or actual Product tampering, contamination or mix-up (e.g., wrong ingredients) shall be delivered within twenty-four (24) hours of receipt. Gilead shall provide all assistance reasonably requested by Eyetech in investigating customer complaints regarding the Product (including testing of the Product in accordance with Eyetech's specifications) that, in Eyetech's reasonable opinion, caused by the Manufacturing of such Product. Such testing shall be at Eyetech's expense unless it is finally determined pursuant to Section 5.10 that such Product did not comply with the Product Warranty. Eyetech shall be responsible for responding to all customers' inquiries and/or complaints relating to the Product and the recordkeeping relating thereto. Gilead and Eyetech shall also comply with the requirements set forth in the Quality Agreement relating to the investigation of customer complaints. Eyetech and Gilead shall each provide the other with copies of any annual reports relating to the Product that it is required to submit to the FDA; provided that each party shall be entitled to redact from such copies confidential information that is not reasonably related to the other party's ongoing performance of its activities with respect to the Product. 5.15. Government Inspections, Seizures and Recalls. (a) If the FDA or any other Governmental Authority conducts an inspection at Gilead's Facility pertaining to the Product, seizes any Product and/or its materials, requests a Recall of any Product, or otherwise notifies Gilead of any violation or potential violation of any Applicable Law, Eyetech shall be notified immediately, and Gilead shall take actions as may be required under the Specifications or otherwise as may be commercially reasonable way to resolve the issue to both parties' reasonable satisfaction. (b) As applicable, Gilead shall promptly send any reports relating to such inspections, Recalls or violations or potential violations of Applicable Law to Eyetech. In the event that any such Governmental Authority requests, but does not seize, the Product in connection with any 22 such inspection, Gilead, as the case may be (i) shall promptly notify Eyetech of such request, (ii) if possible, shall satisfy such request only after receiving Eyetech's approval (not to be unreasonably withheld, conditioned or delayed), (iii) shall follow any reasonable procedures instructed by Eyetech in responding to such request and (iv) shall promptly send any samples of the Product requested by the authority to Eyetech. In any case, Gilead will comply with all Applicable Laws. (c) If the Product supplied by Gilead to Eyetech does not comply with the Product Warranty, other than non-compliance due to API that was non-compliant with the applicable specifications when received by Gilead in a manner that could not reasonably be detected by the required testing, Gilead shall be responsible for costs reasonably required to effect the Recall of any affected Product or other reasonably necessary corrective measures taken with respect thereto. Gilead shall be responsible for pursuing all resolutions with the applicable supplier of non-complying Product Materials. 5.16. Quality Agreement. The parties agree to be bound by the Quality Agreement. In the event there is a discrepancy between the provisions of the Quality Agreement and the provisions of this Agreement, the provisions of the Quality Agreement shall control with respect to terms governing the quality of the Product, and the provisions of this Agreement shall control with respect to all other terms; provided that nothing in the Quality Agreement shall limit Gilead's representations, warranties or obligations under this Agreement or Eyetech's right to approve changes to the Specifications, the suppliers of Product Materials or other matters set forth in this Agreement over which Eyetech has an approval right. The parties may amend the Quality Agreement as set forth therein. 5.17. Manufacturing Committee. (a) The parties and the Sublicensee shall form a committee as of the Effective Date to address Manufacturing issues relating to the Product (the "Manufacturing Committee"). Gilead, Eyetech and the Sublicensee shall each designate two (2) representatives with appropriate expertise to serve as members of the Manufacturing Committee and shall list those initial representatives Attachment 3. Either party or the Sublicensee may replace its representatives serving on the Manufacturing Committee from time to time by written notice to the other party(-ies) and/or the Sublicensee specifying the prior representative(s) to be replaced and the replacement(s) therefor. Gilead and Eyetech shall select one (1) such person each to serve as joint chairpersons of the Manufacturing Committee. The joint chairpersons of the Manufacturing Committee shall be responsible for calling meetings, preparing and circulating an agenda in advance of each meeting, and preparing and issuing minutes of each such meeting within thirty (30) days thereafter. (b) The Manufacturing Committee shall hold meetings at such times and places as it elects to do so, but in no event shall it hold meetings less frequently than once every calendar quarter. Meetings may be held by audio or video teleconference with the consent of each party, provided that at least one (1) meeting per year shall be held in person unless agreed otherwise 23 between the parties. Each party shall be responsible for all of its own expenses of participating in the Manufacturing Committee. Meetings shall be effective only if at least one (1) representative of each party is present or participating. (c) Except as otherwise expressly provided, the role of the Manufacturing Committee shall be advisory, with the goal of serving as a forum for the sharing of information and for the purpose of preventing, or informally resolving (if they are able to facilitate mutual agreement between the parties), disputes between the parties. The Manufacturing Committee shall not have any power to amend, modify or waive compliance with this Agreement. The Manufacturing Committee shall operate as to matters within its jurisdiction by consensus. (d) The Manufacturing Committee shall: (i) evaluate factors such as Manufacturing risk and Eyetech's needs for supply of Product from Gilead based on Eyetech's Planning Forecast; (ii) plan and implement appropriate and mutually agreeable changes to Gilead's Manufacturing capacity as determined pursuant to Section 2.3(b), which may include arranging for and qualifying new equipment for the Manufacture of the Product or to allocate its use of such capacity, review and discuss opportunities for the parties to identify and implement Improvements; (iii) determine how the parties will implement the building and equipment improvement plan and budget attached to this Agreement as Attachment 2-A; provided that the Manufacturing Committee shall not have the authority to require Eyetech, and Eyetech shall have no obligation, to fund any amount in excess of the total budget amount set forth in Attachment 2-A with respect to the expansions of the Facility and the acquisition of additional equipment contemplated in Section 2.2(b); (iv) review and discuss issues arising from the transfer of any Manufacturing-related technology pursuant to Section 2.9; (v) discuss and coordinate as appropriate and mutually agreed the use of Eyetech and Sublicensee expertise and resources with respect to providing support for technical and operational problem resolution and assurance of Product supply in accordance with this Agreement; (vi) discuss any performance issues (e.g., failure to supply), to enable mutually agreeable courses of action to remedy any such issues; (vii) develop and maintain a mutually agreed to set of manufacturing metrics/yield provisions; (viii) establish the Average Yield and allocate cost savings pursuant to Section 4.1(b); 24 (ix) in the event of an occurrence as described in Section 2.9, clauses (i) or (ii), use good faith efforts to resolve any such supply failure for no less than forty-five (45) days; and (x) perform such other functions as mutually agreed in writing by the parties. 5.18. Audits and Inspections. Eyetech shall be permitted, on an annual basis, during regular business hours and on reasonable notice, to physically inspect all Facilities and Gilead shall use commercially reasonable efforts to enable Eyetech to inspect the facilities of all suppliers of Product Materials to Gilead on the same basis. Notwithstanding the foregoing, Eyetech shall have the right to conduct audits of the Facilities and, to extent that Gilead can arrange using commercially reasonable efforts, the facilities of all suppliers of Product Materials to Gilead at any time, when requested, as a reasonable response to an FDA or other regulatory agency audit notice or regulatory agency inquiry regarding a Product, an unresolved deviation in Manufacture of Product by Gilead, customer complaints or adverse events regarding a Product or any other specific FDA request . In addition, Eyetech and/or the Sublicensee shall be entitled to have up to three of their or its representatives present on a daily basis (or on such other observation schedule as the parties may agree) in the Facilities to observe Gilead's Manufacturing operations and Gilead shall provide such representative(s) with reasonable access to the Facilities for such purpose. 5.19. Diversion Issues. Gilead agrees to immediately notify Eyetech if at any time it believes that any Product has been lost or stolen from the Facility, or any quantities of Product that have been rendered unsaleable while in Gilead's possession. 5.20 Notice of Material Events. Gilead and Eyetech each hereby agrees to promptly notify the other party of any actual or anticipated events that have or may be reasonably expected to have a material effect on any Product or on Gilead's ability to Manufacture the Product in accordance with the provisions set forth herein, including any labor difficulties, strikes, shortages in materials, plant closings, interruptions in activity, interruptions or delay in API supply or availability, and the like. 5.21. Survival. The obligations of Gilead under Sections 5.10, 5.11, 5.12, 5.13, 5.14, 5.15, 5.16 and 5.18 of this Agreement shall survive the expiration or termination of this Agreement until one (1) year after the expiration date of the last batch of Product Manufactured hereunder. 25 SECTION 6. REPRESENTATIONS AND WARRANTIES; DISCLAIMERS 6.1. Representations and Warranties of Gilead. (a) Gilead hereby represents and warrants to Eyetech that: (i) The Product when delivered by Gilead to Eyetech under this Agreement: (A) shall be of the quality specified in, and shall conform with, the Specifications, the Quality Agreement, the Product Supplement and all Applicable Laws, and shall be Manufactured and delivered in conformity with the Specifications, the Quality Agreement, the Product Supplement and Applicable Laws (except in each preceding case to the extent that lack of quality or non-conformity is a result of Gilead's compliance with Eyetech's instructions), and shall not contain any material that while in Gilead's control has not been used, handled or stored in accordance with the Specifications, any other agreed upon quality assurance requirements of Eyetech or the supplier of such material, the Quality Agreement, the Product Supplement and cGMP (except in each preceding case to the extent that such material is introduced or used as a result of Gilead's compliance with Eyetech's instructions); and (B) shall, at the time delivered, have a remaining shelf-life of not less than [**]% of initial shelf life. (Sections (a)(i)(A) and (B) collectively, the "Product Warranty"). (ii) Gilead does not employ as of the Effective Date and will not employ during the Term of this Agreement any debarred persons pursuant to sections 306(a) and (b) of the FDA Act (21 U.S.C. 335(a) and (b)) or any comparable Law who will participate in the Manufacture of Product; (iii) The execution, delivery and performance of this Agreement by Gilead does not and will not violate any agreement or instrument to which Gilead is a party; (iv) Gilead will perform its obligations under this Agreement in accordance with Applicable Laws; and (v) Gilead will not use any information or technology which to its knowledge has been misappropriated from any third party or which to its knowledge will infringe any patents of any third party; provided however, that such representation and warranty does not cover infringement of any third party patents that necessarily results from the Manufacture, use, import, offer for sale or sale of Product or the utilization or satisfaction of the Specifications. (b) Gilead represents to Eyetech as of the Effective Date that: 26 (i) it is a corporation duly organized, validly existing and in good standing under the laws of Delaware; (ii) it has power and authority to conduct its business as currently being conducted and as contemplated herein; and (iii) it has power and authority to make, deliver and perform its obligations under this Agreement and has taken all necessary action to authorize the execution, delivery and performance of this Agreement. No consent of authorization of, filing with or other act by or in respect of, any Governmental Authority or any other Person is or will be required in respect of Gilead in connection with the execution, delivery, performance, validity or enforceability of this Agreement. This Agreement has been duly executed and delivered on behalf of Gilead. This Agreement constitutes the legal, valid and binding obligation of Gilead enforceable against Gilead in accordance with its terms. 6.2 Representations and Warranties of Eyetech. (a) Eyetech represents and warrants to Gilead that: (i) it has and will have sufficient right, title and interest in and to the Eyetech Product Intellectual Property to grant a license to the Eyetech Product Intellectual Property pursuant to Section 8.4 of this Agreement; (ii) it, its Affiliates, the Sublicensee and their respective sublicensees and distributors will conduct the further manufacturing, packaging, labeling, testing, use, handling, storage, transport, disposition, marketing, distribution, and commercialization of Product following delivery by Gilead under this Agreement in accordance with all Applicable Laws; (iii) it has not provided and will not provide Gilead with any information or technology that, to its knowledge has been misappropriated from any third party and, the Manufacture of Product by Gilead for supply to Eyetech in compliance with the Specifications, which to its knowledge will not infringe any patents of any third party; (iv) the execution, delivery and performance of this Agreement by Eyetech will not violate any agreement or instrument to which Eyetech is a party; and (v) Eyetech will perform its obligations under this Agreement in compliance with all applicable Laws. (b) Eyetech represents that as of the Effective Date: 27 (i) it is not subject to any legal, regulatory, contractual, or other restrictions which might enable another person or entity to claim any rights in or to the Product or any Information; and (ii) neither it nor its Affiliates nor, to its knowledge, the Sublicensee has received or is otherwise aware of any actual or threatened Claim or Proceeding, the basis of which may be that the manufacture, use, import, offer for sale or sale of Product would infringe or misappropriate any Intellectual Property of any third party except as follows: [**] (iii) it is a corporation duly organized, validly existing and in good standing under the laws of Delaware; (iv) it has power and authority to conduct its business as currently being conducted and as contemplated herein; and (v) it has power and authority to make, deliver and perform its obligations under this Agreement and has taken all necessary action to authorize the execution, delivery and performance of this Agreement. No consent or authorization of, filing with or other act by or in respect of, any Governmental Authority or any other Person is or will be required in respect of Eyetech in connection with the execution, delivery, performance, validity or enforceability of this Agreement; provided that Gilead acknowledges that the Product has not yet received Regulatory Approval in the Territory. This Agreement has been duly executed and delivered on behalf of Eyetech. This Agreement constitutes the legal, valid and binding obligation of Eyetech enforceable against Eyetech in accordance with its terms 6.3 No Other Warranties. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES IN SECTION 6.1 AND 6.2, GILEAD AND EYETECH MAKE NO OTHER WARRANTIES, EXPRESS OR IMPLIED. ALL OTHER WARRANTIES, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, INCLUDING WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT, ARE HEREBY EXPRESSLY DISCLAIMED BY GILEAD AND EYETECH. 6.4. Survival. The provisions of this Section 6 shall survive termination or expiration of this Agreement. SECTION 7. ENVIRONMENTAL REPRESENTATIONS, WARRANTIES AND COVENANTS. 7.1. Compliance with Environmental Laws. 28 Gilead shall perform all Manufacture of Product in material compliance with all applicable Environmental Laws and shall be solely responsible for all Environmental Losses occurring as a result of its Manufacture of Product prior to delivery thereof to Eyetech. 7.2. Permits, Licenses and Authorization. Gilead shall be solely responsible for obtaining, and shall obtain, all necessary environmental or other licenses, registrations, certificates, approvals, authorizations or permits required under Environmental Law, whether original documents or modifications to existing documents, which are necessary to perform Manufacture of the Product as provided in this Agreement and shall bear all costs and expenses associated therewith. Gilead shall provide copies thereof to Eyetech upon request by Eyetech and shall operate in compliance therewith. Gilead shall provide Eyetech with immediate verbal notice, confirmed in writing within twenty-four (24) hours, upon learning of revocation or modification of such documents, or with regard to any other event or regulatory action or involvement such as an order or notice, which in any way materially impacts Gilead's ability to comply with its obligations to supply Product to Eyetech in compliance with this Agreement. 7.3. Hazardous Materials and Waste. The generation, collection, storage, handling, transportation, movement, and Spill of all Hazardous Materials and Waste, as applicable, shall be the sole responsibility of Gilead at it sole cost and expense. 7.4. Generation of Hazardous Wastes. Without limiting other legally applicable requirements, Gilead shall prepare, execute and maintain, as the generator of Hazardous Waste, all registrations, notices, shipping documents and Hazardous Waste manifests required under Environmental Law for Hazardous Waste and in accordance therewith. 7.5. Diversion Issues. Gilead shall be responsible for developing and implementing all procedures necessary to prevent the diversion of Product from the waste stream in the course of Manufacture, including the rendering of the Product unsaleable. 7.6. Health and Safety Procedure. Gilead shall be solely responsible for implementing and maintaining health and safety procedures for the Manufacture of the Product Materials and Product as provided for herein and for any testing and handling of Hazardous Materials and Waste as provided herein. Such procedures shall comply with all applicable Environmental Laws. Other than serving in an advisory role as 29 the Product expert, Eyetech shall have no responsibility for developing, implementing or overseeing Gilead's health and safety program. 7.7. Training. Gilead shall educate and train all affected employees and contractors who participate in the Manufacture of the Product regarding the potential hazards associated with the generation and handling of the Hazardous Materials, Waste, analyzing and handling of the Product, API and Product Materials, and on the proper use of engineering controls, process equipment and appropriate personal protective equipment. Eyetech will provide to Gilead all information within its control regarding the potential or actual hazards associated with the handling of any Hazardous Material or Waste, or on the Manufacture of the Product, or on the proper use of engineering controls, process equipment and appropriate personal protective equipment. Beyond such provision of information, Eyetech shall have no responsibility for educating, training or ensuring knowledge of Gilead's employees or contractors regarding the potential or actual hazards associated with the handling of any Hazardous Material or Waste, or on the Manufacture of the Product, or on the proper use of engineering controls, process equipment and appropriate personal protective equipment. 7.8. Survival. The obligations of Gilead under this Section 7 shall survive termination or expiration of this Agreement. SECTION 8. OWNERSHIP; TRADEMARKS; PROPRIETARY INFORMATION. 8.1. Eyetech's Ownership of Intellectual Property; Eyetech Technology and Information. (a) Right, title and interest in and to any creative ideas, proprietary information, developments, inventions, or improvements or modifications to the Product or the Intellectual Property associated with the Product that are invented or otherwise developed under this Agreement by Eyetech or Gilead, or any of their respective Affiliates or agents, either jointly or severally, and whether or not patentable ("Improvements") shall be governed by this Section 8.1(a). Gilead agrees to disclose to Eyetech all Improvements developed by Gilead or its Affiliates or agents and to receive the approval of Eyetech prior to implementing any Improvements in the Manufacture of Product. (i) Eyetech shall own, and Gilead hereby assigns (or shall cause its Affiliate or agent to assign) to Eyetech, all right, title and interest in and to all Improvements that are useful solely for Manufacturing of Products, i.e. not useful in or common to manufacturing, packaging, filling, testing or other procedures for other products, including those currently manufactured by Gilead ("Product Improvements"). (ii) All other Improvements other than Product Improvements ("Manufacturing Improvements") shall be the exclusive property of Eyetech and shall be 30 held in confidence by Gilead and assigned by Gilead (or by Gilead's Affiliate or agent) to Eyetech for Eyetech's benefit in the development and/or the operation of Manufacturing processes with respect to the Product, provided, however, that Eyetech hereby grants Gilead a nonexclusive, worldwide, paid-up, perpetual, irrevocable license under all Intellectual Property covering the Manufacturing Improvements developed by Gilead or its Affiliates or agents to use and practice such Manufacturing Improvements for the manufacture of Gilead's and third parties' products at any location, with the right to sublicense contract manufacturers for such manufacture of Gilead products, and Gilead shall have the right to disclose such Manufacturing Improvements to sublicensees under such license subject to obligations of confidentiality at least as restrictive as those of Section 12 for purposes of practicing its license rights. (b) Any trademarks, trade names, brand names, patents, slogans, logos, copyrights, trade dress, know-how and goodwill associated with the Product shall be the sole and exclusive property of Eyetech. Gilead shall not have any right or license to use any such rights at any time before, during or after the Term of this Agreement, except as necessary for the Manufacture and supply of Product for Eyetech hereunder. (c) Gilead agrees to execute all assignments and other documents and take all further actions reasonably requested by Eyetech to give effect to the provisions of this Section 8.1. 8.2. Ownership of Other Property. It is agreed that Eyetech, its Affiliates and the Sublicensee are the sole owners of any and all tools, specifications, blueprints and designs supplied or paid for by them, and Gilead shall not use, transfer, loan or publicize any of the above except as necessary for its performance under this Agreement. 8.3. Limited Right to Use. Nothing set forth in this Agreement shall be construed to grant to either party any title, right or interest in or to any Intellectual Property Controlled by the other party or any of its Affiliates or the Sublicensee, except as expressly set forth in Sections 8.1, 8.2 or 8.4. 8.4 License. Eyetech hereby grants to Gilead a non-exclusive paid-up non-transferable non-assignable license under the Eyetech Product Intellectual Property to Manufacture Product in the Territory in accordance with this Agreement, solely for supply to Eyetech. Gilead shall not practice or use the Eyetech Product Intellectual Property for any purpose other than performance of its obligations under this Agreement. 31 8.5. Survival. The provisions of Sections 8.1, 8.2, and 8.3 shall survive the expiration or termination of this Agreement. SECTION 9. INDEMNIFICATION; LIMITATIONS OF LIABILITY. 9.1. Indemnification of Eyetech. Gilead shall indemnify, defend and hold Eyetech, its Affiliates, the Sublicensee and their respective officers, directors, employees and agents (each, an "Eyetech Indemnified Party") harmless from and against any and all Losses suffered, incurred or sustained by any Eyetech Indemnified Party by reason of any Claim or Proceeding to the extent arising out of or resulting from (a) a breach of Gilead's representations, warranties and covenants in Section 6.1; (b) any actual or alleged injury to Person or property or death occurring to any employees, subcontractors, agents of Gilead, or any individuals on the premises of Gilead (other than injuries due to API defects existing upon receipt by Gilead); (c) product liability arising out of or resulting from failure by Gilead to Manufacture the Product in accordance with the Specifications; or (d) any negligent act or omission on the part of any Gilead Indemnified Party. Notwithstanding the foregoing, it is understood and agreed that Gilead shall not have an obligation of defense or indemnity for Claims or Proceedings or be liable for Losses to the extent that Eyetech has an obligation of defense or indemnity for Claims or Proceedings or is liable for Losses pursuant to Section 9.2. Except with respect to Losses arising out of or resulting from third party claims or Gilead's gross negligence or intentional misconduct, in no event shall Gilead's liability under this Section 9.1 exceed $[**] per occurrence 9.2. Eyetech's Indemnification of Gilead. Eyetech shall indemnify and hold Gilead, its Affiliates and its respective officers, directors, employees and agents (each, a "Gilead Indemnified Party") harmless from and against any and all Losses suffered, incurred or sustained by any Gilead Indemnified Party by reason of any Claim or Proceeding to the extent arising out of or resulting from (a) any breach of Eyetech's representations or warranties in Section 6.2; (b) any manufacture, packaging, labeling, testing, use, handling, storage, transport, disposition, marketing, distribution, and commercialization of API (prior to receipt by Gilead) or Products (following delivery by Gilead) unless such Claim or Proceeding arises out of or results from Gilead delivering Product which does not conform with the Specifications and such failure results from Gilead's failure to deliver such Product in conformance with the Product Warranty and not from any defect in the API existing prior to receipt thereof by Gilead; (c) any actual or alleged injury to Person or property or death occurring to any employees, subcontractors, agents of Eyetech, or any individuals on the premises of Eyetech; or (d) any negligent act or omission on the part of any Eyetech Indemnified Party. Notwithstanding the foregoing, it is understood and agreed that Eyetech shall not have an obligation of defense or indemnity for Claims or Proceedings or be liable for Losses to the extent that Gilead has an obligation of defense or indemnity for Claims or Proceedings or is liable for Losses pursuant to Section 9.1. 32 9.3. Assertion of Claim. The indemnification provisions set forth in Sections 9.1 and 9.2 above are conditioned upon the party claiming indemnification (i) promptly furnishing the other party with written notice of each Claim or Proceeding by reason of which there may be a Loss for which indemnity will be claimed, (ii) permitting the indemnifying party to assume the defense and/or settlement of such Claim or Proceeding at its sole cost and expense, and (iii) cooperating at the other party's reasonable request and expense in such defense and/or settlement. The indemnified party may hire counsel of its choice at its own cost and participate in the defense. In no event shall either party institute, settle or otherwise resolve any Claim or Proceeding that involves other than payment of monetary damages without the prior written consent of the other party, not to be unreasonably withheld, delayed or conditioned. 9.4 Limitation of Liability. Except as expressly provided in this Agreement, and except for breach of confidentiality obligations, neither party shall be liable to the other party (and Gilead shall not be liable to the Sublicensee or any Affiliate of Eyetech or the Sublicensee) for lost profits or for any indirect, incidental, consequential, special, punitive or exemplary damages of the other party (or of the Sublicensee or any Affiliate of Eyetech or the Sublicensee) pursuant to or relating to this Agreement, however caused, under any theory of liability. It is expressly understood and agreed that the obligations of either party under Sections 9.1 and 9.2 of this Agreement to indemnify for Losses shall not be limited by this Section 9.4. 9.5. Survival. The provisions of this Section 9 shall survive termination or expiration of this Agreement. SECTION 10. INSURANCE. 10.1. Insurance. Each party shall obtain and keep in force throughout the Term of this Agreement and for a period of three (3) years from the date of the last delivery of Product to Eyetech hereunder, policies of insurance from carriers reasonably acceptable to the other party providing coverage as specified in Section 10.2. Each party shall require its subcontractors (to the extent approved hereunder) or, in the case of Eyetech, its Sublicensee, other sublicensees and distributors, to provide the coverage as specified in Section 10.2, and any deficiencies in the coverage or policy limits of said subcontractors, sublicensees or distributors will be the sole responsibility of such party. The provisions of this Section 10.1 shall survive the expiration or termination of this Agreement. 10.2 Coverage. 33 Each party shall acquire and maintain at its sole cost and expense (i) Statutory Worker's Compensation Insurance and Employer's Liability Insurance; and (ii) Comprehensive General Liability Insurance, including Contract Liability, Product Liability, Bodily Injury and Property Damage Insurance (with a Broad Form Vendor's Endorsement naming the other party, its subsidiaries and affiliated companies and the officers, directors, employees and agents thereof, as well as its authorized distributors and customers, as additional insureds) with a combined single limit of not less than $[**]. Each party shall require its subcontractors, to the extent approved hereunder, and, in the case of Eyetech, its Sublicensee, to provide coverages with a combined single limit of not less than $1,000,000. 10.3. Certificates of Insurance; Maintenance of Coverage. Each party shall submit a certificate of such insurance (which shall include such information as set forth in Section 10.2) to the other party for its approval as of the Effective Date. Any failure of a party to furnish such certificate within thirty (30) days of the Effective Date shall be a material breach of this Agreement. SECTION 11. TITLE, RISK OF LOSS AND REIMBURSEMENT. 11.1. Testing. Gilead shall undertake testing of each shipment of API if required by the Specifications. If the API does not meet the specifications, Gilead will promptly inform Eyetech and Gilead shall be excused from its obligation to supply Product to Eyetech until sufficient quantities of API meeting the Specifications are delivered to Gilead. Upon such delivery of replacement API, Gilead will use commercially reasonable efforts to supply Product to Eyetech within ninety (90) days taking into account Gilead's firm plans and commitments for manufacturing its own and third parties' products at the Facility. To the extent Gilead has existing stock of API which conforms to the approved Specifications and is reasonably sufficient for Manufacture of one or more whole batches of Product, nothing in the forgoing shall relieve Gilead of its obligation to supply such batch(es) of Product deriving from such conforming API, provided, however, that Gilead shall not be in breach of this Agreement for failure to supply future batches of Product if such failure results from Eyetech's or Eyetech's vendor's failure to replenish within an appropriate time Gilead's stock of API conforming to the approved Specifications. 11.2. Title and Risk of Loss. (a) Title to the API supplied by Eyetech shall remain with Eyetech; however, risk of loss for API inventory levels agreed pursuant to Section 5.4(a) shall pass to Gilead at the time API arrives at Gilead's Facilities; provided that Gilead's liability for loss of API shall be subject to the limitation set forth in Section 11.3(b). Gilead shall not use API supplied by Eyetech for any purposes other than those related to the Manufacture of the Product for supply to Eyetech pursuant hereto. 34 (b) The risk of loss or damage to API during the storage thereof by Gilead shall be solely with Gilead for inventory levels thereof agreed pursuant to Section 5.4(a). In the event of such loss or damage, Gilead will purchase from Eyetech, and Eyetech will sell to Gilead any API required for replacement thereof at a price equivalent to Eyetech's replacement costs. 11.3 Reimbursement for Loss of API; Non-Complying Product. (a) Subject to Section 11.3(b), Gilead will reimburse Eyetech for Eyetech's out of pocket costs for API per batch (pro-rated over the usable portion of the batch if applicable) for any batch that does not meet Specifications prior to or as of delivery by Gilead and therefore can not be released, and Gilead will be responsible for all of Gilead's costs of Manufacture of such batch (pro-rated over the usable portion of the batch if applicable), in each case to the extent that such failure to meet Specifications was caused by: (A) a breach of this Agreement by Gilead; (B) the negligence of Gilead, or (C) willful misconduct of Gilead. (b) Gilead shall not be liable or responsible for any reimbursement of API costs or for any costs of Manufacture pursuant to Section 11.3(a) for any batch or partial batch quantity that does not meet Specifications as of delivery by Gilead in excess of [**]. Disputes between the parties as to whether all or any part of a shipment rejected by Eyetech conforms with the Product Specifications shall be resolved pursuant to Sections 5.10 and 5.13. SECTION 12. CONFIDENTIAL INFORMATION. 12.1 Confidentiality of Information. In performing the obligations under this Agreement, each party shall come in contact with certain confidential and proprietary information of the other party that should reasonably be believed by the receiving party to be confidential and proprietary to the other party ("Information"). Each party agrees that it will (and will cause each of its representatives, employees and agents to): (a) use such Information obtained from the other party hereunder only in connection with the activities to be undertaken by each party as contemplated and permitted hereunder; (b) use its commercially reasonable efforts (but in no event lesser efforts than it uses to so safeguard its own confidential and proprietary information) to restrict disclosure of such Information within its own organization to those of its Affiliates, the Sublicensee (in the case of Eyetech), employees, independent contractors, and legal and legal and financial advisors who have a reasonable need to know for purposes of enabling such party to perform its obligations under this Agreement and who are subject to binding obligations of confidentiality at least as protective as those of this Section 12; and 35 (c) not divulge to third parties, without the prior written consent of the other party, any Information obtained from the other party hereunder. 12.2 Exceptions. The confidentiality and limited use obligations of Section 12.1 shall not apply if and to the extent that: (a) the Information is known to the receiving party prior to obtaining the same from the disclosing party, as demonstrated by the receiving party's written records; (b) the Information is, at the time of disclosure, in the public domain, or comes into the public domain without any fault of the receiving party (or, where the receiving party is Eyetech, its Affiliates or the Sublicensee); (c) the Information is obtained by the receiving party from a third party who is not obligated to keep the Information confidential; (d) the Information is independently developed by the receiving party and/or by any of its Affiliates (or, where the receiving party is Eyetech, by the Sublicensee), as demonstrated by the receiving party's written records; or (e) the Information is disclosed pursuant to court order or as otherwise required by law; provided, however, that: (i) the receiving party (A) gives the disclosing party prompt written notice of such required disclosure and (B) assists the disclosing party in its reasonable efforts to prevent or limit such disclosure; and (ii) any Information disclosed pursuant to this Section 12.2.(e) shall otherwise remain Information for the purposes of this Agreement. 12.3 Return or Destruction. Upon expiration or termination of this Agreement, each party shall return to the other party, or by mutual agreement, destroy all Information of the other party and all copies, extracts, and summaries thereof, provided that it may retain one (1) copy thereof in its legal archives solely for the purpose of ensuring compliance with its surviving obligations under this Section 12. 12.4 Terms of Agreement. Neither party shall disclose or refer to the existence or terms of this Agreement in any public statements, whether oral or written, but not limited to, annual reports or shareholder reports, statements to other customers or prospective customers or other communications, without the other party's prior written consent except to the extent that such party, in its reasonable opinion, determines that such disclosure is required by law. Nothing in this Section 12.4 shall restrict a party from disclosing this Agreement to its Affiliates or, in the case of Eyetech, to the Sublicensee. 36 12.5 Survival. The provisions of this Section 12 shall survive the termination or expiration of this Agreement for a period of five (5) years. SECTION 13. TERM; TERMINATION. 13.1. Initial Term; Term. Unless terminated in accordance with the provisions of this Agreement, the initial term (the "Initial Term") of this Agreement shall commence as of the Effective Date and shall continue until the third anniversary of the first Commercial Launch of Product. Not less than 24 months prior to the expiration of the Initial Term the parties shall discuss extending this Agreement for a further period of twelve months. Thereafter the Agreement may be extended by further twelve months periods upon mutual agreement of the parties reached not less than 24 months prior to the expiration of any such extended term. The Initial Term and all renewals thereof collectively shall be considered the "Term" of this Agreement. 13.2. Termination by Eyetech. This Agreement may be terminated by Eyetech: (a) immediately upon written notice to Gilead, upon the bankruptcy (voluntary or involuntary), insolvency or placing of the business of Gilead in the hands of a receiver; or (b) if (i) an occurrence described in Section 2.9(b) occurs, (ii) the Manufacturing Committee has used good faith efforts to resolve any such supply failure for no less than forty-five (45) days and (iii) after such forty-five (45) day period, the Manufacturing Committee shall have failed to resolve such occurrence; or (c) subject to Section 13.2(d), by Eyetech upon a material breach of this Agreement by Gilead if Gilead fails to cure such breach within thirty (30) days after receipt of written notice thereof; or (d) upon written notice to Gilead given within sixty (60) days of the relevant event, with immediate effect, if at any time during the Term, Gilead acquires, is acquired by or becomes an Affiliate of a competitor of Eyetech, where a competitor is a manufacturer, supplier and/or distributor of products competitive with the Product; or (e) after three (3) years, upon at least six (6) months prior written notice to Gilead, in the event that the Product is the subject of a consummated transaction for the sale by Eyetech and Sublicensee to a third party of substantially all Product rights in the Territory or the Product is withdrawn from the market in the Territory by Eyetech for any reason, provided that Eyetech shall comply with Section 2.4(b); or 37 (f) upon prompt written notice to Gilead upon any commitment by Eyetech not to proceed with seeking Regulatory Approval for the Product in the Territory or with commercialization of the Product in the Territory, as evidenced by (i) formal withdrawal of all New Drug Applications (and equivalents thereof) for the Territory; (ii) termination of all commercial launch planning and preparation activities for the Territory; (iii) withdrawal of the Product from the market in the Territory, or (iv) any other action by Eyetech that reasonably and clearly evidences such a commitment; or (g) upon the events giving rise to a right of termination pursuant to Section 14.1. 13.3 Termination by Gilead. This Agreement may be terminated by Gilead: (a) upon a material breach of this Agreement by Eyetech if Eyetech fails to cure such breach within thirty (30) days after receipt of written notice thereof; or (b) upon the events giving rise to a right of termination pursuant to Section 14.1. 13.4. Effect of Termination. (a) Expiration or termination of this Agreement shall not affect rights and obligations of the parties that accrue prior thereto, including that termination of this Agreement shall not affect any obligation to pay money due hereunder, indemnify, or maintain confidentiality, which either party hereto may have incurred during the Term hereof. Termination pursuant to this Section 13 shall be in addition to, and not in place of, a party's other rights and causes of action which were in existence prior to such termination. (b) Within a reasonable time after Eyetech gives notice of termination pursuant to the provisions of Sections 13.2(b), (c), (d), (e) or (f), Eyetech agrees to have good faith discussions with Gilead regarding mitigation of unrecoverable losses resulting from amounts paid toward the purchase price of any product acquired specifically for Manufacture of Product. (c) Unless this Agreement has terminated pursuant to Sections 13.2(d) or 13.3(b), Gilead will fulfill all Orders outstanding as of the effective date of expiration or termination of this Agreement in accordance with the terms of this Agreement. If this Agreement terminates pursuant to Sections 13.2(d) or 13.3(e), (i) Gilead shall be relieved from any obligation to supply any Order for Product having a delivery date after the effective date of termination; (ii) Gilead shall use commercially reasonable efforts to reallocate its personnel, equipment and resources to other projects but to the extent it does not achieve such reallocation, Eyetech shall be liable for the costs thereof; and (iii) Eyetech shall pay Gilead for any Orders placed by Eyetech that have delivery dates after the effective date of termination a percentage of the Price appropriate to fairly compensate Gilead for lost profits on any such Orders. 13.5. Return of Materials, etc. Supplied by Eyetech. 38 (a) Upon the effective date of expiration or termination of this Agreement for any reason whatsoever, Gilead shall promptly deliver to Eyetech all Product Materials, bulk packaging materials and labels, and equipment provided by, or purchased on behalf of, Eyetech. Eyetech will promptly reimburse Gilead for Gilead's out-of-pocket costs for any such items purchased by Gilead for use in Manufacture of Product. Gilead will remove all such equipment from the Facility and have such equipment on its dock ready for Eyetech to transport. Gilead shall maintain ownership of all other equipment utilized in connection herewith. All delivery, removal and transportation costs incurred in connection with this Section 13.5 shall be borne by Eyetech. (b) Upon the effective date of expiration or termination of this Agreement for any reason whatsoever, Gilead shall also deliver to Eyetech all Product Manufactured hereunder and in its control and shall invoice Eyetech in accordance with the terms of Section 4.3. Any Product quarantined and at the time of expiration or termination of this Agreement shall be disposed of or destroyed in accordance with Eyetech's instructions. Subsequent to the expiration or termination of this Agreement, the parties shall continue to be responsible for rejected and non-complying Product and Product Materials in accordance with the terms of Sections 5.9 and 5.10. SECTION 14. FORCE MAJEURE; COMPETING PRODUCT. 14.1. Force Majeure. Performance under this Agreement (other than payments required to be made by any party) shall be excused to the extent prevented or delayed by fire, flood, explosion, widespread product tampering by third parties, governmental acts or regulations, war, any act of God, or by any other similar circumstances of any character reasonably beyond the control of the party so excused. The party affected shall promptly notify in writing the non-affected party or parties of the event of force majeure and the probable duration of the delay. Any delay caused by an event of force majeure shall toll the term of this Agreement, which shall be extended by the length thereof. In the event a force majeure prevents performance by either party for more than three (3) months, either party shall have the right to terminate this Agreement (in its entirety). 14.2. Competing Products. Gilead hereby agrees that during the Term of this Agreement and for a period of [**] years following the termination or expiration of this Agreement, it shall not manufacture, supply or otherwise distribute for itself or a third party, without the prior written approval of Eyetech, any product or products identical or similar to the Product, i.e. aptamers of similar composition for indications for which the Product is approved or developed. In no event shall Gilead manufacture, supply or otherwise distribute for itself or a third party a copy or "knock-off" of the Product so as to infringe or misappropriate Eyetech's or the Sublicensee's Intellectual Property. 39 SECTION 15. MISCELLANEOUS. 15.1. Relationship of the Parties. The parties shall be deemed independent contractors with respect to the terms and provisions of this Agreement and shall not in any respect act as an agent or employee of the other party. All persons employed by Gilead in connection with the manufacture and supply of the Product to Eyetech shall be employees, agents or contractors of Gilead. Under no circumstances shall employees or agents of Gilead be deemed to be employees or agents of Eyetech. 15.2. Successors and Assigns; Subcontracting. Except for assignment of this Agreement in whole to an Affiliate, or by Eyetech to the Sublicensee, upon written notice to the other party, neither party shall, without the prior written consent of the other party (which consent shall not be reasonably withheld or delayed), delegate, transfer, convey, assign or pledge any of its rights or obligations under this Agreement to any other Person. Gilead shall not subcontract any obligation or duty owed under this Agreement without the prior written consent of Eyetech. This Agreement shall be binding upon and inure to the benefit of the parties hereto, and subject to the terms of this Section 15.2, its respective successors, legal representatives and permitted assigns. Any assignment or subcontract in contravention of this Section 15.2 shall be ineffective and considered null and void. 15.3. Notice. All notices, requests, demands or other communications to or upon the parties hereto shall be in writing and, unless otherwise specified herein, deemed to have been given or made (a) five (5) business days after being deposited in the mails, registered mail or certified, return receipt requested, postage prepaid; (b) one (1) business day after being sent by bonded courier for next business day delivery; (c) upon facsimile transmission, the receipt of which is confirmed electronically or telephonically; or (d) when personally delivered, in each case addressed to the appropriate party at the following address: IF TO EYETECH: Eyetech Pharmaceuticals, Inc. 500 Seventh Avenue, 18th Floor New York, New York 10018 Attention: Chief Executive Officer Facsimile No.: (212) 997-9251 with a copy to: Hale and Dorr LLP 60 State Street 40 Boston, Massachusetts 02109 Attention: David E. Redlick, Esq. Facsimile No: (617) 526-5000 IF TO GILEAD: Gilead Sciences, Inc. 650 Cliffside Drive San Dimas, CA 91773 Attention: Tony Caracciolo, Sr. VP, Manufacturing Telephone: (909) 394-4024 Facsimile No: (909) 599-8716 with a copy to: Gilead Sciences, Inc. 333 Lakeside Drive Foster City, CA 94404 Attention: Gregg H. Alton, VP and General Counsel Facsimile No: (650) 522-5537 The above addresses for receipt of notice may be changed by any party by notice, given as provided herein. 15.4. Entire Agreement. This Agreement, including all Attachments attached hereto and made a part hereof contain the entire understanding of the parties, superseding in all respects any and all prior oral or written agreements or understandings pertaining to the subject matter hereof. This Agreement may be amended or modified only by written agreement executed by the parties hereto. 15.5. Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under any applicable Law (a) such provision will be fully severable, (b) this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, (c) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance therefrom and (d) in lieu of such illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement, a legal, valid and enforceable provision that achieves the original intent of the parties reflected in the illegal, invalid or unenforceable provision as best as may be possible. 41 15.6. Waiver. Any term or condition of this Agreement may be waived at any time by the party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the party or parties waiving such term or condition. No waiver by any party of any term or condition of this Agreement, in any one or more instances, shall be deemed to be or construed as a waiver of the same or any other term or condition of this Agreement on any future occasion. Except as expressly stated herein, all remedies, either under this Agreement or by Law or otherwise afforded, will be cumulative and not alternative. 15.7. Headings. Headings in this Agreement are included for ease of reference only and have no legal effect. 15.8. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. 15.9. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to the conflict of law principles thereof. 42 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and to be effective as of the Effective Date. EYETECH PHARMACEUTICALS, INC. By: /s/ Paul Chaney -------------------------- Name: Paul Chaney Title: Chief Operating Officer GILEAD SCIENCES, INC. By: /s/ Mark L. Perry -------------------------- Name: Mark L. Perry Title: Executive Vice President, Operations 43 Attachment 1 Product Supplement Macugen 1. Product Description; Strength/Pack; Item Number Macugen 0.3mg To Be Determined (TBD) Macugen 1.0mg TBD 2. Product Price Appendix 2.1 STANDARD SERVICES/TOLL MANUFACTURING ACTIVITIES (BATCH CHARGES): (a) For Less Than [**] Units (but less than [**] Batches) Delivered in a Calendar Year: Batch Charge $[**] Per-Unit Filling Charge $[**] Per Unit Packaging Charge $[**] Batch Charge is the toll manufacturing fee applicable to the semi-automatic syringe filling from a single shift aseptic filling operation (to be between approximately 10,000 and 20,000 syringes). The Per-Unit Charges shall be applied to each unit of Product delivered from a single batch (i.e., The "Unit Charges" = Number of syringes delivered multiplied by the "Per-Unit Charges") For each Batch manufactured GILEAD shall invoice EYETECH the sum of the Batch Charge plus the Unit Charges. The Batch Charge price set forth above is applicable to no fewer than [**] up to [**] Batches delivered in a calendar year. (b) For Greater Than [**] Units (but less than [**] Batches) Delivered in a Calendar Year: Batch Charge $[**] Per-Unit Filling Charge $[**] Per Unit Packaging Charge $[**] Batch Charge is the toll manufacturing fee applicable to the semi-automatic syringe filling from a single shift aseptic filling operation for one Batch which the Parties estimate will be between approximately 10,000 and 20,000 syringes but the exact size of which will be determined during equipment qualification and validation. The Per-Unit Charges shall be applied to each unit of Product delivered from a single batch (i.e., The "Unit Charges" = Number of syringes delivered multiplied by the "Per-Unit Charges") For each batch manufactured GILEAD shall invoice EYETECH the sum of the Batch Charge plus the Unit Charges. The Batch Charge price set forth above is applicable to no fewer than [**] and up to [**] batches delivered in a calendar year. (c) For Greater Than [**] Batches (but less than [**] Batches) Delivered in a Calendar Year: Batch Charge $[**] Per-Unit Filling Charge $[**] Per Unit Packaging Charge $[**] Batch Charge is the toll manufacturing fee applicable to the semi-automatic syringe filling from a single shift aseptic filling operation (to be between approximately 10,000 and 20,000 syringes). The Per-Unit Charges shall be applied to each unit of Product delivered from a single batch (i.e., The "Unit Charges" = Number of syringes delivered multiplied by the "Per-Unit Charges") For each batch manufactured GILEAD shall invoice EYETECH the sum of the Batch Charge plus the Unit Charges. (d) For greater than [**] Batches (but less than [**] Batches) Delivered in a Calendar Year: Batch Charge $[**] Per-Unit Filling Charge $[**] Per Unit Packaging Charge $[**] Batch Charge is the toll manufacturing fee applicable to the semi-automatic syringe filling from a single shift aseptic filling operation (to be between approximately 10,000 and 20,000 syringes). The Per-Unit Charges shall be applied to each unit of Product delivered from a single batch (i.e., The "Unit Charges" = Number of syringes delivered multiplied by the "Per-Unit Charges") (e) For greater than [**] Batches delivered in a Calendar Year: Batch Charge $[**] Per-Unit Filling Charge $[**] Per Unit Packaging Charge $[**] Batch Charge is the toll manufacturing fee applicable to the semi-automatic syringe filling from a single shift aseptic filling operation (to be between approximately 10,000 and 20,000 syringes). The Per-Unit Charges shall be applied to each unit of Product delivered from a single batch (i.e., The "Unit Charges" = Number of syringes delivered multiplied by the "Per-Unit Charges") For each batch manufactured GILEAD shall invoice EYETECH the sum of the Batch Charge plus the Unit Charges. All of these Batch/Unit charges and related assumptions are based on GILEAD's experience with EYETECH's Product to date and Critical Equipment/discussions with Eyetech to date. GILEAD reserves the right to make reasonable pricing adjustment, per Section 5.2 (b) of the Manufacturing and Supply Agreement if needed to accommodate Product Specification changes or changes to the Product Supplement. GILEAD charges for additional support services/handling requirements (i.e., above and beyond the Standard Services/Toll Manufacturing Activities in Section 4, hereinbelow) including, but not limited to validation and tech transfer efforts for the Product shall be ordered by EYETECH as set forth in Section 2.2 of this Attachment. GILEAD charges for additional support services/handling requirements/materials purchasing as it relates to all aspects (except for the labor component identified as the "Per Unit Packaging Charge", hereinabove) of primary (i.e., the pouch/bag/tray directly containing the Product syringe) and secondary (any respective product cartoning) labeling and packaging materials, on a cost plus [**]% basis. NOTE: These charges (hereinabove) are expressly conditional upon Eyetech continuing to make additional capital investments in additional Critical Equipment in accordance with Section 2.2(b) to facilitate the Manufacture of the PRODUCT at GILEAD's Facility. 2.2 MINIMUM LABOR PRICING FOR SUPPORT SERVICES PERFORMED OUTSIDE THE "STANDARD SERVICES/TOLL MANUFACTURING ACTIVITIES" (HOURLY RATE): In the event of unique/non-routine requirements associated with the Product, cost estimates for Regulatory, Validation, Tech Transfer, additional (i.e., other than the one annual Product stability lot) stability studies and other services will be provided upon request after requirements (i.e., a work plan) are mutually agreed upon by GILEAD and EYETECH. Costs for such services will be procured by EYETECH by separate Purchase Order and will be based upon a time/rate basis using following scale (on a per hour basis for the 2003 Calendar Year): Hourly Rates: Project Support Services (Clerical, General Administrative) $[**] Technician/Specialist $[**] Engineer/Manager/Scientist $[**] Director/Sr. Engineer/Sr. Scientist/Sr. Regulatory $[**] Vice President/Legal $[**] After December 31, 2003, GILEAD may make adjustments to these Hourly Rates as GILEAD requires. Such adjustments to these Hourly Rate will be clearly indicated as part of any quotation GILEAD makes for a mutually agreed upon work plan. 3. Initial Planning Forecast and Annual Minimum Percentages: Eyetech's initial (5) Five Year Planning Forecast of Orders for Product from Gilead on a calendar year basis:

Through Q4/2004 2005 2006 2007 2008 [**] syringes [**] [**] [**] [**]

Annual Minimum Percentages:

- --------------------------------------------------------------- Through Launch 1st Commercial 2nd Commercial 3rd Commercial Year Year Year - --------------------------------------------------------------- 100% 100% [**]% [**]% - ---------------------------------------------------------------

4. Description of Work That Constitutes The "STANDARD SERVICES/TOLL MANUFACTURING ACTIVITIES" To Be Performed By Gilead: Gilead shall manufacture Product for Eyetech from the active drug substance (API) as supplied by Eyetech. The Becton Dickinson syringe and stoppers components and other required starting materials shall be procured by Gilead and included in Product cost. Eyetech will approve the master production and control documents (i.e., Gilead's Master Production Records [MPR] and Specifications [SPC]) for compounding, component preparation, aseptic filling, visual inspection of unlabeled filled syringes, individual and/or bulk syringe container labeling/encoding, individual and/or bulk syringe container packaging (e.g., bagging, sealing as primary and/or secondary [product shelf cartooning] packaging), shipping of individual and/or bulk syringes, and warehousing such Product in accordance with the Specifications that will be followed by GILEAD in the manufacture and testing of the Product and that constitute Exhibit A of this Attachment. Eyetech will provide released API at Gilead's Facility at least two weeks prior to commencement of Product manufacturing. Each will have a release certificate provided to Gilead by Eyetech. API shall be tested by Gilead using Gilead's approved procedures to confirm their identity. Gilead will supply approved sodium phosphate monobasic monohydrate, sodium phosphate dibasic heptahydrate, sodium chloride, sodium hydroxide, hydrochloric acid, nitrogen, and Water for Injection. Gilead will perform quality control tests on these materials and release for use per approved Gilead procedures. Gilead's QC will perform lot specific in-process tests and lot specific testing to release specifications per approved Gilead procedures in Exhibit A of this Attachment. Gilead will additionally perform quality control tests to stability specifications on one lot per year (i.e., the annual stability lot) per approved Gilead procedures in Exhibit A of this Attachment. 5. Purchase Order/Invoicing Contacts: 5.1. Orders to be directed to Gilead via fax at (909) 599-8716, Attention: Gilead Purchasing - Purchasing at (909) 599-8716. 5.2. Invoices to be directed to Eyetech via fax at (212) 997-9251, Attn: Vice President - Finance via fax at (212) 997-9251. Attachment 1 - Product Supplement - Macugen (continued) EXHIBIT A - Master production Records, Bill Of Materials, Analytical Methods and Specifications that constitute Standard Services (unless otherwise noted):

NUMBER REVISION EFFECTIVE TITLE DATE - ------------------------------------------------------------------------------------ [**]

Attachment 2 Critical Equipment

Equipment Model No. Manufacturer Description S/N - ----------------------------------------------------------------------- [**]

Attachment 2-A Building and Equipment Improvement Plan and Budget We understand that the cap on this budget will be $[**], though the parties agree that much less may actually be required depending on Eyetech's requirements. Attachment 3 Initial Manufacturing Committee Membership Gilead and Eyetech initially designate the following two (2) representatives to serve as members of the Manufacturing Committee: For Eyetech: Chuck WilliamsSenior VP Manufacturing Telephone: 973 539 6009 (x229) Facsimile: 973 539 2665 Donald HodgsonDirector Manufacturing Telephone: 714 992 4889 Facsimile No: 714 526 1495 For Gilead: Tony Caracciolo, Sr. VP, Manufacturing Telephone: (909) 394-4024 Facsimile No: (909) 599-8716 Peter Durfee, Sr. Director Manufacturing/Engineering Telephone: (909) 394-4022 Facsimile No: (909) 599-1875 2 Attachment 4 Work Plan for Technology Transfer GILEAD WILL FOLLOW ITS RELATED SOP NO. 877, "LABORATORY TECHNOLOGY TRANSFER OF ANALYTICAL METHODS", TO TRANSFER THE RESPECTIVE MACUGEN TEST METHODS TO THE GILEAD QUALITY CONTROL (QC) LABORATORIES IN SAN DIMAS. SUCH A TYPICAL INTER-LABORATORY TECHNOLOGY TRANSFER OF VALIDATED METHODS REQUIRES MULTIPLE ASSAY PERFORMANCE ON THREE PRODUCT LOTS. THE EYETECH METHODS TO BE TRANSFERRED ARE LISTED ON PAGE TWO OF THIS ATTACHMENT 4. GILEAD WILL PERFORM THIS EFFORT ON A TIME AND MATERIAL BASIS NOT TO EXCEED (NTE) [**] HOURS, BREAKOUT ESTIMATES FOR WORK TO BE PERFORMED BY GILEAD IN SAN DIMAS ARE AS FOLLOWS: GILEAD QC LABORATORY ESTIMATES: CHEMISTRY TESTING [**] HOURS MICROBIOLOGY TESTING [**] HOURS ADDITIONAL REPORTS AND DOCUMENTATION PREPARATION [**] HOURS QC HOURS SUB-TOTAL: [**] HOURS GILEAD PPC LABORATORY ESTIMATES: CHEMISTRY TESTING [**] HOURS MICROBIOLOGY TESTING (EXCLUDES STERILITY) [**] HOURS ADDITIONAL REPORTS AND DOCUMENTATION PREPARATION [**] HOURS PPC HOURS SUB-TOTAL: [**] HOURS GILEAD QA SUPPORT ESTIMATES: [**] HOURS PPC HOURS SUB-TOTAL: [**] HOURS TOTAL PROJECT NTE HOURS: [**] HOURS COSTS FOR THESE SERVICES WILL BE PROCURED BY EYETECH BY SEPARATE PURCHASE ORDER AND WILL BE BASED UPON A TIME/RATE BASIS USING FOLLOWING SCALE (ON A PER HOUR BASIS FOR THE 2003 CALENDAR YEAR) OF HOURLY RATES: PROJECT SUPPORT SERVICES (CLERICAL, GENERAL ADMINISTRATIVE) $[**] TECHNICIAN/SPECIALIST $[**] ENGINEER/MANAGER/SCIENTIST $[**] DIRECTOR/SR. ENGINEER/SR. SCIENTIST/SR. REGULATORY $[**] VICE PRESIDENT/LEGAL $[**] 2 NOTE: These estimates are based upon GILEAD'S experiences to date, method complexity and GILEAD'S related procedures. GILEAD reserves the right to revise these estimates after obtaining a copy of the formal Tech Transfer Protocol under development by Dr. Scypinski at Eyetech. ] 2 Eyetech Method List API Test MTD # Appearance AN-TMD-1011 Water AN-TMD-1007 PH & Solution Clairity AN-TMD-1010 UV Abs AN-TMD-1018 RP MTD 283(Gilead mtd) PBA AN-TMD-1009 SEC AN-TMD-1002 AE AN-TMD-1001 Base composition* AN-TMD-1004 * Is not required for ICH stability DRUG PRODUCT Test MTD # Appearance AN-TMD-1012 Evaluation of Visible AN-TMD-1020 Particles Appearance of 2(degree) AN-TMD-1021 Delivered Volume AN-TMD-1008 pH AN-TMD-1013 Osmolality AN-TMD-1015 Viscosity TBD AE AN-TMD-1001 SEC AN-TMD-1002 UV Abs AN-TMD-1018 PBA AN-TMD-1009 Endotoxins AN-TMD-1006 2 EX-10.59 13 y18060exv10w59.txt EX-10.59: SUMMARY OF INTERIM RETAINER FEE FOR NON-EMPLOYEE DIRECTORS EXHIBIT 10.59 SUMMARY OF INTERIM RETAINER FEE FOR NON-EMPLOYEE DIRECTORS On March 15, 2006, our Compensation Committee of the Board of Directors approved an interim retainer fee to cover service by non-employee directors on the Board (including on any Board committees) for the interim period from March 16, 2006 to June 14, 2006. The purpose of such action is to compensate board members for service during the interim period between March 16, 2006 and the 2006 Annual Meeting of Stockholders, such service of which would otherwise not have been compensated as a result in the change of our fiscal year end. The interim retainer fee is an amount equal to each director's current annual retainer fee, pro-rated for the interim period as set forth below: Chairman of the Board: Interim retainer of $37,500, half of which must be taken as OSI Common Stock with three-month transfer restriction. Balance to be taken in cash or stock at director's option. Chairman of the Audit Committee: Interim retainer of $22,500, half of which must be taken as OSI Common Stock with three-month transfer restriction. Balance to be taken in cash or stock at director's option. Audit Committee Member: Interim retainer of $18,750, half of which must be taken as OSI Common Stock with three-month transfer restriction. Balance to be taken in cash or stock at director's option. Other Committee Member: Interim retainer of $15,625, half of which must be taken as OSI Common Stock with three-month transfer restriction. Balance to be taken in cash or stock at director's option. Consistent with the terms of our Amended and Restated Stock Incentive Plan, one-half of of each non-employee director's interim retainer is payable in the form of an award of restricted OSI common stock, and the remainder is paid in cash on a monthly basis, unless the director elects to receive additional shares of OSI common stock. The grant of restricted stock will be made on March 16, 2006 and will vest in three equal installments on April 16, 2006, May 16, 2006 and June 14, 2006. EX-21 14 y18060exv21.txt EX-21: SUBSIDIARIES OF OSI PHARMACEUTICALS, INC. EXHIBIT 21 SUBSIDIARIES OF THE COMPANY (OSI) Eyetech, Inc., organized under the laws of Delaware. OSI Pharmaceuticals (UK) Limited, organized under the laws of the United Kingdom. Prosidion Limited, organized under the laws of the United Kingdom. EX-23 15 y18060exv23.txt EX-23: CONSENT OF KPMG LLP EXHIBIT 23 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors OSI Pharmaceuticals, Inc.: We consent to the incorporation by reference in the registration statements on Form S-8 (No. 333-129749, No. 333-91118, No. 333-65072, No. 333-42274, No. 333-39509, No. 333-06861, No. 33-64713, No. 33-38443) and on Form S-3 (333-124279) of OSI Pharmaceuticals, Inc. and subsidiaries of our reports dated March 13, 2006, relating to (i) the consolidated balance sheets of OSI Pharmaceuticals, Inc. and subsidiaries as of December 31, 2005 and 2004, and the related consolidated statements of operations, stockholders' equity and cash flows, for the year ended December 31, 2005, for the three months ended December 31, 2004, and for each of the two fiscal years in the period ended September 30, 2004, and (ii) management's assessment of the effectiveness of internal control over financial reporting as of December 31, 2005, and the effectiveness of internal control over financial reporting as of December 31, 2005, which reports appear in the December 31, 2005 Annual Report on Form 10-K of OSI Pharmaceuticals, Inc. Our report described in (ii) above contains an explanatory paragraph relating to the exclusion of internal control over financial reporting associated with one entity acquired during 2005 from management's assessment and our assessment of the effectiveness of internal control over financial reporting of OSI Pharmaceuticals, Inc. as of December 31, 2005. As discussed in note 1(b) to the consolidated financial statements, the Company adopted EITF 00-21 "Revenue Arrangements with Multiple Deliverables" in fiscal 2004. As discussed in notes 1(j) and 8 to the consolidated financial statements, the Company fully adopted the provisions of Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" in fiscal 2003. March 15, 2006 /s/ KPMG LLP EX-31.1 16 y18060exv31w1.htm EX-31.1: CERTIFICATION

EXHIBIT 31.1

CERTIFICATION

      I, Colin Goddard, Ph.D. certify that:

      1. I have reviewed this annual report on Form 10-K of OSI Pharmaceuticals, Inc.;

      2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

      3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

      4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:

      a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

      b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

      c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

      d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

      5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

      a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

      b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 16, 2006

/s/COLIN GODDARD, Ph.D.

Colin Goddard, Ph.D.

Chief Executive Officer

135 EX-31.2 17 y18060exv31w2.htm EX-31.2: CERTIFICATION

EXHIBIT 31.2

CERTIFICATION

      I, Michael G. Atieh, certify that:

      1. I have reviewed this annual report on Form 10-K of OSI Pharmaceuticals, Inc.;

      2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

      3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

      4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:

      a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

      b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

      c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

      d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

      5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

      a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

      b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 16, 2006

/s/MICHAEL G. ATIEH

Michael G. Atieh

Executive Vice President and

Chief Financial Officer

136 EX-32.1 18 y18060exv32w1.htm EX-32.1: CERTIFICATION

EXHIBIT 32.1

OSI PHARMACEUTICALS, INC.

CERTIFICATION PURSUANT TO

18 U.S.C. § 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of OSI Pharmaceuticals, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Colin Goddard, Ph.D., Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/COLIN GODDARD, Ph.D.

Colin Goddard, Ph.D.

Chief Executive Officer

Date: March 16, 2006

137 EX-32.2 19 y18060exv32w2.htm EX-32.2: CERTIFICATION

EXHIBIT 32.2

OSI PHARMACEUTICALS, INC.

CERTIFICATION PURSUANT TO

18 U.S.C. § 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of OSI Pharmaceuticals, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael G. Atieh, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/MICHAEL G. ATIEH

Michael G. Atieh

Executive Vice President and Chief

Financial Officer

Date: March 16, 2006

138 -----END PRIVACY-ENHANCED MESSAGE-----

EX-10.8

                                                                    Exhibit 10.8

                            OSI PHARMACEUTICALS, INC.
                              AMENDED AND RESTATED
                              STOCK INCENTIVE PLAN
                       (INCLUDING AMENDMENTS NO. 1 AND 2)

1.   PURPOSE

     The purpose of this Amended and Restated Stock Incentive Plan (formerly,
the 2001 Incentive and Non-Qualified Stock Option Plan) (the "Plan") is to
encourage and enable selected management, other employees, directors (whether or
not employees), and consultants of OSI Pharmaceuticals, Inc. (the "Company") or
a parent or subsidiary of the Company to acquire a proprietary interest in the
Company through the ownership, directly or indirectly, of common stock, par
value $.01 per share (the "Common Stock"), of the Company. Such ownership will
provide such employees, directors, and consultants with a more direct stake in
the future welfare of the Company and encourage them to remain with the Company
or a parent or subsidiary of the Company. It is also expected that the Plan will
encourage qualified persons to seek and accept employment with, or become
associated with, the Company or a parent or subsidiary of the Company. As used
herein, the term "parent" or "subsidiary" shall mean any present or future
corporation which is or would be a "parent corporation" or "subsidiary
corporation" of the Company as the term is defined in Section 424 of the Code
(determined as if the Company were the employer corporation).

     Pursuant to the Plan, the Company may grant: (i) Incentive Stock Options;
(ii) Non-Qualified Stock Options; (iii) Stock Appreciation Rights; (iv)
Restricted Stock; and (v) Stock Bonuses, as such terms are defined in Section 2.

2.   DEFINITIONS

     Capitalized terms not otherwise defined in the Plan shall have the
following meanings:

          (a) "Award Agreement" shall mean a written agreement, in such form as
the Committee shall determine, that evidences the terms and conditions of a
Stock Award granted under the Plan.

          (b) "Fair Market Value" on a specified date means the value of a share
of Common Stock, determined as follows:

               (i) if the Common Stock is listed on any established stock
exchange or a national market system, including without limitation The Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, Inc.,
its Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system on
the day of determination, as reported in The Wall Street Journal or such other
source as the Committee deems reliable;



               (ii) if the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the high bid and low asked prices for the Common Stock
on the day of determination, as reported in The Wall Street Journal or such
other source as the Committee deems reliable; or

               (iii) in the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the Committee.

          (c) "Code" shall mean the Internal Revenue Code of 1986, as amended.

          (d) "Incentive Stock Option" shall mean an option that is an
"incentive stock option" within the meaning of Section 422 of the Code and that
is identified as an Incentive Stock Option in the Award Agreement by which it is
evidenced.

          (e) "Non-Qualified Stock Option" shall mean an option that is not an
Incentive Stock Option within the meaning of Section 422 of the Code.

          (f) "Restricted Stock" shall mean an award of shares of Common Stock
that is subject to certain conditions on vesting and restrictions on
transferability as provided in Section 8 of this Plan.

          (g) "Stock Appreciation Right" shall mean a right to receive payment
of the appreciated value of shares of Common Stock as provided in Section 7 of
this Plan.

          (h) "Stock Award" shall mean an Incentive Stock Option, a
Non-Qualified Stock Option, a Restricted Stock award, a Stock Appreciation Right
or a Stock Bonus award.

          (i) "Stock Bonus" shall mean a bonus award payable in shares of Common
Stock as provided in Section 9 of this Plan.

3.   ADMINISTRATION OF THE PLAN

     The Plan shall be administered by a committee (the "Committee") as
appointed from time to time by the Board of Directors of the Company, which may
be the Compensation Committee of the Board of Directors. Except as otherwise
specifically provided herein, no person, other than members of the Committee,
shall have any discretion as to decisions regarding the Plan. The Company may
engage a third party to administer routine matters under the Plan, such as
establishing and maintaining accounts for Plan participants and facilitating
transactions by participants pursuant to the Plan.

     In administering the Plan, the Committee may adopt rules and regulations
for carrying out the Plan. The interpretations and decisions made by the
Committee with regard to any question arising under the Plan shall be final and
conclusive on all persons participating or eligible to participate in the Plan.
Subject to the provisions of the Plan, the Committee shall determine the terms
of all Stock Awards granted pursuant to the Plan, including, but not limited to,
the persons to whom, and the time or times at which, grants shall be made, the
number of shares to be covered by each Stock Award, and other terms and
conditions of the Stock Award.


                                        2



4.   SHARES OF STOCK SUBJECT TO THE PLAN

     Except as provided in Section 10, the number of shares that may be issued
or transferred pursuant to Stock Awards granted under the Plan shall not exceed
6,800,000 shares of Common Stock. Such shares may be authorized and unissued
shares or previously issued shares acquired or to be acquired by the Company and
held in treasury. Any shares subject to a Stock Award which for any reason
expires, is cancelled or is unexercised may again be subject to a Stock Award
under the Plan. The aggregate Fair Market Value of the shares with respect to
which Incentive Stock Options (determined at the time of grant of the option)
are exercisable for the first time by an optionee during any calendar year
(under the Plan and all plans of the Company and any parent or subsidiary of the
Company) shall not exceed $100,000.

5.   ELIGIBILITY

     Stock Awards may be granted to directors, officers, employees and
consultants of the Company or a parent or subsidiary of the Company, except that
Incentive Stock Options may not be granted to any such person who is not an
employee of the Company or a parent or subsidiary of the Company.

6.   GRANTING OF OPTIONS

     The Committee may grant options to such persons eligible under the Plan as
the Committee may select from time to time. Such options shall be granted at
such times, in such amounts and upon such other terms and conditions as the
Committee shall determine, which shall be evidenced under an Award Agreement and
subject to the following terms and conditions:

          (a) Type of Option. The Award Agreement shall indicate whether and to
what extent the option is intended to be an Incentive Stock Option or a
Non-Qualified Stock Option.

          (b) Option Price. The purchase price under each Incentive Stock Option
and each Non-Qualified Stock Option shall be not less than 100% of the Fair
Market Value of the Common Stock at the time the option is granted and not less
than the par value of the Common Stock. In the case of an Incentive Stock Option
granted to an employee owning, actually or constructively under Section 424(d)
of the Code, more than 10% of the total combined voting power of all classes of
stock of the Company or of any parent or subsidiary of the Company (a "10%
Stockholder") the option price shall not be less than 110% of the Fair Market
Value of the Common Stock at the time of the grant.

          (c) Medium and Time of Payment. Stock purchased pursuant to the
exercise of an option shall at the time of purchase be paid for in full in cash,
or, upon conditions established by the Committee, by delivery of shares of
Common Stock owned by the recipient. If payment is made by the delivery of
shares, the value of the shares delivered shall be the Fair Market Value of such
shares on the date of exercise of the option. In addition, if the Committee
consents in its sole discretion, an "in the money" Non-Qualified Stock Option
may be exercised on a "cashless" basis in exchange for the issuance to the
optionee (or other person entitled to exercise the option) of the largest whole
number of shares having an aggregate value equal to the


                                        3



value of such option on the date of exercise. For this purpose, the value of the
shares delivered by the Company and the value of the option being exercised
shall be determined based on the Fair Market Value of the Common Stock on the
date of exercise of the option. Upon receipt of payment and such documentation
as the Company may deem necessary to establish compliance with the Securities
Act of 1933, as amended (the "Securities Act"), the Company shall, without stock
transfer tax to the optionee or other person entitled to exercise the option,
deliver to the person exercising the option a certificate or certificates for
such shares.

          (d) Waiting Period. The waiting period and time for exercising an
option shall be prescribed by the Committee in each particular case; provided,
however, that no option may be exercised after 10 years from the date it is
granted. In the case of an Incentive Stock Option granted to a 10% Stockholder,
such option, by its terms, shall be exercisable only within five years from the
date of grant.

          (e) Non-Assignability of Options. No Incentive Stock Option and,
except as may otherwise be specifically provided by the Committee, no
Non-Qualified Stock Option, shall be assignable or transferable by the recipient
except by will or by the laws of descent and distribution. During the lifetime
of a recipient, Incentive Stock Options and, except as may otherwise be
specifically provided by the Committee, Non-Qualified Stock Options, shall be
exercisable only by such recipient. If the Committee approves provisions in any
particular case allowing for assignment or transfer of a Non-Qualified Stock
Option, then such option will nonetheless be subject to a six-month holding
period commencing on the date of grant during which period the recipient will
not be permitted to assign or transfer such option, unless the Committee further
specifically provides for the assignability or transferability of such option
during this period.

          (f) Effect of Termination of Employment. If a recipient's employment
(or service as an officer, director or consultant) shall terminate for any
reason, other than death or Retirement (as defined below), the right of the
recipient to exercise any option otherwise exercisable on the date of such
termination shall expire unless such right is exercised within a period of 90
days after the date of such termination. For Options issued prior to June 15,
2005, the term "Retirement" shall mean the voluntary termination of employment
(or service as an officer, director or consultant) by a recipient who has
attained the age of 55 and who has completed at least five years of service with
the Company. For Options issued on or after June 15, 2005, unless otherwise
determined by the Committee and defined in the applicable Award Agreement, the
term "Retirement" shall mean the voluntary termination of employment (or service
as an officer, director or consultant) by a recipient who has attained the age
of 60 and who has completed at least twenty years of service with the Company.
If a recipient's employment (or service as an officer, director or consultant)
shall terminate because of death or Retirement, the right of the recipient to
exercise any option otherwise exercisable on the date of such termination shall
be unaffected by such termination and shall continue until the normal expiration
of such option. Notwithstanding the foregoing, the tax treatment available
pursuant to Section 421 of the Code upon the exercise of an Incentive Stock
Option will not be available in connection with the exercise of any Incentive
Stock Option more than three months after the date of termination of such option
recipient's employment due to Retirement. Option rights shall not be affected by
any change of employment as long as the recipient continues to be employed by


                                        4



either the Company or a parent or subsidiary of the Company. In no event,
however, shall an option be exercisable after the expiration of its original
term as determined by the Committee. The Committee may, if it determines that to
do so would be in the Company's best interests, provide in a specific case or
cases for the exercise of options which would otherwise terminate upon
termination of employment with the Company for any reason, upon such terms and
conditions as the Committee determines to be appropriate. Nothing in the Plan or
in any Award Agreement shall confer any right to continue in the employ of the
Company or any parent or subsidiary of the Company or interfere in any way with
the right of the Company or any parent or subsidiary of the Company to terminate
the employment of a recipient at any time.

          (g) Leave of Absence. In the case of a recipient on an approved leave
of absence, the Committee may, if it determines that to do so would be in the
best interests of the Company, provide in a specific case for continuation of
options during such leave of absence, such continuation to be on such terms and
conditions as the Committee determines to be appropriate, except that in no
event shall an option be exercisable after 10 years from the date it is granted.

          (h) Sale or Reorganization. In case the Company is merged or
consolidated with another corporation, or in case the property or stock of the
Company is acquired by another corporation, or in case of a reorganization, or
liquidation of the Company, the Board of Directors of the Company, or the board
of directors of any corporation assuming the obligations of the Company
hereunder, shall either (i) make appropriate provisions for the protection of
any outstanding options by the substitution on an equitable basis of appropriate
stock of the Company, or appropriate options to purchase stock of the merged,
consolidated, or otherwise reorganized corporation, provided only that such
substitution of options shall, with respect to Incentive Stock Options, comply
with the requirements of Section 424(a) of the Code, or (ii) give written notice
to optionees that their options, which will become immediately exercisable
notwithstanding any waiting period otherwise prescribed by the Committee, must
be exercised within 30 days of the date of such notice or they will be
terminated.

          (i) Restrictions on Sale of Shares. Without the written consent of the
Company, no stock acquired by an optionee upon exercise of an Incentive Stock
Option granted hereunder may be disposed of by the optionee within two years
from the date such incentive stock option was granted, nor within one year after
the transfer of such stock to the optionee; provided, however, that a transfer
to a trustee, receiver, or other fiduciary in any insolvency proceeding, as
described in Section 422(c)(3) of the Code, shall not be deemed to be such a
disposition. The optionee shall make appropriate arrangements with the Company
for any taxes which the Company is obligated to collect in connection with any
such disposition, including any federal, state, or local withholding taxes. No
stock acquired by an optionee upon exercise of a Non-Qualified Stock Option
granted hereunder may be disposed of by the optionee (or other person eligible
to exercise the option) within six months from the date such Non-Qualified Stock
Option was granted, unless otherwise provided by the Committee.


                                        5



7.   GRANT OF STOCK APPRECIATION RIGHTS

     The Committee may grant Stock Appreciation Rights to such persons eligible
under the Plan as the Committee may select from time to time. Stock Appreciation
Rights shall be granted at such times, in such amounts and under such other
terms and conditions as the Committee shall determine, which terms and
conditions shall be evidenced under an Award Agreement, subject to the terms of
the Plan. Subject to the terms and conditions of the Award Agreement, a Stock
Appreciation Right shall entitle the award recipient to exercise the Stock
Appreciation Right, in whole or in part, in exchange for a payment of shares of
Common Stock, cash or a combination thereof, as determined by the Committee and
provided under the Award Agreement, equal in value to the excess of the Fair
Market Value of the shares of Common Stock underlying the Stock Appreciation
Right, determined on the date of exercise, over the base amount set forth in the
Award Agreement for shares of Common Stock underlying the Stock Appreciation
Right, which base amount shall not be less than the Fair Market Value of such
Common Stock, determined as of the date the Stock Appreciation Right is granted.

8.   GRANT OF RESTRICTED STOCK

     The Committee may grant Restricted Stock awards to such persons eligible
under the Plan as the Committee may select from time to time. Restricted Stock
awards shall be granted at such times, in such amounts and under such other
terms and conditions as the Committee shall determine, which terms and
conditions shall be evidenced under an Award Agreement, subject to the terms of
the Plan. The Award Agreement shall set forth any conditions on vesting and
restrictions on transferability that the Committee may determine is appropriate
for the Restricted Stock award, including the performance of future services or
satisfaction of performance goals established by the Committee. The books and
records of the Company shall reflect the issuance of shares of Common Stock
under a Restricted Stock award and any applicable restrictions and limitations
in such manner as the Committee determines is appropriate. Unless otherwise
provided in the Award Agreement, a recipient of a Restricted Stock award shall
be the record owner of the shares of Common Stock to which the Restricted Stock
relates and shall have all voting and dividend rights with respect to such
shares of Common Stock.

9.   GRANT OF STOCK BONUS

     The Committee may grant Stock Bonus awards to such persons eligible under
the Plan as the Committee may select from time to time. Stock Bonus awards shall
be granted at such times, in such amounts and under such other terms and
conditions as the Committee shall determine, which terms and conditions shall be
evidenced under an Award Agreement, subject to the terms of the Plan. Upon
satisfaction of any conditions, limitations and restrictions set forth in the
Award Agreement, a Stock Bonus award shall entitle the recipient to receive
payment of a bonus described under the Stock Bonus award in the form of shares
of Common Stock of the Company. Prior to the date on which a Stock Bonus award
is required to be paid under an Award Agreement, the Stock Bonus award shall
constitute an unfunded, unsecured promise by the Company to distribute Common
Stock in the future.


                                        6



10.  ADJUSTMENTS IN THE EVENT OF RECAPITALIZATION

     In the event that dividends payable in Common Stock during any fiscal year
of the Company exceed in the aggregate five percent of the Common Stock issued
and outstanding at the beginning of the year, or in the event there is during
any fiscal year of the Company one or more splits, subdivisions, or combinations
of shares of Common Stock resulting in an increase or decrease by more than five
percent of the shares outstanding at the beginning of the year, the number of
shares available under the Plan shall be increased or decreased proportionately,
as the case may be, and the number of shares issuable under Stock Awards
theretofore granted shall be increased or decreased proportionately, as the case
may be, without change in the aggregate purchase price that may be applicable
thereto. Common Stock dividends, splits, subdivisions, or combinations during
any fiscal year that do not exceed in the aggregate five percent of the Common
Stock issued and outstanding at the beginning of such year shall be ignored for
purposes of the Plan. All adjustments shall be made as of the day such action
necessitating such adjustment becomes effective.

11.  WITHHOLDING OF APPLICABLE TAXES

     It shall be a condition to the performance of the Company's obligation to
issue or transfer Common Stock or make a payment of cash pursuant to any Stock
Award that the award recipient pay, or make provision satisfactory to the
Company for the payment of, any taxes (other than stock transfer taxes) the
Company or any subsidiary is obligated to collect with respect to the issuance
or transfer of Common Stock or the payment of cash under such Stock Award,
including any applicable federal, state, or local withholding or employment
taxes.

12.  GENERAL RESTRICTIONS

     Each Stock Award granted under the Plan shall be subject to the requirement
that, if at any time the Board of Directors shall determine, in its discretion,
that the listing, registration, or qualification of the shares of Common Stock
issuable or transferable under the Stock Award upon any securities exchange or
under any state or federal law, or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in connection
with, the granting of the Stock Award or the issue or transfer, of shares of
Common Stock thereunder, shares of Common Stock issuable or transferable under
any Stock Award shall not be issued or transferred, in whole or in part, unless
such listing, registration, qualification, consent, or approval shall have been
effected or obtained free of any conditions not acceptable to the Board of
Directors.

     The Company shall not be obligated to sell or issue any shares of Common
Stock in any manner in contravention of the Securities Act, the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the rules and regulations
of the Securities and Exchange Commission, any state securities law, the rules
and regulations promulgated thereunder or the rules and regulations of any
securities exchange or over the counter market on which the Common Stock is
listed or in which it is included for quotation. The Board of Directors may, in
connection with the granting of Stock Awards, require the individual to whom the
award is to be granted to enter into an agreement with the Company stating that
as a condition precedent to the receipt of shares of Common Stock


                                        7



issuable or transferable under the Stock Award, in whole or in part, he shall,
if then required by the Company, represent to the Company in writing that such
receipt is for investment only and not with a view to distribution, and also
setting forth such other terms and conditions as the Committee may prescribe.
Such agreements may also, in the discretion of the Committee, contain provisions
requiring the forfeiture of any Stock Awards granted and/or Common Stock held,
in the event of the termination of employment or association, as the case may
be, of the award recipient with the Company. Upon any forfeiture of Common Stock
pursuant to an agreement authorized by the preceding sentence, the Company shall
pay consideration for such Common Stock to the award recipient , pursuant to any
such agreement, without interest thereon.

13.  TERMINATION AND AMENDMENT OF THE PLAN

     The Board of Directors or the Committee shall have the right to amend,
suspend, or terminate the Plan at any time; provided, however, that no such
action shall affect or in any way impair the rights of a recipient under any
Stock Award theretofore granted under the Plan; and, provided, further, that
unless first duly approved by the stockholders of the Company entitled to vote
thereon at a meeting (which may be the annual meeting) duly called and held for
such purpose, except as provided in Section 10, no amendment or change shall be
made in the Plan increasing the total number of shares which may be issued or
transferred under the Plan, materially increasing the benefits to Plan
participants or modifying the requirements as to eligibility for participation
in the Plan.

14.  TERM OF THE PLAN

     The Plan shall terminate on June 12, 2011, or on such earlier date as the
Board of Directors or the Committee may determine. Any Stock Award outstanding
at the termination date shall remain outstanding until it has either expired or
been exercised or cancelled pursuant to its terms.

15.  COMPLIANCE WITH RULE 16B-3

     With respect to persons subject to Section 16 of the Exchange Act,
transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors. To the extent any provision of the
Plan or action by the Committee (or any other person on behalf of the Committee
or the Company) fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Committee.


                                        8



16.  RIGHTS AS A STOCKHOLDER

     A recipient of a Stock Award shall have no rights as a stockholder with
respect to any shares issuable or transferable thereunder until the date a stock
certificate is issued to him for such shares unless otherwise provided in the
Award Agreement under the Plan. Except as otherwise expressly provided in the
Plan, no adjustment shall be made for dividends or other rights for which the
record date is prior to the date such stock certificate is issued.

17.  AUTOMATIC GRANT OF OPTIONS TO NON-EMPLOYEE DIRECTORS

          (a) (i) Each director, who is not also an employee of the Company or
any of its affiliates, or the designee of any stockholder of the Company
pursuant to a right to designate one or more directors (an "Eligible Director")
who first becomes an Eligible Director on or after June 13, 2001 but prior to
January 1, 2003, shall automatically be awarded a grant of 30,000 Non-Qualified
Stock Options upon his or her initial election to the Board of Directors. An
Eligible Director receiving an initial option grant under this Section 17(a)(i)
shall not be eligible for an initial grant of option under any other stock
option plan maintained by the Company. Such options shall vest and be
exercisable solely in accordance with the following schedule:

               (A) The options may be exercised with respect to a maximum of
one-half of the option shares during the twelve-month period beginning after the
date of grant.

               (B) The options may be exercised with respect to all of the
option shares upon the Eligible Director's reelection to the Board of Directors
for a second consecutive term.

               (C) The options will expire and will no longer be exercisable as
of the tenth anniversary of the date of grant, subject to sooner expiration upon
the occurrence of certain events as provided elsewhere in this Plan.

               (ii) Each Eligible Director who first becomes an Eligible
Director on or after January 1, 2003, shall automatically be awarded a grant of
50,000 Non-Qualified Stock Options upon his or her initial election to the Board
of Directors. An Eligible Director receiving an initial option grant under this
Section 17(a)(ii) shall not be eligible for an initial grant of option under any
other stock option plan maintained by the Company. Such options shall vest and
be exercisable solely in accordance with the following schedule:

               (A) The options shall not be exercisable during the twelve-month
period beginning after the date of grant.

               (B) The options may be exercised with respect to one-third of the
option shares after the expiration of twelve months from the date of grant.

               (C) The remaining two-thirds of the options shall vest and become
exercisable ratably on a monthly basis over the two-year period commencing one
year from the date of grant and ending three years from the date of grant.


                                        9



               (D) The options will expire and will no longer be exercisable as
of the tenth anniversary of the date of grant, subject to sooner expiration upon
the occurrence of certain events as provided elsewhere in this Plan.

          (b) In addition to the grant provided in subsection (a), each Eligible
Director who first became an Eligible Director on or after June 13, 2001 shall
automatically be awarded a grant of Non-Qualified Stock Options upon each
reelection of such Eligible Director to a subsequent, successive term, in the
amount of an option for 7,500 shares.

          (c) Except to the extent an option is granted under any automatic
grant provision of any other stock option plan maintained by the Company, each
Eligible Director who first became an Eligible Director prior to June 13, 2001
shall automatically be awarded a grant of Non-Qualified Stock Options upon the
reelection of such Eligible Director to a third or subsequent, successive term,
in the amount and at the times hereinafter set forth. The number of options to
which each Eligible Director shall be entitled pursuant to this subsection (c)
shall be as follows:

               (i) 20,000 on the date of the Eligible Director's reelection to a
third one-year term;

               (ii) 20,000 on the date of the Eligible Director's reelection to
a fourth one-year term;

               (iii) 15,000 on the date of the Eligible Director's reelection to
a fifth one-year term;

               (iv) 15,000 on the date of the Eligible Director's reelection to
a sixth one-year term;

               (v) 10,000 on the date of the Eligible Director's reelection to a
seventh one-year term;

               (vi) 10,000 on the later of the date of the annual meeting of
stockholders in 2000, or the date of the Eligible Director's reelection to an
eighth one-year term;

               (vii) 10,000 on the later of the date of the annual meeting of
stockholders in 2001, or the date of the Eligible Director's reelection to a
ninth one-year term; and

               (viii) 7,500 on the date of the Eligible Director's reelection to
a tenth one-year term and on each successive reelection to a one-year term
thereafter.

          (d) Options granted pursuant to subsections (b) or (c) shall vest and
be exercisable solely in accordance with the following schedule:


                                       10



               (i) The options shall not be exercisable during the twelve-month
period beginning after the date of grant.

               (ii) The options may be exercised with respect to one-third of
the option shares after the expiration of twelve months from the date of grant.

               (iii) The remaining two-thirds of the options shall vest and
become exercisable ratably on a monthly basis over the two-year period
commencing one year from the date of grant and ending three years from the date
of grant.

               (iv) The options will expire and will no longer be exercisable as
of the tenth anniversary of the date of grant, subject to sooner expiration upon
the occurrence of certain events as provided elsewhere in this Plan.

          (e) The option price for all options awarded under this Section 17
shall be equal to 100% of the Fair Market Value of a share of Common Stock on
the date of grant.

18.  OPTIONS GRANTED TO EMPLOYEES AND DIRECTORS OF ANY SUBSIDIARY IN THE UK

     In addition to the provisions above, the provisions of this Section 18
shall apply as herein set out to options granted to employees and directors of
any subsidiary in the United Kingdom. The provisions of this Section 18 enable
the Plan to be used in a tax efficient manner in the United Kingdom.

          (a) In this Section 18, the following terms have the meanings ascribed
to them:

          "Election" means an election in the form envisaged in Paragraph 3B(1)
of Schedule 1 to SSCBA and acceptable to the UK Subsidiary to the effect that
any Secondary NIC arising on the exercise, assignment or release of a UK Option
shall be the liability of the recipient and not the liability of the UK
Subsidiary

          "Independent Transfer Agent" means any person (other than the Company
or any company affiliated with the Company or any individual affiliated with any
such company) who is registered as a broker-dealer with the U.S. Securities and
Exchange Commission and who is thereby able to sell and transfer shares in the
Company on behalf of the Optionholder

          "Optionholder" means an employee or director of the UK Subsidiary who
is the holder of a UK Option

          "Secondary NIC" means secondary national insurance contributions as
defined in the SSCBA

          "SSCBA" means the Social Security Contributions and Benefits Act 1992
of the United Kingdom


                                       11



          "UK Option" means an option granted to an employee of the UK
Subsidiary

          "UK Subsidiary" means OSI Pharmaceuticals (UK) Limited (a company
incorporated in England under company number 1709877) and any other UK
Subsidiary of the Company from time to time.

          (b) To the extent that it is lawful to do so, a UK Option may be
granted subject to a condition that any liability of the UK Subsidiary (as
employer or former employer of the relevant Optionholder) to pay Secondary NIC
in respect of the exercise, assignment or release of that UK Option shall be the
liability of the relevant Optionholder and payable by that Optionholder and that
the Optionholder shall not be entitled to exercise the UK Option until he has
entered into an Election to that effect when required to do so by the UK
Subsidiary provided that the Committee may in its discretion at any time or
times release the Optionholder from this liability or reduce his liability
thereunder unless that Election has been entered into between the UK Subsidiary
and that Optionholder and that Election (or the legislation which provides for
such an Election to be effective) does not allow for such an Election to be
subsequently varied.

          (c) If a UK Option is granted subject to the condition referred to in
paragraph (b) above then the Optionholder shall by completing the Election grant
to the UK Subsidiary (as employer or former employer of the relevant
Optionholder) the irrevocable authority, as agent of the Optionholder and on his
behalf, to appoint an Independent Transfer Agent, to act as agent of the
Optionholder and on his behalf, to sell or procure the sale of sufficient of the
Stock subject to the UK Option and remit the net sale proceeds to the UK
Subsidiary so that the net proceeds payable to the UK Subsidiary are so far as
possible equal to but not less than the amount of the Secondary NIC for which
the Optionholder is liable under the terms of the Election and the UK Subsidiary
shall account to the Optionholder for any balance.

               No Stock shall be allotted or transferred to the Optionholder by
the Company until the UK Subsidiary has received an amount in cash equal to the
amount of the Secondary NIC for which the Optionholder is liable under the terms
of the Election.

          (d) If a UK Option is exercised and the Optionholder is liable to tax
duties or other amounts on such exercise and the UK Subsidiary (as his employer
or former employer) is liable to make a payment to the appropriate authorities
on account of that liability, then the Optionholder shall by having completed
the option agreement grant to the UK Subsidiary (as employer or former employer
of the relevant Optionholder) the irrevocable authority, as agent of the
Optionholder and on his behalf, to appoint an Independent Transfer Agent, to act
as agent of the Optionholder and on his behalf, to sell or procure the sale of
sufficient of the Shares subject to the UK Option and remit the net sale
proceeds to the UK Subsidiary so that the net proceeds payable to the UK
Subsidiary are so far as possible equal to but not less than the amount payable
to the appropriate authorities and the UK Subsidiary shall account to the
Optionholder for any balance.

               No Stock shall be allotted or transferred to the Optionholder by
the Company until the UK Subsidiary has received an amount in cash equal to the
amount of any liability of the UK Subsidiary referred to in this paragraph (d).


                                       12

EX-10.32

                                                                   Exhibit 10.32

                 COMPENSATORY ARRANGEMENTS OF EXECUTIVE OFFICERS

     On December 8, 2005, the Compensation Committee (the "Committee") of the
Board of Directors of OSI Pharmaceuticals, Inc. ("OSI" or the "Company")
approved the 2006 annual base salaries and 2005 cash bonuses for OSI's executive
officers including the Company's named executive officers (as that term is
defined in Item 402 of Regulation S-K) as set forth in OSI's proxy statement
dated February 2, 2005. The following table sets forth the annual base salary
levels of such officers for 2006 as compared to 2005 as well as the 2005 cash
bonuses for each such officer:



                                                          2006 BASE
NAME AND POSITION                                           SALARY    2005 BONUS
- -----------------                                         ---------   ----------
                                                                
Colin Goddard, Ph.D.                                       $600,000          --
Chief Executive Officer (1)

Michael G. Atieh                                           $410,000    $250,000
Executive Vice President, Chief Financial Officer
   and Treasurer (2)

Gabriel Leung                                              $400,000    $160,000
Executive Vice President and President, (OSI) Oncology

David Guyer, M.D.                                          $525,000         n/a
Executive Vice President and CEO, (OSI) Eyetech (3)

Anker Lundemose, M.D., Ph.D., D.Sc.                        L195,000    L 75,000
Executive Vice President and President, (OSI) Prosidion

Robert Simon                                               $347,998    $100,000
Executive Vice President, Pharmaceutical Development
   and Technical Operations

Barbara A. Wood                                            $320,000    $100,000
Vice President, General Counsel and Secretary

Neil Gibson, Ph.D.                                         $292,000    $ 90,000
Chief Scientific Officer (4)


(1)  Given the performance of the Company's stock in 2005, the Committee
     concurred with Dr. Goddard's recommendation that he not receive a 2006
     bonus or merit increase to his base salary.

(2)  Mr. Atieh commenced employment as Executive Vice President, Chief Financial
     Officer and Treasurer on May 31, 2005. Mr. Atieh's bonus for 2005 was
     guaranteed as part of his employment contract signed in June, 2005.

(3)  Dr. Guyer became an employee of the Company on November 14, 2005 upon the
     consummation of the acquisition of Eyetech Pharmaceuticals, Inc. As per
     contract, the determination of 2005 bonuses for former Eyetech employees
     will be made by the Committee in February 2006.

(4)  Dr. Gibson assumed the role of Chief Scientific Officer on September 20,
     2005.

Bonuses

     The 2005 bonus awards were computed in accordance with the Committee's
policy of awarding annual bonuses for executive officers, as previously
disclosed, and are consistent with past practice. For purposes of compensation
decisions for 2005, the Committee measured the Company's performance and that of
each executive officer in fiscal year 2005 against goals established by the
executive officers and ratified by the Committee under the Company's Annual
Business Plan prior to the start of the fiscal year. The Company's bonus plan
awards executives for performance as individuals against personal goals and for
achievement of company goals.



Bonus awards for executives are discretionary but generally follow guidelines
that recognize both corporate and personal goal attainment. In general, where an
individual or corporate bonus is awarded the award ranges between 80 and 150% of
the individual's target. For 2005, the Company performance component was set at
80%.

     The bonus targets for the executive officers are either set in accordance
with their employment agreements or are based upon their respective grade
levels. The current bonus targets (which represents a percentage of base salary)
for the executive officers are:



NAME                                  TARGET
- ----                                  ------
                                   
Colin Goddard, Ph.D.                     *
Michael G. Atieh                        50%
Gabriel Leung                           50%
David Guyer, M.D.                       50%
Anker Lundemose, M.D., Ph.D., D.Sc.     50%
Robert Simon                            40%
Barbara Wood                            40%
Neil Gibson                             40%


*    No specified target; determined by the Committee in its discretion.

Stock Option Grants

     Executive officers are eligible for awards of stock options or shares of
stock pursuant to the Company's Amended and Restated Stock Incentive Plan. Such
awards are made at the discretion of the Committee.

     Annual stock option grants for executive officers are a key element of the
executive officer's total compensation. As for all Company employees, the stock
option grants made annually to the executive officers are made in accordance
with the Company's formula-based policy for granting options. According to the
formula, each grade level is assigned a grant multiple. The number of options
granted to an executive officer is determined by multiplying the executive
officer's salary by the grant multiple and then dividing the product by a stock
price which is determined by the CEO and ratified by the Committee and is
typically a 3-6 month trailing average.

     Perquisites

     The only perquisite granted to executive officers which is not available to
other employees relates to the use of automobiles and is in the form of either
the payment of a car lease or, in lieu thereof, a monthly cash payment.
Currently, Mr. Atieh is the only executive officer who does not receive the
perquisites.


                                       -2-

EX-10.50

                                                                   EXHIBIT 10.50

                               [CHASE LETTERHEAD]

                                                               December 13, 2005

OSI Pharmaceuticals, Inc.
58 South Service Road
Suite 110
Melville, NY 11747

Attention   Michael G. Atieh, Executive Vice President &
            Chief Financial Officer
            Stephen R. Grillo, Director, Purchasing & Treasury

      Re:   Commitment Letter

Ladies and Gentlemen

     OSI Pharmaceuticals, Inc. ("you" or the "Borrower" has requested that J.P.
Morgan Securities Inc. ("JPMorgan"), agree to structure, arrange and syndicate a
senior revolving credit facility in an aggregate amount of $75,000,000 for the
Borrower, and that JPMorgan Chase Bank, N.A. "Chase") commit to provide the
$75,000,000 senior secured credit facility (the "Facility") and to serve as
administrative agent for the Facility. JPMorgan is pleased to advise you that it
is willing to act as exclusive arranger for the Facility.

     Furthermore (a) Chase is pleased to advise you of its commitment to provide
the entire amount of the Facility, and (b) JPMorgan is pleased to advise you of
its agreement to uses commercially reasonable efforts to assemble a syndicate of
financial institutions as recommended to JPMorgan and Chase by you and as
identified by JPMorgan and Chase in consultation with you, to participate in the
Facility, in each case upon the terms and subject to the conditions set forth in
this commitment letter (the "Commitment Letter") and in the Term Sheet attached
hereto (the "Term Sheet").

     It is agreed that Chase will act as the sole and exclusive administrative
agent, and that JPMorgan will act as the sole and exclusive Lead Arranger and
Bookrunner (in such capacities, the "Lead Arranger") for the Facility: provided
that the commitments of Chase to act as administrative agent and to provide a
portion of the Facility may be assumed by an affiliated bank and JPMorgan may
assign some or all of its rights and delegate some or all of its
responsibilities hereunder to one of its affiliates. You agree that no other
agents, co-agents or arrangers will be appointed, no other titles will be
awarded and no compensation (other than that expressly contemplated by the Term
Sheet and the Fee Letter referred to below) will be paid in connection with the
Facility unless you and we shall so agree.

     We intend to syndicate the Facility to a group of financial institutions
(together with Chase, the financial institutions becoming lenders under the
Facility being collectively referred to herein as the "Lenders") which have been
recommended to us by you; provided, that we reserve the right to include
additional financial institutions identified by us in consultation with you.
JPMorgan intends to commence syndication efforts promptly upon the execution of
this



Commitment Letter, and you agree actively to assist JPMorgan in completing a
syndication satisfactory to it. Such assistance shall include (a) your using
commercially reasonable efforts to ensure that the syndication effects benefit
materially from your existing banking relationships, (b) direct contact between
senior management and advisors of the Borrower and the subsidiaries of the
Borrower (including, without limitation, Eyetech Pharmaceuticals, Inc.
("Eyetech")), (c) assistance in the preparation of a Confidential Information
Memorandum and other marketing materials to be used in connection with the
syndication and (d) the hosting, with JPMorgan, of one or more meetings of
prospective Lenders.

     As the Lead Arranger, JPMorgan will manage all aspects of the syndication,
including decisions as to the selection of institutions to be approached (after
consultation with you) and when they will be approached, when their commitments
will be accepted, which institutions will participate (after consultation with
you), the allocations of the commitments among the Lenders (as defined below)
and the amount and distribution of fees among the Lenders. In acting as the Lead
Arranger, JPMorgan will have no responsibility other than to arrange the
syndication as set forth herein and shall in no event be subject to any
fiduciary or other implied duties. To assist JPMorgan in its syndication
efforts, you agree promptly to prepare and provide to JPMorgan and Chase all
information with respect to the Borrower and its subsidiaries and the
transactions contemplated hereby, including all financial information and
projections (the "Projections"), as we may reasonably request in connection with
the arrangement and syndication of the Facility. You hereby represent and
covenant that (a) all written information other than the Projections that has
been or will be made available to Chase or JPMorgan by you or any of your
representatives, all information, whether written or oral, presented by you or
any of your representatives to Chase or JPMorgan during any bank meeting or
presentation, or any information, whether written or oral, provided to Chase or
JPMorgan by any executive officer of the Borrower (collectively, the
"Information") when taken together with the information contained in the filings
of the Borrower and the Borrower's subsidiaries with the Securities and Exchange
Commission made prior to the execution of definitive financing documents, is or
will be, when furnished, complete and correct in all material respects and does
not or will not, when furnished, contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
contained therein not materially misleading in light of the circumstances under
which such statements are made and (b) the Projections that have been or will be
made available to Chase or JPMorgan by you, Eyetech or by any of your respective
representatives, have been or will be prepared in good faith based upon
reasonable assumptions. It is understood that such Projections are not
representations and warranties, that the results set forth therein will be
achieved, and that actual results may differ and the difference between actual
results and those set forth in the Projections may be material. You understand
that in arranging and syndicating the Facility we may use and rely on the
information and Projections without independent verification thereof.

     As consideration for Chase's commitment hereunder and JPMorgan's agreement
to perform the services described herein, you agree to pay to Chase the
nonrefundable fees set forth in Addendum J to the Term Sheet and in the Fee
Letter dated the date hereof and delivered herewith (the "Fee Letter").

     Chase's commitment hereunder and JPMorgan's agreement to perform the
services described herein are subject to (a) there not occurring or becoming
known to us any material adverse condition or material adverse change in or
affecting the business, operations, property or


                                       2



condition (financial or otherwise) of the Borrower and its subsidiaries and
Eyetech and its subsidiaries, taken as a whole, except as disclosed in the
Borrower's or Eyetech's unaudited quarterly financial statements for the period
ended March 31, 2005, June 30, 2005 and September 30, 2005 or any publicly
available press releases or filings with the Securities and Exchange Commission
prior to the date hereof, except that fluctuations in the trading prices of the
Borrower's stock shall not be deemed to be a material adverse change or
condition, (b) our completion of and satisfaction in all respects with a due
diligence investigation of the Borrower and the Borrower's subsidiaries, (c) our
not becoming aware after the date hereof of any information or other matter
affecting the Borrower or any subsidiary of the Borrower, or the transactions
contemplated hereby which is inconsistent in a material and adverse manner with
any such information or other matter disclosed to us or made publicly available
prior to the date hereof, (d) there not having occurred a material disruption of
or material adverse change in financial, banking or capital market conditions
that, in our reasonable judgment, is reasonably likely to materially impair the
syndication of the Facility, (e) our satisfaction that prior to and during the
syndication of the Facility there shall be no competing offering, placement or
arrangement of any debt securities or bank financing (other than the convertible
debt described in Section V(c) of the Term Sheet) by or on behalf of the
Borrower or any of the Borrower's affiliates, (f) the negotiation, execution and
delivery on or before February 15, 2006 of definitive documentation with respect
to the Facility satisfactory to Chase and its counsel, (g) your compliance with
the terms of this Commitment Letter and the Fee Letter, and (h) the other
conditions set forth or referred to in the Term Sheet. The terms and conditions
of Chase's commitment hereunder and of the Facility are not limited to those set
forth herein and in the Term Sheet. Those matters that are not covered by the
provisions hereof and of the Term Sheet are subject to the approval and
agreement of Chase, JPMorgan and the Borrower.

     You agree (a) to indemnify and hold harmless Chase, JPMorgan and their
affiliates and their respective officers, directors, employees, advisors, and
agents (each, an "indemnified person") from and against any and all losses,
claims, damages and liabilities to which any such indemnified person may become
subject arising out of or in connection with this Commitment Letter, the
Facility, the use of the proceeds thereof or any related transaction or any
claim, litigation, investigation or proceeding relating to any of the foregoing,
regardless of whether any indemnified person is a party thereto, and to
reimburse each indemnified person upon demand for any reasonable legal or other
expenses incurred in connection with investigating or defending any of the
foregoing, provided that the foregoing indemnity will not, as to any indemnified
person, apply to losses, claims, damages, liabilities or related expenses to the
extent they are found by final, non-appealable judgment of a court to arise from
the willful misconduct or gross negligence of such indemnified person, and (b)
to reimburse Chase, JPMorgan and their affiliates after receipt of invoices for
all reasonable out-of-pocket expenses (including reasonable due diligence
expenses, reasonable field examination fees and expenses, reasonable syndication
expenses, reasonable consultant's fees and expenses (if any), travel
expenses, and reasonable fees, charges and disbursements of counsel) incurred in
connection with the Facility and any related documentation (including this
Commitment Letter, the Term Sheet, the Fee Letter and the definitive financing
documentation) or the administration, amendment, modification or waiver thereof.
No indemnified person shall be liable for any indirect or consequential damages
in connection with its activities related to the Facility. No indemnified person
shall be liable for any damages arising from the use by others of information or
other materials obtained through


                                       3



electronic, telecommunications or other information transmission systems or for
any special, indirect, consequential or punitive damages to connection with the
Facility.

     This Commitment Letter shall not be assignable by you without the prior
written consent of Chase and JPMorgan (and any purported assignment without such
consent shall be null and void), is intended to be solely for the benefit of the
parties hereto and is not intended to confer any benefits upon, or create any
rights in favor of, any person other than the parties hereto. This Commitment
Letter may not be amended or waived except by an instrument in writing signed by
you, Chase and JPMorgan. This Commitment Letter may be executed in any number of
counterparts, each of which shall be an original, and all of which, when taken
together, shall constitute one agreement. Delivery of an executed signature page
of this Commitment Letter by facsimile transmission shall be effective as
delivery of a manually executed counterpart hereof. This Commitment Letter, the
Term Sheet and the Fee Letter set forth the entire understanding of the parties
with respect thereto. This Commitment Letter shall be governed by, and construed
in accordance with, the laws of the State of New York. IF THIS COMMITMENT
LETTER, THE TERM SHEET, THE FEE LETTER OR ANY ACT, OMISSION OR EVENT HEREUNDER
OR THEREUNDER BECOMES THE SUBJECT OF A DISPUTE, YOU, JPMORGAN AND CHASE EACH
HEREBY WAIVE TRIAL BY JURY.

     This Commitment Letter is delivered to you on the understanding that
neither this Commitment Letter, the Term Sheet or the Fee Letter nor any of
their terms or substance shall be disclosed by you or any of your subsidiaries
or representatives, directly or indirectly, to any other person except (a) to
your officers, agents and advisors who are directly involved in the
consideration of this matter or (b) as may be compelled in a judicial or
administrative proceeding or as otherwise required by law, including but not
limited to federal and state securities laws, and the rules or regulations of
any applicable stock exchange (in which case the parties agree to inform the
other parties promptly thereof), provided that, the foregoing restrictions shall
cease to apply (except in respect of the Fee Letter and its terms and substance)
after this Commitment Letter has been accepted by the Borrower. Officers,
directors, employees and agents of JPMorgan and Chase and their affiliates shall
at all times have the right to share amongst themselves information received
from you and your affiliates and your officers, directors, employees and agents
solely for purposes of evaluating and documenting the Facility.

     You acknowledge that JPMorgan, Chase and any of their affiliates may be
providing debt financing, equity capital or other services (including financial
advisory services) to other companies in respect of which you may have
conflicting interests regarding the transactions described herein and otherwise.
Neither JPMorgan nor Chase nor any of their affiliates will use confidential
information obtained from you by virtue of the transaction contemplated by this
letter or their other relationships with you in connection with the performance
by JPMorgan or Chase or any of their affiliates of services for other companies,
and neither JPMorgan nor Chase nor any of their affiliates will finish any such
information to other companies. You also acknowledge that JPMorgan, Chase and
their affiliates have no obligation to use in connection with the transactions
contemplated by this letter, or to furnish to you confidential information
obtained from other companies.

     The compensation, reimbursement, indemnification and confidentiality
provisions contained herein and in the Fee Letter shall remain in full force and
effect regardless of whether


                                       4



definitive financing documentation shall be executed and delivered and
notwithstanding the termination of this Commitment Letter or Chase's commitment
hereunder.

     You hereby authorize JPMorgan and Chase, at their respective sole expense,
to publish such tombstones and give such other publicity to the Facility as each
may from time to time determine with the Borrower's consent which shall not be
unreasonably withheld or delayed. The foregoing authorization shall remain in
effect unless you notify each of JPMorgan and Chase in writing that such
authorization is revoked.

     If the foregoing correctly sets forth our agreement, please indicate your
acceptance of the terms hereof and of the Term Sheet and the Fee Letter by
returning to us executed counterparts hereof and of the Fee Letter on or before
December 16, 2005. Chase's commitment and JPMorgan's agreements herein will
expire at such time in the event Chase has not received such executed
counterparts in accordance with the immediately preceding sentence. This
Commitment Letter and Term Sheet supersede any and all prior versions hereof and
thereof.

     Chase and JPMorgan are pleased to have been given the opportunity to assist
you in connection with this important financing.

                                        Very truly yours,

                                        JPMORGAN CHASE BANK, N.A.


                                        By: /s/
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        J.P. MORGAN SECURITIES, INC.


                                        By: /s/
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

Accepted and agreed to as of
The date first written above by:

OSI PHARMACEUTICALS, INC.


By: /s/
    ---------------------------------
Name:
      -------------------------------
Title:
       ------------------------------


                                       5



                               [CHASE LETTERHEAD]

                                                               February 14, 2006

OSI Pharmaceuticals, Inc.
58 South Service Road
Suite 110
Melville, NY 11747

     Attention: Michael G. Atieh, Executive Vice President & Chief Financial
                Officer Stephan R. Grillo, Director, Purchasing & Treasury

            RE: EXTENSION OF COMMITMENT LETTER

Ladies and Gentlemen:

     Reference is hereby made to the Commitment Letter dated December 13, 2005
(including the attached Term Sheet, the "Commitment Letter") between JPMorgan
Securities Inc. ("JPMorgan"), JPMorgan Chase Bank, N.A. ("Chase") and OSI
Pharmaceuticals, Inc. (the "Borrower"). Capitalized terms used but not defined
herein are used with the meanings assigned to them in the Commitment Letter.

     Chase's commitment under the Commitment Letter and JPMorgan's agreement to
perform the services provided in the Commitment Letter currently expire on
February 15, 2006 unless the parties otherwise agree in writing. Each of
JPMorgan, Chase and the Borrower desires to cause such commitment and agreement
to be extended as provided herein. Accordingly, each of JPMorgan and Chase
hereby agrees that clause (f) of the seventh paragraph of the Commitment Letter
is amended and restated to read as follows:

"(f) the negotiation, execution and delivery on or before March 15, 2006 of
definitive documentation with respect to the Facility satisfactory to Chase and
its counsel".

     Each of JPMorgan, Chase and the Borrower also agree that the Section V.(m)
of the Term Sheet is amended and restated to read as follows:

"(m) Minimum Opening Liquidity (as defined below) at Closing of not less than
$115,000,000, provided that if the Closing occurs during the period commencing
on March 1, 2006 and ending on March 15, 2006, Opening Liquidity shall be not
less than $100,000,000."



     Except as explicitly amended hereby, the Commitment Letter remains in full
force and effect. Please indicate your agreement with the foregoing by returning
to us an executed counterpart of this letter agreement not later than 4:00 p.m.
on February 15, 2006.

                                        Very truly yours,

                                        JPMORGAN CHASE BANK, N.A.


                                        By: /s/
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        JPMORGAN SECURITIES INC.


                                        By: /s/
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

Accepted and agreed to as of
The date first written above by:

OSI PHARMACEUTICALS, INC.


By: /s/
    ------------------------------------
Name:
      ----------------------------------
Title:
       ---------------------------------


                                      -2-

                               [CHASE LETTERHEAD]

                                                                  March 14, 2006

OSI Pharmaceuticals, Inc.
58 South Service Road
Suite 110
Melville, NY 11747

Attention: Michael G. Atieh, Executive Vice President & Chief Financial Officer
           Stephan R. Grillo, Director, Purchasing & Treasury

           RE: EXTENSION OF COMMITMENT LETTER

Ladies and Gentlemen:

      Reference is hereby made to the Commitment Letter dated December 13, 2005
(including the attached Term Sheet, and as each such document has been amended
and extended as of February 14, 2006, (the "Commitment Letter") between JPMorgan
Securities Inc. ("JPMorgan"), JPMorgan Chase Bank, N.A. ("Chase") and OSI
Pharmaceuticals, Inc. (the "Borrower"). Capitalized terms used but not defined
herein are used with the meanings assigned to them in the Commitment Letter.

      Chase's commitment under the Commitment Letter and JPMorgan's agreement to
perform the services provided in the Commitment Letter currently expire on March
15, 2006 unless the parties otherwise agree in writing. Each of JPMorgan, Chase
and the Borrower desires to cause such commitment and agreement to be extended
as provided herein. Accordingly, each of JPMorgan and Chase hereby agrees that
clause (f) of the seventh paragraph of the Commitment Letter is amended and
restated to read as follows:

"(f) the negotiation, execution and delivery on or before March 31, 2006 of
definitive documentation with respect to the Facility satisfactory to Chase and
its counsel".

      Each of JPMorgan, Chase and the Borrower also agree that the Section V.(m)
of the Term Sheet is amended and restated to read as follows:

"(m) Minimum Opening Liquidity (as defined below) at Closing of not less than
$100,000,000."


        Except as explicitly amended hereby, the Commitment Letter remains in
full force and effect.  Please indicate your agreement with the foregoing by
returning to us an executed counterpart of this letter agreement not later than
March 14, 2006.

                                                 Very truly yours,

                                                 JPMORGAN CHASE BANK, N.A.

                                                 By: /s/
                                                     ---------------------------
                                                     Name:
                                                     Title:

                                                 J.P. MORGAN SECURITIES, INC.

                                                 By: /s/
                                                     ---------------------------
                                                     Name:
                                                     Title:
Accepted and agreed to as of
the date first written above by:

OSI PHARMACEUTICALS, INC.

By: /s/
    ---------------------------
    Name:
    Title:

EX-10.51

                                                               EXHIBIT NO. 10.51

          CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE
         SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.

                                LICENSE AGREEMENT

                                 BY AND BETWEEN

                                   PFIZER INC.

                                       AND

                          EYETECH PHARMACEUTICALS, INC.

                          Dated as of December 17, 2002



                                Table of Contents



                                                                                                     Page
                                                                                                     ----
                                                                                                  
ARTICLE 1         DEFINITIONS......................................................................    1

ARTICLE 2         LICENSES.........................................................................   14

   2.1   Eyetech Grants............................................................................   14
   2.2   License Grant to Eyetech..................................................................   16
   2.3   Sublicensing..............................................................................   16

ARTICLE 3         BASE PAYMENTS AND PERFORMANCE MILESTONES.........................................   17

   3.1   Base Payments.............................................................................   17
   3.2   Performance Milestones....................................................................   18

ARTICLE 4         REVENUE SHARE....................................................................   21

   4.1   Revenue Share.............................................................................   21
   4.2   Survival of Licenses After Expiration of Royalty Term and After Expiration of
         Co-Promotion Term.........................................................................   23
   4.3   Third Party Royalties.....................................................................   23

ARTICLE 5         ACCOUNTING AND PROCEDURES FOR PAYMENTS...........................................   26

   5.1   Sales Subject to Royalty Obligations......................................................   26
   5.2   Royalty Payments; Royalty Reports; Pfizer Operating Profit................................   26
   5.3   Currency Exchange; Late Payments..........................................................   27
   5.4   Withholding Taxes.........................................................................   28
   5.5   Audits....................................................................................   28
   5.6   Blocked Payments..........................................................................   29

ARTICLE 6         TECHNICAL AND OTHER INFORMATION..................................................   29

   6.1   Disclosure of Technical Information.......................................................   29
   6.2   Confidentiality...........................................................................   30
   6.3   Publicity Related to this Agreement.......................................................   30
   6.4   Applicability of Obligations to Affiliates, Employees, Directors, Agents,
         Independent Contractors and Consultants...................................................   31

ARTICLE 7         PATENTS..........................................................................   31

   7.1   Third Party License Agreements............................................................   31
   7.2   Disclosure of Patent Applications and Proceedings.........................................   32
   7.3   Prosecution and Maintenance; Costs........................................................   33


                                        i


                                Table of Contents

                                   (continued)



                                                                                                     Page
                                                                                                     ----
                                                                                                  
   7.4   Third Party Infringement Actions..........................................................   34
   7.5   Patent Term Extensions....................................................................   36
   7.6   US Territory Intellectual Property Infringement Claims....................................   37
   7.7   ROW Territory Intellectual Property Infringement Claims...................................   37
   7.8   Ownership and Prosecution of Patent Rights Included in the Collaboration
         Intellectual Property.....................................................................   37

ARTICLE 8         REPRESENTATIONS, WARRANTIES AND COVENANTS........................................   38

   8.1   Eyetech Representations and Warranties....................................................   39
   8.2   Pfizer Representations and Warranties.....................................................   44
   8.3   Eyetech Covenants.........................................................................   45
   8.4   No Consequential or Punitive Damages......................................................   46

ARTICLE 9         TERM.............................................................................   47

ARTICLE 10        TERMINATION......................................................................   47

   10.1  Termination for Convenience...............................................................   47
   10.2  Termination for Breach....................................................................   48
   10.3  Breach of Non-Competition Obligations.....................................................   50
   10.4  Effects of Termination....................................................................   50
   10.5  Non-Competition...........................................................................   52
   10.6  Acquisitions Involving Competing Products.................................................   54
   10.7  Competing Products in the EU..............................................................   55

ARTICLE 11        DISPUTE RESOLUTION...............................................................   55

   11.1  Arbitration...............................................................................   55
   11.2  No Limitation.............................................................................   57

ARTICLE 12        MISCELLANEOUS....................................................................   57

   12.1  Force Majeure.............................................................................   57
   12.2  Assignment................................................................................   57
   12.3  Governing Law.............................................................................   57
   12.4  Jurisdiction..............................................................................   58
   12.5  Notices...................................................................................   58
   12.6  Entire Agreements; Amendments.............................................................   59
   12.7  Severability..............................................................................   60
   12.8  Waivers...................................................................................   60
   12.9  Binding Effect............................................................................   60
   12.10 Further Assurances........................................................................   60


                                       ii


                                Table of Contents

                                   (continued)



                                                                                                     Page
                                                                                                     ----
                                                                                                  
   12.11 Third Party Beneficiaries.................................................................   61
   12.12 Performance by Subsidiaries and Affiliates................................................   61
   12.13 Counterparts..............................................................................   61
   12.14 Headings..................................................................................   61
   12.15 Offset....................................................................................   62


EXHIBIT 1.8      -   COMPOUND
EXHIBIT 1.18     -   EYETECH PATENT RIGHTS
EXHIBIT 8.1(f)   -   CERTAIN INTELLECTUAL PROPERTY MATTERS
EXHIBIT 8.1(i)   -   FUNDING SOURCES
EXHIBIT 8.1(j)   -   STUDIES

                                       iii


                                LICENSE AGREEMENT

         THIS LICENSE AGREEMENT (this "Agreement") dated as of December 17, 2002
(the "Execution Date") between Pfizer Inc., a corporation organized under the
laws of the state of Delaware, 235 East 42nd Street, New York, New York 10017
("Pfizer"), and Eyetech Pharmaceuticals, Inc. ("Eyetech"), a corporation
organized under the laws of the state of Delaware, 500 Seventh Avenue, 18th
Floor, New York, New York 10018.

         WHEREAS, Eyetech owns or licenses or may acquire rights under certain
patents and patent applications, licenses to patents and patent applications,
know-how, trade secrets and scientific and technical information relating to the
aptamer known as Macugen;

         WHEREAS, the Parties desire to co-promote products containing or based
on the Macugen aptamer in the US Territory (as defined below); and

         WHEREAS, Pfizer desires to acquire from Eyetech exclusive rights to
develop and commercialize products containing or based on the Macugen aptamer in
the ROW Territory (as defined below).

         NOW, THEREFORE, the Parties agree as follows:

                                    ARTICLE 1

                                   DEFINITIONS

         Any capitalized terms used herein that are not expressly defined in
this Agreement shall have the meanings set forth in the Collaboration Agreement.
For purposes of this Agreement, the following definitions shall be applicable:

         1.1      "Affiliate" means any Person directly or indirectly controlled
by, controlling or under common control with, a Party, but only for so long as
such control shall continue. For purposes of this definition, "control"
(including, with correlative meanings, "controlled by",



"controlling" and "under common control with") means, with respect to a Person,
possession, direct or indirect, of (a) the power to direct or cause direction of
the management and policies of such Person (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise), or (b) at least 50% of the voting securities (whether directly or
pursuant to any option, warrant or other similar arrangement) or other
comparable equity interests. For the avoidance of doubt, neither of the Parties
shall be deemed to be an "Affiliate" of the other.

         1.2      "AMD Product" means a Product developed for use in the
treatment of age-related macular degeneration.

         1.3      "Approval" means receipt from the applicable Regulatory
Authority of approval to market a drug in one or more countries.

         1.4      "Bankruptcy Code" means 11 U.S.C Sections 101-1330, as
amended.

         1.5      "Cash Flow" means, with respect to any Person (or any
combination of two or more Persons) for any fiscal period, such Person's (or
such combination's) EBITDA for such fiscal period, less any milestone payment
amounts received by such Person (or combination) pursuant to Section 3.1(a) of
this Agreement included in such EBITDA and less any capital expenditures paid by
such Person (or such combination) during such fiscal period.

         1.6      "Collaboration Agreement" means the Collaboration Agreement
dated as of the date hereof between the Parties.

         1.7      "Collaboration Intellectual Property" means Patent Rights and
Technical Information developed or acquired by either Party, or jointly by the
Parties, or by their respective Affiliates, in the course of the Parties' and
their respective Affiliates' activities pursuant to this Agreement or the
Collaboration Agreement.

                                       2


         1.8      "Compound" means the anti-VEGF aptamer known as Macugen
(EYE001), as more specifically described in Exhibit 1.8, including without
limitation metabolites or prodrugs thereof, and any hydrates, conjugates, salts,
esters, isomers, polymorphs or analogues of any of the foregoing.

         1.9      "Control" or "Controlled" means, with respect to any
intellectual property right, the possession (whether by ownership or license) by
a Party (or by any Subsidiary of a Party) of the ability to grant to the other
Party a license under such right without violating the terms of any agreement
with any third party.

         1.10     "Co-Promote" shall have the meaning ascribed to it in the
Collaboration Agreement.

         1.11     "DME Product" means a Product developed for use in the
treatment of diabetic macular edema.

         1.12     "EBITDA" means, with respect to any Person (or combination of
two or more Persons) for any fiscal period, an amount equal to the sum of (a)
the Net Income of such Person (or such combination) for such fiscal period plus
(b) depreciation, amortization, Interest Expense and taxes deducted in
calculating such Net Income, plus (c) any extraordinary or nonrecurring losses
deducted in calculating such Net Income, minus (d) any extraordinary or
nonrecurring gains included in calculating such Net Income, all as determined in
accordance with GAAP.

         1.13     "Effective Date" means the HSR Clearance Date.

         1.14     "EMEA" means The European Agency for the Evaluation of
Medicinal Products.

         1.15     "Escrow Agent" means the third party financial institution
party to, and serving as escrow agent in accordance with, the Escrow Agreement.

                                       3


         1.16     "Escrow Agreement" means the escrow agreement entered into by
and among the Parties, and a third party financial institution in accordance
with Section 3.1(c).

         1.17     "EU" means the European Union, as it may be expanded from time
to time.

         1.18     "Eyetech Patent Rights" means all Patent Rights, now or
hereafter during the Term, Controlled by Eyetech or its Subsidiaries relating
to, or useful in connection with, the manufacture, use or sale of the Compound
or the Products, including, without limitation, the patents and patent
applications set forth on Exhibit 1.18, but excluding patents and patent
applications claiming drug delivery devices, methods or technology licensed by
any third party to Eyetech under any license agreement other than the Gilead
License, the Shearwater License or the Isis License.

         1.19     "Eyetech Technical Information" means all scientific or
technical information and related know-how and trade secrets, now or hereafter
during the term of this Agreement, Controlled by Eyetech or its Subsidiaries
relating to the Compound or the Products, including but not limited to: (a)
medical, clinical, toxicological or other scientific data and (b) processes and
analytical methodology useful in the development, testing, analysis, manufacture
or packaging of the Compound or the Products (excluding drug delivery know-how
and technology licensed by any third party to Eyetech under any license
agreement other than the Gilead License, the Shearwater License or the Isis
License).

         1.20     "Field" means the prevention, treatment or control of all
ophthalmic diseases or conditions.

         1.21     "Fixed Charge Coverage Ratio" means the ratio of:

                  (a)      the aggregate amount of EBITDA for the twelve (12)
month period ended on the last day of the most recently completed fiscal quarter
referred to in clause (a)(i), (b)(i) or

                                       4


(c)(i), as applicable, of the definition of [**] (such four full fiscal quarter
period being referred to herein as the "Prior Quarters") for which financial
statements contained in an SEC Report have been filed with the SEC or, where
Eyetech or any Person acquiring control of or merging with Eyetech in connection
with a Change in Control is not required under applicable law to file SEC
Reports, for which financial statements have been delivered to Pfizer, to

                  (b)      the aggregate amount of Fixed Charges of such Person
for the Prior Quarters.

In addition to and without limitation of the foregoing, for purposes of this
Section 1.21, in the case of a Change in Control of Eyetech, "EBITDA" and "Fixed
Charges" shall be calculated as if such Change in Control occurred during the
most recently completed Prior Quarter after giving effect on a pro forma basis
for the period of such calculation to, without duplication, Interest Expense
with respect to Indebtedness and transaction fees incurred with respect to the
transactions related to such Change in Control of Eyetech and any Person that
acquires control of Eyetech or with whom Eyetech merges in such Change in
Control (and the application of the net proceeds thereof) during the period
commencing on the first day of the Prior Quarters to and including the last day
of the Prior Quarters (the "Reference Period"), all as if such incurrence (and
application) and expense occurred on the first day of the Reference Period.
Furthermore, if interest on any Indebtedness incurred with respect to the
transactions related to such Change in Control may optionally be determined at
an interest rate based upon a factor of a prime, LIBOR, or similar rate, a
eurocurrency interbank offered rate, or other rates, then the interest rate in
effect on the date of such transactions will be deemed to have been the interest
rate in effect on such Indebtedness during the Reference Period.

                                       5


         1.22     "Fixed Charges" means, with respect to any Person (or any
combination of two or more Persons) for any fiscal period, such Person's (or
such combination's) (a) Interest Expenses and (b) dividends paid by such Person
(or such combination) during such fiscal period, all as determined in accordance
with GAAP.

         1.23     "Generic Competition" shall exist during a given calendar
quarter with respect to a Product in any country in the ROW Territory if, during
such calendar quarter, one or more Generic Products shall be commercially
available in such country and shall have, in the aggregate, a [**] percent
([**]%) or more market share of the aggregate of (Products and Generic Products)
(based on data provided by IMS International, or if such data is not available,
such other reliable data source as reasonably determined by Pfizer and agreed by
Eyetech (such agreement not to be unreasonably withheld)) as measured by unit
sales. In the event IMS International data (or such other agreed data source) is
not sufficient to determine the percentage market share for each country in the
EU, the percent market share for the EU countries for which data is not
available will be deemed to be the average percent market share for those EU
countries in which the data is available.

         1.24     "Generic Products" mean, with respect to a Product
commercialized by Pfizer in a country, products (other than Products
commercialized by Pfizer pursuant to this Agreement) that (a) contain the same
active chemical entity(ies) as contained in such Product and (b) have the same
therapeutic benefit as such Product.

         1.25     "Gilead License" means the Licensing Agreement dated as of
March 30, 2000, by and among Eyetech, Gilead Sciences, Inc. ("Gilead") and
NeXstar Pharmaceuticals, Inc., as amended from time to time.

                                       6


         1.26     "Indebtedness" means (a) indebtedness for borrowed money; (b)
the deferred price of property or services (which shall not include ordinary
course of business payables); (c) obligations evidenced by notes, bonds,
debentures, mortgages or similar instruments; (d) capital or finance lease
obligations or hire purchase arrangements; (e) receivables sold or discounted
(other than on a non-recourse basis); (f) any amount raised under any other
transaction (including any forward sale or purchase agreement) having the
commercial effect of a borrowing; and (g) the amount of any balance sheet
liability in respect of any guarantee or indemnity for any of the items referred
to in paragraphs (a) to (f) above.

         1.27     "Interest Expense" means, for any period, without duplication,
the sum of (a) the interest expense of such Person for such period as determined
on a consolidated basis in accordance with GAAP, including, without limitation,
(i) any amortization or accretion of debt discount, (ii) the net cost under any
hedge instrument, (iii) the interest portion of any deferred payment obligation,
and (iv) all accrued interest; (b) the interest component of capitalized lease
obligations determined on a consolidated basis in accordance with GAAP; and (c)
that portion of all operating lease rentals representative of an interest factor
(which shall be deemed to be equal to 1/3 of all operating lease rentals).

         1.28     "Isis License" means the License Agreement dated as of
December 31, 2001, by and between Eyetech and Isis Pharmaceuticals, Inc.
("Isis"), as amended from time to time.

         1.29     "Law" or "Laws" means all laws, statutes, rules, Codes,
regulations, orders, judgments and/or ordinances of any Governmental Authority.

         1.30     "Launch" means the initial shipping of a Product as a, or for,
commercial sale to an unaffiliated third party, excluding any shipping for test
marketing, clinical trial purposes or compassionate or similar use.

                                       7


         1.31     "[**]:



                  (a)   at any given time, both (i) Eyetech's Quarterly Cash
Flow for each of Eyetech's [**] most recently completed fiscal quarters [**]
and (ii) [**] for the [**] period ended on the last day of the most recently
completed fiscal quarter referred to in clause (i) has been equal to or greater
than [**];or



                  (b)   on the date of [**], both (i) the Quarterly Cash Flow
of the combination of [**] in connection with such [**] for each of such [**]
most recently completed fiscal [**] quarters [**] and (ii) the [**] period
ended on the last day of the most recently completed fiscal quarter referred to
in clause (i) has been equal to or greater than [**]; or



                   (c)  at any given time [**], both (i) the Quarterly Cash Flow
[**] in connection with such [**] as to periods [**] for each of such [**} most
recently completed fiscal quarters [**] and (ii) the [**] as to periods [**]
period ended on the last day of the most recently completed fiscal quarter
referred to in clause (i) has been equal to or greater than [**]; or



                   (d)  [**] pursuant to Section 17.11 of the Collaboration
Agreement.



As used in this Section 1.31 and the other provisions of this Agreement relating
to the defined terms used in this Section 1.31, (x) "fiscal quarters" shall
refer to full calendar quarters or successive periods of 13 weeks, as applicable
and [**] under this Agreement and the Collaboration Agreement [**] immediately
prior to the [**] related to such [**], but otherwise will include only [**] in
connection with or as part of [**].



Notwithstanding anything to the contrary contained herein, if any Quarterly
Cash Flow [**] referenced above is derived from financial statements for any
completed fiscal year ended on or before the last day of the most recently
completed fiscal quarter for which the Quarterly Cash Flow [**] is computed for
the purpose of [**] and either (a) such financial statements for such completed
fiscal year are not accompanied by an audit opinion of a nationally
recognized independent accounting firm or (b) the audit opinion accompanying
such financial statements contains a going concern qualification, then [**]
shall be deemed to exist based upon any such Quarterly Cash Flow [**].


         1.32     "Major Country" means France, Germany, Italy, Spain or the
United Kingdom.

         1.33     "MEEI/Draper License" means the License Agreement dated as of
April 4, 2002, by and among Eyetech, The Massachusetts Eye and Ear Infirmary
("MEEI") and The Charles Stark Draper Laboratory, Inc. ("Draper"), as amended
from time to time.

         1.34     "NDA" means a New Drug Application filed with the FDA with
respect to a Product.

         1.35     "Net Income" means, with respect to any Person (or any
combination of two or more Persons) for any fiscal period, the consolidated net
income (or loss) of such Person (or such combination on a pro forma basis), all
as determined in accordance with GAAP.

         1.36     "Net Sales" means the gross amounts billed or invoiced by
Pfizer, its Affiliates and sublicensees for Products in the ROW Territory, less
the following deductions:

                  (a)      trade, quantity and cash discounts allowed, but
expressly excluding discounts or allowances offered as part of a package of
products that includes a Product sold by Pfizer, its Affiliates or sublicensees;

                                       8


                  (b)      refunds, chargebacks and any other allowances which
effectively reduce the net selling price;

                  (c)      actual product returns, credits and allowances
allowed to customers, and actual bad debts;

                  (d)      rebates actually paid or credited to any governmental
agency (or branch thereof) or to any third party payor, administrator or
contractee;

                  (e)      discounts mandated by, or granted to meet the
requirements of, applicable state, provincial or federal law, wholesaler,
including required chargebacks and retroactive price reductions;

                  (f)      transportation, freight, postage charges and other
charges, such as insurance, relating thereto, in each case included as a
specific line item on an invoice to such third parties; and

                  (g)      taxes, excises or other governmental charges upon or
measured by the production, sale, transportation, delivery or use of goods, in
each case included as a specific line item on an invoice to such third parties.

         If any such sales to third parties are made in transactions that are
not at arm's length between the buyer and the seller, then the gross amount to
be included in the calculation of Net Sales shall be the amount that would have
been invoiced had the transaction been conducted at arm's length. Such amount
that would have been invoiced shall be determined, wherever possible, by
reference to the average selling price of the relevant Product in arm's-length
transactions in the relevant country.

         If Pfizer, its Affiliate or sublicensee sells a Product in unfinished
form to a third party for resale, then the gross amount to be included in the
calculation of Net Sales arising from such sale

                                       9


shall be the amount invoiced by the third party upon resale, in lieu of the
amounts invoiced by Pfizer, its Affiliates or sublicensee when selling the
Product in unfinished form. Otherwise, where Pfizer, its Affiliate or
sublicensee sells a Product in finished form to a third party that does not
require a sublicense under the Eyetech Patent Rights for further resale (each
such third party hereinafter a "Distributor"), the amount to be included in the
calculation of Net Sales shall be the price invoiced from Pfizer or its
Affiliate or sublicensee to the third party, not the amount invoiced by the
third party upon resale.

         If, in addition to or in lieu of a transfer price paid for quantities
of Product supplied, any Distributor provides consideration to Pfizer, its
Affiliate or sublicensee in connection with any Product or the Distributor's
rights or relationship with Pfizer, its Affiliate or sublicensee in relation
thereto, then such consideration shall be included in the calculation of Net
Sales in the Quarter in which it becomes due to Pfizer or its Affiliate or
sublicensee (as applicable). Notwithstanding the foregoing, amounts received by
Pfizer, or its Affiliates or sublicensees, for the sale of Products among Pfizer
and its Affiliates or sublicensees for resale shall not be included in the
computation of Net Sales hereunder.

         Net Sales shall be determined from books and records maintained in
accordance with GAAP, consistently applied throughout the organization and
across all products of the entity whose sales of Product are giving rise to Net
Sales.

         1.37     "Party" means either Eyetech or Pfizer; "Parties" means both
Eyetech and Pfizer.

         1.38     "Patent Rights" means the rights and interest in and to all
issued patents and pending patent applications in any country in the Territory,
including, without limitation, all divisionals, continuations, renewals,
continuations-in-part, patents of addition, supplementary protection
certificates, extensions, registrations or confirmation patents and reissues
thereof.

                                       10


         1.39     "Person" means any natural person or any corporation, company,
partnership, joint venture, firm or other entity, including without limitation a
Party.

         1.40     "Pfizer Patent Rights" means all Patent Rights, Controlled by
Pfizer or its Subsidiaries as of the Effective Date or developed or acquired by
Pfizer or its Subsidiaries in the course of the activities contemplated by this
Agreement or the Collaboration Agreement, relating to, or useful in connection
with, the manufacture, use or sale of the Compound or the Products.

         1.41     "Pfizer Technical Information" means all scientific or
technical information and related know-how and trade secrets, Controlled by
Pfizer or its Subsidiaries as of the Effective Date or developed or acquired by
Pfizer or its Subsidiaries in the course of the activities contemplated by this
Agreement or the Collaboration Agreement, including but not limited to: (a)
medical, clinical, toxicological or other scientific data and (b) processes and
analytical methodology useful in the development, testing, analysis, manufacture
or packaging of the Compound or the Products.

         1.42     "Product Operating Profit" means Net Sales less the
Product-related costs attributable to the following: cost of goods sold; third
party royalties; advertising and promotion expenses, including but not limited
to Product samples, speaker programs and market research; field force costs,
including but not limited to field aids; continuing medical education programs;
research and development; destroyed returns, destroyed inventory and other
salvage; and other direct expenses relating to the manufacture, promotion and
sale of the Product, including but not limited to direct legal expenses.

         1.43     "Products" means any product, which (a) contains or is based
on the Compound, either alone or in combination with one or more other
therapeutically active substances, and (b) is for use in the Field; including
for the avoidance of doubt any AMD Product, DME Product or

                                       11


other product developed for any new indication in the Field or as a new
un-pegylated formulation of any such AMD Product, DME Product or other product;
and which product either (x) if manufactured, used, sold, offered for sale, or
imported would, in the absence of the licenses granted hereunder, infringe a
Valid Claim, or (y) utilizes Eyetech Technical Information or Collaboration
Intellectual Property in its manufacture, use or development.

         1.44     "Quarter" means each of the periods ending on each of the four
(4) thirteen (13) week periods as used by Pfizer as reported in its filings with
the Securities and Exchange Commission, the first commencing on January 1 of any
year. For sake of clarification, outside the United States, Net Sales are
computed on each of four (4) thirteen (13) week periods, the first commencing on
December 1 of any year.

         1.45     "Quarterly Cash Flow" means, with respect to any Person (or
any combination of two or more Persons) for any fiscal quarter, such Person's
(or such combination's) Cash Flow for such fiscal quarter.

         1.46     "Regulatory Authority" means any Governmental Authority,
including without limitation EMEA or FDA, with responsibility for granting any
licenses or approvals (with the exception of price approvals) necessary for the
marketing and sale of pharmaceutical products in any country.

         1.47     "Royalty Term" means, on a country-by-country and
Product-by-Product basis, the period commencing on the Effective Date and ending
on the latest date on which such Product is covered by a Valid Claim, or fifteen
(15) years from the Launch of such Product in such country, whichever is later.

         1.48     "ROW Territory" means all countries in the world outside the
US Territory.

                                       12


         1.49     "SEC Reports" means all annual, quarterly or periodic reports
and registration statements required to be filed with the Securities and
Exchange Commission ("SEC") under applicable law.

         1.50     "Shearwater License" means the License, Manufacturing and
Supply Agreement dated as of February 5, 2002, by and between Eyetech and
Shearwater Corporation ("Shearwater"), as amended from time to time.

         1.51     "Subsidiary" means, with respect to a Party, a majority or
wholly owned direct or indirect subsidiary of such Party.

         1.52     "Technical Information" means Eyetech Technical Information or
Pfizer Technical Information.

         1.53     "Term" means the period commencing on the Effective Date and
ending on the expiration of the last-to-expire Royalty Term.

         1.54     "Territory" means the US Territory and the ROW Territory.

         1.55     "US Territory" means the United States of America, including
its territories, possessions and Puerto Rico.

         1.56     "Valid Claim" means any claim from (a) an issued and unexpired
patent included within the Eyetech Patent Rights or the Collaboration
Intellectual Property (other than, in the case of Collaboration Intellectual
Property, claims of Patent Rights that claim inventions solely owned by Pfizer
or solely licensed by Pfizer) that has not been revoked or held unenforceable or
invalid by a decision of a court or other Governmental Authority of competent
jurisdiction, and that has not been disclaimed, denied or admitted to be invalid
or unenforceable through reissue or disclaimer or otherwise; or (b) a patent
application included within the Eyetech Patent Rights or the Collaboration
Intellectual Property (other than, in the case of Collaboration Intellectual

                                       13


Property, claims of Patent Rights that claim inventions solely owned by Pfizer
or solely licensed by Pfizer) that has not been cancelled, withdrawn or
abandoned or been pending for more than [**] years.

         1.57     "Year" means a calendar year.

                                    ARTICLE 2

                                    LICENSES

         2.1      Eyetech Grants. Subject to the terms of this Agreement,
Eyetech hereby grants to Pfizer, and Pfizer hereby accepts:

                  (a)      an exclusive (even as to Eyetech) license under the
Eyetech Patent Rights and Eyetech Technical Information, and under Eyetech's
rights in Collaboration Intellectual Property, to develop, make, have made, use,
sell, offer for sale, import, and have imported Products in the ROW Territory
and a nonexclusive license under the Eyetech Patent Rights and Eyetech Technical
Information, and under Eyetech's rights in Collaboration Intellectual Property,
to use, make and have made Products in the US Territory solely for export to and
sale in countries in the ROW Territory; and


                  (b)      an exclusive (even as to Eyetech) license under the
Eyetech Patent Rights and Eyetech Technical Information, and under Eyetech's
rights in Collaboration Intellectual Property, to develop, make, have made, use,
sell, offer for sale, import, and have imported Products in the US Territory,
[**] under the Eyetech Patent Rights and Eyetech Technical Information, and
under Eyetech's rights in Collaboration Intellectual Property, to develop, make,
have made, use, sell, offer for sale, import, and have imported Products in the
US Territory [**}; provided that [**], as set forth in this Section 2.1(b) [**]
other than in accordance with the Collaboration Agreement; provided further that
if, [**] set forth in Section 1.31(b)[**] in this Section 2.1(b)[**] at such
time [**] set forth in Section 1.31(d) [**] set forth in Section 1.31(d) [**].
The [**] license set forth in this Section 2.1(b) is subject to all of Pfizer's
obligations under the Collaboration Agreement so long as the Collaboration
Agreement shall remain in effect.


                                       14


                  (c)      The licenses granted by Eyetech in Sections 2.1(a)
and 2.1(b) are subject to a retained right of Eyetech to perform Eyetech's
obligations and exercise Eyetech's rights under the Collaboration Agreement and
the Other Product-Related Agreements.

                  (d)      The licenses granted in Sections 2.1(a) and (b)
include sublicenses, as applicable. The sublicenses granted by Eyetech to Pfizer
in Sections 2.1(a) and (b) are subject to the following terms of the Gilead
Agreement, the Isis Agreement and the Shearwater Agreement, respectively:

                           (i)      Sections 2.4, 2.5, 3.6, 3.8, 6.3 and 6.7 of
the Gilead Agreement;

                           (ii)     Sections 4.3 and 4.4 of the Isis Agreement;
and

                           (iii)    Sections 2.3, 3.2, 3.5, 4.1, 4.9, 8.1,
8.2.3, 9.1 and 9.6 of the Shearwater Agreement.

                  (e)      Any sublicensee obligations required by the Gilead
Agreement, the Isis Agreement and the Shearwater Agreement to be included in a
sublicense thereunder, including without limitation any required provision
making the applicable third party licensor a third party beneficiary of any
sublicense thereunder, shall be deemed to be included in this Agreement.

                  (f)      The licenses granted by Eyetech in Sections 2.1(a)
and 2.1(b) with respect to the patents referenced in the third paragraph of
Exhibit 8.1(i) hereof are subject to 35 USC Sections 200-212, 37 CFR Section 401
et seq. and applicable governmental implementing regulations. Any right granted
in this Agreement greater than that permitted under 35 USC Sections 200-212 or
37 CFR Section 401 et seq. shall be subject to modification as may be required
to conform to the provisions of those statutes. All rights reserved to the
United States government and others under 35 USC Sections 200-212 and 37 CFR
Section 401 shall remain and shall in no way be affected by this Agreement.

                                       15


         2.2      License Grant to Eyetech. Pfizer hereby grants to Eyetech a
nonexclusive right and license (and sublicense, as applicable) under the Pfizer
Patent Rights and Pfizer Technical Information, and under Pfizer's rights in
Collaboration Intellectual Property, solely to Co-Promote the Products in the US
Territory and to exercise Eyetech's rights and perform Eyetech's obligations
under this Agreement and the Collaboration Agreement.

         2.3      Sublicensing.

                  (a)      The license in Section 2.1(a) above includes the
right by Pfizer to grant sublicenses; provided that, Eyetech's prior written
consent, not to be unreasonably withheld or delayed, shall be required for
sublicenses to non-Affiliates under such license. The license in Section 2.1(b)
above does not include any right by Pfizer to grant sublicenses without
Eyetech's prior written consent.

                  (b)      Any sublicense granted by Pfizer must be granted
pursuant to a written agreement that subjects the sublicensee to all relevant
restrictions, limitations and obligations in this Agreement and in the
Collaboration Agreement.

                  (c)      Pfizer shall be responsible for failure by its
sublicensees to comply with, and Pfizer guarantees to Eyetech the compliance by
each of its sublicensees with, all relevant restrictions, limitations and
obligations in this Agreement and in the Collaboration Agreement.

                  (d)      In the event of a material default by any sublicensee
under a sublicense agreement, Pfizer will inform Eyetech and take such action,
after consultation with Eyetech, that in Pfizer's reasonable business judgment
is required to address such default.

                  (e)      Pfizer shall provide Eyetech with a copy of each
sublicense agreement, in final executed form, that Pfizer enters into in
accordance with this Section 2.3 not later than five (5) days after the
execution of such sublicense agreement; provided that Pfizer may redact the

                                       16


financial terms from such copies if permitted under the applicable requirements
of the Gilead License, the Shearwater License and the Isis License requiring
delivery to Gilead, Shearwater or Isis of copies of sublicense agreements.

                                   ARTICLE 3

                    BASE PAYMENTS AND PERFORMANCE MILESTONES

         In consideration of the licenses granted to Pfizer hereunder and the
disclosure to Pfizer of Eyetech Technical Information, and subject to the
provisions of this Agreement, Pfizer shall pay to Eyetech Base Payments and
Performance Milestones as follows:

         3.1      Base Payments.

                  (a)      Subject to the terms and conditions of this
Agreement, Pfizer shall pay to Eyetech the following payments (the "Base
Payments"):



- ------------------------------------------------------------------------------
                   Event                                           Payment
- ------------------------------------------------------------------------------
                                                               

(i)      Signing of this Agreement.                                $75,000,000
- ------------------------------------------------------------------------------
(ii)     Acceptance for filing of [**] Product.                    $[**]
- ------------------------------------------------------------------------------
(iii)    Acceptance for filing of [**] Product.                    $[**]
- ------------------------------------------------------------------------------
(iv)     Approval of [**].                                         $[**]
- ------------------------------------------------------------------------------
(v)      Approval of [**].                                         $[**]
- ------------------------------------------------------------------------------
(vi)     Filing of [**].                                           $[**]
- ------------------------------------------------------------------------------
(vii)    Launch of [**].                                           $[**]
- ------------------------------------------------------------------------------
(viii)   Launch of [**].                                           $[**]
- ------------------------------------------------------------------------------
(ix)     Launch of [**].                                           $[**]
- ------------------------------------------------------------------------------
(x)      Launch of [**].                                           $[**]
- ------------------------------------------------------------------------------


                                       17


The Parties understand and agree that the payments referenced in this Section
3.1(a) are subject to the terms and conditions set forth in Sections 3.1(b) and
(c).

                  (b)      The signing fee set forth in Section 3.1(a)(i) shall
be made as set forth in Section 3.1(c) below. The payments pursuant to Sections
3.1(a)(ii) through 3.1(a)(v) shall be made within fifteen (15) days after
Pfizer's receipt from Eyetech of copies of the written notifications received by
Eyetech from [**]. The payments pursuant to Sections 3.1(a)(vi) through
3.1(a)(x) shall be made within fifteen (15) days after the date on which the
applicable event has been achieved.

                  (c)      Payment of the $75,000,000 signing fee will be made
by Pfizer no later than five (5) Business Days after the date of execution of
this Agreement to an account of a mutually satisfactory financial institution,
which will serve as Escrow Agent, pending occurrence of the Effective Date. All
amounts held in such account shall be held for the benefit of Eyetech and
Eyetech will receive interest accrued in accordance with the terms of the Escrow
Agreement. Upon the occurrence of the Effective Date, such amounts shall be
released to Eyetech in accordance with the terms of the Escrow Agreement.

         3.2      Performance Milestones.

                  (a)      Subject to the terms and conditions of this
Agreement, Pfizer shall pay to Eyetech the following payments (each, a
"Performance Milestone Payment") in respect of each of the following milestone
events (each, a "Performance Milestone"):



- --------------------------------------------------------------------------------------------------------
                                     Milestone Event                                 Payment Amount
- --------------------------------------------------------------------------------------------------------
                                                                                  
(i)      In the event Net Sales in the [**] equal or exceed $[**] in any Year.           $[**]
- --------------------------------------------------------------------------------------------------------
(ii)     In the event Net Sales in the [**] equal or exceed $[**] in any Year.           $[**]
- --------------------------------------------------------------------------------------------------------
(iii)    In the event Net Sales in the [**] equal or exceed $[**] in any Year.           $[**]
- --------------------------------------------------------------------------------------------------------


                                       18


                                                                                  
- --------------------------------------------------------------------------------------------------------
(iv)     In the event Net Sales in the [**] equal or exceed $[**] in any Year.           $[**]
- --------------------------------------------------------------------------------------------------------
(v)      In the event Net Sales in the [**] equal or exceed $[**] in any Year.           $[**]
- --------------------------------------------------------------------------------------------------------



The Parties understand and agree that all of the Performance Milestone Payments
referenced in this Section 3.2(a) are subject to the terms and conditions set
forth in Sections 3.2(b) and (c).

                  (b)      Performance Milestone Payments shall be due and
owing, on or before the date sixty (60) days after the end of the applicable
Year, commencing with the first full Year following (or commencing concurrently
with, if Launch occurs on January 1 of any Year) the first Launch of an AMD
Product in the US Territory and for the subsequent [**] Years immediately
following such first full Year.

                  (c)      Subject to the limitation set forth in Section
3.2(b), each Performance Milestone Payment shall be paid in annual installments
of twenty percent (20%) of the total payment amount over five (5) Years,
commencing with the first Year in which such Performance Milestone is achieved
and continuing for each of the immediately following four (4) Years during which
the Performance Milestone is achieved. It is agreed and understood that no
Performance Milestone Payment (taking all annual installments as a single
Performance Milestone Payment) shall be payable more than once. For the
avoidance of doubt, the following examples are provided to illustrate how
Performance Milestone Payments might be paid:

                                   Example #1



- ------------------------------------------------------------------------------------------------------------
                           Year 1        Year 2        Year 3         Year 4        Year 5        Year 6
- ------------------------------------------------------------------------------------------------------------
                                                                                
Aggregate Net Sales         $[**]         $[**]         $[**]          $[**]         $[**]         $[**]
Level [**]
- ------------------------------------------------------------------------------------------------------------


                                       19


                                                                                 
- ------------------------------------------------------------------------------------------------------------
Performance Milestone       $[**]         $[**]         $[**]          $[**]         $[**]         $[**]
Payment to Eyetech
- ------------------------------------------------------------------------------------------------------------



                                       20


                                   Example #2



- ----------------------------------------------------------------------------------------------
                                      Year 1      Year 2      Year 3      Year 4      Year 5
- ----------------------------------------------------------------------------------------------
                                                                       
Aggregate Net Sales Level [**]        >$[**]      >$[**]      >$[**]      >$[**]      >$[**]
                                      <$[**]      <$[**]      <$[**]      <$[**]
- ----------------------------------------------------------------------------------------------
>$[**]>$[**]                            [**]        [**]        [**]        [**]        [**]
>$[**]
>$[**]
>$[**]
- ----------------------------------------------------------------------------------------------
Total Performance Milestone            $[**]       $[**]       $[**]       $[**]       $[**]
Payments to Eyetech
- ----------------------------------------------------------------------------------------------


For avoidance of doubt, the five (5) consecutive Year period during which each
Performance Milestone Payment is payable in increments may be a different five
(5) consecutive Year period for each of the respective Performance Milestone
Payments (e.g., in Example #2 above, the Performance Milestone Payment for
achieving an aggregate annual Net Sales level [**] of $[**] would continue to be
payable in installments in years 6 and 7 if the Performance Milestone were
achieved in such years notwithstanding the fact that the Performance Milestone
Payment for achieving an aggregate annual Net Sales level [**] of $[**] would no
longer be payable after year 5).

                                    ARTICLE 4

                                  REVENUE SHARE

         4.1      Revenue Share. In consideration of the licenses granted to
Pfizer hereunder and the disclosure to Pfizer of Eyetech Technical Information,
and subject to the terms and conditions of this Agreement, Pfizer shall share
revenues with Eyetech based on Net Sales by Pfizer, its Affiliates and
sublicensees [**] in accordance with the following:

                                       21

                  (a)      EU. With respect to Net Sales in the EU in each Year,
Pfizer shall pay Eyetech the greater of (i) twenty percent (20%) of Product
Operating Profit and (ii) (x) for aggregate Net Sales of all Products in
such Year below $1 billion, a royalty of fifteen percent (15%) of
such Net Sales, and (y) for aggregate Net Sales of all Products in such Year of
$1 billion or more, a royalty of twenty percent (20%) of such incremental Net
Sales.

                  (b)      Rest of ROW Territory. With respect to Net Sales in
the ROW Territory, excluding the EU, Pfizer shall pay Eyetech a royalty of ten
percent (10%) of aggregate Net Sales of all Products.

                  (c)      Royalty Adjustments for Generic Products. If, during
a given Quarter, there is Generic Competition in a particular country, then, for
each such country in which there is Generic Competition, the royalties set forth
in Section 4.1(a) or 4.1(b) shall be reduced by [**] percent ([**]%).
Notwithstanding anything to the contrary in this Section 4.1(c) or in Section
4.1(d) or 10.7, in no event shall the aggregate reduction in the royalty
payments otherwise payable under Section 4.1(a) or 4.1(b) with respect to any
given Net Sales of Products in a country be reduced by more than an aggregate of
[**] percent ([**]%) as a result of the royalty reduction provisions of this
Section 4.1(c) and Sections 4.1(d) and 10.7.

                  (d)      Revenue Share Term. Royalty payments [**] under this
Section 4.1 shall continue on a Product-by-Product and country-by-country basis
for the applicable Royalty Term; provided that during portions of any Royalty
Term in which no Valid Claim exists with respect to a Product in a country, the
royalty payments otherwise payable under Section 4.1(a) or 4.1(b) shall, subject
to the limitations set forth in Section 4.1(c), be reduced by [**] percent
([**]%).

                  (e)      Certain ROW Sales. Pfizer shall not, for the purpose
of circumventing the higher royalty payable in respect of EU Net Sales, sell
Products to a third party in the ROW

                                       22


Territory outside of the EU in situations in which Pfizer knows that such third
party will resell the Products into the EU.

         4.2      Survival of Licenses After Expiration of Royalty Term and
After Expiration of Co-Promotion Term. Upon expiration of each Royalty Term, on
a Product-by-Product and country-by-country basis, the licenses set forth in
Section 2.1(a) and, subject to Pfizer continuing to manufacture the Products in
accordance with the same quality standards observed by Pfizer with respect to
the manufacture of Products during the Royalty Term, the license to Trademarks
in the ROW Territory set forth in Section 10.1(d) of the Collaboration Agreement
shall become fully paid-up and perpetual with respect to such Product in such
country. Upon expiration of the Co-Promotion Term, on a Product-by-Product
basis, the licenses set forth in Sections 2.1(b) shall become fully paid-up,
perpetual non-exclusive licenses with respect to such Product in the US
Territory. For the avoidance of doubt, this Section 4.2 shall not apply with
respect to any license set forth in Section 2.1 that is terminated before the
applicable Royalty Term or Co-Promotion Term expires, as applicable.

         4.3      Third Party Royalties. With respect to royalties payable to
third parties payable based on sales of Products:

                  (a)      With respect to such Net Sales in the US Territory,
Eyetech shall pay such royalties and include all such royalty payments in its
Quarterly Expense Reports (as defined in Section 8.6(b) of the Collaboration
Agreement) for the purpose of including such royalty payments in calculations of
the quarterly payments payable pursuant to Section 8.6(d) of the Collaboration
Agreement.

                  (b)      With respect to such sales in the ROW Territory,
Pfizer shall be responsible for [**] percent ([**]%) of such royalties, except
as provided for in subsection (d)

                                       23


below. For the avoidance of doubt, in the event that any withholding or other
taxes are payable by Pfizer on any third party royalty payments due with respect
to sales in the ROW Territory, then Pfizer shall make such tax payments in
addition to making the payments to Eyetech set forth in the immediately
preceding sentence. If any withholding or other taxes are payable by Eyetech on
any third party royalty payments due with respect to sales in the ROW Territory,
and such taxes are not deductible from the royalty payments due to the third
parties, then Pfizer shall pay to Eyetech an additional amount equal to such
taxes. Pfizer shall indemnify Eyetech and its Affiliates and their respective
directors, officers, employees and agents from and against any liability with
respect to withholding or other taxes that are payable by Pfizer or Eyetech on
any third party royalty payments due with respect to sales in the ROW Territory.
The Parties shall establish such procedures as are reasonably necessary to
permit them to reconcile Eyetech's actual payments of such third party royalties
with Pfizer's payments to Eyetech under this Section 4.3(b). Notwithstanding the
foregoing provisions of this Section 4.3(b), Pfizer shall not have any
responsibility for withholding taxes that become payable solely as a result of
an assignment by Eyetech of Eyetech's rights to receive payments from Pfizer to
an Affiliate of Eyetech or other third party.

                  (c)      With respect to Pfizer's responsibility for the
payments of royalties payable by Eyetech to third parties payable based on Net
Sales as set forth in Section 4.3(b), Eyetech shall send Pfizer a quarterly
invoice that shall be based on Pfizer's quarterly report of Net Sales pursuant
to Section 5.2 and shall reflect the amounts due from Pfizer under Section
4.3(b). Pfizer shall, within fifteen (15) days after its receipt of such
invoice, make payment under such invoice by electronic transfer in immediately
available funds to the account

                                       24


designated in writing by Eyetech, which designation shall take place at least
two (2) Business Days before the payment is due.

                  (d)      Pfizer shall be entitled to deduct a portion of third
party royalties payable by Pfizer with respect to sales in the EU from royalties
otherwise payable to Eyetech pursuant to Section 4.1(a) as follows:

                           (i)      With respect to third party royalties
payable pursuant to third party agreements, other than the MEEI/Draper License,
entered into by Eyetech prior to the Execution Date, on sales of Products in the
EU corresponding to increments of aggregate Net Sales of all Products in the EU
of greater than $[**] in any Year, Pfizer may deduct [**]percent ([**]%) of such
incremental third party royalties.

                           (ii)     With respect to third party royalties
payable pursuant to any other third party license agreement, other than the
MEEI/Draper License, on sales of Products in the EU corresponding to increments
of aggregate Net Sales of all Products in the EU of greater than $[**] in any
Year, which agreement is necessary to avoid infringement of third party rights
with respect to Products in the EU, Pfizer may deduct [**] percent ([**]%) of
such incremental third party royalties, up to a maximum aggregate deduction in
any Year of [**] percent ([**]%) of such incremental Net Sales.

                  (e)      Notwithstanding anything to the contrary contained
herein, any and all third party royalties which relate to or otherwise result
from any misrepresentation or breach of Eyetech's representations or warranties
contained in this Agreement or the Collaboration Agreement shall be excluded
from the provisions of this Section 4.3.

                  (f)      Nothing in this Section 4.3 shall be construed to
limit either Party's indemnification obligations pursuant to the Collaboration
Agreement.

                                       25


                  (g)      After the Effective Date, Eyetech shall use
commercially reasonable efforts to negotiate and execute any amendments to the
Gilead License, Shearwater License and Isis License necessary to conform the
definitions of "Net Sales" (or comparable terms thereunder) with the definition
of "Net Sales" hereunder, so as to provide for an equivalent basis for
calculating royalties due under the Gilead License, Shearwater License and Isis
License as is used under this Agreement; provided that Eyetech shall have no
obligation to pay any money to obtain such amendments and Eyetech shall have no
obligation to enter into any amendment that would increase Eyetech's or its
sublicensees' (including Pfizer's) royalty or other obligations under the Gilead
License, Shearwater License or Isis License.

                                    ARTICLE 5

                     ACCOUNTING AND PROCEDURES FOR PAYMENTS.

         Payments hereunder shall be subject to the following provisions:

         5.1      Sales Subject to Royalty Obligations. Sales between or among
Pfizer, its Affiliates or sublicensees shall not be subject to royalties under
Section 4.1; royalties shall only be calculated upon sales by Pfizer, its
Affiliates and sublicensees to independent third parties. Pfizer shall be
responsible for payment obligations arising from sales by its Affiliates and
sublicensees.

         5.2      Royalty Payments; Royalty Reports; Pfizer Operating Profit.

                  (a)      Pfizer shall provide Eyetech with a report of Net
Sales with respect to each Quarter (based on the quarters specified in the
second sentence of Section 1.44) within forty-five (45) days after the end of
such period, which report shall identify, on a country-by-country basis, the
Product, gross sales, Net Sales, deductions from gross sales taken to calculate
Net Sales, and the royalty amount payable to Eyetech under Section 4.1, as well
as the

                                       26


computation of such royalty amount. Pfizer shall make royalty payments to
Eyetech on Net Sales with respect to each Quarter within sixty (60) days after
the end of each such period. Royalty reports shall be kept confidential by
Eyetech and not disclosed to any other party other than Gilead, Shearwater, Isis
and their respective accountants and Boards of Directors. In addition, Eyetech
shall be entitled to disclose such information as required for the purposes of
preparing and disclosing to third parties Eyetech's financial statements, as
required to comply with applicable Laws or requirements imposed by any stock
exchange or Nasdaq and to third party lenders in connection with Eyetech's
financing activities.

                  (b)      Within ninety (90) days of the end of the final
Quarter of each Year during the Term, Pfizer will provide Eyetech with a report
[**] by which [**] and pay [**] to Eyetech together with such report.

         5.3      Currency Exchange; Late Payments. All payments made hereunder
shall be made in U.S. dollars and shall be made by electronic transfer in
immediately available funds to such bank account as Eyetech shall designate in
writing at least five (5) business days before the payment is due. For the
purposes of determining the amount of royalties due for the relevant Quarter,
the amount of Net Sales in any foreign currency shall be computed by (a)
converting such amount for the relevant Quarter into U.S. dollars at the Average
Exchange Rate for the Quarter (the "Average Exchange Rate" means, for each
Quarter for each currency in which Products sales to third parties are
denominated, the average of the prevailing commercial rate of exchange for
purchasing U.S. dollars with such currency on the last business day of each
Pfizer accounting period in the relevant Quarter as published in The Financial
Times), and (b) deducting the amount of any governmental tax, duty, charge or
other fee actually paid by Pfizer or its Affiliates in respect of such
conversion into and remittance of U.S. dollars. All payments

                                       27


under this Agreement shall bear interest from the date due until paid at a rate
equal to the prime rate of Citibank, NA as announced on the date such payment
was due plus three percent (3%), compounded on a calendar quarterly basis. In
addition, Pfizer shall reimburse Eyetech for all reasonable costs and expenses,
including without limitation reasonable attorneys' fees and legal expenses,
incurred in the collection of late payments.

         5.4      Withholding Taxes. Except as otherwise provided in Section
4.3(b), any taxes required to be paid or withheld by Pfizer, its Affiliates or
sublicensees for the account of Eyetech on amounts payable under this Agreement
shall be deducted from the amounts payable at the rates specified by applicable
Law. In addition, Pfizer shall provide promptly to Eyetech receipts from the
government or taxing authority-evidencing payment of such taxes.

         5.5      Audits. Pfizer shall, and shall cause its Affiliates and
sublicensees to, keep full and accurate books and records setting forth gross
sales, Net Sales, Product Operating Profit for the EU and amounts payable to
Eyetech. Pfizer shall permit Eyetech, at Eyetech's sole expense, by a nationally
recognized independent certified public accountants selected by Eyetech (as to
which Pfizer has no reasonable objection), to examine such books and records
upon at least thirty (30) days' advance written notice during normal business
hours and in a manner that does not materially interfere with Pfizer's business,
but not later than three (3) years following the rendering of any such reports,
accountings and payments. The foregoing right of review may be exercised only
once with respect to each such periodic report and payment. Such accountants may
be required by Pfizer to enter into a reasonably acceptable confidentiality
agreement, and in no event shall such accountants reveal to Eyetech the details
of its review except insofar as is necessary to verify the accuracy of reports
and payments made or due hereunder. The results of any such audit shall be
delivered in writing to each Party. Any underpayment determined by such audit
shall promptly

                                       28


be paid or refunded by Pfizer. If Pfizer has underpaid amounts due under this
Agreement by more than five percent (5%) over any reporting period, Pfizer shall
also reimburse Eyetech for the cost of such audit (with the cost of the audit to
be paid by Eyetech in all other cases), plus interest at the interest rate set
forth in Section 5.3, from the date of any such underpayment. Any dispute
arising out of any such audit and any other dispute arising out of the Parties'
respective payment obligations under this Agreement shall be resolved through
binding arbitration in accordance with Article 11, and either party may submit
such dispute to such binding arbitration.

         5.6      Blocked Payments. In the event that, by reason of applicable
Laws or regulations in any country, it becomes impossible or illegal for Pfizer
to transfer, or have transferred on its behalf, royalties or other payments to
Eyetech, such royalties or other payments shall be deposited in local currency
in the relevant country to the credit of Eyetech in a recognized banking
institution designated by Eyetech or, if none is designated by Eyetech within a
period of thirty (30) days, in a recognized banking institution selected by
Pfizer and identified in a notice in writing given to Eyetech.

                                    ARTICLE 6

                         TECHNICAL AND OTHER INFORMATION

         6.1      Disclosure of Technical Information. Promptly upon execution
and delivery of this Agreement, and thereafter periodically during the Term
(periodically shall mean, except as otherwise provided in the Collaboration
Agreement, at least calendar quarterly prior to the first Approval of a Product
in the Territory, and thereafter at least annually), Pfizer and Eyetech shall
each disclose to the other all Eyetech Technical Information and Pfizer
Technical Information not previously disclosed. Each report shall be in the
format and contain the level of detail to be reasonably agreed upon by the
Parties. All Eyetech Technical Information heretofore disclosed

                                       29


by Eyetech to Pfizer shall be deemed to have been disclosed pursuant to this
Agreement and shall be subject to the provisions of this Agreement, including
but not limited to this Article 6.

         6.2      Confidentiality. During the Term and for five (5) years after
the expiration or termination of this Agreement, each Party shall maintain
Confidential Information (as defined in Section 11.2 of the Collaboration
Agreement) provided by the other Party in confidence, and shall not disclose,
divulge or otherwise communicate such Confidential Information to others, or use
it for any purpose other than as permitted under this Agreement and the
Collaboration Agreement. The receiving Party shall have the right to disclose
Confidential Information received from the other Party to governmental agencies
to the extent reasonably required or desirable to secure Approval for marketing
of Products (provided that the receiving Party shall use reasonable efforts to
secure confidential treatment thereof), and to preclinical and clinical
investigators where reasonably necessary or desirable for their information to
the extent normal and usual in the custom of the trade and under a
confidentiality agreement with provisions governing confidentiality and non-use
substantially the same as those contained herein.

         6.3      Publicity Related to this Agreement. The Parties recognize
that each Party may from time to time desire to issue press releases and make
other public statements or disclosures regarding the subject matter of this
Agreement. In such event, the Party desiring to issue an a press release or make
a public statement or disclosure shall provide the other Party with a copy of
the proposed press release, statement or disclosure for review and approval in
advance, which advance approval shall not be unreasonably withheld, conditioned
or delayed. No other public statement or disclosure concerning the existence or
terms of this Agreement shall be made, either directly or indirectly, by either
Party hereto, without first obtaining the written approval of the other Party.
Once any public statement or disclosure has been approved in accordance with
this

                                       30


Section, then either Party may appropriately communicate information contained
in such permitted statement or disclosure. Notwithstanding the foregoing
provisions of Section 5.2, Section 6.2 or this Section 6.3, a Party may (a)
disclose the existence and terms of the Transaction Agreements (as defined in
the Collaboration Agreement) where required, as reasonably determined by the
disclosing Party, by applicable Law, by applicable stock exchange or Nasdaq
regulation or by order or other ruling of a competent court, (b) disclose the
existence and terms of the Transaction Agreements under obligations of
confidentiality to agents, advisors, contractors, investors and sublicensees,
and to potential agents, advisors, contractors, investors and sublicensees, in
connection with such Party's activities hereunder and in connection with such
Party's financing activities and (c) publicly announce any of the matters set
forth in Exhibit 17.14(c) of the Collaboration Agreement, provided that such
announcements do not entail disclosure of non-public technical or scientific
information (which for clarity, excludes clinical trial results) and the
announcing Party provides the other Party with a copy of the proposed text of
such announcement sufficiently in advance of the scheduled release or
publication thereof to afford such other Party a reasonable opportunity to
review and comment upon the proposed text.

         6.4      Applicability of Obligations to Affiliates, Employees,
Directors, Agents, Independent Contractors and Consultants. The confidentiality
obligations of the Parties under this Article 6 shall be applicable to Parties,
as well as their respective Affiliates, employees, directors, agents,
independent contractors and consultants.

                                    ARTICLE 7

                                     PATENTS

         7.1      Third Party License Agreements. The Parties acknowledge that
the provisions of this Article 7 are subject in all respects to the provisions
of any license agreements between

                                       31


Eyetech and third party licensors of the Eyetech Patent Rights and the
obligations of Eyetech and the rights of Pfizer under this Article 7 are limited
accordingly. Eyetech and Pfizer shall, within the foregoing constraints,
cooperate in the continued prosecution and maintenance by Eyetech or Gilead of
the Eyetech Patent Rights listed on Exhibit 1.18 and licensed to Eyetech by
Gilead. After the Effective Date, Eyetech shall not, without Pfizer's consent,
enter into any third party license agreement relating to material Patent Rights
that Eyetech proposes to license from a third party and that Eyetech reasonably
foresees would, upon the execution of such third party license agreement,
constitute Eyetech Patent Rights, if Pfizer's obligations, pursuant to
Section(s) 4.3(a) and/or 4.3(b), to share in or pay the royalties payable under
third party license agreements, as applicable, would apply to royalties payable
under such third party license agreement; provided that if Eyetech proposes to
license Patent Rights from a third party that would, upon the execution of such
third party license agreement, constitute Eyetech Patent Rights, and Pfizer
withholds its consent for more than thirty (30) days after Eyetech notifies
Pfizer that Eyetech proposes to license such Patent Rights, then Eyetech may
elect to license such Patent Rights at Eyetech's sole expense, in which case
such Patent Rights shall be excluded from the Eyetech Patent Rights.

         7.2      Disclosure of Patent Applications and Proceedings. Eyetech
shall disclose to Pfizer the complete texts of all patent applications within
the Eyetech Patent Rights filed by Eyetech, or by Eyetech's licensors to the
extent Eyetech is permitted to provide such texts to Pfizer under the terms of
Eyetech's agreements with such licensors, as well as information received
concerning the institution or possible institution of any interference,
opposition, re-examination, reissue, revocation or any official proceeding
involving patents and patent applications within the Eyetech Patent Rights
prosecuted and/or maintained by Eyetech, or by

                                       32


Eyetech's licensors to the extent Eyetech receives such information, anywhere in
the Territory. Pfizer shall have the right to review all such pending
applications and other proceedings and make recommendations to Eyetech, and to
Eyetech's licensors if permitted under the terms of Eyetech's agreements with
such licensors, concerning such applications and proceedings and their conduct.
Eyetech agrees, subject to any limitations set forth in Eyetech's agreements
with Eyetech's licensors, to keep Pfizer promptly and fully informed of the
course of such patent prosecution and other proceedings including, without
limitation, by providing Pfizer with copies of all substantive communications
submitted to or received from patent offices throughout the Territory. Pfizer
shall provide such patent consultation at no cost to Eyetech or its licensors,
and shall hold all information disclosed to it under this Section 7.2 as
confidential subject to the provisions of Article 6 of this Agreement.

         7.3      Prosecution and Maintenance; Costs. Eyetech shall not abandon
any Eyetech Patent Rights with respect to which Eyetech controls prosecution and
maintenance activities, either directly or through step-in rights granted to
Eyetech in any third party license agreement, without at least 90 days' prior
notice of such abandonment to Pfizer. If Eyetech decides to abandon any such
Eyetech Patent Rights, Pfizer shall have the option to continue the prosecution
and maintenance of such Eyetech Patent Rights in Eyetech's name at Pfizer's
expense, subject to any limitations set forth in Eyetech's agreements with
Eyetech's licensors. If Pfizer desires that Eyetech file any application for a
patent in specific countries, or file any patent applications on improvements
and variations upon inventions disclosed in the Eyetech Patent Rights or
otherwise relating to the Compound or the Products, Pfizer shall advise Eyetech
of such countries or improvements, variations or inventions, as the case may be.
Eyetech shall consider Pfizer's request in good faith and shall not unreasonably
decline to file the requested patent

                                       33


application and, if Eyetech files the patent applications as requested, Pfizer
shall pay all reasonable expenses, including reasonable fees for patent counsel,
for filing and for prosecuting such requested patent applications; provided that
Eyetech may decline to file the requested patent application if Eyetech does not
possess all legal rights necessary to make such filing. Pfizer shall have
reasonable access to all documentation, filings and communications to or from
the respective patent offices and shall be kept advised as to the status of all
pending applications to the extent pertaining to the Compound or any Products
and to the extent Eyetech is able to provide such access, it being understood
that all such documentation, filings and communications shall constitute
Confidential Information of Eyetech. Unless otherwise explicitly set forth above
in this Section 7.3, the Parties shall each be responsible for fifty percent
(50%) of the Parties' patent prosecution and maintenance costs relating to the
Eyetech Patent Rights in the US Territory and Pfizer shall be responsible for
one hundred percent (100%) of the Parties' patent prosecution and maintenance
costs relating to the Eyetech Patent Rights in the ROW Territory. Eyetech shall
include all such US Territory costs in Eyetech's Quarterly Expense Reports
pursuant to Section 8.6(b) of the Collaboration Agreement. Pfizer shall
reimburse Eyetech for Pfizer's share of all such ROW Territory costs within
thirty (30) days after receiving any invoice from Eyetech for such costs.


         7.4      Third Party Infringement Actions. If any third party shall in
the reasonable opinion of either Party, within any country in the Territory,
infringe any Eyetech Patent Rights through infringing activities in the Field,
the Party learning of such infringement shall promptly notify the other Party
and provide it with any available evidence of such possible infringement. In the
ROW Territory, as between Pfizer and Eyetech, and subject to any rights retained
by Eyetech's licensors, Pfizer shall have the first right to bring suit and to
take action against such infringer in its own name, or in the name of Eyetech
(or Eyetech's licensor, to the extent Eyetech

                                       34


possesses the rights necessary to enable Pfizer to join such licensor under the
terms of Eyetech's license agreement with such licensor; provided that Eyetech
shall have no liability for any failure of such licensor to appear or cooperate
in such action) where necessary, in which case Pfizer shall control the
prosecution of any such suit or claim, including without limitation the choice
of counsel, and shall have the exclusive right to settle or dispose of any such
suit or claim. In the US Territory, as between Pfizer and Eyetech, and subject
to any rights retained by Eyetech's licensors, Eyetech shall have the first
right to bring suit and to take action against such infringer in its own name,
or in the name of Pfizer where necessary, in which case Eyetech shall control
the prosecution of any such suit or claim, including without limitation the
choice of counsel, and shall have the exclusive right to settle or dispose of
any such suit or claim. Notwithstanding anything to the contrary in this Section
7.4, but subject to any legal obligations of Eyetech to its licensors with
respect to Eyetech Patent Rights, if a Party fails to initiate a suit or take
other appropriate action that it has the initial right to initiate or take
pursuant to this Section 7.4 within ninety (90) days after becoming aware of the
basis for such suit or action, then the other Party may, in its discretion,
provide the Party having the initial right with written notice of such other
Party's intent to initiate a suit or take other appropriate action. If such
other Party provides such notice and the Party having the initial right fails to
initiate a suit or take such other appropriate action within thirty (30) days
after receipt of such notice from the other Party, then the other Party shall
have the right to initiate a suit or take other appropriate action that it
believes is reasonably required to protect the intellectual property rights at
issue. Notwithstanding the foregoing provisions of this Section 7.4, in the case
of an infringement action pursuant to Section 505(b) of the Act, subject to any
legal obligations of Eyetech to its licensors with respect to Eyetech Patent
Rights, if the Party that has the initial right to initiate such action fails to
notify

                                       35


the other Party, at least fifteen (15) days prior to such Party's deadline under
the Act for bringing such action, that such Party will bring such action, then
the other Party may, in its discretion, initiate such action after giving
written notice of such election to the Party with the initial right to initiate
such action. The proceeds of any recovery, court award or settlement of such
action shall, after any required payments to Eyetech's licensors, first be
applied to reimburse the Parties for the costs and expenses of such prosecution
and the balance shall be paid, for amounts relating to the US Territory, [**]
percent ([**]%) to Pfizer and [**] percent ([**]%) to Eyetech, and for amounts
relating to the ROW Territory, [**] percent ([**]%) to Pfizer and [**] percent
([**]%) to Eyetech.


         7.5      Patent Term Extensions. The Parties shall cooperate, if
necessary and appropriate, with each other in gaining patent term extension
wherever applicable to Eyetech Patent Rights. The Parties shall, if necessary
and appropriate, use reasonable efforts to agree upon a joint strategy relating
to patent term extensions, but, in the absence of mutual agreement with respect
to any extension issue, a patent shall be extended if either Party elects to
extend such patent. Eyetech shall use commercially reasonable efforts to obtain
from Gilead the right to make determinations with respect to patent term
extensions pursuant to 35 U.S.C. Paragraph 156 ("Hatch-Waxman Extension") for
each Product for which regulatory approval is obtained in the US Territory, it
being agreed that such commercially reasonable efforts shall not require
Eyetech to pay any money to obtain such right. The Parties shall mutually agree
upon the patent for any Hatch-Waxman Extension prior to FDA approval of each
Product. If Eyetech has not obtained the right from Gilead to control
determinations respecting Hatch-Waxman Extensions, Eyetech will advise Gilead
as to the patent selected by the Parties for such extension, and will use
commercially reasonable efforts to have Gilead seek a Hatch-Waxman Extension
for such patent, it being agreed that such commercially reasonable efforts
shall not require Eyetech to pay any money to have Gilead take such action. The
Parties shall each be responsible for fifty percent (50%) of the costs of
seeking and/or obtaining patent term extensions relating to the Eyetech Patent
Rights in the US Territory and Pfizer shall be responsible for one hundred
percent (100%) of the costs of seeking and/or obtaining patent term extensions
relating to the Eyetech Patent Rights in the ROW Territory. Eyetech shall
include all such US Territory costs in Eyetech's Quarterly Expense Reports
pursuant to Section 8.6(b) of the Collaboration Agreement. Pfizer shall
reimburse Eyetech for all such ROW Territory costs incurred by Eyetech within
thirty (30) days after receiving any invoice from Eyetech for such costs.


                                       36


         7.6      US Territory Intellectual Property Infringement Claims. Each
Party's indemnification obligations to the other Party with respect to any
actions, claims, demands, suits or other legal proceedings are brought or
threatened to be brought against either Party by a third party for infringement
of such third party's trademarks, know-how, Patent Rights or other intellectual
property rights relating to the Parties' Co-Promotion of Products by virtue of
the Parties' manufacture, use, sale, offer for sale or importation of Products
hereunder or under the Collaboration Agreement in furtherance of such
Co-Promotion of Products are set forth in Section 12.6 of the Collaboration
Agreement.

         7.7      ROW Territory Intellectual Property Infringement Claims. Each
Party's indemnification obligations to the other Party with respect to any
actions, claims, demands, suits or other legal proceedings are brought or
threatened to be brought against either Party by a third party for infringement
of such third party's trademarks, know-how, Patent Rights or other intellectual
property rights relating to Pfizer's commercialization of Products in the ROW
Territory by virtue of the Parties' manufacture, use, sale, offer for sale or
importation of Products hereunder or under the Collaboration Agreement in
furtherance of such commercialization of Products in the ROW Territory are set
forth in Section 12.6 of the Collaboration Agreement.

         7.8      Ownership and Prosecution of Patent Rights Included in the
Collaboration Intellectual Property. As between Eyetech and Pfizer, (a) Eyetech
shall solely own all inventions included in the Collaboration Intellectual
Property invented solely by Eyetech's employees and agents, (b) Pfizer shall
solely own all inventions included in the Collaboration Intellectual Property
invented solely by Pfizer's employees and agents, and (c) the Parties shall
jointly own all inventions included in the Collaboration Intellectual Property
invented by employees and agents of both Parties. Inventorship shall be
determined in accordance with United States patent

                                       37


law. Each Party shall have the first right to prosecute and maintain Patent
Rights included in the Collaboration Intellectual Property solely owned by such
Party and Eyetech shall have the first right to prosecute and maintain Patent
Rights included in the Collaboration Intellectual Property jointly owned by the
Parties. Neither Party shall abandon any Patent Rights included in the
Collaboration Intellectual Property that such Party has the first right to
prosecute and maintain without at least 90 days' prior notice of such
abandonment to the other Party. If a Party decides to abandon any such Patent
Rights, the other Party shall have the option to continue the prosecution and
maintenance of such Patent Rights in the name(s) of the Party or Parties owning
such Patent Rights and at such other Party's expense. The costs of prosecuting
and maintaining Patent Rights included in the Collaboration Intellectual
Property shall be shared equally by the Parties in the US Territory and borne
entirely by Pfizer in the ROW Territory; provided that either Party may elect
not to pay such costs with respect to any given Patent Rights included in the
Collaboration Intellectual Property being prosecuted and/or maintained by the
other Party incurred from and after such time as such Party notifies the other
Party of such election, and thereafter any licenses granted in this Agreement by
the other Party to the Party making such election shall exclude such Patent
Rights. Such costs of prosecuting and maintaining Patent Rights included in the
Collaboration Intellectual Property in the US Territory shall be included in the
Parties' Quarterly Expense Reports pursuant to Section 8.6(b) of the
Collaboration Agreement. Pfizer shall reimburse Eyetech for all such costs of
prosecuting and maintaining Patent Rights included in the Collaboration
Intellectual Property in the ROW Territory incurred by Eyetech within thirty
(30) days after receiving any invoice from Eyetech for such costs.

                                       38


                                    ARTICLE 8

                    REPRESENTATIONS, WARRANTIES AND COVENANTS

         8.1      Eyetech Representations and Warranties. Eyetech hereby
represents and warrants, as of the date hereof, to Pfizer as follows:

                  (a)      To the best of Eyetech's knowledge, (i) the issued
Eyetech Patent Rights are valid and enforceable patents, (ii) no third party is
infringing any such Eyetech Patent Rights and (iii) except for the third party
intellectual property rights referred to in the letter from Harsha Murthy to
Larry Miller dated December 17, 2002, the manufacture, use, sale, offer for sale
or importation by Pfizer or Eyetech of the Compound described in Exhibit 1.8 or
the Product being used by Eyetech in clinical trials as of the Execution Date
will not infringe any issued patents of third parties and are not covered by
third party patent applications containing claims that would, if issued, be
infringed. Eyetech has furnished to Pfizer all material information in its
possession requested by Pfizer as to the foregoing in the written requests
identified in the letter from Larry Miller to Harsha Murthy dated December 17,
2002. Except with respect to patents and patent applications subject to the Isis
License, Gilead License and Shearwater License listed on Exhibit 1.18, Eyetech
is the legal and beneficial owner of all the Eyetech Patent Rights and all of
the Eyetech Technical Information, and, except as set forth in Exhibit 8.1(i),
no other person, firm, corporation or other entity has any right, interest or
claim in or to, and Eyetech has not entered into any agreement granting any
right, interest or claim in or to, the Eyetech Patent Rights or Eyetech
Technical Information; provided that Eyetech gives no representation or warranty
as to whether any third party has independently developed rights to scientific
or technical information or related know-how or trade secrets. Except with
respect to patents and patent applications licensed to Eyetech under the
MEEI/Draper License, Exhibit 1.18 is a complete and correct list of all patents
and patent applications in the Territory owned by or licensed to Eyetech or any
of its Subsidiaries (and indicating which are owned and which are licensed)
relating to the

                                       39


manufacture, use, sale, offer for sale or importation of the Compound or any
Product. Except with respect to the matters set forth in (x) the letter from
Harsha Murthy to Larry Miller dated December 17, 2002 and (y) Exhibit 8.1(i), to
the best of Eyetech's knowledge, Eyetech or its Subsidiaries own or possess
adequate licenses or other valid rights to use all patents, patent rights and
know-how (collectively, "Intellectual Property") necessary to manufacture the
Compound described in Exhibit 1.8 and the Product being used by Eyetech in
clinical trials as of the Execution Date in the Territory and to distribute, use
and sell such Compound and such Product in the Territory, all free of any lien,
encumbrance, liability or other restriction.

                  (b)      Eyetech has disclosed to Pfizer all material
information known to Eyetech relating to: (i) the drug quality, including
stability, variability, impurities and delivery performance in each case
relating to the Product, and (ii) changes made by Eyetech or its Affiliates
after the initiation of Phase III Clinical Studies for the Products relating to
formulation, packaging and method of manufacture and formulation and to
processing parameters, and (iii) the status of discussions with FDA or any
Governmental Authorities directly relating thereto, and (iv) clinical trial site
and contract research organization compliance with all provisions of the Act
governing clinical investigations, and (v) the safety and efficacy of the
Products.

                  (c)      Eyetech has the corporate power and authority to
execute and deliver this Agreement and the Collaboration Agreement and to
perform its obligations hereunder and thereunder, and the execution, delivery
and performance of this Agreement and the Collaboration Agreement by Eyetech
have been duly and validly authorized and approved by proper corporate action on
the part of Eyetech, and Eyetech has taken all other action required by Law, its
certificate of incorporation or by-laws or any agreement to which it is a party
or by which it or its assets are bound required to authorize such execution,
delivery and (subject to obtaining all

                                       40


necessary governmental approvals with respect to the manufacture, use, sale,
offer for sale or importation of Products and subject to any necessary HSR
Clearance) performance. Assuming due authorization, execution and delivery on
the part of Pfizer, each of this Agreement and the Collaboration Agreement
constitutes a legal, valid and binding obligation of Eyetech, enforceable
against Eyetech in accordance with its respective terms.

                  (d)      The execution and delivery of this Agreement and the
Collaboration Agreement by Eyetech and the performance by Eyetech contemplated
hereunder and thereunder will not violate (subject to obtaining all necessary
governmental approvals with respect to the manufacture, use, sale, offer for
sale or importation of Products and subject to obtaining any necessary HSR
Clearance) any ordinance, Law, decree or government regulation or any order of
any court or other governmental department, authority, agency or instrumentality
therein.

                  (e)      Neither the execution and delivery of this Agreement
or the Collaboration Agreement nor the performance hereof or thereof by Eyetech
requires Eyetech to obtain any permits, authorizations or consents from any
governmental body (subject to obtaining all necessary governmental approvals
with respect to the manufacture, use, sale, offer for sale or importation of
Products and subject to obtaining any necessary HSR Clearance) or from any other
person, firm or corporation, and such execution, delivery and performance will
not result in the breach of or give rise to any termination of any agreement or
contract to which Eyetech may be a party which relates to the Eyetech Patent
Rights, Eyetech Technical Information, the Compound or the Products.

                  (f)      Except for the matters referred to in Exhibit 8.1(f),
there is no action, claim, demand, suit, proceeding, arbitration, grievance,
citation, summons, subpoena, inquiry or investigation of any nature, civil,
criminal, regulatory or otherwise, in law or in equity, pending

                                       41


or, to the best knowledge of Eyetech, threatened against Eyetech or its
Affiliates in connection with the Compound, the Product or any Eyetech Patent
Rights or against or relating to the transactions contemplated by this Agreement
or the Collaboration Agreement. To the best knowledge of Eyetech, except for the
matters referred to in Exhibit 8.1(f), there is no action, claim, demand, suit,
proceeding, arbitration, grievance, citation, summons, subpoena, inquiry or
investigation of any nature, civil, criminal, regulatory or otherwise, in law or
in equity, pending or threatened against, Isis, Gilead, Shearwater or any of
their respective Affiliates in connection with the Compound, the Product or any
Eyetech Patent Rights or against or relating to the transactions contemplated by
this Agreement or the Collaboration Agreement.

                  (g)      The Gilead License as heretofore delivered by Eyetech
to Pfizer represents the complete agreement and understanding between Gilead and
Eyetech relating to the Eyetech Patent Rights and Eyetech Technical Information
which are the subject of the Gilead License. The Isis License as heretofore
delivered by Eyetech to Pfizer represents the complete agreement and
understanding between Isis and Eyetech relating to the Eyetech Patent Rights and
Eyetech Technical Information which are the subject of the Isis License. The
Shearwater License as heretofore delivered by Eyetech to Pfizer represents the
complete agreement and understanding between Shearwater and Eyetech relating to
the Eyetech Patent Rights and Eyetech Technical Information which are the
subject of the Shearwater License. None of the Gilead License, Isis License or
Shearwater License has been modified, supplemented or amended, other than by
amendments thereto provided to Pfizer prior to the Execution Date. Except for
the Gilead License, the Isis License and the Shearwater License, there are no
agreements to which Eyetech or any of its Affiliates is a party pursuant to
which Eyetech or any of its Affiliates has a license, or an option to obtain a
license, or holds an immunity from suit, with respect to patents which (i)

                                       42


are pending, applied for, granted or registered, and (ii) but for Eyetech's
rights under such agreements, could be asserted by third parties to be infringed
by the distribution, use, or sale of the Compound, or the Product being used by
Eyetech in clinical trials as of the Execution Date, in the Territory. Eyetech
has previously delivered to Pfizer all of its agreements with any third parties
regarding supply and manufacture of all goods and services relating to the
Compound and the Product being used by Eyetech in clinical trials as of the
Execution Date (the "Supply Agreements"), none of which have been modified,
supplemented or amended.

                  (h)      Each of the Gilead License, Isis License and
Shearwater License is in full force and effect, all payments to date required to
be made thereunder by Eyetech have been made, and Eyetech is in compliance in
all material respects with its respective obligations thereunder.

                  (i)      Exhibit 8.1(i) sets forth all sources of funding,
grants or loans Eyetech has received and, to Eyetech's knowledge, that Gilead or
NeXstar Pharmaceuticals, Inc. has received, in connection with the discovery,
research and development of the Compound and any Product.

                  (j)      Exhibit 8.1(j) sets forth a list of (i) all
pre-clinical and clinical studies of the Compound, together with the dates and
brief descriptions of such studies, previously or currently undertaken or
sponsored by Eyetech or its Affiliates and by any third-party investigator under
any contract with Eyetech, data and reports relating to which have been
previously provided to Pfizer and (ii) material correspondence and contact
information with the FDA and other Regulatory Authorities regarding the Compound
and the Products, copies of which have been previously provided to Pfizer.

                                       43


                  (k)      No person owns 50% or more of the voting securities
of Eyetech. Eyetech has no subsidiaries other than those whose financial
statements are maintained on a consolidated basis with those of Eyetech.

         8.2      Pfizer Representations and Warranties.

         Pfizer hereby represents and warrants, as of the date hereof, to
Eyetech as follows:

                  (a)      Pfizer has the corporate power and authority to
execute and deliver this Agreement and the Collaboration Agreement and to
perform its obligations hereunder and thereunder, and the execution, delivery
and performance of this Agreement and the Collaboration Agreement by Pfizer have
been duly and validly authorized and approved by proper corporate action on the
part of Pfizer, and Pfizer has taken all other action required by Law, its
certificate of incorporation or by-laws or any agreement to which it is a party
or by which it or its assets are bound required to authorize such execution,
delivery and (subject to obtaining all necessary governmental approvals with
respect to the manufacture, use, sale, offer for sale or importation of Products
and subject to any necessary HSR Clearance) performance. Assuming due
authorization, execution and delivery on the part of Eyetech, each of this
Agreement and the Collaboration Agreement constitutes a legal, valid and binding
obligation of Pfizer, enforceable against Pfizer in accordance with its
respective terms.

                  (b)      The execution and delivery of this Agreement and the
Collaboration Agreement and the performance by Pfizer contemplated hereunder and
thereunder will not violate (subject to obtaining appropriate governmental
health, pricing and reimbursement approvals) any state, federal or other statute
or regulation or any order of any court or other governmental department,
authority, agency or instrumentality therein.

                                       44


                  (c)      There is no action, claim, demand, suit, proceeding,
arbitration, grievance, citation, summons, subpoena, inquiry or investigation of
any nature, civil, criminal, regulatory or otherwise, in law or in equity,
pending or relating to or, to the knowledge of Pfizer, threatened against Pfizer
in connection with or relating to the transactions contemplated by this
Agreement or the Collaboration Agreement, and assuming the accuracy of the
representations and warranties of Eyetech contained herein, Pfizer is unaware
and has no reason to be aware of any basis for the foregoing.

                  (d)      Neither the execution and delivery of this Agreement
or the Collaboration Agreement nor the performance hereof or thereof by Pfizer
requires Pfizer to obtain any permits, authorizations or consents from any
governmental body (subject to obtaining all necessary governmental approvals
with respect to the manufacture, use, sale, offer for sale or importation of the
Product and subject to obtaining any necessary HSR Clearance) or from any other
person, firm or corporation and such execution, delivery and performance will
not result in the breach of or give rise to any termination of any agreement or
contract to which Pfizer may be a party, except that would not reasonably be
expected to adversely affect the ability of Pfizer to perform its obligations
under this Agreement.

         8.3      Eyetech Covenants.

         Eyetech covenants and agrees as follows:

                  (a)      As soon as practicable after the date hereof, Eyetech
will provide Pfizer with accurate, complete and final versions of all reports
and studies previously submitted to Pfizer to the extent not previously
provided, together with access to any related data and files, and to principal
investigators and such persons participating in the studies.

                                       45


                  (b)      Subject to Pfizer's and its sublicensees' performance
of their obligations under this Agreement and the Collaboration Agreement
(including such obligations relating to third party royalties), Eyetech shall
use commercially reasonable efforts to maintain the Isis License, Gilead License
and Shearwater License in good standing and not to take any actions (or omit or
fail to take any actions) which would result in a breach of any of such license
agreements. Eyetech agrees that it shall not amend, modify or supplement any of
the Isis License, Gilead License or Shearwater License in any manner that would
adversely affect Pfizer's rights under this Agreement or the Collaboration
Agreement without the consent of Pfizer. In addition, Eyetech shall not sell,
assign, convey, pledge, hypothecate or otherwise transfer any of the Isis
License, Gilead License or Shearwater License or Eyetech's rights or obligations
thereunder, or otherwise make any commitments or offers in a manner that
conflicts with Pfizer's rights hereunder without the consent of Pfizer. Eyetech
shall immediately notify Pfizer upon receipt by Eyetech or its Affiliates of any
notice from Gilead, Isis or Shearwater of such party's intent to terminate
Eyetech's rights, exercise its respective rights or remedies thereunder, or
otherwise take any action that may adversely affect Pfizer's rights under this
Agreement.

         8.4      No Consequential or Punitive Damages.

                  (a)      NEITHER PARTY HERETO WILL BE LIABLE FOR INDIRECT,
INCIDENTAL, CONSEQUENTIAL, SPECIAL, EXEMPLARY OR PUNITIVE DAMAGES ARISING FROM
OR RELATING TO ANY BREACH OF THIS AGREEMENT, OR FOR LOST PROFITS ARISING FROM OR
RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF ANY NOTICE OF SUCH
DAMAGES. NOTHING IN THIS SECTION 8.4 IS INTENDED TO LIMIT OR RESTRICT THE
INDEMNIFICATION

                                       46


RIGHTS OR OBLIGATIONS OF EITHER PARTY UNDER THIS AGREEMENT WITH RESPECT TO THIRD
PARTY CLAIMS.

                  (b)      Notwithstanding anything to the contrary contained in
this Agreement, in the case of any claim by any party alleging any breach of
this Agreement by the other party, any payment obligation pursuant to Articles 3
and 4 of this Agreement (the "Payment Obligations"), will not be considered as
constituting special, incidental, indirect or consequential damages under this
Agreement (and, accordingly, nothing in Section 8.4(a) shall prevent recovery or
inclusion in the definition of "Losses").

                                    ARTICLE 9

                                      TERM

         9.1      This Agreement shall be effective as of the date first set
forth above and shall remain in effect for the Term.

                                   ARTICLE 10

                                   TERMINATION

         10.1     Termination for Convenience. This Agreement shall terminate:
(a) upon (i) twelve (12) months prior written notice from Pfizer of termination
of this Agreement, if such notice is given prior to the first Launch of a
Product in the Territory, (ii) nine (9) months prior written notice from Pfizer
of termination of this Agreement, if such notice is given prior to the fifth
anniversary of the first Launch of a Product in the Territory or (iii) six (6)
months prior written notice from Pfizer of termination of this Agreement, if
such notice is given after the fifth anniversary of the first Launch of a
Product in the Territory, in each case which notice Pfizer shall be entitled to
submit in its absolute and sole discretion; and (b) at Eyetech's sole option,
exercisable by giving written notice of termination to Pfizer, following
termination or expiration

                                       47


of the Collaboration Agreement as provided in Sections 13.1, 13.2(b), 13.4,
13.5, 13.6, 13.8 and 17.11 of the Collaboration Agreement.

         10.2     Termination for Breach. Eyetech shall have the rights set
forth below in this Section 10.2 by notice to Pfizer, and Pfizer shall have the
rights set forth below in this Section 10.2 by notice to Eyetech.

                  (a)      Upon Eyetech's notice to Pfizer that a Material
Default by Pfizer has occurred, the Parties will meet to discuss in good faith
whether a plan to remedy the Material Default can be mutually agreed. If the
Parties fail to so agree within thirty (30) days after the date of such notice,
Section 10.2(b) below shall apply. Notwithstanding the foregoing provisions of
this Section 10.2(a), in the case of a payment default, the provisions of
Section 10.2(b) below shall apply without any obligation to meet to discuss
remedies pursuant to this Section 10.2(a).

                  (b)      Subject to the terms hereof, upon the occurrence of
any Material Default by Pfizer, Eyetech may, upon ninety (90) days prior written
notice, terminate this Agreement. Eyetech may give the notice specified in this
Section 10.2(b) concurrently with the notice specified in Section 10.2(a) and
shall not give the notice specified in this Section 10.2(b) later than sixty
(60) days after the date of the notice specified in Section 10.2(a).

                  (c)      Upon Pfizer's notice to Eyetech that a Material
Default by Eyetech has occurred, the Parties will meet to discuss in good faith
whether a plan to remedy the Material Default can be mutually agreed. If the
Parties fail to so agree within thirty (30) days after the date of such notice,
Section 10.2(d) below will apply. Notwithstanding the foregoing provisions of
this Section 10.2(c), in the case of a payment default, the provisions of
Section 10.2(d) below shall apply without any obligation to meet to discuss
remedies pursuant to this Section 10.2(c).

                                       48


                  (d)      Subject to the terms hereof, upon the occurrence of
any Material Default by Eyetech, Pfizer may, upon ninety (90) days prior notice,
terminate this Agreement. Pfizer may give the notice specified in this Section
10.2(d) concurrently with the notice specified in Section 10.2(c) and shall not
give the notice specified in this Section 10.2(d) later than sixty (60) days
after the date of the notice specified in Section 10.2(c).

                  (e)      "Material Default" means:

                           (i)      any default by any Party hereto of its
covenants, agreements or other performance obligations under this Agreement or
the Collaboration Agreement other than a payment default (which may include any
one or more defaults of any specific covenant, agreement or other performance
obligations contained herein) that, when aggregated with any other such uncured
defaults by such Party, is (a) material to this Agreement and the Collaboration
Agreement taken as a whole, and (b) shall have continued for thirty (30) days
after written notice thereof was provided to the alleged defaulting Party by the
non-defaulting Party (or, if such default cannot be cured within such thirty
(30) day period, if the alleged defaulting Party does not promptly commence and
diligently continue all reasonable actions to cure such defaults during such
thirty (30) day period or does not cure in full such default within sixty (60)
days after written notice thereof was provided to the alleged defaulting Party);
or

                           (ii)     any default by any Party hereto of its
payment obligations hereunder that shall have continued for fifteen (15) days
after written notice thereof was provided to the alleged defaulting Party by the
non-defaulting Party; provided that, in the event of a good faith payment
dispute, such fifteen (15) day cure period shall be extended through the
fifteenth day following the date on which such dispute is resolved if the
alleged defaulting Party paid all undisputed amounts when due and provided the
non-defaulting Party with a reasonably

                                       49


detailed written explanation of the alleged defaulting Party's basis for
disputing the payment obligation within the fifteen (15) day period following
the written notice of the default by the non-defaulting Party.

         10.3     Breach of Non-Competition Obligations. If a Party breaches its
obligations under Section 10.5, the other Party may terminate this Agreement
upon thirty (30) days prior written notice of termination to the breaching
Party; provided that, if the breaching Party permanently ceases the activity or
eliminates the condition, as applicable, giving rise to the breach of its
obligations under Section 10.5 prior to the expiration of such thirty (30) day
notice period, such termination shall not take effect.

         10.4     Effects of Termination. In the event that this Agreement is
terminated in accordance with Section 10.1 or 10.2:

                  (a)      the licenses set forth in Sections 2.1 and 2.2 shall
terminate;

                  (b)      Eyetech's right to receive all payments due and owing
under Articles 3 and 4 hereof as of the effective date of such termination shall
survive;

                  (c)      each Party's right to recover against the other Party
for any breaches of any representations, warranties, covenants and agreements of
such other Party under this Agreement as of the effective date of such
termination shall survive;

                  (d)      the provisions of Articles 5 and 11, Section 6.2 and
this Section 10.4 shall survive the expiration or termination of this Agreement
in accordance with their terms;

                  (e)      Pfizer shall promptly and in no event later than
sixty (60) days after termination or expiration (i) transfer to Eyetech
ownership of all governmental or regulatory filings and approvals (including all
INDs and NDAs (and their foreign equivalents)) relating to Products, (ii)
deliver to Eyetech all pre-clinical and clinical data and information in
Pfizer's

                                       50


possession or control relating to the Products, (iii) deliver to Eyetech copies
of all reports, records, regulatory correspondence and other materials in
Pfizer's possession or control relating to the pre-clinical and clinical
development, regulatory approval, manufacture, distribution and sales of
Products, including without limitation all information contained in the
centralized global safety database established and maintained by Pfizer in
accordance with the Regulatory Services Agreement, and (iv) deliver to Eyetech
all data and information relating to process conditions, in-process controls,
analytical methodology and formulation, in each case as developed by Pfizer and
relating to the manufacturing of Products, solely for use in connection with the
Products;

                  (f)      Pfizer shall grant to Eyetech a non-exclusive,
non-royalty-bearing, perpetual right and license under Pfizer's and its
Affiliates' rights in Collaboration Intellectual Property to develop, make, have
made, use, sell, offer for sale, import, and have imported Products in the
Territory;

                  (g)      if Pfizer has taken over responsibility for
contracting with API Bulk Drug Substance Supplier(s) and/or Fill and Finish
Services Supplier(s), or for performing, either directly or through Affiliates,
services that otherwise would be performed by API Bulk Drug Substance
Supplier(s) and/or Fill and Finish Services Supplier(s), Pfizer shall continue
to manufacture or have manufactured (including filling and finishing) Product
being manufactured by Pfizer and/or its Affiliates, on the terms and conditions
in effect immediately prior to termination, for worldwide supply to Eyetech
during the shorter of (i) the twenty-four (24) month period following
termination and (ii) the period following termination and prior to Eyetech's
establishment of its own manufacturing capabilities and/or third party
manufacturing and supply arrangements with respect to the Products; and Pfizer
shall cooperate with Eyetech during such period to assign to Eyetech all third
party manufacturing and supply (including fill

                                       51


and finish services) agreements and transfer to Eyetech all manufacturing
know-how, and to provide Eyetech with such other assistance as may be requested
by Eyetech, reasonably required by Eyetech for the purpose of establishing its
own manufacturing capabilities and/or third party manufacturing and supply
arrangements with respect to the Products;

                  (h)      Pfizer shall permit Eyetech, at Eyetech's option, to
purchase, at Manufacturing Cost, all or any part of Pfizer's worldwide unsold
inventory of raw materials for Products, work-in-progress Products and finished
Products as of the effective date of termination, provided that, Pfizer shall
not be required to sell to Eyetech inventories of raw materials for Products and
work-in-progress Products that Pfizer needs to satisfy its obligations under
Section 10.4(g); and

                  (i)      unless this Agreement expressly provides that
termination shall be the sole and exclusive remedy for a particular breach
hereof, either Party's right to commence an action, suit or other proceeding
claiming breach of this Agreement by the other Party shall survive termination.

         Upon any termination of this Agreement, each Party shall promptly
return to the other Party all written Confidential Information, and all copies
thereof, of such other Party.

         10.5     Non-Competition. During the Term and Co-Promotion Term (as
defined in the Collaboration Agreement), neither Pfizer nor Eyetech nor any of
their Affiliates shall, directly or indirectly, manufacture commercial
quantities of, or market, sell, detail or promote, any Competing Product in the
Territory (excluding the EU), except for the Products as provided in this
Agreement and in the Collaboration Agreement. If (a) either Party terminates the
Collaboration Agreement pursuant to Section 13.2, 13.4 or 13.5 of the
Collaboration Agreement or (b) Pfizer terminates this Agreement pursuant to
Section 10.1 of this Agreement, then the

                                       52


prohibition set forth in the immediately preceding sentence shall, in the case
of a termination described in clause (a) of this sentence, be extended with
respect to the other Party and its Affiliates through a period immediately
following the effective date of such termination of:

                           (i)      [**], if such termination occurs [**],

                           (ii)     [**], if such termination occurs [**], or

                           (iii)    [**], if such termination occurs [**],

and, in the case of a termination described in clause (b) of this sentence, be
extended with respect to Pfizer and its Affiliates through a period immediately
following the effective date of such termination of:

                           (i)      [**], if such termination occurs [**],

                           (ii)     [**], if such termination occurs [**], or

                           (iii)    [**], if such termination occurs [**].

Notwithstanding the foregoing, Eyetech and its Affiliates, either directly or in
collaboration with third parties, shall be entitled to commercialize products
that contain or are based on the Compound for use outside the Field ("POF"),
provided such products are sold under product trademarks other than the
Trademark(s) and are: (a) in a different dosage strength; (b) in a different
formulation; or (c) with a different delivery system; in each case not intended
or developed for use in the Field. Eyetech and its Affiliates shall not conduct
clinical trials or marketing studies with respect to such POF to support use of
such POF in the Field, and Eyetech and its Affiliates shall require any third
party collaborator to comply with this undertaking with respect to any POF.
Subject to the provisions of Section 10.6, any breach of this Section 10.5 shall
entitle the non-breaching Party to terminate this Agreement pursuant to Section
10.3.

                                       53


         10.6     Acquisitions Involving Competing Products. Notwithstanding the
provisions of Section 10.5 above, if during the Term Pfizer or Eyetech or any of
their respective Affiliates acquires or agrees to acquire a Competing Product in
the Territory through acquisition of or merger with a company or entity, or is
acquired or agrees to be acquired by a company or entity that owns a Competing
Product in the Territory, Pfizer or Eyetech, as applicable, shall have thirty
(30) days from the date of public announcement of the acquisition or merger to
notify the other Party as to whether Pfizer or Eyetech or the acquiring company
or entity, as applicable, intends to divest its interest in such Competing
Product. In the event that Pfizer or Eyetech or the acquiring company or entity,
as applicable, elects to divest its interest in such Competing Product, such
Party or the acquiring company or entity shall use reasonable efforts to
identify a third party purchaser to whom such Party or the acquiring company or
entity will divest its interest in such Competing Product and to enter into a
definitive agreement with such third party for such divestiture as soon as
reasonably practicable under the circumstances. If Pfizer or Eyetech or the
acquiring company or entity, as applicable, elects not to divest its interest in
such Competing Product or fails to divest its interest in such Competing Product
within [**] after the closing of the transaction for which Pfizer or Eyetech, as
applicable, has provided the other Party with notice, then the other Party shall
have the option, upon written notice to Pfizer or Eyetech, as applicable, given
no later than ninety (90) days after the earlier of: (i) Pfizer's or Eyetech's
written notice, as applicable, of its election not to divest such Competing
Product; and (ii) the end of such [**] period described above, to terminate this
Agreement pursuant to Section 10.5, treating such election not to divest or
failure to divest such Competing Product as a breach of Section 10.5.
Notwithstanding the provisions of Section 10.5 and this Section 10.6, however,
neither Party shall have the right to terminate this Agreement based on the
other Party's or its

                                       54


Affiliate's or acquiring company's or entity's failure to divest its interest in
a Competing Product that is sold only in the EU.

         10.7     Competing Products in the EU. Notwithstanding the provisions
of Sections 10.5 and 10.6 above, (a) if Pfizer or any of its Affiliates,
directly or indirectly, manufactures commercial quantities of, or markets,
sells, details or promotes, any Competing Product in the EU, the licenses
granted by Eyetech to Pfizer in Section 2.1(a) shall at Eyetech's option, which
option shall be exercisable upon notice by Eyetech to Pfizer, convert to
nonexclusive licenses, and (b) if Eyetech or any of its Affiliates, directly or
indirectly, manufactures commercial quantities of, or markets, sells, details or
promotes, any Competing Product in the EU, then with respect to any given Net
Sales of Products in the EU, subject to the limitations set forth in Section
4.1(c), the royalties set forth in Section 4.1(a) or 4.1(b) shall thereafter be
reduced by [**] percent ([**]%).

                                   ARTICLE 11

                               DISPUTE RESOLUTION

         11.1     Arbitration. Any payment dispute or dispute arising out of any
audit conducted pursuant to Section 5.5 shall be resolved through binding
arbitration as follows:

                  (a)      A Party may submit such dispute to arbitration by
notifying the other Party, in writing, of such dispute. Within thirty (30) days
after receipt of such notice, the Parties shall designate in writing a single
arbitrator to resolve the dispute; provided, however, that if the Parties cannot
agree on an arbitrator within such 30-day period, the arbitrator shall be
selected by the New York, New York office of the American Arbitration
Association (the "AAA"). The arbitrator shall be a lawyer knowledgeable and
experienced in the law concerning the subject

                                       55


matter of the dispute, and shall not be an Affiliate, employee, consultant,
officer, director or stockholder of any Party.

                  (b)      Within thirty (30) days after the designation of the
arbitrator, the arbitrator and the Parties shall meet, at which time the Parties
shall be required to set forth in writing all disputed issues and a proposed
ruling on the merits of each such issue.

                  (c)      The arbitrator shall set a date for a hearing, which
shall be no later than thirty (30) days after the submission of written
proposals pursuant to Section 11.1(b), to discuss each of the issues identified
by the Parties. The Parties shall have the right to be represented by counsel.
Except as provided herein, the arbitration shall be governed by the Commercial
Arbitration Rules of the AAA; provided, however, that the Federal Rules of
Evidence shall apply with regard to the admissibility of evidence.

                  (d)      The arbitrator shall use his or her best efforts to
rule on each disputed issue within thirty (30) days after the completion of the
hearings described in Section 11.1(c). The determination of the arbitrator as to
the resolution of any dispute shall be binding and conclusive upon all Parties.
All rulings of the arbitrator shall be in writing and shall be delivered to the
Parties.

                  (e)      The (i) attorneys' fees of the Parties in any
arbitration, (ii) fees of the arbitrator and (iii) costs and expenses of the
arbitration shall be borne by the Parties as determined by the arbitrator.

                  (f)      Any arbitration pursuant to this Section 11.1 shall
be conducted in New York, New York. Any arbitration award may be entered in and
enforced by a court in accordance with Section 12.4.

                                       56


         11.2     No Limitation. Nothing in Section 11.1 shall be construed as
limiting in any way the right of a Party to seek a temporary restraining order
or preliminary injunction with respect to any actual or threatened breach of
this Agreement from, or to bring an action in aid of arbitration in, a court in
accordance with Section 12.4. Should any Party seek a temporary restraining
order or preliminary injunction, then for purposes of determining whether to
grant such temporary restraining order or preliminary injunction, the dispute
underlying the request for such temporary restraining order or preliminary
injunction may be heard by a court in accordance with Section 12.4.

                                   ARTICLE 12

                                  MISCELLANEOUS

         12.1     Force Majeure. No Party shall be liable for failure of or
delay in performing obligations set forth in this Agreement, and no Party shall
be deemed in breach of its obligations, if such failure or delay is due to
natural disasters or any causes reasonably beyond the control of such Party.

         12.2     Assignment. Except as otherwise provided herein, neither this
Agreement nor any of the rights or obligations hereunder may be assigned by
either Party without the prior consent of the other Party, except assignment, in
whole or in part, to an Affiliate of the assigning Party so long as such
Affiliate agrees in writing to be bound by the terms of this Agreement. The
assigning Party shall remain primarily liable hereunder notwithstanding any such
assignment. Any attempted assignment in violation hereof shall be void.

         12.3     Governing Law. This Agreement shall be governed by the laws of
the State of New York without regard to its conflict of laws provisions.

                                       57


         12.4     Jurisdiction. Except with respect to disputes arising out of
audits conducted pursuant to Section 5.5 or with respect to payment disputes,
which shall be resolved through binding arbitration in accordance with Article
11, each Party (a) irrevocably submits to the exclusive jurisdiction in the
United States District Court for the Southern District of New York and any State
courts sitting in New York, New York (collectively, the "Courts"), for purposes
of any action, suit or other proceeding arising out of this Agreement, and (b)
agrees not to raise any objection at any time to the laying or maintaining of
the venue of any such action, suit or proceeding in any of the Courts,
irrevocably waives any claim that such action, suit or other proceeding has been
brought in an inconvenient forum and further irrevocably waives the right to
object, with respect to such action, suit or other proceeding, that such Court
does not have any jurisdiction over such Party.

         12.5     Notices. All notices, instructions and other communications
hereunder or in connection herewith shall be in writing, shall be sent to the
address below and shall be: (a) delivered personally; (b) sent by registered or
certified mail, return receipt requested, postage prepaid; (c) sent via a
reputable nationwide overnight courier service; or (d) sent by facsimile
transmission. Any such notice, instruction or communication shall be deemed to
have been delivered upon receipt if delivered by hand, three (3) Business Days
after it is sent by registered or certified mail, return receipt requested,
postage prepaid, one (1) Business Day after it is sent via a reputable
nationwide overnight courier service, or when transmitted with electronic
confirmation of receipt, if transmitted by facsimile (if such transmission is on
a Business Day; otherwise, on the next Business Day following such
transmission). Notices shall be addressed as follows:

                                       58


If to Pfizer:                                 If to Eyetech:

PFIZER INC.                                   EYETECH PHARMACEUTICALS, INC.
235 East 42nd Street                          500 Seventh Avenue, 18th Floor
New York, New York 10017-5755                 New York, New York  10018

Fax: 212-808-8652                             Fax: 212-997-9251

Attention: President, Pfizer Pharmaceutical   Attention: Chief Executive Officer
           Group

with a copy to:                               with a copy to:

PFIZER INC.                                   Hale and Dorr LLP
235 East 42nd Street                          60 State Street
New York, New York 10017-5703                 Boston, Massachusetts 02109
Attn.: Senior Vice President and General      Attn.: David E. Redlick, Esq.
       Counsel

Fax: 212-808-8924                             Fax: 617-526-5000

Either Party may change its address by giving notice to the other Party in the
manner provided above.

         12.6     Entire Agreements; Amendments. This Agreement, together with
the Collaboration Agreement and the other Other Product-Related Agreements, sets
forth the complete understanding of the Parties with respect to the Parties'
joint development and commercialization of Products and supersedes all prior
understandings and writings relating to such subject matter. None of the terms
or this Agreement shall be amended, supplemented or modified except in writing
signed by the Parties hereto. The Parties understand and agree that each of this
Agreement and the Collaboration Agreement are considered to be a single
integrated agreement and contain intellectual property rights and licenses
relating to the Products for which Pfizer has bargained and paid consideration.
If any applicable court of competent jurisdiction determines this Agreement or
the Collaboration Agreement to be executory in nature, such agreements shall
otherwise be deemed to be, for purposes of Section 365 (n) of the Bankruptcy

                                       59


Code, licenses of rights to "intellectual property" as defined under Section 101
of the Bankruptcy Code.

         12.7     Severability. If and solely to the extent that any provision
of this Agreement shall be invalid or unenforceable, or shall render this entire
Agreement to be unenforceable or invalid, such offending provision shall be of
no effect and shall not effect the validity of the remainder of this Agreement
or any of its provisions; provided, however, the Parties shall use their
respective reasonable efforts to renegotiate the offending provisions to best
accomplish the original intentions of the Parties.

         12.8     Waivers. Any term or condition of this Agreement may be waived
at any time by the Party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly executed
by or on behalf of the Party or Parties waiving such term or condition. Neither
the waiver by any Party of any term or condition of this Agreement nor the
failure on the part of any Party, on one or more instances, to enforce any of
the provisions of this Agreement or to exercise any right or privilege, shall be
deemed or construed to be a waiver of such term or condition for any similar
instance in the future or of any subsequent breach hereof. All rights, remedies,
undertakings, obligations and agreements contained in this Agreement shall be
cumulative and none of them shall be a limitation of any other remedy, right,
undertaking, obligation or agreement.

         12.9     Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the Parties hereto and their respective permitted successors
and assigns.

         12.10    Further Assurances. Following the date hereof, Eyetech and
Pfizer shall and, to the extent this Agreement expressly imposes obligations on
its Affiliates, each Party shall cause each of its respective Affiliates to,
from time to time, execute and deliver such additional

                                       60


instruments, documents, conveyances or assurances and take such other actions as
shall be necessary or otherwise reasonably requested by Pfizer or Eyetech, to
confirm and assure the rights and obligations provided for in this Agreement,
and render effective the consummation of the transactions contemplated thereby.

         12.11 Third Party Beneficiaries. None of the provisions of this
Agreement shall be for the benefit of or enforceable by any third party
including, without limitation, any creditor of either Party. No third party
shall obtain any right under any provision of this Agreement or shall by reasons
of any such provision make any claim in respect of any debt, liability or
obligation (or otherwise) against either Party hereto.

         12.12 Performance by Subsidiaries and Affiliates. To the extent that
this Agreement imposes obligations on Subsidiaries and Affiliates of a Party,
such Party agrees to cause its Subsidiaries and Affiliates to perform such
obligations.

         12.13 Counterparts. This Agreement may be executed in any two or more
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together shall constitute one and the same document.

         12.14 Headings. Headings in this Agreement are included herein to ease
of reference only and shall have no legal effect. References to Sections and
Exhibits are to Sections and Exhibits of this Agreement unless otherwise
specified.

                                       61



         12.15 Offset. All amounts due and payable from Pfizer to Eyetech
pursuant to this Agreement are subject to offset in respect of the amount of any
liabilities of Eyetech paid by Pfizer to Gilead pursuant to Section 3 of the
Stand-By License Agreement between Pfizer and Gilead dated December 13, 2002.

         IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed as of the date first written above by their duly authorized officers.

PFIZER INC.                               EYETECH PHARMACEUTICALS, INC.

By:    /s/ Henry A. McKinnell             By:    /s/ David R. Guyer
       __________________________                __________________________

Name:  Henry A. McKinnell                 Name:  David R. Guyer
       __________________________                __________________________

Title: Chairman and CEO                   Title: CEO
       __________________________                __________________________
                                       62



                                   EXHIBIT 1.8

                                    COMPOUND

[**]

                                       63



                                  EXHIBIT 1.18

                              EYETECH PATENT RIGHTS



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                                       64





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                                       65





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                                       66





- ---------------------------------------------------------------------------------------------------------------
                  APPLICATION                                                        PATENT
COUNTRY              NUMBER            FILING DATE          STATUS                   NUMBER          ISSUE DATE
- ---------------------------------------------------------------------------------------------------------------
                                                                                      
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                                       67



                                 EXHIBIT 8.1(f)

                      CERTAIN INTELLECTUAL PROPERTY MATTERS

[**] which were previously disclosed to Pfizer.

                                       68



                                 EXHIBIT 8.1(i)

                                 FUNDING SOURCES

With respect to Eyetech, other than general corporate funding, Eyetech has not
received any funding, grants or loans in connection with the discovery, research
and development of the Compound or any Product.

To Eyetech's knowledge, with respect to Gilead or NeXstar Pharmaceuticals, other
than general corporate funding received by Gilead or NeXstar Pharmaceuticals,
neither Gilead nor NeXstar Pharmaceuticals has received any funding, grants or
loans in connection with the discovery, research and development of the Compound
or any Product.

To Eyetech's knowledge, the following Patent Rights were supported by grants
[**]. As a result, the Parties are subject to the provisions of Law referenced
in Section 2.1(f) of this Agreement.

                                       69



                                 EXHIBIT 8.1(j)

                                     STUDIES

8.1(j)(i): (A) The following is a list of all pre-clinical and clinical studies
of the Compound, together with the dates and brief descriptions of such studies,
previously or currently undertaken or sponsored by Eyetech or its Affiliates and
by any third-party investigator under any contract with Eyetech, data and
reports relating thereto which have been previously provided to Pfizer.

1.  [**]

    - Objectives:
              - Primary: [**]
    - Design:
              - [**]

    - NO-GO Criteria:
              - [**]
    - Logistics
              - [**]
2.  [**]

    - Objectives:
              - Primary: [**]
    - Design:
              - [**]
    - NO-GO Criteria:
              - [**]
    - Logistics
              - [**]
3.  [**]

    - Objectives:
              - Primary: [**]
    - Design:
              - [**]
    - NO-GO Criteria:
              - [**]
    - Logistics
              - [**]
4.  [**]

    - Objectives:
              - Primary: [**]
    - Design:
              - [**]
    - NO-GO Criteria:
              - [**]
    - Logistics
              - [**]
5.  [**]

    - Objectives:
              - Primary: [**]
    - Design:
              - [**]
    - NO-GO Criteria:
              - [**]
    - Logistics
              - [**]

                                       70



6. [**]
   -Objectives:
                -Primary: [**]
   -Design:
                -[**]
   -NO-GO Criteria:
                -[**]
   -Logistics
                -[**]

7. [**]

   -Objectives:
                -Primary: [**]
   -Design:
                -[**]
   -NO-GO Criteria:
                -[**]
   -Logistics
                -[**]

8. [**]
   -Objectives
                -Primary: [**]
   -Design:
                -[**]
   -NO-GO Criteria:
                -[**]
   -Logistics
                -[**]

8.1(j)(i): (B) In addition, Eyetech plans to undertake the following
clinical studies of the Compound:

   1. [**]
      -Objectives:
                -Primary: [**]
      -Design:
                -[**]
      -NO-GO Criteria:
                -[**]
      -Logistics
                -[**]

   2. [**]
      -Objectives:
                -Primary: [**]
      -Design:
                -[**]
      -NO-GO Criteria:
                -[**]
      -Logistics
                -[**]

   3. [**]
      -Objectives:
                -Primary: [**]
      -Design:
                -[**]
      -NO-GO Criteria:
                -[**]
      -Logistics
                -[**]


                                       71


4.       [**]
    -    Objectives:
         - Primary:[**]
    -    Design:
         -    [**]
    -    NO-GO Criteria:
         -    [**]
    -    Logistics
         -    [**]

5.       [**]
    -    Objectives:
         - Primary:[**]
    -    Design:
         -    [**]
    -    NO-GO Criteria:
         -    [**]
    -    Logistics
         -    [**]

6.       [**]
    -    Objectives:
         - Primary:[**]
    -    Design:
         -    [**]
    -    NO-GO Criteria:
         -    [**]
    -    Logistics
         -    [**]

7.       [**]
    -    Objectives:
         - Primary:[**]
    -    Design:
         -    [**]
    -    NO-GO Criteria:
         -    [**]
    -    Logistics
         -    [**]

8.       [**]
    -    Objectives:
         - Primary:[**]
    -    Design:
         -    [**]
    -    NO-GO Criteria:
         -    [**]
    -    Logistics
         -    [**]

9.       [**]
    -    Objectives:
         - Primary:[**]
    -    Design:
         -    [**]
    -    NO-GO Criteria:
         -    [**]
    -    Logistics
         -    [**]


8.1(j)(ii): The following is a list of all material correspondence and contact
information with the FDA and other Regulatory Authorities regarding the Compound
and the Products, copies of which have been previously provided to Pfizer.

                                       72



1.       EYE001 - [**] - FDA Correspondence (Updated 9/24/02)



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                                       73





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                                       74





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                                       75





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2.       [**] Correspondence (Updated 7/26/02)



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3.       [**] Correspondence (Updated 6/19/02)



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4.       [**] Correspondence (Updated 7/26/02)



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5.       [**] Correspondence (Updated 7/26/02)



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                                       76




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[**]6.   [**]Correspondence (Updated 6/19/02)



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7.       [**] Correspondence (Updated 8/29/01)



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8.       [**] Correspondence (Updated 7/26/02)



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                                       77




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9.   [**] Correspondence (Updated 6/19/02)



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10.      [**] Correspondence (Updated 6/19/02)



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11.      [**] Correspondence (Updated 6/19/02)



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12.      [**] Correspondence



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13.      [**] Correspondence (Updated 6/19/02)



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14.      [**] Correspondence (Updated 6/19/02)



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                                       78



15.      [**] Correspondence (Updated 7/26/02)



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16.      [**] Correspondence



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[**]

                                       79



17.      [**] Correspondence (Updated 6/19/02)



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                                       80

EX-10.52

                                                                   EXHIBIT 10.52

          CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE
         SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.

                             COLLABORATION AGREEMENT

                                 BY AND BETWEEN

                                   PFIZER INC.

                                       AND

                          EYETECH PHARMACEUTICALS, INC.

                          DATED AS OF DECEMBER 17, 2002



                                TABLE OF CONTENTS



                                                                                                                  PAGE
                                                                                                                  ----
                                                                                                               
ARTICLE 1 DEFINITIONS.........................................................................................       2

ARTICLE 2 CO-PROMOTION OF PRODUCTS IN THE US TERRITORY........................................................      18

     2.1  Co-Promotion........................................................................................      18
     2.2  License Grants......................................................................................      18
     2.3  Compliance With Law.................................................................................      18
     2.4  Detailing Obligations...............................................................................      18
     2.5  Training............................................................................................      18
     2.6  Promotional Materials and Call Center Communications................................................      20
     2.7  Samples.............................................................................................      20
     2.8  Distribution and Booking of Sales...................................................................      21
     2.9  Contract Sales Forces...............................................................................      21
     2.10  Delivery Technology Development Agreement..........................................................      21

ARTICLE 3 MANAGEMENT OF ALLIANCE..............................................................................      22

     3.1  Committee/Subcommittees.............................................................................      22
     3.2  Meetings............................................................................................      22
     3.3  Clinical Development/Regulatory Subcommittee........................................................      23
     3.4  Commercialization Subcommittee......................................................................      26
     3.5  Manufacturing Subcommittee..........................................................................      27
     3.6  Joint Operating Committee...........................................................................      29
     3.7  Deadlocks...........................................................................................      30
     3.8  Limitation on Decision-Making Authority.............................................................      30

ARTICLE 4 CLINICAL AND REGULATORY MATTERS.....................................................................      31

     4.1  Clinical and Regulatory Matters in the US Territory.................................................      31
     4.2  Clinical and Regulatory Matters in the ROW Territory................................................      33
     4.3  Inquiries, Adverse Events, etc. ....................................................................      35
     4.4  Pfizer's Performance of Regulatory Services Agreement Obligations...................................      36

ARTICLE 5 PRODUCT DEVELOPMENT.................................................................................      37

     5.1  Development Plan and Budget.........................................................................      37
     5.2  AMD Product and DME Product Development.............................................................      38
     5.3  Development of Products for Additional Indications in the Field.....................................      38

ARTICLE 6  LAUNCH, CO-PROMOTION AND DETAILING.................................................................      39

     6.1  Co-Promotion of Products............................................................................      39
     6.2  Marketing Plan and Budget...........................................................................      39
     6.3  Detailing...........................................................................................      40
     6.4  Detailing Reports...................................................................................      40
     6.5  Detail Shortfalls...................................................................................      41


                                       i



                                                                                                               
     6.6  Sales Force Responsibilities........................................................................      44
     6.7  Product Information.................................................................................      45
     6.8  Orders..............................................................................................      45
     6.9  Audit...............................................................................................      45
     6.10  Third Party Reports................................................................................      45
     6.11  Medical Claims.....................................................................................      45
     6.12  Manufacturing......................................................................................      46
     6.13  Customer Support...................................................................................      50

ARTICLE 7 PAYMENT PROVISIONS..................................................................................      50

     7.1  Payment Currency....................................................................................      50
     7.2  Payments............................................................................................      50

ARTICLE 8 EXPENSE SHARING AND COMPENSATION....................................................................      51

     8.1  Sharing of Development Costs........................................................................      51
     8.2  Responsibility for Regulatory Costs.................................................................      53
     8.3  Responsibility for Cost of Goods Sold...............................................................      53
     8.4  Responsibility for Marketing Expenses...............................................................      54
     8.5  Net Sales Reports...................................................................................      54
     8.6  Quarterly Reconciliation of Net Sales and Expenses..................................................      54
     8.7  Offset..............................................................................................      56

ARTICLE 9 ACCOUNTING AND REPORTS..............................................................................      56

     9.1  Books and Records...................................................................................      56
     9.2  Audits..............................................................................................      56
     9.3  Sales Force Efforts.................................................................................      57

ARTICLE 10  INTELLECTUAL PROPERTY RIGHTS AND LABELING.........................................................      58

     10.1  Trademark and Corporate Logos......................................................................      58
     10.2  Copyrights and Proprietary Programs................................................................      61
     10.3  Developments.......................................................................................      62
     10.4  Third Party Agreements.............................................................................      62

ARTICLE 11  CONFIDENTIAL INFORMATION..........................................................................      63

     11.1  Treatment of Confidential Information..............................................................      63
     11.2  Confidential Information...........................................................................      64

ARTICLE 12  REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION...................................................      65

     12.1  Eyetech's Representations..........................................................................      65
     12.2  Pfizer's Representations...........................................................................      66
     12.3  No Warranties......................................................................................      67
     12.4  General Indemnification in Favor of Pfizer.........................................................      67
     12.5  General Indemnification in Favor of Eyetech........................................................      68
     12.6  Product Liability and Intellectual Property Infringement Indemnification...........................      69
     12.7  "Losses"...........................................................................................      72
     12.8  No Consequential or Punitive Damages...............................................................      73
     12.9  General Indemnification Procedures.................................................................      73



                                       ii




                                                                                                               
ARTICLE 13  TERM AND TERMINATION..............................................................................      77

     13.1  Term...............................................................................................      77
     13.2  Termination for Breach.............................................................................      77
     13.3  HSR Denial.........................................................................................      79
     13.4  Detail Shortfalls..................................................................................      79
     13.5  Breach of Non-Competition Obligations..............................................................      80
     13.6  Changes of Control.................................................................................      80
     13.7  Termination of License Agreement...................................................................      80
     13.8  Sales Threshold Termination........................................................................      81
     13.9  Survival of Obligations............................................................................      81

ARTICLE 14  NON-COMPETITION; DETAILING SERVICES AGREEMENT.....................................................      84

     14.1  Non-Competition....................................................................................      84
     14.2  Acquisitions Involving Competing Products..........................................................      86
     14.3  Detailing Services Agreement; Additional Agreements................................................      87

ARTICLE 15  DISPUTE RESOLUTION................................................................................      88

     15.1  Arbitration........................................................................................      88
     15.2  No Limitation......................................................................................      89

ARTICLE 16  HSR MATTERS.......................................................................................      90

     16.1  HSR Filings........................................................................................      90
     16.2  HSR Cooperation; Further Assurances................................................................      90
     16.3  Activities Prior to the Effective Date.............................................................      91

ARTICLE 17 MISCELLANEOUS......................................................................................      91

     17.1  Governing Law......................................................................................      91
     17.2  Jurisdiction.......................................................................................      91
     17.3  Waiver.............................................................................................      91
     17.4  Notices............................................................................................      92
     17.5  Entire Agreement...................................................................................      93
     17.6  Headings...........................................................................................      93
     17.7  Severability.......................................................................................      93
     17.8  Registration and Filing of the Agreement...........................................................      94
     17.9  Assignment.........................................................................................      94
     17.10 Successors and Assigns.............................................................................      94
     17.11 Divestiture by Pfizer..............................................................................      95
     17.12 Counterparts.......................................................................................      96
     17.13 Force Majeure......................................................................................      96
     17.14 Non-Solicitation of Employees......................................................................      97
     17.15  Press Releases and Other Disclosures..............................................................      97
     17.16  Third-Party Beneficiaries.........................................................................      98
     17.17  Relationship of the Parties.......................................................................      98
     17.18  Performance and Compliance by Affiliates..........................................................     100




                                      iii




                                 
EXHIBIT 1.20               -        Group/Joint Details
EXHIBIT 1.52               -        Call Center Costs
EXHIBIT 2.5                -        Sales Force Training Program
EXHIBIT 3.4(d)             -        Matters where Eyetech Possesses Special Expertise
                                    or has Special Relationships
EXHIBIT 3.4(e)             -        Initially Planned Phase III(b)/IV Product Studies
EXHIBIT 5.1(a)             -        Development Programs for the AMD Product and the DME
                                    Product
EXHIBIT 5.1(b)             -        AMD Agreed Development Costs and the DME Agreed
                                    Development Costs
EXHIBIT 6.2                -        Marketing Budgets and Detailing Requirements
EXHIBIT 6.12(a)            -        Pre-Existing Clinical Supply Agreements
EXHIBIT 10.4               -        Third Party Agreements
EXHIBIT 12.6(a)(iii)       -        Certain Product Liability Matters
EXHIBIT 12.6(b)(iii)(A)    -        Eyetech 2002 Clinical Supply Costs
EXHIBIT 12.6(b)(iii)(B)    -        Certain Third Party Intellectual Property
EXHIBIT 17.15              -        Joint Press Release
EXHIBIT 17.15(c)           -        Permitted Disclosures




                                       iv



                             COLLABORATION AGREEMENT

         THIS COLLABORATION AGREEMENT dated as of December 17, 2002 (the
"Execution Date"), between Pfizer Inc. ("Pfizer"), a corporation organized under
the laws of the State of Delaware, having a business address at 235 East 42nd
Street, New York, New York 10017-5755, and Eyetech Pharmaceuticals, Inc.
("Eyetech"), a corporation organized under the laws of the State of Delaware,
having a business address at 500 Seventh Avenue, 18th Floor, New York, New York
10018.

         WHEREAS, the Parties have executed the Other Product-Related Agreements
(as defined below) with respect to the aptamer known as Macugen;

         WHEREAS, the Parties have also executed the Equity Agreements (as
defined below) with respect to purchases of shares of Eyetech capital stock that
have been and/or will be made from Eyetech by Pfizer, Pfizer Ireland
Pharmaceuticals, a Pfizer Affiliate organized under the laws of the Republic of
Ireland ("Pfizer Ireland"), and/or another Pfizer Affiliate designated by
Pfizer;

         WHEREAS, the Parties have also executed the Detailing Services
Agreement (as defined below); and

         WHEREAS, the Parties would like to set forth the terms and conditions
pursuant to which they will collaborate in connection with the worldwide
development and commercialization of products containing or based on the Macugen
aptamer and with respect to certain other matters as described in this Agreement
and in the Other Product-Related Agreements.

         NOW, THEREFORE, the Parties agree as follows:



                                    ARTICLE 1

                                   DEFINITIONS

         The following terms, whether used in the singular or plural, shall have
the following meanings:

         1.1      "Act" means both the United States Food, Drug and Cosmetic
Act, as amended, and the regulations promulgated under the foregoing.

         1.2      "Affiliate" means any Person directly or indirectly controlled
by, controlling or under common control with, a Party, but only for so long as
such control shall continue. For purposes of this definition, "control"
(including, with correlative meanings, "controlled by", "controlling" and "under
common control with") means, with respect to a Person, possession, direct or
indirect, of (a) the power to direct or cause direction of the management and
policies of such Person (whether through ownership of securities or partnership
or other ownership interests, by contract or otherwise), or (b) at least 50% of
the voting securities (whether directly or pursuant to any option, warrant or
other similar arrangement) or other comparable equity interests. For the
avoidance of doubt, neither of the Parties shall be deemed to be an "Affiliate"
of the other.

         1.3      "AMD Product" means a Product developed for use in the
treatment of age-related macular degeneration.

         1.4      "API Bulk Drug Substance Supplier" means a third-party
supplier of active pharmaceutical ingredient bulk drug substance for Products
with which Eyetech or Pfizer enters into a supply agreement pursuant to Section
6.12.

         1.5      "Approval" means receipt from FDA of approval to market a drug
product in the US Territory.

                                       2



         1.6      "Bankruptcy Code" means 11 USC Sections 101-1330, as amended.

         1.7      "beneficial ownership" (and other correlative terms) by a
Person means, with respect to any security: (a) such Person or any of such
Person's Affiliates directly or indirectly owns such security; (b) such Person
or any of such Person's Affiliates has the right to acquire such security
(whether such right is exercisable immediately or only after the passage of
time) pursuant to any agreement, arrangement or understanding (whether or not in
writing) or upon the exercise of conversion rights, exchange rights, rights,
warrants or options, or otherwise; or (c) ownership, direct or indirect, by any
other Person with which such Person or any of such Person's Affiliates has any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of such security; provided, however, that a Person shall not
be deemed to have beneficial ownership of any security by virtue of an
agreement, arrangement or understanding to vote such security that arises solely
from a revocable proxy or consent given to such Person in response to a public
proxy or consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations of the Securities Exchange Act of 1934, as
amended.

         1.8      "Business Day" means a day that is not a Saturday, Sunday or a
day on which banking institutions in New York, New York are authorized by Law to
remain closed.

         1.9      "Call Center" means the call center to be established by
Pfizer and substantially dedicated to receiving and answering Product-related
inquiries and complaints from or on behalf of, as applicable, Product-users,
physicians, managed care organizations, and others residing in the US Territory.

                                       3



         1.10     "Change in Control" means, with respect to a Party, an event
where:

                  (a)      any Person or group of Persons (as the term "group"
is interpreted pursuant to Rule 13d-5 under the Securities Exchange Act of 1934,
as amended) acquires beneficial ownership of capital stock of the Party (other
than (x) directly from such Party or (y) from underwriter(s) of such Party's
capital stock in a public offering) entitling the holder(s) thereof to at least
a majority of the voting power of the then outstanding capital stock of such
Party with respect to the election of directors of such Party, or

                  (b)      the Party enters into a merger, consolidation,
reorganization or similar transaction with another Person (the "Acquiring
Corporation") in which less than a majority of the voting power of the
outstanding capital stock of such Party (if it is the surviving entity) or of
the Acquiring Corporation (if it is the surviving entity) with respect to the
election of directors following such transaction is held by Persons who were
shareholders of such Party immediately prior to such transaction, or

                  (c)      the Party sells to any Person(s) in one or more
related transactions properties or assets representing all or substantially all
of the properties and assets of such Party.

         1.11     "CMC" means the chemistry, manufacturing and controls section
of the Product NDA.

         1.12     "Code" or "Codes" means the Code on Interactions with
Healthcare Professionals promulgated by the Pharmaceutical Research and
Manufacturers of America (PhRMA), the American Medical Association Guidelines on
Gifts to Physicians, and the PhRMA Principles on Conduct of Clinical Trials and
Communication of Clinical Trial Results, as any of the foregoing may be amended.

                                       4



         1.13     "Commercially Reasonable Efforts" means, with respect to a
Product, commercially reasonable efforts, which in no event will be less than
the efforts the Party required to make such efforts generally uses (as
applicable in the context used in this Agreement) in developing, seeking
Approvals, manufacturing, promoting, detailing and marketing its other
pharmaceutical products (if any) that are comparable to such Product, taking
into account product labeling or anticipated labeling, market potential, past
performance (if any), economic return potential, medical and clinical
considerations, the regulatory environment, and competitive market conditions in
the therapeutic area, all as measured by the facts and circumstances at the time
such efforts are due.

         1.14     "Competing Product" means [**].

         1.15     "Consumer Price Index" or "CPI" means the Consumer Price Index
- - Urban Wage Earners and Clerical Workers, U.S. City Average, All Items, 1982-84
= 100, published by the United States Department of Labor, Bureau of Statistics
(or its successor equivalent index).

         1.16     "Co-Promotion" means the joint marketing and promotion
(including without limitation Detailing) of the Products in the US Territory as
described in Article 6. "Co-Promote" when used as a verb shall mean to engage in
the activities described in Article 6.

         1.17     "Co-Promotion Budget" is defined in Section 6.2.

         1.18     "Co-Promotion Term" means the period from the Effective Date
until the later of (a) the expiration of the last to expire Valid Claim (as such
term is defined in the License Agreement) in the United States of America and
(b) 15 years after Launch of the last Product in the US Territory, unless sooner
terminated as provided in this Agreement.

         1.19     "Cost of Goods Sold" means Manufacturing Costs plus or minus
an adjustment to be mutually agreed by the Parties from time to time for
variances between the standard cost

                                       5



component(s) of Manufacturing Costs and the actual costs incurred by the Parties
that such standard cost component(s) are intended to cover.

         1.20     "Detail" means a face-to-face contact of either an Eyetech or
Pfizer Sales Representative, as the case may be, with a medical professional
with prescribing authority during which scientific and/or medical information
about a Product is discussed. A Detail does not include a reminder or sample
drop. With respect to certain group or institutional presentations, or joint
details by Sales Representatives of both parties, Exhibit 1.20 sets forth how
such presentations will be counted for determination of the number of Details.
Details shall be measured by each Party's internal recording of such activity,
provided that such measurement shall be on the same basis as the recording
Party's measurement for its sales representatives detailing of such recording
Party's other products (if any), consistently applied throughout the
Co-Promotion Term. When used as a verb, the term "Detailing" means to engage in
the activity of a Detail.

         1.21     "Detailing Services Agreement" means the Detailing Services
Agreement dated as of the Execution Date between the Parties relating to an
arrangement by which Eyetech may, at its option, detail for Pfizer on a contract
basis Xalatan, Xalcom, and any other products approved for use in the Field
containing latanoprost as an active ingredient, including without limitation
Xalatan and Xalcom life-cycle products, that are owned by Pfizer or its
Affiliates.

         1.22     "Detailing Report" is defined in Section 6.4.

         1.23     "Detail Requirement" means the number of Details that each
Party's Sales Representatives are required to perform in the US Territory
pursuant to a Marketing Plan.

         1.24     "Development Costs" means the costs, including without
limitation Out-of-Pocket Costs in relation to the preclinical and clinical
development of Products and the conduct

                                       6



of Product Studies and direct and identifiable variable personnel costs in
relation to preclinical development of Products and the conduct of preclinical
Product Studies, as set forth in each relevant Development Plan; provided,
however, Development Costs shall not include any (a) Out-of-Pocket Costs paid by
either Party prior to December 1, 2002, (b) [**], or (c) except for direct and
identifiable variable personnel costs explicitly provided for in this Section
1.24, Internal Costs.

         In addition, Development Costs shall include Out-of-Pocket Costs and
direct and identifiable variable personnel costs of (w) manufacturing clinical
supplies of Products, (x) process development for clinical and commercial scale
manufacture of Products, including without limitation manufacturing process
optimization in accordance with Section 6.12(h), (y) stability studies and (z)
providing manufacturing transition support in accordance with Section 6.12.

         1.25     "Development Plan" is defined in Section 5.1.

         1.26     "Distribution Agreement" means the Distribution Agreement
dated as of the Execution Date between the Parties relating to the provision by
Pfizer of Product distribution services in the US Territory on a contract basis
for Eyetech.

         1.27     "DME Product" means a Product developed for use in the
treatment of diabetic macular edema.

         1.28     "DOJ" means the United States Department of Justice.

         1.29     "Effective Date" means the HSR Clearance Date.

         1.30     "Equity Agreements" means (a) the Series D Preferred Stock
Purchase Agreement dated as of the Execution Date, to which the Parties and
Pfizer Ireland are parties, and (b) the Amended and Restated Investors' Rights
Agreement, the Amended and Restated Right of First

                                       7



Refusal and Co-Sale Agreement and the Amended and Restated Voting Agreement,
each to be entered into by Eyetech and Pfizer Ireland after the Execution Date
in accordance with the aforementioned Series D Preferred Stock Purchase
Agreement.

         1.31     "FDA" means the United States Food and Drug Administration and
any successor agency thereto.

         1.32     "Field" means the prevention, treatment or control of all
ophthalmic diseases or conditions.

         1.33     "Fill and Finish Services Supplier" means a third party
supplier of fill and finish services necessary to produce Products in finished
(i.e., ready for administration to patients) form for sale in the US Territory
with which Eyetech or Pfizer enters into an agreement pursuant to Section 6.12.

         1.34     "First Approval" means the first Approval of a Product.

         1.35     "FTC" means the United States Federal Trade Commission.

         1.36     "Funded Inventory Build Costs" means the amount of pre-Launch
Manufacturing Costs funded by each of the Parties pursuant to Section 6.12(f).
Each Party's Funded Inventory Build Costs shall be increased by amounts funded
pursuant to Section 6.12(f) and reduced by the Inventory Build Credit applied
pursuant to Section 8.3.

         1.37     "GAAP" means accounting principles generally accepted in the
United States of America.

         1.38     "GMP" means the Good Manufacturing Practices regulations
promulgated by the FDA under the Act as of the time of manufacture of the
applicable Products.

         1.39     "Governmental Authority" means any court, agency, department
or other instrumentality of any foreign, federal, state, county, city or other
political subdivision.

                                       8



         1.40     "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (15 U.S.C. Sec. 18a), and the rules and regulations
promulgated thereunder.

         1.41     "HSR Clearance" means either (a) early termination of the
applicable waiting period under the HSR Act with respect to the HSR Filings or
(b) expiration of the applicable waiting period under the HSR Act with respect
to the HSR Filings.

         1.42     "HSR Clearance Date" means the earlier of (a) the date on
which the FTC or DOJ shall notify Eyetech and Pfizer of early termination of the
applicable waiting period under the HSR Act or (b) the day after the date on
which the applicable waiting period under the HSR Act expires.

         1.43     "HSR Filings" means the filings by Pfizer and Eyetech with the
FTC and the Antitrust Division of the DOJ of a Notification and Report Form for
Certain Mergers and Acquisitions (as that term is defined in the HSR Act) with
respect to the matters set forth in the Transaction Agreements, together with
all required documentary attachments thereto.

         1.44     "IND" means an investigational new drug application filed with
the FDA with respect to a Product.

         1.45     "Internal Costs" means a Party's and/or its Affiliate's costs
and expenses for overhead, personnel, rent, depreciation and amortization,
utilities, equipment leases, general and administrative expenses and similar
items.

         1.46     "Know-How" means unpatented technical and other information
which is not known to the public, including information comprising or relating
to concepts, discoveries, data, designs, formulae, methods, models, assays,
research plans, procedures, designs for experiments and tests and results of
experimentation and testing (including results of research or development),
together with processes, including manufacturing processes, specifications,

                                       9



techniques, chemical, pharmacological, toxicological, clinical, analytical and
quality control data, trial data, case report forms, data analyses, reports or
summaries, including documents (which shall include paper, notebooks, books,
files, ledgers, records, tapes, discs, diskettes, CD-ROM and any other media on
which the foregoing information can be permanently stored) containing any of the
foregoing information. The fact that an item is known to the public shall not be
taken to exclude the possibility that a compilation including the item, and/or a
development related to the item, is (or remains) not known to the public.

         1.47     "Launch" means the initial shipping of a Product as a, or for,
commercial sale to an unaffiliated third party, excluding any shipping for test
marketing, clinical trial purposes or compassionate or similar use.

         1.48     "Law" or "Laws" means all laws, statutes, rules, Codes,
regulations, orders, judgments and/or ordinances of any Governmental Authority.

         1.49     "License Agreement" means the License Agreement dated as of
the Execution Date between the Parties.

         1.50     "Major Country" means France, Germany, Italy, Spain or the
United Kingdom.

         1.51     "Manufacturing Costs" means costs that relate to (a) Products
supplied by a non-Affiliate third party, or (b) Products manufactured directly
by a Party or an Affiliate of a Party. In the case of (a), Manufacturing Costs
shall be a "standard cost" per unit, which standard cost shall include (i) the
amount paid to such a third party, plus (ii) the manufacturing Party's (i.e.,
the Party then responsible for manufacturing pursuant to Section 6.12) direct
and identifiable Internal Costs and Out-of-Pocket Costs, which amounts shall be
subject to the other Party's reasonable approval, incurred or accrued by the
manufacturing Party in connection with quality assurance, supply chain
management, and similar activities comprising the manufacturing

                                       10



Party's oversight of the manufacturing process of the non-Affiliate third party.
In the case of (b), Manufacturing Costs shall be a "standard cost" per unit,
which standard cost shall include the cost of raw materials, labor, and other
direct and identifiable variable costs and appropriate costs for equipment
pools, plant operations and plant support services. The costs for plant
operations and support services would include utilities, maintenance,
engineering, safety, human resources, finance, plant management and other
similar activities. The plant operations and support services costs would be
allocated on a mutually agreed basis consistent with GAAP. Costs which cannot be
identified to a specific activity supporting product manufacturing, such as
charges for corporate overhead which are not controllable by the manufacturing
plant, shall not be included in standard cost.

         1.52     "Marketing Expenses" means all Out-of-Pocket Costs paid or
accrued by a Party pursuant to a Marketing Plan and directly related to the
Co-Promotion of the Products in the US Territory, including those in connection
with:

                  (a) [**]

                  (b) [**] for the Products [**]; (iii) [**] the Products [**];
(iv) [**]; (v) [**] the Products [**]; and (vi) [**] the Products [**]. With
respect to [**] as determined in accordance with [**] subject to [**]; and

                  (c) [**] the Products.

         Notwithstanding the foregoing, Marketing Expenses shall not include any
costs or expenses incurred prior to the Execution Date, and shall include (i)
Eyetech's Out-of-Pocket Costs and direct and identifiable variable personnel
costs incurred pursuant to Section 6.13 and amounts paid by Eyetech to Pfizer
pursuant to the Distribution Agreement and (ii) filing or other user fees or
maintenance fees paid to the FDA in order for Eyetech or Pfizer, as the case may
be, to obtain or maintain regulatory approval for the Products.

                                       11



         All other Out-of-Pocket Costs incurred in the Co-Promotion of the
Products in the US Territory, but not specifically identified above, but which
have been approved by the CSC or provided for in the Marketing Plan, shall be
accounted for and deemed Marketing Expenses for all purposes of this Agreement.

         1.53     "Marketing Plan" is defined in Section 6.2.

         1.54     "NDA" means a New Drug Application filed with the FDA with
respect to a Product.

         1.55     "Net Sales" means the gross amounts billed or invoiced by
Eyetech and its Affiliates for Products in the US Territory, less the following
deductions:

                  (a)      trade, quantity and cash discounts allowed, but
expressly excluding discounts or allowances offered as part of a package of
products that includes a Product sold by Eyetech or its Affiliates;

                  (b)      refunds, chargebacks and any other allowances which
effectively reduce the net selling price;

                  (c)      actual product returns, credits and allowances
allowed to customers, and actual bad debts;

                  (d)      rebates actually paid or credited to any governmental
agency (or branch thereof) or to any third party payor, administrator or
contractee;

                  (e)      discounts mandated by, or granted to meet the
requirements of, applicable state, provincial or federal law, wholesaler,
including required chargebacks and retroactive price reductions;

                                       12



                  (f)      transportation, freight, postage charges and other
charges, such as insurance, relating thereto, in each case included as a
specific line item on an invoice to such third parties; and

                  (g)      taxes, excises or other governmental charges upon or
measured by the production, sale, transportation, delivery or use of goods, in
each case included as a specific line item on an invoice to such third parties.

         If any such sales to third parties are made in transactions that are
not at arm's length between the buyer and the seller, then the gross amount to
be included in the calculation of Net Sales shall be the amount that would have
been invoiced had the transaction been conducted at arm's length. Such amount
that would have been invoiced shall be determined, wherever possible, by
reference to the average selling price of the relevant Product in arm's-length
transactions in the US Territory.

         If Eyetech or its Affiliate sells a Product in unfinished form to a
third party for resale, then the gross amount to be included in the calculation
of Net Sales arising from such sale shall be the amount invoiced by the third
party upon resale, in lieu of the amounts invoiced by Eyetech or its Affiliates
when selling the Product in unfinished form. Otherwise, where Eyetech or its
Affiliate sells a Product in finished form to a third party that does not
require a sublicense under the Eyetech Patents for further resale (each such
third party hereinafter a "Distributor"), the amount to be included in the
calculation of Net Sales shall be the price invoiced from Eyetech or its
Affiliate to the third party, not the amount invoiced by the third party upon
resale.

         If, in addition to or in lieu of a transfer price paid for quantities
of Product supplied, any Distributor provides consideration to Eyetech or its
Affiliate in connection with any Product or the Distributor's rights or
relationship with Eyetech or its Affiliate in relation thereto, then such

                                       13



consideration shall be included in the calculation of Net Sales in the Quarter
in which it becomes due to Eyetech or its Affiliate (as applicable).

         Notwithstanding the foregoing, amounts received by Eyetech or its
Affiliates (x) for the sale of Products among Eyetech and its Affiliates for
resale or (y) for the sale of Products by Eyetech or its Affiliates to Pfizer or
its Affiliates or sublicensees for resale in the ROW Territory, shall not be
included in the computation of Net Sales hereunder.

         Net Sales shall be determined from books and records maintained in
accordance with GAAP, consistently applied throughout the organization and
across all products of the entity whose sales of Product are giving rise to Net
Sales.

         1.56     "Other Product-Related Agreements" means the License
Agreement, the Distribution Agreement and the Regulatory Services Agreement.

         1.57     "Out-of-Pocket Costs" means costs and expenses paid to third
parties (or payable to third parties and accrued in accordance with GAAP), other
than Affiliates or employees, by either Party after the Execution Date (or, in
the case of Development Costs, after December 1, 2002).

         1.58     "Party" means either Eyetech or Pfizer; "Parties" means both
Eyetech and Pfizer.

         1.59     "Person" means any natural person or any corporation, company,
partnership, joint venture, firm or other entity, including without limitation a
Party.

         1.60     "Pharmacia Merger" means the merger contemplated by the
Agreement and Plan of Merger dated as of July 13, 2002 among Pfizer, Pilsner
Acquisition Sub Corp., a wholly owned Subsidiary of Pfizer, and Pharmacia
Corporation ("Pharmacia") (as the same may be amended or supplemented or
restated from time to time, the "Pharmacia Merger Agreement") providing for the
merger of Pilsner Acquisition Sub Corp. with and into Pharmacia.

                                       14



         1.61     "Phase III Clinical Study" means a Product Study with study
design and statistical power intended to meet the requirement for Approval by
the FDA.

         1.62     "Phase III(b)/IV Product Study" means a clinical study
designed to support or profile a Product or intended to be the basis of a
post-approval Product filing, including without limitation proposed label
changes not explicitly described in Section 1.64 below, but not including any
clinical study intended to be the basis of any regulatory filing for initial FDA
or other Governmental Authority approval for marketing of Products or conducted
as a condition to the prior receipt of any regulatory approval for marketing of
Products. Phase III(b)/IV Product Studies shall include, without limitation,
epidemiological studies and modeling and pharmacoeconomic studies.

         1.63     "Product" means any product, that (a) contains or is based on
the anti-VEGF aptamer known as "Macugen" or "EYE001", including any metabolites
or prodrugs of such aptamer or any hydrates, conjugates, salts, esters, isomers,
polymorphs or analogues of any of the foregoing, either alone or in combination
with one or more other therapeutically active substances, and (b) is for use in
the Field; including for the avoidance of doubt any AMD Product, DME Product or
other product developed in accordance with the terms of this Agreement for any
indication in the Field other than AMD or DME, or as a new un-pegylated
formulation of any such AMD Product, DME Product or other product (each such
other product, an "Additional Developed Product").

         1.64     "Product Studies" means clinical, preclinical, safety, and
other studies that are designed to support FDA or other Governmental Authority
approval for marketing of Products. For the avoidance of doubt, Product Studies
shall not include [**], but shall include [**].

         1.65     "PSURs" means periodic safety update reports.

                                       15



         1.66     "Quarter" means (i) with respect to Eyetech, each of the
periods ending on March 31, June 30, September 30 and December 31, and (ii) with
respect to Pfizer each of the periods ending at the end of each of the four (4)
thirteen (13) week periods as used by Pfizer as reported in its filings with the
Securities and Exchange Commission, the first such period commencing on January
1 of any year, and the terms "Eyetech Quarter" and "Pfizer Quarter" shall be
construed accordingly.

         1.67     "Regulatory Costs" means the costs, including without
limitation the Out-of-Pocket Costs and direct and identifiable variable
personnel costs, in relation to making or supporting regulatory filings in the
US Territory; provided, however, Regulatory Costs shall not include any (a)
Out-of-Pocket Costs paid by either Party prior to the Execution Date, (b) costs
of making or supporting regulatory filings in the ROW Territory, or (c) except
for direct and identifiable variable personnel costs explicitly provided for in
this Section 1.67, Internal Costs. In addition, Regulatory Costs shall include
amounts paid by Eyetech to Pfizer under the Regulatory Services Agreement.

         1.68     "Regulatory Services Agreement" means the Regulatory Services
Agreement dated as of the Execution Date between the Parties relating to the
provision by Pfizer of specified regulatory services in the US Territory on a
contract basis for Eyetech.

         1.69     "ROW Territory" means all countries in the world other than
the US Territory.

         1.70     "Sales Representative" means an individual who engages in
Detailing and other promotional efforts in the Field with respect to the
Products and who has been trained and is employed by either Pfizer or Eyetech or
their respective Affiliates.

         1.71     "Senior Executive" means, with respect to Eyetech, the Chief
Executive Officer of Eyetech, and with respect to Pfizer, a corporate officer of
Pfizer with senior decision-making

                                       16



authority; "Senior Executives" means both such officers. Pfizer shall initially
designate Karen Katen as its Senior Executive.

         1.72     "Specifications" means the specifications for the manufacture
and packaging of the Products consistent with the NDA.

         1.73     "Subsidiary" means, with respect to a Party, a majority or
wholly-owned direct or indirect subsidiary of such Party.

         1.74     "Territory" means the US Territory and the ROW Territory.

         1.75     "Trademark" means (i) MACUGEN and (ii) any other trademark
associated with the Products that may be selected by the Parties in accordance
with Section 10.1(e), excluding the respective corporate names and logos of the
Parties.

         1.76     "Transaction Agreements" means this Agreement, the Other
Product-Related Agreements, the Equity Agreements and the Detailing Services
Agreement.

         1.77     "US Territory" means the United States of America, including
its territories, possessions and Puerto Rico.

         1.78     "Xalatan" means latanoprost ophthalmic solution which is
presently sold by Pharmacia under the trademark Xalatan(R) as a single entity.

         1.79     "Xalcom" means product containing as active ingredients
latanoprost and timolol and which is presently sold by Pharmacia under the
trademark Xalcom(R) as a single entity.

         1.80     "Year" means each calendar year during the Co-Promotion Term.

                                       17



                                    ARTICLE 2

                  CO-PROMOTION OF PRODUCTS IN THE US TERRITORY

         2.1      Co-Promotion. Subject to the terms of this Agreement, the
Parties shall Co-Promote Products in the US Territory co-exclusively with each
other as provided in this Agreement.

         2.2      License Grants. Each Party's rights under intellectual
property rights owned or controlled by the other Party, with respect to the
development, manufacture and Co-Promotion of Products in the US Territory, are
as set forth in the License Agreement.

         2.3      Compliance With Law. Both Pfizer and Eyetech shall Co-Promote
the Products in the US Territory in accordance with applicable Law, the terms of
this Agreement and the then-current Marketing Plan. Neither Party shall be
required to undertake any action or inaction, or to incur expenditures in
connection with any such action or inaction under this Agreement that it
believes, in good faith, may violate any Law.

         2.4      Detailing Obligations. Subject to Exhibit 6.2, the Detailing
obligations of the Parties in respect of the Products shall be as set out in the
then-current Marketing Plan.

         2.5      Training.

                  (a)      Pfizer shall, at its sole expense, provide initial
sales and product training in connection with the first Product Detailed by
Eyetech Sales Representatives in the US Territory pursuant to this Agreement for
up to forty (40) Eyetech Sales Representatives. Eyetech may also elect to have
Pfizer provide such initial sales and product training to an additional fifteen
(15) Eyetech Sales Representatives, in which case Eyetech shall reimburse Pfizer
for Pfizer's Out-of-Pocket Costs and direct and identifiable variable personnel
costs incurred in connection with such training for such additional Sales
Representatives. Such training shall, at Eyetech's option,

                                       18



be conducted in multiple program sessions; provided that Pfizer shall not be
required to provide more than four (4) separate program sessions, the first
three (3) of which shall be for not less than ten (10) Eyetech Sales
Representatives each. A description of Pfizer's current initial sales force
training program is described in Exhibit 2.5. Such program is subject to
revision from time to time by Pfizer, provided that the initial training
provided by Pfizer to Eyetech from time to time shall be the same as the initial
training that Pfizer contemporaneously provides to Pfizer's Sales
Representatives that Detail Products. Pfizer will provide ongoing training
relating to Products for the trainers of Eyetech's Sales Representatives. All
training programs for Eyetech's Sales Representatives other than the initial
sales and product training will be the responsibility of Eyetech, at its sole
expense; provided, however, that Pfizer will provide follow-up training for such
Eyetech Sales Representatives at Eyetech's reasonable request, provided that
Eyetech reimburses Pfizer for the reasonable costs and expenses incurred by
Pfizer in connection with such follow-up training. In order to coordinate the
training of Eyetech Sales Representatives with training of Pfizer Sales
Representatives, any training provided by Pfizer to Eyetech Sales
Representatives pursuant to this Section 2.5(a) shall take place at times and at
locations reasonably selected by Pfizer in consultation with Eyetech.

                  (b)      Pfizer and Eyetech shall, each at its own expense
(except as otherwise set forth in Section 2.5(a)), comply with any training plan
for the Products contained in the applicable Marketing Plan.

                  (c)      If a Party organizes Co-Promotion-related meetings of
its employees (such as periodic briefings of its Sales Representatives), it will
make reasonable efforts to keep the Product-related portions of such meetings
independent from other matters and to give the other Party advance notice of
such meetings. If requested by the other Party, the Party organizing such

                                       19



meeting will permit Sales Representatives of the other Party to attend and
participate in such meetings or such portions thereof which relate to the
Co-Promotion of Products.

         2.6      Promotional Materials and Call Center Communications. The
Parties will only utilize promotional, advertising, communication and
educational materials relating to the Products in the US Territory (collectively
"Promotional Materials") and only conduct promotional activities for the
Products which, in each case, have been approved in the Marketing Plan or
otherwise by the CSC (as defined in Section 3.1). All Promotional Materials
shall name and feature both Parties with equal prominence. All promotional
activities conducted by the Parties shall be consistent with the Promotional
Materials so approved and the then-current Marketing Plan. Promptly after the
Effective Date, the Parties will mutually agree upon procedures whereby
designated representatives of each of them representing the marketing, medical,
regulatory and legal functions, will meet, whether in person, by telephone or by
videoconference, in order to discuss all promotional activities (except for
Detailing) and Promotional Materials prior to final approval thereof by the CSC.
In addition, as a prominent part of each communication with customers and other
third parties, the Call Center shall clearly identify the Products as joint
products of Eyetech and Pfizer. Eyetech shall own all rights to all Promotional
Materials, including all copyrights thereto, and Pfizer hereby assigns to
Eyetech all rights, title and interests of Pfizer in and to such Promotional
Materials, including without limitation all copyright interests of Pfizer
therein. Unless and until Promotional Materials are approved by the CSC for
publication or other general dissemination, each Party shall maintain them in
confidence pursuant to the terms of Article 11.

         2.7      Samples. The Parties, through the CSC, shall determine whether
it is necessary and appropriate to undertake a sampling program for the first
Product and, if so, the appropriate

                                       20



terms and allocation of responsibilities for satisfying such sampling program;
provided that any samples will be allocated fairly between the Parties'
respective Sales Representatives in accordance with the Detailing arrangements
set forth in the Marketing Plan; and provided further that each Party shall be
responsible, at its sole expense, for (a) accounting for samples held, disposed
of or distributed by such Party or its Sales Representatives, (b) destroying and
disposing of samples after the latest date on which such samples are usable and
(c) complying with the requirements of all applicable Laws, including without
limitation the requirements of the Prescription Drug Marketing Act of 1987, as
amended.

         2.8      Distribution and Booking of Sales. Eyetech shall be
responsible for distribution, invoicing, credit and collection for the Products
in the US Territory. Eyetech will book all sales of Products in the US
Territory; provided that this Section 2.8 shall not be construed as an assurance
by Pfizer to Eyetech regarding the appropriate accounting treatment of such
sales.

         2.9      Contract Sales Forces. Without the consent of the other Party,
neither Pfizer nor Eyetech may use any contract sales force to Co-Promote or
Detail any Product.

         2.10     Delivery Technology Development Agreement. Promptly after the
Effective Date, the Parties shall in good faith discuss entering into a separate
agreement to provide for the development by the Parties of additional Product
delivery technology. The Parties intend to provide in such agreement for a
sharing between the Parties of the costs and benefits of developing and
commercializing such additional delivery technology on the same basis as
development costs and commercialization benefits are shared under this Agreement
and the License Agreement; provided that, for the avoidance of doubt, it is
agreed that neither Party would be required to make any upfront license fee
payments to the other Party in connection with such separate agreement.

                                       21



                                    ARTICLE 3

                             MANAGEMENT OF ALLIANCE

         3.1      Committee/Subcommittees. In order to fulfill the objectives of
this Agreement, the Parties agree to establish a Joint Operating Committee
("JOC"), a Commercialization Subcommittee ("CSC"), a Clinical
Development/Regulatory Subcommittee ("CDRSC"), and a Manufacturing Subcommittee
("MSC"), and such other committees and subcommittees as may be established by
mutual consent of Eyetech and Pfizer. Each committee and subcommittee shall have
two co-chairpersons, one designated by each of Eyetech and Pfizer. All decisions
of the committees and subcommittees shall be by a vote of the co-chairpersons,
each co-chairperson having one vote, and all decisions shall be by unanimous
consent of the co-chairpersons.

         3.2      Meetings. The chairpersons of the JOC, CSC, CDRSC, MSC, or any
other committee or subcommittee, shall call meetings quarterly, or as otherwise
requested by one of the Parties. Meetings may be held in person, by telephone,
or by video conference call, and the location of each meeting shall alternate
between sites located in New York, New York selected by each co-chairperson.
Additional participants may be invited by any representative to attend meetings
where appropriate. The Parties shall cause their respective representatives on
the committees and subcommittees to use diligent efforts, acting in good faith,
to resolve all matters presented to them as expeditiously as possible.

                                       22



         3.3      Clinical Development/Regulatory Subcommittee.

                  (a)      The CDRSC shall consist of research and development,
commercial, regulatory and marketing/medical managers (as needed) from each of
Eyetech and Pfizer, each of which shall confirm to the other its designees. The
CDRSC will establish a clinical development working group that shall be
responsible for:

                           (i)      Preparing annual Development Plans;

                           (ii)     Monitoring progress of all Product Studies
in the Territory (including reviewing costs and activities against the annual
Development Plan);

                           (iii)    Facilitating the exchange of all development
information and data relating to all Product Studies in the Territory;

                           (iv)     Review and approval of statistical analysis
plans and protocols for all Product Studies in the Territory and revising any
investigator's brochure(s); and

                           (v)      Providing updates on its activities and
achievements to the JOC.

                  (b)      The CDRSC will also establish a regulatory working
group that will be responsible for:

                           (i)      Overseeing, monitoring and coordinating all
regulatory (FDA) aspects of the US Territory Product Approval program, including
all US Territory regulatory actions, communications and filings (including
matters pertaining to Product labeling) and submissions (including filings and
submissions of supplements and amendments to FDA with respect to the Products);

                           (ii)     Establishing the schedule and implementation
strategy for all FDA filings;

                                       23



                           (iii)    Coordinating preparation for and attendance
at FDA advisory committee meetings;

                           (iv)     Coordinating responses to additional FDA
requirements and FDA inquiries;

                           (v)      Proposing, overseeing and agreeing upon a
regulatory strategy and plan for obtaining regulatory approvals for the Products
in the Territory;

                           (vi)     Facilitating the exchange of all regulatory
information and data relating to Products in the Territory;

                           (vii)    Facilitating the exchange of information in
conjunction with Section 4.3 of this Agreement in order to ensure that
significant issues concerning adverse event information and safety issues are
addressed consistently among Governmental Authorities in the Territory; and

                           (viii)   Providing updates on its activities and
achievements to the JOC.

                  (c)      Neither Party shall make any change to any annual
Development Plan without the prior approval of the CDRSC, and all Development
Plans and Development Costs provided therein shall be consistent with the terms
of this Agreement. If the CDRSC is unable to reach a decision on any issue
within fifteen (15) Business Days after presentation, either Party may refer the
issue to the JOC for resolution.

                  (d)      Following a referral to the Senior Executives of the
Parties pursuant to Section 3.7 below, the final decision-making authorities set
out in Sections 3.3 (e), (f), (g) and (h) shall apply.

                  (e)      [**] shall have the final decision-making authority
for matters relating to [**] for such Product [**] to such Product [**];
provided, however, that [**] shall have the final

                                       24



decision-making authority as to [**], provided that [**]. For purposes of the
previous sentence, [**]; provided, however, that [**].

                  (f)      [**] shall have final decision-making authority with
respect to [**] the Parties shall [**]. Except as otherwise set forth in this
Agreement, [**] shall have final decision-making authority with respect to [**].

                  (g)      Notwithstanding the Parties' joint approval rights
set forth in Section 3.3(f), [**] may not prevent [**] from [**] for the
applicable Product, [**].

                  (h)      Subject to Pfizer's fulfillment of its obligations
under the Regulatory Services Agreement, which shall require Pfizer to perform
its obligations thereunder in a commercially reasonable manner, in the event
that Eyetech materially fails to discharge its regulatory obligations in the US
Territory in a commercially reasonable manner applying accepted pharmaceutical
industry standards, and in compliance with all Laws, and fails to cure such
failure following written notice thereof from Pfizer and a reasonable
opportunity to cure, then the final decision-making authority with respect to
[**] the Products [**] shall be transferred to Pfizer for the balance of the
Co-Promotion Term; provided that in the event that after such transfer (x)
Pfizer closes a Divestiture Transaction pursuant to Section 17.11 or (y)
materially fails to discharge its regulatory obligations in the US Territory in
a commercially reasonable manner applying accepted pharmaceutical industry
standards, and in compliance with all Laws, and fails to cure such failure
following written notice thereof from Eyetech and a reasonable opportunity to
cure, then the final decision-making authority with respect to [**] the Products
[**] shall thereafter be exercised jointly by the Parties for the balance of the
Co-Promotion Term.

                                       25



         3.4      Commercialization Subcommittee.

                  (a)      The CSC shall consist of members from each of Eyetech
and Pfizer, each of which shall confirm to the other its designees. The CSC
shall be responsible with respect to the US Territory for:

                           (i)      Preparing and implementing annually the
Marketing Plan;

                           (ii)     Monitoring progress under and compliance
with the Marketing Plan;

                           (iii)    Coordinating with the CDRSC with respect to
regulatory issues and future Product development activities to be undertaken
pursuant to the Development Plans;

                           (iv)     Developing positioning and market strategies
consistent with the Marketing Plan, including decisions to seek or include any
new indication, formulation or usage for the Products, such as for life cycle
management;

                           (v)      Developing advertising material and
strategies and promotional materials for the Parties' Sales Representatives for
the Products, designing packaging, and planning and overseeing educational and
professional symposia and speaker and activity programs for the Products in the
US Territory;

                           (vi)     Providing updates on the CSC's activities
and achievements to the JOC; and

                           (vii)    Discussing the prices at which the Products
will be sold to unaffiliated third parties throughout the Territory.

                  (b)      Following a referral to the Senior Executives of the
Parties pursuant to Section 3.7 below, the final decision-making authorities set
out in Sections 3.4(c), (d) and (e) shall apply.

                                       26



                  (c)      Subject to Sections 3.4(d), (e) and (f) below, Pfizer
shall have final decision-making authority with respect to [**]:

                           (i)  activities [**];

                           (ii) [**]

                           (iii) [**] the Products; and

                           (iv) [**], including [**],

                  (d) [**] shall have final decision-making authority with
respect to:

                           (i)  [**] Eyetech shall [**]; and

                           (ii) [**] Eyetech [**]

                  (e) The Parties shall mutually agree upon [**] Products [**]
covered by [**] shall have [**].

                  (f) Notwithstanding the provisions of Section 3.4(c), but
subject to the provisions of Section 3.4(g), in the event that Pfizer closes a
Divestiture Transaction pursuant to Section 17.11, the final decision-making
authority with respect to all US Territory marketing and other commercial
activities for the Products pursuant to this Section 3.4, [**] Eyetech [**]
pursuant to [**] shall thereafter be exercised jointly by the Parties for the
balance of the Co-Promotion Term.

                  (g)      All Marketing Plans shall be consistent with the
terms of this Agreement. If the CSC is unable to reach a decision on any issue
within fifteen (15) Business Days after presentation, either Party may refer the
issue to the JOC for resolution.

         3.5      Manufacturing Subcommittee.

                  (a)      The MSC shall consist of members from each of Eyetech
and Pfizer, each of which shall confirm to the other its designees. The MSC
shall be responsible for:

                           (i)      Overseeing manufacturing activities underway
as of the Effective Date, including formulation development, product
characterization studies, stability studies, and management of clinical supplies
of the Products;

                                       27



                           (ii)     Overseeing the manufacturing of registration
batches of Product;

                           (iii)    Overseeing process development plans;

                           (iv)     Monitoring worldwide quality assurance
efforts and ensuring that all Products are manufactured in accordance with the
Parties' quality standards;

                           (v)      Overseeing supply relationships with any
third party manufacturers;

                           (vi)     Subject to Section 4.1(c), review of the CMC
section of the NDA for each Product, provided that the time period for reviewing
any such CMC section shall, notwithstanding the provisions of Section 4.1(c), be
thirty (30) days from the date on which Eyetech, through the CDRSC, provides
Pfizer with a draft of the NDA pursuant to Section 4.1(c);

                           (vii)    Overseeing manufacture of the Products;

                           (viii)   Reviewing and approving Specifications for
purposes of the NDA and for Launch;

                           (ix)     Commencing and overseeing any new
manufacturing activities, including Product manufacturing process validation
prior to NDA approval and any pre-approval inspection of the Product
manufacturing subcontractors;

                           (x)      Coordinating with the CSC and CDRSC as
appropriate;

                           (xi)     Preparation for FDA inspections and ensuring
adherence to compliance standards;

                           (xii)    Evaluating the forecasts provided in each
Marketing Plan as well as inventory levels for the Product and future logistic
strategies and capacity planning;

                                       28



                           (xiii)   Reviewing quality-related issues concerning
the Product or any component thereof; and

                           (xiv)    Providing updates on the MSC's activities
and achievements to the JOC.

                  (b)      If the MSC is unable to reach a decision on any issue
within fifteen (15) Business Days after presentation, either Party may refer the
issue to the JOC for resolution. Following a referral to the Senior Executives
of the Parties pursuant to Section 3.7 below, [**]shall have final
decision-making authority with respect to [**]; provided that:

                           (i)      Pfizer shall [**] any agreement [**] entered
into [**] (ii) [**] Pfizer [**] and/or [**] that otherwise would [**], and
Pfizer [**] pursuant to this Section 3.5 [**],

                           (iii)    [**] Pfizer [**] pursuant to Section 17.11,
[**],

                           (iv)     [**] the Parties, and

              (v)    [**] all Products [**].

3.6 Joint Operating Committee.

                  (a)      The Joint Operating Committee ("JOC") shall consist
of an equal number of members from each of Eyetech and Pfizer. Each of Eyetech
and Pfizer shall confirm to the other its designees. At least one of Pfizer's
designees shall be the Vice President in Pfizer's Pharmaceuticals Group with
global responsibility for the therapeutic area covering the Products. The JOC
shall address all of the significant and strategic issues within the purview of
the various subcommittees, and shall be responsible for resolving any issues
referred by the subcommittees. The JOC will be presented with updates on the
activities and achievements of the subcommittees. All decisions of the JOC will
be unanimous votes of the co-chairpersons.

                                       29



                  (b)      If the JOC is unable to resolve any issue within ten
(10) Business Days after presentation, either Party may refer the issue to the
Senior Executives for resolution pursuant to Section 3.7.

         3.7      Deadlocks. If for any reason the JOC cannot resolve any matter
properly referred to it, either Party may refer the matter to the Senior
Executives for resolution. If after discussing the matter in good faith and
attempting to find a mutually satisfactory resolution to the issue, the Senior
Executives fail to come to consensus within five (5) Business Days of the date
on which the matter is referred to the Senior Executives, the provisions of
Sections 3.3(d), 3.4(b), and 3.5(b), as applicable, shall apply and resolutions
reached through such provisions shall be binding on the Parties; provided that
such decisions are made in good faith and are consistent with the provisions of
this Agreement.

         3.8      Limitation on Decision-Making Authority. Notwithstanding
anything to the contrary, none of the committees or subcommittees contemplated
by this Article 3 nor any Senior Executive pursuant to this Article 3 shall be
entitled to determine any matters for which: (a) one or more of the Parties is
allocated decision-making authority elsewhere in this Agreement; or (b) such
determination would violate or permit the violation of any express provision of
this Agreement, including, without limitation, the provisions of Sections
3.3(f), 3.3(g), 3.3(h), 3.4(e) and 3.5(b) that provide explicitly for mutual or
joint decision-making; or (c) this Agreement provides that neither Party shall
have final decision-making authority or provides that a decision shall not be
made without the approval or consent of a particular Party.

                                       30



                                   ARTICLE 4

                         CLINICAL AND REGULATORY MATTERS

         4.1      Clinical and Regulatory Matters in the US Territory. This
Section 4.1 shall apply to clinical and regulatory matters relating to Products
in the US Territory.

                  (a)      Subject to Section 3.3, [**]FDA for the Products [**]
for each of the Products.

                  (b)      All NDAs and Approvals within the US Territory
relating to the Products shall be the property of Eyetech and held in the name
of Eyetech or its designated Affiliates. Eyetech's designated representative
shall serve as the designated regulatory official for Products in the US
Territory for purposes of receiving communications from the FDA.

                  (c)      Eyetech will provide Pfizer with copies, which copies
may be in draft form, of the following submissions to the FDA through the CDRSC.
If reasonably practicable, Eyetech will provide Pfizer with such copies at least
fifteen (15) days prior to planned submission to the FDA by Eyetech, whereupon
Pfizer shall provide comments to Eyetech regarding such submission at least ten
(10) days prior to such planned submission, and, Eyetech shall reasonably
consider the comments given by Pfizer prior to making such submission:

                           (i)      all annual reports regarding a Product prior
to First Approval of such Product, including without limitation the annual
reports required under 21 C.F.R. 312.33 as it may be amended; and

                           (ii)     all other filings that are not subject to a
deadline imposed by the Act of less than twenty-one (21) days after discovery of
an event that triggers the filing requirement and that are not otherwise
required to be jointly agreed upon pursuant to Section 4.1(d).

                                       31



                  (d)      Eyetech shall provide notice to Pfizer within two (2)
Business Days of discovery by Eyetech of any event that triggers an FDA filing
requirement that is subject to a deadline imposed by the Act of less than
twenty-one (21) days after the discovery of such an event. Eyetech shall
promptly provide copies of any correspondence or other submission subject to
this Section 4.1(d) to Pfizer, and the chairpersons of the CDRSC shall discuss
in good faith and on a timely basis determine the most effective and expeditious
means of responding to such FDA filing requirement.

                  (e)      Eyetech shall provide notice to Pfizer of any
additional FDA requirements which FDA may impose with respect to the First
Approval, (including without limitation, additional clinical studies) and of all
FDA inquiries requiring a response within two (2) Business Days of receipt
thereof by Eyetech. Eyetech will promptly provide Pfizer with copies of all
correspondence between Eyetech and FDA and copies of all FDA contact reports
produced by Eyetech.

                  (f)      In connection with Sections 4.1(a), (b) and (c)
above, Eyetech shall provide Pfizer with notice of all meetings, conferences,
and discussions (including without limitation, advisory committee meetings and
any other meeting of experts convened by FDA concerning any topic relevant to
the Products) scheduled with FDA concerning any pending NDA or other regulatory
matters relating to the Products within two (2) Business Days after Eyetech
receives notice of the scheduling of such meeting, conference, or discussion.
Pfizer shall be entitled to have reasonable representation present at all such
meetings. Eyetech and Pfizer, through the CDRSC, shall use reasonable efforts to
agree (subject to Section 3.3(f)(i) to the extent applicable) in advance on the
scheduling of such meetings and on the objectives to be

                                       32



accomplished at such meetings, conferences, and discussions and the agenda for
the meetings, conferences, and discussions with FDA.

                  (g)      Each Party shall provide to the other Party, through
the CDRSC, on a timely basis copies of all material pre-clinical and clinical
data compiled in support of an NDA or other regulatory filings in the US
Territory with respect to the Products.

                  (h)      Any decision to initiate a recall or withdrawal of
Product in the US Territory shall be made by the CDRSC. Before the CDRSC
initiates a recall or withdrawal, and upon the request for a recall or
withdrawal by either Party, the Parties shall promptly and in good faith discuss
the reasons therefor. Under no circumstances shall either Party unreasonably
object to a recall or withdrawal requested by the other Party, and neither Party
shall have any right to object to a recall or withdrawal requested by the other
Party for failure of a Product to meet the Specifications, for material safety
concerns or for noncompliance with the Act. In the event of any recall or
withdrawal, Pfizer shall implement any necessary action, with assistance from
Eyetech as reasonably requested by Pfizer.

         4.2      Clinical and Regulatory Matters in the ROW Territory. This
Section 4.2 shall apply to clinical and regulatory matters relating to Products
in the ROW Territory.

                  (a)      After the Effective Date, Pfizer will assume sole
ownership, control of and responsibility for all regulatory filings in the ROW
Territory, and Eyetech shall cooperate with Pfizer in connection with such
filings as reasonably requested by Pfizer and at Pfizer's sole cost and expense.
Prior to Pfizer taking over responsibility for contracting with API Bulk Drug
Substance Supplier(s) and/or Fill and Finish Services Supplier(s) or performing,
either directly or through Affiliates, services that otherwise would be
performed by API Bulk Drug Substance Supplier(s) and/or Fill and Finish Services
Supplier(s) in accordance with Section 6.12, Eyetech

                                       33



shall be responsible for providing Pfizer with Product samples for use in
connection with regulatory filings relating to Products in the ROW Territory at
Pfizer's sole cost and expense.

                  (b)      All regulatory approvals in the ROW Territory
relating to the Products shall be deemed the property of Pfizer and held in
Pfizer's or its Affiliate's name.

                  (c)      Pfizer's rights under Sections 4.2(a) and (b) above
are subject to the following: Pfizer shall provide Eyetech with notice of all
meetings, conferences, and discussions (including without limitation, any
meeting of experts convened by regulatory authorities concerning any topic
relevant to the Products) scheduled with Governmental Authorities concerning any
material regulatory matters relating to the Products within two (2) Business
Days after the scheduling of such meeting, conference, or discussion. Eyetech
shall be entitled to have reasonable representation present at all such
meetings. In addition, with respect to clinical and regulatory matters in the
ROW Territory, Pfizer shall promptly provide Eyetech with (i) copies of all
pre-clinical and clinical data compiled in support of regulatory filings in the
ROW Territory, (ii) copies of all material regulatory correspondence with EMEA,
as defined in the License Agreement, (or any Governmental Authority in a Major
Country) and with Japanese Governmental Authorities, (iii) advance copies of
material submissions to EMEA (or any Governmental Authority in a Major Country)
and to Japanese Governmental Authorities, and the same opportunity to comment in
advance on such submissions (and to have its comments reasonably taken into
account) as Pfizer is provided with respect to the submissions to FDA under
Section 4.1(c), provided, however, that an inadvertent failure by Pfizer to
submit Eyetech advance copies pursuant to this Section 4.2(c)(iii) shall not be
considered a material breach of this Agreement if Pfizer has implemented
procedures reasonably designed to avoid any such failure and cures any such
failure promptly after its discovery, (iv) notices of any revocations of

                                       34



Product marketing approvals and any Product recalls, and (v) reasonable
responses to inquiries by Eyetech regarding the regulatory approval and
commercialization processes for each Product in the ROW Territory, including
without limitation reasonable access to Pfizer personnel, documents and files in
connection with such inquiries.

         4.3      Inquiries, Adverse Events, etc.

                  (a)      Eyetech and Pfizer shall be responsible for the
surveillance, receipt, evaluation, and reporting of product complaints and
reports of adverse drug experiences, for the Products in the US Territory and
the ROW Territory, respectively; provided, however, during the term of the
Regulatory Services Agreement, Pfizer shall perform certain of such US Territory
responsibilities on behalf of Eyetech under the terms of the Regulatory Services
Agreement.

                  (b)      Eyetech shall be responsible for promptly
investigating Product complaints and reports of adverse drug experiences and
other required safety information (e.g., PSURs and annual safety reports)
associated with the use of any Product in the US Territory. As to each Product,
Eyetech shall submit reports of all adverse drug experiences associated with the
use of the Product(s) and other required safety information to the FDA in
accordance with applicable Law. Eyetech shall submit a copy of each such report
to Pfizer contemporaneously with its submission of the report to FDA, or in
advance of such submission if, and as, reasonably necessary to permit Pfizer to
comply with legal requirements applicable to it, if practicable.

                  (c)      Pfizer shall promptly investigate Product complaints
and reports of adverse drug experiences and other required safety information
(e.g., PSURs and annual safety reports) associated with the use of any Product
in the ROW Territory. As to each Product, Pfizer shall submit reports of all
adverse drug experiences associated with the use of the Product(s) and other
required safety information to the applicable Governmental Authorities in the
ROW

                                       35



Territory in accordance with applicable Law. Pfizer shall submit a copy of each
such report to Eyetech contemporaneously with its submission of the report to
the applicable Governmental Authority in the ROW Territory, or in advance of
such submission if, and as, reasonably necessary to permit Eyetech to comply
with legal requirements applicable to it, if practicable.

                  (d)      Eyetech shall have the sole responsibility for
revising the Product labeling for the US Territory, and Pfizer for the ROW
Territory, as needed, to adequately warn of the potential risks identified by
reports of adverse drug experiences associated with the use of the Product and
from Product complaints. In addition, the Parties agree to jointly develop
additional written procedures including the mechanics for the surveillance,
receipt, evaluation, and reporting of Product complaints and adverse drug
experiences, including the possible maintenance of a worldwide safety database,
in accordance with this Article 4 and subject to the oversight of the CDRSC.

                  (e)      Each Party shall notify the other Party within two
(2) Business Days after it receives information about the initiation of any
investigation, review or inquiry by FDA or other Governmental Authority
concerning the distribution, promotion or sale of the Product, not otherwise
described above.

         4.4      Pfizer's Performance of Regulatory Services Agreement
Obligations. During the term of the Regulatory Services Agreement, all of
Eyetech's regulatory obligations under this Agreement are subject to Pfizer's
performance of its obligations under the Regulatory Services Agreement to the
extent Eyetech's performance of Eyetech's obligations depends on Pfizer's
performance of Pfizer's obligations under the Regulatory Services Agreement.

                                       36



                                   ARTICLE 5

                               PRODUCT DEVELOPMENT

         5.1      Development Plan and Budget. The CDRSC shall develop an annual
development plan, which shall include preclinical and clinical plans and a
budget (a "Development Plan") in respect of the Products consistent with the
terms of this Agreement for each Year during the Co-Promotion Term. The CDRSC
shall meet to discuss the first Development Plan within ninety (90) days after
the Execution Date. A description of the overall development programs for
development of the AMD Product and DME Product is attached as Exhibit 5.1(a),
and a summary of the budgets for agreed upon Development Costs for such programs
(respectively, the "AMD Agreed Development Costs" and the "DME Agreed
Development Costs") are attached as Exhibit 5.1(b) to this Agreement. Each
annual Development Plan may be updated throughout the Year as deemed appropriate
by the CDRSC. Cumulative Development Costs for each of the AMD Product and DME
Product shall not exceed the AMD Agreed Development Costs and the DME Agreed
Development Costs, respectively, for such Products absent mutual consent of the
Parties. The Parties' respective obligations with respect to Development Costs
shall be as set forth in Section 8.1, provided that, unless otherwise agreed by
the Parties, neither Party shall be obligated to pay for any Development Costs
in excess of the AMD Agreed Development Costs or the DME Agreed Development
Costs, respectively, except to the extent a Party exercises its final
decision-making authority in accordance with Article 3 to approve such excess
Development Costs over the objection of the other Party or otherwise
unilaterally incurs such excess Development Costs, in which case the Party
exercising such final decision-making authority or unilaterally incurring excess
Development Costs shall be solely responsible for such excess Development Costs.
The Parties

                                       37



acknowledge that the budgets set forth in Exhibit 5.1(b) do not cover
preclinical Development Costs for periods after the end of 2003 and do not cover
Development Costs for manufacturing process development and optimization. With
respect to such Development Costs not covered by the budgets set forth in
Exhibit 5.1(b), the Parties shall discuss reasonably necessary preclinical
Development Costs for subsequent periods and Development Costs for manufacturing
process development and optimization, and amend Exhibit 5.1(b) to cover such
additional Development Costs.

         5.2      AMD Product and DME Product Development. Each of the Parties
shall, during the Co-Promotion Term, use Commercially Reasonable Efforts to
develop and obtain Approvals for at least one AMD Product and one DME Product as
provided in this Agreement. In the event that a party fails to exercise such
Commercially Reasonable Efforts, such Party's sole liability and the other
Party's sole remedy for such failure shall be termination of this Agreement in
accordance with Section 13.2.

         5.3      Development of Products for Additional Indications in the
Field. At the request of either Party, the Parties shall in good faith meet and
discuss jointly developing Additional Developed Products where preclinical
and/or clinical results provide a reasonable basis for pursuing such additional
development or the pursuit of such additional development is otherwise
potentially commercially attractive. If the Parties agree to pursue such
additional development, the Parties shall amend the applicable Development
Plan(s) accordingly. If the Parties do not agree to pursue such additional
development, either Party shall have the right to pursue development of such
Additional Developed Products at its sole expense, subject to the other Party's
rights under this Agreement with respect to the Co-Promotion of Products
(including Additional Developed Products); provided, however, that such
additional development would

                                       38



not, based on the best available scientific evidence, be reasonably likely to
have a materially adverse effect on the Co-Promotion of the Products.

                                   ARTICLE 6

                       LAUNCH, CO-PROMOTION AND DETAILING

         6.1      Co-Promotion of Products. Eyetech and Pfizer shall be jointly
responsible for the Co-Promotion of Products in the US Territory, with each
Party participating (except as otherwise expressly provided in this Agreement)
in all types of marketing activity in the US Territory. Each of the Parties
shall Co-Promote the Products in the US Territory during the Co-Promotion Term
in accordance with the terms of this Agreement and the applicable Marketing
Plan, and in compliance with all Laws. In conducting Co-Promotion activities,
each Party shall use Commercially Reasonable Efforts to Co-Promote the sale of
the Products in the US Territory. In the event that a Party fails to exercise
such Commercially Reasonable Efforts, such Party's sole liability and the other
Party's sole remedy for such failure shall be (a) termination of this Agreement
in accordance with Section 13.2 and (b) if applicable to such failure, the
remedies set forth in Section 6.5 below. All aspects of each Marketing Plan will
be determined pursuant to the committee system set forth in Article 3.

         6.2      Marketing Plan and Budget.

                  (a)      The CSC shall, subject to the provisions of Sections
3.4(c), (d), (e) and (f), develop a Marketing Plan (a "Marketing Plan") and a
marketing budget (a "Co-Promotion Budget") for the period from the Effective
Date through Launch of the first Product in the US Territory and for each Year
thereafter during the Co-Promotion Term consistent with Exhibit 6.2 and the
other terms of this Agreement. The first Marketing Plan shall be a pre-Launch
Marketing Plan, such Marketing Plan to be as approved by the JOC within six (6)
months of the

                                       39



Effective Date (the "Pre-Launch Marketing Plan"). The Pre-Launch Marketing Plan
shall contain a pre-Launch Co-Promotion Budget covering the period of time from
the Effective Date through the Launch of the first Product in the US Territory
of up to $[**] or such higher amount as is agreed between the Parties. The
pre-Launch Co-Promotion Budget shall not exceed $[**] unless otherwise agreed by
both Parties, and neither Party's election to withhold such agreement shall be
subject to the other Party's decision-making authority. Neither Party shall
engage in any Co-Promotion activities except as provided in the applicable
Marketing Plan. Subsequent annual Marketing Plans will describe the plan for
commercialization of the Products in the US Territory, including: (a) general
strategies for the Detailing and marketing of the Products and allocation of
responsibilities for marketing activities; (b) Detail Requirements and sampling
activities, if any; (c) market and sales forecasts; (d) pricing and discounting
analysis; (e) advertising, public relations and other promotional programs,
including professional symposia and speaker and activity programs to be used in
the Co-Promotion of the Products; and (f) [**]. Each Marketing Plan and the
Co-Promotion Budget may, subject to the provisions of Sections 3.4(c), (d), (e)
and (f), be updated from time to time as deemed appropriate by the CSC.

                  (b)      Exhibit 5.1(b) also includes [**], which Product
Studies will be performed absent mutual agreement by the Parties to the
contrary. [**] these [**] of Products, [**].

         6.3      Detailing. The Parties shall be responsible for performing the
Detail Requirements specified in each then-current Marketing Plan.

         6.4      Detailing Reports. Each Party shall provide the other Party
and the CSC with a report as soon as practicable but in no event later than
forty-five (45) days following the end of each Quarter during the Co-Promotion
Term setting forth, in such detail and form as the Parties shall agree, the
number of Details made by such Party's Sales Representatives of Products in the

                                       40



US Territory during such Quarter (each, a "Detailing Report"), provided,
however, that the Detailing Report for the fourth such Quarter in each Year
shall be cumulative and reflect the number of Details made by such Party's
respective Sales Representatives in the US Territory during such Year. Eyetech
covenants that it shall develop an internal system for the purpose of reporting
the number of Details of its Sales Representatives, and that it shall have such
system implemented by the time it begins Detailing the Products.

         6.5      Detail Shortfalls.

                  (a)      In the event that either Party fails to perform (such
Party, a "Shortfall Party") at least [**] percent ([**]%) of its Detail
Requirement in any Year as reported pursuant to Section 6.4 or verified pursuant
to Section 9.3, the Shortfall Party shall pay to the other Party as liquidated
damages an amount equal to the Detail Cost (as hereinafter defined), multiplied
by the applicable factor set forth below (the "Shortfall Factor") multiplied by
the total number of Details in the shortfall (the Detail Cost, multiplied by the
number of Details in the shortfall, multiplied by the Shortfall Factor, the
"Detail Shortfall Payment Amount"), on an incremental basis as set forth below:

                                       41





- -----------------------------------------------------------------------------------------
                                                                                Shortfall
                                            Detail Shortfall Level                Factor
- -----------------------------------------------------------------------------------------
                                                                          
For such portion of shortfall which is: > or = [**]% but < [**]% of Detail         [**]
                                         Requirement
- -----------------------------------------------------------------------------------------
For such portion of shortfall which is: > or = [**]% but < [**]% of Detail         [**]
                                         Requirement
- -----------------------------------------------------------------------------------------
For such portion of shortfall which is: < [**]% of Detail Requirement              [**]
- -----------------------------------------------------------------------------------------


For purposes of this Section 6.5, "Detail Cost" means $[**]. If a Party wishes
to verify the Details performed by the other Party in any Year, such Party shall
give notice to the other Party that the notifying Party wishes to verify Details
pursuant to Section 9.3 within forty-five (45) days after receipt of the other
Party's last Detailing Report set forth in Section 6.4 for such Year.

                  (b)      With respect to any Year in which only one of the
Parties was a Shortfall Party, the Shortfall Party shall, within one-hundred
twenty (120) days after the end of such Year (or within thirty (30) days after
completion of any verification(s) of Details pursuant to Section 9.3 conducted
pursuant to Section 6.5(a) for such Year, if such verification(s) have not been
completed within ninety (90) days after the end of such Year), pay the Detail
Shortfall Payment Amount to the other Party.

                  (c)      With respect to any Year in which both Parties are
Shortfall Parties, the Party having performed the highest percentage of its
Detail Requirement in such Year (the "Highest Performing Party") shall be deemed
not to be a Shortfall Party and the percentage of such Party's Detail
Requirement performed by such Party shall be deemed to equal [**] percent
([**]%) of that Party's Detail Requirement in such Year. The other Party shall
continue to be required to pay a Detail Shortfall Payment Amount in accordance
with Section 6.5(b); provided, however, such Detail Shortfall Payment Amount to
be paid by such other Party shall be reduced

                                       42



by (i) multiplying such other Party's Detail Requirement for such Year by the
percentage of the Highest Performing Party's Detail Requirement actually
performed by the Highest Performing Party during such Year and (ii)
recalculating such other Party's Detail Shortfall Payment Amount using the
reduced Detail Requirement for such other Party calculated in accordance with
the immediately preceding clause (i).

                  (d)      In the event that either Party fails to perform at
least [**] percent ([**]%) of its aggregate Detail Requirement (such Party, the
"Detail Breaching Party") for [**] during the Co-Promotion Term (a "Detail
Shortfall Period"), then:

                           (i)      If Pfizer is the Detail Breaching Party,
Eyetech shall have the right, in addition to the remedies provided for in
Sections 6.5(b) and 6.5(c) above, exercisable upon notice to Pfizer given within
ninety (90) days after the end of such Detail Shortfall Period (or within thirty
(30) days after completion of any verification of Pfizer's Details pursuant to
Section 9.3 conducted at Eyetech's request pursuant to Section 6.5(a) for such
Detail Shortfall Period, if such verification has not been completed within
sixty (60) days after the end of such Detail Shortfall Period), such notice to
be effective ninety (90) days after the date of such notice to Pfizer (or thirty
(30) days after completion of any verification of Pfizer's Details for such
Detail Shortfall Period requested by Eyetech, if later), to terminate this
Agreement; and

                           (ii)     If Eyetech is the Detail Breaching Party,
Pfizer shall have the right, in addition to the remedies provided for in
Sections 6.5(b) and 6.5(c) above, exercisable upon notice to Eyetech given
within ninety (90) days after the end of such Detail Shortfall Period (or within
thirty (30) days after completion of any verification of Eyetech's Details
pursuant to Section 9.3 conducted at Pfizer's request pursuant to Section 6.5(a)
for such Detail Shortfall Period, if such verification has not been completed
within sixty (60) days after the end of such

                                       43



Detail Shortfall Period), such notice to be effective ninety (90) days after the
date of such notice to Eyetech (or thirty (30) days after completion of any
verification of Eyetech's Details for such Detail Shortfall Period requested by
Pfizer, if later), to elect to adjust, for the balance of the Co-Promotion Term,
the percentage of Net Sales that Pfizer would be entitled to receive under
Section 8.6(a), and the percentage of costs and expenses included in the
calculation of net payment amounts in Section 8.6(c) for which Pfizer would be
responsible would be increased from [**] percent ([**]%) to [**] percent
([**]%), Eyetech's corresponding percentage would be decreased from [**]percent
([**]%) to [**] percent ([**]%) and Eyetech would not have any further Detailing
responsibilities under this Agreement (the "Elective Remedy"); and

                           (iii)    The Parties understand and agree that the
Detail Shortfall Payment Amount shall be paid as liquidated damages and not as a
penalty and that such sum represents a genuine pre-estimate of the loss the
Parties believe would be suffered as a result of Detail shortfalls. In the event
of any Detail shortfall under Section 6.5, the remedies and compensation as
provided herein shall govern, and neither Party shall have any further claim for
breach of this Agreement on account of such Detail shortfall; provided that
nothing in this sentence shall preclude either Party from using a Detail
shortfall as a basis for termination of this Agreement for breach by the other
Party of such other Party's obligations under Section 6.1; and provided that a
failure to give or election not to give a notice by a Party prior to a deadline
set forth in Section 6.5(d)(i) or 6.5(d)(ii) with respect to a Detail shortfall
during any Detail Shortfall Period shall not constitute a waiver by such Party
with respect to the remedies and compensation under this Section 6.5 with
respect to a Detail shortfall during any subsequent Detail Shortfall Period.

         6.6      Sales Force Responsibilities. Each Party shall be solely
responsible for all costs and expenses incurred in providing the personnel
necessary to provide the services to be

                                       44



performed by it as described in this Article 6. During the Co-Promotion Term,
Pfizer shall, in a manner determined at Pfizer's sole reasonable discretion, (a)
maintain and support a professional sales force in the US Territory; and (b)
ensure that sales of the Product will constitute a factor in the variable
compensation of Pfizer's Sales Representatives.

         6.7      Product Information. During the Co-Promotion Term, each Party
will provide the other with all material information relevant to the Detailing
and promotion of the Product within a reasonable time after such information
becomes known to the Party, provided such information is not received under a
secrecy obligation.

         6.8      Orders. Eyetech shall, subject to Pfizer's performance of
Pfizer's obligations under the Distribution Agreement, process and fulfill all
orders for Products from customers in the US Territory. Except as otherwise
provided in the Distribution Agreement, in the event that an order for Products
from a customer in the US Territory is received by Pfizer, Pfizer shall promptly
forward such order to Eyetech for processing and fulfillment.

         6.9      Audit. The number of Details shall be subject to external
audit as provided in Article 9.

         6.10     Third Party Reports. From time to time during the term hereof
the CSC shall agree upon the third party reports (such as those from IMS), to
the extent permitted by such third party, which the Parties wish to receive in
connection with the Co-Promotion of the Products (and the determinations to be
made under Section 6.2 with respect to the Marketing Plan and Co-Promotion
Budgets). The expenses of such reports shall be Marketing Expenses.

         6.11     Medical Claims. Neither Party shall make any medical claim for
the Products beyond the scope of the relevant regulatory approval(s) then in
effect for the Products; provided that, both Parties may distribute any
information concerning the Products or their use, including

                                       45



but not limited to scientific articles, reference publications, and healthcare
economic information, in accordance with applicable Laws and subject to the
oversight of the CSC.

         6.12     Manufacturing.

                  (a)      After the Effective Date, Eyetech shall use
commercially reasonable efforts to enter into an agreement with an API Bulk Drug
Substance Supplier to supply the Parties with a supply of the active
pharmaceutical ingredient for the Products in the Territory. The selection of
such API Bulk Drug Substance Supplier and the terms and conditions of the
agreement to be entered into with the API Bulk Drug Substance Supplier shall be
subject to approval by the MSC. In addition, prior to the Execution Date,
Eyetech entered into the agreements set forth in Exhibit 6.12(a) with respect to
the supply of Products for clinical trials, and such agreements are hereby
deemed approved by the MSC. [**] shall be responsible for day-to-day management
of such API Bulk Drug Substance Supplier on behalf of the Parties.

                  (b)      After the Effective Date, Eyetech shall also use
commercially reasonable efforts to enter into an agreement with a Fill and
Finish Services Supplier to provide fill and finish services for the Products in
the US Territory. The selection of such Fill and Finish Services Supplier and
the terms and conditions of the agreement to be entered into with the Fill and
Finish Services Supplier shall be subject to approval by the MSC. [**] shall be
responsible for day-to-day management of such Fill and Finish Services Supplier
on behalf of the Parties.

                  (c)      The MSC shall not take any action or direct Eyetech
to take any action that would result in a breach of any agreement set forth on
Exhibit 6.12(a), or of any agreement between Eyetech and an API Bulk Drug
Substance Supplier or between Eyetech and a Fill and Finish Services Supplier,
including without limitation any minimum purchase obligation or non-cancelable
order obligation, entered into by Eyetech and approved by the MSC.

                                       46



                  (d)      Subject to the provisions of Sections 2.8 and
6.12(c), the MSC may decide to have Pfizer (i) enter into agreement(s) with API
Bulk Drug Substance Supplier(s) and/or Fill and Finish Services Supplier(s)
and/or (ii) supply active pharmaceutical ingredient and/or fill and finish
services for the Products, in either case to replace the agreement(s) referred
to in Sections 6.12(a) and/or 6.12(b) or to provide a second source of supply
for active pharmaceutical ingredient and/or fill and finish services for the
Products; provided that the terms and conditions of any such agreements or
arrangements involving Pfizer shall be subject to Eyetech's prior approval and,
if such agreements or arrangements involving Pfizer relate to the supply of
active pharmaceutical ingredient and/or fill and finish services for the
Products in the US Territory, such agreements or arrangements shall be entered
into pursuant to agreements between Eyetech and Pfizer for such supply on terms
to be mutually agreed by the Parties; provided further that any such agreements
or arrangements shall be structured so that Eyetech acquires and maintains title
to all inventory of Products supplied for sale in the US Territory. From and
after such time, if any, as responsibility for manufacturing the Products has
been transitioned to Pfizer, Pfizer shall use Commercially Reasonable Efforts to
manufacture and supply sufficient quantities of the Products to enable Eyetech
to respond on a timely basis to all customer demand for Product in the US
Territory.

                  (e)      During any period in which Eyetech is the contracting
Party with API Bulk Drug Substance Supplier(s), Eyetech shall supply active
pharmaceutical ingredient for the Products to be sold by Pfizer in the ROW
Territory in accordance with terms and conditions to be mutually agreed by the
Parties, including resale pricing from Eyetech to Pfizer equal to Eyetech's
Manufacturing Costs incurred in providing such supply. Such terms and conditions
shall provide for an equitable allocation of supply between the US Territory and
the ROW

                                       47



Territory in the event that the supply of active pharmaceutical ingredient for
the Products at any time is not sufficient to meet worldwide demand, such
allocation to be based on the orders placed by the Parties during the six-month
period preceding the shortfall in supply or, if sales have not been made in both
the US Territory and the ROW Territory during such preceding six-month period,
on the Parties' reasonable sales forecasts for the period affected by such
shortfall. In addition, such terms and conditions shall impose on Pfizer all of
Eyetech's obligations to the API Bulk Drug Substance Supplier(s) with respect to
the active pharmaceutical bulk drug substance so supplied by Eyetech to Pfizer
for the ROW Territory, shall be structured so that Eyetech shall have no
obligations to such API Bulk Drug Substance Supplier(s) with respect to the
active pharmaceutical bulk drug substance so supplied by Eyetech to Pfizer for
the ROW Territory greater than Pfizer's obligations to Eyetech with respect to
the active pharmaceutical bulk drug substance so supplied by Eyetech to Pfizer
for the ROW Territory, and shall not require Eyetech to give any warranties or
otherwise assume any liability for the performance of the API Bulk Drug
Substance Supplier(s) or for any active pharmaceutical ingredient bulk drug
substance so supplied by Eyetech to Pfizer.

                  (f)      Following the Effective Date, Eyetech shall, at least
thirty (30) days prior to the commencement of each Quarter commencing prior to
the first Launch of a Product in the US Territory in which Eyetech anticipates
incurring Manufacturing Costs for pre-Launch inventory of Products intended for
sale in the US Territory, prepare and deliver to Pfizer a statement of such
Manufacturing Costs (the "Manufacturing Costs Statement") projected to be
incurred by Eyetech during such Quarter. Within fifteen (15) days after
Eyetech's delivery of such statement of projected pre-Launch inventory
Manufacturing Costs, Pfizer shall pay Eyetech [**] percent ([**]%) of such
projected Manufacturing Costs for inventory, projected for sale in

                                       48



the US Territory if the first Launch of a Product is expected to occur in the
US Territory and no substantially concurrent Launch of a Product in the ROW
Territory is expected. Each Manufacturing Costs Statement shall contain an
adjustment as necessary to reflect any variance between the projected
Manufacturing Costs included by Eyetech in prior Manufacturing Cost Statements
and Eyetech's actual Manufacturing Costs for pre-Launch inventory of Products
projected for sale in the US Territory. For the avoidance of doubt, Eyetech
shall not have any financial responsibility for Manufacturing Costs for any
inventory of Products projected for sale in the ROW Territory, and Pfizer shall
be solely responsible for making all necessary payments for any such inventory.
Notwithstanding the foregoing provisions of this Section 6.12(f), the first
Quarter for which the Parties shall provide the statements of projected
pre-Launch inventory Manufacturing Costs shall be the second Quarter of 2003,
and adjustments shall be included the Parties' first statements of such
projected Manufacturing Costs for any pre-Launch inventory Manufacturing Costs
incurred by the Parties between the Execution Date and the end of the first
Quarter of 2003 as if such Manufacturing Costs were variances over previously
projected pre-Launch inventory Manufacturing Costs.

                  (g)      In the event an API Bulk Drug Substance Supplier or
Fill and Finish Services Supplier requires that Eyetech pay for capital
expenditures required for the manufacture of the Products other than as part of
the per-unit purchase price of the Products, Pfizer shall pay [**] percent
([**]%) of such expenditures and Eyetech shall pay [**] percent ([**]%) of such
expenditures; provided that any agreement obligating Eyetech to pay for such
capital expenditures shall be subject to the approval of the MSC as set forth in
Sections 6.12(a) and 6.12(b). Pfizer shall reimburse Eyetech for Pfizer's share
of all such expenditures incurred by Eyetech within thirty (30) days after
receiving any invoice from Eyetech for such expenditures.

                                       49



                  (h)      The Parties shall cooperate, through the MSC, to
obtain mutually agreeable second sources for the supply of active pharmaceutical
ingredient bulk drug substance and fill and finish services for the Products.
The Parties shall also cooperate, through the MSC, to optimize, or cause the API
Bulk Drug Substance Supplier(s) and/or Fill and Finish Services Supplier(s) to
optimize, the manufacturing process used to manufacture the Products in order to
achieve improved quality and efficiency.

                  (i)      Subject to the provisions of Sections 6.12(f) and
6.12(g), the Parties' respective obligations with respect to Manufacturing Costs
relating to Products manufactured for sale in the US Territory shall be as set
forth in Section 8.3.

         6.13     Customer Support. Eyetech will, subject to Pfizer's
performance of its obligations under the Distribution Agreement, be responsible
for distribution and invoicing of Products in the US Territory and providing
customer service representatives to handle customer inquiries and service
related to the Products. The number of these customer service representatives
will be sufficient to reasonably handle calls and inquiries related to the
Products. Such distribution, invoicing and customer service expenses shall be
Marketing Expenses.

                                   ARTICLE 7

                               PAYMENT PROVISIONS

         7.1      Payment Currency. All amounts due under this Agreement shall
be paid to the designated Party in United States dollars.

         7.2      Payments. All payments under this Agreement shall be made on
or before the due date by electronic transfer in immediately available funds to
the respective account designated in writing by each Party at least two (2)
Business Days before the payment is due. Pfizer shall notify Eyetech's
Treasurer, or such other Eyetech representative as Eyetech's treasurer shall

                                       50



designate in writing, by facsimile transmission as to the date and amount of any
payment that Pfizer shall make at least two (2) Business Days prior to such
transfer. Eyetech shall notify Pfizer's treasurer, or such other Pfizer
representative as Pfizer's treasurer shall designate in writing, by facsimile
transmission as to the date and amount of any payment that Eyetech shall make at
least two (2) Business Days prior to such transfer. All payments under this
Agreement shall bear interest from the date due until paid at a rate equal to
the prime rate of Citibank, NA as announced on the date such payment was due
plus three percent (3%), compounded on a calendar quarterly basis. In addition,
the Party liable for late payment shall reimburse the other Party for all
reasonable costs and expenses, including without limitation reasonable
attorneys' fees and legal expenses, incurred in the collection of late payments.

                                   ARTICLE 8

                        EXPENSE SHARING AND COMPENSATION

         8.1      Sharing of Development Costs.

                  (a)      Subject to Sections 8.1(b) and (c), Pfizer shall pay
seventy-five percent of all Development Costs and Eyetech shall pay twenty-five
percent (25%) of all Development Costs (including Development Costs incurred for
clinical studies performed to support regulatory filings in both the US
Territory and the ROW Territory).

                  (b)      Subject to Section 8.1(e), with respect to
Development Costs incurred for clinical studies performed solely to support a
regulatory filing, or solely as a condition of receiving regulatory approval, in
a country in the ROW Territory:

                           (i)      Pfizer shall pay ** and Eyetech shall pay
** of the first ** of such Development Costs; and

                           (ii)     Pfizer shall pay all of such Development
Costs in excess of xxx.

                                       51


                  (c)      The Parties shall each pay fifty percent (50%) of
Development Costs incurred for clinical studies performed solely to support a
regulatory filing in the US Territory, or solely as a condition of receiving
regulatory approval in the US Territory.

                  (d)      Following the Effective Date, (i) Eyetech shall, at
least thirty (30) days prior to the commencement of each Quarter in which
Eyetech anticipates incurring Development Costs, prepare and deliver to Pfizer a
statement of Development Costs projected to be incurred by Eyetech during such
Quarter in accordance with Section 5.1 above and the annual Development Plan
applicable to such Quarter and (ii) Pfizer shall, at least thirty (30) days
prior to the commencement of each Quarter in which Pfizer anticipates incurring
Development Costs, prepare and deliver to Eyetech a statement of Development
Costs projected to be incurred by Pfizer during such Quarter in accordance with
Section 5.1 above and the annual Development Plan applicable to such Quarter.
Each Party shall include in such statement an adjustment for variances between
projected Development Costs included in prior such statements delivered by such
Party and actual Development Costs incurred by such Party in the periods covered
by such prior statements. After delivery by each Party of its statement of
projected Development Costs, Eyetech shall, at least fifteen (15) days prior to
the commencement of such Quarter, prepare and deliver to Pfizer a combined
statement of projected Development Costs to be incurred by both Parties for such
Quarter, which shall provide a net amount to be advanced by the Party projected
to incur less than its share of the combined Development Costs for such Quarter
to the Party projected to incur more than its share of such combined Development
Costs, such net amount to equal the difference between each Party's share of the
combined Development Costs for such Quarter as determined in accordance with
Sections 8.1(a), (b) and (c) and the Development Cost amount such Party is
projected to incur during such Quarter. Within fifteen (15) days after

                                       52



Eyetech's delivery of such combined statement of projected Development Costs,
the Party required to advance the net amount reflected in such combined
statement shall pay the other Party such net amount. Notwithstanding the
foregoing provisions of this Section 8.1(e), the first Quarter for which the
Parties shall provide the statements of projected Development Costs shall be the
second Quarter of 2003, and adjustments shall be included the Parties' first
statements of projected Development Costs for any Development Costs incurred by
the Parties between December 1, 2002 and the end of the first Quarter of 2003 as
if such Development Costs were variances over previously projected Development
Costs.

                  (e)      For purposes of Section 8.1(b) above, a clinical
study shall not be treated as performed solely to support a regulatory filing in
one or more countries in the ROW Territory if such clinical study is also
performed to support a regulatory filing in the US Territory; provided, however,
that the mere fact that a clinical study performed to support a regulatory
filing in the ROW Territory is required to be filed with FDA (pursuant to FDA
regulations requiring that any clinical study conducted anywhere in the world be
filed with FDA regardless of whether such clinical study is performed as a
condition to receiving regulatory approval from FDA), does not in and of itself
mean that such clinical study is also performed to support a regulatory filing
in the US Territory.

         8.2      Responsibility for Regulatory Costs. [**] be responsible for
[**] of all Regulatory Costs. Such Regulatory Costs shall be reflected in the
Parties' Quarterly Expense Reports pursuant to Section 8.6(b). [**] shall be
solely responsible for all Out-of-Pocket Costs and other costs solely related to
making or supporting regulatory filings in the ROW Territory.

         8.3      Responsibility for Cost of Goods Sold. [**] be responsible for
[**] of all Cost of Goods Sold for Products sold in the US Territory. Such Cost
of Goods Sold shall be reflected in

                                       53



the Parties' Quarterly Expense Reports pursuant to Section 8.6(b); provided that
Pfizer and Eyetech shall each receive a credit (the "Inventory Build Credit")
against the amount otherwise to be paid by it with respect to Cost of Goods Sold
pursuant to this Section 8.3 equal to the lesser of (a) its share of the Cost of
Goods Sold for such Quarter and (b) the previously un-credited portion of its
Funded Inventory Build Costs.

         8.4      Responsibility for Marketing Expenses. [**] responsible for
[**] of all Marketing Expenses for the Products in the US Territory. Such
Marketing Expenses shall be reflected in the Parties' Quarterly Expense Reports
pursuant to Section 8.6(b). Pfizer shall be solely responsible for all
Out-of-Pocket Costs and other costs solely related to the marketing and
promotion of Products in the ROW Territory. In the event that any Out-of-Pocket
Costs related to both the marketing and promotion of Products in the US
Territory and the marketing and promotion of Products in the ROW Territory are
incurred by either Party, the Parties shall in good faith discuss an equitable
sharing of such Out-of-Pocket Costs.

         8.5      Net Sales Reports. Subject to Pfizer's performance of its
obligations under the Distribution Agreement, Eyetech shall deliver
electronically to Pfizer daily (if practicable, but in any event not less than
weekly) a report of gross sales of the Products in the US Territory on a daily
(if practicable, but in any event not less than weekly) and Year-to-date basis.

         8.6      Quarterly Reconciliation of Net Sales and Expenses.

                  (a)      During the Co-Promotion Term and subject to the terms
and conditions hereof, Eyetech shall pay to Pfizer fifty percent (50%) of Net
Sales in the US Territory. Payments by Eyetech to Pfizer of such amounts shall
be made in accordance with the reconciliation procedures set forth below in this
Section 8.6.

                                       54



                  (b)      Within thirty (30) days after the end of each Quarter
during the Co-Promotion Term, each Party shall provide the other Party with a
statement of the expenses described in Sections 8.2, 8.3 and 8.4 relating to the
Co-Promotion of Products, if any, incurred by such Party during such Quarter, as
well as the details of any adjustments to be made to the amounts submitted by
such Party for previous Quarters (such reports, "Quarterly Expense Reports").
The Quarterly Expense Reports shall be in a form to be mutually agreed by the
Parties within ninety (90) days after the Execution Date.

                  (c)      Within forty (40) days after the end of each Quarter
during the Co-Promotion Term, Eyetech shall prepare and deliver to Pfizer a
report setting forth (i) the Net Sales of the Products in the US Territory
during said Quarter, (ii) adjustments (including reimbursements or recoupment of
prior deductions), if any, to Net Sales reported for any previous Quarter, (iii)
each Party's share of the amounts set forth in the Quarterly Expense Reports for
such Quarter, (iv) a calculation of the net amount payable and the Party owing
such net amount after subtracting each Party's share of the amounts set forth in
the Quarterly Expense Reports from each Party's share of Net Sales for such
Quarter and (v) a statement of the net amount payable and the Party owing such
net amount based on the foregoing calculation. The report prepared and delivered
by Eyetech pursuant to this Section 8.6(c) shall be in a form to be mutually
agreed by the Parties within ninety (90) days after the Execution Date.
Notwithstanding the foregoing provisions of Section 8.6(b) and this Section
8.6(c), the first Quarter for which the Parties shall provide Quarterly Expense
Reports and for which Eyetech shall provide a report pursuant to this Section
8.6(c) shall be the second Quarter of 2003, and adjustments shall be included in
the Parties' first Quarterly Expense Reports for any Regulatory Costs, Cost of
Goods Sold and Marketing Expenses incurred by the Parties between the

                                       55



Execution Date and the end of the first Quarter of 2003 as if such costs and
expenses were adjustments to be made to amounts previously reported in Quarterly
Expense Reports.

                  (d)      The net amount payable, if any, as set forth in the
report prepared and delivered in accordance with Section 8.6(c) shall be paid by
the Party owing such net amount to the other Party within fifteen (15) days
after such report is delivered by Eyetech.

         8.7      Offset. Any amount payable by either Party pursuant to Section
8.6 may be offset against any other amounts then payable to such Party under
Section 8.1.

                                   ARTICLE 9

                             ACCOUNTING AND REPORTS

         9.1      Books and Records. Each Party shall keep comprehensive books
and records relating to this Agreement in accordance with GAAP. Such books and
records shall document all Detailing Reports and Net Sales, authorized expenses
incurred or paid and any other costs incurred (including Marketing Expenses,
Manufacturing Costs, third party royalty expenses, product liability and product
recall expenses and Development Costs) or revenues earned relating to this
Agreement and include all information subject to audit pursuant to Section 9.2.
All such books and records shall be maintained for three (3) Years following the
relevant Year or such longer period as is required by Law.

         9.2      Audits. These audit and adjustment provisions apply with
respect to all payments due from one Party to another pursuant to this
Agreement, including without limitation amounts payable pursuant to Article 8
and the number of Details performed under Section 6.4. Each Party shall have the
right to have the applicable books and records of the other Party audited by a
nationally recognized independent certified public accountant, selected by a
Party (as to which firm the other Party has no reasonable objection), under
appropriate confidentiality provisions

                                       56



reasonably acceptable to the accounting firm conducting the audit, for the sole
purpose of verifying the accuracy of all financial, accounting and numerical
information and calculations under this Agreement. Any such audit shall be
conducted no more than once each Year during the Co-Promotion Term, shall be
limited to payments due within the prior three (3) Years, and shall be conducted
upon at least thirty (30) days' advance notice during normal business hours and
in a manner that does not interfere unreasonably with the business of the
audited entity. The results of any such audit shall be delivered in writing to
each party. Any underpayment or overbilling determined by such audit shall
promptly be paid or refunded by the audited Party. If the audited Party has
underpaid or overbilled amounts due under this Agreement by more than five
percent (5%) over any reporting period, the audited Party shall also reimburse
the other Party for the cost of such audit (with the cost of the audit to be
paid by the auditing Party in all other cases), plus interest at the interest
rate set forth in Section 7.2, from the date of any such underpayment or
overpayment. If the audited party is shown to be a Shortfall Party, the
provisions of Section 6.5 of this Agreement shall control. Such accountants
shall not reveal to the party seeking verification the details of its review,
except insofar as is necessary to describe the underpayment, overbilling or
level of Details. Any dispute arising out of any audit conducted pursuant to
this Section 9.2 and any other dispute arising out of the Parties' respective
payment obligations under this Agreement shall be resolved through binding
arbitration in accordance with Article 15, and either party may submit such
dispute to such binding arbitration.

         9.3      Sales Force Efforts. For two (2) Years following each Year,
each Party shall keep records relating to Details made by its Sales
Representatives, and Detailing Reports, during or for such Year, including
sampling of the Products. Such records shall be available for inspection and
audit in accordance with Section 9.2 above to determine compliance with the
terms hereof.

                                       57



                                   ARTICLE 10

                    INTELLECTUAL PROPERTY RIGHTS AND LABELING

         10.1     Trademark and Corporate Logos.

                  (a)      Subject to the provisions of this Section 10.1, each
Party shall retain all right, title and interest in and to its respective
corporate name and logo.

                  (b)      In the Territory, the Products shall be promoted and
sold solely under the MACUGEN Trademark and shall use a trade dress mutually
agreed by the Parties that includes Pfizer's and Eyetech's logos; provided that,
on a country-by-country basis in the ROW Territory, the Parties may jointly
agree that Pfizer shall promote and sell the Products in the ROW Territory under
Trademarks other than the MACUGEN Trademark in accordance with Section 10.1(e).
In the Territory, subject to the requirements of Law, Eyetech and Pfizer shall
be identified and given equal exposure and prominence on all Product package
inserts, trade packages, packaging, samples, and promotional materials; provided
that Eyetech acknowledges that in the ROW Territory such identification of
Eyetech shall be as the licensor or developer of the Products; and provided,
further, that if Eyetech or Pfizer cannot be given equal exposure and prominence
on all Product package inserts, trade packages, packaging, samples, and
promotional materials in the Territory as a result of the requirements of Law,
then Eyetech or Pfizer, as the case may be, shall be given as close to equal
exposure and prominence as possible, consistent with applicable Law.

                  (c)      For the Co-Promotion Term, (i) Pfizer grants to
Eyetech the non-exclusive right, free of charge, to use the Pfizer name and logo
in the US Territory solely for the purpose of Co-Promotion of the Products in
accordance with the terms of this Agreement and (ii) Eyetech grants to Pfizer
the non-exclusive right, free of charge, to use the Eyetech name and logo and
the

                                       58



Trademark(s) in the US Territory solely for the purpose of Co-Promotion of the
Products in accordance with the terms of this Agreement; provided that such
rights shall be exercised, and all Products bearing such names and/or logos
and/or such Trademark shall be manufactured, in accordance with the quality
standards established by the MSC.

                  (d)      For the Term (as defined in the License Agreement),
Eyetech grants to Pfizer the non-exclusive right, free of charge, to use the
Eyetech name and logo and the Trademark(s) in the ROW Territory solely for
purposes of marketing and promoting Products in the ROW Territory in accordance
with the License Agreement; provided that such right shall be exercised, and all
Products bearing such names and/or logos and/or such Trademark(s) shall be
manufactured, in accordance with the quality standards established by the MSC.

                  (e)      Eyetech shall remain the owner of the Eyetech name
and logo and the Trademark(s) and the goodwill pertaining thereto. Eyetech shall
be solely responsible for registering and maintaining the Trademark(s) in the
Territory and shall remain the owner thereof. Except as contemplated herein,
Eyetech shall have no rights in or to the Pfizer name or logo or the goodwill
pertaining thereto. Except as contemplated herein, Pfizer shall have no rights
in the Trademark(s) in the Territory or to the Eyetech name or logo, or the
goodwill pertaining thereto. It is the Parties' intention to utilize a single
trademark for the Product throughout the Territory. Accordingly, Pfizer agrees
to use the MACUGEN Trademark for the Products in the ROW Territory, provided,
however, if any Governmental Authority in the EMEA or Japan fails to approve
MACUGEN as the trademark for the Product, or if either Party reasonably
determines that use of the MACUGEN Trademark may violate the rights of any third
party in the ROW Territory, then the Parties shall jointly select an alternative
Trademark for the Product in the ROW Territory. In either event, Eyetech shall
be solely responsible for registering and

                                       59



maintaining such alternative Trademark in the ROW Territory and shall be the
owner thereof. Pfizer shall not register or seek to register the MACUGEN
Trademark or any alternative Trademark selected by the Parties in any country of
the Territory. [**] responsible for [**] of the cost of registering and
maintaining the Trademark(s) in the US Territory and [**] shall be responsible
for [**] percent ([**]%) of the cost of registering and maintaining the
Trademark(s) in the ROW Territory. Eyetech shall include all such US Territory
costs in Eyetech's Quarterly Expense Reports pursuant to Section 8.6(b). Pfizer
shall reimburse Eyetech for all such ROW Territory costs incurred by Eyetech
within thirty (30) days after receiving any invoice from Eyetech for such costs.

                  (f)      Eyetech shall inform Pfizer promptly of any
infringement of or challenge to the Trademark(s) in the Territory, whether
actual or threatened, which comes to the notice of Eyetech. In respect of the
defense and infringement of the Trademark(s) in the ROW Territory, as between
Pfizer and Eyetech, Pfizer shall have the first right, at its sole cost and
expense, to bring suit and to take action against such infringer or challenger,
in which case Pfizer shall control the prosecution or defense of any such suit
or claim, including without limitation, the choice of counsel, and shall have
the exclusive right to settle or dispose of any such suit or claim. Eyetech
shall provide reasonable assistance and co-operation as Pfizer may reasonably
request, at Pfizer's sole cost and expense.

                  (g)      Pfizer shall inform Eyetech promptly of any
infringement of or challenge to the Trademark(s) in the Territory, in each case
whether actual or threatened, which comes to the notice of Pfizer. In respect of
the defense and infringement of the Trademark(s) in the US Territory, as between
Eyetech and Pfizer, Eyetech shall have the first right to bring suit and to take
action against such infringer or challenger, in which case Eyetech shall control
the

                                       60



prosecution or defense of any such suit or claim, including without limitation,
the choice of counsel, and shall have the exclusive right to settle or dispose
of any such suit or claim. Pfizer shall provide reasonable assistance and
co-operation as Eyetech may reasonably request.

                  (h)      Notwithstanding anything to the contrary in Sections
10.1(f) and 10.1(g) above, if a Party fails to initiate a suit or take other
appropriate action that it has the initial right to initiate or take pursuant to
Section 10.1(f) or Section 10.1(g), as applicable, within ninety (90) days after
becoming aware of the basis for such suit or action, then the other Party may,
in its discretion, provide the Party having the initial right with written
notice of such other Party's intent to initiate a suit or take other appropriate
action. If such other Party provides such notice and the Party having the
initial right fails to initiate a suit or take such appropriate action within
thirty (30) days after receipt of such notice from the other Party, then the
other Party shall have the right to initiate a suit or take other appropriate
action that it believes is reasonably required to protect the intellectual
property rights at issue. The proceeds of any recovery, court award or
settlement of such action shall first be applied to reimburse the Parties for
the costs and expenses of such prosecution and the balance shall be paid, for
amounts relating to the US Territory, [**] percent ([**]%) to Pfizer and [**]
percent ([**]%) to Eyetech, and for amounts relating to the ROW Territory, [**]
percent ([**]%) to Pfizer and [**] percent ([**]%) to Eyetech.

         10.2     Copyrights and Proprietary Programs. Eyetech shall own all
copyrights relating to Promotional Materials developed for use in the US
Territory for the Products. Pfizer and Eyetech shall each retain all rights
including, without limitation, copyrights and trademarks, to all of their
respective existing programs and materials in all formats (print, video, audio,
digital, computer, etc.) regarding sales training, patient education and disease
management programs owned by each of them as of the Execution Date, as well as
any modifications each may develop

                                       61



in the future which are not specific to the Product. Eyetech and Pfizer shall,
from time to time, endeavor to each notify the other as to the identity of such
existing programs and materials. In addition, all new programs regarding sales
training, patient education and disease management jointly developed by Eyetech
and Pfizer pursuant to this Agreement shall be jointly owned by Eyetech and
Pfizer, and each Party shall have the right to use and exploit such developed
programs freely without any need to obtain the consent of the other Party and
without any duty to account to the other Party for such use or exploitation.
Each Party hereby assigns to the other Party all rights, title and interests,
including all intellectual property rights, in and to such Promotional Materials
and programs as necessary to give effect to the provisions of this Section 10.2.

         10.3     Developments. All ideas, inventions, Know-How, writings, data
and technical information (whether patentable or copyrightable or not) arising
out of any development or Product Study of any AMD Product or DME Product,
whether such development or study is sponsored and/or conducted by Eyetech or
Pfizer or their respective Affiliates or any third party shall be owned by
Eyetech. Pfizer hereby assigns to Eyetech all rights, title and interests,
including all intellectual property rights, in and to such ideas, inventions,
Know-How, writings, data and technical information as necessary to give effect
to the provisions of this Section 10.3.

         10.4     Third Party Agreements. Subject to Pfizer's performance of its
material obligations under this Agreement and under the License Agreement with
respect to its exercise of rights sublicensed to Pfizer by Eyetech and with
respect to third party royalties payable by Pfizer, Eyetech covenants and agrees
with Pfizer that, except where a failure by Eyetech to comply with the following
would not have a material adverse effect on the Co-Promotion of the Products,
Eyetech: (a) shall not execute any amendment, modification or waiver of any of
the

                                       62



licenses and agreements listed on Exhibit 10.4 ("Third Party Agreements")
without the prior written consent of Pfizer, (b) shall not make any election or
exercise any right or option (or omit to take any action) that would terminate
or relinquish in whole or in part any Third Party Agreement, (c) shall comply
with all of its obligations under the Third Party Agreements in all material
respects, (d) shall take such reasonable actions as shall be necessary to keep
in full force and effect the Third Party Agreements, and (e) shall give prompt
notice to Pfizer, together with a summary of outstanding issues if Pfizer so
requests and subject to any obligations of confidentiality owed by Eyetech to
the other parties to such Third Party Agreements, of any actual or alleged
defaults, breaches, violations, proposed amendments or proposed modifications
of, or any proposed waivers under, any of the Third Party Agreements by any of
the parties to the Third Party Agreements.

                                   ARTICLE 11

                            CONFIDENTIAL INFORMATION

         11.1     Treatment of Confidential Information. During the Co-Promotion
Term and for five (5) years after the expiration or termination of this
Agreement, each Party shall maintain Confidential Information (as defined in
Section 11.2) of the other Party in confidence, and shall not disclose, divulge
or otherwise communicate such Confidential Information to others (except for
agents and advisors under obligations of confidentiality) or use it for any
purpose other than in connection with the development, manufacture, marketing,
promotion, distribution or sale of the Products as provided in this Agreement,
and each Party agrees to exercise reasonable efforts to prevent and restrain the
unauthorized disclosure of such Confidential Information by any of its
directors, officers, employees, consultants, subcontractors, licensees or
agents, which reasonable

                                       63



efforts shall be at least as diligent as those generally used by such Party in
protecting its own confidential and proprietary information.

         11.2     Confidential Information. "Confidential Information" means all
trade secrets or other proprietary information, including without limitation any
proprietary data and materials (whether or not patentable or protectable as a
trade secret), regarding a Party's technology, products, business or objectives
or regarding the Products, which is disclosed by a Party to the other Party. All
information disclosed prior to the Effective Date by Eyetech to Pfizer under or
pursuant to the confidentiality agreement between the Parties dated as of April
22, 2002, as amended, shall be deemed "Confidential Information" of Eyetech.
Notwithstanding the foregoing, there shall be excluded from the foregoing
definition of Confidential Information any of the foregoing that:

                  (a)      was known by the receiving Party prior to its date of
disclosure to the receiving Party as shown by the receiving Party's written
records; or

                  (b)      either before or after the date of the disclosure to
the receiving Party is lawfully disclosed to the receiving Party by third
parties not in violation of any obligation to the other Party; or

                  (c)      either before or after the date of the disclosure to
the receiving Party becomes published or generally known to the public through
no fault or omission on the part of the receiving Party or its Affiliates; or

                  (d)      is independently developed by or for the receiving
Party without reference to or reliance upon the Confidential Information as
demonstrated by contemporaneous written records of the receiving Party; or

                                       64



                  (e)      is required to be disclosed by the receiving Party to
comply with applicable Laws, to defend or prosecute litigation or to comply with
governmental regulations or the regulations or requirements of any stock
exchange or Nasdaq, provided that the receiving Party provides prior notice of
such disclosure to the other Party and takes reasonable and lawful actions to
avoid and/or minimize the degree of such disclosure.

                                   ARTICLE 12

                 REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION

         12.1     Eyetech's Representations. Eyetech hereby represents and
warrants as of the date hereof as follows:

                  (a)      Eyetech has the corporate power and authority to
execute and deliver this Agreement and to perform its obligations hereunder, and
the execution, delivery and performance of this Agreement has been duly and
validly authorized and approved by proper corporate action on the part of
Eyetech, and Eyetech has taken all other action required by law, its certificate
of incorporation or by-laws or any agreement to which it is a party or by which
it or its assets are bound required to authorize such execution, delivery and
(subject to obtaining all necessary governmental approvals with respect to the
manufacture, use, sale, offer for sale, or importation of Products and subject
to any necessary HSR Clearance) performance. Assuming due authorization,
execution and delivery on the part of Pfizer, this Agreement constitutes a
legal, valid and binding obligation of Eyetech, enforceable against Eyetech in
accordance with its terms.

                  (b)      All manufacturing operations conducted by Eyetech (or
by third parties on its behalf) relating to the manufacturing of the Products
are being conducted in material

                                       65



compliance with applicable requirements and standards of any Governmental
Authority in the jurisdiction(s) in which such manufacturing is being conducted.

                  (c)      The representations and warranties of Eyetech
contained in the License Agreement are true and correct in all respects.

                  (d)      Eyetech has disclosed to Pfizer all material
information known to Eyetech relating to: (i) the drug quality, including
stability, variability, impurities and delivery performance in each case
relating to the Product, and (ii) changes made by Eyetech or its Affiliates
after the initiation of Phase III Clinical Trials for the Products relating to
formulation, packaging and method of manufacture and formulation and to
processing parameters, and (iii) the status of discussions with FDA or any
Governmental Authorities directly relating thereto, and (iv) clinical trial site
and contract research organization compliance with all provisions of the Act
governing clinical investigations, and (v) the safety and efficacy of the
Products.

         12.2     Pfizer's Representations. Pfizer hereby represents and
warrants as of the date hereof as follows:

                  (a)      Pfizer has the corporate power and authority to
execute and deliver this Agreement and to perform its obligations hereunder, and
the execution, delivery and performance of this Agreement has been duly and
validly authorized and approved by proper corporate action on the part of
Pfizer, and Pfizer has taken all other action required by law, its certificate
of incorporation or by-laws or any agreement to which it is a party or by which
it or its assets are bound required to authorize such execution, delivery and
(subject to obtaining all necessary governmental approvals with respect to the
manufacture, use, sale, offer for sale, or importation of Products and subject
to any necessary HSR Clearance) performance. Assuming due authorization,
execution and delivery on the part of Eyetech, this Agreement constitutes a

                                       66



legal, valid and binding obligation of Pfizer, enforceable against Pfizer in
accordance with its terms.

                  (b)      The representations and warranties of Pfizer
contained in the License Agreement are true and correct in all respects.

         12.3     No Warranties. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN,
THE PARTIES MAKE NO REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY KIND, EITHER
EXPRESS OR IMPLIED.

         12.4     General Indemnification in Favor of Pfizer.

                  (a)      Eyetech shall indemnify, defend and hold Pfizer
Parties (as hereinafter defined) harmless from and against any and all Losses
(as hereinafter defined) incurred, suffered or sustained by Pfizer Parties or to
which Pfizer Parties become subject, arising out of or resulting from:

                           (i)      any misrepresentation or breach of any
representation, warranty, covenant or agreement made by Eyetech in this
Agreement or the Other Product-Related Agreements; or

                           (ii)     any violation of the Act by Eyetech; or

                           (iii)    any third party claims, actions, suits,
proceedings, liabilities or obligations ("Third Party Claims") arising out of or
resulting from:

                                    (aa)     any misrepresentation or breach of
                  any representation, warranty, covenant or agreement made by
                  Eyetech in this Agreement or the Other Product-Related
                  Agreements; or

                                    (bb)     the manufacture, use or sale of a
                  Product, including without limitation all Third Party Claims
                  involving death or bodily injury caused or

                                       67



                  allegedly caused by the use of the Product (any all such
                  Losses, "Product Liability"), where Eyetech is the
                  manufacturer of Product (but not where Eyetech is the
                  contracting Party with API Bulk Drug Substance Supplier(s)
                  and/or Fill and Finish Services Supplier(s) pursuant to
                  Section 6.12) and where such Product fails to meet
                  Specifications or is not manufactured in accordance with GMP,
                  if applicable; or

                                    (cc)     the gross negligence, recklessness
                  or willful misconduct (other than as to Product Liability
                  matters) of Eyetech Parties in connection with Eyetech's
                  performance of this Agreement or the Other Product-Related
                  Agreements.

For purposes of this Article 12, "Pfizer Parties" means Pfizer and its
Affiliates and their respective agents, directors, officers and employees.

                  (b)      None of the indemnities in Section 12.4(a) shall
apply to the extent that any Loss is the result of any breach of this Agreement
or the Other Product-Related Agreements by Pfizer or of any gross negligence,
recklessness or willful misconduct of Pfizer Parties.

         12.5     General Indemnification in Favor of Eyetech.

                  (a)      Pfizer shall indemnify, defend and hold Eyetech
Parties (as hereinafter defined) harmless from and against any and all Losses
incurred, suffered or sustained by Eyetech Parties or to which Eyetech Parties
become subject, arising out of or resulting from:

                           (i)      any misrepresentation or breach of any
representation, warranty, covenant or agreement made by Pfizer in this Agreement
or the Other Product-Related Agreements; or

                           (ii)     any violation of the Act by Pfizer; or

                                       68



                           (iii)    any Third Party Claims arising out of or
                  resulting from:

                                    (aa)     any misrepresentation or breach of
                  any representation, warranty, covenant or agreement made by
                  Pfizer in this Agreement or the Other Product-Related
                  Agreements; or

                                    (bb)     Product Liability, where Pfizer is
                  the manufacturer of Product (but not where Pfizer is the
                  contracting Party with API Bulk Drug Substance Supplier(s)
                  and/or Fill and Finish Services Supplier(s) pursuant to
                  Section 6.12) and where such Product fails to meet
                  Specifications or is not manufactured in accordance with GMP,
                  if applicable; or

                                    (cc)     the gross negligence, recklessness
                  or willful misconduct (other than as to Product Liability
                  matters) of Pfizer Parties in connection with Pfizer's
                  performance of this Agreement or the Other Product-Related
                  Agreements.

For purposes of this Article 12, "Eyetech Parties" means Eyetech and its
Affiliates and their respective agents, directors, officers and employees.

                  (b)      None of the indemnities in Section 12.5(a) shall
apply to the extent that any Loss is the result of any breach of this Agreement
or the Other Product-Related Agreements by Eyetech or of any gross negligence,
recklessness or willful misconduct of Eyetech Parties.

         12.6     Product Liability and Intellectual Property Infringement
Indemnification.

                  (a)      Product Liability.

                           (i)      US Territory. Eyetech shall indemnify,
defend and hold the Pfizer Parties harmless from and against [**] percent
([**]%) of the amount of any and all Losses arising out of or resulting from any
Third Party Claim involving Product Liability in the US

                                       69



Territory (other than Product Liability Losses for which one Party is obligated
to indemnify the other Party pursuant to Section 12.4 or 12.5); Pfizer shall
indemnify, defend and hold the Eyetech Parties harmless from and against [**]
percent ([**]%) of the amount of any and all Losses arising out of or resulting
from any Third Party Claim involving Product Liability in the US Territory
(other than Product Liability Losses for which one Party is obligated to
indemnify the other Party pursuant to Section 12.4 or 12.5).

                           (ii)     ROW Territory. Pfizer shall indemnify,
defend and hold Eyetech Parties harmless from and against [**] percent ([**]%)
of the amount of any and all Losses arising out of or resulting from any Third
Party Claim involving Product Liability in the ROW Territory (other than Product
Liability Losses for which Eyetech is obligated to indemnify Pfizer pursuant to
Section 12.4).

                           (iii)    Certain Product Liability Claims.
Notwithstanding Sections 12.6(a)(i) and 12.6(a)(ii) above, Eyetech shall
indemnify, defend and hold the Pfizer Parties harmless from and against [**]
percent ([**]%) of the amount of any and all Losses arising out of or resulting
from any Third Party Claims involving the Product Liability matters described in
Exhibit 12.6(a)(iii).

                  (b)      Intellectual Property Infringement.

                           (i)      US Territory. Eyetech shall indemnify,
defend and hold the Pfizer Parties harmless from and against [**] percent
([**]%) of the amount of any and all Losses arising out of or resulting from any
Third Party Claims involving any actual or alleged infringement of any
trademarks, patent rights or other intellectual property rights, or
misappropriation of trade secrets, of any Person in connection with the
manufacture, use, sale or importation of the Product in the US Territory or in
connection with the manufacture or use of

                                       70



the Product in the ROW Territory for subsequent importation and/or sale in the
US Territory (other than Losses for which one Party is obligated to indemnify
the other Party pursuant to Section 12.4 or 12.5 and other than Losses relating
to Products ultimately sold outside the US Territory, which are governed by
Section 12.6(b)(ii)); Pfizer shall indemnify, defend and hold the Eyetech
Parties harmless from and against [**] percent ([**]%) of the amount of any and
all Losses arising out of or resulting from any Third Party Claims involving any
actual or alleged infringement of any trademarks, patent rights or other
intellectual property rights, or misappropriation of trade secrets, of any
Person in connection with the manufacture, use, sale or importation of the
Product in the US Territory or in connection with the manufacture or use of the
Product in the ROW Territory for subsequent importation and/or sale in the US
Territory (other than Losses for which one Party is obligated to indemnify the
other Party pursuant to Section 12.4 or 12.5 and other than Losses relating to
Products ultimately sold outside the US Territory, which are governed by Section
12.6(b)(ii)).

                           (ii)     ROW Territory. Pfizer shall indemnify,
defend and hold the Eyetech Parties harmless from and against [**] percent
([**]%) of the amount of any and all Losses arising out of or resulting from any
Third Party Claims involving any actual or alleged infringement of any
trademarks, patent rights or other intellectual property rights, or
misappropriation of trade secrets, of any Person in connection with the
manufacture, use, sale or importation of the Product in the ROW Territory or in
connection with the manufacture or use of the Product in the US Territory for
subsequent importation and/or sale in the ROW Territory (other than Losses for
which Eyetech is obligated to indemnify Pfizer pursuant to Section 12.4 and
other than Losses relating to Products ultimately sold by Eyetech in the US
Territory, which are governed by Section 12.6(b)(i)).

                                       71



                           (iii)    Certain Third Party Intellectual Property.
Notwithstanding Sections 12.6(b)(i) and 12.6(b)(ii) above, Eyetech shall
indemnify, defend and hold the Pfizer Parties harmless from and against [**]
percent ([**]%) of the amount of any and all Losses arising out of or resulting
from any Third Party Claims based on the matters set forth in:

                           (A)      the letter from Harsha Murthy to Larry
                                    Miller dated December 17, 2002 in connection
                                    with the manufacture, use, sale or
                                    importation of Products in the Territory;
                                    provided that such indemnity shall not apply
                                    to (I) Losses for which Pfizer is obligated
                                    to indemnify Eyetech pursuant to Section
                                    12.5, (II) Losses arising out of Third Party
                                    Claims [**] such Losses or (III) royalties
                                    or other amounts payable [**]; or

                           (B)      Exhibit 12.6(b)(iii)(B).

         12.7     "Losses". For purposes of this Article 12, "Losses" shall
mean, subject to Section 12.8, any and all (a) claims, losses, liabilities,
damages, fines, royalties, governmental penalties or punitive damages,
deficiencies, interest, awards, and judgments, and (b) with respect to third
parties, settlement amounts and all of the items referred to in clause (a) above
which, in accordance with Section 12.8, include third party special, indirect,
incidental, consequential damages (including without limitation lost profits)
and third party punitive and multiple damages, and (c) in connection with all of
the items referred in clauses (a) and (b) above, any and all costs and expenses
(including reasonable attorneys' fees and all other expenses reasonably incurred
in investigating, preparing or defending any litigation or proceeding, commenced
or threatened).

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         12.8     No Consequential or Punitive Damages.

                  (a)      NEITHER PARTY HERETO WILL BE LIABLE FOR INDIRECT,
INCIDENTAL, CONSEQUENTIAL, SPECIAL, EXEMPLARY OR PUNITIVE DAMAGES ARISING FROM
OR RELATING TO ANY BREACH OF THIS AGREEMENT, OR FOR LOST PROFITS ARISING FROM OR
RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF ANY NOTICE OF SUCH
DAMAGES. NOTHING IN THIS SECTION 12.8 IS INTENDED TO LIMIT OR RESTRICT THE
INDEMNIFICATION RIGHTS OR OBLIGATIONS OF EITHER PARTY UNDER THIS AGREEMENT WITH
RESPECT TO THIRD PARTY CLAIMS.

                  (b)      Notwithstanding anything to the contrary contained in
this Agreement, in the case of any claim by any Party alleging any breach of
this Agreement by the other Party, any payment obligation pursuant to Sections
8.1 and 8.6 of this Agreement (the "Payment Obligations"), will not be
considered as constituting special, incidental, indirect or consequential
damages under this Agreement (and, accordingly, nothing in Section 12.8(a) shall
prevent the recovery or inclusion of Payment Obligations in the definition of
"Losses").

         12.9     General Indemnification Procedures.

                  (a)      A Party seeking indemnification pursuant to this
Article 12 (an "Indemnified Party") shall give prompt notice to the Party from
whom such indemnification is sought (the "Indemnifying Party") of the
commencement or assertion of any Third Party Claim (which in no event includes
any claims by any Pfizer Parties or any Eyetech Parties) in respect of which
indemnity may be sought hereunder, shall give the Indemnifying Party such
information with respect thereto as the Indemnifying Party may reasonably
request, and shall not make any admission concerning such Third Party Claim,
unless such admission is required by applicable

                                       73



Law or legal process, including in response to questions presented in
depositions or interrogatories. Any admission made by the Indemnified Party,
except for an admission required by applicable Law or legal process, or the
failure to give such notice shall relieve the Indemnifying Party of any
liability hereunder only to the extent that the ability of the Indemnifying
Party to defend such Third Party Claim is prejudiced thereby. The Indemnifying
Party shall have the right, exercisable by written notice to the Indemnified
Party within thirty (30) days of receipt of notice from the Indemnified Party of
the commencement or assertion of a Third Party Claim, to assume and conduct the
defense of such Third Party Claim, with counsel selected by the Indemnifying
Party and reasonably acceptable to the Indemnified Party. The Indemnified Party
shall not settle such Third Party Claim within such thirty (30) day period.
Subject to the initial and continuing satisfaction of the terms and conditions
of this Article 12, the Indemnifying Party shall have full control of such Third
Party Claim, including settlement negotiations and any legal proceedings. If the
Indemnifying Party does not assume the defense of such Third Party Claim in
accordance with this Section 12.9, the Indemnified Party may defend the Third
Party Claim. If both Parties are Indemnifying Parties pursuant to
co-indemnification obligations under Section 12.6 with respect to the same Third
Party Claim, the Parties shall determine by mutual agreement, within twenty (20)
days following their receipt of notice of commencement or assertion of such
Third Party Claim (or such lesser period of time as may be required to properly
respond to such claim), which Party shall assume the lead role in the defense
thereof. Should the Parties be unable to mutually agree on which Party shall
assume the lead role in the defense of such Third Party Claim, both Parties
shall be entitled to participate in such defense through counsel of their
respective choosing; provided that in the case of any Third Party Claim with
respect to which (i) both Parties are Indemnifying Parties pursuant to
co-

                                       74



indemnification obligations under Section 12.6(b) and (ii) more than [**]
percent ([**]%) of the Products involved in the infringement or misappropriation
alleged in such Third Party Claim were sold or intended for sale in the ROW
Territory, Pfizer may defend the Third Party Claim in accordance with this
Section 12.9 (without giving effect to the immediately preceding sentence), but
may not enter into any settlement or consent to any judgment with respect to
such Third Party Claim without Eyetech's prior written consent if either (x)
such settlement or judgment would, taking into account the indemnification
provisions of Section 12.6(b), impose more than $[**] in liability on Eyetech or
(y) such settlement or judgment would, taking into account the indemnification
provisions of Section 12.6(b), impose more monetary liability on Eyetech than on
Pfizer or include non-monetary conditions with respect to Eyetech.

                  (b)      The Indemnifying Party or the Indemnified Party, as
the case may be, shall have the right to participate in (but not control), at
its own expense (subject to the immediately succeeding sentence), the defense of
any Third Party Claim which the other is defending as provided in this
Agreement. The Indemnifying Party shall not be liable for any litigation costs
or expenses incurred, without its consent, by the Indemnified Party where the
action or proceeding is under the control of the Indemnifying Party; provided,
however, that if the Indemnifying Party fails to take reasonable steps necessary
to defend such Third Party Claim, the Indemnified Party may assume its own
defense, and the Indemnifying Party will be liable for all reasonable costs or
expenses paid or incurred in connection therewith.

                  (c)      The Indemnifying Party, if it shall have assumed the
defense of any Third Party Claim as provided in this Agreement, shall not
consent to a settlement of, or the entry of any judgment arising from, any such
Third Party Claim to the extent such Third Party Claim involves equitable or
other non-monetary relief from the Indemnified Party. No Party shall,

                                       75


without the prior written consent of the other Party, enter into any compromise
or settlement which commits the other Party to take, or to forbear to take, any
action.

                  (d)      Whether the Indemnifying Party chooses to defend or
prosecute any Third Party Claim, all the Parties hereto shall cooperate in the
defense or prosecution thereof and shall furnish such records, information and
testimony, and attend such conferences, discovery proceedings, hearings, trials
and appeals, as may be reasonably requested in connection therewith.

                  (e)      The Indemnified Party shall use commercially
reasonable efforts to pursue all rights and remedies available in order to
minimize the Losses for which indemnification is provided to the Indemnified
Party under this Article 12. Any indemnification hereunder shall be made net of
any insurance proceeds recovered by the Indemnified Party from unaffiliated
third parties; provided, however, that if, following the payment to the
Indemnified Party of any amount under this Article 12, such Indemnified Party
recovers any such insurance proceeds in respect of the claim for which such
indemnification payment was made, the Indemnified Party shall promptly pay an
amount equal to the amount of such proceeds (but not exceeding the amount of
such indemnification payment) to the Indemnifying Party.

                  (f)      The Parties agree and acknowledge that the provisions
of this Article 12 represent the Indemnified Party's exclusive recourse with
respect to any Losses for which indemnification is provided to the Indemnified
Party under this Article 12.

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                                   ARTICLE 13

                              TERM AND TERMINATION

         13.1     Term. This Agreement shall be effective as of the Effective
Date and shall continue in force until the expiration of the Co-Promotion Term,
unless sooner terminated as provided herein.

         13.2     Termination for Breach. Eyetech shall have the rights set
forth below in this Section 13.2 by notice to Pfizer, and Pfizer shall have the
rights set forth below in this Section 13.2 by notice to Eyetech.

                  (a)      Upon Eyetech's notice to Pfizer that a Material
Default by Pfizer has occurred, the Parties will meet to discuss in good faith
whether a plan to remedy the Material Default can be mutually agreed. If the
Parties fail to so agree within thirty (30) days after the date of such notice,
Section 13.2(b) below shall apply. Notwithstanding the foregoing provisions of
this Section 13.2(a), in the case of a payment default, the provisions of
Section 13.2(b) below shall apply without any obligation to meet to discuss
remedies pursuant to this Section 13.2(a).

                  (b)      Subject to the terms hereof, upon the occurrence of
any Material Default by Pfizer, Eyetech may, upon ninety (90) days prior written
notice, terminate this Agreement and the other Product-Related Agreements.
Eyetech may give the notice specified in this Section 13.2(b) concurrently with
the notice specified in Section 13.2(a) and shall not give the notice specified
in this Section 13.2(b) later than sixty (60) days after the date of the notice
specified in Section 13.2(a).

                  (c)      Upon Pfizer's notice to Eyetech that a Material
Default by Eyetech has occurred, the Parties will meet to discuss in good faith
whether a plan to remedy the Material Default can be mutually agreed. If the
Parties fail to so agree within thirty (30) days after the

                                       77



date of such notice, Section 13.2 (d) below shall apply. Notwithstanding the
foregoing provisions of this Section 13.2(c), in the case of a payment default,
the provisions of Section 13.2(d) below shall apply without any obligation to
meet to discuss remedies pursuant to this Section 13.2(c).

                  (d)      Subject to the terms hereof, upon the occurrence of
any Material Default by Eyetech, Pfizer may, upon ninety (90) days prior notice,
terminate this Agreement and the other Product-Related Agreements. Pfizer may
give the notice specified in this Section 13.2(d) concurrently with the notice
specified in Section 13.2(c) and shall not give the notice specified in this
Section 13.2(d) later than sixty (60) days after the date of the notice
specified in Section 13.2(c).

                  (e)      "Material Default" means:

                           (i)      any default by any Party hereto of its
covenants, agreements or other performance obligations under this Agreement or
the License Agreement other than a payment default (which may include any one or
more defaults of any specific covenant, agreement or other performance
obligations contained herein) that, when aggregated with any other such uncured
defaults by such Party, is (x) material to this Agreement and the License
Agreement taken as a whole, and (y) shall have continued for thirty (30) days
after written notice thereof was provided to the alleged defaulting Party by the
non-defaulting Party (or, if such defaults cannot be cured within such 30-day
period, if the alleged defaulting Party does not promptly commence and
diligently continue all reasonable actions to cure such defaults during such
30-day period or does not cure in full such defaults within sixty (60) days
after written notice thereof was provided to the alleged defaulting Party); or

                                       78



                           (ii)     any default by any Party hereto of its
payment obligations hereunder that shall have continued for fifteen (15) days
after written notice thereof was provided to the alleged defaulting Party by the
non-defaulting Party; provided that, in the event of a good faith payment
dispute, such fifteen (15) day cure period shall be extended through the
fifteenth day following the date on which such dispute is resolved if the
alleged defaulting Party paid all undisputed amounts when due and provided the
non-defaulting Party with a reasonably detailed written explanation of the
alleged defaulting Party's basis for disputing the payment obligation within the
fifteen (15) day period following the written notice of the default by the
non-defaulting Party.

                  (f)      In the event of a Material Default by Eyetech
described in Section 13.2(c), Pfizer may, in its sole discretion, elect by
written notice to Eyetech of such election not later than sixty (60) days after
the date of the notice specified in Section 13.2(c), as an alternative to
terminating this Agreement and the other Product-Related Agreements, the
Elective Remedy.

         13.3     HSR Denial. Either Party may terminate all of the Transaction
Agreements effective upon notice to the other Party if the HSR Clearance Date
shall not have occurred on or prior to the date sixty (60) days after the
Parties make their respective HSR Filings pursuant to Section 16.1. In the event
of any termination pursuant to this Section 13.3, the Transaction Agreements,
including without limitation Section 13.9 of this Agreement, shall terminate;
provided, however, the confidentiality agreement between the Parties dated as of
April 22, 2002, as amended, shall remain in full force and effect
notwithstanding any termination of the Transaction Agreements in accordance with
this Section 13.3.

         13.4     Detail Shortfalls. Either Party may terminate this Agreement
as provided in Section 6.5.

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         13.5     Breach of Non-Competition obligations. If a Party breaches its
obligations under Section 14.1, the other Party may terminate this Agreement
upon thirty (30) days prior written notice of termination to the breaching
Party; provided that, if the breaching Party permanently ceases the activity or
eliminates the condition, as applicable, giving rise to the breach of its
obligations under Section 14.1 prior to the expiration of such thirty (30) day
notice period, such termination shall not take effect.

         13.6     Changes of Control. In the event of any Change in Control, the
Party subject to such Change of Control shall promptly notify the other Party of
such Change in Control, and the Party not subject to such Change of Control
shall have the right upon sixty (60) days notice, to terminate this Agreement
and the other Product-Related Agreements where the Acquiring Corporation has not
agreed to assume all obligations of an Affiliate of the Party subject to the
Change of Control under this Agreement and the License Agreement. In the event
of any Change in Control of Eyetech, Pfizer shall have the right upon one
hundred twenty (120) days notice, to terminate either or both of the Regulatory
Services Agreement and the Distribution Agreement. If the Change of Control of
Eyetech is an acquisition of Eyetech by a third party that, together with its
Affiliates, had annual revenues from the sale of prescription pharmaceutical
products in the US in excess of US$1 billion during its most recently reported
fiscal year, then the acquiring Person shall have the right upon one hundred
twenty (120) days written notice, to terminate either or both of the Regulatory
Services Agreement and the Distribution Agreement. In either event, each of
Pfizer or the acquiring Person must exercise its right of termination with six
(6) months of the date of such Change of Control.

         13.7     Termination of License Agreement. In the event that the
License Agreement is terminated or expires for any reason, either Party may, at
its option, terminate this Agreement and the other Product-Related Agreements
upon written notice of termination to the other Party.

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         13.8     Sales Threshold Termination. If, during the [**] period
commencing with the Year following the earlier of (a) the implementation of a
National Coverage Determination for the first Product from the United States
Department of Health and Human Services (Centers for Medicare and Medicaid
Services) and (b) the [**] of such Product in the US Territory, the Net Sales
in the US Territory for any [**] during such [**] period are less than [**],
for the [**], and such failure to achieve such Net Sales targets is not a
result of Eyetech's material breaches of its representations, warranties,
covenants and agreements contained in this Agreement and the License Agreement
(such failure to achieve Net Sales, the "Net Sales Failure"), then Eyetech may,
at any time within [**] following determination of Net Sales for the [**], elect
to terminate this Agreement upon 180 days notice to Pfizer; provided that such
termination shall be Eyetech's sole and exclusive remedy and Pfizer's sole and
exclusive liability in the event of termination by Eyetech pursuant to this
Section 13.8. In the event of any termination of this Agreement pursuant to this
Section 13.8, Eyetech shall thereafter pay to Pfizer (x) a royalty of [**]
percent ([**]%) of the first [**] of annual Net Sales in the US Territory and
(y) a royalty of [**] percent ([**]%) of annual Net Sales in the US Territory
[**], for each Year of the [**] Years of the Co-Promotion Term immediately
following such termination, as if this Agreement had not been terminated.



         13.9     Survival of obligations. Notwithstanding any termination or
expiration of this Agreement,

                  (a)      neither Party shall be relieved of any obligations
incurred prior to such termination or expiration, including without limitation
payment obligations accrued prior to such termination or expiration;

                  (b)      the obligations of the Parties with respect to
accounts and reports (Article 9), ownership of intellectual property (Article
10), the protection and nondisclosure of Confidential Information (Article 11),
dispute resolution (Article 15), indemnification (Sections 12.4, 12.5, 12.6,
12.7, 12.8 and 12.9), this Section 13.9 and non-competition (Section 14.1), as
well as any other provision of this Agreement which by its terms survives
termination or which is required to give effect to such termination or the
consequences of such termination, shall survive termination and remain in effect
in accordance with their respective terms;

                  (c)      If the License Agreement remains in effect after such
termination or expiration of this Agreement (a "License Survival Event"), the
provisions of this Agreement that relate to Products in the RoW Territory shall
survive such termination for so long as the License Agreement remains in effect.
If a License Survival Event takes place, the Parties recognize that adjustments
may need to be made to certain of such surviving provisions relating to Products
in the RoW Territory, such as the arrangements respecting the governance
provisions set forth in Article 3. Without limiting the foregoing, the Parties
acknowledge that the following rights shall survive termination or expiration of
this Agreement in the case of a License Survival Event: (a) the rights granted
to Pfizer in Sections 10.1 and 10.2 of this Agreement; (b) Eyetech's rights with

                                       81



respect to the MSC's responsibilities for ensuring that all Products are
manufactured in accordance with the Parties' quality standards pursuant to
Section 3.5; and (c) Eyetech's rights with respect to Pfizer's regulatory
activities in the RoW Territory pursuant to Section 4.2(c) of this Agreement.
After a License Survival Event, for so long as the License Agreement remains in
effect, Pfizer shall have rights with respect to Eyetech's regulatory activities
in the US Territory commensurate with the rights Eyetech has with respect to RoW
Territory regulatory matters under Section 4.2(c);

                  (d)      Pfizer's obligations under Section 8.1 with respect
to Development Costs during the following periods immediately following
termination shall survive any termination pursuant to Section 13.2 based on
Material Default(s) by Pfizer or any termination pursuant to Section 13.7: (i)
if such termination occurs prior to the first Launch of a Product in the US
Territory, twelve (12) months, (ii) if such termination occurs after the first
Launch of a Product in the US Territory but prior to the fifth anniversary of
such Launch, nine (9) months, and (iii) if such termination occurs after the
fifth anniversary of the first Launch of a Product in the US Territory, six (6)
months;

                  (e)      Pfizer shall promptly and in no event later than
sixty (60) days after termination or expiration (i) transfer to Eyetech
ownership of all governmental or regulatory filings and approvals (including all
INDs and NDAs (and their foreign equivalents)) relating to Products, (ii)
deliver to Eyetech all pre-clinical and clinical data and information in
Pfizer's possession or control relating to Products, (iii) deliver to Eyetech
copies of all reports, records, regulatory correspondence and other materials in
Pfizer's possession or control relating to the pre-clinical and clinical
development, regulatory approval, manufacture, distribution and sales of
Products, including without limitation all information contained in the
centralized global safety

                                       82



database established and maintained by Pfizer in accordance with the Regulatory
Services Agreement, and (iv) deliver to Eyetech all data and information
relating to process conditions, in-process controls, analytical methodology and
formulation, in each case as developed by Pfizer and relating to the
manufacturing of Products, solely for use in connection with the Products;

                  (f)      Pfizer shall grant to Eyetech a non-exclusive,
non-royalty-bearing, perpetual right and license under Pfizer's and its
Affiliates' rights in Collaboration Intellectual Property (as defined in the
License Agreement) to develop, make, have made, use, sell, offer for sale,
import, and have imported Products in the Territory;

                  (g)      if Pfizer has contracted with API Bulk Drug Substance
Supplier(s) or with Fill and Finish Services Supplier(s), or if Pfizer has taken
over responsibility for performing, either directly or through Affiliates,
services that otherwise would be performed by API Bulk Drug Substance
Supplier(s) and/or Fill and Finish Services Supplier(s), Pfizer shall continue
to manufacture or have manufactured (including filling and finishing of)
Products being manufactured by Pfizer and/or its Affiliates, on the terms and
conditions in effect immediately prior to the applicable notice of termination,
for worldwide supply to Eyetech during the shorter of (i) the twenty-four (24)
month period following termination and (ii) the period following termination and
prior to Eyetech's establishment of its own manufacturing capabilities and/or
third party manufacturing and supply arrangements with respect to the Products;
and Pfizer shall cooperate with Eyetech during such period to assign to Eyetech
all third party manufacturing and supply (including fill and finish services)
agreements and transfer to Eyetech all manufacturing know-how, and to provide
Eyetech with such other assistance as may be requested by Eyetech, reasonably
required by Eyetech for the purpose of establishing its own manufacturing

                                       83



capabilities and/or third party manufacturing and supply arrangements with
respect to the Products;

                  (h)      Pfizer shall permit Eyetech, at Eyetech's option, to
purchase, at Manufacturing Cost, all or any part of Pfizer's worldwide unsold
inventory of raw materials for Products, work-in-progress Products and finished
Products as of the effective date of termination, provided that, Pfizer shall
not be required to sell to Eyetech inventories of raw materials for Products and
work-in-progress Products that Pfizer needs to satisfy its obligations under
Section 13.9(g); and

                  (i)      unless this Agreement expressly provides that
termination shall be the sole and exclusive remedy for a particular breach
hereof, either Party's right to commence an action, suit or other proceeding
claiming breach of this Agreement by the other Party shall survive termination.

         Upon any termination of this Agreement, each Party shall promptly
return to the other Party all written Confidential Information, and all copies
thereof, of such other Party and Pfizer shall have no further right with respect
to, and shall cease all activities related to Co-Promotion of the Products.

                                   ARTICLE 14

                  NON-COMPETITION; DETAILING SERVICES AGREEMENT

         14.1     Non-Competition. During the Co-Promotion Term and during the
Term (as defined in the License Agreement), neither Pfizer nor Eyetech nor any
of their Affiliates shall, directly or indirectly, manufacture commercial
quantities of, or market, sell, detail or promote, any Competing Product in the
Territory (excluding the EU, as defined in the License Agreement), except for
the Products as provided in this Agreement and in the License

                                       84



Agreement. If (a) either Party terminates this Agreement pursuant to Section
13.2, 13.4 or 13.5 of this Agreement or (b) Pfizer terminates the License
Agreement pursuant to Section 10.1 of the License Agreement, then the
prohibition set forth in the immediately preceding sentence shall, in the case
of a termination described in clause (a) of this sentence, be extended with
respect to the other Party and its Affiliates through a period immediately
following the effective date of such termination of:

                           (i)      [**], if such termination occurs [**],

                           (ii)     [**], if such termination occurs [**], or

                           (iii)    [**], if such termination occurs [**],

and, in the case of a termination described in clause (b) of this sentence, be
extended with respect to Pfizer and its Affiliates through a period immediately
following the effective date of such termination of:

                           (i)      [**], if such termination occurs [**],

                           (ii)     [**], if such termination occurs [**], or

                           (iii)    [**], if such termination occurs [**].

Notwithstanding the foregoing, Eyetech and its Affiliates, either directly or in
collaboration with third parties, shall be entitled to commercialize products
that contain or are based on the Compound (as defined in the License Agreement)
for use outside the Field ("POF"), provided such products are sold under product
trademarks other than the Trademark(s) and are: (a) in a different dosage
strength; (b) in a different formulation; or (c) with a different delivery
system; in each case not intended or developed for use in the Field. Eyetech and
its Affiliates shall not conduct clinical trials or marketing studies with
respect to such POF to support use of such POF in the Field, and Eyetech and its
Affiliates shall require any third party collaborator to comply

                                       85



with this undertaking with respect to any POF. Subject to the provisions of
Section 14.2, any breach of this Section 14.1 shall entitle the non-breaching
Party to terminate this Agreement and the Other Product-Related Agreements
pursuant to Section 13.5.

         14.2     Acquisitions Involving Competing Products. Notwithstanding the
provisions of Section 14.1 above, if during the Co-Promotion Term Pfizer or
Eyetech or any of their respective Affiliates acquires or agrees to acquire a
Competing Product in the Territory through acquisition of or merger with a
company or entity, or is acquired or agrees to be acquired by a company or
entity that owns a Competing Product in the Territory, Pfizer or Eyetech, as
applicable, shall have thirty (30) days from the date of public announcement of
the acquisition or merger to notify the other Party as to whether Pfizer or
Eyetech or the acquiring company or entity, as applicable, intends to divest its
interest in such Competing Product. In the event that Pfizer or Eyetech or the
acquiring company or entity, as applicable, elects to divest its interest in
such Competing Product, such Party or the acquiring company or entity shall use
reasonable efforts to identify a third party purchaser to whom such Party or the
acquiring company or entity will divest its interest in such Competing Product
and to enter into a definitive agreement with such third party for such
divestiture as soon as reasonably practicable under the circumstances. If Pfizer
or Eyetech or the acquiring company or entity, as applicable, elects not to
divest its interest in such Competing Product or fails to divest its interest in
such Competing Product within [**] after the closing of the transaction for
which Pfizer or Eyetech, as applicable, has provided the other Party with
notice, then the other Party shall have the option, upon written notice to
Pfizer or Eyetech, as applicable, given no later than ninety (90) days after the
earlier of: (i) Pfizer's or Eyetech's written notice, as applicable, of its
election not to divest such Competing Product; and (ii) the end of such [**]
period described above, to terminate this Agreement and the Other Product-

                                       86



Related Agreements pursuant to Section 14.1, treating such election not to
divest or failure to divest such Competing Product as a breach of Section 14.1.
Notwithstanding the provisions of Section 14.1 and this Section 14.2, however,
neither Party shall have the right to terminate this Agreement and the Other
Product-Related Agreements based on the other Party's or its Affiliate's or
acquiring company's or entity's failure to divest its interest in a Competing
Product that is sold only in the EU (as defined in the License Agreement).

         14.3     Detailing Services Agreement; Additional Agreements.

                  (a)      The Detailing Services Agreement shall become
effective only upon the completion of the Pharmacia Merger.

                  (b)      The Parties shall in good faith undertake to identify
an additional Pfizer product for ophthalmic use and potential sale to retinal
specialists, in addition to the products covered by the Detailing Services
Agreement (an "Additional Pfizer Product"). If the Parties are able to identify
and mutually agree upon such Additional Pfizer Product, the Parties will attempt
to negotiate in good faith the terms and conditions of an agreement to allow
Eyetech to detail, co-develop or license such Additional Pfizer Product.

                  (c)      If for any reason (i) the Pharmacia Merger Agreement
is terminated or (ii) Pfizer determines that the Pharmacia Merger cannot be
closed, then, in either event, Pfizer and Eyetech will undertake in good faith
to identify a Pfizer product for ophthalmic use and sale to retinal specialists
to substitute for the products covered by the Detailing Services Agreement (a
"Substitute Product"). If the Parties are able to identify and mutually agree
upon such Substitute Product, the Parties will attempt to negotiate in good
faith the terms and conditions of an agreement to allow Eyetech to detail,
co-develop or license such Substitute Product.

                                       87



                  (d)      Notwithstanding the foregoing, neither Party is
obligated to enter into any agreement with the other pursuant to subsections
14.3(b) or 14.3(c). Accordingly, if the Parties are unable to enter into an
agreement respecting an Additional Pfizer Product or Substitute Product, Eyetech
shall have no rights to any such product, and Pfizer shall have no obligations
to Eyetech with respect to any such product or resulting from the Parties'
inability to enter into an agreement pursuant to subsections 14.3(b) or 14.3(c).

                                   ARTICLE 15

                               DISPUTE RESOLUTION

         15.1     Arbitration. Any payment dispute or dispute arising out of any
audit conducted pursuant to Section 9.2 shall be resolved through binding
arbitration as follows:

                  (a)      A Party may submit such dispute to arbitration by
notifying the other Party, in writing, of such dispute. Within thirty (30) days
after receipt of such notice, the Parties shall designate in writing a single
arbitrator to resolve the dispute; provided, however, that if the Parties cannot
agree on an arbitrator within such 30-day period, the arbitrator shall be
selected by the New York, New York office of the American Arbitration
Association (the "AAA"). The arbitrator shall be a lawyer knowledgeable and
experienced in the law concerning the subject matter of the dispute, and shall
not be an Affiliate, employee, consultant, officer, director or stockholder of
any Party.

                  (b)      Within thirty (30) days after the designation of the
arbitrator, the arbitrator and the Parties shall meet, at which time the Parties
shall be required to set forth in writing all disputed issues and a proposed
ruling on the merits of each such issue.

                  (c)      The arbitrator shall set a date for a hearing, which
shall be no later than thirty (30) days after the submission of written
proposals pursuant to Section 15.1(b), to discuss

                                       88



each of the issues identified by the Parties. The Parties shall have the right
to be represented by counsel. Except as provided herein, the arbitration shall
be governed by the Commercial Arbitration Rules of the AAA; provided, however,
that the Federal Rules of Evidence shall apply with regard to the admissibility
of evidence.

                  (d)      The arbitrator shall use his or her best efforts to
rule on each disputed issue within thirty (30) days after the completion of the
hearings described in Section 15.1(c). The determination of the arbitrator as to
the resolution of any dispute shall be binding and conclusive upon all Parties.
All rulings of the arbitrator shall be in writing and shall be delivered to the
Parties.

                  (e)      The (i) attorneys' fees of the Parties in any
arbitration, (ii) fees of the arbitrator and (iii) costs and expenses of the
arbitration shall be borne by the Parties as determined by the arbitrator.

                  (f)      Any arbitration pursuant to this Section 15.1 shall
be conducted in New York, New York. Any arbitration award may be entered in and
enforced by a court in accordance with Section 17.2.

         15.2     No Limitation. Nothing in Section 15.1 shall be construed as
limiting in any way the right of a Party to seek a temporary restraining order
or preliminary injunction with respect to any actual or threatened breach of
this Agreement from, or to bring an action in aid of arbitration in, a court in
accordance with Section 17.2. Should any Party seek a temporary restraining
order or preliminary injunction, then for purposes of determining whether to
grant such temporary restraining order or preliminary injunction, the dispute
underlying the request for such temporary restraining order or preliminary
injunction may be heard by a court in accordance with Section 17.2.

                                       89



                                   ARTICLE 16

                                   HSR MATTERS

         16.1     HSR Filings. Each of Eyetech and Pfizer shall as promptly as
possible and not later than January 22, 2003 file with the FTC and the Antitrust
Division of the DOJ, any HSR Filing required of it under the HSR Act with
respect to the transactions contemplated by the Transaction Agreements. The
Parties shall cooperate with one another to the extent necessary in the
preparation of any HSR Filing required to be filed under the HSR Act. Each Party
shall be responsible for its own costs, expenses, and filing fees associated
with any HSR Filing.

         16.2     HSR Cooperation; Further Assurances. Eyetech and Pfizer agree,
and shall cause each of their respective Affiliates, to cooperate and to use
their respective commercially reasonable efforts to obtain any HSR Clearance
required for the consummation of the transactions contemplated under the
Transaction Agreements and to respond to any government requests for information
under the HSR Act. The Parties will consult and cooperate with one another, and
consider in good faith the views of one another, in connection with any
analyses, appearances, presentations, memoranda, briefs, arguments, opinions and
proposals made or submitted by or on behalf of either Party in connection with
proceedings under or relating to the HSR Act. For the avoidance of doubt, it is
agreed that neither Party shall be obligated in any way to (a) sell, transfer or
otherwise dispose of (including without limitation by way on any "hold separate"
or similar arrangement) any asset or product or business, (b) terminate any
contractual relationship, or (c) amend, terminate or otherwise modify any
licenses or other intellectual property agreements, in order to obtain HSR
Clearance with respect to the transactions contemplated by the Transaction
Agreements.

                                       90



         16.3     Activities Prior to the Effective Date. The Parties shall not
engage in any of the activities contemplated by this Agreement and the Other
Product-Related Agreements, other than seeking to obtain HSR Clearance, prior to
the Effective Date.

                                   ARTICLE 17

                                  MISCELLANEOUS

         17.1     Governing Law. This Agreement shall be governed by and
interpreted in accordance with the internal laws of the State of New York,
without regard to its conflicts of laws rules.

         17.2     Jurisdiction. Except with respect to disputes arising out of
audits conducted pursuant to Section 9.2 or with respect to payment disputes,
which shall be resolved through binding arbitration in accordance with Article
15, each Party (a) irrevocably submits to the exclusive jurisdiction in the
United States District Court for the Southern District of New York and any State
courts sitting in New York, New York (collectively, the "Courts"), for purposes
of any action, suit or other proceeding arising out of this Agreement, and (b)
agrees not to raise any objection at any time to the laying or maintaining of
the venue of any such action, suit or proceeding in any of the Courts,
irrevocably waives any claim that such action, suit or other proceeding has been
brought in an inconvenient forum and further irrevocably waives the right to
object, with respect to such action, suit or other proceeding, that such Court
does not have any jurisdiction over such Party.

         17.3     Waiver. Waiver by a Party of a breach hereunder by the other
Party shall not be construed as a waiver of any succeeding breach of the same or
any other provision. No delay or omission by a Party to exercise or avail itself
of any right, power or privilege that it has or may have hereunder shall operate
as a waiver of any right, power or privilege by such Party. No

                                       91



waiver shall be effective unless made in writing with specific reference to the
relevant provision(s) of this Agreement and signed by a duly authorized
representative of the Party granting the waiver.

         17.4     Notices. All notices, instructions and other communications
hereunder or in connection herewith shall be in writing, shall be sent to the
address below and shall be: (a) delivered personally; (b) sent by registered or
certified mail, return receipt requested, postage prepaid; (c) sent via a
reputable nationwide overnight courier service; or (d) sent by facsimile
transmission. Any such notice, instruction or communication shall be deemed to
have been delivered upon receipt if delivered by hand, three (3) Business Days
after it is sent by registered or certified mail, return receipt requested,
postage prepaid, one (1) Business Day after it is sent via a reputable
nationwide overnight courier service, or when transmitted with electronic
confirmation of receipt, if transmitted by facsimile (if such transmission is on
a Business Day; otherwise, on the next Business Day following such
transmission).

Notices to Pfizer shall be addressed to:

              PFIZER INC.
              235 East 42nd Street
              New York, New York 10017-5755
              Telecopy: (212) 808-8652
              Attention: President, Pfizer Pharmaceutical Group

              with a copy to:

              PFIZER INC.
              235 East 42nd Street
              New York, New York 10017-5703
              Telecopy: (212) 808-8924
              Attention: Senior Vice President and General Counsel

Notices to Eyetech shall be addressed to:

              EYETECH PHARMACEUTICALS, INC.
              500 Seventh Avenue

                                       92



              18th Floor
              New York, New York 10018
              Telecopy: (212) 997-9251
              Attention: Chief Executive Officer

              with a copy to:

              Hale and Dorr LLP
              60 State Street
              Boston, Massachusetts 02109
              Telecopy: (617) 526-5000
              Attention: David E. Redlick, Esq.

Either Party may change its address by giving notice to the other Party in the
manner provided above.

         17.5     Entire Agreement. This Agreement (including Exhibits),
together with the Other Product-Related Agreements, contains the complete
understanding of the Parties with respect to the Parties' joint development and
commercialization of Products and supersedes all prior understandings and
writings relating to such subject matter. The Parties understand and agree that
this Agreement and the License Agreement are considered to be a single
integrated agreement and contain intellectual property rights and licenses
relating to the Products for which Pfizer has bargained and paid consideration.
If any applicable court of competent jurisdiction determines this Agreement
and/or the License Agreement to be executory in nature, such Transaction
Agreements shall be deemed to be, for purposes of Section 365(n) of the
Bankruptcy Code, licenses of rights to "intellectual property" as defined under
Section 101 of the Bankruptcy Code.

         17.6     Headings. Headings in this Agreement are for convenience of
reference only and shall not be considered in construing this Agreement.

         17.7     Severability. If any provision of this Agreement is held
unenforceable by a court or tribunal of competent jurisdiction because it is
invalid or conflicts with any law of any

                                       93



relevant jurisdiction, the validity of the remaining provisions shall not be
affected. In such event, the Parties shall negotiate a substitute provision
that, to the extent possible, accomplishes the original business purpose.

         17.8     Registration and Filing of the Agreement. To the extent, if
any, that a Party concludes in good faith that it is required to file or
register this Agreement or a notification thereof with any Governmental
Authority, including without limitation the US Securities and Exchange
Commission, or the US Federal Trade Commission, in accordance with applicable
Laws, such Party may do so. The other Party shall cooperate in such filing or
notification and shall execute all documents reasonably required in connection
therewith. In such situation, the Parties will request confidential treatment of
sensitive provisions of the Agreement, to the extent permitted by Law. The
Parties shall promptly inform each other as to the activities or inquiries of
any such Governmental Authority relating to this Agreement, and shall cooperate
to respond to any request for further information therefrom.

         17.9     Assignment. Except as otherwise provided herein, including
without limitation in Section 17.11, neither this Agreement nor any of the
rights or obligations hereunder may be assigned by either Party without the
prior consent of the other Party, except assignment, in whole or in part, to an
Affiliate of the assigning Party so long as such Affiliate agrees in writing to
be bound by the terms of this Agreement. The assigning Party shall remain
primarily liable hereunder notwithstanding any such assignment. Any attempted
assignment in violation hereof shall be void.

         17.10    Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the Parties hereto and their
respective permitted successors and assigns.

                                       94



         17.11    Divestiture by Pfizer.

                  (a)      If (i) Pfizer enters into a definitive agreement to
acquire or merge with another company (the "Target") involving a purchase price
in excess of $[**] (which amount shall be increased on January 1 of each year to
reflect increases in the Consumer Price Index on each such January 1 over the
level of the Consumer Price Index on January 1, 2003), (ii) Pfizer reasonably
believes that a "Divestiture Requirement" exists, namely that the Governmental
Authorities with responsibility for antitrust or competition review and approval
of such acquisition or merger for either the United States or the EU, as defined
in the License Agreement (each an "Antitrust Authority" and, together, the
"Antitrust Authorities") will not grant the requisite clearance or approval for
the consummation of the acquisition or merger unless (x) Pfizer assigns,
sublicenses or otherwise transfers (any such assignment, sublicense or transfer,
a "Divestiture Transaction") Pfizer's rights and obligations under this
Agreement or the License Agreement to a non-Affiliate third party or (y) the
Target divests the business, product line or agreement(s) of the Target (the
"Target's Competitive Business") giving rise to the Divestiture Requirement,
(iii) Pfizer has used commercially reasonable efforts to avoid any requirement
of having to enter into a Divestiture Transaction, including without limitation
if reasonably practicable in Pfizer's good faith business judgment by
undertaking, or causing the Target to undertake, to the relevant Antitrust
Authorities to divest the Target's Competitive Business giving rise to the
antitrust or competition concern and (iv) the Target's Competitive Business
comprised less than [**] percent ([**]%) of the Target's revenues for the
Target's last fiscal year and less than [**] percent ([**]%) of the Target's
fair market value (as determined by Pfizer's Board of Directors in good faith
based on written advice and analysis of a nationally recognized investment
bank), Pfizer shall so notify Eyetech (a "Notice of Divestiture"), which Notice
of Divestiture shall include a detailed description of the Divestiture
Requirement, a certification to

                                       95



Eyetech by Pfizer of the accuracy of such description and a copy of the written
advice and analysis of the investment bank. Pfizer may not give more than one
Notice of Divestiture in any twenty-four (24) month period.


         17.11  (b)      If Pfizer gives a Notice of Divestiture, Eyetech may,
at its option (the "Acquisition Option"), elect to acquire Pfizer's rights under
this Agreement and the License Agreement by giving Pfizer notice of such
election (a "Preliminary Acquisition Notice") at any time within ten (10)
Business Days following the date of the Notice of Divestiture. If Eyetech
exercises its Acquisition Option, Pfizer shall promptly discuss with [**]
Eyetech [**] under this Agreement and the License Agreement and [**] referred to
in Section 17.11(c) [**] (as defined below) would be acceptable, with or without
[**] referred to in clause (i) of Section 17.11(d). Promptly after Eyetech gives
a Preliminary Acquisition Notice, the Parties will then jointly select an
investment bank to determine the fair market value of Pfizer's rights under this
Agreement and the License Agreement (the "FMV"). If the Parties are unable to
jointly select an investment bank within [**] Business Days after Eyetech gives
a Preliminary Acquisition Notice, the Parties shall select by a random drawing
an investment bank from among the top ten (10) investment banks from Thomson
Financial's then current listing of top financial advisors for worldwide
completed mergers and acquisitions or, if such directory is not then available,
from an alternative listing of investment banks for mergers and acquisitions to
be mutually agreed by the Parties, to determine the FMV. The investment bank
shall complete its valuation within [**] Business Days of its appointment, and
shall provide its results in writing to both Pfizer and Eyetech. The purchase
price to be paid by Eyetech to Pfizer shall be equal to [**] percent ([**] %) of
the FMV (the "Eyetech Purchase Price"). The results of the valuation shall be
binding on the Parties, and the fees of the investment bank shall be borne [**].

         (c)    If Eyetech wishes to acquire Pfizer's rights under this
Agreement and the License Agreement at the Eyetech Purchase Price, Eyetech shall
provide Pfizer with written notice (the "Confirmatory Acquisition Notice") to
that effect within [**] Business Days of the determination of the FMV; provided
that Eyetech may elect not to purchase Pfizer's rights under this Agreement and
the License Agreement, and if Eyetech does not provide Pfizer with a
Confirmatory Acquisition Notice within such [**] Business Day period after the
determination of FMV, Eyetech shall be deemed to have elected not to purchase
such rights. If Eyetech provides Pfizer with a Confirmatory Acquisition Notice
and [**] indicated that [**] of the [**], (i) Eyetech shall be required [**] of
the [**] at the time [**] between Eyetech and Pfizer, and (ii) Eyetech may [**];
provided that Eyetech may [**] and to [**]. If Eyetech provides Pfizer with a
Confirmatory Acquisition Notice and [**] indicated that such [**], then Eyetech
shall be [**] of the [**] at the time [**] between Eyetech and Pfizer. The
closing of the acquisition transaction shall not occur prior to the later of (x)
closing of Pfizer's acquisition of or merger with the Target and (y) [**] days
after the relevant Notice of Divestiture. Such acquisition transaction shall be
entered into pursuant to an acquisition agreement [**] to such [**], which
acquisition agreement shall contain [**] after the relevant Notice of
Divestiture; provided that such provision shall expire, and Eyetech's
obligations under such acquisition agreement shall no longer be [**], if Eyetech
does not provide Pfizer with a notice of [**] of such [**] within such [**] day
period.


         (d)    If [**] to the [**] referred to in Section 17.11(c), Eyetech
shall [**] to Pfizer [**]. The [**] shall: (i) be [**] to such [**], shall be
[**] by Eyetech in the [**] between Eyetech and Pfizer, and if [**] by Eyetech,
shall be [**] by such [**] as the Parties shall mutually agree, (ii) [**] at an
[**] based on [**] at the time of the transaction, (iii) be [**] (with Eyetech
having the [**] for any or all [**], which accrued interest shall compound and
be added to principal on the date of [**]), (iv) [**] of the date of issuance,
at which time [**] shall be [**], and (v[**] at any time [**].

         (e)    If Eyetech does [**] Pfizer with, [**], its Confirmatory
Acquisition Notice, or is [**] to be [**], then Pfizer may, concurrently with
the [**] with the Target, close a Divestiture Transaction with a [**] so long as
the [**] executes and delivers to Eyetech an agreement to be bound by this
Agreement and the License Agreement. [**] means [**] that is [**] in terms of
[**] in the calendar year most recently completed as of the date [**].


                  (f)      If (x) Pfizer consummates a Divestiture Transaction
or (y) Eyetech acquires Pfizer's rights under this Agreement and the License
Agreement pursuant to this Section 17.11, Pfizer shall, as requested by Eyetech,
either (i) subject to any necessary approval by the Antitrust Authorities,
maintain either or both of the Distribution Agreement and the Regulatory
Services Agreement in effect for such period of time, up to twelve (12) months
following the effective date of the Divestiture Transaction or acquisition by
Eyetech, as Eyetech may request, or (ii) terminate such agreements on the date
or dates specified by Eyetech.

         17.12    Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

         17.13    Force Majeure. No Party shall be liable for failure of or
delay in performing obligations set forth in this Agreement, and no Party shall
be deemed in breach of its obligations, if such failure or delay is due to
natural disasters or any causes reasonably beyond the control of such Party.

                                       96




         17.14    Non-Solicitation of Employees. During the Co-Promotion Term,
neither Party shall, directly or indirectly, recruit, or solicit any employee of
the other Party with whom such Party has come into contact or interacted for the
purposes of performing this Agreement, without the prior consent of the other
Party, except pursuant to general solicitations not targeted specifically at
such employees or in response to unsolicited employment inquiries by such
employees.

         17.15    Press Releases and Other Disclosures. The Parties hereby each
approve the form of joint press release set forth in Exhibit 17.15 hereto and
will cooperate in the release thereof as soon as practicable after the signature
of this Agreement by the Parties. The Parties also recognize that each Party may
from time to time desire to issue additional press releases and make other
public statements or disclosures regarding the subject matter of this Agreement.
In such event, the Party desiring to issue an additional press release or make a
public statement or disclosure shall provide the other Party with a copy of the
proposed press release, statement or disclosure for review and approval in
advance, which advance approval shall not be unreasonably withheld, conditioned
or delayed. No other public statement or disclosure concerning the existence or
terms of this Agreement shall be made, either directly or indirectly, by either
Party hereto, without first obtaining the written approval of the other Party.
Once any public statement or disclosure has been approved in accordance with
this Section, then either Party may appropriately communicate information
contained in such permitted statement or disclosure. Notwithstanding the
foregoing provisions of this Section 17.15 or of Article 11, a Party may (a)
disclose the existence and terms of the Transaction Agreements where required,
as reasonably determined by the disclosing Party, by applicable Law, by
applicable stock exchange or Nasdaq regulation or by order or other ruling of a
competent court, (b) disclose the existence

                                       97



and terms of the Transaction Agreements under obligations of confidentiality to
agents, advisors, contractors, investors and sublicensees, and to potential
agents, advisors, contractors, investors and sublicensees, in connection with
such Party's activities hereunder and in connection with such Party's financing
activities and (c) publicly announce any of the matters set forth in Exhibit
17.15(c), provided that such announcements do not entail disclosure of
non-public technical or scientific information (which, for clarity, excludes
clinical trial results) and the announcing Party provides the other Party with a
copy of the proposed text of such announcement sufficiently in advance of the
scheduled release or publication thereof to afford such other Party a reasonable
opportunity to review and comment upon the proposed text.

         17.16    Third-Party Beneficiaries. None of the provisions of this
Agreement shall be for the benefit of or enforceable by any third party,
including, without limitation, any creditor of either Party. No such third party
shall obtain any right under any provision of this Agreement or shall by reason
of any such provision make any claim in respect of any debt, liability or
obligation (or otherwise) against either Party.

         17.17    Relationship of the Parties. Each Party shall bear its own
costs incurred in the performance of its obligations hereunder without charge or
expense to the other, except as expressly provided in this Agreement. Neither
Party shall have any responsibility for the hiring, termination or compensation
of the other Party's employees or for any employee compensation or benefits of
the other Party's employees. No employee or representative of a Party shall have
any authority to bind or obligate the other Party to this Agreement for any sum
or in any manner whatsoever, or to create or impose any contractual or other
liability on the other Party without said other Party's approval. For all
purposes, and notwithstanding any other provision of this Agreement to the
contrary, Pfizer's legal relationship under this Agreement to Eyetech shall be

                                       98



that of independent contractor. Nothing in this Agreement shall be construed to
establish a relationship of partners or joint venturers between the Parties.

                                       99



         17.18    Performance by Subsidiaries and Affiliates. To the extent that
this Agreement imposes obligations on Subsidiaries and Affiliates of a Party,
such Party agrees to cause its Subsidiaries and Affiliates to perform such
obligations.

         IN WITNESS WHEREOF, the Parties have signed this Agreement as of the
Execution Date.

PFIZER INC.                         EYETECH PHARMACEUTICALS, INC.

By:    /s/ Henry A. McKinnell       By:    /s/ David R. Guyer
       ______________________              ______________________

Name:  Henry A. McKinnell           Name:  David R. Guyer
       ______________________              ______________________

Title: Chairman and CEO             Title: CEO
       ______________________              ______________________



                                      100



                                  EXHIBIT 1.20

                               GROUP/JOINT DETAILS




     Pfizer or Eyetech personnel, as the case may be, may make Product
presentations to medical professionals with prescribing authority in group
situations (each, a "Detailee"). Such presentations maybe be through speaker
programs, dinner and lunch programs, symposia, and other programs the nature of
which has been approved by the CSC.

[**] such a presentation will be considered [**]. It is understood that [**], as
the case may be, [**] For such group presentations conducted by either Eyetech
or Pfizer [**] conducting such presentation. [**] a group presentation, [**]
such a group presentation, [**] If, however, prior to such presentation, [**] It
is understood that for symposia and other group presentations [**] as provided
above. [**]




                                  EXHIBIT 1.52

                                Call Center Costs

         For purposes of calculating Marketing Expenses, monthly Call Center
expenses shall equal the sum of:

         (i)      $[**]/month* multiplied by the number of full-time equivalent
                  Call Center Representatives (as defined below); and

         (ii)     Out-of-Pocket Costs paid by Pfizer for Call Center services
                  outsourced by Pfizer to non-employee third parties.

         A "Call Center Representative" shall mean a Pfizer employee whose
primary responsibility is to handle calls from or to Product-users, physicians
and other health care professionals, and managed care organizations concerning
questions about the Product and Product reimbursement, or a supervisor of any
such individual.

- ------------------------------------
* Adjusted annually, with the first such adjustment taking place for the first
full calendar year following the calendar year in which the Product is initially
Launched in the US Territory, according to changes in the Consumer Price Index
for All Urban Consumers (CPI U): U.S. city average, for the preceding Year.

                                      101


                                   EXHIBIT 2.5

                          Sales Force Training Program


     The initial training Pfizer will offer to Eyetech field force
representatives will be Pfizer's typical training, i.e. "AS IS" program. [**]
various training phases [**]. Pfizer may also update the training program from
time to time. [**]



     [**] training time is [**] during the field time.



     The program includes training [**] subsequent training activities.



     Typical content covered during training consists of:



     -    [**]



     -    [**]



     -    [**]



     -    [**]



     -    [**]



     The program includes material [**]



     [**] appropriate training materials, [**] weeks prior to the training
program commencement. The training of Eyetech Sales Representatives will be
scheduled to coincide with regularly scheduled Pfizer training sessions.



     [**] These include (but are not limited to) topics such as the ones listed
below:



     -    [**]



     -    [**]



     -    [**]



     -    [**]



     -    [**]



     -    [**]


                                      102



                                 EXHIBIT 3.4(d)


 Matters where Eyetech Possesses Special Expertise or has Special Relationships


                                      [**]

                                      103


                                 EXHIBIT 3.4(e)

     -    [**]Objectives:

          -    Primary: [**].

     -    Design:

     -    [**]NO-GO Criteria:

     -    [**]LOGISTICS

          -    INITIATION DATE: [**]DURATION: [**]

          -    ESTIMATED COST: [**]

     -    [**] [**]Objectives:

          -    Primary: [**]

     -    Design:

     -    [**]NO-GO Criteria:

          -    [**].

     -    LOGISTICS

          -    INITIATION DATE: [**]DURATION: [**]

ESTIMATED COST: [**]. [**].

     -    Objectives:

     -    [**]Design:

     -    [**]NO-GO Criteria:

     -    [**]LOGISTICS

INITIATION DATE: [**]DURATION: [**]ESTIMATED COST: [**]

                                       104



[**] Development Programs [**]The Completed and Planned Clinical Studies
     Include:

     -    [**]Objectives:

     -    [**]Design:

     -    [**]NO-GO Criteria:

     -    [**]LOGISTICS

[**] Cost: [**]
[**] . [**]

     -    Objectives:

     -    [**]Design:

     -    [**]NO-GO Criteria:

     -    [**]LOGISTICS

     -    [**]. [**]Objectives:

     -    [**]Design:

     -    [**]NO-GO Criteria:

     -    [**]LOGISTICS

          -    [**]Cost: 2.0 MM

     -    EOP1002 (COMPLETED): Phase I/II. [**]Objectives:

     -    [**]Design:

     -    [**]NO-GO Criteria:

     -    [**]LOGISTICS

     -    [**]Objectives:

     -    [**]Design:

     -    [**]NO-GO Criteria:

     -    [**]Logistics

          -    Initiation Date: Ongoing[**]Duration: [**] 3Q04 completion

     -    Estimated Cost: [**]. [**]Objectives:

     -    [**]Design:

     -    [**]NO-GO Criteria:

     -    [**]LOGISTICS

          -    INITIATION DATE: [**]DURATION: [**]

          -    ESTIMATED COST: [**]

[**] [**]

     -    Objectives

     -    Primary: [**]Design:

     -    [**]NO-GO Criteria:

     -    [**]LOGISTICS

          -    INITIATION DATE: [**]

          -    DURATION: [**]

          -    ESTIMATED COST: [**]

                                       105



     -    [**] [**]Objectives

     -    [**]Design:

     -    [**]NO-GO Criteria:

          -    [**].

     -    LOGISTICS

          -    INITIATION DATE: [**]DURATION: [**]

     -    ESTIMATED COST: [**]. [**]Objectives:

     -    [**]Design:

     -    [**]NO-GO Criteria:

     -    [**]LOGISTICS

          -    INITIATION DATE: [**]DURATION: [**]ESTIMATED COST: [**]

[**].  [**]

     -    Objectives:

          -    [**].

     -    Design:

     -    [**]NO-GO Criteria:

     -    [**]LOGISTICS

          -    INITIATION DATE: [**]

          -    DURATION: [**]

          -    ESTIMATED COST: [**]

          -

[**] [**]

     -    Objectives:

          -    Primary: [**]

     -    Design:

     -    [**]NO-GO Criteria:

          -    [**].

     -    LOGISTICS

          -    INITIATION DATE: [**]DURATION: [**]

          -    ESTIMATED COST: [**]

     -    [**] [**]Objectives:

     -    [**]Design:

          -    [**]

     -    NO-GO Criteria:

     -    [**]LOGISTICS

                                       106



          -    INITIATION DATE: [**]DURATION: [**]

[**] [**]

     -    Objectives

     -    [**]Design:

     -    [**]NO-GO Criteria:

     -    [**]LOGISTICS

          -    INITIATION DATE: [**]DURATION: [**].

     -    ESTIMATED COST: [**]. [**]Objectives

     -    [**]Design:

     -    [**]NO-GO Criteria:

     -    [**]LOGISTICS

          -    INITIATION DATE: [**]DURATION: [**]

          -    ESTIMATED COST: [**]

                                       107



                                 EXHIBIT 5.1(b)

                                      [**]

Note: all numbers in Millions of US dollars



                      REMAINING
STUDY NUMBER/NAME    COSTS IN CDP    [**]
- -----------------------------------------
                               
      [**]                           [**]
- -----------------------------------------
      [**]                           [**]
- -----------------------------------------
      [**]                           [**]
- -----------------------------------------
      [**]                           [**]
- -----------------------------------------
      [**]               [**]        [**]
- -----------------------------------------
      [**]               [**]        [**]
- -----------------------------------------
      [**]               [**]        [**]
- -----------------------------------------
      [**]              $[**]        [**]
- -----------------------------------------
      [**]              $[**]        [**]
- -----------------------------------------
      [**]              $[**]        [**]

- -----------------------------------------
      [**]              $[**]        [**]
- -----------------------------------------
      [**]              $[**]        [**]
- -----------------------------------------
      [**]              $[**]        [**]
- -----------------------------------------
      [**]              $[**]        [**]
- -----------------------------------------
      [**]              $[**]        [**]
- -----------------------------------------
      [**]              $[**]

- -----------------------------------------
      [**]              $[**]
- -----------------------------------------
      [**]              $[**]
- -----------------------------------------
      [**]              $[**]
- -----------------------------------------




                         [**]
                      REMAINING
STUDY NUMBER/NAME    COSTS IN CDP    [**]
- -----------------------------------------
                               
- -----------------------------------------
      [**]              $[**]        [**]

- -----------------------------------------
      [**]              $[**]        [**]

- -----------------------------------------
      [**]              $[**]
- -----------------------------------------
      [**]              $[**]
- -----------------------------------------
      [**]              $[**]
- -----------------------------------------
      [**]              $[**]        [**]
                         [**]
- -----------------------------------------


                                       108



                               
- -----------------------------------------
      [**]              $[**]
- -----------------------------------------



                                       109



                                   EXHIBIT 6.2


                  Marketing Budgets and Detailing Requirements

     Marketing Budgets.  After Launch of the first AMD Product in the US
Territory, the following shall apply:

     Eyetech shall [**] set forth below. Pfizer shall [**]

                    
- ------------------------------------
[**]    [**]    [**]    [**]    [**]

- ------------------------------------
[**]    [**]    [**]    [**]
                                [**]
- ------------------------------------



*Beginning with the [**] and thereafter [**] Marketing Expenses shall be
calculated as follows:

[**]

     Detailing Requirements.  The following principles shall apply to the
allocation of Detailing responsibilities between the Parties:

     (i)       [**] Eyetech shall [**] Detailing [**] of the Details [**] in
performing Details [**]

     (ii)      Pfizer shall [**] in performing Details [**]

     (iii)     Eyetech shall [**] detailing responsibilities.

     (iv)      [**] Eyetech shall [**] detailing responsibilities [**] under
this Agreement. [**]

     (v)       Detailing assignments shall be consistent with the principles
set forth in (i) to (iv) above, shall be set forth in each applicable Marketing
Plan [**]


                    
- ------------------------------------
        [**]    [**]    [**]    [**]

- ------------------------------------
[**]
- ------------------------------------
[**]    [**]    [**]    [**]    [**]
- ------------------------------------
[**]    [**]    [**]    [**]
- ------------------------------------
[**]
- ------------------------------------
[**]    [**]    [**]    [**]
- ------------------------------------
[**]    [**]    [**]    [**]
- ------------------------------------



                                       110



                                 EXHIBIT 6.12(a)

                     Pre-Existing Clinical Supply Agreements


1.   [**] Agreement dated [**] between Eyetech and [**]

2.   Purchase Order dated [**] between Eyetech and [**]

3.   Purchase Order dated [**] between Eyetech and [**]

4.   [**] between Eyetech and [**]

5.   [**] dated [**] between Eyetech and [**]

6.   Purchase Order dated [**] between Eyetech [**]


                                       111



                                  EXHIBIT 10.4

                             Third Party Agreements

1.   Licensing Agreement dated as of March 30, 2000, by and among Eyetech,
     Gilead Sciences, Inc. and NeXstar Pharmaceuticals, Inc., as amended by
     Amendment No. 1 dated May 9, 2000 and as subsequently amended by Amendment
     No. 2 dated December 4, 2001 and as subsequently amended by Amendment No. 3
     dated August 30, 2002.

2.   License Agreement dated as of December 31, 2001, by and between Eyetech and
     Isis Pharmaceuticals, Inc.

3.   License, Manufacturing and Supply Agreement dated as of February 5, 2002,
     by and between Eyetech and Shearwater Corporation.

                                       112



                              EXHIBIT 12.6(a)(iii)

                        Certain Product Liability Matters


Product Liability arising out of any claim by a patient enrolled as of the
Execution Date in an ongoing Eyetech clinical trial based on safety issues
related to Eyetech's pre-clinical testing program (other than reproductive
studies).


                                       113



                             EXHIBIT 12.6(b)(iii)(A)

                       Eyetech 2002 Clinical Supply Costs

                            Direct Cost Estimate API
                                 Current (2002)

                                Clinical Product

API Yield per Run (grams) from                             [**]
    [**]mM Batch Size



                                 $/Batch    $/gram
                                 -----------------
                                      
Raw Material (critical)            [**]      [**]

Contract Cost [**]                $[**]     $[**]

Release Cost (QC/QA)              $[**]     $[**]

Total Direct Cost (API)           $[**]     $[**]


Cost/gram = $[**]

Cost/mg = $[**]

Cost of [**]mg fill = ([**])*[**]*$[**] = $[**]
Note: [**]mg dose has a [**]% overfill

                                       114



                             EXHIBIT 12.6(b)(iii)(B)

                    Certain Third Party Intellectual Property

                                      [**]

                                       115



                                  EXHIBIT 17.15

                               Joint Press Release

For immediate release:                    Contacts: Justin Jackson
December 18, 2002                         212-213-0006
                                          (Burns McClellan on behalf of Eyetech)
                                          Geoffrey Cook
                                          212-733-5244 (Pfizer)

           PFIZER, EYETECH PHARMACEUTICALS ENTER GLOBAL COLLABORATION

                      FOR POTENTIAL TREATMENT FOR BLINDNESS

         New York, NY, December 18, 2002 - Pfizer Inc and Eyetech
Pharmaceuticals, Inc. today announced they have entered into an agreement to
jointly develop and commercialize Eyetech's Macugen(TM) (pegaptanib sodium), a
potential treatment for age-related macular degeneration (AMD) and diabetic
macular edema (DME), both leading causes of blindness.

         Under terms of the deal, which is subject to government approval,
Pfizer will make initial payments of $100 million, with the potential for an
additional $195 million in milestone payments based on worldwide regulatory
submission and approvals. Eyetech also has the potential to receive up to an
additional $450 million in milestone payments, which are contingent upon
successful commercialization of Macugen(TM) and based on attainment of
agreed-upon sales levels. Pfizer will also fund the majority of the ongoing
development costs for both the AMD and DME indications. Further, if approved,
Macugen(TM) will be co-promoted by Eyetech and Pfizer in the United States where
Eyetech will have an ophthalmology sales force and record sales. Outside of the
United States, Pfizer will market the product exclusively under a
royalty-bearing license. Additional payments are subject to worldwide
Macugen(TM) sales. Further terms of the deal were not disclosed.

         This is a landmark accomplishment for a young biotechnology company. We
are excited to partner with the world's leading pharmaceutical company to bring
a potentially innovative

                                       116



therapy to so many patients who are at risk of losing their sight," said Dr.
David Guyer, Eyetech Pharmaceuticals' co-founder and chief executive officer.

         The U.S. Food and Drug Administration has granted Macugen(TM)
"fast-track" status for the treatment of exudative, or "wet" form of AMD as well
as for DME because of the product's expected potential to fulfill a significant
unmet medical need.

         "We are very pleased to partner with Eyetech on what we believe will be
a breakthrough treatment for a devastating medical condition," said Pfizer
President Karen Katen. "As the world's population ages, there will be an
increasing number of people at risk for macular degeneration."

         Administered by intravitreal injection, Macugen(TM) is an aptamer that
selectively binds to and neutralizes Vascular Endothelial Risk Factor (VEGF). In
early clinical studies, Macugen(TM) was shown to inhibit abnormal blood vessel
growth and stabilize and/or reverse blood vessel leakage in the back of the eye
resulting in improved vision by three lines or more on standard eye charts in 26
percent of patients.

         Eyetech's Phase III development program for wet AMD involves nearly
1,200 patients at 117 investigational sites in the United States, Canada, South
America, Europe, Israel and Australia, the largest clinical development program
of its kind. Macugen(TM) is being developed as monotherapy as well as in
combination with photodynamic therapy.

                   WET AGE-RELATED MACULAR DEGENERATION (AMD)

         The leading cause of irreversible vision loss among Americans over the
age of 55, AMD occurs in two different forms: dry AMD and wet AMD. The wet form
accounts for approximately 200,000 new cases annually, with a prevalence of 1.2
million cases in the United States alone.

         Wet AMD is characterized by the growth of abnormal blood vessels into
the area beneath the retina. This process, known as angiogenesis or
neovascularization, results in fragile blood vessels that leak fluid and blood
into the macula, the center portion of the retina. This leakage damages the area
and results in a rapid loss of central vision, which is critical for tasks such
as reading, driving, watching television and recognizing faces.

                                       117



         Laser photocoagulation and photodynamic therapy are the only current
treatments for certain types of patients.

                          DIABETIC MACULAR EDEMA (DME)

         DME affects roughly 135,000 Americans with diabetes each year and is
the leading cause of blindness in adults under the age of 55. The decreased
vision that characterizes DME results from fluid and lipids leaking from retinal
blood vessels

         Eyetech Pharmaceuticals (www.eyetk.com) is dedicated to the discovery,
development and commercialization of novel therapeutics and delivery systems to
combat the vision loss associated with ophthalmic diseases. Founded in 2000, the
privately-held, New York City-based company is focused on meeting the medical
needs of patients with diseases that affect the back of the eye. Its investors
include partners and affiliates of JP

         Morgan, BB Biotech, MPM Capital, Alta Partners, Schroder Ventures, Life
Sciences and International BioTechnology Trust plc, and Merrill Lynch KECALP.
Pfizer Inc discovers, develops, manufactures and markets leading prescription
medicines, for humans and animals, and many of the world's best-known consumer
brands.

         DISCLOSURE NOTICE: The information contained in this document is as of
         December 18, 2002. Pfizer assumes no obligation to update any
         forward-looking statements contained in this document as a result of
         new information or future events or developments.

         This document contains forward-looking information about a product in
         development that involves inherent uncertainties. The success of this
         research and development project and the speed with which regulatory
         authorizations and the launch of the product may be achieved, as well
         as competitive factors, could affect the actual outcome of this
         collaboration.

         A further list and description of the risks, uncertainties and other
         matters that could cause the Pfizer's description contained herein to
         differ materially can be found in the Company's Annual Report on Form
         10-K for the fiscal year ended December 31, 2001, and in its periodic
         reports on Forms 10-Q and 8-K (if any).

                                       118



                                EXHIBIT 17.15(c)

Permitted Disclosures[**]

                                       119

EX-10.53

                                                                   EXHIBIT 10.53

          CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE
         SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.

                                                                  EXECUTION COPY

                               LICENSING AGREEMENT

         This LICENSING AGREEMENT ("Agreement"), effective as of March 31, 2000
(the "Effective Date"), by and among GILEAD SCIENCES, INC., a Delaware
corporation with its principal office located at 333 Lakeside Drive, Foster
City, CA 94404 ("Gilead Sciences"), and its wholly-owned subsidiary, NEXSTAR
PHARMACEUTICALS, INC., a Delaware corporation (collectively with Gilead
Sciences, "Gilead"), and EYETECH PHARMACEUTICALS, INC., a Delaware corporation
with its principal offices located at 300 East 42nd Street, Third Floor, New
York, New York 10017 ("EyeTech"). Unless otherwise defined in this Agreement,
all capitalized terms shall have the meanings given to them in Section 1.1 of
this Agreement.

                                    RECITALS

         1.       WHEREAS, Gilead owns certain patents and patent applications
and related know-how for NX1838, and has made certain filings for regulatory
approvals with respect to NX1838; and

         2.       WHEREAS, Gilead and EyeTech desire to enter into this
Agreement and certain other agreements, including an agreement providing for the
fill-and-finish manufacture of quantities of Product sufficient for the
completion of Phase Ib clinical trials; and

         3.       WHEREAS, subject to the terms and conditions set forth in this
Agreement, Gilead wishes to license to EyeTech and EyeTech wishes to license
from Gilead all of Gilead's rights under patents, patent applications and
know-how related to NX1838, and have access to all regulatory approvals with
respect to NX1838; and

         4.       WHEREAS, subject to the terms and conditions set forth in this
Agreement, Gilead also wishes to sell to EyeTech and EyeTech wishes to purchase
from Gilead its inventory of NX1838.

         NOW, THEREFORE, the Parties hereto, intending to be legally bound,
hereby agree as follows:

                                    SECTION 1
                                   DEFINITIONS

         1.1      Definitions. For purposes of this Agreement, the following
terms shall have the meanings set forth below:

                                       1.


         "Affiliate" shall mean any Person that, directly or indirectly, through
one or more intermediaries, Owns, is Owned by or is under common Ownership with,
a Party, where "Own" or "Ownership" means (a) direct or indirect possession of
at least fifty percent (50%) of the outstanding voting securities of a
corporation or a comparable ownership in any other type of Person, provided,
however, that if the law of the jurisdiction in which such entity operates does
not allow fifty percent (50%) or greater ownership by a Party, such ownership
interest shall be at least forty percent (40%) or (b) that a Person or group of
Persons otherwise has the unilateral ability to control and direct the
management of the entity, whether by contract or otherwise.

         "Business Day" shall mean any day other than a Saturday, Sunday or
banking holiday in New York City or San Francisco, California.

         "Calendar Quarter" shall mean a calendar quarter (i.e., period of three
(3) consecutive months) ending on March 31, June 30, September 30 or December
31.

         "Calendar Year" shall mean any period of twelve (12) consecutive months
ending on December 31.

         "Competitive Product" shall mean a product competitive with a Product.

         "Compulsory License" means a compulsory license under the Licensed
Patents obtained by a Third Party through the order, decree, or grant of a
governmental authority of competent jurisdiction, authorizing such Third Party
to manufacture, use, sell, offer for sale or import a Competitive Product in one
or more countries within the Territory.

         "Control", "Controls", and "Controlled" shall mean, with respect to a
particular item of information or intellectual property right, that the
applicable Party owns or has a license to such item or right and has the ability
to grant to the other Party access to and a license or sublicense (as
applicable) under such item or rights as provided for in this Agreement without
violating the terms of any agreement or other arrangement with any Third Party.

         "Damages" shall mean any and all costs, losses, claims, liabilities,
fines, penalties, damages and expenses, court costs, and reasonable fees and
disbursements of counsel, consultants and expert witnesses incurred by a Party
hereto (including any interest payments which may be imposed in connection
therewith).

         "Delivery Date" shall mean the date that is ten (10) days after the
Effective Date.

         "Effective Date" shall have the meaning given such term in the first
sentence of this Agreement.

         "EU" shall mean Austria, Belgium, Denmark, Finland, France, Germany,
Greece, Ireland, Italy, Luxembourg, The Netherlands, Portugal, Spain, Sweden and
the United Kingdom, and future members of the European Union (or its successor),
upon their admission for full membership (with commercial rights and privileges
substantially comparable to those of the foregoing countries).

                                       2.


         "EyeTech Rights" shall mean any invention or inventions, patentable or
not, know-how, information and/or data relating to the Product, including,
without limitation, pre-clinical studies and clinical trial information,
manufacturing processes, formulations, modes of delivery and/or data necessary
for the manufacture, use or sale of the Product, which are Controlled by EyeTech
during the term of this Agreement, and all Patents covering any of the foregoing
which are Controlled by EyeTech during the term of this Agreement.

         "FDA" shall mean the United States Food and Drug Administration, or any
successor thereto.

         "Field" shall mean the prevention and treatment of all human and other
animal diseases and conditions, and expressly excluding in vivo and in vitro
diagnostic applications.

         "First Commercial Sale" shall mean, with respect to any particular
country, the first sale of a Product in such country by EyeTech, or any of its
Affiliates or sublicensees, after Regulatory Approvals in such country have been
granted from the relevant Regulatory Authority in such country for such Product.

         "GAAP" shall mean United States generally accepted accounting
principles, consistently applied.

         "Indemnified Party" shall have the meaning given in Section 7.2 hereof.

         "Indemnifying Party" shall have the meaning given in Section 7.2
hereof.

         "Know-How" shall mean all ideas, materials, inventions (whether
patentable or not), trade secrets, data, instructions, processes, formulas,
expert opinion and information, including, without limitation, the Manufacturing
Information and biological, chemical, pharmacological, toxicological, physical
and analytical, safety, manufacturing and quality control data and information,
in each case within the Field, that, as of the Effective Date are (i) existing,
and (ii) Controlled by Gilead as of the Effective Date, in each case which is
necessary or useful for the development, manufacture, use, sale or
commercialization of the Product in the Field. Excluded from Know-How are any
Patents, the Licensed Patents and the Transferred Assets.

         "License" shall mean the license granted by Gilead to EyeTech pursuant
to Section 2.1.

         "Licensed Patents" shall mean any Patents listed in Exhibit D (as
updated from time to time pursuant to Section 5.6) which claim the manufacture,
use, import, offer for sale or sale of Products in accordance with this
Agreement and which now or at any time during the term of this Agreement are
Controlled by Gilead or any Affiliate of Gilead.

         "Major Countries" shall mean Canada, France, Germany, Italy, Japan,
Spain, United Kingdom and the United States.

         "Manufacturing Information" shall mean copies of all existing
information in written and electronic form in Gilead's possession or control as
of the Effective Date, with respect to any Product existing as of the Effective
Date, that relates to, in the Field: (1) processes for the production of NX1838,
and intermediates in the preparation of a Product; (2) the in-process

                                       3.


analytical controls for production of each of: (a) NX1838; and (b) a Product;
(3) the process, formulation and development reports generated for the
preparation of a Product; (4) the analytical methods and validation for the
quality control release of each of: (a) NX1838; and (b) a Product; and (5) the
stability protocols, stability indicating methods and stability data for each
of: (a) NX1838; and (b) a Product.

         "NDA" shall mean a New Drug Application filed with the FDA requesting
market approval for a new drug product.

         "Net Sales" shall mean, with respect to the Product, the gross amount
billed or invoiced by EyeTech, its Affiliates or sublicensees, to unrelated
Third Parties for the Products in finished product form, less the following
deductions:

                  (a)      trade, quantity and cash discounts allowed, but
expressly excluding discounts or allowances offered as part of a package of
products that includes a Product sold by EyeTech, its Affiliates or
sublicensees;

                  (b)      refunds, chargebacks and any other allowances which
effectively reduce the net selling price;

                  (c)      actual product returns, credits and allowances;

                  (d)      rebates actually paid or credited to any governmental
agency (or branch thereof) or to any Third Party payor, administrator or
contractee;

                  (e)      discounts mandated by, or granted to meet the
requirements of, applicable state, provincial or federal law, wholesaler,
including required chargebacks and retroactive price reductions;

                  (f)      transportation, freight, postage charges and other
charges such as insurance, relating thereto, in each case included as a specific
line item on an invoice to such Third Parties; and

                  (g)      taxes, excises or other governmental charges upon or
measured by the production, sale, transportation, delivery or use of goods, in
each case included as a specific line item on an invoice to such Third Parties.

Notwithstanding the foregoing, amounts received by EyeTech, or its Affiliates or
sublicensees, for the sale of Products among EyeTech and its Affiliates or
sublicensees for resale shall not be included in the computation of Net Sales
hereunder. Net Sales shall be determined from books and records maintained in
accordance with GAAP. In the event the Product is sold as part of a combination
product, or as part of bundled products or as part of a delivery system, the Net
Sales from the combination product, bundled product or delivery system, for the
purposes of determining royalty payments, shall be determined by multiplying the
Net Sales (as defined without regard to this paragraph) of the combination
product by the fraction, A/(A+B) where A is the average sale price of the
Product when sold separately in finished form and B is the average sale price of
the other product(s) or system sold separately in finished form, or, only if the
value of B cannot be determined, where A+B is the average sales price of the
product(s) and

                                       4.


the delivery system together. If the value of B can be determined, in no event
will the sales price of any combination product, bundled product or delivery
system product be less than the sum of A and B. In the event that such average
sale price cannot be determined for both the Product and such other product(s)
or system in combination, the following calculation shall be substituted for the
calculation recited in (ii) of the preceding sentence: the Net Sales (as defined
without regard to this paragraph) of the combination products shall be
multiplied by the fraction C/(C+D) where C is EyeTech's cost of goods of the
Product and D is EyeTech's cost of goods for the other product(s) or system,
determined in accordance with the method of accounting normally employed by
EyeTech in computing cost of goods, provided, however, that the minimum value of
such fraction as used in the calculation of Net Sales shall be 0.9.

         "NX1838" shall mean Gilead's proprietary compound known as NX1838, as
described in Exhibit A.

         "Party" shall mean either Gilead or EyeTech, and "Parties" shall mean
both of Gilead and EyeTech.

         "Patents" shall mean patents and patent applications, both foreign and
domestic, including without limitation, all extensions, reissues, renewals,
reexaminations, patents of addition, supplementary protection certificates and
inventors' certificates thereof, substitutions, provisionals, divisionals,
continuations and continuations-in-part.

         "Person" shall mean a natural person, a corporation, a partnership, a
trust, a joint venture, a limited liability company, any governmental authority
or any other entity or organization.

         "Pivotal Clinical Trial" shall mean either (a) a trial on sufficient
numbers of patients that is designed to establish that a pharmaceutical product
is safe and efficacious for its intended use, and to define warnings,
precautions and adverse reactions that are associated with the pharmaceutical
product in the dosage range to be prescribed, and to support Regulatory Approval
of such pharmaceutical product or label expansion of such pharmaceutical
product, or (b) a clinical trial that began as a trial on sufficient numbers of
patients that is designed to establish the safety and biological activity of a
pharmaceutical product for its intended use, and to define warnings, precautions
and adverse reactions that are associated with the pharmaceutical product in the
dosage range to be prescribed, after such date as the U.S. Food and Drug
Administration or its successor (or equivalent regulatory authority) has
indicated that the applicable Party may reasonably continue such trials with the
intention to establish that a pharmaceutical product is safe and efficacious for
its intended use, and to define warnings, precautions and adverse reactions that
are associated with the pharmaceutical product in the dosage range to be
prescribed, and to support Regulatory Approval of such pharmaceutical product or
label expansion of such pharmaceutical product.

         "Product" shall mean any pharmaceutical composition containing NX1838
in any formulation, dosage concentration or volume, together with all label
expansions, line extensions and improvements thereon, which may be included in
any supplement, modification or addition to the filings for Regulatory Approval
of the foregoing compound.

                                       5.


         "Product Data Package" shall include the following information and data
related to the Product in the possession or control of Gilead as of the
Effective Date: (a) the Regulatory Documents; (b) pre-clinical and clinical
development protocols, data, and reports; (c) manufacturing development
technical reports; (d) toxicology reports; and (e) such other information and
data specifically identified in Exhibit B attached hereto.

         "Product Inventory" shall mean the NX1838 and Product inventory, in
bulk or finished form, which Gilead Controls as of the Effective Date, as
identified in Exhibit C attached hereto.

         "Reasonable Diligence" shall mean commercially reasonable efforts to
develop, obtain Regulatory Approval, and/or commercialize, as applicable, a
Product in a country in the Territory, consistent with accepted business
practices and legal requirements, and comparable to efforts in the
pharmaceutical industry applicable to development, obtaining of Regulatory
Approval for, or commercialization of human pharmaceutical products at an
equivalent stage of development and similar market potential, profit potential
and strategic value in view of conditions then prevailing.

         "Regulatory Approval" shall mean (a) in the United States, approval by
the FDA of an NDA, or equivalent application, for marketing approval and
satisfaction of any related applicable FDA registration and notification
requirements (if any) and (b) in any country other than the United States, all
approvals (including any required marketing, pricing and reimbursement
approvals) by the Regulatory Authority in such country of a single application
or set of applications comparable to an NDA, enabling legal sale of a product in
such country.

         "Regulatory Authority" shall mean the FDA in the United States or the
equivalent governmental agency having jurisdiction in any other country in the
Territory.

         "Regulatory Documents" shall mean the (a) United States investigational
new drug application (the "IND") #56503 (dated July 12, 1998), and all
amendments and annual reports to same; (b) any pediatric data package or other
exclusivity extensions relating to Products; and (c) any other regulatory
filings with Regulatory Authorities relating to the Product.


         "Royalty Term" shall mean, with respect to each country in which
Product is sold, the period of time equal to the longer of (i) ten (10) years
from the date of First Commercial Sale of the Product in such country, or (ii)
the expiration of the last-to-expire Licensed Patent in such country that claims
the manufacture, use, and or sale of such Product as such activities are carried
out pursuant to this Agreement.


         "Territory" shall mean the world, unless the License terminates with
respect to a country pursuant to Section 6.7, in which case the Territory shall
exclude any country in which the License has so terminated.

         "Third Party" shall mean a Person other than EyeTech, Gilead or their
Affiliates.

         "Transferred Assets" shall mean the Product Inventory and the Product
Data Package.

                                       6.


                                    SECTION 2
           GRANT OF LICENSES AND TRANSFER AND DELIVERY OF TRANSFERRED
                      ASSETS AND MANUFACTURING INFORMATION

         2.1      Grant of License. Subject to the terms and conditions of this
Agreement, during the term of this Agreement, Gilead hereby grants to EyeTech an
exclusive license under the Licensed Patents and Know How to make, have made,
use, sell, offer to sell, import and export the Product within the Field
throughout the Territory, with a right to sublicense to its Affiliates or
(subject to Section 2.4) to any other Person.

         2.2      Transferred Assets. As of the Effective Date, Gilead hereby
assigns, transfers and conveys to EyeTech all of Gilead's right, title and
interest in and to the Transferred Assets (subject to Section 4.5(c)), and
EyeTech hereby accepts such assignment, transfer and conveyance. On or before
the Delivery Date, Gilead shall have delivered to EyeTech all of the Transferred
Assets and the Manufacturing Information. EyeTech shall have up to ten (10) days
after such delivery to inventory the delivered Transferred Assets and
Manufacturing Information and to give notice to Gilead of any Transferred Assets
and Manufacturing Information that were not so delivered. If Gilead receives
notice or otherwise learns after the Delivery Date that it has failed to deliver
any Transferred Assets or Manufacturing Information to EyeTech, Gilead shall
provide to EyeTech any such Transferred Assets or Manufacturing Information no
later than five (5) Business Days after receipt of such notice or knowledge (or
within such longer time as is mutually agreed by EyeTech and Gilead). The
clinical data portion of the Product Data Package shall be provided to EyeTech
in computer-readable format, where available, and otherwise in printed format.
Gilead shall be under no obligation to convert to electronic format any portion
of the Product Data Package that currently is available only in printed format.
In the event that EyeTech is unwilling or unable to assume physical possession
of the Transferred Assets and Manufacturing Information by the Effective Date,
Gilead shall be entitled to charge EyeTech a reasonable fee for storage of the
Transferred Assets and Manufacturing Information beyond the Effective Date.
Gilead shall ship the Transferred Assets to EyeTech F.O.B. to EyeTech's
designated facilities. For a period of 90 days following the receipt by EyeTech
of the Transferred Assets and Manufacturing Information, Gilead personnel shall
be reasonably available during Gilead's normal business hours to respond to
technical inquiries of EyeTech regarding Products as is reasonably requested by
EyeTech. EyeTech acknowledges that Gilead makes no representations or warranties
with respect to the Transferred Assets or Manufacturing Information (other than
as expressly set forth in Section 5 below) and that it accepts such Transferred
Assets and Manufacturing Information "as is."

         2.3      Negative Covenant of EyeTech. EyeTech shall not use or
practice Licensed Patents or Know-How outside the Field or outside the Territory
or for any other purpose except activities that it conducts in compliance with
this Agreement.

         2.4      Sublicenses. EyeTech shall have the right to sublicense the
licenses granted to it by Gilead under this Agreement without the consent of
Gilead; provided that (i) prompt notice and a copy of such sublicense shall be
given by EyeTech to Gilead pursuant to Section 8.2 of this Agreement; (ii)
EyeTech shall remain obligated at all times under this Agreement without regard
to whether it has sublicensed its rights or whether EyeTech's sublicensee has
performed; (iii)

                                       7.


such sublicense shall name Gilead as a third party beneficiary of such
sublicense; and (iv) any such sublicenses granted by EyeTech shall contain
provisions providing for its termination or assignment to Gilead, at the option
of Gilead, of EyeTech's interest therein upon termination of this Agreement, and
shall further contain provisions which obligate such sublicensee to comply with
such terms, conditions, agreements and obligations that are consistent with the
terms, conditions, agreements and obligations to which EyeTech is subject under
this Agreement.

         2.5      Gilead Right of First Negotiation. Except as otherwise
provided in this Section 2.5, Gilead shall have a right of first negotiation
with respect obtaining all rights with respect to any Product which is, or which
can reasonably be expected to be, [**] (a "Reversion Product") as follows:
Eyetech shall notify Gilead in writing if Eyetech intends to seek, negotiate, or
solicit offers to license a Third Party to commercialize the Reversion Product
for the treatment or prevention [**] (the "Reversion Field") and a specific
territory (the "Reversion Territory"), prior to contacting any such potential
Third Party licensees. Such written notice shall include sufficient detailed
technical information concerning the Reversion Product as Gilead may reasonably
require to evaluate its interest in such Reversion Product. Within thirty (30)
days after receiving Eyetech's notice as to the Reversion Product, Gilead shall
notify Eyetech whether it is interested in negotiating with Eyetech the terms
under which Gilead shall obtain a license from Eyetech to research, develop and
commercialize Reversion Products as described herein. If Gilead provides such
notice, the Parties shall negotiate exclusively and in good faith for a period
of up to ninety (90) days after Eyetech receives Gilead's notice of interest
(the "Negotiation Period") the terms of an agreement pursuant to which Eyetech
will grant to Gilead and its Affiliates an exclusive, royalty-bearing,
sublicensable license, under all Eyetech Know-How and Eyetech Patents relating
to such Reversion Product, to research, develop, make, have made, use, import,
offer for sale, sell and otherwise commercialize such Reversion Product within
the Reversion Field within the Reversion Territory, and which agreement shall
include commercially reasonable provisions for transfer of or access to relevant
regulatory filings and technology to Gilead. Neither Gilead nor Eyetech shall
have any obligation to actually enter into a license agreement with respect to
such Reversion Product. If either Gilead does not respond to Eyetech's notice of
intent to license the Reversion Product within thirty (30) days after Gilead's
receipt thereof, or Gilead and Eyetech fail to agree upon the terms of a license
under rights to the Reversion Product during the Negotiation Period, Eyetech
shall be free to commercialize such Reversion Product by itself or through its
Affiliates or Third Parties without further obligation to Gilead.

                                    SECTION 3
                             PAYMENTS AND DELIVERIES

         In consideration of the exclusive license granted herein and the
transfer of ownership of the Transferred Assets, EyeTech shall pay the following
amounts to Gilead:

         3.1      Initial Payments and Deliveries.


                  (a)      On Monday, April 3, 2000, EyeTech shall pay to Gilead
the sum of seven million United States Dollars (US$7,000,000) by Federal Reserve
electronic wire transfer in immediately available funds to an account designated
by Gilead. Such amount shall be non-refundable and non-creditable, and shall not
be subject to any counterclaim or set-off.


                                       8.


                  (b)      On or before the Effective Date, EyeTech and Gilead
Sciences shall enter into a Warrant Agreement (the "Warrant Agreement") mutually
satisfactory to both Parties pursuant to which EyeTech shall issue to Gilead
Sciences a warrant to purchase EyeTech Series B Preferred Stock.

                  (c)      On or before the Delivery Date, Gilead shall deliver
to EyeTech (i) all of the Transferred Assets pursuant to Section 2.2 of this
Agreement; (ii) all of the Manufacturing Information pursuant to Section 2.2 of
this Agreement; and (iii) a schedule ("Schedule of Transferred Assets and
Manufacturing Information") setting forth each of the Transferred Assets and
Manufacturing Information being delivered to EyeTech at such time.

                  (d)      Within ten (10) days of delivery of the Transferred
Assets and the Manufacturing Information and of the Schedule of Transferred
Assets and Manufacturing Information pursuant to Section 3.1(c) above, EyeTech
shall inventory the delivered Transferred Assets and Manufacturing Information
pursuant to Section 2.2 and shall either (i) deliver to Gilead a receipt
acknowledging the receipt of each of the Transferred Assets and the
Manufacturing Information set forth on the Schedule of Transferred Assets and
Manufacturing Information or (ii) notify Gilead of any Transferred Assets or
Manufacturing Information that Gilead did not deliver. If Gilead receives notice
or otherwise learns after the Delivery Date that it has failed to deliver any
Transferred Assets or Manufacturing Information to EyeTech, Gilead shall provide
to EyeTech any such Transferred Assets or Manufacturing Information no later
than five (5) Business Days after receipt of such notice or knowledge (or within
such longer time as is mutually agreed by EyeTech and Gilead). Within ten (10)
days of Gilead delivering such missing items to EyeTech following notice given
by EyeTech pursuant to clause (ii) of this Section 3.1(d), EyeTech shall deliver
the receipt described in clause (i) of this Section 3.1(d).

         3.2      Milestone Payments. Within five (5) Business Days of EyeTech
and/or its Affiliates or sublicensees achieving the first occurrence of each of
the milestone events listed below with respect to any Product, EyeTech shall
notify Gilead of such achievement and the date thereof, and within thirty (30)
days of the date of such achievement, pay the one-time non-refundable fees
specified below to Gilead by Federal Reserve electronic wire transfer in
immediately available funds to an account designated by Gilead; provided,
however, that in no event shall the following fees be payable more than once
with respect to Products for any particular geographical area or Milestone:



            Milestone                                                      Fee
- ------------------------------------                                      -----
                                                                       
First [**] with respect to a Product                                      $[**]

First [**] with respect to a Product                                      $[**]

First [**] with respect to a Product                                      $[**]

First [**] with respect to a Product                                      $[**]

First [**] with respect to a Product                                      $[**]

First [**] with respect to a Product                                      $[**]


                                       9.


         3.3      Royalties.

                  (a)      Royalty on Products. EyeTech shall pay Gilead a
royalty payment on Net Sales of Products that are made or sold during the
Royalty Term and that are sold by EyeTech, its Affiliates or sublicensees (the
"Royalty") according to the following rates, as adjusted in accordance with
Sections 3.3(b) below:

                           (i)      [**] percent ([**]%) of Net Sales in the
United States for the first [**] million dollars ($[**]) in Net Sales in the
United States in a given Calendar Year;

                           (ii)     [**] percent ([**]%) of Net Sales in the
United States for the next [**] dollars ($[**]), up to and including, [**]
dollars ($[**]) in Net Sales during the same Calendar Year;

                           (iii)    [**] percent ([**]%) of Net Sales in the
United States in excess of [**] dollars ($[**]) during the same Calendar Year;
and

                           (iv)     [**] percent [**]%) of Net Sales outside the
United States in the same Calendar Year.

         By way of example, if, in the year 2005, EyeTech Net Sales in the
United States were equal to [**] dollars ($[**]), and [**] dollars ($[**])
outside the United States, then the Royalty payable to Gilead hereunder would
equal [**] dollars ($[**]), calculated in the following manner:



AMOUNT OF NET SALES                               ROYALTY RATE           ROYALTY
- ----------------------------                      ------------           -------
                                                                   
First $[**] (United States)                           [**]%               $ [**]
Next $[**] (United States)                            [**]%               $ [**]
Next $[**] (United States)                            [**]%               $ [**]
$[**] (outside United States)                         [**]%               $ [**]
- ----------------------------                                              ------
       Total Royalty                                                      $ [**]


         By way of further example, if, through the second Calendar Quarter in
the year 2005, EyeTech Net Sales in the United States were equal to [**] dollars
($[**]), and [**] dollars ($[**]) outside the United States, then the Royalty
payable to Gilead hereunder after such Calendar Quarter would equal [**] dollars
($[**]), calculated in the following manner:



AMOUNT OF NET SALES                               ROYALTY RATE           ROYALTY
                                                  ------------           -------
                                                                   
First $[**] (United States)                           [**]%               $ [**]
Next $[**] (United States)                            [**]%               $ [**]
$[**] (outside United States)                         [**]%               $ [**]
- ----------------------------                                              ------
       Total Royalty                                                      $ [**]


                                      10.


                  (b)      Offset. Notwithstanding the forgoing, on a country by
country and Product by Product basis, EyeTech may credit against Net Sales [**]
percent ([**]%) of any royalties it must pay to any Third Party on any Product:
(1) pursuant to any licenses necessary to practice the License; or (2) resulting
from any litigation (including settlement thereof) under Section 6.16; provided,
however, for purposes of this Section 3.3(b) that the applicable royalty rates
used for calculation of Royalties payable to Gilead shall not be reduced to less
than [**] percent ([**]%) of the royalty rates(s) otherwise applicable pursuant
to Section 3.3(a).

         3.4      Payment; Report. All Royalties payable to Gilead under this
Agreement shall be paid in U.S. dollars within sixty (60) days of the end of
each Calendar Quarter or as otherwise specifically provided herein by Federal
Reserve electronic wire transfer in immediately available funds to an account
designated by Gilead. At the time of payment of Royalties, EyeTech shall send to
Gilead a statement with respect to the applicable Calendar Quarter, country by
country and Product by Product, for EyeTech, its Affiliates and sublicensees, of
the amount of aggregate worldwide gross sales and Net Sales, the amount of gross
sales during such Calendar Quarter, an itemized calculation of Net Sales showing
deductions provided for in the definition of Net Sales and in Section 3.3(b),
and, on a cumulative basis for the current Calendar Year, the amount of
Royalties or other payments due on such sales.

         3.5      Exchange Rate; Manner and Place of Payment.

                  (a)      All payments due hereunder from time to time shall be
paid in U.S. Dollars. For purposes of computing such payments, the Net Sales of
Product in countries other than the United States shall be converted into U.S.
Dollars as computed using the average monthly rate of exchange at the time for
such currencies as the rate applicable to the transfer of funds arising from
payments as published in the Wall Street Journal (New York edition). The
currency conversion system used by EyeTech shall be subject to audit by Gilead
as described in Section 3.6 and, if not determined to be a system reflecting the
fair market value of the currencies in question, shall be modified as necessary
to effect currency conversion at fair market value.

                  (b)      Notwithstanding the provisions of Section 3.5(a), if
by reason of any restrictive exchange laws or regulations, EyeTech shall be
unable to convert to U.S. Dollars the amount, determined as above, equivalent to
the amount due by EyeTech hereunder, then EyeTech shall so notify Gilead
promptly and provide an explanation of the circumstances. In such event, EyeTech
shall make all such payments or the balance thereof due hereunder and which is
not paid in foreign currency as provided below, in U.S. Dollars as soon as
reasonably possible after and to the extent that such restrictive exchange laws
or regulations are lifted so as to permit EyeTech to pay amounts due under this
Section 3.5 in U.S. Dollars. EyeTech shall promptly notify Gilead if such
restrictions are so lifted. At its option Gilead shall meanwhile have the right
to request the payment (to it or to its nominee), and, upon request, EyeTech
shall pay or cause to be paid amounts due (or such portions thereof as are
specified by Gilead) in the currency of any other country designated by Gilead
and legally available to EyeTech under the then-existing laws of regulations.
Any payments shall be payable to Gilead by wire transfer at such bank in the
United States as Gilead Sciences shall specify from time to time. Not less than
one (1) Business Day prior to such wire transfer, the remitting party shall
telefax the receiving party advising it of the amount and of the payment to be
made.

                                      11.


         3.6      Audits. EyeTech and its Affiliates and sublicensees shall keep
full and accurate books and records relating to the financial performance of the
Product. During the term of this Agreement plus four (4) years after termination
or expiration of this Agreement, Gilead shall have the right, during regular
business hours and upon reasonable advance notice, to have such books and
records audited by an independent certified accountant so as to verify the
accuracy of the information previously reported to Gilead. Such information
shall be deemed to be Proprietary Information of EyeTech and, as such, subject
to confidentiality obligations pursuant to Section 6.3. The independent
certified account shall keep confidential any Proprietary Information obtained
during such audit and shall report to Gilead only the amounts of Royalties due
and payable. The cost of such audit shall be borne by Gilead; however, in the
event such audit reveals that the Royalties to Gilead constitute an underpayment
of five percent (5%) or more from that revealed by the audit to be actually
owed, the cost of the audit shall be borne by EyeTech. EyeTech shall include in
all sublicenses granted as permitted under Section 2.4 an audit provision
substantially similar to the foregoing requiring the sublicensee to keep full
and accurate books and records relating to the Product and granting Gilead the
right to audit the accuracy of the information reported by the sublicensee in
connection therewith on the same terms as apply to an audit of EyeTech's records
hereunder. The terms of this Section 3.6 shall survive any termination or
expiration or termination of this Agreement for a period of four (4) years.

         3.7      Withholding Taxes. Any and all taxes levied on account of
royalty payments paid or owed from a country in which provision is made in the
law or by regulation for withholding will be deducted from royalty payments paid
Gilead hereunder. EyeTech shall cooperate with Gilead to claim exemption from
such deductions or withholdings under any double taxation or similar agreement
in force from time to time.

         3.8      Sublicensee Obligations. In the event EyeTech sublicenses its
right to sell a Product, such sublicense shall include an obligation for the
sublicensee to account for and report its Net Sales of Products and provide that
Gilead shall have audit rights therefor pursuant to this Section 3 on the same
basis as if such sales were Net Sales of Products by EyeTech, and EyeTech shall
pay royalty payments to Gilead as if the Net Sales of the sublicensee were Net
Sales of EyeTech.

         3.9      Late Payments. Any amounts not paid by EyeTech when due under
this Agreement shall be subject to interest from and including the date payment
is due through and including the date upon which Gilead has collected
immediately available funds in an account designated by Gilead at a rate equal
to the sum of two percent (2%) plus the prime rate of interest quoted in the
Money Rates section of The Wall Street Journal, calculated daily on the basis of
a 360-day year, or similar reputable data source. No special notice by Gilead to
EyeTech of such interest due shall be required.

         3.10     Compulsory License. If either Party learns that a Third Party
has obtained a Compulsory License in any country in the Territory, such Party
shall promptly notify the other Party of such occurrence. If the royalty rate
payable by the grantee of the Compulsory License is less than the royalty rates
applicable in such country set forth in Section 3.3 of this Agreement, then the
applicable royalty rates set forth in Section 3.3 of this Agreement shall be
reduced to the lower royalty rates applicable in such country pursuant to such
Compulsory License for so long

                                      12.


as sales of a Competitive Product are made by any Third Party pursuant to the
Compulsory License.

                                    SECTION 4
                         TERM OF AGREEMENT; TERMINATION

         4.1      Term. The term of this Agreement shall commence upon the
Effective Date and, unless sooner terminated as provided in this Section 4,
expire on the expiration of all Royalty Terms for all Products.

         4.2      Licenses upon Expiration. In the event that the Agreement
expires as set forth in Section 4.1 above without early termination, the License
shall automatically become, at EyeTech's election made at least 90 days prior to
such expiration, either (i) an exclusive, irrevocable, royalty-bearing license,
subject to the surviving provisions of the Agreement, to use and/or sublicense
the use of Know How to make, have made, use, import, have imported, offer for
sale, sell, and have sold Product(s) in the Field in the Territory as it exists
at the time of such expiration, subject to payment by EyeTech to Gilead of a
royalty equal to [**] percent ([**]%) of Net Sales of Products made pursuant to
the license under this Section 4.2(i) after the expiration of this Agreement, or
(ii) a non-exclusive, irrevocable, royalty-free, paid-up license, subject to the
surviving provisions of this Agreement, to use and/or sublicense the use of Know
How to make, have made, use, import, have imported, offer for sale, sell, and
have sold Product(s) in the Field in the Territory as it exists at the time of
such expiration.

         4.3      Termination for Breach. Each Party shall have the right to
terminate this Agreement and its obligations hereunder for material breach by
the other Party, which breach remains uncured for sixty (60) days after written
notice is provided to the breaching Party, or in the case of an obligation to
pay royalty payments or other amounts owing under this Agreement, which breach
remains uncured for thirty (30) days after written notice to the breaching
Party; provided, however, that non-payment of any royalty amounts or other
payments owing under this Agreement, for which the non-paying Party reasonably
disputes the obligation or amounts not paid, shall not be deemed a breach of an
obligation to pay royalty payments or other amounts owing under this Agreement,
provided that the non-paying Party has paid all such amounts not in reasonable
dispute.

         4.4      Termination in Event of Patent Challenge. Gilead shall have
the right to terminate this Agreement if EyeTech challenges the validity of the
Licensed Patents within any country in the Territory, effective thirty (30) days
after EyeTech's receipt of written notice of such termination by Gilead.

         4.5      Reversion of Product Rights.

                  (a)      Termination of Agreement. In the event that this
Agreement is terminated pursuant to Sections 4.3 or 4.4 above, other than for
Gilead's material breach of this Agreement, the License shall terminate
immediately upon such termination.

                  (b)      Loss of License Rights in Country. In the event that
EyeTech permanently loses its right to use and sell Products in any country
other than by reason of any

                                      13.


action or failure to act on the part of Gilead or any party acting on behalf of
Gilead, the License shall terminate with respect to such country.

                  (c)      Transfer of Rights. With respect to any and all
countries in which EyeTech's license rights are terminated pursuant to Sections
4.5(a), 4.5(b), or 6.7(b): (i) such country(ies) shall automatically be removed
from the Territory; (ii) EyeTech hereby grants to Gilead an exclusive, freely
sublicensable license under the EyeTech Rights, which license shall be
royalty-free and paid-up, subject to Section 4.5(d), to make, have made, use,
import, offer for sale, sell and otherwise research, develop and commercialize
formulations of the NX1838 in such countries, and Gilead covenants not to
practice such license until the actual termination of EyeTech's license rights
as to such countries pursuant to Sections 4.5(a) or (b); (iii) EyeTech shall
assign all of its right, title and interest in and to, and shall cooperate in
the transfer of all of, the following related to Products to the extent that
EyeTech Controlled such during the term of this Agreement: (A) INDs and
Regulatory Approvals, (B) all pre-clinical and clinical development protocols,
data, and reports and other information and data (with any clinical data to be
in computer-readable format, where available, and otherwise in printed format,
with no obligation of EyeTech to convert to electronic format any portion of
such clinical data that currently is available only in printed format), (C)
manufacturing development technical reports, (D) toxicology reports, and (E)
such other information and data specifically identified in Exhibit B or of such
type (the preceding (A), (B), (C), (D) and (E) constituting the "Updated Product
Data Package"), (iv) EyeTech shall deliver to Gilead copies of all information,
records and data that it Controls that are reasonably necessary for the
research, development and commercialization of Products, including without
limitation all clinical data relating to Products, forward to Gilead samples of
all chemical and biological materials acquired, made, cloned, synthesized, first
discovered or collected as a result of research development or commercialization
of Products and reasonable necessary to continue the research, development and
commercialization of Products, and take such other actions and execute such
other instruments, assignments and documents as may be necessary to effect the
transfer of rights and materials hereunder to Gilead; and (v) EyeTech shall
provide assistance reasonably requested by Gilead for a period of ninety (90)
days following the date of notice of termination to facilitate the exercise of
the license granted to Gilead in Section 4.5(c)(ii).

                  (d)      Royalties. Any license granted to Gilead pursuant to
Section 4.5(c) shall be subject to payment of a royalty to EyeTech on a
country-by-country basis at a rate equal to: (i) if such license is granted
after initiation of Pivotal Clinical Trials for a Product applicable to such
country, [**] percent ([**]%) of Gilead's net sales of Products in such country,
or (ii) if such license is granted on or after the first Regulatory Approval of
Product in such country, [**] percent ([**]%) of Gilead's net sales of Products
in such country.

         4.6      Accrued Rights and Obligations; Survival. Termination or
expiration of this Agreement for any reason shall be without prejudice to any
rights which shall have accrued to the benefit of either Party prior to such
termination or expiration, including damages arising from any breach hereunder.
The following provisions of this Agreement shall survive the expiration or
termination of this Agreement: Sections 2.3, 4.2, 4.6, 5, 6.3, 6.4, 6.5, 6.9,
6.11(a), 6.12, 6.18, 7, 8. The following provisions of this Agreement shall
survive the expiration of this Agreement to the extent that the license granted
to EyeTech pursuant to Section 4.2 is in effect: Sections 3.4 through 3.9, 4.3,
4.5, 6.2, 6.7(d), 6.7(f), 6.8, 6.11(b), 6.11(c), 6.11(d), 6.13, 6.16 and
6.17(a).

                                      14.


                                    SECTION 5
                         REPRESENTATIONS AND WARRANTIES

         5.1      Corporate Existence and Power. As of the Effective Date, each
Party represents and warrants to the other that it (a) is a corporation duly
organized, validly existing and in good standing under the laws of the state in
which it is incorporated, and (b) has full corporate power and authority and the
legal right to own and operate its property and assets and to carry on its
business as it is now being conducted and as contemplated in this Agreement,
including, without limitation, the right to grant the licenses granted
hereunder.

         5.2      Authority and Binding Agreement. As of the Effective Date,
each Party represents and warrants to the other that it (a) has the corporate
power and authority and the legal right to enter into this Agreement and perform
its obligations hereunder, (b) has taken all necessary corporate action on its
part required to authorize the execution and delivery of the Agreement and the
performance of its obligations hereunder, and (c) the Agreement has been duly
executed and delivered on behalf of such Party, and constitutes a legal, valid
and binding obligation of such Party and is enforceable against it in accordance
with its terms.

         5.3      Title. As of the Effective Date, each Party represents and
warrants to the other that it has sufficient legal and/or beneficial title under
its intellectual property rights necessary to perform activities contemplated
under this Agreement and to grant the licenses contained in this Agreement and
other ownership rights conveyed pursuant to this Agreement

         5.4      No Conflict. Each Party represents and warrants to the other
that it has not entered, and will not enter, into any agreement with any Third
Party which is in conflict with the rights granted to the other Party under this
Agreement, and has not taken and will not take any action that would in any way
prevent it from granting the rights granted to the other Party under this
Agreement, or that would otherwise materially conflict with or adversely affect
the rights granted to the other Party under this Agreement.

         5.5      No Approvals or Consents Required. Each Party represents and
warrants to the other that all necessary consents, approvals and authorizations
of all governmental authorities and other persons or entities required to be
obtained by such Party in order to enter into this Agreement have been obtained.

         5.6      Patents. Gilead represents and warrants to EyeTech that in
Exhibit D, Gilead has in good faith supplied a complete list of all Patents it
Controls as of the Effective Date, that, but for the grant of the License, would
be infringed by the manufacture, use or sale of Products in the Field. If
EyeTech reasonably determines that any Patent Controlled by Gilead or any
Affiliate of Gilead as of the Effective Date should be added to Exhibit D
because EyeTech's manufacture, use or sale of Products would infringe such
Patent, then there shall be no deemed breach of Gilead's representations and
warranties in this Section 5.6 until after the parties negotiate in good faith
regarding the addition of any such Patent to Exhibit D without any additional
financial obligation and are unable to reach agreement on such addition of such
Patent.

         5.7      No Conflict. Each Party represents and warrants to the other
that the execution and delivery of the Agreement by such Party and the
performance of such Party's obligations

                                      15.


hereunder (a) do not conflict with or violate any requirement of applicable law
or regulation or any provision of articles of incorporation or bylaws of such
Party in any material way, and (b) do not conflict with, violate or breach or
constitute a default or require any consent under, any contractual obligation or
court or administrative order by which such Party is bound.

         5.8      Regulatory Documents. Gilead represents and warrants to
EyeTech that:

                  (a)      Gilead has furnished EyeTech with access to a
complete copy of the United States Regulatory Documents for the Product,
including all material amendments and supplements thereto;

                  (b)      the Regulatory Documents have been accepted by, and
Gilead has received no notice that the Regulatory Documents are not in good
standing with, the relevant Regulatory Authorities;

                  (c)      to its knowledge, Gilead has filed with the relevant
Regulatory Authorities all required notices, supplemental applications and
annual or other reports, including adverse experience reports, with respect to
the Regulatory Documents which are material;

                  (d)      Gilead has received no written notice of any
regulatory action by the relevant Regulatory Authorities which may reasonably be
expected to have a material adverse effect on the ability of a Party to obtain
Regulatory Approval for Products based upon the Regulatory Documents.

         5.9      Manufacturing Information. Gilead represents and warrants
that, it has delivered or shall by the Delivery Date deliver to EyeTech all of
the Transferred Assets and the Manufacturing Information.

         5.10     Product Quality. Gilead hereby represents and warrants that
all Product Inventory that is provided to EyeTech pursuant to the terms of this
Agreement has been manufactured in compliance with all laws, rules and
regulations (including without limitation, all applicable IND applications)
applicable to the conduct of Gilead's Phase I clinical trial for a Product.

         5.11     Implied Warranties. EXCEPT AS EXPRESSLY PROVIDED IN THIS
SECTION 5, GILEAD MAKES NO REPRESENTATION OR WARRANTY AS TO THE PATENTS,
LICENSED PATENTS, KNOW-HOW, THE TRANSFERRED ASSETS, PRODUCTS, ITS INVENTORY OF
PRODUCTS OR NX1838, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW,
BY STATUTE OR OTHERWISE, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT OF THIRD
PARTY RIGHTS, OR OTHERWISE, AND GILEAD SPECIFICALLY DISCLAIMS ANY AND ALL
IMPLIED OR STATUTORY WARRANTIES. Without limiting the foregoing, EyeTech
acknowledges that it has not and is not relying upon any implied warranty,
including without limitation implied warranties of merchantability, fitness for
a particular purpose, non-infringement of third party rights, or upon any
representation or warranty whatsoever as to the prospects (financial, regulatory
or otherwise), or the validity or likelihood of success, of any Product after
the Effective Date.

                                      16.


                                    SECTION 6
               ADDITIONAL COVENANTS AND AGREEMENTS OF THE PARTIES

         6.1      Governmental Filings. Gilead and EyeTech each agree to prepare
and file whatever filings, requests or applications are required to be filed
with any governmental authority in connection with this Agreement and to
cooperate with one another as reasonably necessary to accomplish the foregoing.
Without limiting the generality of the foregoing, prior to, or within five (5)
Business Days following, the assignment, transfer and conveyance by Gilead to
EyeTech of the Transferred Assets pursuant to Section 2.2, Gilead shall have
submitted to the relevant Regulatory Authorities the information required of a
former owner of regulatory filings with respect to the Product, and EyeTech
shall submit to the relevant Regulatory Authorities the information required of
a new owner of regulatory filings with respect to the Product.

         6.2      Compliance with Law. EyeTech shall comply with all
supranational, national, federal, state, provincial and other local laws and
regulations applicable to EyeTech's manufacture, use, development, marketing and
sale of the Product. Without limiting the generality of the foregoing sentence,
EyeTech shall not promote the Product in any manner in conflict with any
applicable laws or regulations.

         6.3      Proprietary Information; Exceptions. Each Party will maintain
all Proprietary Information received by it under this Agreement in trust and
confidence and will not disclose any such Proprietary Information to any Third
Party or use any such Proprietary Information for any purposes other than those
necessary or permitted for performance under this Agreement. In particular,
EyeTech shall not use any Know How for the manufacture or sale of any product
other than a Product in the Field. Each Party may use such Proprietary
Information only to the extent required to accomplish the purposes of this
Agreement. Proprietary Information shall not be used for any purpose or in any
manner that would constitute a violation of any laws or regulations, including
without limitation the export control laws of the United States. Proprietary
Information shall not be reproduced in any form except as required to accomplish
the intent of this Agreement. No Proprietary Information shall be disclosed to
any employee, agent, consultant, Affiliate, or sublicensee who does not have a
need for such information. To the extent that disclosure is authorized by this
Agreement, the disclosing Party will obtain prior agreement, from its employees,
directors, agents, consultants, Affiliates, sublicensees or clinical
investigators to whom disclosure is permitted to be made, to obligations to hold
in confidence and not make use of such information for any purpose other than
those permitted by this Agreement, that are at least as restrictive as those of
this Section 6.3. Each Party will use at least the same standard of care as it
uses to protect its own Proprietary Information of a similar nature to ensure
that such employees, agents, consultants and clinical investigators do not
disclose or make any unauthorized use of such Proprietary Information, but no
less than reasonable care. Each Party will notify the other within two (2)
Business Days upon discovery of any unauthorized use or disclosure of the
Proprietary Information.

         Proprietary Information shall not include any information which, as
shown by competent proof:

                  (a)      is now, or hereafter becomes, through no act or
failure to act on the part of the receiving Party, its employees or contractors
in breach hereof, generally known or available;

                                      17.


                  (b)      is known by the receiving Party at the time of
receiving such information, as evidenced by its contemporaneous written records;

                  (c)      is hereafter furnished to the receiving Party by a
Third Party, as a matter of right and without restriction on disclosure;

                  (d)      is independently developed by the receiving Party
without any breach of this Agreement, as shown by independent, contemporaneous,
written records; or

                  (e)      is the subject of a prior, express, written
permission to disclose provided by the disclosing Party.

         Notwithstanding any other provision of this Section 6.3, (i) the
Parties agree that they shall issue a press release in the form attached hereto
as Exhibit F, and (ii) either Party may disclose such terms to bona fide
potential corporate partners, to the extent required or contemplated by this
Agreement, and to financial underwriters and other Third Parties with a need to
know such information, provided that all such disclosures shall be made only to
such Third Parties under an obligation of confidentiality and appropriately
limited use.

         6.4      Authorized Disclosure. Notwithstanding any other provision of
this Agreement, each Party may disclose Proprietary Information if such
disclosure:

                  (a)      is in response to a valid order of a court or other
governmental body of the United States or a foreign country, or any political
subdivision thereof; provided, however, that the receiving Party shall first
have given notice to the other Party hereto and shall have made a reasonable
effort to obtain a protective order requiring that the Proprietary Information
so disclosed be used only for the purposes for which the order was issued;

                  (b)      is otherwise required by governmental law, rule or
regulation, including without limitation rules or regulations of the U.S.
Securities and Exchange Commission, or by rules of the National Association of
Securities Dealers; or

                  (c)      is otherwise necessary to file or prosecute patent
applications, prosecute or defend litigation or comply with applicable
governmental regulations or otherwise establish rights or enforce obligations
under this Agreement, but only to the extent that any such disclosure is
necessary. Under no circumstances will EyeTech disclose publicly proprietary
features of Gilead manufacturing technology for NX1838; provided, however, that
Gilead shall cooperate with EyeTech to disclose such information to the extent
required to provide EyeTech with reasonable protection from liability by reason
of this prohibition on disclosure.

         6.5      Return of Proprietary Information. In the event that the
License terminates or expires, EyeTech shall promptly return all Proprietary
Information received by it from Gilead.

         6.6      Expenses. Gilead and EyeTech shall each bear their own direct
and indirect expenses incurred in connection with the negotiation and
preparation of this Agreement and, except as set forth in this Agreement, the
performance of the obligations contemplated hereby.

                                      18.


         6.7      Efforts.

                  (a)      EyeTech shall use Reasonable Diligence to develop,
obtain Regulatory Approval for, and commercialize Product(s) in the Territory
and shall be solely responsible for all related development, regulatory and
commercialization efforts and costs; provided, however, with respect to
countries in the Territory that are not Major Countries (such countries,
"Non-Major Countries"), EyeTech shall have the right to determine, on a country
by country basis using its reasonable discretion not to pursue Regulatory
Approval in such Non-Major Country because commercialization of the Product is
not economically feasible for EyeTech. EyeTech shall provide Gilead with written
notice of all decisions by EyeTech to not pursue development, Regulatory
Approval or commercialization in a country in the Territory for a Product in the
Field for any reason within thirty (30) days of such decision.

                  (b)      In the event EyeTech or its sublicensees fail to
undertake Reasonable Diligence in developing, obtaining Regulatory Approval of,
and/or commercializing Products in one or more Major Countries in the Territory,
such failure shall (i) automatically cause the License to terminate with respect
to such Major Country(ies) and have the consequences set forth in Section 4.5(c)
with respect to any such Major Country(ies); and (ii) shall entitle Gilead to
terminate this Agreement for material breach under Section 4.3 if there have
been such failures of diligence applying to four (4) or more Major Countries,
with the consequences set forth in Section 4.5(c); provided in each case that
EyeTech (or its sublicensee) does not cure such failure within ninety (90) days
of written notice from Gilead specifying its belief that such failure has
occurred and the reasons therefor. Gilead shall not be entitled to exercise the
foregoing termination rights if EyeTech reasonably disputes Gilead's contention
that EyeTech has failed in such Reasonable Diligence until after the Parties
have first completed dispute resolution procedures pursuant to Section 8.9.

                  (c)      EyeTech's Responsibilities. EyeTech shall be
responsible, at its sole expense, for all development of, regulatory activities
relating to, and commercialization of Products in the Territory beginning on the
Effective Date, including performing clinical development of Products within the
Territory using standard pharmaceutical industry practices, and making all
regulatory filings necessary to obtain Regulatory Approvals of Products in the
Territory. Within thirty (30) days of the Effective Date, EyeTech shall provide
to Gilead a formal clinical development plan for Products in the Field in the
Territory (the "Development Plan"), pursuant to which EyeTech will carry out
development of Products under this Agreement, which shall be reasonably
satisfactory to Gilead. The Development Plan shall be subject to amendment by
EyeTech from time to time, with notice and copy of such amended Development Plan
to Gilead; provided, however, (i) Gilead shall have the right to review such
proposed amendment prior to its adoption; (ii) EyeTech shall in good faith
consider any reasonable comments and considerations raised by Gilead within five
(5) Business Days of Gilead's receipt of such proposed amendment; and (iii) such
proposed amendment is consistent with EyeTech's obligations of Reasonable
Diligence pursuant to Sections 6.7(a) and (b).

                  (d)      Regulatory Filings and Matters. EyeTech will file
such regulatory filings as may be necessary to obtain Regulatory Approvals of
Products within the Territory. EyeTech will be responsible for all
communications with all supranational, regional, federal, state, provincial or
other local regulatory agencies, department, bureaus and other governmental

                                      19.


authorities with jurisdiction over Regulatory Approvals in connection with such
filings. EyeTech will keep Gilead informed of the status of such filings in each
country, and will provide Gilead with at least sixty (60) days advance notice of
the final submission of an application for Regulatory Approval in any country of
the Territory. EyeTech will promptly advise Gilead each time that it obtains
Regulatory Approval of Products in a country of the Territory. EyeTech shall be
responsible for the reporting of adverse events related to the use of Products
marketed by EyeTech, its Affiliates or sublicensees in the Territory.

                  (e)      Reporting; Meetings. Prior to February 1, May 1,
August 1 and November 1 of each Calendar Year, EyeTech will submit to Gilead,
written reports summarizing the status and progress of the clinical development,
marketing and commercialization efforts for each Product in sufficient detail so
as to allow Gilead to monitor EyeTech's compliance with Section 6.7(a). During
March and September of each Calendar Year, senior executive and scientific
personnel of EyeTech will meet with Gilead representatives to report on the
status of development and commercialization of Products and to consult as to
modifications in the development plan referenced in Section 6.7(c).

         6.8      Pricing. EyeTech shall determine, in its sole discretion, the
pricing, discounting policy and other commercial terms relating solely to
Products. EyeTech agrees that EyeTech, its Affiliates and its sublicensees shall
not subject the selling price of Products to abnormal discounts taken against
Products in order to achieve sales of other products.

         6.9      Export Control. This Agreement is made subject to any
restrictions concerning the export of products or technical information from the
United States of America or other countries which may be imposed upon or related
to Gilead or EyeTech from time to time. Each Party agrees that it will not
export, directly or indirectly, any technical information acquired from the
other Party under this Agreement or any products using such technical
information to a location or in a manner that at the time of export requires an
export license or other governmental approval, without first obtaining the
written consent to do so from the appropriate agency or other governmental
entity.

         6.10     Inability to Develop or Commercialize. EyeTech represents that
it has, and covenants that it will maintain adequate resources and expertise to
fulfill its obligations under this Agreement. During the term of this Agreement,
EyeTech shall provide such information that Gilead may request that is
reasonably necessary for Gilead to verify that EyeTech has adequate resources
and expertise to fulfill its obligations under this Section 6.10.

                                      20.


         6.11     Compliance with Laws; Cooperation; Maintenance of Original
Documents.

                  (a)      Each Party shall carry out its activities pursuant to
this Agreement in compliance with all applicable supranational, national, state,
provincial and local laws, rules, regulations and guidances.

                  (b)      Gilead and EyeTech each agree to use all commercially
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary or proper to make effective the
transactions contemplated by this Agreement, including such actions as may be
reasonably necessary to obtain approvals and consents of governmental Persons
and other Persons (including, without limitation, all applicable drug listing
and notifications to the relevant Regulatory Authority identifying EyeTech as
the licensee of the Product), in each case as reasonably necessary to allow
EyeTech to develop, obtain Regulatory Approvals for, and commercialize Products
as provided in this Agreement; provided that no Party shall be required in
connection with such activities to (1) make any payment (other than as expressly
required pursuant to this Agreement), or (2) assume any other material
obligation not otherwise required to be assumed by this Agreement.

                  (c)      For so long as EyeTech, its Affiliates or
sublicensees is making, using or selling Products, Gilead shall store and
maintain all original Manufacturing Information in a secure location in
accordance with practices customary for Gilead and the pharmaceutical industry
for regulatory documents and in compliance with applicable laws and regulations,
and, upon proper notice from a Regulatory Authority of competent jurisdiction
over Products, shall make such Manufacturing Information reasonably available to
such Regulatory Authority.

                  (d)      EyeTech shall store and maintain all original Updated
Product Data Package in a secure location in accordance with practices customary
for EyeTech and the pharmaceutical industry for regulatory documents and in
compliance with applicable laws and regulations.

         6.12     Cooperation. If either Party shall become engaged in or
participate in any investigation, claim, litigation or other proceeding with any
Third Party, including any proceeding before a Regulatory Authority, relating in
any way to the Product or any of the Licensed Patents the other Party shall
cooperate in all reasonable respects with such Party in connection therewith,
including, without limitation, using its reasonable efforts to make available to
the other Party such Party's employees who may be helpful with respect to such
investigation, claim, litigation or other proceeding, provided that, for
purposes of this provision, reasonable efforts to make available any employee
shall be deemed to mean providing a Party with reasonable access to any such
employee at no cost for a period of time not to exceed 24 hours (e.g., three
8-hour Business Days). Thereafter, any such employee shall be made available for
such time and upon such terms and conditions (including, but not limited to,
compensation) as the Parties may mutually agree.

         6.13     Exclusive Rights. The licenses granted under this Agreement to
EyeTech are exclusive, and no Person, including without limitation Gilead, shall
have any right with respect to such licenses during the term of this Agreement,
except as otherwise permitted under this Agreement. Except as otherwise
permitted by this Agreement, Gilead shall refrain from granting

                                      21.


any right to any Third Party relating to NX1838, the Licensed Patents or the
Transferred Assets that would, in any manner, violate the terms of or conflict
with the rights granted to EyeTech pursuant to this Agreement.

         6.14     Patent Prosecution and Maintenance.

                  (a)      Prosecution of Patents. Licensed Patents shall be
prosecuted and maintained in the Territory by Gilead using diligent efforts, at
Gilead's expense, except as otherwise provided in this Section 6.14(a). If
Gilead reasonably determines that it has no material or commercially useful
application for a Licensed Patent, then EyeTech shall have the right to have
Gilead prosecute and maintain such Licensed Patents or file for such patent term
extension therefor at EyeTech's sole expense. EyeTech shall bear all reasonable
costs of any inter partes patent proceeding, including without limitation
oppositions, interferences or contested re-examinations, which proceeding shall
be conducted under the control of Gilead.

                  (b)      EyeTech shall assist Gilead in obtaining patent
extensions and supplementary protection certificates, and provide such other
assistance as reasonably requested by Gilead in connection with the prosecution
and maintenance of the Licensed Patents in any part of the Territory at
EyeTech's sole expense.

         6.15     Infringement of Licensed Patents.

                  (a)      Notice. Each Party shall promptly notify the other in
writing of any alleged infringement by Third Parties of any Licensed Patent
within the Territory and provide any information available to that Party
relating to such alleged infringement or misappropriation. EyeTech shall have no
rights with respect to any infringement of Licensed Patents that occurs outside
of the Field and/or outside the Territory except the right to receive notice
pursuant to this Section 6.15(a).

                  (b)      Enforcement of Licensed Patents against Competitive
Products. If any Licensed Patent is infringed by a Third Party in connection
with the manufacture, use, sale, offer for sale or import of a Competitive
Product within the Field and within the Territory ("Competitive Product
Infringement"), EyeTech shall have the primary right, but not the obligation, to
initiate, prosecute and control any action with respect to such infringement in
the Territory, by counsel of its own choice, to secure the cessation of the
infringement or to enter suit against the infringer. Gilead shall have the right
to participate in any such action with respect to the Licensed Patents and to be
represented by counsel of its own choice. If EyeTech fails to bring an action or
proceeding to enforce a Licensed Patent within a period of one hundred twenty
(120) days after having knowledge of infringement of such Licensed Patent, then
Gilead shall have the right to bring and control any such action by counsel of
its own choice, and EyeTech shall have the right to participate in such action
and be represented by counsel of its own choice. If a Party brings any such
action or proceeding under this Section 6.15(b), the other Party agrees to be
joined as a party plaintiff and to give the first Party reasonable assistance
and authority to control, file and prosecute the suit as necessary. The costs
and expenses of the Party bringing suit under this Section 6.15(b) (including
the internal costs and expenses specifically attributable to such suit) shall be
reimbursed first out of any damages or other monetary awards recovered in favor
of the Parties, and any remaining damages shall be treated as Net Sales of

                                      22.


EyeTech in its Territory if EyeTech controlled the action or allocated between
the parties in accordance with their economic interest in the profitability of
Products if Gilead controlled the action. No settlement or consent judgment or
other voluntary final disposition of a suit under this Section 6.15(b) relating
to a Licensed Patent may be entered into without the consent of Gilead, not to
be unreasonably withheld.

                  (c)      Enforcement of Licensed Patents against
Non-Competitive Products. With respect to any infringement of Licensed Patents
within the Field and within the Territory that is not a Competitive Product
Infringement, Gilead shall have the primary right, but not the obligation, to
initiate, prosecute and control any action with respect to such infringement, by
counsel of its own choice, to secure the cessation of the infringement or to
enter suit against the infringer and shall be the "Lead Party" and EyeTech shall
be the "Secondary Party". The Secondary Party shall have the right to
participate in any such action with respect to its Patents and to be represented
by counsel of its own choice. If the Lead Party fails to bring an action or
proceeding to enforce a Licensed Patent within a period of one hundred twenty
(120) days after having knowledge of infringement of such Licensed Patent, then
the Secondary Party shall have the right to bring and control any such action by
counsel of its own choice, and the Lead Party shall have the right to
participate in such action and be represented by counsel of its own choice. If a
Party brings any such action or proceeding hereunder, the other Party agrees to
be joined as a party plaintiff and to give the first Party reasonable assistance
and authority to control, file and prosecute the suit as necessary. The costs
and expenses of the Party bringing suit under this Section 6.15(c) (including
the internal costs and expenses specifically attributable to such suit) shall be
reimbursed first out of any damages or other monetary awards recovered in favor
of the Parties, and any remaining damages shall be paid to Gilead if Gilead
controlled the action, or paid to each Party in proportion to their expenditures
in such action, if EyeTech controlled the action. No settlement or consent
judgment or other voluntary final disposition of a suit under this Section
6.15(c) relating to a Licensed Patent may be entered into without the consent of
Gilead, not to be unreasonably withheld.

         6.16     Infringement of Third Party's Rights.

                  (a)      If the practice of the Licensed Patents through the
manufacture, use or sale of Products by EyeTech, its Affiliates or sublicensees
results in a claim for patent infringement against EyeTech, its Affiliates or
sublicensees, the Party to this Agreement first having notice of that claim
shall promptly notify the other Party in writing. The notice shall set forth the
facts of the claim in reasonable detail.

                  (b)      If a Third Party asserts that a patent or other right
owned by or licensed to it is infringed by the practice of the Licensed Patents
through the manufacture, use or sale of Products by EyeTech, its Affiliates or
sublicensees pursuant to the License, EyeTech may attempt to resolve the problem
raised by the asserted infringement. The matter shall be deemed resolved if
EyeTech obtains: (a) a license permitting EyeTech to manufacture, use and sell
Products in that country on a royalty-free or royalty-bearing basis; (b) a
statement or representation from the Third Party that: (1) no action will be
taken against EyeTech, its Affiliates or its sublicensees, or (2) that the
patent or other right is not infringed by the manufacture, use or sale of
Products by EyeTech, its Affiliates or its sublicensees; or (c) a final judgment
by a court of competent jurisdiction from which no appeal has or can be taken
that the

                                      23.


Third Party's patent(s) alleged to be infringed is invalid, or the Third Party's
patent(s) or other right(s) are unenforceable or not infringed by the
manufacture, use or sale of Products by EyeTech, its Affiliates or sublicensees.
EyeTech shall have the primary right to defend any such claim. Gilead shall have
the right, but not the obligation, to participate in any such suit at its sole
option and at its own expense. Each Party shall reasonably cooperate with the
Party conducting the defense of the claim. Neither Party shall enter into any
settlement that affects the other Party's rights or interests without such other
Party's prior written consent, not to be unreasonably withheld. If EyeTech makes
a payment to any Third Party in the course of defending or settling any claim
brought by a Third Party pursuant to this Section 6.16, EyeTech shall be
entitled to offset a percentage of all such amounts against royalties due to
Gilead hereunder as provided in Section 3.3(b).

         6.17     Manufacturing.

                  (a)      EyeTech shall be solely responsible for the
manufacture of Product following the Effective Date, including without
limitation for clinical trials and commercialization.

                  (b)      The Parties shall enter into an agreement dated as of
the Effective Date (the "Manufacturing Agreement") obligating the Parties to
enter into a clinical supply agreement providing for the fill and finish of
sufficient quantities of Product Inventory to complete a Phase Ib trial
investigating the use of NX1838 for the treatment of age-related macular
degeneration.

         6.18     Use of Names, Logos or Symbols. No Party hereto shall use the
name, trademarks, logos, physical likeness, employee names or owner symbol of
the other Party hereto for any purpose, including, without limitation, in
connection with any private or public securities placements, without the prior
written consent of the affected Party, such consent not to be unreasonably
withheld or delayed so long as such use of name is limited to objective
statements of fact, rather than for endorsement purposes. Nothing contained
herein shall be construed as granting either Party any rights or license to use
any of the other Party's trademarks or trade names without separate, express
written permission of the owner of such trademark or trade name.

                                    SECTION 7
                                 INDEMNIFICATION

         7.1      Indemnification.

                  (a)      Gilead shall indemnify, defend and hold EyeTech (and
its directors, officers, employees, consultants, Affiliates and sublicensees)
(each, an "EyeTech Indemnitee") harmless from and against any and all Damages
incurred or suffered by an EyeTech Indemnitee as a result of Third Party claims,
actions or proceedings (collectively, "EyeTech Claims") to the extent such
EyeTech Claims are a consequence of:

                                    (1)      the breach or alleged breach of any
representation or warranty by Gilead hereunder, or

                                      24.


                                    (2)      the negligence or misconduct of
Gilead in connection with its activities under this Agreement;

except to the extent such EyeTech Claims are a consequence any of the items in
Sections 7.1(b)(1), (2) or (3).

                  (b)      EyeTech shall indemnify, defend and hold Gilead (and
its directors, officers, employees, consultants and Affiliates) (each, a "Gilead
Indemnitee") harmless from and against any and all Damages incurred or suffered
by a Gilead Indemnitee as a result of Third Party claims, actions or proceedings
(collectively, "Gilead Claims") to the extent such Gilead Claims are a
consequence of:

                                    (1)      the breach or alleged breach of any
representation or warranty by EyeTech hereunder;

                                    (2)      the negligence or willful
misconduct of EyeTech in connection with its activities under this Agreement;

                                    (3)      the possession, research,
development, manufacture, use, offer for sale, sale, administration, storage or
transport of NX1838 or Products by EyeTech or its Affiliates or sublicensees;

except to the extent such Gilead Claims are a consequence any of the items in
Sections 7.1(a)(1) or (2).

         7.2      Mechanics. If a Party or its Affiliate has a right to be
indemnified under this Section 7 (the "Indemnified Party"), such Party or
Affiliate (i) shall give prompt notice of such EyeTech Claim or Gilead Claim, as
the case may be (as applicable, a "Claim"), to the other Party (the
"Indemnifying Party") and (ii) subject to Sections 6.15 and 6.16 of this
Agreement, will have the first right to defend any Claims for which it is
entitled to indemnification from the other Party under Section 7.1, with the
cooperation and at the expense of such other Party, provided that it will not
settle any such Claim without the prior written consent of the Indemnifying
Party, which consent shall not be unreasonably withheld. If the Indemnified
Party is defending a Claim, the Indemnifying Party shall have the right to be
present in person or through counsel at substantive legal proceedings. In the
event that the Parties cannot agree as to the application of Section 7.1 to any
Damages or Claim, the Parties may conduct separate defenses of such claim. Each
Party further reserves the right to claim indemnity from the other in accordance
with Section 7.1 upon resolution of the underlying claim.

         7.3      Insurance Coverage. Each Party represents and warrants that it
is covered and will continue to be covered by a comprehensive general liability
insurance program which covers all of each Party's activities and obligations
hereunder in accordance with reasonable pharmaceutical industry standards. Each
Party will provide the other Party with written notice at least fifteen (15)
days prior to any cancellation or material change in such insurance program.
Each Party will maintain such insurance program, or other program with
comparable coverage, beyond the expiration or termination of this Agreement
during the period in which any Product is being commercially distributed or
sold, and for a commercially reasonable period thereafter.

                                      25.


         7.4      Indemnification Payment Adjustments. The amount of any Damages
for which indemnification is provided under this Section 7 shall be reduced to
take account of any net tax benefit and shall be increased to take account of
any net tax detriment arising from the incurrence or payment of any such Damages
or from the receipt of any such indemnification payment and shall be reduced by
the insurance proceeds received and any other amount recovered, if any, by the
Indemnified Party with respect to any Damages; provided, however, that an
Indemnified Party shall not be subject to an obligation to pursue an insurance
claim relating to any Damages for which indemnification is sought hereunder. If
any Indemnified Party shall have received any payment pursuant to this Section 7
with respect to any Damages and shall subsequently have received insurance
proceeds or other amounts with respect to such Damages, then such Indemnified
Party shall pay to the Indemnifying Party an amount equal to the difference (if
any) between (1) the sum of the amount of those insurance proceeds or other
amounts received and the amount of the payment by such Indemnifying Party
pursuant to this Section 7 with respect to such Damages and (2) the amount
necessary to fully and completely indemnify and hold harmless such Indemnified
Party from and against such Damages; provided, however, in no event will such
Indemnified Party have any obligation pursuant to this sentence to pay to such
Indemnifying Party an amount greater than the amount of the payment by such
Indemnifying Party pursuant to this Section 7 with respect to such Damages.

         7.5      Indemnification Payment. Upon the final determination of
liability and the amount of the indemnification payment under this Section 7,
the appropriate Party shall pay to the other in immediately available funds,
within thirty (30) Business Days after such determination, the amount of any
claim for indemnification made hereunder.

         7.6      Survival. The provisions of this Section 7 shall survive any
termination of this Agreement with respect to actions of the Parties during the
term of the Agreement or the term of any license to EyeTech, whichever occurs
later. Each Indemnified Party's rights under this Section 7 shall not be deemed
to have been waived or otherwise affected by such Indemnified Party's waiver of
the breach of any representation, warranty, agreement or covenant contained in
or made pursuant to this Agreement, unless such waiver expressly and in writing
also waives any or all of the Indemnified Party's right under Section 7.

                                    SECTION 8
                                  MISCELLANEOUS

         8.1      Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the Parties hereto and their respective
successors and assigns; provided, however, that neither Gilead nor EyeTech may
assign any of its rights, duties or obligations hereunder without the prior
written consent of the other, which consent may be withheld in the other's sole
discretion, except that no prior written consent shall be required in the event
that a Third Party acquires substantially all of the assets or outstanding
shares of, or merges with, EyeTech or Gilead, as the case may be. No assignment
of this Agreement or of any rights hereunder shall relieve the assigning Party
of any of its obligations or liability hereunder. Any attempted assignment not
in compliance with this Section 8.1 shall be of no force or effect.

         8.2      Notices. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given if delivered by hand,

                                      26.


prepaid telex, cable, telegram or facsimile and confirmed in writing, or mailed
first class, postage prepaid, by registered or certified mail, return receipt
requested (mailed notices and notices sent by telex, cable or telegram shall be
deemed to have been given on the date received) as follows:

                               If to Gilead, as follows:

                               Gilead Sciences, Inc.
                               333 Lakeside Drive,
                               Foster City, CA 94404
                               Facsimile: (650) 522-5488
                               Attn: Chief Executive Officer

                               With a copy to:

                               Gilead Sciences, Inc.
                               333 Lakeside Drive,
                               Foster City, CA 94404
                               Facsimile: (650) 522-5537
                               Attn: General Counsel

                               If to EyeTech, as follows:

                               EyeTech Pharmaceuticals, Inc.
                               300 East 42nd Street
                               Third Floor
                               New York, N.Y. 10017
                               Facsimile: (212) 883-8883
                               Attn: Chief Executive Officer

                               With a copy to:

                               Duval & Stachenfeld LLP
                               300 East 42nd Street
                               Third Floor
                               New York, N.Y. 10017
                               Facsimile: (212) 883-8883
                               Attn: Harsha Murthy

or in any case to such other address or addresses as hereafter shall be
furnished as provided in this Section 8.2 by any Party hereto to the other
Party.

         8.3      Waiver; Remedies. Any term or provision of this Agreement may
be waived at any time by the Party entitled to the benefit thereof by a written
instrument executed by such Party. No delay on the part of Gilead or EyeTech in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of either Gilead or EyeTech of any
right, power or privilege hereunder operate as a waiver of any other right,
power or privilege hereunder nor shall any single or partial exercise of any
right, power or privilege

                                      27.


hereunder preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder.

         8.4      Survival of Representations. Each of the representations and
warranties made in this Agreement shall survive the expiration or termination of
this Agreement only with respect to activities conducted or events occurring
prior to the expiration or termination of the Agreement.

         8.5      Entire Agreement. This Agreement, together with all exhibits
hereto and the Warrant Agreement and the Manufacturing Agreement, constitute the
entire agreement between the Parties with respect to the subject matter hereof
and supersedes all prior agreements or understandings of the Parties relating
thereto.

         8.6      Amendment. This Agreement may be modified or amended only by
written agreement of the Parties hereto.

         8.7      Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute a single instrument.

         8.8      Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of California, excluding its choice of
law rules, except for the application of the Federal Arbitration Act pursuant to
Section 8.9(c)(ii).

         8.9      Dispute Resolution.

                  (a)      The Parties recognize that disputes as to certain
matters may from time to time arise during the term of this Agreement which
relate to either party's rights and/or obligations hereunder or thereunder. It
is the objective of the Parties to establish procedures to facilitate the
resolution of disputes arising under this Agreement in an expedient manner by
mutual cooperation and without resort to litigation. To accomplish this
objective, the Parties agree to follow the procedures set forth in this Section
8.9 if and when a dispute arises under this Agreement. In the event of disputes
between the Parties, a Party seeking to resolve such dispute will, by written
notice to the other Party, have such dispute referred to their respective
executive officers designated below or their successors, for attempted
resolution by good faith negotiations within fourteen (14) days after such
notice is received. Said designated officers are as follows:

                  For EyeTech:      Chief Executive Officer
                  For Gilead:       Chief Executive Officer

         In the event the designated executive officers are not able to resolve
such dispute, either party may at any time after the 14 day period invoke the
provisions of Section 8.9(b) hereinafter.

                  (b)      Following settlement efforts pursuant to Section
8.9(a), any dispute, controversy or claim arising out of or relating to the
validity, construction, enforceability or performance of this Agreement,
including disputes relating to alleged breach or to termination of this
Agreement under Section 4, other than disputes which are expressly prohibited
herein from

                                      28.


being resolved by this mechanism, shall be settled by binding Alternative
Dispute Resolution ("ADR") in the manner described below:

                           (i)      If a party intends to begin an ADR to
resolve a dispute, such party shall provide written notice (the "ADR Request")
to counsel for the other party informing such other party of such intention and
the issues to be resolved. From the date of the ADR Request and until such time
as any matter has been finally settled by ADR, the running of the time periods
contained in Section 4.3 as to which party must cure a breach of this Agreement
shall be suspended as to the subject matter of the dispute.

                           (ii)     Within ten (10) business days after the
receipt of the ADR Request, the other party may, by written notice to the
counsel for the party initiating ADR, add additional issues to be resolved.

                           (iii)    Disputes regarding the scope, validity and
enforceability of Patents shall not be subject to this Section 8.9, except for
Section 8.9(a), and shall be submitted to a court of competent jurisdiction.

                  (c)      The ADR shall be conducted pursuant to Comprehensive
Rules for Commercial, Real Estate and Construction Disputes then in effect,
except that notwithstanding those rules, the following provisions shall apply to
the ADR hereunder:

                           (i)      The arbitration shall be conducted by a
panel of three arbitrators (the "Panel"). The Panel shall be selected from a
pool of retired independent federal judges to be presented to the Parties by
JAMS.

                           (ii)     The time periods set forth in the JAMS rules
shall be followed, unless a party can demonstrate to the Panel that the
complexity of the issues or other reasons warrant the extension of one or more
of the time tables. In such case, the Panel may extend such time tables, but in
no event shall the time tables being extended so that the ADR proceeding extends
more than 18 months from its beginning to the Award. In regard to such time
tables, the Parties (i) acknowledge that the issues that may arise in any
dispute involving this Agreement may involve a number of complex matters and
(ii) confirm their intention that each party will have the opportunity to
conduct complete discovery with respect to all material issues involved in a
dispute within the framework provided above. Within such time frames, each party
shall have the right to conduct discovery in accordance with the Federal Rules
of Civil Procedure. The Panel shall not award punitive damages to either party
and the Parties shall be deemed to have waived any right to such damages. The
Panel shall, in rendering its decision, apply the substantive law of the State
of California, without regard to its conflict of laws provisions, except that
the interpretation of and enforcement of this Section 8.9(c)(ii) shall be
governed by the Federal Arbitration Act. The Panel shall apply the Federal Rules
of Evidence to the hearing. The proceeding shall take place in San Francisco,
San Mateo or Santa Clara Counties, California. The fees of the Panels and JAMS
shall be paid by the losing Party which shall be designated by the Panel. If the
Panel is unable to designate a losing party, it shall so state and the fees
shall be split equally between the Parties.

                                      29.


                           (iii)    The Panel is empowered to award any remedy
allowed by law, including money damages, multiple damages, prejudgment interest
and attorneys' fee, and to grant final, complete, interim, or interlocutory
relief, including injunctive relief but excluding punitive damages.

                           (iv)     Except as set forth in Section 8.9(c)(ii),
above, each party shall bear its own legal fees. The Panel shall assess its
costs, fees and expenses against the party losing the ADR unless it believes
that neither party is the clear loser, in which case the Panel shall divide such
fees, costs and expenses according to the Panel's sole discretion.

                           (v)      The ADR proceeding shall be confidential and
the Panel shall issue appropriate protective orders to safeguard each party's
Proprietary Information. Except as required by law, no party shall make (or
instruct the Panel to make) any public announcement with respect to the
proceedings or decision of the Panel without prior written consent of each other
party. The existence of any dispute submitted to ADR, and the award, shall be
kept in confidence by the Parties and the Panel, except as required in
connection with the enforcement of such award or as otherwise required by
applicable law.

                  (d)      The Parties agree that judgment on any arbitral award
issued pursuant to this Section 8.9 shall be entered in the United States
District Court for the Northern District of California or, in the event such
court does not have subject matter jurisdiction over the dispute in question,
such judgment shall be entered in the Superior Court of the State of California,
in the County of San Mateo, and each Party agrees to the co-exclusive personal
jurisdiction of such courts for the purpose of entry of such a judgment.

         8.10     Captions. All section titles or captions contained in this
Agreement, in any Exhibit referred to herein and the table of contents, if any,
to this Agreement are for convenience only, shall not be deemed a part of this
Agreement and shall not affect the meaning or interpretation of this Agreement.

         8.11     No Third Party Rights or Obligations. Except as expressly
provided in Section 7, no provision of this Agreement shall be deemed or
construed in any way to result in the creation of any rights or obligation in
any Person not a Party to this Agreement.

         8.12     Severability. If any provision of this Agreement is found or
declared to be invalid or unenforceable by any court or other competent
authority having jurisdiction, such finding or declaration shall not invalidate
any other provision hereof, and this Agreement shall thereafter continue in full
force and effect. In the event any such provision is so declared invalid or
unenforceable, the Parties shall negotiate an alternative provision that closely
approximates the Parties' intent, to the extent allowable under law.

         8.13     Attachments. All Exhibits and other attachments to this
Agreement are by this reference incorporated herein and made a part of this
Agreement.

         8.14     Disclaimer of Agency. This Agreement shall not constitute any
Party the legal representative or agent of another, nor shall any Party have the
right or authority to assume, create, or incur any Third Party liability or
obligation of any kind, express or implied, against or in the name of or on
behalf of another except as expressly set forth in this Agreement.

                                      30.


         8.15     Interpretation. This Agreement has been jointly prepared by
the Parties and their respective legal counsel and shall not be strictly
construed against either Party.

         8.16     Force Majeure. Each of the Parties hereto shall be excused
from the performance of its obligations hereunder (except the payment of money)
in the event such performance is prevented by force majeure, provided that the
non-performing Party promptly provides notice of the prevention to the other
Party. Such excuse shall be continued so long as the condition constituting
force majeure continues and the non-performing Party makes and continues to make
reasonable efforts to remove or overcome the condition. For the purposes of this
Agreement, force majeure shall mean any act of God, fire, casualty, flood, war,
earthquake, strike, failure of public utilities, any act, exercise, assertion or
requirement of governmental authority, accident, epidemic, destruction of
facilities, or such other similar occurrences beyond the control of the Party
whose performance is affected.

         8.17     Limitation of Liability. IN NO EVENT SHALL EITHER PARTY OR ITS
RESPECTIVE AFFILIATES AND PERMITTED SUBLICENSEES BE LIABLE FOR SPECIAL,
EXEMPLARY, CONSEQUENTIAL OR PUNITIVE DAMAGES, WHETHER IN CONTRACT, WARRANTY,
TORT, STRICT LIABILITY OR OTHERWISE, EXCEPT TO THE EXTENT SUCH PARTY MAY BE
REQUIRED TO INDEMNIFY THE OTHER PARTY FROM SUCH DAMAGES CLAIMED BY THIRD PARTIES
UNDER SECTION 7.

         8.18     No Assumption of Obligations. Except as expressly provided in
this Agreement: (i) neither Party is assuming any of the other Party's
responsibilities, duties (including, without limitation, compliance with all
applicable laws and regulations), obligations (including payment obligations),
claims, Damages, liabilities, burdens and problems of any nature whatsoever
(collectively, "Obligations"), whether by operation of law or otherwise, and
(ii) without limiting the foregoing, EyeTech is not assuming any of Gilead's
Obligations with respect to Transferred Assets.

                                      31.


         IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.

GILEAD SCIENCES, INC.                        EYETECH PHARMACEUTICALS, INC.

By: /s/Mark L. Perry                         By: /s/David Guyer
    ---------------------------------            -------------------------------
    Mark L. Perry                                David Guyer
    Senior Vice President, Operations            Chief Executive Officer

NEXSTAR PHARMACEUTICALS, INC.

By: /s/Mark L. Perry
    ---------------------------------
    Mark L. Perry
    Chief Financial Officer

                                      32.


                                    EXHIBIT A

                                     NX1838

         The compound NX1838, is [**]

                                      A-1.


                                    EXHIBIT B

                    PRODUCT DATA PACKAGE INFORMATION AND DATA

           Regulatory
               IND
               Pre-IND submissions
               IND correspondence
               IND supplements

           Clinical
               Case Report Forms by site
               1838 Project Files
               Investigator Files by Site

           Manufacturing (API)
               Synthesis Batch Records
               Accompanying Analytical Data
               Records of Failed Lots

           Manufacturing (DP)
               Master Production Records
               Bills of Materials
               Assay methods
               Finished Product Specifications

                                      B-1.


                                    EXHIBIT C

                                PRODUCT INVENTORY

NX1838 PHYSICAL COUNT SHEET

                                              DATE: 03/23/00
                                               COUNTED BY: Felicia Yu, Judy Liou



                                                                     Expiration Date     Physical Count
                                                                     ---------------     --------------
                                                                                   
NX1838 Lots
     LOT# 131901E  3MGS IN 100 MICROLITERS                               2/29/00                 16
     LOT# 141901E  4MGS IN 100 MICROLITERS                              04/13/99                 50
     LOT# 251901E  3MGS IN 200 MICROLITERS                               7/14/99                149

Ingredients
     1106510911    NX 1838 APTAMER           LOT# 97000690              10/14/99              792.8
     1106510911    NX 1838 APTAMER           LOT# 98000122              10/28/99               5441
     1100500911    SODIUM PHOSP MONOBASIC    LOT# 97000299                7/3/02            11527.1
     1100600911    SODIUM PHOSP DIBASIC      LOT# 97000649              12/18/02              11435
     1200110911    SODIUMCHLORIDI            0.9% INJECTION              5/31/00                 20
     1645080911    SYRINGES                  1 ML W/NEEDLE                 03/01               1100

Other clinical batches
     101804E       1/2 MG DOSE EXPIRE 10/99                                10/99                 12
     111803E       1 MG DOSE EXPIRE 10/99                                  10/99                 12
     201901E       1.5 MG PER SYRINGES EXPIRE 07/00                         7/00                 21
     211901E       2.5 MG PER SYRINGES EXPIRE 06/00                         6/00                 25
     151805E       91599400000 EXPIRE 03/99                                 3/99                  3
     121802E       91299400000 EXPIRE 05/99                                 5/99                  2


                                      C-1.


                                    EXHIBIT D

                                LICENSED PATENTS

                        
[**]                       [**]




                                      D-1.

                   "[AMENDMENT NO. 1]" TO LICENSING AGREEMENT

     THIS AMENDMENT NO. 1 (the "Amendment") is entered into as of the 9th day
of May, 2000, by and among GILEAD SCIENCES, INC., a Delaware corporation,
NEXSTAR PHARMACEUTICALS, INC., a Delaware corporation (these two parties
collectively referred to herein as "Gilead") and EYETECH PHARMACEUTICALS, INC.,
a Delaware corporation (hereinafter "EyeTech"), to amend the Licensing
Agreement made effective as of March 31, 2000 (the "Agreement") by and among
Gilead and EyeTech, whereby Gilead licensed EyeTech to further clinically
develop and commercialize Gilead's proprietary compound NX 1838. Capitalized
terms used and not otherwise defined herein shall have the meanings given them
in the Agreement.

                                    RECITALS

     WHEREAS, the Parties desire to amend the Agreement to define the term
"Proprietary Information" which was employed but not defined in the Licensing
Agreement, and to set the term of survival for the confidentiality,
nondisclosure and nonuse obligations pertaining to such Proprietary Information.

     NOW, THEREFORE, in consideration of the foregoing and the covenants and
promises contained in this Amendment, and the Parties hereby amend the
Agreement as follows:

1. Section 1.1 is hereby amended to insert the following defined term and
definition immediately following the definition for Product Inventory:

          "Proprietary Information" shall mean, subject to Section 6.3 of the
     Agreement, any Know-How, patent applications or other confidential
     information of a Party disclosed by such Party to another Party in the
     course of negotiating or performing under this Agreement or any other
     written agreement between the Parties entered into on or prior to May 9,
     2000. Proprietary Information shall be deemed to include the terms of this
     Agreement and the terms of any other written agreement between the Parties
     entered into on or prior to May 9, 2000.

2. Section 6.3 is hereby amended to add the following new paragraph to the end
of such section:

          The obligations of confidentiality, nondisclosure and nonuse contained
     in this Section 6.3 shall survive any expiration or termination of this
     Agreement for a period of five (5) years.

3. The Agreement, as amended by this Amendment, shall remain in full force and
effect according to its terms.

4. This Amendment may be executed in any number of counterparts, each of which
shall be deemed an original, and all of which taken together shall constitute
one and the same instrument.

5. This Amendment shall be effective as of the date first written above.

     IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment
effective as of the date first written above.


GILEAD SCIENCES, INC.                  EYETECH PHARMACEUTICALS, INC.

By:  /s/ Mark L. Perry                 By:  /s/ David Guyer
   ---------------------------------      ----------------------------------

Name:  Mark L. Perry                   Name:  David Guyer

Title: Senior Vice President,          Title: Chief Executive Officer
       Operations


NEXSTAR PHARMACEUTICALS, INC.

By:  /s/ Mark L. Perry
   ---------------------------------

Name:  Mark L. Perry

Title: Chief Financial Officer




                   "[AMENDMENT NO. 2]" TO LICENSING AGREEMENT

     THIS AMENDMENT NO. 2 ("the Second Amendment") is entered into as of
December 4, 2001, by and between EyeTech Pharmaceuticals, Inc. a Delaware
corporation ("EyeTech") and Gilead Sciences, Inc., a Delaware corporation
("Gilead"), to amend that certain Licensing Agreement dated as of March 31,
2000, as amended by Amendment No. 1 to Licensing Agreement dated as of May 9,
2000 (the "Agreement") by and between EyeTech and Gilead (as successor in
interest to NeXstar Pharmaceuticals, Inc.). Capitalized terms used and not
otherwise defined herein shall have the meanings given them in the Agreement.

     WHEREAS, EyeTech desires to obtain access to notebooks of Gilead relating
or potentially relating to the compound NX1838;

     WHEREAS, Gilead is willing to provide such access to EyeTech personnel if
the information in such notebooks is kept confidential by EyeTech and its
personnel under the terms of the Agreement;

     WHEREAS, in support of EyeTech's activities under the Agreement, Gilead
would like to provide to EyeTech, and EyeTech would like to receive from
Gilead, certain of Gilead's inventory of VEGF aptamer and potentially a
reference standard possessed by Gilead, as determine by Gilead ("Materials").

     NOW, THEREFOR, in consideration of the foregoing and the covenants
herein, EyeTech and Gilead hereby agree, and the Agreement is hereby amended,
as follows:

1. All information learned, received, extracted or copied by EyeTech from
notebooks or other documents or records of Gilead, or excerpts thereof, that
Gilead provides or makes available to EyeTech after the date hereof shall be
deemed to be Proprietary Information of Gilead and subject to provisions in the
Agreement pertaining to Proprietary Information of Gilead.

2. Nothing in this Second Amendment shall be construed as creating any
obligation of Gilead to provide or make available to EyeTech any notebooks or
other documents or records of Gilead, or excerpts thereof, beyond any such
obligation of Gilead currently existing under the Agreement.

3. Gilead will deliver the materials to EyeTech within fifteen (15) days after
the date hereof.

4. EyeTech shall not and shall not permit any person or entity to (a) administer
any Materials to humans under any circumstances; or (b) administer any Materials
to animals except in compliance with U.S. National Institutes of Health
guidelines and all other applicable laws, rules, and regulations.

5. Nothing in this Amendment shall be construed to grant either Party any right
or license beyond those set forth in the Agreement.

6. GILEAD PROVIDES THE MATERIALS "AS IS", WITH NO WARRANTY, EXPRESS, IMPLIED OR
STATUTORY, INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY, TITLE,
NON-INFRINGEMENT, EXCLUSIVITY, OR FITNESS FOR A PARTICULAR PURPOSE.

7. Solely for purposes of Section 7.1(b) of the Agreement, the Materials will
deemed to included within NX1838.

8. The Agreement, as amended by this Second Amendment, shall remain in full
force and effect according to its terms.

9. This Second Amendment may be executed in any number of counterparts, each of
which shall be deemed an original, and all of which taken together shall
constitute one and the same instrument.

10. This Second Amendment shall be effective as of the date first written above.

     IN WITNESS WHEREOF, the parties hereto have duty executed this Second
Amendment effective as of the date first written above.


EYETECH PHARMACEUTICALS, INC.                GILEAD SCIENCES, INC.

By:    /s/  Harsha Murthy                    By:    /s/  Nicole Onetto
       ----------------------                       -------------------------

Name:  Harsha Murthy                         Name:  Nicole Onetto

Title: V.P. - Business Development &         Title: SVP Medical Affairs
       General Counsel

1



                     AMENDMENT NO. 3 TO LICENSING AGREEMENT

         This Amendment No. 3 to Licensing Agreement (the "Third Amendment")
amends, effective August, 2002, the LICENSING AGREEMENT, itself effective
as of March 30, 2002 and previously amended first as of May 9, 2000 and second
as of December 4, 2001 (as so twice amended, the "Agreement") originally by and
among GILEAD SCIENCES, INC., a Delaware corporation with its principal office
located at 333 Lakeside Drive, Foster City, CA 94404 ("Gilead"), and its
wholly-owned subsidiary, NEXSTAR PHARMACEUTICALS, INC., a Delaware corporation,
on the one hand, and EYETECH PHARMACEUTICALS, INC., a Delaware corporation with
its principal office as of the date hereof located at 500 Seventh Avenue, 18th
Floor, New York, New York 10018 ("EyeTech"), on the other hand, and currently
between Gilead and EyeTech. All capitalized terms used herein and not otherwise
defined shall have the meanings given in the Agreement. All references to
"Sections" and "Articles" are to sections and articles of the Agreement unless
otherwise specified below.

         The Parties hereby amend the Agreement as follows:

     1.  The definition of Net Sales is deleted in its entirety and replaced
with the following:

"`Net Sales' shall mean, with respect to the Product, the gross amount billed or
invoiced by EyeTech, its Affiliates or sublicensees to Third Parties for
Products and Combination Products (defined below), less the following deductions
to the extent included in such billed or invoiced or credited amounts:

               (a)  trade, quantity and cash discounts allowed, but expressly
excluding discounts or allowances offered as part of a package of products that
includes a Product sold by EyeTech, its Affiliates or sublicensees;

               (b)  refunds, chargebacks and any other allowances which
effectively reduce the net selling price;

               (c)  actual product returns, credits and allowances allowed to
customers;

               (d)  rebates actually paid or credited to any governmental agency
(or branch thereof) or to any Third Party payor, administrator or contractee;

               (e)  discounts mandated by, or granted to meet the requirements
of, applicable state, provincial or federal law, wholesaler, including required
chargebacks and retroactive price reductions;

               (f)  transportation, freight, postage charges and other charges
such as insurance, relating thereto, in each case included as a specific line
item on an invoice to such Third Parties; and

               (g)  taxes, excises or other governmental charges upon or
measured by the production, sale, transportation, delivery or use of goods, in
each case included as a specific line item on an invoice to such Third Parties.

                                       2.


If any such sales to Third Parties are made in transactions that are not at
arm's length between the buyer and the seller, then the gross amount to be
included in the calculation of Net Sales shall be the amount that would have
been invoiced had the transaction been conducted at arm's length. Such amount
that would have been invoiced shall be determined, wherever possible, by
reference to the average selling price of the relevant Product in arm's-length
transactions in the relevant country.

If EyeTech, its Affiliate or sublicensee sells a Product in unfinished form to a
Third Party for resale, then the gross amount to be included in the calculation
of Net Sales arising from such sale shall be the amount invoiced by the Third
Party upon resale, in lieu of the amount invoiced by EyeTech, its Affiliates or
sublicensee when selling the Product in unfinished form. Otherwise, where
EyeTech, its Affiliate or sublicensee sells a Product in finished form to a
Third Party that does not require a sublicense under the Licensed Patents for
further resale (a distributor) (each such Third Party hereinafter a
"Distributor"), the amount to be included in the calculation of Net Sales shall
be the price invoiced from EyeTech or its Affiliate or sublicensee to the Third
Party, not the amount invoiced by the Third Party upon resale.

If, in addition to or in lieu of a transfer price paid for quantities of Product
supplied, any Distributor provides consideration to EyeTech, its Affiliate or
sublicensee in connection with any Product or the Distributor's rights or
relationship with EyeTech, its Affiliate or sublicensee in relation thereto,
then such consideration shall be included in the calculation of Net Sales in the
calendar quarter in which it becomes due to EyeTech or its Affiliate or
sublicensee (as applicable).

Notwithstanding the foregoing, amounts received by EyeTech, or its Affiliates or
sublicensees, for the sale of Products among EyeTech and its Affiliates or
sublicensees for resale shall not be included in the computation of Net Sales
hereunder.

Net Sales shall be determined from books and records maintained in accordance
with GAAP, consistently applied throughout the organization and across all
products of the entity whose sales of Product are giving rise to Net Sales.

If any Product (i) contains or is sold with a therapeutically active ingredient
other than NX1838 (such therapeutically active ingredient an "Other Active"),
regardless of whether they are coformulated or physically packaged together, or
(ii) is sold with a mechanical or pharmacological delivery system for the
delivery of such Product (such system, a "Delivery System), (such a Product
including and together with the Other Active or Delivery System, a "Combination
Product") then Net Sales from the Combination Product shall be determined by
multiplying the Net Sales of the Combination Product (as determined without
reference to the calculations of this paragraph) by the fraction A/(A+B), where
A is the average sale price of a Product of the same formulation and dosage when
not sold as part of a Combination Product, and B is the average sale price of
the Other Active or Delivery System when sold separately, or, only if the value
of B cannot be determined, where A+B is the average sales price of the
Combination Product. If A and B can be determined, in no event will the sales
price of the Combination Product be less than the sum of A and B. If both A and
B, and A+B, cannot be determined, then C/(C+D) shall be substituted for A/(A+B)
in such calculation, where C is EyeTech's cost of goods of the Product and D is
EyeTech's cost of goods for the Other Active or Delivery System, determined in
accordance with the method of accounting normally employed by EyeTech in
computing cost of goods sold (which must be in accordance with GAAP consistently
applied throughout EyeTech), provided, however, that the minimum value of

                                       3.


such fraction as used in the calculation of Net Sales shall be 0.9. All average
prices, for purposes of this paragraph, shall be determined on a
country-by-country and product-by-product basis.

For clarity and without limiting the generality of the foregoing, the inclusion
of PEG (polyethylene gylcol) in a Product, because PEG is not a therapeutically
active molecule, will not in itself be deemed to result in a Combination Product
for purposes of the foregoing paragraph."

     2.   The phrase "with a right to sublicense to its Affiliates or (subject
          to Section 2.4) to any other Person" in Section 2.1 is deleted and
          replaced with the following: "with a right (subject to Section 2.4) to
          sublicense to its Affiliates or to any other Person."

     3.   In Section 2.5, the phrase "EyeTech Know-How and EyeTech Patents" in
          the nineteenth (19th) line is deleted and replaced with the following:
          "EyeTech Rights."

     4.   The following words are included in the sentence that is the text of
          Section 2.3, at the end of the sentence: "within the scope of the
          license granted EyeTech in Section 2.1."

     5.   Section 3.3(b) is deleted in its entirety and replaced with the
          following:

     "Offset. Notwithstanding the foregoing, on a country-by-country and
     Product-by-Product basis, EyeTech may credit against Royalties otherwise
     due hereunder on Net Sales of such Product in such country [**] percent in
     any calendar quarter ([**]%) of any royalties it must pay to any Third
     Party on sales of such Product in such country in such calendar quarter:
     (1) pursuant to any licenses necessary to practice the License; or (2)
     resulting from any litigation (including settlement thereof) under Section
     6.16; provided, however, for purposes of this Section 3.3(b) that the
     applicable royalty rates used for calculation of Royalties payable to
     Gilead shall not be reduced to less than [**]percent ([**]%) of the royalty
     rate(s) otherwise applicable pursuant to Section 3.3(a)."

     6.   The following is inserted between the first and second sentences of
          Section 3.7: "EyeTech shall promptly remit any amounts so withheld to
          the appropriate governmental authority and provide Gilead with written
          evidence of such payment."

     7.   Section 4.6 is deleted in its entirety and replaced with the
          following:

     "Accrued Rights and Obligations; Survival. Termination or expiration of
     this Agreement for any reason shall be without prejudice to any rights
     which shall have accrued to the benefit of either Party prior to such
     termination or expiration, including damages arising from any breach
     hereunder. The following provisions of this Agreement shall survive any
     expiration or termination of this Agreement: Sections 2.3, 3.6, 4.2, 4.6,
     5, 6.3, 6.4, 6.5, 6.9, 6.11(a), 6.12, 6.18, 7, and 8. In addition, the
     following provisions of this Agreement shall survive the expiration of this
     Agreement to the extent that the license granted to EyeTech pursuant to
     Section 4.2 is in effect: Sections 3.4 through 3.9, 4.3, 4.5, 6.2,
     6.7(c)-(e), 6.8, 6.9, 6.11(b), 6.11(c), 6.11(d), 6.13, 6.16 and 6.17(a)."

     8.   The last sentence of Section 6.13 is deleted in its entirety and
          changed to read as follows: "Except as otherwise permitted by this
          Agreement or required by law, Gilead shall refrain from granting any
          right to any Third Party relating to NX1838, the Licensed Patents or
          the

                                       4.


          Transferred Assets that would, in any manner, violate the terms of or
          conflict with the rights granted to EyeTech pursuant to this
          Agreement.

     9.   The phrase "distribution," is inserted immediately prior to
          "administration" in the second (2nd) line of Section 7.1(b)(3).

     10.  Section 8.2, "Notices" is changed to show EyeTech's address as
          follows: EyeTech Pharmaceuticals, Inc., 500 Seventh Avenue, 18th
          Floor, New York, New York 10018, Facsimile: 212-997-9251, attn: Chief
          Executive Officer.

     11.  The Agreement, as amended by this Third Amendment, remains in full
          force and effect according to its terms.

     12.  Article 18 shall apply to this Third Amendment as if set forth herein
          in its entirety.

          IN WITNESS WHEREOF, the Parties have caused this Third Amendment to be
duly executed and delivered as of the day and year first above written.

GILEAD SCIENCES, INC.                        EYETECH PHARMACEUTICALS, INC.

By: /s/Gregg Alton                           By: /s/David Guyer
   ---------------------------------------      --------------------------------

Name: Gregg Alton                               David Guyer

Title: Vice President and General Counsel       Chief Executive Officer

NEXSTAR PHARMACEUTICALS, INC.

By: ___________________________________

Name: _________________________________

Title: ________________________________

                                       5.

EX-10.54

                                                                   EXHIBIT 10.54

          CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE
         SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.

                   LICENSE, MANUFACTURING AND SUPPLY AGREEMENT

This Agreement ("AGREEMENT") is made and entered into on February 5, 2002 (the
"EFFECTIVE DATE") by and between:

      1.    Shearwater Corporation, having its principal place of business at
            490 Discovery Drive, Huntsville, Alabama, 35806, U.S.A.
            ("SHEARWATER"); and

      2.    Eyetech Pharmaceuticals, Inc., 666 Fifth Avenue, 35th Floor, New
            York, New York, 10103, U.S.A. ("EYETECH").

                                     WHEREAS

      A.    EYETECH is in the business of developing pharmaceutical products,
            including in particular a vascular endothelial growth factor
            antagonist designated as EYE001, as defined below.

      B.    SHEARWATER has PEGylation technology, including in particular the
            LICENSED TECHNOLOGY, for the formulation of pharmaceutical products
            for the treatment of human and animal disease which typically, among
            other benefits, have increased circulating lifetimes and enhanced
            therapeutic utility.

      C.    SHEARWATER has certain rights and rights to sublicense under ENZON
            PATENTS to make, have made, use, sell, have sold and import products
            pursuant to a Cross-License Agreement ("CROSS-LICENSE AGREEMENT")
            entered into with Enzon, Inc. ("ENZON") on January 7, 2002.

      D.    EYETECH wishes to use the LICENSED TECHNOLOGY and may wish to
            practice technology covered by SHEARWATER'S rights under the
            CROSS-LICENSE AGREEMENT in order to apply the REAGENT to EYE001 to
            produce the formulation of the PRODUCT.

      E.    EYETECH desires to obtain an exclusive license to the LICENSED
            TECHNOLOGY from SHEARWATER to develop, market and sell the PRODUCT
            throughout the


                                                                    Page 1 of 40

            TERRITORY, and SHEARWATER desires to grant such license to EYETECH
            under the terms and conditions specified herein.

      F.    Furthermore, SHEARWATER is also engaged in the business of
            manufacturing bulk quantities of pharmaceutical raw materials, and
            possesses the requisite plant, equipment and personnel to produce
            the REAGENT in accordance with the SPECIFICATIONS and all applicable
            governmental regulations, including, without limitation, U.S. Food
            and Drug Administration regulations, and consistent with EYETECH'S
            requirements.

      G.    EYETECH desires SHEARWATER to manufacture and supply bulk quantities
            of the REAGENT to EYETECH for the sole purpose of permitting EYETECH
            to make, use and sell the PRODUCT, and SHEARWATER agrees to
            undertake the manufacture and supply of the REAGENT specified under
            this AGREEMENT in accordance with all of the terms and conditions
            specified below.

                                    AGREEMENT

1.    Definitions

      1.1.  "ACTIVE MOLECULE" shall mean any molecule that has not been
            conjugated to polyethylene glycol, and that has potential or actual
            preventive or therapeutic activity.

      1.2.  "AFFILIATE" shall mean, with respect to any PERSON, any other PERSON
            which controls, is controlled by, or is under common control with,
            such PERSON. A PERSON shall be regarded as in control of another
            PERSON if it owns, or controls, at least fifty percent (50%) of the
            voting stock or other ownership interest of the other PERSON, or if
            it possesses the power to direct or cause the direction of the
            management and policies of the other PERSON by any means whatsoever.

      1.3.  "BEST EFFORTS" shall mean that EYETECH shall act in a manner
            reasonably calculated to obtain MARKETING AUTHORIZATION and
            commercialize and market the PRODUCT, but shall not be required to:
            (a) act in a manner inconsistent with EYETECH'S overall business
            strategy; (b) take action which


                                                                    Page 2 of 40

            results in a materially adverse change to this AGREEMENT; (c) act in
            a manner contrary to its normal commercial practices; or (d)
            commence any litigation.

      1.4.  "BIOLOGICS LICENSE APPLICATION" shall mean a Biologics License
            Application, as defined in the U.S. Federal Food, Drug, and
            Cosmetics Act, as amended, and the regulations promulgated
            thereunder, and any corresponding supranational, foreign or domestic
            MARKETING AUTHORIZATION application, registration or certification,
            necessary or useful to market the PRODUCT in the TERRITORY.

      1.5.  "CONTROLLED" shall mean the ability to grant a license or sublicense
            as contemplated herein without violating the terms of any agreement
            or other arrangement with any THIRD PARTY.

      1.6.  "DOLLARS" shall mean U.S. dollars.

      1.7.  "EMEA" shall mean the European Medicines Evaluation Agency, and any
            successor agency thereto, having the administrative authority to
            regulate the marketing of human pharmaceutical products or
            biological therapeutic products, delivery systems and devices in the
            European Union.

      1.8.  "ENZON PATENTS" shall mean (a) all patent applications owned or
            CONTROLLED by Enzon, Inc. ("ENZON") or its AFFILIATES that [**]) all
            patents owned or CONTROLLED by ENZON or the ENZON AFFILIATES that
            [**]). For clarity, excluded from ENZON PATENTS are patents and
            patent applications [**]. Further excluded from ENZON PATENTS are
            [**]. The ENZON PATENTS include those listed on Schedule IV.

      1.9.  "EYE001" shall mean EYETECH'S lead compound as of the EFFECTIVE
            DATE, known to EYETECH as "EYE001," an anti-VEGF aptamer.

      1.10. "FDA" shall mean the U.S. Food and Drug Administration, and any
            successor agency thereto, having the administrative authority to
            regulate the marketing of human pharmaceutical products or
            biological therapeutic products, delivery systems and devices in the
            United States.


                                                                    Page 3 of 40


      1.11. "FIRST COMMERCIAL SALE" shall mean, with respect to any PRODUCT, the
            first sale for use or consumption by the general public of such
            PRODUCT. A transfer of the PRODUCT by EYETECH, its AFFILIATES or its
            SUBLICENSEES (a) solely for research and development purposes and
            for the purpose of directly enabling EYETECH, its AFFILIATES and its
            permitted SUBLICENSEES to research and develop PRODUCTS under this
            AGREEMENT and (b) prior to EYETECH'S receipt of MARKETING
            AUTHORIZATION from the FDA (or from the governing health authority
            of any other country) for use of such PRODUCT in humans, shall not
            be considered a FIRST COMMERCIAL SALE, except in the case of (b) to
            the extent such PRODUCT is purchased for sale to a THIRD PARTY end
            user after such Marketing Authorization is obtained.



      1.12. "GOOD MANUFACTURING PRACTICES" or "GMP" shall mean the current good
            manufacturing practices required by the FDA and set forth in the
            Food, Drug and Cosmetics Act or FDA regulations, policies or
            guidelines in effect at a particular time for the manufacturing and
            testing of pharmaceutical materials.


      1.13. "ICH" shall mean the International Conference on Harmonization.

      1.14. "LAW" means any local, state or federal rule, regulation, statute or
            law in any jurisdiction relevant to the activities undertaken
            pursuant to this AGREEMENT or applicable to either of the parties
            with respect to any matters set forth herein.

      1.15. "LICENSED TECHNOLOGY" shall mean, collectively, the SHEARWATER
            PATENT RIGHTS and the SHEARWATER KNOW-HOW.

      1.16. "MARKETING AUTHORIZATION" shall mean such governmental approval for
            the marketing of the PRODUCT in a country or countries in the
            TERRITORY as is necessary to enable EYETECH, its AFFILIATES, or its
            SUBLICENSEES to sell and distribute lawfully the PRODUCT to such
            countries in the TERRITORY.

      1.17. "NET INVOICED SALES" means the actual amount invoiced for PRODUCT
            sold less (a) [**]; (b) [**]; (c) [**]; (d) [**], (to the extent
            separately stated on the invoice and billed to the purchaser); (e)
            [**] the PRODUCT to the extent identified specifically on the
            invoice, (f) [**] , provided that where the PRODUCT is:


                                                                    Page 4 of 40

            1.17.1. sold by EYETECH [**]; or

            1.17.2. sold to any AFFILIATE of EYETECH;

            the NET INVOICED SALES amount of each such PRODUCT shall be [**].
            For sales made by SUBLICENSEES of EYETECH, the NET INVOICED SALES
            amount shall be [**] the PRODUCT, which shall also be subject to
            Sections 1.17.1 and 1.17.2.

      1.18. "NET SALES" shall mean the aggregate of the NET INVOICED SALES of
            all PRODUCT sold by EYETECH, its AFFILIATES and SUBLICENSEES.

      1.19. "PEG" shall mean poly (ethylene glycol).

      1.20. "PEGYLATION", with a correlative meaning for "PEGYLATED", shall mean
            [**] bonding of polyethylene glycol [**] with or to other materials,
            including but not limited to proteins, peptides, biomolecules, small
            molecules, therapeutic agents, diagnostic agents, imaging agents,
            implanted devices, and equipment. "PEGYLATION" shall include the
            synthesis, derivatization, characterization, and modification of
            polyethylene glycol for such purposes, together with the synthesis,
            derivatization, characterization, and modification of the raw
            materials and intermediates for the manufacture of the REAGENT or
            PRODUCT by means of [**] bonding, and all methods of making and
            using each and all of the foregoing. For clarity, PEGYLATION shall
            [**].

      1.21. "PERSON" shall mean an individual, corporation, partnership, limited
            liability company, trust, business trust, association, joint stock
            company, joint venture, pool, syndicate, sole proprietorship,
            unincorporated organization, governmental authority, or any other
            form of entity not specifically listed herein.

      1.22. "PRODUCT" shall mean a product produced by linking EYE001 to the
            REAGENT.

      1.23. "REAGENT" shall mean [**].

      1.24. "ROYALTY TERM" shall mean, with respect to each PRODUCT in each
            country in the TERRITORY, the period of time equal to the longer of
            (a) [**] years from


                                                                    Page 5 of 40

            the date of the FIRST COMMERCIAL SALE of such PRODUCT in such
            country, or (b) if the manufacture, use or sale of such PRODUCT in
            such country is covered in whole or in part by a VALID PATENT CLAIM,
            the term for which such VALID PATENT CLAIM remains in effect.

      1.25. "SHEARWATER CORE TECHNOLOGY" shall mean technology relating to the
            [**], including, without limitation, the SHEARWATER KNOW-HOW and the
            SHEARWATER PATENT RIGHTS.

      1.26. "SHEARWATER KNOW-HOW" shall mean (a) all technical, scientific and
            other know-how, information, trade secrets, knowledge, technology,
            ideas, concepts, formulae, procedures, methods, processes,
            protocols, techniques, materials and results of experimentation and
            testing, including samples, data, results and other materials,
            (whether or not patented or patentable) in written, electronic or
            any other form, in which SHEARWATER has an ownership or licensable
            interest; and (b) which are necessary or useful for EYETECH to make,
            use, develop, sell or seek MARKETING AUTHORIZATION to market a
            PRODUCT, or otherwise necessary or useful to practice the licenses
            granted under this AGREEMENT.


      1.27. "SHEARWATER PATENT RIGHTS" shall mean all of the legal rights
            conferred upon SHEARWATER under the patents and patent applications
            listed in Schedule III in the TERRITORY and all provisionals,
            converted provisionals, non-provisional U.S. applications,
            continuations, divisionals, continuations-in-part, or substitutes
            thereof and all patents issuing therefrom or reexamination, reissues
            or extensions of said patents and all foreign counterparts of said
            applications and patents, and which are necessary or useful to
            produce and sell the PRODUCT. Schedule III sets forth the status of
            the patents included in the SHEARWATER PATENT RIGHTS as of the time
            this AGREEMENT is executed. Schedule III may be updated from time to
            time to list any other patents or patent applications which become
            included in the SHEARWATER PATENT RIGHTS.


      1.28. "SHEARWATER'S MANUFACTURING COST" shall mean the sum of the
            following costs incurred by SHEARWATER, [**] to the REAGENT sold to
            EYETECH by SHEARWATER, and to other services performed by SHEARWATER
            for EYETECH: [**] relating to the [**], including, without
            limitation, [**] related to the [**] pursuant to Section 4, and the
            [**].


                                                                    Page 6 of 40

      1.29. "SPECIFICATIONS" shall mean the specifications of the REAGENT set
            forth in Schedule I hereto. The SPECIFICATIONS and test methods
            listed in Schedule I may be modified at any time but only by the
            mutual agreement of both parties as set forth in Section 5.3. Any
            such modification to the SPECIFICATIONS shall be rendered into
            writing and appended at Schedule I.

      1.30. "SUBLICENSEE" shall mean any PERSON, including AFFILIATES, to which
            EYETECH grants a sublicense to develop, make, have made, use,
            import, export, offer for sale and sell the PRODUCT. SUBLICENSEE
            shall not include distributors or other parties to which EYETECH
            sells the PRODUCT in the ordinary course of business, or
            manufacturers or contract synthesis facilities which produce the
            active molecule in EYE001 for EYETECH.

      1.31. "TERRITORY" shall mean the world.

      1.32. "THIRD PARTY" shall mean any party other than SHEARWATER, EYETECH
            and their respective AFFILIATES.

      1.33. "VALID PATENT CLAIM" shall mean either (a) a claim of an issued and
            unexpired patent included within the SHEARWATER PATENT RIGHTS or
            ENZON PATENTS which has not been held unenforceable, unpatentable or
            invalid by a decision of a court or other governmental agency of
            competent jurisdiction, unappealable or unappealed within the time
            allowed for appeal, and which has not been admitted to be invalid or
            unenforceable through reexamination, reissue, disclaimer or
            otherwise, or (b) a claim of a pending patent application included
            within the SHEARWATER PATENT RIGHTS or ENZON PATENTS, which claim
            has not been abandoned or finally disallowed without the possibility
            of appeal or refiling of such application.

      1.34. The following schedules are attached hereto and incorporated in and
            are deemed to be an integral part of this AGREEMENT:

            Schedule I          THE SPECIFICATIONS

            Schedule II         REMUNERATION AND INITIAL FORECAST

            Schedule III        SHEARWATER PATENT RIGHTS


                                                                    Page 7 of 40

            Schedule IV         ENZON PATENTS

2.    Representations and Warranties

      2.1.  By Both Parties. Each party represents and warrants to the other
            that: (a) it has the full right and power to enter into and perform
            this AGREEMENT; (b) this AGREEMENT constitutes its legal, valid and
            binding obligation; (c) to the best of its knowledge, there are no
            agreements or arrangements between such party and any THIRD PARTY
            which could prevent it from, or conflict with such party's carrying
            out all of its obligations hereunder, including (without
            limitation), in the case of SHEARWATER, its grant to EYETECH of the
            licenses described in Section 3.1 below; (d) to the best of its
            knowledge, it has sufficient legal and/or beneficial title under its
            intellectual property rights necessary for the purposes contemplated
            under this AGREEMENT and to grant the licenses contained in this
            AGREEMENT; (e) to the best of its knowledge, it is not aware of any
            material communications alleging that it has violated or, by
            conducting its obligations as currently proposed under this
            AGREEMENT, it would violate any of the intellectual property rights
            of any THIRD PARTY; and (f) all of its employees, officers and
            consultants have executed agreements requiring assignment to the
            party of all inventions made during the course of and as a result of
            their association with such party and obligating the individual to
            maintain as confidential the CONFIDENTIAL INFORMATION of such party,
            as set forth in Section 9 herein.

      2.2.  By SHEARWATER. In addition to the representations and warranties set
            forth in Section 5.2, SHEARWATER represents and warrants to EYETECH
            that:

            2.2.1. As of the EFFECTIVE DATE, SHEARWATER is not aware of:

                  (A)   any existing claims or litigation brought by a THIRD
                        PARTY under any THIRD PARTY patent, trade secret or
                        other THIRD PARTY proprietary right in respect of
                        SHEARWATER'S exploitation of the LICENSED TECHNOLOGY;

                  (B)   any basis upon which practice of the inventions
                        described in the SHEARWATER PATENT RIGHTS or KNOW-HOW
                        would infringe on the rights of THIRD PARTIES; or


                                                                    Page 8 of 40

                  2.2.2. any licenses or restrictions other than those included
                  herein on its or its licensees' ability to practice the
                  LICENSED TECHNOLOGY.

                  2.2.3. SHEARWATER has made or will make available to EYETECH
                  all material technical information in its possession of which
                  it is aware that is pertinent to the development, manufacture,
                  commercialization or use of the PRODUCT, and useful or
                  necessary to enable EYETECH to exercise its rights under this
                  AGREEMENT.

                  2.2.4. SHEARWATER shall comply with all applicable present and
                  future LAWS applicable to the transportation, storage, use
                  handling and disposal of hazardous materials. SHEARWATER has
                  and will maintain during the term of this AGREEMENT all
                  government permits, including without limitation health,
                  safety and environmental permits necessary for the conduct of
                  the activities that SHEARWATER undertakes pursuant to this
                  AGREEMENT.

            2.3.  By EYETECH. EYETECH warrants to SHEARWATER that it will use
                  its BEST EFFORTS to seek MARKETING AUTHORIZATION, and develop,
                  commercialize and market the PRODUCT by [**]. If EYETECH
                  believes that it cannot, within the exercise of reasonable
                  business judgment, commercialize the PRODUCT in one or more
                  countries in the TERRITORY by [**], then EYETECH may request
                  from SHEARWATER an extension of time, and the parties shall
                  negotiate in good faith to determine a time extension that is
                  mutually acceptable. In the event that EYETECH does not use
                  BEST EFFORTS in this regard, the licenses granted to EYETECH
                  in Section 3.1 [**]. In the event that the licenses granted to
                  EYETECH in Section 3.1 [**] of the TERRITORY as provided for
                  herein above, EYETECH'S obligations to pay milestones and
                  royalties to SHEARWATER, as provided for in this AGREEMENT,
                  shall continue. Notwithstanding the foregoing, in the event
                  EYETECH does not use at least reasonable efforts to develop,
                  seek MARKETING AUTHORIZATION, commercialize and market the
                  PRODUCT in [**] in the TERRITORY by [**] or such later date as
                  mutually agreed to by the parties, it shall be deemed a
                  material breach of this AGREEMENT by EYETECH and SHEARWATER
                  may terminate this AGREEMENT under Section 11.4.


                                                                    Page 9 of 40

            2.4.  Limitation of Liability. EXCEPT AS EXPRESSLY PROVIDED
                  ELSEWHERE IN THIS AGREEMENT, NEITHER PARTY SHALL BE LIABLE TO
                  THE OTHER FOR SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL,
                  PUNITIVE OR EXEMPLARY DAMAGES ARISING OUT OF ANY OF THE TERMS
                  OR CONDITIONS OF THIS AGREEMENT OR WITH RESPECT TO ITS
                  PERFORMANCE HEREUNDER, EXCEPT WHERE SUCH DAMAGES WERE CAUSED
                  BY NEGLIGENCE OR WILLFUL MISCONDUCT OF A PARTY.
                  Notwithstanding the foregoing, each party shall be liable to
                  the other for special, indirect, incidental, consequential,
                  punitive or exemplary damages arising out a breach of the
                  non-disclosure and non-use obligations under Section 9.
                  Nothing in this Section 2.4 is intended to limit either
                  party's obligations under Section 10.

            2.5.  EXCEPT AS SET FORTH IN THIS AGREEMENT, SHEARWATER AND EYETECH
                  DISCLAIM ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING
                  THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
                  PARTICULAR PURPOSE.

3.    Grant of Licenses

      3.1.  Grant.

            (A)   Subject to the terms and conditions of this AGREEMENT,
                  SHEARWATER hereby grants to EYETECH, for the term of this
                  AGREEMENT, an exclusive license (with the right to grant
                  sublicenses as set forth in Section 3.2 below) under the
                  LICENSED TECHNOLOGY to develop, make, have made, use, import,
                  offer for sale and sell the PRODUCT in the TERRITORY.

            (B)   Subject to the terms and conditions of this AGREEMENT,
                  SHEARWATER shall grant to EYETECH, until the last-to-expire
                  VALID PATENT CLAIM of ENZON PATENTS, a sole license (with the
                  right to grant sublicenses as set forth in Section 3.2 below)
                  under those rights SHEARWATER has to the ENZON PATENTS, solely
                  to develop, make, have made, use, import, offer for sale and
                  sell in the TERRITORY that version of the PRODUCT that [**].
                  Such license shall be subject to the retained rights of ENZON
                  and the ENZON AFFILIATES to practice all the


                                                                   Page 10 of 40

                  inventions described and claimed in the ENZON PATENTS for the
                  conduct of research and development (such purposes not
                  including in connection with human clinical trials) of
                  pharmaceutical products that it is developing either itself,
                  with its AFFILIATE, or in conjunction with a THIRD PARTY.

            (C)   Subject to the terms and conditions of this AGREEMENT,
                  SHEARWATER shall grant to EYETECH, for the sole purpose of,
                  and with respect to and only with respect to, the manufacture,
                  use, sale, offer for sale, and importation in the TERRITORY of
                  that version of the PRODUCT that [**], a non-exclusive license
                  under those rights SHEARWATER has:

                  (I)   to patents or patent applications (other than the ENZON
                        PATENTS) owned or CONTROLLED by ENZON or the ENZON
                        AFFILIATES; and

                  (II)  all patent claims owned or CONTROLLED by ENZON or the
                        ENZON AFFILIATES that (x) are not within the ENZON
                        PATENTS or the PATENTS in subclause (i) above; (y) [**];
                        and (z) claim the composition, manufacture, or use of
                        that version of [**].

                  The license granted under this Section 3.1(c) excludes [**].
                  The license granted under this Section 3.1(c) shall remain in
                  effect on a country-by-country basis until the longer of (1)
                  the [**] anniversary of the FIRST COMMERCIAL SALE of the
                  PRODUCT in a particular country, or (2) the expiration of the
                  last-to-expire VALID PATENT CLAIM of the ENZON PATENTS
                  claiming the composition, manufacture, or use of such PRODUCT
                  in such country.

      3.2.  Sublicenses. EYETECH shall have the right to grant sublicenses under
            the licenses in Section 3.1 above to any THIRD PARTY or AFFILIATE,
            provided that, under each sublicense, each SUBLICENSEE shall be
            subject to terms and conditions that are consistent with the terms
            and conditions of this AGREEMENT as applicable; provided, however,
            that [**] this AGREEMENT.


                                                                   Page 11 of 40

      3.3.  ENZON Patent Rights.

            3.3.1. EYETECH agrees and acknowledges that the availability of the
                  licenses to be granted under Sections 3.1(b) and 3.1(c) are
                  subject to the following condition precedent: EYETECH must
                  [**] with the [**]PRODUCT: [**] in the PRODUCT[**] and the
                  [**] to be [**] to be used to [**] of the [**], to the extent
                  known[**], to the extent known[**] PRODUCT with [**]; so that
                  [**] the PRODUCT and that such license [**]. In the event that
                  [**] product [**] as the PRODUCT and that the [**], the
                  licenses under Sections 3.1(b) and 3.1(c) shall be [**]. If,
                  at anytime during the term of this AGREEMENT, EYETECH wishes
                  to make, use, import, export, offer for sale and sell in the
                  TERRITORY [**] EYETECH shall [**] of the PRODUCT, [**] of
                  PRODUCT based on those terms provided in this AGREEMENT.

            3.3.2. EYETECH agrees and acknowledges that any such licenses to be
                  granted under Sections 3.1(b) and 3.1(c) are subject to the
                  following limitations and conditions:

                  (A)   Such licenses shall [**];

                  (B)   Such licenses shall [**];

                  (C)   Such licenses shall [**] the PRODUCT


                  (D)   [**]Such licenses shall [**] a product with the [**]



                  (E)   Such licenses shall [**] the PRODUCT [**];



                  (F)   Such licenses shall [**] the PRODUCT [**];



                  (G)   EYETECH shall [**] for such PRODUCT, [**];



                  (H)   [**]EYETECH shall [**];



                  (I)   Subject to any prior termination, such licenses shall
                        [**]; and



                  (J)   Such licenses shall [**].


            3.4.  SHEARWATER Covenant. SHEARWATER covenants that, during the
                  term of this AGREEMENT, and subject to the terms of this
                  AGREEMENT, it will not grant


                                                                   Page 12 of 40

                  any THIRD PARTY a license under the LICENSED TECHNOLOGY or its
                  rights under the ENZON PATENTS to, and shall not itself, make,
                  have made, use, sell or have sold the PRODUCT in the
                  TERRITORY. Furthermore, SHEARWATER covenants that, during the
                  term of this AGREEMENT, it will not enter into any agreement
                  with a THIRD PARTY in which it licenses the LICENSED
                  TECHNOLOGY to such THIRD PARTY for use in making, using,
                  selling or importing products which [**]. Notwithstanding the
                  foregoing, the parties understand and agree that any agreement
                  existing as of the EFFECTIVE DATE between SHEARWATER and a
                  THIRD PARTY, under which SHEARWATER grants a license, a
                  license option or other rights under SHEARWATER'S LICENSED
                  TECHNOLOGY, is not subject to the foregoing indication
                  limitation.

            3.5.  EYETECH Covenant.

                  3.5.1. EYETECH hereby covenants that it will refrain from
                         judicially challenging the validity or enforceability
                         of any ENZON PATENTS and will contractually restrict
                         its SUBLICENSEES from similarly challenging the
                         validity or enforceability of the ENZON PATENTS. In the
                         event EYETECH or its SUBLICENSEES so challenge the
                         ENZON PATENTS: (a) EYETECH shall pay for all attorney's
                         fees, costs of suit, and other out-of-pocket expenses
                         incurred by ENZON and/or SHEARWATER in resisting or
                         opposing such challenge in the event that such
                         challenge is not successful; and (b) EYETECH'S and its
                         SUBLICENSEES' sublicense rights to such ENZON PATENTS
                         shall terminate.

                  3.5.2. EYETECH hereby covenants that it will refrain from
                         judicially challenging the validity or enforceability
                         of any SHEARWATER PATENT RIGHTS and will contractually
                         restrict its SUBLICENSEES from similarly challenging
                         the validity or enforceability of the SHEARWATER PATENT
                         RIGHTS. In the event EYETECH or its SUBLICENSEES so
                         challenge the SHEARWATER PATENT RIGHTS: (a) EYETECH
                         shall pay for all attorney's fees, costs of suit, and
                         other out-of-pocket expenses incurred by SHEARWATER in
                         resisting or opposing such challenge in the event that
                         such challenge is not successful; and (b) EYETECH'S and
                         its SUBLICENSEES' sublicense rights to such SHEARWATER
                         PATENT RIGHTS shall terminate.

4.    Manufacture and Supply of the Reagent

      4.1.  Exclusivity. SHEARWATER will manufacture and supply one hundred
            percent (100%) of EYETECH'S, its AFFILIATES' and SUBLICENSEES'
            purchase requirements of the REAGENT for the manufacturing of the
            PRODUCT.


                                                                   Page 13 of 40

            EYETECH, its AFFILIATES and SUBLICENSEES will purchase the REAGENT
            exclusively from SHEARWATER for the manufacture of the PRODUCT,
            subject to Sections 4.7 and 4.8.

      4.2.  Audit. During the term of this AGREEMENT, SHEARWATER shall supply
            the REAGENT for use in manufacturing PRODUCT exclusively to EYETECH,
            its AFFILIATES and SUBLICENSEES. Upon reasonable advance notice,
            EYETECH shall grant to SHEARWATER reasonable access to EYETECH'S
            books and records during normal business hours for the purpose of
            verifying EYETECH'S compliance with the purchase requirement in
            Section 4.1 above.

      4.3.  Minimum Purchases and Rolling Forecast. As soon as practicable after
            the EFFECTIVE DATE the parties shall mutually agree upon the
            contents of Schedule II which shall set forth the minimum purchase
            requirements of EYETECH for the REAGENT for the [**] calendar
            quarters immediately following the EFFECTIVE DATE. EYETECH shall, at
            least thirty (30) days prior to the commencement of the [**] each
            successive calendar quarter following the EFFECTIVE DATE, furnish
            SHEARWATER with a rolling forecast of its requirements of the
            REAGENT during the forthcoming [**] calendar quarters, with the
            required quantities for the first [**] calendar quarters to be a
            binding order for supply of the REAGENT and the forecast for the
            remaining [**]) calendar quarters to be an estimate only.
            Notwithstanding the foregoing, (i) SHEARWATER shall only be bound to
            supply up to [**] percent ([**]%) of the initial forecast for any
            calendar quarter. In the event that EYETECH'S forecast exceeds [**]
            percent ([**]%) of the initial forecast for any calendar quarter,
            then the parties will meet in good faith to discuss how SHEARWATER
            can meet the revised forecast, and (ii) in no event shall EYETECH
            purchase less than [**] percent ([**]%) of the initial forecast for
            any calendar quarter.

      4.4.  Purchase Orders. EYETECH will order the REAGENT from SHEARWATER by
            means of a standard EYETECH purchase order and SHEARWATER shall ship
            or cause the REAGENT to be shipped pursuant to its standard shipping
            documents; provided, however, that all terms and conditions
            respecting any orders of REAGENT other than quantity and delivery
            dates shall be governed exclusively by the terms of this AGREEMENT.
            Such EYETECH purchase order


                                                                   Page 14 of 40


            shall specify the quantity and delivery date of the REAGENT.
            However, in case of inconsistency between the purchase order or the
            standard shipping documents and the terms and conditions of this
            AGREEMENT, the terms and conditions of this AGREEMENT or any
            modification of this AGREEMENT agreed to in writing by the parties
            shall govern as to matters dealt with in this AGREEMENT, any such
            inconsistent terms in such purchase order or shipping documents are
            hereby expressly rejected. EYETECH shall, at least thirty (30) days
            prior to the commencement of the third and each successive calendar
            quarter following the EFFECTIVE DATE, provide SHEARWATER with a
            written purchase order for such calendar quarter. Any such purchase
            order shall be sent to the attention of SHEARWATER'S Sales Manager.


      4.5.  Fulfillment. To the extent that any orders for REAGENT do not exceed
            [**] percent ([**]%) of EYETECH'S forecast for a respective calendar
            quarter, and to the extent forecasts and purchase orders are
            submitted as provided hereunder, SHEARWATER shall commence
            fulfilling these orders no later than: (a) [**] of the date an order
            is placed; or (b) any other mutually agreed upon delivery date. If
            SHEARWATER determines that it cannot commence fulfilling an order by
            the later of [**] of the date an order is placed or any other agreed
            upon delivery date, then SHEARWATER will promptly notify EYETECH in
            writing within [**] hours of such determination. To the extent that
            such order for REAGENT does not exceed [**] percent ([**]%) of
            EYETECH'S forecast for a respective calendar quarter, and to the
            extent that such purchase order is submitted as provided hereunder,
            the provisions of Section 4.7 apply.

      4.6.  Payment of Invoices. SHEARWATER shall send invoices to EYETECH for
            the REAGENT shipped to EYETECH no earlier than the date on which the
            REAGENT is placed aboard the carrier at the point of shipment from
            the place of manufacture or storage owned or controlled by
            SHEARWATER. All shipments of REAGENT will be delivered to EYETECH at
            the address first set forth above. All risk of loss or damage to
            REAGENT shall transfer upon delivery to such destination. All
            invoices will be in DOLLARS, payable to SHEARWATER, at the address
            provided above or such other address as SHEARWATER may from time to
            time advise EYETECH. Payment will be due thirty (30) days from
            receipt of invoice unless acceptance is delayed pursuant to Sections
            6.2, 6.3 and 6.4, in


                                                                   Page 15 of 40


            which case they shall be due as provided thereunder. Amounts past
            due shall bear interest at the rate of one and a quarter percent
            (1.25%) per month, compounded daily, or the maximum rate allowed
            under law, whichever is less.



      4.7.  Failure to Supply. Subject to Section 15.1, if SHEARWATER cannot
            supply at least seventy-five percent (75%) of the amount of the
            REAGENT consistent with and at the times specified by Sections 4.3
            and 4.4 and does not cure the deficiency within ninety (90) days
            after EYETECH so notifies SHEARWATER in writing that a portion of
            the REAGENT due for delivery has not been delivered, after using all
            reasonable efforts, then SHEARWATER will be considered as being
            unable to manufacture and sell to EYETECH the REAGENT under this
            AGREEMENT ("FAILURE"). In the case of a FAILURE for any reason,
            SHEARWATER shall, subject to this Section 4.7, immediately work with
            EYETECH and grant to one THIRD PARTY contract manufacturer (the
            "CONTRACT MANUFACTURER" such CONTRACT MANUFACTURER being subject to
            approval by EYETECH, such approval to not be unreasonably withheld)
            a personal, non-assignable, non-exclusive right and license under
            the LICENSED TECHNOLOGY to make the amount of REAGENT, for the sole
            purpose of EYETECH producing the PRODUCT, in accordance with
            EYETECH'S order for the relevant calendar quarter as well as during
            the following three (3) calendar quarters or such longer period if
            required to fully address the FAILURE in accordance with Section
            4.8. Such FAILURE by SHEARWATER to supply EYETECH with the REAGENT
            will not be taken as a refusal by SHEARWATER to supply EYETECH with
            the REAGENT for subsequent calendar quarters unless SHEARWATER so
            indicates. With respect to such subsequent calendar quarters, if
            SHEARWATER has demonstrated that it has the ability to supply all of
            EYETECH'S REAGENT requirements hereunder, EYETECH will resume
            purchases of the REAGENT from SHEARWATER in the manner provided for
            by this AGREEMENT. Payments made by EYETECH to the CONTRACT
            MANUFACTURER for REAGENT supplied during a FAILURE shall be
            recognized by SHEARWATER, and SHEARWATER shall not seek payment for
            such supply. Notwithstanding the foregoing, all of EYETECH'S
            milestone and royalty obligations shall remain in effect during the
            period of any FAILURE. If SHEARWATER, for any reason, shall on two
            (2) separate occasions FAIL under this Section 4.7 to supply EYETECH
            with the REAGENT, EYETECH shall thereafter be allowed to purchase
            from the CONTRACT MANUFACTURER all of its future requirements of the
            REAGENT without regard to SHEARWATER'S willingness and ability to
            supply EYETECH with its requirements of the REAGENT.


      4.8.  Technology Transfer. In the event that SHEARWATER grants to the
            CONTRACT MANUFACTURER, as contemplated in Section 4.7, a personal,
            non-assignable, non-exclusive right and license under the LICENSED


                                                                   Page 16 of 40


            TECHNOLOGY to make, have made and use the REAGENT for the sole
            purpose of manufacturing for EYETECH the PRODUCT, SHEARWATER shall,
            at its expense, transfer sufficient of its technology, including
            required SHEARWATER KNOW-HOW and training of personnel, to enable
            the CONTRACT MANUFACTURER to manufacture the REAGENT for the sole
            purpose of EYETECH producing the PRODUCT. Such CONTRACT MANUFACTURER
            shall be bound to treat all such SHEARWATER KNOW-HOW as SHEARWATER
            CONFIDENTIAL INFORMATION, subject to the obligations of Section 9.


      4.9.  Intellectual Property. Any and all rights to any improvement,
            modification, application or invention discovered, conceived or
            reduced to practice by either party or both (or by such CONTRACT
            MANUFACTURER, EYETECH, its AFFILIATES or its SUBLICENSEES ) in the
            course of the manufacture of the PRODUCT (but not EYE001 alone) and
            which relate to SHEARWATER CORE TECHNOLOGY shall be solely owned by
            SHEARWATER ("CORE TECHNOLOGY INVENTIONS"). EYETECH, its CONTRACT
            MANUFACTURER, AFFILIATES and SUBLICENSEES shall each assign to
            SHEARWATER all of its interests in such CORE TECHNOLOGY INVENTIONS
            and in all intellectual property rights therein. Such CORE
            TECHNOLOGY INVENTIONS shall be included in the LICENSED TECHNOLOGY
            and subject to the license granted to EYETECH pursuant to this
            AGREEMENT. SHEARWATER shall be responsible, at its sole expense and
            discretion, and with the cooperation of EYETECH, for the filing,
            prosecution and maintenance of foreign and domestic patent
            applications and patents covering such CORE TECHNOLOGY INVENTIONS.
            Any and all rights to any inventions discovered, conceived or
            reduced to practice by either party or both in the course of the
            manufacture of PRODUCTS (but not EYE001 alone) which relate solely
            to EYE001 and that are not SHEARWATER CORE TECHNOLOGY or CORE
            TECHNOLOGY INVENTIONS, shall belong solely to EYETECH ("EYETECH
            INVENTIONS"). SHEARWATER shall assign to EYETECH all of its
            interests in such EYETECH INVENTIONS and in all intellectual
            property rights therein. EYETECH shall be responsible, at its sole
            expense and discretion, and with the cooperation of SHEARWATER if
            requested by EYETECH, for the filing, prosecution and maintenance of
            foreign and domestic patent applications and patents covering such
            EYETECH INVENTIONS. Except as otherwise provided in this Section,
            all inventions made solely by employees of a party during the course
            of the manufacture of PRODUCTS shall be the property of such party.
            Further, also except as otherwise provided in this Section, if
            employees of SHEARWATER and EYETECH jointly develop any invention
            during the manufacture of PRODUCT ("JOINT INVENTION"), SHEARWATER
            and


                                                                   Page 17 of 40

            EYETECH shall each own an undivided one-half (1/2) interest, without
            a duty of accounting to the other party, in and to such JOINT
            INVENTION. With respect to patent applications on a JOINT INVENTION,
            the parties shall determine which party shall be responsible for
            filing, prosecuting, maintaining and defending patent applications
            and patents on behalf of both parties, based on a good faith
            determination of the relative contributions of the parties to the
            invention and the relative level of interest of the parties in the
            invention.

5.    Specifications, GMP and Manufacturing Process

      5.1.  Specifications. The quality of the REAGENT is defined in the
            SPECIFICATIONS as per Schedule I attached hereto.

      5.2.  Warranty. SHEARWATER warrants that the REAGENT will be manufactured
            in compliance with the current GMP requirements of the FDA and the
            ICH. SHEARWATER warrants that the REAGENT will, upon delivery to the
            carrier, be in conformity with said SPECIFICATIONS. Except as
            provided in Sections 2.1 and 2.2, SHEARWATER provides no other
            warranties, express or implied, regarding the REAGENT and disclaims
            all other express and implied warranties, including the implied
            warranties of merchantability and fitness for a particular purpose.
            SHEARWATER'S liability for breach of the foregoing warranty shall be
            limited to the actions and procedures required in Sections 4.7 and
            4.8 above and Section 6 below.

      5.3.  Modifications. Any modifications of the SPECIFICATIONS will require
            reasonable prior written approval of EYETECH and SHEARWATER. Each
            party may propose a change to the SPECIFICATIONS to the other party
            for evaluation considering the relative costs, benefits and
            technical ability to make such change. EYETECH shall bear any and
            all costs of developing and implementing revised SPECIFICATIONS.


                                                                   Page 18 of 40

6.    Quality and Complaints

      6.1.  Analysis. Promptly after arrival of a shipment of the REAGENT at
            EYETECH, EYETECH shall analyze the REAGENT using methods approved by
            both parties according to the analytical procedures in Schedule I.

      6.2.  Complaints. Any complaints by EYETECH that a shipment of the REAGENT
            does not comply with the requirements of Section 5.1 or Section 5.2
            shall be delivered to SHEARWATER in writing at the latest within
            [**] days after arrival of the shipment of the REAGENT and shall
            include full details of such complaint including supporting data for
            purposes of consideration and verification by SHEARWATER. If no such
            written complaint is received by SHEARWATER within the above [**]
            day period, EYETECH will be deemed to have accepted the applicable
            shipment of REAGENT, which shall conclusively be presumed to be
            without defect and to meet all SPECIFICATIONS and warranties
            hereunder.

      6.3.  Complaints Procedure. If SHEARWATER receives a complaint under
            Section 6.2 the following procedures shall apply:

            6.3.1. Within [**] days from the date on which such details of
                  EYETECH'S complaint are received by SHEARWATER, or if such
                  quantity is not then available, as soon as SHEARWATER has the
                  necessary quantities available, provided it is not later than
                  [**] days after SHEARWATER'S receipt of the details of
                  EYETECH'S complaint, SHEARWATER shall supply EYETECH the
                  replacement quantity of the REAGENT that was allegedly missing
                  or defective from the original shipment.

            6.3.2. If the alleged defect concerns the quality of the REAGENT
                  delivered and SHEARWATER accepts the details submitted by
                  EYETECH as to the non-compliance of the REAGENT, the
                  replacement material described in Section 6.3.1 will be
                  provided to EYETECH at no additional cost.

            6.3.3. If the alleged defect concerns the quality of the REAGENT
                  delivered and SHEARWATER, acting reasonably and in good faith,
                  does not accept the details submitted by EYETECH, then within
                  [**] days from the date on which the details of EYETECH'S
                  complaint are received by

                                                                   Page 19 of 40

                  SHEARWATER, SHEARWATER and EYETECH will agree upon and appoint
                  an independent scientific and technical expert to review
                  EYETECH'S details supporting its complaint of non-compliance.
                  EYETECH shall not unreasonably withhold acceptance of the
                  independent scientific and technical expert. The findings of
                  the expert shall be final and conclusively binding on the
                  parties as to whether the REAGENT complies with the
                  requirements of Sections 5.1 and 5.2 as to defects in quality.
                  If the analysis of the expert does not confirm EYETECH'S
                  complaint, EYETECH shall be obligated to pay for any
                  replacement quantities shipped by SHEARWATER. If the expert
                  holds that the REAGENT does not meet requirements of Sections
                  5.1 and 5.2, all the fees of the expert and the laboratory
                  shall be paid by SHEARWATER and EYETECH shall have no
                  obligation to pay for the quantities of defective REAGENT, but
                  shall be responsible for payment of replacement quantities
                  which are in conformance with Sections 5.1 and 5.2 within [**]
                  days after EYETECH'S receipt of such replacement shipment. On
                  the other hand, if the expert does not confirm EYETECH'S
                  complaint, all of the fees of the laboratory and the expert
                  will be paid by EYETECH, EYETECH shall be obligated to pay for
                  any replacement quantities shipped by SHEARWATER in addition
                  to the original quantities shipped, and EYETECH shall be
                  considered to have finally and completely accepted such
                  allegedly defective shipment of the REAGENT.

      6.4.  Compliance. SHEARWATER warrants that it will perform regular
            self-inspections in order to assure compliance with GMP requirements
            and submit to inspections by EYETECH and/or regulatory authorities
            such as the FDA. Upon thirty (30) days prior written notice, EYETECH
            shall have the right once in each twelve (12) month period and at
            reasonable hours to audit the quality systems of SHEARWATER. Such
            audits shall be performed to verify, among other things: (1) the
            quality of the facilities providing the REAGENT; (2) the general
            controls and security practices and procedures at any facility or
            part of a facility used by SHEARWATER to provide the REAGENT; and
            (3) SHEARWATER'S compliance with all applicable laws. In addition,
            EYETECH will have the option to designate an independent THIRD
            PARTY, subject to confidentiality obligations to

                                                                   Page 20 of 40

            SHEARWATER, to verify that all proprietary manufacturing operations
            and associated technologies relating to the manufacture of the
            REAGENT are in compliance with GMP and all other equivalent
            governmental requirements in the TERRITORY. If SHEARWATER becomes
            aware that any shipment of the REAGENT to EYETECH does not meet all
            of the requirements of Section 5.1 and Section 5.2, SHEARWATER will
            promptly notify EYETECH.

7.    Remuneration

      7.1.  Milestone Payments. The parties hereto agree that in partial
            consideration for the rights acquired by EYETECH under this
            AGREEMENT, EYETECH will pay to SHEARWATER milestone payments in
            accordance with and at the times set out in Schedule II herein. Such
            payments shall be in addition to any royalty or other payments due
            under this AGREEMENT. The payment of the milestone due upon the
            grant of MARKETING AUTHORIZATION shall be [**] [**] DOLLARS ($[**])
            [**] due SHEARWATER under Section 7.2.1 [**] DOLLARS ($[**]) amount
            equal to [**] the amount due to SHEARWATER[**] a royalty on NET
            SALES of PRODUCT under Section 7.2.1, [**] DOLLARS ($[**])
            [**].

      7.2.  Royalties. In partial consideration for the licenses granted to
            EYETECH herein, during the ROYALTY TERM, EYETECH shall pay the
            following royalties:

            7.2.1. SHEARWATER. EYETECH shall pay a royalty to SHEARWATER in an
                  amount equal to [**] percent ([**]%) of the portion of annual
                  NET SALES of all PRODUCT sold in each country in the TERRITORY
                  in which the manufacture, use or sale of such PRODUCT is
                  covered by a VALID PATENT CLAIM that is less than [**] DOLLARS
                  ($[**]), and in an amount equal to [**] percent ([**]%) of the
                  portion of annual NET SALES of all PRODUCT sold in each
                  country in the TERRITORY in which the manufacture, use or sale
                  of such PRODUCT is covered by a VALID PATENT CLAIM that is
                  equal to or greater than [**] DOLLARS ($[**]). EYETECH shall
                  pay a royalty to SHEARWATER in an amount equal to [**] percent
                  ([**]%) of the portion of annual NET SALES of all PRODUCT sold
                  in each country in the TERRITORY in which the manufacture, use
                  or sale of such PRODUCT is not covered by a VALID PATENT
                  CLAIM, but uses SHEARWATER KNOW-HOW that is less than [**]
                  dollars ($[**]).

                                                                   Page 21 of 40

                  EYETECH shall pay a royalty to SHEARWATER in an amount equal
                  to [**] percent ([**]%) of the portion of annual NET SALES of
                  all PRODUCT sold in each country in the TERRITORY in which the
                  manufacture, use or sale of such PRODUCT is not covered by a
                  VALID PATENT CLAIM, but uses SHEARWATER KNOW-HOW that is equal
                  to or more than [**] dollars ($[**]).

      7.3.  Accrual of Royalties. No royalties shall be payable on a PRODUCT
            distributed to THIRD PARTIES solely for marketing and advertising
            purposes or as a sample for testing or evaluation purposes. No
            royalties shall be payable on sales among EYETECH, its AFFILIATES
            and its SUBLICENSEES, but royalties shall be payable on subsequent
            sales by EYETECH, its AFFILIATES or its SUBLICENSEES to a THIRD
            PARTY. No multiple royalty shall be payable on a PRODUCT because the
            manufacture, use or sale of such PRODUCT is covered by more than one
            SHEARWATER PATENT RIGHT or ENZON PATENT or is subject to both
            SHEARWATER KNOW-HOW and a VALID PATENT CLAIM.

      7.4.  Third Party Royalties. If EYETECH, its AFFILIATES or its
            SUBLICENSEES are required to pay royalties to any THIRD PARTY
            because the manufacture, use or sale of the PRODUCT infringes any
            patent rights of such THIRD PARTY in any country of the TERRITORY
            (but only with respect to the use or the manufacture of the REAGENT
            or use of the REAGENT or LICENSED TECHNOLOGY in the manufacture of
            the PRODUCT), EYETECH, its AFFILIATES or its SUBLICENSEES may deduct
            from royalties thereafter due with respect to the NET INVOICED SALES
            of such PRODUCT in such country, an amount equal to up to [**]
            percent ([**]%) of the royalties or such other fees paid to such
            THIRD PARTY, subject to the limitation in the immediately following
            sentence. In no event shall the royalties due on the NET INVOICED
            SALES of the PRODUCT on account of any reduction pursuant to this
            Section 7.4 be reduced by means of such deductions by more than [**]
            percent ([**]%) of the royalties which otherwise would have been due
            SHEARWATER hereunder on the NET INVOICED SALES of the PRODUCT.

      7.5.  Manufacturing and Supply of the REAGENT.

                                                                   Page 22 of 40

            7.5.1. In addition, EYETECH shall pay to SHEARWATER for the supply
                  of the REAGENT complying with the SPECIFICATIONS and GMP the
                  prices in DOLLARS per unit of REAGENT set forth in Schedule
                  II.

            7.5.2. The DOLLARS per unit prices provided for in Section 7.5.1
                  shall remain in full force and effect for a period ending [**]
                  years after the EFFECTIVE DATE of the AGREEMENT. Thereafter,
                  the price at which EYETECH purchases the REAGENT from
                  SHEARWATER may be increased by SHEARWATER in each succeeding
                  [**] period in accordance with [**].

            7.5.3. If based on EYETECH'S projected forecast of the REAGENT,
                  SHEARWATER determines that improvement to or expansion of its
                  manufacturing capabilities are required, then SHEARWATER shall
                  provide written notification thereof within [**] days of
                  receipt of any EYETECH forecast. EYETECH and SHEARWATER shall
                  agree on the scope of the work required and shall prepare an
                  estimated budget for the SHEARWATER MANUFACTURING COSTS
                  attributed to such work before any work is performed, for
                  which EYETECH must pay SHEARWATER hereunder. EYETECH agrees to
                  pay all SHEARWATER'S MANUFACTURING COSTS of [**] SHEARWATER
                  [**] including, but not limited to, [**] including, but not
                  limited to, [**] for any particular use. In the event that any
                  governmental or regulatory agency requests information
                  regarding the REAGENT or requires that any further work or
                  testing be performed on the current GMP manufacturing process
                  of the REAGENT, such information shall be obtained, or such
                  work shall be done, at the expense of EYETECH, as provided
                  herein.

8.    Royalty Reports and Accounting

      8.1.  Reports, Exchange Rates. EYETECH shall notify SHEARWATER in writing
            promptly upon the FIRST COMMERCIAL SALE of a PRODUCT by EYETECH, its
            AFFILIATES or its SUBLICENSEES. During the portion of the term of
            this AGREEMENT following the FIRST COMMERCIAL SALE of a PRODUCT,
            EYETECH shall furnish to SHEARWATER a quarterly written report
            showing in reasonably specific detail, on a country by country
            basis: (a) the gross sales of each PRODUCT sold by EYETECH, its
            AFFILIATES and its SUBLICENSEES

                                                                   Page 23 of 40

            during the reporting period and the amounts deducted therefrom to
            determine NET INVOICED SALES from such gross sales; (b) the
            royalties payable in DOLLARS, if any, which shall have accrued
            hereunder based upon the NET INVOICED SALES of each PRODUCT; (c) the
            withholding taxes, if any, required by LAW to be deducted in respect
            of such sales; (d) the date of the FIRST COMMERCIAL SALE of each
            PRODUCT in each country during the reporting period; and (e) the
            exchange rates used in determining the amount of DOLLARS. With
            respect to sales of PRODUCTS invoiced in DOLLARS, the gross sales,
            NET INVOICED SALES, and royalties payable shall be expressed in
            DOLLARS. With respect to sales of PRODUCTS invoiced in a currency
            other than DOLLARS, the gross sales, NET INVOICED SALES and
            royalties payable shall be expressed in the domestic currency of the
            party making the sale together with the DOLLAR equivalent of the
            royalty payable. The DOLLAR equivalent shall be calculated using the
            average exchange rate (local currency per DOLLAR) published in The
            Wall Street Journal, Western Edition, under the heading "Currency
            Trading", on the last business day of each month during the
            applicable calendar quarter. Reports shall be due on the thirtieth
            (30th) day following the close of each quarter. EYETECH, its
            AFFILIATES and its SUBLICENSEES shall keep complete and accurate
            records in sufficient detail to properly reflect all gross sales and
            NET INVOICED SALES of each PRODUCT and to enable the royalties
            payable hereunder to be determined.

      8.2.  Audits.


            8.2.1. Upon at least ten (10) business days of the written request
                  of SHEARWATER, and not more than once in each calendar year,
                  EYETECH shall permit an independent certified public
                  accounting firm of nationally recognized standing, selected by
                  SHEARWATER and reasonably acceptable to EYETECH, at
                  SHEARWATER'S expense, to have access during normal business
                  hours to such of the records of EYETECH as may be reasonably
                  necessary to verify the accuracy of the royalty reports
                  hereunder for any year ending not more than twenty-four (24)
                  months prior to the date of such request. The accounting firm
                  shall disclose to each party whether the NET INVOICED SALES or
                  NET SALES are correct or incorrect and the specific details
                  concerning any discrepancies. No other information shall be
                  provided to SHEARWATER.


                                                                   Page 24 of 40

            8.2.2. If such accounting firm concludes that additional royalties
                  were owed during such period, EYETECH shall pay the additional
                  royalties within thirty (30) days of the date SHEARWATER
                  delivers to EYETECH such accounting firm's written report so
                  concluding. The fees charged by such accounting firm shall be
                  paid by SHEARWATER; provided however, that if the audit
                  discloses that the royalties payable by EYETECH for the
                  audited period are more than one hundred five percent (105%)
                  of the royalties actually paid for such period, then EYETECH
                  shall pay the reasonable fees and expenses charged by such
                  accounting firm.

            8.2.3. EYETECH shall include in each sublicense granted by it
                  pursuant to this AGREEMENT a provision requiring the
                  SUBLICENSEE to make reports to EYETECH, to keep and maintain
                  records of sales made and deductions taken pursuant to such
                  sublicense, and to grant access to such records by
                  SHEARWATER'S independent accountant to the same extent
                  required of EYETECH under this AGREEMENT. Upon the expiration
                  of [**] months following the end of any calendar year, the
                  calculation of royalties payable with respect to such calendar
                  year shall be binding and conclusive upon SHEARWATER and
                  EYETECH, its AFFILIATES and SUBLICENSEES.

      8.3.  Payment Terms. Royalties shown to have accrued by each royalty
            report provided for under Section 8.2 above shall be due and payable
            on the date such royalty report is due. Payment of royalties in
            whole or in part may be made in advance of such due date.

      8.4.  Payment Method. Except as provided for in this Section 8.4, all
            royalty payments by EYETECH under this AGREEMENT shall be paid in
            DOLLARS, and all such payments shall be originated from a United
            States bank located in the United States and made by bank wire
            transfer in immediately available funds to such account as
            SHEARWATER shall designate before such payment is due. Upon the
            election of SHEARWATER made in writing not less than thirty (30)
            days prior to any payment date, EYETECH shall pay all royalties
            owing to SHEARWATER hereunder in the currency in which such
            royalties accrued, without conversion into DOLLARS.

                                                                   Page 25 of 40

      8.5.  Exchange Control. If at any time legal restrictions prevent the
            prompt remittance of part or all royalties with respect to any
            country of the TERRITORY where the PRODUCT is sold, payment shall be
            made through such lawful means or methods as SHEARWATER reasonably
            shall determine.

9.    Confidentiality


      9.1.  Confidential Information. During the term of this AGREEMENT, and for
            a period of ten (10) years following the expiration or earlier
            termination hereof, each party shall maintain in confidence all
            information of the other party (including samples) disclosed by the
            other party and identified as, or acknowledged to be, confidential
            (the "CONFIDENTIAL INFORMATION"), and shall not use, disclose or
            grant the use of the CONFIDENTIAL INFORMATION except as permitted
            under this AGREEMENT or necessary to perform its obligations
            hereunder, except on a need-to-know basis to those directors,
            officers, AFFILIATES, employees, permitted SUBLICENSEES, permitted
            assignees and agents, the CONTRACT MANUFACTURER, INDEPENDENT
            COUNSEL, consultants, lawyers, bankers, clinical investigators or
            contractors, to the extent such disclosure is reasonably necessary
            in connection with such party's activities as expressly authorized
            by this AGREEMENT. Each party shall advise the foregoing who have
            access to the CONFIDENTIAL INFORMATION of the other party of its
            confidential and proprietary nature, and shall impose on the
            foregoing the duties of non-use and non-disclosure as stated in the
            Section 9.1. SHEARWATER KNOW-HOW is hereby deemed to be SHEARWATER
            CONFIDENTIAL INFORMATION. Each party shall notify the other promptly
            upon discovery of any unauthorized use or disclosure of the other
            party's CONFIDENTIAL INFORMATION.


      9.2.  Permitted Disclosures.

            9.2.1. The non-disclosure obligations contained in Section 9.1 shall
                  not apply to the extent that any receiving party (the
                  "RECIPIENT") is required (a) to disclose information by LAW,
                  order, or regulation of a government agency or a court of
                  competent jurisdiction, or by the rules of a securities
                  exchange; (b) to disclose information to a patent office for
                  the purposes of filing a patent on RECIPIENT'S method or
                  invention; (c) to disclose information to any governmental
                  agency for purposes of obtaining

                                                                   Page 26 of 40

                  approval to test or market a PRODUCT, provided in either case
                  that the RECIPIENT shall provide written notice thereof to the
                  other party and sufficient opportunity to object to any such
                  disclosure or to request confidential treatment thereof.

            9.2.2. The non-disclosure and non-use obligations contained in
                  Section 9.1 shall not apply to the extent that the RECIPIENT
                  can demonstrate that (a) the disclosed information was public
                  knowledge at the time of such disclosure to the RECIPIENT, or
                  thereafter became public knowledge, other than as a result of
                  action or omission of the RECIPIENT in violation hereof; (b)
                  the disclosed information was rightfully known by the
                  RECIPIENT without the obligation of confidentiality (as shown
                  by its written records) prior to the date of disclosure to the
                  RECIPIENT by the other party hereunder; (c) the disclosed
                  information was disclosed to the RECIPIENT on an unrestricted
                  basis from a source unrelated to any party to this AGREEMENT
                  and not under a duty of confidentiality to the other party; or
                  (d) the disclosed information was independently developed by
                  the RECIPIENT (as shown by its written records) without use of
                  CONFIDENTIAL INFORMATION disclosed by the other party.

      9.3.  Return of Confidential Information. Within ten (10) days following a
            request from either party or upon the expiration or termination of
            this AGREEMENT by either party, for any reason, each party shall
            deliver to the other party or, at the other party's election,
            destroy any and all CONFIDENTIAL INFORMATION, together with any and
            all copies thereof, provided that each party may keep one copy of
            such CONFIDENTIAL INFORMATION for purposes of complying with its
            contractual obligations under this AGREEMENT.

      9.4.  Terms of this Agreement. Except as otherwise provided in Section 9.2
            above and subject to either party's reporting obligations under
            applicable state and federal LAWS, (a) SHEARWATER and EYETECH shall
            not disclose any terms or conditions of this AGREEMENT to any THIRD
            PARTY without the prior written consent of the other party, such
            consent not to be unreasonably withheld or delayed, and (b)
            SHEARWATER and EYETECH shall not use the other party's name in
            publicity materials without the prior written consent of the other
            party,

                                                                   Page 27 of 40

            such consent not to be unreasonably withheld or delayed.
            Notwithstanding the foregoing, SHEARWATER and EYETECH shall prepare
            and issue a joint press release reasonably acceptable to both
            parties announcing the relationship created under this AGREEMENT.


      9.5.  Publication. After an AFFIRMATIVE DETERMINATION by the INDEPENDENT
            COUNSEL pursuant to Section 3.3.1. it may be to the mutual interest
            of the parties to publish articles relating to data generated or
            analyzed as a part of this AGREEMENT. Neither party shall submit for
            written or oral publication or presentation any manuscript,
            abstract, writing, printed material or the like which includes data
            or any other CONFIDENTIAL INFORMATION of the other party without
            first obtaining the prior written consent of the other party, which
            consent shall not be unreasonably withheld or delayed; provided
            however, that valid commercial reasons may exist for withholding
            such consent. Nothing contained herein shall be construed as
            precluding either party from making, in its discretion, any
            disclosures of information of any type which relate to the safety,
            efficacy, toxicology, or pharmacokinetic characteristics of the
            PRODUCT to the extent that either party may be required by LAW to
            make disclosures of such information.


      9.6.  Data. Any data which arises from testing of the PRODUCT by EYETECH,
            its AFFILIATES or its SUBLICENSEES which is reasonably necessary for
            SHEARWATER to monitor the quality and/or performance of the REAGENT,
            including, without limitation, the results of animal studies,
            toxicological testing and human clinical trials, shall be deemed
            CONFIDENTIAL INFORMATION and shall be shared with SHEARWATER, within
            a reasonable time of EYETECH receiving or deriving such data.

10.   Indemnification

      10.1. Indemnity.

            10.1.1. By SHEARWATER. SHEARWATER shall defend, indemnify and hold
                  EYETECH, EYETECH'S AFFILIATES, and EYETECH'S directors,
                  officers, employees and agents harmless from and against all
                  claims, actions, losses, liabilities, damages and expenses
                  (including reasonable attorney's fees and costs) resulting
                  from all claims, demands, actions and other proceedings by any
                  THIRD PARTY to the extent arising from (a) the

                                                                   Page 28 of 40

                  breach of any representation, warranty or covenant of
                  SHEARWATER under this AGREEMENT or (b) the negligence,
                  recklessness or willful misconduct of SHEARWATER in the
                  performance of its obligations and its permitted activities
                  under this AGREEMENT.

            10.1.2. By EYETECH. EYETECH shall defend, indemnify and hold
                  SHEARWATER, SHEARWATER'S AFFILIATES, and SHEARWATER'S
                  officers, employees and agents harmless from and against all
                  losses, liabilities, damages and expenses (including
                  reasonable attorney's fees and costs) resulting from all
                  claims, demands, actions and other proceedings by any THIRD
                  PARTY to the extent arising from (a) the breach of any
                  representation, warranty or covenant of EYETECH under this
                  AGREEMENT, (b) the research, development, manufacturing,
                  commercialization or marketing of the PRODUCT (without regard
                  to culpable conduct), or (c) the negligence, recklessness or
                  willful misconduct of EYETECH or its AFFILIATES or
                  SUBLICENSEES in the performance of its or their obligations
                  and its or their permitted activities under this AGREEMENT.

      10.2. Indemnification Procedures. A party seeking indemnification under
            this Section 10 (the "INDEMNIFIED PARTY") shall give prompt notice
            of the claim to the other party (the "INDEMNIFYING PARTY") and,
            provided that the INDEMNIFYING PARTY is not contesting the indemnity
            obligation, shall permit the INDEMNIFYING PARTY to control any
            litigation relating to such claim and disposition of any such claim,
            provided that the INDEMNIFYING PARTY shall act reasonably and in
            good faith with respect to all matters relating to the settlement or
            disposition of any claim as the settlement or disposition relates to
            the parties being indemnified under this Section 10, and the
            INDEMNIFYING PARTY shall not settle or otherwise resolve any claim
            without prior notice to the INDEMNIFIED PARTY and the consent of the
            INDEMNIFIED PARTY, if such settlement involves any remedy other than
            the payment of money by the INDEMNIFYING PARTY. The INDEMNIFIED
            PARTY shall cooperate with the INDEMNIFYING PARTY in its defense of
            any claim for which indemnification is sought under this Section 10.

                                                                   Page 29 of 40


         10.3.    Insurance. EYETECH, at its own expense, shall maintain
                  comprehensive general liability insurance, including product
                  liability insurance, against claims regarding the research,
                  development, manufacture, commercialization or marketing of
                  the PRODUCT under this AGREEMENT in the minimum amount of one
                  million DOLLARS ($1,000,000) per occurrence, and five million
                  DOLLARS ($5,000,000) in the aggregate, with SHEARWATER named
                  as an additional insured, such policies shall include a
                  provision that coverage will not be terminated unless
                  SHEARWATER has been given at least thirty (30) days written
                  notice. EYETECH shall maintain such insurance for so long as
                  it continues to research, develop, manufacture, commercialize,
                  or market the PRODUCT, and shall from time to time provide
                  copies of certificates of such insurance to SHEARWATER upon
                  its request.


11.      Term and Termination

         11.1.    Expiration. This AGREEMENT comes into effect on the EFFECTIVE
                  DATE and will remain in force until the last to expire of any
                  VALID PATENT CLAIM included in the SHEARWATER PATENT RIGHTS or
                  ENZON PATENTS (such date, the "INITIAL TERM DATE").


         11.2.    Renewal of Term. At least one hundred twenty (120) days before
                  the expiration of the INITIAL TERM DATE under Section 11.1,
                  the parties shall discuss in good faith whether and on what
                  terms to extend the term of this AGREEMENT.


         11.3.    Termination by EYETECH. EYETECH shall have the right to
                  terminate this AGREEMENT in the following circumstances:

                  11.3.1.  If the MARKETING AUTHORIZATION for the PRODUCT is
                           withdrawn or suspended by the regulatory authorities
                           (the FDA and the EMEA) in both the major markets
                           (both the United States and Europe) of the TERRITORY;

                  11.3.2.  If scientific or medical findings, which clearly
                           indicate serious hazards associated with the PRODUCT,
                           prohibit further marketing of the PRODUCT;

                  11.3.3.  If significant changes in competitiveness seriously
                           inhibit the effective marketing of the PRODUCT; or


                                                                   Page 30 of 40



                  11.3.4.  In the event EYETECH is unable to market the PRODUCT
                           in the TERRITORY due to valid patent infringement
                           claims of THIRD PARTIES.


         11.4.    Termination for Cause. Each party shall have the right to
                  terminate this AGREEMENT for failure to comply with the
                  material terms of this AGREEMENT by the other party, provided
                  such failure to comply is not corrected by the failing party
                  within twenty (20) days of written notice of any failure to
                  make timely payment of royalties or any other amount, when due
                  hereunder, or within ninety (90) days of receipt of written
                  notice of any other failure from the non-failing party. The
                  right of either party to terminate this AGREEMENT as provided
                  herein above shall not be affected in any way by such party's
                  waiver of or failure to take actions with respect to any
                  previous default.


         11.5.    Bankruptcy. In case of the filing of a voluntary petition for
                  bankruptcy, the failure to cause an involuntary petition in
                  bankruptcy to be dismissed within sixty (60) days after the
                  filing thereof, suspension of payment, assignment for the
                  benefit of creditors, voluntary liquidation or otherwise of
                  one party then the other party shall be entitled to terminate
                  this AGREEMENT by giving thirty (30) days written notice.

         11.6.    Effect of Termination.

                  11.6.1.  The provisions of Sections 2, 3.5, 4.9, 5.2, 9 and 10
                           shall survive termination of this AGREEMENT for any
                           reason whatsoever.

                  11.6.2.  In the event of termination of this AGREEMENT by
                           EYETECH pursuant to Section 11.2, EYETECH shall
                           continue to be obligated to purchase REAGENT pursuant
                           to any issued purchase orders. If EYETECH terminates
                           this AGREEMENT prior to the end of the first [**]
                           quarters after the EFFECTIVE DATE, it shall be
                           obligated to purchase the minimum quantities
                           specified for such first [**] quarters pursuant to
                           Section 4.3.

                  11.6.3.  If EYETECH terminates this AGREEMENT pursuant to
                           Section 11.4, the following shall occur so long as
                           EYETECH continues to develop, make, have made, use,
                           import, offer for sale or sell the PRODUCT: (a) the
                           licenses granted pursuant to Section 3.1 shall
                           survive such termination,


                                                                   Page 31 of 40


                           subject to the terms and conditions of the
                           CROSS-LICENSE AGREEMENT; and (b) EYETECH shall
                           continue to pay SHEARWATER royalties and milestones
                           payments and make reporting obligations pursuant to
                           Sections 7 and 8. During the period in which EYETECH
                           is obligated to pay SHEARWATER royalties for use of
                           the REAGENT, the SHEARWATER covenant of Section 3.4
                           shall survive. In addition, EYETECH shall pay
                           SHEARWATER other payments which have accrued
                           hereunder prior to such termination.

                  11.6.4.  In the event this AGREEMENT is terminated by either
                           party for any other reason, all licenses granted to
                           EYETECH in Section 3.1 shall immediately terminate.
                           Termination of this AGREEMENT by either party shall
                           not terminate EYETECH'S obligation to pay all
                           milestone payments, royalties, and other payments
                           which shall have accrued hereunder prior to such
                           termination.

12.      Assignment

         12.1.    Unless otherwise expressly permitted hereunder, except as part
                  of the sale of the entire business to which this AGREEMENT
                  relates, a merger, consolidation, reorganization or other
                  combination with or into another PERSON, or the transfer or
                  assignment to an AFFILIATE, pursuant to which the surviving
                  entity or assignee assumes the assigning or merging parties
                  obligations hereunder, neither party may assign any of its
                  rights or delegate any of its duties under this AGREEMENT
                  unless the other party has given specific written approval
                  thereto, with such approval not to be unreasonably withheld.
                  Any purported assignment not in accordance with this Section
                  12.1 shall be void and of no effect.

         12.2.    This AGREEMENT shall not only be binding upon each party
                  signatory hereto but also to its successors by consolidation,
                  combination, acquisition or merger, and assignees.

13.      Notices

         13.1.    Any notice or document required or permitted hereunder shall
                  be deemed to have been served properly if personally
                  delivered, delivered by facsimile transmission, or mailed by
                  registered or certified United States mail, postage


                                                                   Page 32 of 40


                  prepaid and properly addressed, to the respective party to
                  whom such notice relates at the applicable address set forth
                  in the caption of this AGREEMENT or at such alternate address
                  as shall be specified by notice given in the manner herein
                  provided. Facsimile transmission shall be deemed received on
                  the first business day following a confirmed transmission, and
                  a mailed notice or document shall be deemed received on the
                  fourth (4th) business day following the date of posting.

14.      Re-negotiation

         14.1.    In the event the CROSS-LICENSE AGREEMENT terminates or expires
                  while this AGREEMENT is still in effect, the parties agree to
                  meet to discuss in good faith any resulting changes to be made
                  in the terms of this AGREEMENT, including but not limited to,
                  financial terms.

15.      Miscellaneous

         15.1.    Force Majeure. Neither party shall be held liable or
                  responsible to the other party nor be deemed to have defaulted
                  under or breached this AGREEMENT for failure or delay in
                  fulfilling or performing any term of this AGREEMENT to the
                  extent, and for so long as, such failure or delay is caused by
                  or results from causes beyond the reasonable control of the
                  affected party including but not limited to fire, floods,
                  embargoes, war, acts of war (whether war is declared or not),
                  insurrections, riots, civil commotions, strikes, lockouts or
                  other labor disturbances, acts of God or acts, omissions or
                  delays in acting by any governmental authority or other party;
                  provided, however, that the foregoing shall not be applied to
                  excuse or delay any royalty or other payment obligation of
                  either party under this AGREEMENT. When such circumstances
                  arise, the parties shall discuss what, if any modification of
                  the terms of this AGREEMENT may be required to arrive at an
                  equitable solution.

         15.2.    Severability. All the terms and provisions of this AGREEMENT
                  are distinct and severable, and if any term or provision is
                  held unenforceable, illegal or void in whole or in part by any
                  court, regulatory authority or other competent authority it
                  shall to that extent be deemed not to form part of this
                  AGREEMENT, and the enforceability, legality and validity of
                  the remainder of this AGREEMENT will not


                                                                   Page 33 of 40


                  be affected, provided that, in any case where as a result of
                  the operation of this Section 15.2 the rights or obligations
                  of a party are materially altered to the detriment of that
                  party, that party may terminate this AGREEMENT within thirty
                  (30) days from the date of the relevant decision of the
                  relevant court, regulatory authority or other competent
                  authority.

         15.3.    Variation. This AGREEMENT may not be released, discharged,
                  supplemented, amended, varied or modified in any manner except
                  by an instrument in writing signed by a duly authorized
                  officer or representative of each of the parties hereto.

         15.4.    Forbearance and Waiver. No waiver by a party in respect of any
                  breach will operate as a waiver in respect of any subsequent
                  breach. No failure or delay by a party in exercising any right
                  or remedy will operate as a waiver thereof, nor will any
                  single or partial exercise or waiver of any right or remedy
                  prejudice its further exercise or the exercise of any other
                  right or remedy.

         15.5.    Counterparts. This AGREEMENT may be executed in more than one
                  counterpart, each of which constitutes an original and all of
                  which together shall constitute one enforceable agreement.

         15.6.    No Partnership. The relationship of the parties is that of
                  independent contractors and this AGREEMENT will not operate so
                  as to create a partnership or joint venture of any kind
                  between the parties.

         15.7.    Construction. The parties have participated jointly in the
                  negotiation and drafting of this AGREEMENT. In the event that
                  an ambiguity or question of intent or interpretation arises,
                  this AGREEMENT shall be construed as if drafted jointly by the
                  parties and no presumption or burden of proof shall arise
                  favoring or disfavoring any party by virtue of the authorship
                  of any of the provisions of this AGREEMENT.

         15.8.    Entire Agreement. This AGREEMENT constitutes the entire
                  understanding between the parties and supersedes any prior
                  understanding and agreements between and among them respecting
                  the subject matter hereof. There are no representations,
                  agreements, arrangements or understandings, oral or written,
                  between the parties relating to the subject matter of this
                  AGREEMENT which are


                                                                   Page 34 of 40


                  not fully expressed in this AGREEMENT. This AGREEMENT shall be
                  binding upon, and inure to the benefit of, the parties and
                  their respective successors and assigns.

         15.9.    Governing Law. This AGREEMENT shall be governed by and
                  construed in accordance with the LAWS of the State of
                  California, U.S.A., without regard to its choice of law rules.



IN WITNESS WHEREOF, the parties hereto have caused their authorized
representatives to execute this AGREEMENT by signing below:

SIGNED:

For and on behalf of:                    For and on behalf of:
Shearwater Corporation                   Eyetech Pharmaceuticals, Inc.
Signature /s/ Stephen A. Charles         Signature /s/ Harsha Murthy
          ----------------------------             ----------------------------
Name:  Stephen A. Charles, Ph.D.         Name:  Harsha Murthy
Title:  Vice President, Corporate        Title: Vice President, Business
        Development                             Strategy & General Counsel


                                                                   Page 35 of 40


                                   SCHEDULE I

                               THE SPECIFICATIONS

                                    [**][**]



PROCEDURE NUMBER      TEST                             SPECIFICATION
                                                 
[**]                  [**]                             [**]
[**]                  [**]                             [**]
[**]                  [**]                             [**]
[**]                  [**]                             [**]
[**]                  [**]                             [**]
[**]                  [**]                             [**]
[**]                  [**]                             [**]

[**]
[**]                  [**]                             [**]
[**]                  [**]                             [**]
[**]                  [**]                             [**]
[**]                  [**]                             [**]
[**]                  [**]                             [**]
[**]                  [**]                             [**]
[**]                  [**]                             [**]

                      [**]
[**]                  [**]                             [**]
[**]                  [**]                             [**]
[**]                  [**]                             [**]


ALL FORMS PRESENTING THE ABOVE RESULTS MUST BE ATTACHED

                                      [**]


                                                                   Page 36 of 40


                                   SCHEDULE II

                        REMUNERATION AND INITIAL FORECAST

Pursuant to Section 7.1 the following milestone payments will be payable by
EYETECH to SHEARWATER:




MILESTONE                                         MILESTONE PAYMENT (US DOLLARS)
                                               
Within ten (10) days from the INDEPENDENT
  COUNSEL'S AFFIRMATIVE DETERMINATION                                $1,500,000
Within [**] of [**]                                                  $[**]
Within [**] of [**]                                                  $[**]



The above payments shall be made only upon the first time achieved for the
PRODUCT.

Pursuant to Section 4.3, EYETECH shall purchase the following amounts of REAGENT
from SHEARWATER:



CALENDAR QUARTER FOLLOWING THE EFFECTIVE DATE   AMOUNT OF REAGENT REQUIRED (KG)
                                             
1
2
3
4
5
6
7
8



                                                                   Page 37 of 40


Pursuant to Section 7.5.1, EYETECH will pay to SHEARWATER the following prices
for the REAGENT manufactured according to cGMP and the SPECIFICATIONS.



TOTAL AMOUNT OF REAGENT PURCHASED OVER 12               PRICE PER GRAM (DOLLARS)
MONTH PERIOD (KG)
                                                     
Less than [**] kg                                                          $[**]

Equal to or greater than [**] kg and less than [**] kg                     $[**]

Equal to or greater than [**] kg and less than [**] kg                     $[**]

Equal to or greater than [**] kg                                           $[**]



                                                                   Page 38 of 40


                                  SCHEDULE III

                            SHEARWATER PATENT RIGHTS



SC REFERENCE         PATENT NUMBER       PRIORITY DATE       STATUS
                                                    
[**]                 [**]                [**]                [**]
[**]                 [**]                [**]                [**]
[**]                 [**]                [**]                [**]



                                                                   Page 39 of 40


                                   SCHEDULE IV

                                  ENZON PATENTS

[**]


                                                                   Page 40 of 40

EX-10.55

                                                               EXHIBIT NO. 10.55

          Confidential Materials omitted and filed separately with the
         Securities and Exchange Commission. Asterisks denote omissions.


EYETECH PHARMACEUTICALS

                                                      500 Seventh Avenue
                                                      18(th) Floor
                                                      New York, New York 10018
                                                      August 29, 2003


Raylo Chemicals Inc.
8045 Argyll Road
Edmonton, Alberta
Canada
Attn:  Matt Colomb
       Greg Klak
       Robin Nicol

Gentlemen:

      This Letter of Understanding ("LOU") is agreed to and accepted by and
between Eyetech Pharmaceuticals, Inc., a Delaware corporation ("Eyetech") and
Raylo Chemicals, Inc., a company organized and existing under the laws of Canada
("Raylo"), and sets forth the intentions, terms and conditions pursuant to which
Eyetech and Raylo will undertake actions to allocate between themselves control
of the technical and operational aspects of the manufacture of Eyetech's
proprietary compound Macugen(TM) during the period that this LOU remains in
effect. This LOU shall take effect on September 1, 2003 and remain in effect
until the earlier of such time as (a) this LOU is terminated by joint agreement
between Eyetech and Raylo after satisfaction of certain mutually agreed to
performance targets for the Macugen(TM) production at Raylo or (b) the parties
discontinue any relationship between them whereby Raylo manufactures Eyetech's
Macugen(TM) compound for Eyetech at Raylo's facility.

      During the period that this LOU is in effect, the parties hereto envision
entering into a definitive Manufacturing and Supply Agreement (the "Proposed
Agreement") setting forth certain agreements between them relating to a proposed
long term manufacturing relationship whereby Raylo would manufacture the
Macugen(TM) compound for Eyetech.

      Eyetech and Raylo agree as follows:

1.    Allocation of Responsibility and Authority for Production of Macugen(TM)

      -     Eyetech will assume responsibility for and have full authority over
            all operational and technical decisions relating to the manufacture
            of Macugen(TM) at Raylo's facility.

      -     Eyetech will assign a sufficient number of its own employees, not to
            exceed 8, (the "Eyetech Staff") to work on the Macugen(TM)
            production on-site at Raylo's facility at Eyetech's sole cost.

      -     Raylo shall take all reasonable steps to facilitate Eyetech's
            decision-making regarding the Macugen(TM) production.

      -     Raylo shall direct its supervisors to follow all reasonable
            instructions concerning the Macugen(TM) production issued by the
            Eyetech Staff designated to oversee such production.

      -     Raylo shall direct its shift supervisors to report all technical
            problems related to the Macugen(TM) production to the Eyetech Staff
            as well as keeping Raylo management informed.

      -     Raylo will maintain full responsibility for cGMP compliance, safety
            and all administrative matters, including batch records and other
            production documentation related to the production of Macugen(TM).

      -     Eyetech will assist Raylo in establishing the inventory control and
            raw material tracking system for the Macugen(TM) production unit,
            but Raylo will be responsible for the implementation of such system.

      -     Eyetech will execute a confidentiality agreement covering all its
            employees which will prohibit the disclosure of any information
            obtained by Eyetech or its employees concerning proprietary
            information belonging to Raylo and/or Raylo's customers.

      -     Eyetech shall have the right to designate staff that will have
            access at all times to the Macugen(TM) production area and the
            office area assigned to Eyetech.

      -     A joint committee consisting of 2 Raylo and 2 Eyetech personnel will
            be established to handle HR, scheduling and other non-process
            related issues as they arise; this committee will meet weekly.

2.    Dedication of Production Areas and Raylo Support at Raylo's Facility

      -     Eyetech will pay Raylo for all Macugen(TM) batches manufactured at
            its facility, including rejected batches for the term of this
            agreement. Payment will be made as follows:

      -     Monthly rate of $[**] US, invoiced in Canadian dollars at an
            exchange rate to be agreed between Raylo and Eyetech

            - This rate covers resources equivalent to what have been employed
            to date on this project, and changes in scope (i.e. additional
            staff) will have to be negotiated independently

            - This rate will be fixed for the first six months of the project,
            starting September 1, 2003. If the current plan (i.e. Eyetech
            operational control) is to be extended at this point, the rate will
            be reviewed and revised if necessary

            - Variable charges (non-key raw materials and consumables)
            associated with manufacturing will be charged separately, and are
            expected to be approximately $[**] US per batch. This figure can be
            confirmed and reviewed as necessary.

            - In terms of batch 8P, which will not be progressed, it is proposed
            that Raylo invoice Eyetech for $[**] US for this batch, with the
            understanding that there will be no reimbursement for Eyetech
            supplied raw materials that were utilized in this run.

      -     In exchange for the considerations given above no later than by
            September 5, 2003 Raylo will dedicate exclusively to Macugen(TM)
            production, and give Eyetech Staff full access to the following
            production areas:

                  1.    One Synthesis Suite

                  2.    One Purification Suite

                  3.    One Lyophilization Suite

      -     Eyetech will have certain process equipment dedicated to Macugen and
            will be used solely for Macugen production.

      -     Eyetech will be responsible for maintenance of an inventory of spare
            parts and any upgrades for equipment used in the production of
            Macugen(TM).

3.    Quality Control

      -     Operators will be trained to run the in-process Macugen(TM) assays.
            Additional equipment to perform the in-process Macugen (TM) assays
            may be purchased and installed at Eyetech's expense, if agreed by
            Raylo and Eyetech

4.    Quality Assurance

      -     Eyetech Staff will assume responsibility for streamlining batch
            records including review of batch records and "clean up" of the
            batch record process.

      -     Eyetech will make recommendations to Raylo as to new
            systems/processes and will work with Raylo to see if they can be
            implemented in Raylo systems.

      -     Raylo personnel shall provide QA oversight, batch record review, and
            Macugen related documentation to Eyetech upon Eyetech's request.

Neither Party shall make any press release or other public presentation or
disclosure with respect to this LOU nor the transactions contemplated hereby
without the prior written consent and approval of the other Party, except to the
extent required under applicable law or regulation or under the rules of any
stock exchange or NASDAQ.

If the foregoing terms are acceptable, please sign both originals of this LOU
below, return to us one fully-signed original to acknowledge your agreement to
and acceptance of this LOU, and retain one fully-signed original for your files.

We look forward to the execution of this LOU and the continuation of our
relationship with regard to Macugen(TM).

                                    Very truly yours,

                                    EYETECH PHARMACEUTICALS, INC.


                                    By: /s/ Chuck Williams
                                        ---------------------------------
                                         Name:  Chuck Williams
                                         Title:  Senior VP, Manufacturing


ACCEPTED AND AGREED:

RAYLO CHECMICALS, INC.


By:   /s/Robin H. Nicol
      ------------------
      Name:  Robin H. Nicol
      Title:  Manager, Research, Development and Oligo Unit

                    ADDENDUM TO LOU DATED AS OF SEPTEMBER 1, 2003

Raylo Chemicals, Inc ("Raylo") and Eyetech Pharmaceuticals, Inc. ("Eyetech")
hereby agree to add the provisions set forth below to their Letter of
Understanding effective dated as of September 1, 2003 (the "LOU"). This Addendum
shall be effective as of November 1, 2003.

      1.    Additional Space

In addition to the exclusively dedicated production areas at the Raylo listed in
the LOU Clause 2., Raylo will dedicate exclusively to the Macugen(TM) production
for a period not to exceed 180 days the following production areas:

            1.    One Synthesis Suite

            2.    One Purification Suite

            3.    One Area currently used for Glass Washing

      2.    Additional Payment

In addition to the monthly rate payable by Eyetech to Raylo, Eyetech shall pay
to Raylo for the Additional Space listed under clause 1 of this Addendum $ [**]
CDN per month.

      3.    Currency Rate

For the monthly payments of the $ [**]US under the LOU, which as of the
Effective date of this addendum will be paid in the amount of $ [**]CDN. For any
other payments denominated in US. Dollars it is agreed that Eyetech will pay
Raylo, at Raylo's option, in US. Dollars or at the exchange rate reported in the
Wall Street Journal Eastern Edition on the date the payment becomes due.

      4.    Outstanding Payments

An outstanding amount of $ [**]US invoiced to Eyetech by Raylo shall be paid to
Raylo before the end of calendar year 2003.

      5.    Renewal Option

Eyetech shall have the option to renew the LOU for an additional term of 180
days, but not beyond completion of the process validation.

                  [SIGNATURE NEXT PAGE]

Accepted by:                                     Accepted by:

Raylo Chemicals, Inc.                            Eyetech Pharmaceuticals, Inc.

/s/ T. Matthew Colomb                            /s/ Paul G. Chaney
- ---------------------------------                -------------------------------
Signature                                        Signature

T. Matthew Colomb                                Paul G. Chaney
- ---------------------------------                -------------------------------
Printed Name                                     Printed Name

President                                        C.O.O.
- ---------------------------------------------    -------------------------------
Title                                            Title

EX-10.56

                                                                   EXHIBIT 10.56

          CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE
        SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.

                       MANUFACTURING AND SUPPLY AGREEMENT

      This MANUFACTURING AND SUPPLY AGREEMENT (the "Agreement") dated as of
November 11, 2003 (the "Effective Date") is made by and between Raylo Chemicals
Inc., a Canadian corporation ("Raylo") and Eyetech Pharmaceuticals, Inc., a
Delaware corporation ("Eyetech").

                                    RECITALS

      WHEREAS, Eyetech develops and commercializes new drugs to reduce and
prevent serious vision loss caused by eye disease and to develop new
technologies to safely deliver drugs to the back of the eye;

      WHEREAS, Raylo is a contract manufacturer of chemical compounds for human
drugs;

      WHEREAS, Raylo and Eyetech wish to enter into an agreement describing the
terms and conditions upon which Raylo will manufacture and supply to Eyetech,
and Eyetech will purchase from Raylo, the active pharmaceutical ingredient in
Eyetech's Macugen(TM) product;

      WHEREAS, Raylo and Eyetech wish to set forth certain license terms
pursuant to which Raylo will license and sublicense its intellectual property to
permit Eyetech to manufacture for itself or have manufactured by a third party
manufacturer the same product;

      WHEREAS, Raylo and Eyetech are parties to a certain Letter of
Understanding dated September 1, 2003 (the "LOU") that, during the effectiveness
of such LOU, will supersede and/or modify certain terms of this Agreement; and

      WHEREAS, Raylo and Eyetech are parties to a certain Quality Agreement
dated November 11, 2003 (the "Quality Agreement"), which sets forth certain
agreements of the Parties regarding quality control and quality assurance;

      NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises, covenants and agreements hereinafter set forth the parties hereto
agree as follows:

                                 1. DEFINITIONS


      1.1 "15mM Process" shall mean the process for manufacturing API
established, validated and documented through the 15mM Process Validation
Procedures.

      1.2 "15mM Process Validation Procedures" shall mean the procedures for
validation of the 15mM Process set forth in the Quality Agreement.

      1.3 "Affiliate" shall mean, with respect to a Party, any Person that
controls, is controlled by, or is under common control with such Party. For
purposes of this Section 1.3, "control" shall refer to (a) in the case of a
Person that is a corporate entity, direct or indirect ownership of fifty percent
(50%) or more of the stock or shares having the right to vote for the election
of directors of such Person and (b) in the case of a Person that is an entity,
but is not a corporate entity, the possession, directly or indirectly, of the
power to direct, or cause the direction of, the management or policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise.

      1.4 "Agreement" shall mean this Manufacturing and Supply Agreement between
Raylo and Eyetech together with the recitals and all exhibits, schedules and
attachments hereto.


      1.5 "Amgen License Fee" shall mean a fee in the amount of US$[**] payable
by Eyetech to Raylo upon exercise by Eyetech of its option to license the Amgen
Patents in accordance with Section 2.3(a).



      1.6 "Amgen Patents" shall mean U.S. Patent No. 4,762,779 and Canadian
Patent No. 1,303,526 and all Patent Rights based on such patents, and all
counterparts of any of the foregoing in any country.


      1.7 "API" shall mean active pharmaceutical ingredient bulk drug substance
manufactured for use in the Eyetech Product, as described in the Specifications.

      1.8 "Applicable Legal Requirements" shall mean: (a) any and all federal,
national, supranational, state and local laws, regulations, ordinances, orders
and requirements applicable to the activities under this Agreement; and (b) any
other specifications, guidelines, procedures and directives mutually agreed to
by the Parties, applicable to the API or Eyetech Product, or activities under
this Agreement, including, without limitation, cGMP.

      1.9 "Batch" shall mean a batch of API resulting from the 15mM Process.

      1.10 "[**]" shall mean [**].

      1.11 "Binding Order" shall have the meaning set forth in Section 3.2(b)
hereof.

      1.12 "Business Day" shall mean a day on which banks are open for business
in both New York, New York and Edmonton, Alberta.



                                       2

      1.13 "Certificates" means, with respect to the API, all necessary
certificates of analysis and/or certificates of compliance.

      1.14 "CFR" shall mean the United States Code of Federal Regulations.

      1.15 "cGMP" shall mean applicable current Good Manufacturing Practices as
described, without limitation, in ICHQ7A as specified in the Quality Agreement.

      1.16 "Confidential Information" shall mean all Know How or other
information (whether or not patentable) regarding a Party's technology,
products, business information or objectives, and all biological materials of a
Party. Notwithstanding the foregoing, Confidential Information shall not include
Know-How or other information that:

            (a) was known or used by the receiving Party or its Affiliates prior
to its date of disclosure to the receiving Party; or

            (b) either before or after the date of the disclosure to the
receiving Party is lawfully disclosed to the receiving Party or its Affiliates
by sources other than the disclosing Party rightfully in possession of such
Know-How or other information and not bound by confidentiality obligations to
the disclosing Party; or

            (c) either before or after the date of the disclosure to the
receiving Party or its Affiliates is or becomes published or otherwise is or
becomes part of the public domain through no breach hereof on the part of the
receiving Party or its Affiliates; or

            (d) is independently developed by or for the receiving Party or its
Affiliates without reference to or reliance upon the Confidential Information of
the disclosing Party as demonstrated by written records.

      1.17 "Delivery" and all variations of this term means the delivery to
Eyetech of API, FCA (Incoterms 2000) the Facility, together with all applicable
Certificates, that meets the Specifications and has been manufactured in
accordance with cGMP.

      1.18 "Dollars" or "$" shall mean Canadian Dollars unless expressly
provided otherwise.

      1.19 "Effective Date" shall have the meaning set forth in the introduction
hereto.

      1.20 "Eyetech Intellectual Property" shall mean all Eyetech Know-How and
Eyetech Patent Rights.

      1.21 "Eyetech Know-How" shall mean any Know-How that (a) either (i) is in
Eyetech's and/or its Affiliates' possession on the Effective Date or (ii)
Eyetech and/or its Affiliates develop or acquire during the Term and (b) is
owned or controlled by, or licensed to, Eyetech and/or its Affiliates and to
which Eyetech and/or its Affiliates have


                                       3

the right to grant licenses or sublicenses without violating the terms of any
agreement with a third party.

      1.22 "Eyetech Materials" shall mean the raw materials to be supplied to
Raylo by Eyetech pursuant to Section 3.3 hereof. A list of all Eyetech Materials
is attached hereto as Exhibit B.

      1.23 "Eyetech Patent Rights" shall mean Patent Rights that (a) cover
Eyetech Know-How and (b) are owned or controlled by, or licensed to, Eyetech
and/or its Affiliates and to which Eyetech and/or its Affiliates have the right
to grant licenses or sublicenses without violating the terms of any agreement
with a third party.

      1.24 "Eyetech Product" shall mean Eyetech's product named "Macugen(TM)"
delivered by intravitreal injection.

      1.25 "Facility" shall mean Raylo's facility at 1021 Hayter Road, Edmonton,
Alberta, Canada or such other manufacturing facility of Raylo or its Affiliates
as may be approved by Eyetech.

      1.26 "FD&C Act" shall mean the United States Federal Food, Drug, and
Cosmetic Act, as amended, and the regulations promulgated thereunder.

      1.27 "FDA" shall mean the United States Food and Drug Administration.

      1.28 "Forecast" shall have the meaning set forth in Section 3.2(a) hereof.

      1.29 "Improvement" shall mean any upgrade, new version, adaptation,
change, redesign, improvement, derivative work, modification or development of
or to the API, the Specifications, or the method or process of manufacture,
production or use of the API, conceived or reduced to practice, or otherwise
created, in the course of the Parties' activities pursuant to this Agreement.

      1.30 "Initial Term" shall have the meaning set forth in Section 9.1.

      1.31 "Know-How" shall mean all information, inventions, discoveries,
copyrights, trade secrets, data or materials, whether proprietary or not, and
all Improvements.

      1.32 "LOU" shall have the meaning set forth in the recitals hereto.

      1.33 "LOU Termination Date" shall mean the date that the interim
provisions of the LOU relating to the processing of API at the Facility and
responsibility for rejected Batches shall, by agreement of the Parties in
accordance with Section 4.1(c), terminate.

      1.34 "Material Safety Data Sheet" means the material safety data sheet
used to comply with the United States Occupational Safety and Health
Administration's Hazard Communication Standard, 29 CFR Section 1910.120, as
amended from time to time.


                                       4

      1.35 "Minimums" shall mean the percentages of Eyetech's requirements for
API used in the Eyetech Product set forth on Exhibit C hereto.

      1.36 "mM" shall mean one-thousandth of a Mole.

      1.37 "Negotiated Per Gram Cost" shall mean the cost per gram of API to be
paid by Eyetech to Raylo set forth on Exhibit D, as adjusted from time to time
in accordance with Section 4.2.

      1.38 "PAI" shall mean a pre-approval inspection of the Facility to
demonstrate the requirements of Section 505 of the FD&C Act are met with regard
to the methods used in, and the facilities and controls used for, the
manufacture and processing of a drug.

      1.39 "Parties" shall mean Raylo and Eyetech together and "Party" shall
mean either Raylo or Eyetech individually.

      1.40 "Patent Rights" shall mean all patents and patent applications
(including any continuations and continuations-in-part of any such patent
applications, and any divisionals, provisionals or substitute applications with
respect to any such patent applications), any patent issued with respect to any
such patent applications, any reissue, reexamination, renewal or extension
(including any supplemental patent certificate) of any such patent, and any
confirmation patent or registration patent or patent of addition based on any
such patent, and all counterparts of any of the foregoing in any country.

      1.41 "Person" shall mean any natural person or any corporation, company,
partnership, joint venture, firm or other entity, including without limitation a
Party.

      1.42 "Quality Agreement" shall have the meaning set forth in the recitals
hereto.

      1.43 "Raw Materials" means ingredients, additives, purification resins,
and reagents, and any other components or in-process materials as defined in 21
CFR Section 210.3, which are purchased by Raylo for use in the manufacture of
the API, but not including the Eyetech Materials.

      1.44 "Raylo Intellectual Property" shall mean all Raylo Know-How and Raylo
Patent Rights.

      1.45 "Raylo Know-How" shall mean any Know-How that (a) either (i) is in
Raylo's and/or its Affiliates' possession on the Effective Date or (ii) Raylo
and/or its Affiliates develop or acquire during the Term and (b) is owned or
controlled by, or licensed to, Raylo and/or its Affiliates and to which Raylo
and/or its Affiliates have the right to grant licenses or sublicenses without
violating the terms of any agreement with a third party.

      1.46 "Raylo Patent Rights" shall mean Patent Rights that (a) cover Raylo
Know-How and (b) are owned or controlled by, or licensed to, Raylo and/or its
Affiliates


                                       5

and to which Raylo and/or its Affiliates have the right to grant licenses or
sublicenses without violating the terms of any agreement with a third party.

      1.47 "Services" shall have the meaning set forth in Section 3.6.

      1.48 "Specifications" shall mean the initial specifications for the API
set forth on Exhibit A hereto, and any subsequent changes or modifications to
the initial specifications as determined by Eyetech from time to time.

      1.49 "Term" shall mean the Initial Term as it may be extended pursuant to
Section 9.1 hereof.

      1.50 "Validation Batches" shall mean Batches of API submitted by Raylo to
Eyetech for validation of the 15mM Process pursuant to the Quality Agreement.


                 2. VALIDATION; REGULATORY COMPLIANCE; LICENSES


      2.1 Validation. Validation of the 15mM Process shall be conducted as set
forth in the Quality Agreement. All post-validation changes to the 15mM Process
shall require the prior written approval of Eyetech.

      2.2 Regulatory Compliance and Records.

            (a) Regulatory Inspections and Notices. Raylo is responsible for
passing any required PAI in connection with Eyetech's application for regulatory
approval of the Eyetech Product. Eyetech shall provide a third party consultant,
at its cost, to advise Raylo on what steps are necessary for Raylo to pass any
such PAI with respect to the API in the Facility. Raylo shall provide Eyetech
with a copy of all inspection results, including a copy of any inspection report
and/or observations from the regulatory authority (or its designee) for any
regulatory inspection; provided that Raylo may redact any third party
confidential information from such inspection results if such third party
confidential information is not relevant to a complete understanding of the
impact of the regulatory inspection on Raylo's ability to manufacture and supply
API in accordance with this Agreement. Raylo shall notify Eyetech within two (2)
Business Days after receiving formal notice about the initiation of any
compliance or enforcement action, investigation, inspection, review or inquiry
by the FDA or other regulatory authority concerning the API, including any Form
483, recall, seizure, warning letter, or court complaint. In addition, Eyetech
shall have the right to have, at Eyetech's option, up to two (2) Eyetech
representatives present at the Facility for any regulatory inspection that
relates to the manufacture of the API.

            (b) Access to Records. Eyetech shall have access to all records,
documents and materials of Raylo relating to this Agreement and the manufacture
of the API. Upon Eyetech's request and at Eyetech's cost, Raylo shall promptly
deliver to Eyetech a single copy of any such records, documents and materials
that Eyetech may request.


                                       6

            (c) Regulatory Submissions and Support. Raylo shall cooperate with
Eyetech and provide Eyetech with any information in Raylo's possession that
Eyetech requires in order to make submissions to regulatory authorities relating
to the API and/or the Eyetech Product. Eyetech will advise Raylo from time to
time of any regulatory submissions relating to the API and/or the Eyetech
Product requiring responses from Raylo. Raylo shall respond to any such inquiry
and provide all requested information promptly after Raylo's receipt of the
inquiry, and Raylo shall provide Eyetech with notice of any inquiry from a
regulatory authority within two (2) Business Days from Raylo's receipt of the
inquiry.

      2.3 Licenses; Covenants.


            (a) License Under Amgen Patents. Raylo hereby grants to Eyetech an
irrevocable, perpetual, non-exclusive, worldwide, royalty-free license, with the
right to grant sublicenses to Eyetech's Affiliates and to Pfizer Inc. and Pfizer
Inc.'s affiliates, under the Amgen Patents, solely to make, have made, use,
sell, offer for sale and import the API and Eyetech Product, effective upon
written notice from Eyetech to Raylo that it is exercising its option to license
the Amgen Patents and payment by Eyetech to Raylo of the Amgen License Fee.
Raylo hereby agrees not to transfer or grant to any third party any rights in
the Amgen Patents that would prevent or are inconsistent with the foregoing
license grant to Eyetech.


            (b) License Under Eyetech Intellectual Property. Eyetech hereby
grants to Raylo a non-exclusive, worldwide, non-sublicensable, royalty-free
license under the Eyetech Intellectual Property during the Term solely to
perform Raylo's obligations under this Agreement.

            (c) License Under Raylo Intellectual Property. In order to ensure
that Eyetech will be free to continue using, or having used, its manufacturing
processes and other technology relating to the API and the Eyetech Product both
during the Term and after the expiration or termination of this Agreement, Raylo
hereby grants to Eyetech an irrevocable, perpetual, non-exclusive, worldwide,
royalty-free license, with the right to grant sublicenses to Eyetech's
Affiliates and to Pfizer Inc. and Pfizer Inc.'s Affiliates, under the Raylo
Intellectual Property, solely to make, have made, use, sell, offer for sale and
import the API and Eyetech Product.


            (d) Covenants Regarding [**]. Raylo hereby agrees (i) to [**] in
full force and effect during the Term and thereafter for a period of [**], (ii)
agrees not to take any action or omit to take any action, which action or
omission could result in [**] and (iii) agrees to notify Eyetech within two (2)
Business Days of receiving any communication from or on behalf of [**]. Upon
request by Eyetech, and at Eyetech's expense or [**], Raylo shall exercise its
right under Section 2.02 of the [**] that are [**] those of the [**] designated
by Eyetech.


      2.4 Ownership of and Licenses to Improvements. Each Party shall own all
Improvements made by it or its employees. Raylo hereby grants to Eyetech an
irrevocable, perpetual, exclusive, worldwide, royalty-free license, with the
right to grant


                                       7

sublicenses, to all Improvements made by Raylo and its employees, solely to
make, have made, use, sell, offer for sale and import the API and Eyetech
Product. Eyetech hereby grants to Raylo an irrevocable, perpetual,
non-exclusive, worldwide, royalty-free license, with the right to grant
sublicenses, to manufacturing method or process Improvements made by Eyetech and
its employees, solely for purposes unrelated to the making, having made, using,
sale, offer for sale or importation of the API or the Eyetech Product.

      2.5 Upgrade to Manufacturing Process. If Eyetech requests that Raylo
upgrade its manufacturing process for the API from the 15mM Process to a higher
volume process (e.g., to a 100mM process), the Parties shall in good faith
cooperate to make any operational changes necessary to implement such upgrade
and to amend this Agreement, including without limitation the validation and
pricing provisions hereof, as reasonably necessary to accommodate such necessary
changes.


           3. SUPPLY OF PRODUCT; EYETECH MATERIALS; SERVICES; ADVERSE
                         EXPERIENCE REPORTING; FACILITY


      3.1 Supply and Purchase of API. Raylo shall manufacture API exclusively
for and sell API exclusively to Eyetech and its Affiliates and, if requested by
Eyetech, to Pfizer Inc. and its affiliates, and Eyetech (together with its
Affiliates, Pfizer Inc. and Pfizer Inc.'s affiliates) shall purchase from Raylo
quantities of the API sufficient to meet Eyetech's Minimum obligations; provided
that Eyetech shall not be obligated to purchase such Minimums from Raylo if its
failure to do so is related to Raylo's failure to accept Eyetech's Binding
orders or to Deliver API to Eyetech by the requested delivery dates in Eyetech's
Binding Orders. If Eyetech requests that Raylo sell API to Pfizer Inc. and
Pfizer Inc.'s affiliates, Eyetech hereby guarantees to Raylo payment by Pfizer
Inc. and Pfizer Inc.'s affiliates for API Delivered by Raylo in accordance with
written orders placed by Pfizer Inc. and Pfizer Inc.'s affiliates.

      3.2 Production Planning; Forecasts.

            (a) Forecast. During the Term, Eyetech shall provide to Raylo,
within the first month of each quarter, on a quarterly basis, a rolling forecast
for orders of API with respect to the following four (4) quarters (each, a
"Forecast"). Eyetech shall be obligated to purchase at least [**] of the amount
of API forecast for the first quarter of any Forecast, and shall execute a
binding purchase order to that effect. The forecast for the remaining three (3)
quarters of any Forecast shall be non-binding.

            (b) Binding Orders. The binding portions of the Forecasts and
Eyetech's purchase orders for quantities in excess of such binding portions
shall be binding (each, a "Binding Order" and, collectively, "Binding Orders").

            (c) Obligation to Supply

                  (1) Raylo shall (A) fill all Binding Orders, (B) Deliver API
                  ordered thereunder, (C) use best efforts to accommodate
                  Eyetech's requested Delivery dates, and (D) in any case
                  Deliver such API within the quarter, for up to [**]% of
                  Eyetech's requirements


                                       8

                  forecasted for the first quarter in the most recent Forecast
                  preceding such Binding Orders, provided that Eyetech submits
                  purchase orders for such Binding Orders at least [**] days
                  preceding the requested Delivery date and provided further
                  that Eyetech acknowledges that if, despite Raylo's best
                  efforts to accommodate Eyetech's requested Delivery dates,
                  Raylo is unable to fully accommodate such requested Delivery
                  dates due to [**], then Raylo shall not be in breach of its
                  obligations pursuant to clause (C) above as long as Raylo
                  continues to use its best efforts to Deliver the API ordered
                  by Eyetech as close as reasonably practicable to Eyetech's
                  requested Delivery dates. In addition, Raylo shall use best
                  efforts to fill all Binding Orders, and Deliver API ordered
                  thereunder by the requested Delivery date, for quantities in
                  excess of [**]% of Eyetech's requirements forecasted for the
                  first quarter in the most recent Forecast preceding such
                  Binding Orders, provided that Eyetech submits purchase orders
                  for such Binding Orders at least [**] days preceding the
                  beginning of the quarter in which Delivery is requested.

                  (2) If Raylo is unable to supply the API ordered by Eyetech
                  hereunder and Raylo is unable to remedy the problem within
                  [**] days after its initial failure to supply, then thereafter
                  Eyetech's Minimum obligations hereunder shall no longer apply;
                  provided that Eyetech shall in good faith discuss with Raylo
                  alternative minimum commitments to substitute for Eyetech's
                  Minimum obligations if Raylo's failure to supply is due to
                  causes that Raylo eliminates and Raylo gives Eyetech
                  assurances to Eyetech's reasonable satisfaction that Raylo
                  will reliably satisfy any orders placed by Eyetech to meet
                  such alternative minimum commitments.

      3.3 Supply and Use of Eyetech Materials. Eyetech shall supply Raylo, at
least [**] days prior to the beginning of the first binding forecast period.,
with Eyetech Materials in sufficient amounts and adequate quality to permit
Raylo to meet its obligations above. The Parties acknowledge that failures by
Eyetech to meet such Eyetech Materials supply obligations may cause increases in
Raylo's costs of manufacturing API, and therefore the Parties agree to negotiate
in good faith adjustments to the API purchase price as necessary to compensate
Raylo for any such cost increases. Eyetech shall be responsible for shipping and
delivery of Eyetech Materials to Raylo. With respect to all Eyetech Materials,
Raylo shall: (a) at all times keep the Eyetech Materials secure and safe from
loss, damage, theft, misuse and unauthorized access in such manner as Raylo
stores its own proprietary materials of a similar nature, (b) maintain, store,
and handle the Eyetech Materials according to Eyetech's specifications and
current good manufacturing practice requirements (cGMP) and (c) dispose of
Eyetech Materials only in connection with Raylo's responsibilities under this
Agreement and otherwise follow Eyetech's instructions with regard to the
handling and disposition


                                       9

of the Eyetech Materials. Title in and to the Eyetech Materials shall at all
times remain with Eyetech.

      3.4 Raw Materials; Annual List from Eyetech. Raylo shall be responsible
for the planning, procurement, testing, storage and release of the Raw
Materials. All Raw Materials purchased by Raylo shall meet cGMP and shall
conform to the specifications for such Raw Materials set forth in the
Specifications.

      3.5 cGMP Manufacture. Raylo will manufacture all API using the 15mM
Process in accordance with cGMP, the Specifications, Applicable Legal
Requirements, and all terms and conditions contained in the applicable Binding
Order (to the extent such terms and conditions are not inconsistent with this
Agreement), at the Facility.

      3.6 Raylo Services. Raylo shall diligently carry out the following
services (the "Services") in a professional and workmanlike manner:

            (a) Prepare, maintain and review all documents and records relating
to the manufacture of API, including without limitation all production records,
including master production and control records, and Batch production and
control records, in each case as required by and consistent with cGMP and the
Specifications.

            (b) Maintain a quality control unit in compliance with the FD&C Act,
including 21 CFR Section 211.22, and establish a procedure for communications
and interactions with Eyetech's quality control unit with respect to the
manufacture of the API.

            (c) Operate the Facility, including the supply of utilities, and
manufacture the API in conformance with the Specifications.

            (d) Provide, in accordance with a sampling plan to be established by
Eyetech and subject to the purchase price provisions of Section 4.1, API samples
and in-process samples for analysis and Batch release by Eyetech.

            (e) Review requirements (if any) for modifications to the 15mM
Process in order to meet the Specifications for manufacture of subsequent API
and notify Eyetech of such proposed modifications. Any such modifications to the
15mM Process are subject to approval by Eyetech.

            (f) Issue all Certificates.

      3.7 Facility.

            (a) Interim Cooperation at the Facility. In accordance with the LOU,
the Parties have agreed that Eyetech shall have certain supervisory involvement
relating to the processing of API at the Facility during an interim period that
commenced prior to the Effective Date. During such interim period, which shall
end on the LOU Termination Date, certain obligations of the Parties under this
Agreement shall be superseded and/or modified as set forth in the LOU.


                                       10

            (b) Onsite Representative. Subsequent to the LOU Termination Date,
Raylo shall permit up to four (4) Eyetech employees, consultants and/or
representatives (which, at Eyetech's option, may include representatives of
Pfizer Inc.) to have reasonable access to the Facility during the manufacture of
the API, for the purpose of observing, reporting on, and consulting as to such
manufacturing efforts, including without limitation access to the review of all
batch records and documents. Raylo agrees to consider, in good faith, any
suggestions that Eyetech, or its onsite consultants/representatives, may have
regarding the design or operation of the Facility and shall, in all cases,
promptly respond to Eyetech regarding such suggestions.


                          4. PAYMENT AND PRICING TERMS


      4.1 API Purchase Price; Amendment of LOU. Raylo shall sell API to Eyetech
for the following prices and fees:

            (a) Prior to LOU Termination Date. Prior to the LOU Termination
Date, Eyetech shall pay Raylo the amounts set forth in the LOU.

            (b) After the LOU Termination Date. After the LOU Termination Date,
Raylo shall sell API manufactured using the 15mM Process to Eyetech at the
Negotiated Per Gram Cost as described in Exhibit D; provided that if, after the
LOU Termination Date, Eyetech determines that a change in the Specifications is
required, and such change increases Raylo's cost of production, the Parties
shall in good faith negotiate an amendment to this Agreement to compensate Raylo
for such increase to Raylo's cost of production.

            (c) Amendment of LOU. The Parties hereby amend the LOU to reflect
that the LOU shall terminate upon the completion of validation of the 15mM
Process pursuant to the Quality Agreement.

      4.2 Invoices. Invoices for the purchase price for API shall be delivered
to Eyetech no earlier than at the time of Delivery of such API. All properly
delivered invoices shall be paid by Eyetech within [**] days after Eyetech's
receipt thereof. In order to facilitate timely invoicing by Raylo, Eyetech
agrees that it will use commercially reasonable efforts to provide QC reports to
Raylo no later than [**] days after Raylo's delivery of samples to Eyetech for
testing.


      4.3 Amgen License Fee. If Eyetech exercises its option to obtain a license
under the Amgen Patents as set forth in Section 2.3(a), Eyetech shall pay to
Raylo [**].


      4.4 [**]License Fees. Eyetech shall reimburse Raylo for any license fees
and royalties paid by Raylo to [**] that are attributable to Raylo's supply of
API to Eyetech hereunder. Raylo shall invoice Eyetech for such license fees and
royalties after Raylo has paid them and shall include with such invoices
evidence of payment. Eyetech shall pay all such invoices within [**]) days after
Eyetech's receipt thereof.


                                       11

      4.5 Currency. Raylo shall invoice Eyetech, and Eyetech shall pay Raylo,
all amounts hereunder in Canadian Dollars; provided that the [**], if payable,
shall be invoiced and paid in United States dollars.

      4.6 Taxes. All prices and charges are inclusive of all taxes, levies,
imposts, duties and fees of whatever nature imposed by or under the authority of
any government or public authority in respect of the Services and delivery of
API shall be paid by Raylo (other than any taxes on the income of Eyetech, which
shall be paid by Eyetech); provided that Eyetech shall be responsible for all
taxes, levies, imposts, duties and fees imposed by or under the authority of any
government or public authority in respect of the API (including any exportation
from Canada or importation into any other country) after Eyetech takes title to
API from Raylo.


                  5. REPRESENTATIONS, WARRANTIES AND COVENANTS


      5.1 Of Both Parties. Each Party warrants and represents as of the
Effective Date that such Party: (1) has the corporate power and authority to
enter into this Agreement; (2) is aware of no legal, contractual or other
restriction, limitation or condition that might affect adversely its ability to
perform hereunder; and (3) is in good standing under the laws of each
jurisdiction in which it is incorporated or engages in business activities.

      5.2 Of Raylo. Raylo represents, warrants and covenants to Eyetech that:

            (a) the Services shall be performed in accordance with this
Agreement and the Quality Agreement;

            (b) all API provided to Eyetech under this Agreement shall meet the
Specifications and shall be manufactured in accordance with cGMP;

            (c) unencumbered title to all API will be conveyed to Eyetech upon
payment by Eyetech of any invoices relating to such API;

            (d) the facilities (including, without limitation, the Facility) and
practices that shall be used in the performance of the Services and the
manufacture of the API shall conform to all Applicable Legal Requirements;

            (e) to the best of Raylo's knowledge and belief, Raylo has not, does
not and will not employ any individual who is debarred under Section 306 of the
FD&C Act and will provide a certification that it has not, does not and will not
use in any capacity the services of any person debarred under Section 306 of the
FD&C Act in connection with the manufacture of the API;

            (f) Raylo has obtained, and shall maintain during the term of this
Agreement, all required government permits, including but not limited to health,
safety and environmental permits, necessary for the conduct of the Services;


                                       12

            (g) to the best of Raylo's knowledge and belief, Raylo's performance
of the Services and manufacture of the API will not infringe any rights
(including, without limitation, any intellectual property rights) of any third
party;

            (h) the information provided by Raylo to Eyetech pursuant to Section
2.2 shall be a complete and accurate in all material respects;

            (i) Raylo shall comply with any and all environmental requirements
in the performance of the Services and the manufacture of the API;

            (j) Raylo is the sole owner of the [**] Patents and has all rights
necessary to grant Eyetech the license set forth in Section 2.3(a); and

            (k) [**], as provided by Raylo to Eyetech prior to the Effective
Date, remains in full force and effect as of the Effective Date.

      5.3 Of Eyetech. Eyetech represents and warrants to Raylo that, to the best
of Eyetech's knowledge and belief, the Eyetech Materials provided by Eyetech for
use by Raylo in the manufacturing of API will not infringe or violate any valid
intellectual property rights of any third party.

      5.4 No Other Warranties. THE WARRANTIES CONTAINED IN THIS SECTION 5 ARE
EXPRESSLY IN LIEU OF AND EXCLUDE, AND THE PARTIES HEREBY EXPRESSLY DISCLAIM AND
NEGATE, ALL OTHER WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, ARISING BY
OPERATION OF LAW OR OTHERWISE, INCLUDING BUT NOT LIMITED TO, IMPLIED WARRANTIES
OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE AND
NON-INFRINGEMENT.


                                  6. COMPLAINTS


      6.1 Complaints Regarding API. In the event Eyetech has a complaint with
respect to API supplied to Eyetech, then:

            (a) If Eyetech's complaint concerns the quantity of such API,
Eyetech shall provide Raylo written notice of its complaint and provide
sufficient evidence to substantiate the short quantity. Upon receipt of such
written notice and substantiating evidence, Raylo shall supply to Eyetech as
promptly as practicable the said short quantity of such API. Such replacement
quantity shall be provided by Raylo at no additional cost to Eyetech, assuming
that Eyetech has already paid for such replacement quantity.

            (b) If Eyetech's complaint concerns the quality of such API
(non-compliance with the warranties set forth in Section 5 hereof), Eyetech
shall provide Raylo written notice of its complaint and provide sufficient
analytical evidence to substantiate the impairment. Upon receipt of such written
notice and substantiating evidence, the impaired amount of API shall be replaced
by Raylo with an equal amount of API conforming with the Specifications, as
promptly as practicable. Such replacement


                                       13

quantity shall be provided by Raylo at no additional cost to Eyetech, assuming
that Eyetech has already paid for such replacement quantity.

            (c) Should Raylo disagree with the substantiating evidence provided
by Eyetech, Raylo shall supply the replacement quantity of API in accordance
with the terms of paragraphs (a) and (b) of this Section 6.1, and then both
Parties shall immediately and jointly carry out the necessary analysis to verify
whether Eyetech's complaint is justified. Should said analysis confirm the
validity of the complaint by Eyetech, then the matter shall be deemed
conclusively resolved. Should said analysis confirm the invalidity of the
complaint by Eyetech, then Raylo shall invoice Eyetech for the replacement
quantity provided in accordance with the terms of this Agreement.

      6.2 Recalls. If Eyetech undertakes a recall related to the API, Eyetech
shall notify Raylo. Raylo shall cooperate with and provide assistance to Eyetech
in connection with any such recall as reasonably requested by Eyetech.

      7. INDEMNIFICATION AND INSURANCE

      7.1 Indemnification.

            (a) By Raylo. Raylo shall indemnify, defend and hold harmless
Eyetech, its Affiliates, its sublicensees and distributors and their respective
directors, officers, employees and agents, from and against any and all
liabilities, damages, losses, costs or expenses whatsoever (including reasonable
legal fees and disbursements) arising out of or resulting from claims, demands,
or actions by third parties to the extent such liabilities, damages, losses,
costs or expenses arise from:

                  (1) any breach of Raylo's representations, warranties and
                  covenants set forth in Section 5; or

                  (2) personal injury (including death) or property damage
                  relating to or arising out of the failure by Raylo to
                  manufacture the API in accordance with cGMP and/or the
                  Specifications; or

                  (3) Raylo's violation of any environmental requirements in the
                  manufacture of API or performance of the Services.

            (b) By Eyetech. Eyetech shall indemnify, defend and hold harmless
Raylo, its Affiliates and their subcontractors, and their respective directors,
officers, employees and agents, from and against any and all liabilities,
damages, losses, costs or expenses whatsoever (including reasonable legal fees
and disbursements) arising out of or resulting from claims, demands, or actions
by third parties to the extent such liabilities, damages, losses, costs or
expenses arise from:

                  (1) any breach of Eyetech's representations and warranties set
                  forth in Section 5; or


                                       14

                  (2) personal injury (including death) or property damage
                  relating to or arising out of any manufacture, use,
                  distribution or sale of the Eyetech Product by Eyetech, its
                  Affiliates or its sublicensees; except, in each case, to the
                  extent that Raylo is indemnifying Eyetech in accordance with
                  Section 7.1(a)(2) above.

      7.2 Procedure for Indemnification. In the event that any person (an
"Indemnified Party") entitled to indemnification under Section 7.1(a) or 7.1(b)
is seeking such indemnification, such Indemnified Party shall promptly notify
the indemnifying Party (the "Indemnitor") in writing of the claim (and in
reasonable detail); provided, however, that failure to give such notification
shall not affect the indemnification to be provided hereunder except to the
extent the Indemnitor shall have been actually prejudiced as a result of such
failure. The Indemnitor shall manage and control, at its sole expense, the
defense of the claim and its settlement. The Indemnified Party shall provide the
Indemnitor, at the Indemnitor's cost, with reasonable assistance and relevant
information to support the defense of any such claim. The Indemnitor shall not
accept any settlement which imposes liability not covered by this
indemnification or impose any obligation on, or otherwise adversely affect, the
Indemnified Party or other Party without the prior written consent of such
Indemnified Party or other Party, as applicable. Nothing contained in this
Section 7.2 shall oblige the Indemnified Party to take any action or steps in
its own name in defending any claim, action or proceedings; however, the
Indemnified Party, at is option and expense, may review and comment on the
defense of any claim through its own counsel; provided that the Indemnitor shall
be responsible for the fees and costs of the Indemnified Party's counsel if: (1)
the Indemnitor and the Indemnified Party shall have mutually agreed to the
retention of such counsel; (2) the Indemnified Party shall have reasonably
concluded that there may be one or more legal defenses available to it which are
different from or additional to those available to the Indemnitor; or (3) the
named parties to any such proceeding (including the impleaded parties) include
both the Indemnitor and the Indemnified Party, and representation of both
parties by the same counsel would be inappropriate in the opinion of the
Indemnified Party's counsel due to actual or potential differing interests
between them; in any such case, one (1) firm of attorneys separate from the
Indemnitor's counsel may be retained to represent the Indemnified Party at the
Indemnitor's expense. As the Parties intend complete indemnification, all costs
and expenses incurred by an Indemnified Party in connection with enforcement of
Sections 7.1(a) or (b) shall also be reimbursed by the Indemnitor.

      7.3 Insurance. Raylo shall obtain and maintain during the term of this
Agreement: (1) comprehensive general liability insurance on a claims made basis,
with coverage limits of not less than US$5 million per claim and US$20 million
aggregate and (2) property insurance which includes business interruption
coverage. Raylo shall name Eyetech as an additional insured on its policies. The
minimum level of insurance set forth herein shall not be construed to create a
limit on Raylo's liability hereunder. Within thirty (30) days after the
Effective Date, Raylo shall furnish to Eyetech a certificate of insurance
evidencing such coverage. Each such certificate of insurance, as well as any
certificates evidencing new or modified coverages of Raylo, shall include a
provision whereby thirty (30) days written notice must be received by Eyetech
prior to coverage modification, and ten (10) days written notice must be
received by Eyetech prior to


                                       15

coverage cancellation, by either Raylo or the insurer. In addition, Raylo shall
promptly notify Eyetech of any cancellation or modification of such insurance
coverage and of any new or modified coverage. In the case of a modification or
cancellation of such coverage, Raylo shall promptly provide Eyetech with a new
certificate of insurance evidencing that Raylo's coverage meets the requirements
in the first sentence of this Section 7.3.


                 8. LIMITATION OF LIABILITY; LIQUIDATED DAMAGES.


      8.1 EXCEPT WITH RESPECT TO (i) RAYLO BREACHING ITS CONFIDENTIALITY
OBLIGATIONS UNDER SECTION 10 HEREOF, AND (ii) EYETECH'S COSTS OF PROCURING
ALTERNATE SUPPLY OF API IF RAYLO FAILS TO MEET ITS OBLIGATIONS TO SUPPLY API
HEREUNDER, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR
SPECIAL, INCIDENTAL, CONSEQUENTIAL, EXEMPLARY, PUNITIVE, MULTIPLE OR OTHER
INDIRECT DAMAGES, OR FOR LOSS OF PROFITS, LOSS OF DATA OR LOSS OF USE DAMAGES,
ARISING OUT OF THE MANUFACTURE, SALE, SUPPLYING OR FAILURE OR DELAY IN SUPPLYING
OF THE API OR EYETECH PRODUCT OR OTHERWISE ARISING OUT OF THIS AGREEMENT,
WHETHER BASED UPON WARRANTY, CONTRACT, TORT, STRICT LIABILITY OR OTHERWISE, EVEN
IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR LOSSES.

      8.2 NOTHING IN THIS SECTION 8 IS INTENDED TO LIMIT OR RESTRICT THE
INDEMNIFICATION OBLIGATIONS OF RAYLO UNDER THIS AGREEMENT WITH RESPECT TO THIRD
PARTY CLAIMS UNDER SECTION 7.


                                 9. TERMINATION.


      9.1 Initial Term; Extensions. This Agreement shall take effect as of the
Effective Date and shall, unless sooner terminated pursuant to this Section 9,
remain in effect until November 11, 2008 (the "Initial Term"). Upon written
notice from Eyetech to Raylo on or before six (6) months prior to the expiration
of the Initial Term, Eyetech shall have the right to extend the term of this
Agreement for a period of up to three (3) years, as determined by Eyetech in its
discretion. Eyetech shall specify the number of years for such extension in the
notice provided to Raylo under this Section 9.1. Upon written notice to Raylo
not later than six (6) months prior to the expiration of the term as extended by
Eyetech pursuant to this Section 9.1, Eyetech shall have the further right to
extend of the term of this Agreement for an additional period of up to three (3)
years. Eyetech shall specify the number of years for such extension in the
notice provided to Raylo under this Section 9.1.

      9.2 Termination by Eyetech.

            (a) Eyetech Product Failure. Eyetech shall have the right to
terminate this Agreement immediately, upon written notice, if Eyetech elects to
abandon its efforts to commercialize the Eyetech Product.


                                       16


            (b) Failure to Obtain Licenses to Third Party Patent Rights. Eyetech
shall have the right to terminate this Agreement immediately, upon written
notice, if Raylo has not obtained all licenses to third party Patent Rights
necessary to enable Eyetech to use and offer for sale the API in, and to import
the API into, the United States and any other country in which the Amgen
Patents [**] are in force.


            (c) Nonoccurrence of the LOU Termination Date. Eyetech shall have
the right to terminate this Agreement and the LOU immediately, upon written
notice, if the LOU Termination Date has not occurred on or before January 1,
2005.

            (d) Regulatory Changes and Infractions. Eyetech shall have the right
to terminate this Agreement if the (i) United Stated Food and Drug
Administration imposes requirements that require a change in the Specifications
that, in Eyetech's judgment, Raylo cannot accommodate to Eyetech's reasonable
satisfaction or (ii) Raylo is unable to Deliver Eyetech's requirements of API
due to violation of any Applicable Legal Requirements.

            (e) Change in Control of Raylo. In the event that any Person (other
than Raylo, any trustee or other fiduciary holding securities under an employee
benefit plan of Raylo, or any corporation owned directly or indirectly by the
stockholders of Raylo in substantially the same proportion as their ownership of
stock of Raylo) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Securities Exchange Act of 1934, as amended), directly or indirectly,
of securities of Raylo representing greater than 50% of the combined voting
power of Raylo's then outstanding securities (a "Change in Control"), Eyetech
may terminate this Agreement upon thirty (30) days' written notice given to
Raylo at any time within six (6) months after such Change in Control.

            (f) Competitive Pricing. In the event that at any time during the
Term after December 31, 2005, a third party other than Pfizer Inc. or an
affiliate of Pfizer Inc. is able to manufacture API in accordance with the
Specifications and cGMP, in at least the same quantities as those manufactured
by Raylo hereunder and at a cost that is less than the price for the API
currently charged Eyetech by Raylo, then Raylo shall have [**] days in which to
reduce its price for the API to the price to be charged Eyetech by such third
party; provided that if the third party with which Eyetech proposes to enter
into such lower-cost arrangement would use a higher volume or different process
than a 15mM process and Raylo agrees in writing to develop a higher volume or
different process in order to achieve the required cost reduction, then Raylo
shall have an additional [**] days (i.e., a total of [**] days) in which to
reduce its price for the API to the price to be charged Eyetech by such third
party. If Raylo fails to lower its prices, Eyetech shall have the right to
terminate this Agreement immediately, upon written notice; provided that orders
made by Eyetech prior to such termination would be filled by Raylo, and paid for
by Eyetech, in accordance with the terms of this Agreement.

      9.3 Termination for Breach; Insolvency. Either Raylo or Eyetech may
terminate this Agreement immediately, without prejudice to any other remedies
available


                                       17

to it at law or in equity, by notice in writing to the other upon the occurrence
of any of the following events:

            (a) If the other Party (the "Breaching Party") materially breaches
this Agreement, and such breach is not remedied within sixty (60) days after
receipt by the Breaching Party of notice identifying the breach; or

            (b) If the other Party ceases for any reason to carry on business,
dissolves, liquidates, winds up, or files or is petitioned into bankruptcy,
liquidation, rehabilitation or dissolution or becomes insolvent or fails
generally to pay its debts or obligations or a petition is filed seeking the
appointment of or the taking possession by a receiver, custodian, trustee or
similar official.

      9.4 Effect of Expiration or Termination. Upon the expiration of this
Agreement at the end of the Term, or upon the termination of this Agreement by
either Party pursuant to this Section 9:

            (a) Raylo shall promptly: (i) return to Eyetech all relevant
records, materials or Eyetech Confidential Information (to the extent legal or
regulatory requirements permit), including, without limitation, all
manufacturing records relating to the API; (ii) return to Eyetech the Eyetech
Materials then in the possession or control of Raylo or its Affiliates; and
(iii) discontinue all manufacture of the API;

            (b) Eyetech shall promptly return to Raylo all Raylo Confidential
Information (to the extent legal or regulatory requirements permit);

            (c) The licenses granted under Section 2.3(a) and (c) shall survive
termination and the licenses granted under Section 2.3(b) shall not;

            (d) At Eyetech's request, and at Eyetech's expense or the expense of
Eyetech's designated second or alternative source manufacturer of API, Raylo
shall exercise its right under Section 2.02 of the [**] to grant a license on
terms [**] designated by Eyetech at any time prior to the first anniversary of
the expiration or termination of this Agreement;

            (e) At Eyetech's request and at Eyetech's expense, Raylo shall
provide Eyetech with reasonable assistance in transferring the manufacturing
activities covered by this Agreement to a third party contract manufacturer; and

            (f) At Eyetech's request, Raylo shall sell to Eyetech all (i)
inventory of Raw Materials then in Raylo's possession, at Raylo's out-of-pocket
costs incurred in the procurement of such Raw Materials, (ii) work-in-process
then in Raylo's possession, at a pro rated portion of the Negotiated Per Gram
Cost reflecting Raylo's out-of-pocket costs and the work performed by Raylo
prior to transfer, and (iii) API then in Raylo's possession, at the Negotiated
Per Gram Cost.

      9.5 Survival. The expiration or prior termination of this Agreement for
whatever reason shall not affect the accrued rights of either Raylo or Eyetech
arising


                                       18

under this Agreement and Sections 2.3(a), 2.3(c), 2.3(d), 6, 7, 8, 9, 10 and 11
shall survive such expiration or termination.


                               10. CONFIDENTIALITY


      10.1 Confidential Information. Each Party agrees that all Confidential
Information disclosed to it or its Affiliates by the other Party (a) shall not
be used by the receiving Party or its Affiliates except in connection with the
activities contemplated by this Agreement or in order to further the purposes of
this Agreement and, for the avoidance of doubt, shall not be used by the
receiving Party in connection with products or services other than the API or
the manufacture thereof, (b) shall be maintained in confidence by the receiving
Party and its Affiliates, and (c) shall not be disclosed by the receiving Party
or its Affiliates to any third party who is not an Affiliate or consultant of,
or an advisor to, the receiving Party or its Affiliates without the prior
written consent of the disclosing Party. Notwithstanding the foregoing
provisions of this Section 10.1, (x) either Party may disclose Confidential
Information of the other Party if such Party is required to make such disclosure
by applicable law, regulation or legal process, including without limitation by
the rules or regulations of the United States Securities and Exchange Commission
(the "SEC") or similar regulatory agency in a country other than the United
States or of any stock exchange or Nasdaq, in which event such Party shall
provide prior notice of such intended disclosure to such other Party if possible
under the circumstances and shall disclose only such Confidential Information of
such other Party as is required to be disclosed and (y) the Parties (and each
employee, representative, or other agent of the Parties) may disclose to any and
all Persons, without limitation of any kind, the United States federal tax
treatment and tax structure of the transactions set forth in this Agreement and
all materials of any kind (including opinions or other tax analyses) that are
provided to the Parties relating to such tax treatment and tax structure.

      10.2 Disclosures to Employees, Consultants, Advisors, Agents and
Subcontractors. Each Party agrees that it and its Affiliates shall provide
Confidential Information received from the other Party only to the receiving
Party's respective employees, consultants, advisors, agents and subcontractors
and to the employees, consultants, advisors, agents and subcontractors of the
receiving Party's Affiliates, who have a need to know such Confidential
Information to assist the receiving Party in fulfilling its obligations under
this Agreement, provided that Eyetech and Raylo shall each remain responsible
for any failure by its and its Affiliates' respective employees, consultants,
advisors, agents and subcontractors to treat such information and materials as
required under Section 10.1.

      10.3 Term. All obligations of confidentiality imposed under Sections 10.1
and 10.2 shall expire upon the later of (a) expiration or termination of this
Agreement and (b) five (5) years after the date the applicable Confidential
Information is disclosed.


                             11. GENERAL PROVISIONS


      11.1 Independent Status of Parties. Each Party shall act as an independent
contractor and shall not bind nor attempt to bind the other Party to any
contract, or any


                                       19

performance of obligations outside of this Agreement. Nothing contained or done
under this Agreement shall be interpreted as constituting either Party the
agent, partner or joint venturer of the other in any sense of the term
whatsoever unless expressly so stated.

      11.2 Subcontracting. Raylo shall have the right to wholly or partly
subcontract the activities to be performed by Raylo hereunder, provided,
however, that (a) said subcontractor shall be approved in advance by Eyetech,
such approval not to be unreasonably withheld, and (b) Raylo shall remain fully
responsible for all of its obligations hereunder.

      11.3 Publicity. Neither Party shall originate any publicity, news release
or other public announcement, written or oral, relating to this Agreement
without the prior written approval of the other Party except as otherwise
required by law. Such approval shall not be unreasonably withheld. Upon approval
and launch of the Eyetech Product, Eyetech will allow Raylo to publicly announce
that Raylo is a manufacturer of API for Eyetech.

      11.4 Governing Law. This Agreement shall be governed by and interpreted in
accordance with, and any arbitration or court action hereunder shall apply, the
laws of the State of New York, excluding (i) its conflicts of laws principles,
(ii) the United Nations Convention on Contracts for the International Sale of
Goods, (iii) the 1974 Convention on the Limitation Period in the International
Sale of Goods (the "1974 Convention"); and (iv) the protocol amending the 1974
Convention, done at Vienna April 11, 1980.

      11.5 Dispute Resolution. Any dispute arising out of or relating to this
Agreement shall be resolved through binding arbitration as follows:

            (a) A Party may submit such dispute to arbitration by notifying the
other Party, in writing, of such dispute. Within thirty (30) days after receipt
of such notice, the Parties shall designate in writing a single arbitrator to
resolve the dispute; provided, however, that if the Parties cannot agree on an
arbitrator within such 30-day period, the arbitrator shall be selected by the
Minneapolis, Minnesota, USA office of the American Arbitration Association (the
"AAA"). The arbitrator shall be a lawyer with biotechnology and/or
pharmaceutical industry legal experience, and shall not be an Affiliate,
employee, consultant, officer, director or stockholder of any Party.

            (b) Within thirty (30) days after the designation of the arbitrator,
the arbitrator and the Parties shall meet, at which time the Parties shall be
required to set forth in writing all disputed issues and a proposed ruling on
the merits of each such issue.

            (c) The arbitrator shall set a date for a hearing, which shall be no
later than forty-five (45) days after the submission of written proposals
pursuant to Section 11.5(b), to discuss each of the issues identified by the
Parties. The Parties shall have the right to be represented by counsel. Except
as provided herein, the arbitration shall be governed by the Commercial
Arbitration Rules of the AAA; provided, however, that the Federal Rules of
Evidence shall apply with regard to the admissibility of evidence and the
arbitration shall be conducted by a single arbitrator.


                                       20

            (d) The arbitrator shall use his or her best efforts to rule on each
disputed issue within thirty (30) days after the completion of the hearings
described in Section 11.5(c). The determination of the arbitrator as to the
resolution of any dispute shall be binding and conclusive upon all Parties. All
rulings of the arbitrator shall be in writing and shall be delivered to the
Parties.

            (e) The (i) attorneys' fees of the Parties in any arbitration, (ii)
fees of the arbitrator and (iii) costs and expenses of the arbitration shall be
borne by the Parties as determined by the arbitrator.

            (f) Any arbitration pursuant to this Section 11.5 shall be conducted
in Minneapolis, Minnesota, USA. Any arbitration award may be entered in and
enforced by any court of competent jurisdiction.

      11.6 No Limitation. Nothing in Section 11.5 shall be construed as limiting
in any way the right of a Party to seek an injunction or other equitable relief
with respect to any actual or threatened breach of this Agreement or to bring an
action in aid of arbitration. Should any Party seek an injunction or other
equitable relief, or bring an action in aid of arbitration, then for purposes of
determining whether to grant such injunction or other equitable relief, or
whether to issue any order in aid of arbitration, the dispute underlying the
request for such injunction or other equitable relief, or action in aid of
arbitration, may be heard by the court in which such action or proceeding is
brought.

      11.7 Notices. All notices, instructions and other communications hereunder
or in connection herewith shall be in writing and shall be (a) delivered
personally, (b) sent by registered or certified mail, return receipt requested,
postage prepaid, (c) sent via a reputable nationwide overnight courier service,
or (d) sent by facsimile transmission, in each case to an address set forth
below. Any such notice, instruction or communication shall be deemed to have
been delivered upon receipt if delivered by hand, three Business Days after it
is sent by registered or certified mail, return receipt requested, postage
prepaid, one Business Day after it is sent via a reputable nationwide overnight
courier service, or when transmitted with electronic confirmation of receipt, if
transmitted by facsimile with confirmed answerback (if such transmission is on a
Business Day; otherwise, on the next day following such transmission).

      Notices to Raylo shall be addressed to     Raylo Chemicals, Inc.
                                                 8045 Argyll Road
                                                 Edmonton, Alberta
                                                 Canada T6C 4A9
                                                 Phone:  (780) 468-6060
                                                 Fax:  (780) 472-8189
                                                 Attn:  Matt Colomb

      Notices to Eyetech shall be addressed to   Eyetech Pharmaceuticals, Inc.
                                                 500 Seventh Avenue, 18th Floor
                                                 New York, New York 10018


                                       21

                                                 Phone:  (212) 997-9241
                                                 Fax:  (212) 997-9251
                                                 Attn:  Chief Executive Officer

      With a copy to:                            Eyetech Pharmaceuticals, Inc.
                                                 500 Seventh Avenue, 18th Floor
                                                 New York, New York 10018
                                                 Phone: (212) 997-9241
                                                 Fax: (212) 997-9251
                                                 Attn: General Counsel

      Either Party may change its address by giving notice to the other Party in
the manner herein provided.

      11.8 Entire Agreement. This Agreement, the LOU and the Quality Agreement
collectively contain the full understanding of the Parties with respect to the
subject matter hereof and supersede all prior understandings and writings
relating thereto. No waiver, alteration or modification of any of the provisions
of such agreements shall be binding unless made in writing and signed by the
Parties.

      11.9 Headings. The headings contained in this Agreement are for
convenience of reference only and shall not be considered in construing this
Agreement.

      11.10 Severability. If, under applicable law or regulation, any provision
of this Agreement is invalid or unenforceable, or otherwise directly or
indirectly affects the validity of any other material provision(s) of this
Agreement (such invalid or unenforceable provision, a "Severed Clause"), this
Agreement shall endure except for the Severed Clause. The Parties shall consult
one another and use reasonable efforts to agree upon a valid and enforceable
provision that is a reasonable substitute for the Severed Clause in view of the
intent of this Agreement.

      11.11 Assignment. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by either Party without the prior written
consent of the other Party, except to an Affiliate of the assigning Party or to
any party who acquires all or substantially all of the capital stock or assets
of the assigning Party related to the transactions contemplated in this
Agreement by merger, consolidation, sale of assets or otherwise, so long as such
Affiliate or other party agrees in writing to be bound by the terms of this
Agreement.

      11.12 Performance by Affiliates. To the extent that this Agreement imposes
obligations on Affiliates of a Party, such Party agrees to cause its Affiliates
to perform such obligations. Either Party may use one or more of its Affiliates
to perform its obligations and duties hereunder, provided that the Parties shall
remain liable hereunder for the prompt payment and performance of all their
respective obligations hereunder.

      11.13 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Parties hereto and their successors and permitted
assigns.


                                       22

      11.14 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of such together
shall constitute one and the same instrument.


                                       23

      IN WITNESS WHEREOF, the Parties hereto have caused this Manufacturing and
Supply Agreement to be executed in their names by their properly and duly
authorized officers or representatives as of the date first above written.

RAYLO CHEMICALS, INC.                     EYETECH PHARMACEUTICALS, INC.

By:     /s/ J. Matthew Colomb             By:    /s/Paul G. Chaney
   ------------------------------------      -----------------------------------
Name: J. Matthew Colomb                   Name:  Paul G. Chaney
Title:  President                         Title: Chief Operating Officer

November 11, 2003


                                       24

                                    Exhibit A

                                 Specifications

- --------------------------------------------------------------------------------
                                                                   2880
                                                                   ----

RAYLO                                                          Form No A009
CHEMICALS                      [**]                            Issue       6


Product/Intermediate     Supercedes       Effective Date     Page 1 of 2
Specification                    None     June 18, 2002


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

Test                              Test Method                   Limit

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



                                      [**]



Sampling Instructions:     [**]
Sample Size:               [**]      Reserve Sample:  [**]  Biosample Size: [**]
Storage Conditions:        [**]      Sample Retention Time:     [**]
Release Validity Period:   [**]      Sample Disposal:           [**]


- --------------------------------------------------------------------------------
APPROVED BY                      SIGNATURE                         DATE


QUALITY CONTROL GROUP            [ILLEGIBLE]                       May 29, 2002
LABORATORY GROUP                 [ILLEGIBLE]                       May 31, 2002
MANUFACTURING GROUP              [ILLEGIBLE]                       May 31, 2002
QUALITY ASSURANCE GROUP          [ILLEGIBLE]                       June 18, 2002
- --------------------------------------------------------------------------------


                                       25

- --------------------------------------------------------------------------------
                                                                   2880
                                                                   ----

RAYLO                                                          Form No A009
CHEMICALS                      [**]                            Issue       6


Product/Intermediate     Supercedes       Effective Date     Page 2 of 2
Specification                    None     June 18, 2002


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

CHEMICAL FORMULA                        STRUCTURAL FORMULA


    [**]                                [**]

PHYSICAL DATA

    [**]



[**]

================================================================================


                                       26

                                    Exhibit B

                                Eyetech Materials







- ---------------------------------------------------------------------------------------------------------------
Raylo Spec Number      Company         Specification Name          Common       u/m             Quantity Breaks
                                                                    Name
- ---------------------------------------------------------------------------------------------------------------
                                                                                 

[**]





                                       27

                                    Exhibit C

                                    Minimums




2004              2005             2006              2007              2008
                                                           
100%              100%             [**]%             [**]%             [**]%




                                       28

                                    Exhibit D

                            Negotiated Per Gram Cost

      Per gram pricing shall be based on the following assumptions and formula:

Maximum [**]:

      Will be based on the [**].

[**]:

      Will be the [**] during the life of this agreement [**].

[**]:

      Will initially be the [**]

[**]:

      Will be [**] hereunder.

[**]:

      Will initially be [**].

      [**]. However, should Eyetech [**].

      [**] Raylo will [**].

[**]:

         Will initially be [**].

[**]:

      Shall be [**]:

      1- In calculation of [**].

      2- In calculation for [**].

      3- In calculation of [**].

      4- In calculation of [**].

The Formula for Per Gram Cost [**] will be in $ per gram:

                                      [**]
- --------------------------------------------------------------------------------
                                      [**]



                                       29

                                   Exhibit D-1

              Areas of Facility Dedicated to Production for Eyetech

           [Floor plan of the area divided into work and office space]


                                       30

EX-10.57

                                                                  EXHIBIT 10.57

          CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE
        SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.

                                LICENSE AGREEMENT

         This License Agreement (the "Agreement") is effective as of December
31, 2001 (the "Effective Date") between ISIS PHARMACEUTICALS, INC., a Delaware
corporation having an address at 2292 Faraday Avenue, Carlsbad, CA ("Isis") and
EYETECH PHARMACEUTICALS, INC., a corporation having an address at 666 Fifth
Avenue, 35th Floor, New York, NY 10103 ("EyeTech"). Isis and Eyetech may be
referred to herein as the "Parties," or each individually as a "party."

                                    ARTICLE 1
                                   DEFINITIONS

         Capitalized terms used herein have the meaning set forth in Exhibit A.

                                    ARTICLE 2
                                SCOPE OF LICENSE

2.1      Grant. Subject to the terms of this Agreement and during the Term, Isis
grants to EyeTech a non-exclusive license under the Licensed Patent Rights to
make, have made, use and sell EYE001 worldwide. The license is sublicensable.

                                    ARTICLE 3
                           LICENSE FEES AND ROYALTIES

         3.1      Fees and Royalties. EyeTech will pay to Isis the fees,
milestones and royalties set forth in this Article 3.

                  3.1.1    License Fees. EyeTech will pay an initial,
irrevocable and non-refundable license fee of $2,000,000 (the "License Fee") to
Isis, $1,000,000 of which will be paid upon execution of this Agreement and
$1,000,000 of which will be paid upon the earlier of (i) the date of the AMD
Completed Patient Enrollment, or (ii) July 31, 2002.

                  3.1.2    Milestones. EyeTech will pay the following milestones
to Isis:

                           a.       For the initial indication of age-related
                                    macular degeneration for EYE001:
                                    [**]

                           b.       For each additional therapeutic indication
                                    for EYE001:
                                    [**]



                                       2                        [EXECUTION COPY]

                  3.1.3    Royalties on EYE001. EyeTech will pay Isis a royalty
of [**] on Net Sales of EYE001 when the manufacture, use or sale of EYE001 would
infringe the Licensed Patent Rights.

                                    ARTICLE 4
                              PAYMENTS AND REPORTS

         4.1      Payment. Royalty payments will be due every three (3) months
beginning with the first commercial sale of EYE001 (each such 3-month period a
"Reporting Period") and will be paid within sixty (60) days of the close of each
Reporting Period. Each royalty payment will be accompanied by a statement of the
amount of Net Sales and all adjustments thereto during such Reporting Period.

         4.2      Mode of Payment. EyeTech will make all payments required under
this Agreement in U.S. Dollars. The payments due on the sale of EYE001 received
outside the United States will be translated using exchange rates published in
the Wall Street Journal on the last day of the Reporting Period in question.

         4.3      Records Retention. EyeTech and its sublicensees will keep
complete and accurate records pertaining to the sale of EYE001 and covering all
transactions from which the Net Sales are derived for a period of thirty-six
(36) months after the year in which such Net Sales were received, and in
sufficient detail to permit Isis to confirm the accuracy of royalty calculations
hereunder.

         4.4      Audit Request. No more than once each calendar year and at the
request of Isis, EyeTech will permit an independent, certified public accountant
appointed by Isis and acceptable to EyeTech, at reasonable times and upon
reasonable notice, to examine those records and all other material documents
relating to or relevant to Net Sales in the possession or control of EyeTech,
for a period of two (2) years after such royalties have accrued, as may be
necessary to: (a) determine the correctness of any report or payment made under
this Agreement; or (b) obtain information as to the royalties payable for any
Reporting Period in the case of EyeTech's failure to report or pay pursuant to
this Agreement. Said accountant will not disclose to Isis any information other
than information relating to said reports, royalties, and payments and will
disclose such information in a format agreed upon by the parties that will
ensure that no confidential information of EyeTech is disclosed. Results of any
such examination will be made available to both parties. The fees charged by the
public accountant conducting the audit will be paid for by Isis, provided that,
if the audit determines that the additional royalties payable by EyeTech for an
audited period exceed [**] of the royalties actually paid for such period, then
EyeTech will pay the fees and expenses charged by such accounting firm.



                                       3                        [EXECUTION COPY]

                                    ARTICLE 5
                      PATENTS, INFRINGEMENT AND ENFORCEMENT

         5.1      Patent Prosecution and Maintenance. Isis will have the right
and responsibility to prosecute and/or maintain the Licensed Patent Rights in
any country at its own expense. If ISIS decides to discontinue the prosecution
or maintenance of any Licensed Patent Right entirely or in a particular
country, it will inform EyeTech thereof with sufficient time for EyeTech to
assume the prosecution or maintenance of such Licensed Patent Right, and EyeTech
may assume such prosecution or maintenance if such Licensed Patent Right
provides a substantial competitive advantage to EyeTech with respect to EYE001
in the applicable country. If Isis has granted similar rights to third parties,
EyeTech's rights under this section 5.1 will be shared equally with such third
parties.

                                    ARTICLE 6
                         REPRESENTATIONS AND WARRANTIES

         6.1      Isis Representation and Warranty. Isis warrants that it has
the lawful right to grant the license made the subject of this Agreement. Except
as expressly stated in this section, Isis makes no other representations of any
kind or nature whatsoever. ISIS MAKES NO WARRANTIES OR REPRESENTATIONS, EXPRESS
OR IMPLIED, INCLUDING BUT NOT LIMITED TO, WARRANTIES OF FITNESS FOR A PARTICULAR
PURPOSE OR MERCHANTABILITY OR NONINFRINGEMENT REGARDING OR WITH RESPECT TO THE
LICENSED PATENTS. Without limiting the generality of the foregoing, nothing in
this Agreement will be construed as (a) a warranty or representation by Isis as
to validity or scope of the Licensed Patent Rights or (b) a warranty or
representation that anything made, used, sold or otherwise disposed of under the
license is or will be free from infringement of third party rights.

         6.2      EyeTech Representations and Warranties. EyeTech represents and
warrants to Isis that EyeTech has the power and authority to execute, deliver
and perform this Agreement, and this Agreement is a valid and binding obligation
of EyeTech, enforceable in accordance with its terms.

                                    ARTICLE 7
                                    INDEMNITY

         7.1      EyeTech agrees to indemnify, hold harmless and defend Isis,
its officers, directors, employees and agents, from and against any and all
claims, suits, losses, damages, costs, fees and expenses (collectively,
"Claims") resulting from or arising out of (a) the development, manufacture,
storage, sale or other distribution or any other use of EYE001 by EyeTech, its
affiliates, sublicensees, agents and representatives or use by end users and
other third parties of EYE001; and (b) EyeTech's breach of any representation or
warranty herein.

         7.2      In all cases where Isis seeks indemnification from EyeTech
under this Article 7, Isis will promptly notify EyeTech of receipt of any claim
or lawsuit covered by



                                       4                        [EXECUTION COPY]

such indemnification obligation and will cooperate fully with EyeTech in
connection with the investigation and defense of such claim or lawsuit. EyeTech
will have the right to control the defense, with counsel of its choice, provided
that Isis will have the right to be represented by advisory counsel at its own
expense. Neither party will settle or dispose of the matter in any matter that
could negatively and materially affect the rights or liability of the other
party without the prior written consent of such party, which will not be
unreasonably withheld or delayed.

                                    ARTICLE 8
                              TERM AND TERMINATION

         8.1      Term. This Agreement will commence as of the Effective Date
and continue until the last Licensed Patent Rights expire (the "Term").

         8.2      Termination for Breach. Notwithstanding anything to the
contrary herein, a party may terminate this Agreement in the event that the
other party (the "Defaulting Party") materially breaches its obligations
hereunder and fails to cure such breach within ninety (90) days of receipt of
written notice thereof (which notice will specify the breach in reasonable
detail and demand it be cured) (or, if such breach cannot be cured in such
ninety (90) day period, if the Defaulting Party does not commence and diligently
continue (until completed) actions to cure such default). Such termination will
be without prejudice to the non-Defaulting Party's other rights under this
Agreement, or any of its other rights or remedies available to it by law or in
equity.

         8.3      Termination by EyeTech. Notwithstanding anything contained
herein to the contrary, EyeTech has the right to terminate this Agreement at any
time in its sole discretion by giving ninety (90) days advance written notice to
ISIS; provided, that at the time of such termination EyeTech is not conducting
(and does not intend to conduct) itself in a manner that would, but for the
license granted in Article 2 of this Agreement, infringe the Licensed Patent
Rights. In the event of such termination by EyeTech, EyeTech will still be
obligated to pay any amounts due to Isis hereunder which, but for the lapse of
time, will be owed to Isis, including the unpaid portion of the License Fee.
Notwithstanding Section 3.1.1 above, any unpaid portion of the License Fee will
be immediately due and payable upon such termination.

         8.3      Effect of Termination. Upon the termination of this Agreement
for any reason, all rights licensed to EyeTech will revert to Isis.

         8.4      Accrued Rights, Surviving Rights and Obligations. Termination
or expiration of this Agreement for any reason will be without prejudice to any
rights that will have accrued to the benefit of either party prior to such
termination or expiration. Such termination or expiration will not relieve
either party from obligations that are expressly indicated to survive
termination or expiration of this Agreement including, without limitation,
EyeTech's obligation to pay all royalties that will have accrued hereunder.
Without limiting the foregoing, the parties' rights and obligations under
Articles 4, 6 and 7, and section 8.3 will likewise survive termination or
expiration of this Agreement.



                                       5                        [EXECUTION COPY]

                                    ARTICLE 9
                                  MISCELLANEOUS

         9.1      Relationship of the Parties. Nothing in this Agreement is
intended to create, or creates, a partnership or joint venture relationship
between the parties. The relationship between the parties hereunder is that of
independent contractors.

         9.2      Successors and Assigns. Except as otherwise provided herein,
this Agreement may not be assigned by a party without the prior written consent
of the other, provided, however, that either party may assign this Agreement to
any successor by merger or to the purchaser of all or substantially all of its
assets provided that the party will remain liable and responsible for the
performance and observance of all of its duties and obligations hereunder.
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective permitted successors and
assigns any rights, remedies, obligations or liabilities under this Agreement.

         9.3      Governing Law. This Agreement will be governed by and
construed under the laws of the State of Delaware without giving effect to its
conflict of laws rules.

         9.4      Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be decreed an original, but all of which
together will constitute one and the same instrument.

         9.5      Compliance With Laws. Both parties will comply with all
applicable laws, rules and regulations pertaining to the development, testing,
manufacture, marketing and import or export of EYE001 and will, as appropriate,
include similar provisions in any sublicense agreements requiring sublicensees
to do the same.

         9.6      Notices. Unless otherwise provided, any notice required or
permitted under this Agreement will be given in writing and will be deemed
effectively given upon personal delivery to the party to be notified or five (5)
days after upon deposit with the United States Post Office by registered or
certified mail, postage prepaid or through a major courier (such as Federal
Express, DHL or UPS), or sent by facsimile, and addressed to the party to be
notified at the address set forth below.

To Isis:                            Isis Pharmaceuticals, Inc.
                                    2292 Faraday Avenue
                                    Carlsbad, CA 92008
                                    Attn: Executive Vice President
                                    Fax: 760-931-3861
                                    Phone: 760-603-2707

with copies to:                     General Counsel
                                    Fax: 760-603-3820



                                       6                        [EXECUTION COPY]

To EyeTech:                         EyeTech Pharmaceuticals, Inc.
                                    666 Fifth Avenue
                                    35th Floor
                                    New York, NY 10103
                                    Attn: Chief Executive Officer
                                    Fax:   212-582-2645
                                    Phone: 212-582-8376

with copies to:                     General Counsel

         9.7      Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of Isis and EyeTech. The waiver by
either of the parties of any breach of any provision hereof by the other party
shall not be construed to be a waiver of any succeeding breach of such provision
or a waiver of the provision itself.

         9.8      Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision will be excluded
from this Agreement and the balance of the Agreement will be interpreted as if
such provision were so excluded and will be enforceable in accordance with its
terms.

         9.9      Force Majeure. No party will be deemed to be in default of
this Agreement to the extent the performance of its obligations or attempts to
cure any breach are delayed or prevented by reason of any act of God, war, fire,
natural disaster, accident, act of government, or any other cause beyond the
reasonable control of such party, if the party affected will give prompt notice
of any such event to the other party. In the event of such a force majeure
event, the time for performance or cure will be extended for the period equal to
the duration of such force majeure event but not in excess of six (6) months.

         9.10     Entire Agreement. This Agreement is the entire agreement of
the parties with respect to the subject matter hereof, and any previous
agreements, discussions or understandings, whether written or oral, are hereby
merged herein.

         9.11     Press Release. EyeTech and Isis agree that each Party may
issue a press release. The Parties will confer on such press releases, to review
and comment and incorporate the other Party's reasonable comments and
suggestions prior to issuance of such press release.



                                       7                        [EXECUTION COPY]

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.

ISIS PHARMACEUTICALS, INC.                   EYETECH PHARMACEUTICALS, INC.

By: /s/ B. Lynne Parshall                    By: /s/David Guyer
    ---------------------------------            -------------------------------

Name: B. Lynne Parshall                      Name: David Guyer

Title: Executive Vice President              Title: Chief Executive Officer



                                       8                        [EXECUTION COPY]

                                    EXHIBIT A
                                   DEFINITIONS

1.   "AMD Completed Patient Enrollment" means the completion of enrollment of
     that number of patients in EyeTech's Pivotal Phase II/III clinical trial
     program that is necessary to gain Food and Drug Administration regulatory
     approval of EYE001 for the treatment of the wet form of age-related macular
     degeneration.

2.   "Major Market" means Canada, any European Community member country, Japan
     or the United States.

3.   "Manufacturing Process" means the process steps [**] set forth in master
     batch records for EYE001 in the version existing as of the Effective Date,
     including reasonable minor variants and extensions of process steps
     thereof.

4.   "Net Sales" will mean the gross invoice price of EYE001 sold by EyeTech,
     its affiliates and sublicensees to a third party less the following items:
     (i) trade discounts, credits or allowances, (ii) credits or allowances
     additionally granted upon returns, rejections or recalls (except where any
     such recall arises out of EyeTech's or sublicensee's gross negligence,
     willful misconduct or fraud), (iii) freight, shipping and insurance
     charges, (iv) taxes, duties or other governmental tariffs (other than
     income taxes) and (v) government-mandated rebates. EyeTech, its affiliates
     or sublicensees will be treated as having sold EYE001 for an amount equal
     to the fair market value of EYE001 if: (a) EYE001 is used by EyeTech, its
     affiliates or sublicensees without charge or provision of invoice, or (b)
     EYE001 is provided to a third party by EyeTech, its affiliates or
     sublicensees without charge or provision of invoice and used by such third
     party.

5.   "EYE001" means EyeTech's EYE001 NX1838 non-antisense therapeutic product
     (or any product containing EyeTech's EYE001 NX1838 non-antisense
     therapeutic product for the treatment of ophthalmic conditions. EYE001 will
     also include any minor chemical modification to EYE001 NX1838.

6.   "Patent" or "Patents" means (a) patent applications (including provisional
     applications and applications for certificates of invention); (b) any
     patents issuing from such patent applications (including certificates of
     invention); (c) all patents and patent applications based on, corresponding
     to, or claiming the priority date(s) of any of the foregoing; and (d) any
     substitutions, extensions (including supplemental protection certificates),
     registrations, confirmations, reissues, divisionals, continuations,
     re-examinations, renewals and foreign counterparts thereof.

7.   "Licensed Patent Rights" means all Patents owned by Isis or controlled by
      Isis through the Term which Isis has the right to sublicense and such
      sublicense does not create any obligation to any third party, which claim
      or cover [**].

8.   "Reporting Period" has the meaning set forth in Section 4.1.

9.   "Term" has the meaning set forth in Section 8.1.

EX-10.58

                                                               EXHIBIT NO. 10.58


          CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE
        SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.





                   MANUFACTURING AND SUPPLY (FILL AND FINISH)

                                   AGREEMENT

                                    BETWEEN

                         EYETECH PHARMACEUTICALS, INC.

                                      AND

                             GILEAD SCIENCES, INC.




                         DATED AS OF NOVEMBER 26, 2003

                               TABLE OF CONTENTS

                                                                                                       
1. DEFINITIONS.........................................................................................   1

   1.1  Affiliate......................................................................................   1
   1.2  Agreement......................................................................................   1
   1.3  Annual Minimum Volume..........................................................................   1
   1.4  API............................................................................................   2
   1.5  Applicable Law.................................................................................   2
   1.6  Business Day...................................................................................   2
   1.7  cGMP...........................................................................................   2
   1.8  Claim or Proceeding............................................................................   2
   1.9  Commercial Launch..............................................................................   2
   1.10  Controlt......................................................................................   2
   1.11  Environmental Laws............................................................................   2
   1.12  Environmental Losses..........................................................................   2
   1.13  Eyetech Indemnified Party.....................................................................   2
   1.14  Eyetech Product Intellectual Property.........................................................   2
   1.15  Facility......................................................................................   3
   1.16  FDA...........................................................................................   3
   1.17  FDA Act.......................................................................................   3
   1.18  Gilead Indemnified Party......................................................................   3
   1.19  Governmental Authority........................................................................   3
   1.20  Hazardous Materials...........................................................................   3
   1.21  Hazardous Waste...............................................................................   3
   1.22  Information...................................................................................   3
   1.23  Initial Term..................................................................................   3
   1.24  Inspection Period.............................................................................   3
   1.25  Intellectual Property.........................................................................   3
   1.26  Laws..........................................................................................   3
   1.27  Losses........................................................................................   4
   1.28  Manufacturing.................................................................................   4
   1.29  Purchase Order................................................................................   4
   1.30  Person........................................................................................   4
   1.31  Price.........................................................................................   4
   1.32  Product.......................................................................................   4
   1.33  Product Materials.............................................................................   4
   1.34  Product Supplement............................................................................   4
   1.35  Product Warranty..............................................................................   5
   1.36  Quality Agreement.............................................................................   5
   1.37  Quantitative Defects..........................................................................   5
   1.38  Recall........................................................................................   5
   1.39  Regulatory Approvals..........................................................................   5
   1.40  Specifications................................................................................   5
   1.41  Release.......................................................................................   5
   1.42  Sublicensee...................................................................................   5
   1.43  Term..........................................................................................   5
   1.44  Territory.....................................................................................   5
   1.45  Waste.........................................................................................   5

2. SUPPLY REQUIREMENTS; ORDERS; SHIPMENT AND DELIVERY TERMS; REPORTS; ALTERNATIVE SUPPLY...............   6

   2.1.  Agreement to Supply...........................................................................   6




                                       2

                                                                                                      
   2.2.  Use of Facility, Equipment, Molds and Tooling.................................................   6
   2.3.  Current Production Guidelines; Capacity.......................................................   7
   2.4   Forecasts and Orders..........................................................................   8
   2.5.  Standard Forms................................................................................  10
   2.6.  Procurement and Approval of Raw Materials.....................................................  10
   2.7.  Supply of API.................................................................................  11
   2.8.  Product Samples...............................................................................  11
   2.9.  Alternative Supply............................................................................  11
   2.10. Start Up Activities...........................................................................  12

3. SHIPMENT AND DELIVERY TERMS; REPORTS................................................................  14

   3.1.  Shipment Reports..............................................................................  14
   3.2.  Delivery/Shipping Instructions/Risk of Loss...................................................  14

4. PRICE; PAYMENT; PRICE ADJUSTMENTS; TAXES............................................................  15

   4.1.  Purchase Price; Yield Adjustments.............................................................  15
   4.2.  Price Adjustments.............................................................................  15
   4.3.  Invoices......................................................................................  15
   4.4.  Payment.......................................................................................  16
   4.5.  Taxes.........................................................................................  16

5. MANUFACTURING STANDARDS AND QUALITY ASSURANCE.......................................................  16

   5.1.  Manufacturing Standards.......................................................................  16
   5.2.  Modifications in Specifications...............................................................  16
   5.3.  Pest Control..................................................................................  17
   5.3.  Storage and Handling..........................................................................  17
   5.5.  Maintenance of Facility, Equipment and Molds..................................................  18
   5.6.  Legal and Regulatory Filings and Requests.....................................................  18
   5.7.  Analysis of Materials.........................................................................  18
   5.8.  Quality Tests and Checks......................................................................  19
   5.9.  Non-complying Product.........................................................................  19
   5.10. Responsibility for Rejected and Non-Complying Product.........................................  19
   5.11. Disposal of Rejected and Non-Complying Product and Product Materials..........................  19
   5.12. Maintenance and Retention of Records..........................................................  20
   5.13. Quantitative Defects; Rejection of Product; Disposal of Rejected Shipments....................  20
   5.14. Customer Complaints and Inquiries.............................................................  22
   5.15. Government Inspections, Seizures and Recalls..................................................  22
   5.16. Quality Agreement.............................................................................  23
   5.17. Manufacturing Committee.......................................................................  23
   5.18  Audits and Inspections........................................................................  25
   5.19. Diversion Issues..............................................................................  25
   5.20. Notice of Material Events.....................................................................  25
   5.21. Survival......................................................................................  25

6. REPRESENTATIONS AND WARRANTIES; DISCLAIMERS.........................................................  25

   6.1.  Representations and Warranties of Gilead......................................................  25
   6.2.  Representations and Warranties of Eyetech.....................................................  27
   6.1.  No Other Waranties............................................................................  28
   6.4.  Survival......................................................................................  28

7. ENVIRONMENTAL REPRESENTATIONS, WARRANTIES AND COVENANTS.............................................  28

   7.1.  Compliance with Environmental Laws............................................................  28
   7.2.  Permits, Licenses and Authorization...........................................................  29
   7.3.  Hazardous Materials and Waste.................................................................  29




                                       3

                                                                                                      
   7.4.  Generation of Hazardous Wastes................................................................  29
   7.5.  Diversion Issues..............................................................................  29
   7.6.  Health and Safety Procedure...................................................................  29
   7.7.  Training......................................................................................  30
   7.8.  Survival......................................................................................  30

8. OWNERSHIP; TRADEMARKS; PROPRIETARY INFORMATION......................................................  30

   8.1.  Eyetech's Ownership of Intellectual Property; Eyetech Technology and Information..............  30
   8.2.  Ownership of Other Property...................................................................  31
   8.3.  Limited Right to Use..........................................................................  31
   8.4.  License.......................................................................................  31
   8.5.  Survival......................................................................................  31

9. INDEMNIFICATION; LIMITATIONS OF LIABILITY...........................................................  32

   9.1.  Indemnification of Eyetech....................................................................  32
   9.2.  Eyetech's Indemnification of Gilead...........................................................  32
   9.3.  Assertion of Claim............................................................................  32
   9.4.  Limitation of Liability.......................................................................  33
   9.5.  Survival......................................................................................  33

10. INSURANCE..........................................................................................  33

   10.1.  Insurance....................................................................................  33
   10.2.  Coverage.....................................................................................  33
   10.3.  Certificates of Insurance; Maintenance of Coverage...........................................  34

11. Title, Risk of Loss and Reimbursement..............................................................  34

   11.1.  Testing......................................................................................  34
   11.2.  Title and Risk of Loss.......................................................................  34
   11.3.  Reimbursement for Loss of API; Non-Complying Product.........................................  34

12.  CONFIDENTIAL INFORMATION..........................................................................  35

   12.1.  Confidential Information.....................................................................  35
   12.2.  Exceptions...................................................................................  36
   12.3.  Return or Destruction........................................................................  36
   12.4.  Terms of Agreement...........................................................................  36
   12.5.  Survival.....................................................................................  37

13. TERM, TERMINATION..................................................................................  37

   13.1.  Initial Term; Term...........................................................................  37
   13.2.  Termination by Eyetech.......................................................................  37
   13.3.  Termination by Gilead........................................................................  38
   13.4.  Effect of Termination........................................................................  38
   13.5.  Return of Materials, etc. Supplied by Eyetech................................................  38

14. FORCE MAJEURE; COMPETING PRODUCT...................................................................  39

   14.1.  Force Majeure................................................................................  39
   14.2.  Competing Product............................................................................  39

15. MISCELLANEOUS......................................................................................  40

   15.1.  Relationship of the Parties..................................................................  40
   15.2.  Successors and Assigns.......................................................................  40
   15.3.  Notice.......................................................................................  40
   15.4.  Entire Agreement.............................................................................  41




                                       4

                                                                                                      
   15.5.  Severability.................................................................................  41
   15.6.  Waiver.......................................................................................  42
   15.7.  Headings.....................................................................................  42
   15.8.  Counterparts.................................................................................  42
   15.9.  Governing Law................................................................................  42




                                       5

                       MANUFACTURING AND SUPPLY AGREEMENT

      MANUFACTURING AND SUPPLY AGREEMENT dated as of November 26, 2003
("Effective Date"), by EYETECH PHARMACEUTICALS, INC., a Delaware corporation
having its principal office located at 500 Seventh Avenue, 18th Floor, New York,
NY 10018 (hereinafter "Eyetech") and GILEAD SCIENCES, INC., a Delaware
corporation having its principal place of business at 333 Lakeside Drive, Foster
City, CA 94404 (hereinafter "Gilead").

                                   WITNESSETH:

      WHEREAS, Eyetech desires to have Gilead manufacture and supply Eyetech
with certain quantities of Product;

      WHEREAS, Gilead desires to manufacture and supply to Eyetech with such
quantities of Product; and

      WHEREAS, the parties are willing to carry out the foregoing pursuant to
the terms and conditions set forth in this Agreement;

      NOW, THEREFORE, in consideration of these premises and the covenants,
agreements, representations and warranties herein contained, and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows.:

                             SECTION 1. DEFINITIONS.

      As used in this Agreement, the following defined terms shall have the
meanings set forth below.

      1.1 "Affiliate" shall mean, with respect to any Person other than a
natural person, any corporation or other business entity that either directly or
indirectly, controls such Person, is controlled by such Person, or is under
common control with such Person. For purposes of this definition, the term
"control" means the possession of the power to direct or cause the direction of
the management and policies of such Person, whether through the ownership of
more than fifty percent (50%) of voting securities, by contract or otherwise.

      1.2 "Agreement" shall mean this Manufacturing and Supply Agreement and all
attachments hereto as the same may be amended, supplemented or otherwise
modified from time to time.

      1.3 "Annual Minimum Percentage" shall mean, subject to Sections 2.3(b),
2.4(f)(iii) and 2.9(b), the minimum percentage of Eyetech's total orders (on a
unit basis) from all sources for Product for distribution in the Territory that
are scheduled for delivery during a calendar year that Eyetech is obligated to
order from Gilead, for any calendar years that such minimum percentage is set
forth in the Product Supplement.

      1.4 "API" shall mean the bulk active substances specified in clauses (a)
and (b) of the definition of "Product", as used to Manufacture the Product.

      1.5 "Applicable Laws" shall mean all Laws applicable to Manufacture of
Products for the Territory by Gilead at the Facility (including ingredients,
testing, storage, handling, intermediates, bulk and finished products),
including without limitation cGMP and any Environmental Laws.

      1.6 "Business Day" shall mean any day other than Saturday, Sunday or any
day on which banks located in New York, New York are authorized or obligated to
be closed.

      1.7 "cGMP" shall mean all applicable current good manufacturing practices
for pharmaceutical products promulgated by any Governmental Authority having
jurisdiction in the form of laws, regulations, (as applicable to pharmaceutical
products and ingredients) as the same may be updated, supplemented or amended
from time to time, as applicable to Products.

      1.8 "Claim or Proceeding" shall mean any third party claim, demand,
action, suit, proceeding or arbitration including any Governmental Authority
investigation.

      1.9 "Commercial Launch" shall mean the first day which Eyetech, the
Sublicensee, or one of their respective Affiliates makes a commercial sale of
the Product following Regulatory Approval in the Territory.

      1.10 "Control", "Controls" and "Controlled" mean, with respect to a
particular item of information or intellectual property right, that the
applicable party owns or has a license to such item or right and has the ability
to grant to the other party access to and a license or sublicense (as
applicable) under such item or rights as provided for herein without violating
the terms of any agreement or other arrangement with any third party existing as
of the Effective Date.

      1.11 "Environmental Laws" shall mean all Laws whether currently in
existence or hereafter promulgated, enacted, adopted or amended, relating to
safety, preservation or protection of human health and the environment and/or
relating to the handling, treatment, transportation or disposal of Waste
including any matters related to Spills and threatened Spills of materials and
substances.

      1.12 "Environmental Losses" shall mean any and all fines, penalties,
costs, liabilities, damages or losses incurred by Eyetech, an Affiliate of
Eyetech, or the Sublicensee, or for which Eyetech, an Affiliate of Eyetech, or
the Sublicensee is liable or obligated pursuant to any Environmental Laws
arising out of any violation of any Environmental Laws by Gilead that occurs in
the course of or results from the Manufacture of Product.

      1.13 "Eyetech Indemnified Party" shall have the meaning set forth in
Section 9.1.

      1.14 "Eyetech Product Intellectual Property" shall mean any Intellectual
Property Controlled by Eyetech that covers the Manufacture of Product by Gilead
pursuant to this Agreement or that is otherwise necessary or useful for such
Manufacture.


                                                                               2

      1.15 "Facility"" shall mean Gilead's manufacturing facilities located at
502 Covina Boulevard, San Dimas, California and (for storage only) 542 Covina
Boulevard, San Dimas California, and, subject to Eyetech's prior written
approval, such other facilities of Gilead used in (a) the Manufacture of Product
or (b) storage of Product Materials and Product.

      1.16 "FDA" shall mean the United States Food and Drug Administration or
any successor agency.

      1.17 "FDA Act" shall mean the United States Food, Drug and Cosmetic Act,
as amended.

      1.18 "Gilead Indemnified Party" shall have the meaning set forth in
Section 9.2.

      1.19 "Governmental Authority" shall mean any duly authorized court,
tribunal, arbitrator, agency, commission, official or other instrumentality of
any federal, state, province, county, city or other political subdivision,
domestic or foreign.

      1.20 "Hazardous Materials" shall mean any pollutant, contaminant,
hazardous or toxic substance, constituent or material, including petroleum
products and their derivatives, or other substances generated or utilized in the
course of Manufacture, whether or not regulated under or pursuant to any
Environmental Law.

      1.21 "Hazardous Waste" shall mean waste arising from the Manufacture of
the Product, that is defined in, or which may be determined to be hazardous
waste under, any Environmental Laws.

      1.22 "Information" shall have the meaning set forth in Section 12.1.

      1.23 "Initial Term" shall have the meaning set forth in Section 13.1.

      1.24 "Inspection Period" shall have the meaning set forth in Section
5.13(b).

      1.25 "Intellectual Property" shall mean (a) any processes, trade secrets,
inventions, know-how, industrial models, designs, methodologies, drawings,
formulae, procedures, techniques, clinical data or technical or other
information or data, manufacturing, engineering and technical drawings, and (b)
registered trade marks, trade mark applications, unregistered marks, trade
dress, trade names, brand names, copyrights, patents, patent applications, and
any and all provisionals, divisions, continuations, continuations in part,
extensions, substitutions, renewals, registrations, revalidations, reissues or
additions, including supplementary certificates of protection, of or to any of
the aforesaid patents and patent applications, and all foreign counterparts of
any, or to any, of the aforesaid patents and patent applications.

      1.26 "Laws" shall mean any law, statute, rule, regulation, ordinance or
other pronouncements of any Governmental Authority having the effect of law,
promulgated by any Governmental Authority having jurisdiction in the Territory.


                                                                               3

      1.27 "Losses" shall mean any and all damages, judgments, liabilities,
fines, fees, settlements, payments, obligations, penalties, deficiencies,
losses, costs and expenses (including Environmental Losses, interest, court
costs, reasonable fees of attorneys, accountants and other experts and other
reasonable expenses of litigation or other proceedings or of any claim, default
or assessment).

      1.28 "Manufacturing" shall mean the warehousing of Product Materials and
API after receipt thereof, compounding, component preparation, incoming and
outgoing quality control and other procedures, or any part thereof, involved in
manufacturing Product from the Product Materials and API and packing such
Product in accordance with the Specifications, which shall include the
procedures of filling, inspecting, individual and/or bulk syringe container
labeling, individual and/or bulk syringe container packaging (e.g. bagging,
sealing, primary and/or secondary packaging) and shipping of individual and/or
bulk syringes, and warehousing such Product in accordance with the
Specifications, until delivery by Gilead in accordance with this Agreement. The
terms "Manufacture", "Manufactured", "Manufacturing", in this Agreement shall
have the identical meaning.

      1.29 "Order" shall mean a written form submitted by Eyetech pursuant to
Sections 2.4(b) and (e) and in accordance with the terms of this Agreement to
Gilead authorizing the Manufacture of Product.

      1.30 "Person" shall mean any natural person, entity, corporation, general
partnership, limited partnership, proprietorship, other business organization,
trust, union, association or Governmental Authority.

      1.31 "Price" shall mean the price set forth in the relevant Product
Supplement to be charged by Gilead for Product Manufactured and supplied
hereunder as delivered to Eyetech.

      1.32 "Product" shall mean a filled syringe intended to be used for
injections directly into a patient's eye (i.e., not for use with any drug
delivery system not requiring direct injections into a patient's eye) and
packaged as set forth in the applicable Specifications that contains a quantity
of either (a) the anti-VEGF aptamer know as "Macugen" or "EYE001", or (b) any
metabolite or prodrug of such aptamer or any hydrate, conjugate, salt, ester,
isomer, polymorph or analogue of any of the foregoing, either alone or in
combination with one or more other therapeutically active substances, that is
added to this Agreement as a "Product" pursuant to Section 2.1(b), in each of
case (a) or (b) as stated in the applicable Specifications.

      1.33 "Product Materials" shall mean the excipients with which API is
combined to manufacture Product, syringes, plungers, packaging (e.g. bagging,
sealing, primary and/or secondary packaging) and miscellaneous bulk shipping
materials.

      1.34 "Product Supplement" shall mean the mutually agreed Product-specific
supplement attached to this Agreement as Attachment 1 that specifies
requirements for Manufacture of such Product in addition to the Specifications
and cGMP. Attachment 1 may be amended in writing from time to time upon written
agreement of both parties, including without


                                                                               4

limitation to add requirements for Manufacture, Specifications and cGMP
requirements for additional Products.

      1.35 "Product Warranty" shall have the meaning given such term in Section
6.1(a)(i)(B).

      1.36 "Quality Agreement" shall mean those supplemental quality provisions
set forth in the Quality Agreement between Gilead and Eyetech relating to the
Product executed prior to or concurrently with this Agreement and incorporated
herein by reference, as the same may be amended or modified from time to time as
set forth therein.

      1.37 "Quantitative Defects" shall mean defects in a shipment of Product
such that the shipment (as delivered pursuant to Section 3.2) has less than the
invoiced amount of Product for such shipment.

      1.38 "Recall" shall mean a "recall", "correction" (i.e. a field or market
correction) or "market withdrawal" (i.e. a withdrawal from the market not
requiring notification to the FDA) and shall include any post-sale warning or
mailing of information.

      1.39 "Regulatory Approval" shall mean approval of a New Drug Application
(or equivalent thereof) issued by the FDA as required for marketing of the
Product in the Territory.

      1.40 "Specifications" shall mean the specifications for the Manufacture
and shipping, of the Product, including all formulae, Product Materials
requirements, analytical procedures and standards of quality control and quality
assurance, which are attached hereto as Exhibit A to Attachment 1, and as such
Specifications may be amended, supplemented or otherwise modified by the parties
in accordance with Section 5.2 hereof.

      1.41 "Spill" shall mean any spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the indoor
or outdoor environment, including the movement of Hazardous Materials through
the ambient air, soil, subsurface water, groundwater, wetlands, lands or
subsurface strata.

      1.42 "Sublicensee" shall mean Eyetech's co-promotion partner, Pfizer Inc.
and its Affiliates.

      1.43 "Term" shall have the meaning set forth in Section 13.1.

      1.44 "Territory" shall mean the United States of America, including its
territories, possessions and Puerto Rico.

      1.45 "Waste" shall mean all wastes that arise from Manufacture of Product
hereunder, including Hazardous Waste.

      The definitions in this Section 1 shall apply equally to both the singular
and plural forms of the terms defined. As used in this Agreement, (i) the words
"include", "includes" and "including" shall be deemed to be followed by the
phrase "without limitation"; (ii) the words


                                                                               5

"hereof", "herein", "hereby" and derivatives or similar words refer to this
entire Agreement; (iii) all references to Sections and Attachments shall be
deemed references to Sections of this Agreement and Attachments to this
Agreement unless the context shall otherwise require; and (iv) whenever this
Agreement refers to a number of days, such number shall refer to calendar days
unless otherwise specified.

           SECTION 2. SUPPLY REQUIREMENTS; ORDERS; ALTERNATIVE SUPPLY.

2.1.  Agreement to Supply.

      (a)   During the Term of this Agreement and subject to the provisions of
this Agreement, including the forecasting and ordering provisions, Gilead shall
Manufacture and supply, exclusively to Eyetech, quantities of the Product
identified in Section 1.32 for the Territory that are covered by Orders
submitted by Eyetech in accordance with the terms of this Agreement.

      (b)   Upon mutual agreement, the parties may include additional Products
under this Agreement by executing and delivering additional Product Appendices,
whereupon the definition of "Product" shall be expanded to include the
product(s) included in such new Product Appendix. Any such additional Product
Appendices shall be governed by and made a part of this Agreement. Gilead shall
Manufacture and supply, exclusively to Eyetech, quantities of such additional
Products for the Territory that are covered by Orders submitted by Eyetech in
accordance with the terms of this Agreement.

      (c)   Both Gilead and Eyetech acknowledge the fact that the Product is in
the developmental phase of the product life cycle and there is no certainty that
the Product will be commercialized, as certain data and information will become
available as the project progresses which may cause Eyetech, or the Sublicensee,
to decide that the Product is not commercially viable in the United States or
the FDA to decide the Product is not sufficiently safe or efficacious enough for
its intended use to satisfy requirements for issuance of a Regulatory Approval
therefor in the Territory. For the avoidance of doubt, nothing in this agreement
obligates Eyetech to proceed with any commercial activities if Eyetech should
chose not to commercialize the Product in the Territory, provided that it
exercises its right to terminate this Agreement in compliance with Section
13.2(f).

2.2.  Use of Facility, Equipment, Molds and Tooling.

      (a)   All Manufacturing shall be carried out by Gilead, at its Facility
utilizing equipment, molds and tooling in the manner set forth in the
Specifications.

      (b)   Eyetech will purchase and pay for the equipment to be used for
Manufacture of the Product that Gilead does not currently own or lease (such
equipment, which is identified in Attachment 2 hereto, together with any
additional equipment so designated as set forth below in this Section 2.2(b),
the "Critical Equipment"). Any such Critical Equipment will be delivered to the
Facility and placed as designated by Gilead and dedicated to Manufacture of the
Product,


                                                                               6

provided, however, that Eyetech will retain title to the Critical Equipment.
Eyetech will fund the acquisition of replacement parts necessary for the repair
of the Critical Equipment and Gilead will fund and provide routine maintenance,
upkeep, cleaning and requalifications of the Critical Equipment. Gilead will
provide the space for the Critical Equipment rent free in Facility and will be
responsible for costs associated with the operation of the space. The parties
acknowledge that certain expansions to the Facility, and the acquisition of
certain additional equipment, which upon such acquisition and delivery to the
Facility shall be designated "Critical Equipment" for purposes of this
Agreement, that are the subject of the building and equipment improvement plan
and budget attached to this Agreement as Attachment 2-A will be necessary for
Gilead's performance under this Agreement and that Eyetech shall fund such
Facility expansions and equipment acquisitions as determined by the
Manufacturing Committee in accordance with Section 5.17(d)(iii). Upon
termination of this Agreement, or upon Gilead's ceasing to use the Critical
Equipment for production of the Product, Gilead will cooperate reasonably with
Eyetech to arrange for the prompt removal on a reasonable schedule of such
Critical Equipment and to take such other steps as reasonably necessary for
Eyetech to protect its ownership of the Critical Equipment (and as agreed to in
that certain Master Security Agreement No. 4134080 dated July 26, 2002 among
General Electric Capital Corporation, Eyetech and Gilead with respect to the
Syringe Filler referred to therein).

2.3.  Current Production Guidelines; Capacity.

      (a)   The Product Supplement sets forth Eyetech's initial good faith
non-binding (except as otherwise set forth in Section 2.4(i)) five (5) year
forecast of its Orders for Product from Gilead on a calendar year basis (as
updated annually, the "Planning Forecast"). The first year of each Planning
Forecast will include planned Orders on a unit basis and a monthly basis. During
the Term, Eyetech shall update such Planning Forecast on an annual basis on or
before July 1 of the first year of such Planning Forecast and shall include in
each such update a forecast for an additional year commencing at the end of the
existing Planning Forecast (if such additional year would fall within any
portion of the Term then remaining). Subject to the terms hereof, Gilead shall
devote adequate manufacturing capacity to be capable of producing and supplying
Eyetech (and/or its Affiliates or designees) during a calendar year [**] percent
([**]%) of the quantity of Product stated in the Planning Forecast for such
calendar year ("Order Limit").

      (b)   Eyetech will promptly notify Gilead of any potential increases in
Eyetech's Orders for Product over the quantities stated in the Planning
Forecast. If requested by Eyetech at least one (1) year in advance of the
applicable calendar year, the parties will discuss in good faith any potential
adjustment of manufacturing capacity at Gilead necessary to accommodate Orders
for Product in a calendar year in excess of the applicable Order Limit for such
calendar year. Gilead will make any capacity adjustment to accommodate such
increased Orders in accordance with the parties' agreement as to the process,
schedule, and appropriate compensation, investment or payment by Eyetech
therefor. If the parties fail to agree on such a potential increase of
Manufacturing capacity, then Eyetech's Annual Minimum Percentage obligation
shall be limited to purchasing a quantity of Product that is equal to or greater
than the Annual Minimum Percentage of Eyetech's Orders excluding amounts in
excess of the agreed Order Limit.


                                                                               7

      (c)   The parties acknowledge that the Commercial Launch of the Product
will constitute the launch of a new pharmaceutical product in the Territory and,
therefore, actual demand may vary considerably from forecasted demand.
Accordingly, the parties each agree to use best efforts to cooperate with one
another in a manner that enables Gilead to accommodate changing demand.

2.4.  Forecasts and Orders.

      (a)   Forecast Schedule. Eyetech shall provide Gilead with a rolling
forecast schedule of demand for Product ("Forecast Schedule") for the following
twelve (12) calendar months. Each Forecast Schedule shall be expressed in
integer multiples of the current batch size agreed by the parties and shall be
compiled and updated on or before the first day of every month. The initial
Forecast Schedule is set forth in the Product Supplement. Eyetech shall also
keep Gilead updated through monthly review meetings involving the relevant staff
from each party as to its revised forecasts in order to enable capacity planning
and other such activities to be carried out.

      (b)   Order Quantities. The quantities of Product detailed in the first
three (3) months of each Forecast Schedule will be quantities for which Eyetech
shall place a firm order ("Order") that, subject to Section 2.4(f), Gilead shall
accept, confirm and fulfill in accordance with this Section 2.4. The required
delivery dates for each such Order shall be specified in the Order. Required
delivery dates shall be no sooner than twelve (12) weeks after delivery of the
first Forecast Schedule and Order including such delivery dates, unless
otherwise mutually agreed in writing by the parties.

      (c)   Non-binding Forecast. The last 9 months of the Forecast Schedule
shall constitute a good faith estimate by Eyetech of its future Product
requirements and does not constitute any minimum purchase requirement or any
binding commitment by Eyetech to purchase such Product requirements, subject to
Section 2.4(i).

      (d)   Terms. Eyetech shall place Orders for Product in whole numbers of
batches. Gilead shall Manufacture Product only in whole numbers of batches and
shall have no obligation to accept or meet any Orders for Product that are for
other than whole numbers of Batches.

      (e)   Placement and Confirmation. Eyetech shall place Orders for Product
by sending an Eyetech Order form to Gilead by facsimile or in any other written
or electronic form. Gilead shall respond to each Order received from Eyetech
within five (5) Business Days of receipt and accept or reject the Order;
provided, however, that (i) Gilead shall only reject an Order for quantities
covered by the binding portion of any Forecast Schedule in accordance with the
limitation set forth in Section 2.4(f)(i) and (ii) if Gilead fails to respond
within such time period, it shall be deemed to have accepted such Order. If
Gilead receives any Eyetech Order, Planning Forecast or Forecast Schedule after
the close of business on a Business Day, then Gilead will not be deemed to have
received such Order, Planning Forecast or Forecast Schedule until the start of
the next Business Day. Any acceptance of an Order shall include confirmation of
the delivery dates, delivery site and quantity as set out in the Order.


                                                                               8

      (f)   Limitations.

            (i)   If any Order covering a one month period is for a quantity
      greater than the quantity for such period as provided in the Forecast
      Schedule in which that month was the fourth month of the previous such
      forecast ("Forecast Quantity"), Gilead shall not be obligated to supply
      Eyetech with any quantities that are in excess of [**] percent ([**]%) of
      the Forecast Quantity, with any amounts in such Order in excess of such
      amount being the "Excess Amount", unless mutually agreed in writing by
      Gilead and Eyetech. If Eyetech submits an Order that includes an Excess
      Amount, then promptly after Eyetech receives Gilead's response to
      Eyetech's Order that includes such Excess Amount, Gilead and Eyetech shall
      discuss the possibility of Gilead supplying Eyetech with all or a portion
      of such Excess Amount. If discussion is required on the amount or timing
      of production and delivery, then the relevant planning personnel from both
      parties will agree upon and confirm any agreed amended forecast within
      three Business Days of Gilead's first receipt of the relevant Forecast
      Schedule.

            (ii)  If any Order covering any one month period would make the
      total Orders for such calendar year exceed the applicable Order Limit (as
      defined in Section 2.3(a)), Gilead shall not be obligated so supply
      Eyetech with any portion of such Order that would cause such Order Limit
      to be exceeded. If Eyetech submits an Order that if fulfilled would cause
      the Order Limit to be exceeded for such calendar year, then promptly after
      Eyetech receives Gilead's response to such Order, Gilead and Eyetech shall
      discuss the possibility of Gilead supplying Eyetech with all or a portion
      of such Excess Amount.

            (iii) If Gilead rejects any Order(s) or any portion(s) of Order(s)
      in accordance with this Section 2.4(f), then Eyetech's Annual Minimum
      Percentage obligation shall be limited to purchasing a quantity of Product
      that is equal to or greater than the Annual Minimum Percentage of
      Eyetech's Orders excluding such Order(s) or portion(s) of Order(s).

      (g)   Acceptance of Orders and Fulfillment. Subject to the terms of this
Agreement, including the limitations in Section 2.4(f), Gilead shall accept,
confirm and fulfill Orders submitted by Eyetech in accordance with this Section
2.4 in accordance with their terms (including without limitation with respect to
quantities ordered and delivery dates specified in such Orders). Gilead shall
use commercially reasonable efforts to fulfill other Orders and to satisfy any
changes in quantity, delivery phasing or dates requested by Eyetech in respect
of any Order accepted by Gilead, provided that Gilead shall not be required to
incur any additional costs to satisfy such changes, unless the amount of such
costs has been agreed upon in writing in advance between the parties, and
Eyetech has agreed in writing to reimburse all such costs.

      (h)   Order Non-Satisfaction. If Gilead becomes aware that any Order
previously accepted or confirmed in accordance with Section 2.4(g) will not be
satisfied as to quantity or delivery date, then Gilead shall inform Eyetech as
soon as reasonably practicable and in any event within two (2) Business Days.


                                                                               9

      (i)   Annual Minimum Percentage. Subject to Sections 2.3(b), 2.4(f)(iii)
and 2.9(b), Eyetech shall order quantities of Product from Gilead in any
calendar year that equal or exceed the Annual Minimum Percentage for such
calendar year, if any. The quantities in any Order cancelled by Eyetech and any
quantities by which any Order is reduced shall not be counted toward
satisfaction of this obligation; provided that such cancellation or reduction is
not due to a failure by Gilead to accept, confirm and fulfill Orders in
accordance with this Section 2.4 (in which case the cancelled or reduced
quantities shall be counted toward satisfaction by Eyetech of this obligation,
whether or not Gilead informs Eyetech as required under Section 2.4(h)). Eyetech
shall keep or cause to be kept records relating to the volume of Product ordered
from Gilead and any other supplier for a period of four years after the time
period to which such records relate. Gilead shall be entitled to inspect such
records at least once per year. For the avoidance of doubt, Gilead hereby
acknowledges that Eyetech Annual Minimum Percentage obligations do not apply to
the manufacture of products other than the Product. If Eyetech fails to order
quantities of Product from Gilead in any calendar year that equal or exceed the
Annual Minimum Percentage for such calendar year, then Eyetech acknowledges and
agrees that the difference between (i) the amount Eyetech would have paid Gilead
had it ordered the Annual Minimum Percentage for such calendar year and (ii) the
amount Eyetech actually paid Gilead for Product for such year constitute an
appropriate measure of Gilead's damages resulting from such failure and Gilead
acknowledges and agrees that such damages shall constitute Gilead's sole and
exclusive remedy for such failure to purchase Annual Minimum Percentages.

2.5.  Standard Forms.

Any Orders for Product submitted by Eyetech shall reference this Agreement. In
ordering and delivering the Product, Eyetech and Gilead may employ their
standard forms, but nothing in those forms shall be construed to modify, amend
or supplement the terms of this Agreement and, in the case of any conflict
herewith, this Agreement shall control. Any term or condition in any Order,
confirmation or other document furnished by Eyetech or Gilead with respect to
orders or deliveries of Product that is in any way inconsistent with the terms
or conditions of this Agreement is hereby expressly rejected.

2.6.  Procurement and Approval of Product Materials.

Subject to Sections 5.4(c) and 2.4(f), Gilead shall order sufficient quantities
of all Product Materials to enable Gilead to Manufacture, and to deliver, the
Product in accordance with Orders placed by Eyetech and accepted by Gilead
pursuant to Section 2.4(e). All Product Materials used in the Manufacture of the
Product and the supplier(s) thereof shall have been approved in writing by
Eyetech. Gilead shall issue and pay all purchase orders for such Product
Materials. Gilead may not substitute or otherwise replace any Product Materials
and/or any supplier thereof without the prior written consent of Eyetech. Gilead
agrees to provide Eyetech, on a timely basis, all information that Eyetech may
reasonably request in order to comply with internal Eyetech procedures regarding
approval of a change in Product Materials and/or any supplier thereof. The costs
of Product Materials and the management and procurement of such Product
Materials shall be included in the Price in accordance with the terms of Section
4.1 hereof. If Eyetech designates certain suppliers, Gilead shall obtain Product
Materials from such suppliers and the Price shall be


                                                                              10

adjusted to account for any cost savings or increased costs resulting from
obtaining Product Materials from such suppliers.

      2.7   Supply of API.

Gilead will not purchase API. Eyetech will supply API at its own expense on a
schedule sufficient to permit Gilead to Manufacture the quantity of Product
specified in the Forecast Schedule and Orders. Gilead shall not be obligated to
supply Product to fulfill Orders if Eyetech does not supply Gilead with
sufficient quantities of API in a timely manner. At Eyetech's election, the API
may be delivered directly from Eyetech's vendor to Gilead at the vendor's or
Eyetech's expense. Eyetech or its vendor shall supply Gilead with a copy of the
certificate of analysis for the API no later than the date of delivery of the
API to Gilead. Gilead shall provide Eyetech with monthly reports of Gilead's
usage of API supplied by Eyetech, which reports shall account for all used and
unused API in a manner that provides Eyetech with a reasonable basis for
anticipating Gilead's needs for API for fulfillment of pending and subsequent
Orders.

      2.8.  Product Samples.

Gilead shall provide Eyetech (or any such other Person as Eyetech shall
designate) with representative lot samples of each production batch of Product
promptly upon request. Eyetech shall be entitled to review, upon reasonable
prior written notice and during normal business hours, all manufacturing records
relating to such samples including all analytical procedures and cleaning
validation relating to the equipment used in connection with the Manufacture of
the Product. Such Product samples shall be delivered and shipped to Eyetech (or
such other Person as Eyetech shall designate) in accordance with the provisions
set forth in Section 3.2 hereof, or as otherwise instructed by Eyetech. Eyetech
shall pay for such samples when invoiced in accordance with Section 4.3 hereof.

      2.9.  Alternative Supply.

      (a)   Nothing in this Agreement shall prevent Eyetech, the Sublicensee or
any of its Affiliates from manufacturing, or engaging third parties to
manufacture on their behalf, Products for the Territory, provided that Eyetech
satisfies its Annual Minimum Percentage obligations pursuant to Section 2.4(i)
for each Product. Gilead shall cooperate with all reasonable requests by Eyetech
to assist at Eyetech's expense in the transfer qualification activities
undertaken by Eyetech or any such third party, provided that Eyetech satisfies
its Annual Minimum Percentage obligations for the applicable Product pursuant to
Section 2.4(i). Gilead will provide such technology transfer activities at the
agreed upon technical rate and mutually approved work plan.

      (b)   Subject to the limitations set forth below in this Section 2.9(b),
if (i) there is a failure by Gilead to accept Orders submitted by Eyetech in
accordance with Section 2.4 in any [**] consecutive calendar quarters or a
failure by Gilead to fulfill Orders accepted by Gilead in any [**] consecutive
calendar quarters, such that Gilead has not delivered at least [**] percent
([**]%) of the Product quantities ordered by Eyetech during such consecutive
calendar quarters within [**] days of the delivery dates specified in the
relevant Orders, or (ii) Gilead gives notice


                                                                              11

to Eyetech pursuant to Section 2.4(h) that clause (i) will be true, then Eyetech
shall have the right reduce the Annual Minimum Percentage for the remaining term
of this Agreement by up to the greater of [**] percent ([**]%) or the reasonably
anticipated amount of shortfall in timely, conforming supply by Gilead, and have
such quantities of Product supplied by other suppliers qualified pursuant to
Section 2.9(a); provided that, if the occurrence as described in clause (i) or
(ii) results primarily from events outside the reasonable control of Gilead and
Gilead subsequently provides Eyetech with commercially reasonable assurances
that it can resume supply of Product to Eyetech in a timely manner in compliance
with this Agreement, then Eyetech's Annual Minimum Percentage obligation shall
thereafter be restored to its prior level. If an occurrence as described in
clause (i) or (ii) occurs, the Manufacturing Committee (as defined in Section
5.17) will use good faith efforts to resolve any such supply failures as soon as
commercially practicable; provided that, Eyetech shall have the termination
right set forth in Section 13.2(b) unless both (A) the occurrence as described
in clause (i) or (ii) results primarily from events outside the reasonable
control of Gilead and (B) Gilead subsequently provides Eyetech with commercially
reasonable assurances that it can resume supply of Product to Eyetech in a
timely manner in compliance with this Agreement. In addition, if the FDA imposes
requirements on the Manufacture of the Product that requires Eyetech to modify
the Specifications, the Manufacturing Committee will use good faith efforts to
resolve any resulting issues (including costs increases resulting from such
FDA-imposed requirements) that would prevent Gilead from Manufacturing the
Product in accordance with this Agreement. If the Manufacturing Committee is not
able to resolve such issues, Eyetech shall have the termination right set forth
in Section 13.2(b).

2.10  Start Up Activities.

In addition to quantities of Product ordered and supplied pursuant to Section
2.4, Eyetech will purchase and Gilead will supply Product as set forth in this
Section 2.10:

      (a)   Registration (or Clinical) Batches: The parties acknowledge that
prior to the Effective Date Gilead provided Eyetech with certain batches of
Product to support Product registration or for use in clinical trials
(collectively, the "Registration Batches"). Each Registration Batch consists of
approximately [**] units (i.e., single dose units) of Product that Gilead has
tested in-process in accordance with the Specifications in the Product
Supplement. Each Product in a Registration Batch consists of 0.3 mg, 1 mg or 3mg
of Macugen as requested by Eyetech. To the extent that Eyetech has not already
made such payments prior to the Effective Date, Eyetech will pay Gilead batch
charges at $[**] (i.e., $[**] per single shift of aseptic filling) plus an
additional filling charge of $[**] for each unit of Product (i.e., $[**] per
single dose unit), as invoiced by Gilead. For Registration Batches packaged by
Gilead, Eyetech will pay (to the extent not already paid prior to the Effective
Date) Gilead an additional packaging charge of $[**] (i.e., $[**] per single
shift of packaging activities) per lot. For Registration Batches tested by
Gilead, Eyetech will pay (to the extent not already paid prior to the Effective
Date) an additional testing batch charge of $[**] per lot. This price will be
adjusted for increases due to changes to the Specifications or changes to the
Product Supplement provided to Gilead after the Effective Date. Gilead will
deliver entire Registration Batches of the Product, bulk packaged only, CPT to
the finished packaging site designated by Eyetech (Incoterms 2000) and will
deliver


                                                                              12

partial Registration Batches of the Product FCA Gilead's San Dimas facility
(Incoterms 2000). Gilead will provide for storage up to 90 days following
completion of production (i.e., the Batch is packaged and ready for shipment to
Eyetech), with a provision for longer storage as follows:



                                   Days over 90 days:        [**]          [**]
                                                                 
      Room Temperature Storage     per pallet/day           $[**]         $[**]

      Refrigerated Storage         per pallet/day           $[**]         $[**]


      (b)   Process Validation Batches: Gilead will provide Eyetech with at
least 3 batches (anticipated) of Product of each strength (i.e. 0.3 mg, 1 mg or
3mg of Macugen) that Eyetech has plans to commercialize, for purposes of process
validation ("Process Validation Batches"). Each Process Validation Batch will
consist of approximately [**] units of Product. Each Product in a Process
Validation Batch will consist of 0.3 mg, 1 mg or 3mg of Macugen as requested by
Eyetech. Eyetech will pay Gilead batch charges at $[**] (i.e., $102,000.00 per
single shift of aseptic filling) plus an additional filling labor charge of
$[**] for each unit of Product (i.e., $[**] per single dose unit), as invoiced
by Gilead. For Validation Batches packaged by Gilead, Eyetech will pay Gilead an
additional packaging charge of $[**] for each unit of Product (i.e., $[**] per
single dose unit), as invoiced by Gilead. Also for Validation Batches packaged
by Gilead, Gilead will charge for additional support services/handling
requirements/materials purchasing as it relates to all aspects (except the
packaging labor charge identified above) of primary (i.e., the pouch/bag/tray
directly containing the filled syringe) and of secondary (i.e., product shelf
cartoning) labeling and packaging materials, on a cost plus [**]% basis. For
process Validation Batches tested by Gilead, Eyetech will pay an additional
testing charge of $[**] per lot. This price will be adjusted for increases due
to changes to the Specifications or changes to the Product Supplement provided
to Gilead after the Effective Date. Gilead will deliver entire Process
Validation Batches of the Product, bulk packaged only, CPT to the finished
packaging site designated by Eyetech (Incoterms 2000) and will deliver partial
Process Validation Batches of the Product FCA Gilead's San Dimas facility
(Incoterms 2000). Gilead will provide for storage up to 90 days following
completion of production (i.e. the Batch is packaged and ready for shipment to
Eyetech), with a provision for longer storage as follows:



                                   Days over 90 days:        [**]          [**]
                                                                 
      Room Temperature Storage     per pallet/day           $[**]         $[**]

      Refrigerated Storage         per pallet/day           $[**]         $[**]


      (c)   Additional Charges: The following charges will not be included in
the cost/price of the Registration or Process Validation Batches and shall be
separately invoiced by Gilead, provided that Eyetech has approved such charges
in advance and such charges are reasonably documented by Gilead: (i) third party
contractor costs for installation of and support for Critical Equipment; (ii)
travel, accommodation, and FTE costs for Gilead employees and other Gilead out
of pocket expenses in support of the technology transfer to a third party, which
shall be covered under the work plan as specified in Section 2.9(a), (iii)
acquisition and repair of Critical


                                                                              13

Equipment (iv) other unique/non-routine requirements associated with the
Product, including but not limited to additional (i.e., other than the one
annual Product stability lot) stability studies, costs for project start-up
including process validation activities (e.g., writing, executing and approval
of respective validation documents), development of expanded regulatory
documentation and/or filings and the Product's technology transfer to Gilead's
QC laboratory that will be provided upon request after requirements are mutually
agreed upon by Gilead and Eyetech pursuant to a "work plan" as contemplated in
Attachment 1. In addition, Eyetech will pay Gilead's costs incurred in
accordance with Attachment 4 (as modified from time to time by mutual agreement
of the parties, which shall not be unreasonably withheld) for project start-up
including process validation activities and the Product's technology transfer to
Gilead's QC laboratory for Product to be ordered and supplied pursuant to
Section 2.4.

2.11  Stability Work Plan. Promptly after the Effective Date, the parties shall
use good faith efforts to agree upon a stability work plan, which will be
incorporated into and made a part of this Agreement. The stability work plan
shall include a description of services relating to stability and other tests to
be performed by Gilead at Eyetech's request and additional compensation terms
relating to Gilead's performance of such services.

SECTION 3:  SHIPMENT AND DELIVERY TERMS; REPORTS

3.1.  Shipment Reports.

On the date of each shipment of Product, Gilead shall submit to Eyetech, via
e-mail in the manner detailed above, a report detailing the branch order number,
ship date, container/trailer number and contents of each such shipment.

3.2.  Delivery/Shipping Instructions/Risk of Loss.

Gilead shall deliver Product and any Product samples requested by Eyetech
pursuant to Section 2.8 hereof FCA (Incoterms 2000) the Facility and otherwise
in accordance with this Section 3.2. With the initial shipment of Product from a
specific batch, Gilead shall include a certificate of compliance and a
certificate of analysis with such shipment. The Price reflects shipping terms of
FCA (Incoterms 2000) from the Facility for an entire batch. Partial batch
shipments will be subject to additional charges if such partial shipments are
requested by Eyetech and are not due to failures by Gilead to deliver Product in
accordance with accepted Orders. Gilead shall coordinate with Eyetech for the
shipment of the Product with a common carrier from Gilead's Facility to
Eyetech's designated facilities in accordance with shipment instructions
provided by Eyetech. Eyetech will provide a list of common carriers and will pay
the outbound freight delivery costs. Gilead will schedule freight pick up, load
the carrier's trailer and complete documentation all in accordance with
Eyetech's requirements. Gilead will communicate storage and transit requirements
provided by Eyetech to selected carriers.


                                                                              14

              SECTION 4. PRICE; PAYMENT; PRICE ADJUSTMENTS; TAXES.

4.1.  Purchase Price; Yield Adjustments.

      (a)   Eyetech shall purchase the Product from Gilead at prices as set
forth in Attachment 1.

      (b)   After Gilead Manufactures the [**] batches of Product having the
same concentration and the same process/equipment trains, the Manufacturing
Committee will establish an average yield ("Average Yield") for the Manufacture
of Product from API and Product Materials and, based on such Average Yield, the
Manufacturing Committee will allocate savings for batch yields that are more
than [**] percentage points above such Average Yield equally between the
parties.

4.2   Price Adjustments.

      (a)   Subject to Sections 2.3(b), 2.9(b), 4.1(b), 4.2(b), (c) and (d) and
5.2(b), the prices shall be fixed for the Initial Term of this Agreement. In
addition to the adjustments provided for in Sections 2.3(b), 2.9(b), 4.1(b),
4.2(b), (c) and (d) and 5.2(b), after the expiration of the Initial Term of this
Agreement, Gilead may adjust the prices set forth in Attachment 1 based on and
consistent with mutually acceptable industry indices.

      (b)   Cost savings from any Improvements in Manufacturing implemented by
Gilead shall be applied as of the date of implementation by Gilead and shall be
[**] by the parties.

      (c) If the price of a Product Material increases or decreases by more than
[**] percent ([**]%) during a calendar year, the parties will increase or
decrease the relevant Price to reflect such increased or decreased costs.

      (d) If the Product Specifications or the Product Supplement are changed
during the term of this Agreement, the parties agree to negotiate in good faith
an adjustment to the Price.

4.3   Invoices.

Gilead shall submit invoices for all shipments of Product hereunder to Eyetech
upon delivery thereof. Each invoice issued by Gilead hereunder shall specify, at
a minimum, the Price in respect of the Product delivered, or, for Registration
Batches and Process Validation Batches, the applicable charges; and the quantity
of the Product delivered. Gilead shall also be entitled to invoice Eyetech or
any such Affiliate of Eyetech in respect of all import duties and similar
charges incurred by Gilead in delivering any Batch of Product, if relevant, and
the cost of carriage, freight and insurance if at any time Eyetech has requested
Gilead to arrange the delivery transportation .


                                                                              15

4.4   Payment.

Subject to Section 5.13(a), all invoices under this Agreement shall be payable
by Eyetech in U.S. Dollars within forty-five (45) days of date of delivery of
the Products to Eyetech's representative to which such invoice pertains. Any
amounts not paid by Eyetech when due under this Agreement shall be subject to
interest from and including the date payment is due up to and including the date
upon which Eyetech has made a wire transfer of immediately available funds into
an account designated (and notified to Eyetech) by Gilead at a rate equal to the
sum of two percent (2%) plus the prime rate of interest quoted in the "Money
Rates" section of the West Coast edition of The Wall Street Journal calculated
daily on the basis of a 365-day year, or, if lower, the highest rate permitted
under applicable law. Any amounts paid [**] or more days prior to being due
shall be subject to a discount of [**] percent of the invoiced amount.

4.5   Taxes.

The Prices will be exclusive of, and Eyetech will be responsible for, all
tariffs, duties and use, consumption, sales, or excise taxes of any taxing
authority on Product delivered by Gilead under this Agreement excluding taxes
based upon the income of Gilead. If Gilead is required to pay any such tax or
other similar charge, Eyetech shall promptly reimburse Gilead for payment of
such amount.

            SECTION 5. MANUFACTURING STANDARDS AND QUALITY ASSURANCE.

5.1.  Manufacturing Standards.

Gilead shall Manufacture, and supply, the Product (including disposing of all
Waste and other materials) strictly in accordance with the Specifications,
Applicable Laws, and the Quality Agreement. Nothing in this Agreement shall
obligate Gilead to take any action that would or is likely to result in a
violation of any Environmental Law.

5.2.  Modifications in Specifications.

      (a)   Gilead shall not make any revisions to the Specifications without
the prior written consent of Eyetech.

      (b)   If the Specifications are proposed to be modified, the party seeking
to make such modification shall notify the other party to this Agreement as far
in advance as is practicable prior to the proposed effectiveness of such
modification, and the parties shall jointly agree on whether and/or when to
implement such modification; provided that if the parties are unable to agree on
the implementation of any modification after engaging in good faith negotiations
for [**] days, Eyetech shall be entitled to use third party manufacturers as
provided in Section 2.9(b). To the extent that such modification results in an
increase or decrease in the cost of Manufacturing the Product, the parties shall
jointly examine and mutually agree upon the consequences thereof and shall
adjust the Price by the amount of such increase or decrease. Gilead shall
promptly notify Eyetech of the date of implementation of any such modification.


                                                                              16

5.3.  Pest Control.

Gilead shall Manufacture the Product, and Gilead shall store all API, Product
Materials and Product, in a clean, dry area, free from insects and rodents, in a
manner to prevent entry of foreign materials and contamination of Product. Pest
control measures will include the adequate cleaning of the Facility, control of
food and drink, protection of Product from environmental conditions that may
adversely affect the quality of the Product, monitoring of flying and crawling
pests and logs detailing findings and actions taken.

5.4   Storage and Handling.

      (a)   Gilead shall store and handle all Product Materials and Product
strictly in accordance with the provisions of all Applicable Laws, the Quality
Agreement, and the Specifications. In addition, at any given time Gilead shall
store quantities of API provided by Eyetech, provided that such quantities do
not exceed quantities necessary for the Manufacture of quantities of Product
covered any binding Orders then in effect plus the quantities of Product
forecasted by Eyetech for the following [**] months, strictly in accordance
with the provisions of all Applicable Laws, the Quality Agreement, and the
Specifications. Gilead shall use API and Product Materials utilized for the
Manufacture of the Product on a first in, first out basis and before the
expiration date as required under Applicable Laws and the terms of the Quality
Agreement.

      (b)   For Batches of Product other than Registration Batches and Process
Validation Batches, Gilead will provide storage of Product for 60 days following
completion of production (i.e., the Batch is packaged and ready for shipment to
Eyetech) without charge. The charge for storage after such 60 day period shall
be as follows:



                                   Days over 60 days:        [**]          [**]
                                                                 
      Room Temperature Storage     per pallet/day           $[**]         $[**]

      Refrigerated Storage         per pallet/day           $[**]         $[**]


      (c)   The parties will mutually agree on quantities of Product Materials
to be held by Gilead in inventory at its expense. At Eyetech's request, Gilead
will use reasonable efforts to store additional quantities of Product Materials
at Eyetech's expense.

      (d)   Gilead shall notify Eyetech of its need to use a third party
warehouse for storage of any Product, API or Product Materials beyond the
periods or levels referenced in Sections 5.4(b) or (c), and any such storage at
such third party warehouse shall be subject to prior written approval by Eyetech
and shall be at the cost of Eyetech. Subject to the terms of any agreement
between Gilead and such third party approved by Eyetech, Eyetech shall have the
right to audit


                                                                              17

any such third party warehouse upon reasonable prior written notice and during
normal business hours.

5.5.  Maintenance of Facility, Equipment and Molds.

Gilead shall maintain all equipment, tooling and molds utilized in the
Manufacture of Product under this Agreement in good operating condition and
shall maintain its Facility and such equipment, tooling and molds in accordance
with, or in a manner that shall exceed the requirements of (i) all Applicable
Laws, and (ii) all requirements set forth in the Specifications and the Quality
Agreement. In the event that Gilead has knowledge that it has failed to, or
anticipates it will fail to, meet any of the foregoing requirements relating to
the maintenance of its Facility or any equipment, tooling or molds utilized in
connection herewith, or in the event that Gilead receives any notice from any
Governmental Authority relating to its maintenance of, or failure to maintain,
its Facility or any equipment, tooling or molds utilized in connection herewith,
Gilead shall promptly contact Eyetech (or such other department or person as
Eyetech may direct), provide copies of such notice to Eyetech and, if such
notice relates specifically to the Product, the parties will work together in
good faith to address the problem.

5.6.  Legal and Regulatory Filings and Requests.

Gilead shall cooperate and be diligent in making all required responses to all
requests for information from, and in making all legally required responses to,
Governmental Authorities having jurisdiction in the Territory to make such
requests, pertaining to Manufacture of the Product, and shall provide Eyetech
with copies of all such responses. If additional work is required to prepare
such information, Gilead shall cooperate with Eyetech in preparing such
information at Eyetech's expense, based on agreed to hourly fees established for
out-of-scope services. For the avoidance of doubt, Eyetech acknowledges that for
responding to requests involving but not limited to non-routine information,
development protocols and studies, or additional regulatory documentation or
filings, Gilead will be compensated based on the hourly rates set forth in
Attachment 1, Section 2.2. Gilead shall (a) obtain and comply with all licenses,
consents and permits it is required to have pursuant to Applicable Laws, and (b)
comply with all Applicable Laws.

5.7.  Analysis of Materials.

Prior to use in production, Gilead shall have shipments of API and Product
Materials analyzed for such matters as Eyetech may require in accordance with
the Specifications, Quality Agreement, attached Product Supplements and Gilead
standard operating procedures, and Gilead shall ensure that all API and Product
Materials conform to the Specifications as determined by such required analysis.
Such analyses may be conducted by Gilead internally or by an outside laboratory
retained by Gilead and reasonably approved by Eyetech. For purposes of this
Agreement, such tests shall be considered routine and shall be performed at
Gilead's expense. All test results are to be documented in accordance with cGMP
and available for inspection at Eyetech's request upon reasonable notice during
reasonable business hours. Eyetech will be responsible for the costs of
replacement and disposition for all API, except to the extent that such


                                                                              18

API fails to conform to Specifications due to Gilead's non-compliance with
Section 5.4(a) or this Section 5.7. Gilead will be responsible for the costs of
replacement and disposition of Product Materials that fail to conform to
Specifications subject to the limitation set forth in Section 11.3(b).

5.8.  Quality Tests and Checks.

Quality tests and checks for the Product will be conducted in accordance with
the Quality Agreement and the Product Supplement (Attachment 1).

5.9.  Non-Complying Product.

No Product shall be released for delivery and shipment by Gilead unless such
Product strictly complies with the Product Warranty as is determined by any
testing and analysis of Product that Gilead is required to perform under this
Agreement.

5.10. Responsibility for Rejected and Non-Complying Product.

Product rejected pursuant to Section 5.13(b) hereof shall be quarantined and
shall be properly tagged and isolated and shall not be released without the
prior written approval of Eyetech. Eyetech will promptly submit to Gilead a
report specifying the bases for its rejection of such Product. Promptly after
receipt of such report, Gilead will submit to Eyetech a response on the rejected
Product, including the investigation and testing done and recommend either
disposition or acceptance and release of the Product shipment as being in
compliance with the Product Warranty. Eyetech shall review such report and
notify Gilead that Eyetech disputes Gilead's conclusion, accepts Gilead's
conclusion and therefore approves the recommended disposition or release of the
Product, or requests additional data from Gilead. With respect to rejections
pursuant to Section 5.13(b), in the event the parties do not agree on whether
the Product complies with the Product Warranty, the parties shall submit samples
of the non-complying Product to one (1) mutually agreed upon independent third
party laboratory and such party's determinations as to whether the Product
complies with the Product Warranty shall be final and binding upon the parties.
The cost of such independent laboratory analysis shall be paid for by the party
who is determined to be incorrect with respect to the rejected Product's
compliance with the Product Warranty. If it is determined by either Eyetech's
agreement or an independent third party laboratory determination, that Product
rejected pursuant to Section 5.13(b) complies with the Product Warranty, then
Eyetech will promptly pay Gilead's invoice therefor in accordance with its
terms.

5.11. Disposal of Rejected and Non-Complying Product and Product Materials.

All Product rejected pursuant to Section 5.10 and all non-conforming Product
Materials not able to be used in the Manufacture of the Product pursuant to
Section 5.7 shall be removed (if applicable) and disposed of by the party in
possession thereof, as the case may be, in a manner consistent with Applicable
Laws and as approved in advance by Eyetech (such disposal to be at a reasonable
cost in the circumstances and at the expense of the party deemed to be
responsible for


                                                                              19

such Product pursuant to the terms of Sections 5.10 or such Product Materials
pursuant to Section 5.7) and all documentation relating to such disposition
shall be made available to the other party upon request. The non-disposing
party, at its discretion and cost, may be present to witness the destruction of
rejected or non-complying Product Materials, Product or Product in process. No
rejected or non-complying Product Materials, Product or Product in process shall
be sold as salvage or for any other purpose by either party or designees or
agents thereof without the prior written approval of the other party. Gilead
shall be responsible for ensuring that all printed packaging waste materials
bearing Eyetech or Sublicensee names or logos are destroyed and shall not rely
on any third party for such destruction unless Gilead personnel actually witness
such destruction by the third party.

5.12. Maintenance and Retention of Records.

      (a)   Gilead shall maintain detailed records with respect to Product
Materials and API usage and Manufacturing, which records shall include
production code dates, and Gilead shall maintain detailed records with respect
to shipping information relating to the Product, in each case according to
Gilead operating procedures and so that Product can be easily traced in case of
a Recall or rejection of Product or Product Materials. Such records shall also
be maintained and retained in accordance with the Quality Agreement and the
Specifications. Such records shall be sufficient such that Gilead shall under
normal circumstances be capable of responding to inquiries by Eyetech within one
(1) Business Day of notification and shall be able to provide the production
code date and the location of the Product in question.

      (b)   Gilead shall provide to Eyetech on an annual basis a production
record, including control charts, trend analysis, consumer complaints,
deviations and reworks, and any other information, in each case as mutually
agreed, for purposes of preparing an Annual Report as required by cGMP.

5.13. Quantitative Defects; Rejection of Product; Disposal of Rejected
      Shipments.

      (a)   Rejection for Quantitative Defects. Eyetech shall notify Gilead in
writing of any claim relating to Quantitative Defects in shipments of the
Product within thirty (30) days following actual receipt of such shipments by
Eyetech, including Eyetech's bases for concluding that any shortage in quantity
is a Quantitative Defect. If Gilead disputes Eyetech's conclusion, the parties
will work in good faith to determine whether such shortage was due to a
Quantitative Defect. At Eyetech's request, Gilead shall, at its own expense,
provide Eyetech with any missing quantities of such Product promptly after
receipt of notice from Eyetech, but in no event later than forty-five (45) days
following receipt of notice. Eyetech shall be obligated to pay only for actual
quantities of Product delivered in the initial shipment (irrespective of the
invoiced amount) in accordance with Section 4.3 hereof and shall pay for any
quantities subsequently delivered by Gilead to Eyetech as replacements for
missing quantities in accordance with Section 4.3 hereof and, if Eyetech has
paid for quantities of Product not delivered in the initial shipment at the time
that Eyetech discovers the Quantitative Defect, Gilead shall, at Eyetech's
option, either reimburse Eyetech for the amount paid for such non-delivered
quantities or credit such payment against Eyetech's obligations with respect to
future delivered quantities. If it is determined any shortage


                                                                              20

in the original shipment was not due to a Quantitative Defect, Eyetech will
promptly pay unpaid amounts of the invoice therefor in accordance with this
Agreement. If Gilead does not receive any notice of rejection on the basis of a
Quantitative Defect within forty-five (45) days of Eyetech's receipt of the
relevant shipment, Eyetech shall be deemed to have accepted such shipment of
Product with respect to adequacy of Product quantities in such shipment.

      (b)   Rejection for Product Warranty Defects. Within forty-five (45) days
following receipt by Eyetech (or its designee) of any shipment of Product
hereunder ("Inspection Period"), Eyetech shall have the right to give Gilead
notice of rejection of any part of such shipment of Product that fails to comply
with the Product Warranty; provided, however, that the only time restriction
applicable to Eyetech's provision of notice of rejection of any shipments of
Product where failure of Products to comply with the Product Warranty in a
manner that would not reasonably have been discovered by any inspection, testing
or analysis of such Product conducted by Eyetech or its designees, shall be that
such notice must be provided prior to the end of the shelf life for such batch
of Product. Determination as to the propriety of any rejection for
non-compliance with the Product Warranty shall be made pursuant to Section 5.10.
If Gilead does not receive within the Inspection Period any notice of rejection
based on non-compliance with the Product Warranty, Eyetech shall be deemed to
have accepted such shipment of Product with respect to compliance with the
Product Warranty as may be reasonably determined by such inspection, analysis or
testing; provided that nothing in this Section 5.13(b) shall limit Gilead's
obligations under Section 9.1 with respect to Losses arising out of or resulting
from third party claims or Gilead's gross negligence or intentional misconduct.
Subject to the last sentence of Section 5.10, Eyetech shall not be obligated to
pay the Price for Product rejected pursuant to this Section 5.13(b) and if
Eyetech has paid for quantities of Product rejected pursuant to this Section
5.13(b) at the time Eyetech rejects such quantities, Gilead shall, in addition
to reimbursing Eyetech for API in accordance with Section 11.3, at Eyetech's
option either reimburse Eyetech for the amount paid for such quantities of
Product rejected pursuant to this Section 5.13(b) or credit such payment against
Eyetech's obligations with respect to future Orders.

      (c)   Replacement of Product Rejected for Non-Compliance with Product
Warranty. If requested by Eyetech, Gilead shall replace any Product rejected
pursuant to Section 5.13(b) as soon as practicable and in no case later than
forty-five (45) days following receipt of Eyetech's notice of rejection with
respect thereto, and Eyetech will pay the applicable Price therefor in
accordance with this Agreement. In addition to any other rights or remedies of
Eyetech hereunder, Eyetech shall have the right to set off any refund relating
to paid invoices for any rejected shipped Product for which it has been finally
determined pursuant to Section 5.10 that such rejection was proper against
invoices otherwise due or that become due to Gilead.

      (d)   The provisions of this Section 5.13 shall survive termination or
expiration of this Agreement with respect to shipments of Product Manufactured
by Gilead that are delivered to or sold by Eyetech subsequent to the termination
or expiration of this Agreement; provided, that (i) for any Product rejected
subsequent to the termination or expiration of this Agreement, Eyetech, in lieu
of having Gilead replace such rejected and/or missing quantities of Product, may
elect in its sole discretion to have Gilead reimburse Eyetech for the last
applicable Price for the quantity of Product to be replaced (including any
reasonable applicable freight charges) by Eyetech or a


                                                                              21

third party selected by Eyetech, and (ii) for any Product rejected subsequent to
the termination or expiration of this Agreement, Eyetech shall permit Gilead to
replace such rejected and/or missing quantities of Product unless Gilead no
longer has the capabilities to do so and shall have the right to require Gilead
to reimburse Eyetech for the last applicable Price for the quantity of Product
to be replaced (including any reasonable applicable freight charges) by Eyetech
or a third party selected by Eyetech if Gilead does not have such capabilities
or if Gilead fails to replace such rejected and/or missing quantities in
accordance with Section 5.13(c).

5.14. Customer Complaints and Inquiries.

Eyetech or Gilead, as the case may be, shall give the other party written notice
within forty-eight (48) hours of initial receipt of any information it receives
regarding the safety of the Product, including any confirmed or unconfirmed
information on adverse events possibly associated with the use of the Product;
provided that Eyetech's obligation to provide Gilead with such notices shall be
limited to information received by Eyetech that Eyetech determines relates to,
or is reasonably likely to relate to, the Specifications or Gilead's
Manufacturing activities under this Agreement. Eyetech or Gilead, as the case
may be, shall notify the other party of any complaint or investigation relating
to the Product promptly upon receipt; provided, that, all complaints concerning
suspected or actual Product tampering, contamination or mix-up (e.g., wrong
ingredients) shall be delivered within twenty-four (24) hours of receipt. Gilead
shall provide all assistance reasonably requested by Eyetech in investigating
customer complaints regarding the Product (including testing of the Product in
accordance with Eyetech's specifications) that, in Eyetech's reasonable opinion,
caused by the Manufacturing of such Product. Such testing shall be at Eyetech's
expense unless it is finally determined pursuant to Section 5.10 that such
Product did not comply with the Product Warranty. Eyetech shall be responsible
for responding to all customers' inquiries and/or complaints relating to the
Product and the recordkeeping relating thereto. Gilead and Eyetech shall also
comply with the requirements set forth in the Quality Agreement relating to the
investigation of customer complaints. Eyetech and Gilead shall each provide the
other with copies of any annual reports relating to the Product that it is
required to submit to the FDA; provided that each party shall be entitled to
redact from such copies confidential information that is not reasonably related
to the other party's ongoing performance of its activities with respect to the
Product.

5.15. Government Inspections, Seizures and Recalls.

      (a)   If the FDA or any other Governmental Authority conducts an
inspection at Gilead's Facility pertaining to the Product, seizes any Product
and/or its materials, requests a Recall of any Product, or otherwise notifies
Gilead of any violation or potential violation of any Applicable Law, Eyetech
shall be notified immediately, and Gilead shall take actions as may be required
under the Specifications or otherwise as may be commercially reasonable way to
resolve the issue to both parties' reasonable satisfaction.

      (b)   As applicable, Gilead shall promptly send any reports relating to
such inspections, Recalls or violations or potential violations of Applicable
Law to Eyetech. In the event that any such Governmental Authority requests, but
does not seize, the Product in connection with any


                                                                              22

such inspection, Gilead, as the case may be (i) shall promptly notify Eyetech of
such request, (ii) if possible, shall satisfy such request only after receiving
Eyetech's approval (not to be unreasonably withheld, conditioned or delayed),
(iii) shall follow any reasonable procedures instructed by Eyetech in responding
to such request and (iv) shall promptly send any samples of the Product
requested by the authority to Eyetech. In any case, Gilead will comply with all
Applicable Laws.

      (c)   If the Product supplied by Gilead to Eyetech does not comply with
the Product Warranty, other than non-compliance due to API that was
non-compliant with the applicable specifications when received by Gilead in a
manner that could not reasonably be detected by the required testing, Gilead
shall be responsible for costs reasonably required to effect the Recall of any
affected Product or other reasonably necessary corrective measures taken with
respect thereto. Gilead shall be responsible for pursuing all resolutions with
the applicable supplier of non-complying Product Materials.

5.16. Quality Agreement.

The parties agree to be bound by the Quality Agreement. In the event there is a
discrepancy between the provisions of the Quality Agreement and the provisions
of this Agreement, the provisions of the Quality Agreement shall control with
respect to terms governing the quality of the Product, and the provisions of
this Agreement shall control with respect to all other terms; provided that
nothing in the Quality Agreement shall limit Gilead's representations,
warranties or obligations under this Agreement or Eyetech's right to approve
changes to the Specifications, the suppliers of Product Materials or other
matters set forth in this Agreement over which Eyetech has an approval right.
The parties may amend the Quality Agreement as set forth therein.

5.17. Manufacturing Committee.

      (a)   The parties and the Sublicensee shall form a committee as of the
Effective Date to address Manufacturing issues relating to the Product (the
"Manufacturing Committee"). Gilead, Eyetech and the Sublicensee shall each
designate two (2) representatives with appropriate expertise to serve as members
of the Manufacturing Committee and shall list those initial representatives
Attachment 3. Either party or the Sublicensee may replace its representatives
serving on the Manufacturing Committee from time to time by written notice to
the other party(-ies) and/or the Sublicensee specifying the prior
representative(s) to be replaced and the replacement(s) therefor. Gilead and
Eyetech shall select one (1) such person each to serve as joint chairpersons of
the Manufacturing Committee. The joint chairpersons of the Manufacturing
Committee shall be responsible for calling meetings, preparing and circulating
an agenda in advance of each meeting, and preparing and issuing minutes of each
such meeting within thirty (30) days thereafter.

      (b)   The Manufacturing Committee shall hold meetings at such times and
places as it elects to do so, but in no event shall it hold meetings less
frequently than once every calendar quarter. Meetings may be held by audio or
video teleconference with the consent of each party, provided that at least one
(1) meeting per year shall be held in person unless agreed otherwise


                                                                              23

between the parties. Each party shall be responsible for all of its own expenses
of participating in the Manufacturing Committee. Meetings shall be effective
only if at least one (1) representative of each party is present or
participating.

      (c)   Except as otherwise expressly provided, the role of the
Manufacturing Committee shall be advisory, with the goal of serving as a forum
for the sharing of information and for the purpose of preventing, or informally
resolving (if they are able to facilitate mutual agreement between the parties),
disputes between the parties. The Manufacturing Committee shall not have any
power to amend, modify or waive compliance with this Agreement. The
Manufacturing Committee shall operate as to matters within its jurisdiction by
consensus.

      (d)   The Manufacturing Committee shall:

            (i)    evaluate factors such as Manufacturing risk and Eyetech's
      needs for supply of Product from Gilead based on Eyetech's Planning
      Forecast;

            (ii)   plan and implement appropriate and mutually agreeable changes
      to Gilead's Manufacturing capacity as determined pursuant to Section
      2.3(b), which may include arranging for and qualifying new equipment for
      the Manufacture of the Product or to allocate its use of such capacity,
      review and discuss opportunities for the parties to identify and implement
      Improvements;

            (iii)  determine how the parties will implement the building and
      equipment improvement plan and budget attached to this Agreement as
      Attachment 2-A; provided that the Manufacturing Committee shall not have
      the authority to require Eyetech, and Eyetech shall have no obligation, to
      fund any amount in excess of the total budget amount set forth in
      Attachment 2-A with respect to the expansions of the Facility and the
      acquisition of additional equipment contemplated in Section 2.2(b);

            (iv)   review and discuss issues arising from the transfer of any
      Manufacturing-related technology pursuant to Section 2.9;

            (v)    discuss and coordinate as appropriate and mutually agreed the
      use of Eyetech and Sublicensee expertise and resources with respect to
      providing support for technical and operational problem resolution and
      assurance of Product supply in accordance with this Agreement;

            (vi)   discuss any performance issues (e.g., failure to supply), to
      enable mutually agreeable courses of action to remedy any such issues;

            (vii)  develop and maintain a mutually agreed to set of
      manufacturing metrics/yield provisions;

            (viii) establish the Average Yield and allocate cost savings
      pursuant to Section 4.1(b);


                                                                              24

            (ix)  in the event of an occurrence as described in Section 2.9,
      clauses (i) or (ii), use good faith efforts to resolve any such supply
      failure for no less than forty-five (45) days; and

            (x)   perform such other functions as mutually agreed in writing by
      the parties.

5.18. Audits and Inspections.

Eyetech shall be permitted, on an annual basis, during regular business hours
and on reasonable notice, to physically inspect all Facilities and Gilead shall
use commercially reasonable efforts to enable Eyetech to inspect the facilities
of all suppliers of Product Materials to Gilead on the same basis.
Notwithstanding the foregoing, Eyetech shall have the right to conduct audits of
the Facilities and, to extent that Gilead can arrange using commercially
reasonable efforts, the facilities of all suppliers of Product Materials to
Gilead at any time, when requested, as a reasonable response to an FDA or other
regulatory agency audit notice or regulatory agency inquiry regarding a Product,
an unresolved deviation in Manufacture of Product by Gilead, customer complaints
or adverse events regarding a Product or any other specific FDA request . In
addition, Eyetech and/or the Sublicensee shall be entitled to have up to three
of their or its representatives present on a daily basis (or on such other
observation schedule as the parties may agree) in the Facilities to observe
Gilead's Manufacturing operations and Gilead shall provide such
representative(s) with reasonable access to the Facilities for such purpose.

5.19. Diversion Issues.

Gilead agrees to immediately notify Eyetech if at any time it believes that any
Product has been lost or stolen from the Facility, or any quantities of Product
that have been rendered unsaleable while in Gilead's possession.

5.20  Notice of Material Events.

Gilead and Eyetech each hereby agrees to promptly notify the other party of any
actual or anticipated events that have or may be reasonably expected to have a
material effect on any Product or on Gilead's ability to Manufacture the Product
in accordance with the provisions set forth herein, including any labor
difficulties, strikes, shortages in materials, plant closings, interruptions in
activity, interruptions or delay in API supply or availability, and the like.

5.21. Survival.

The obligations of Gilead under Sections 5.10, 5.11, 5.12, 5.13, 5.14, 5.15,
5.16 and 5.18 of this Agreement shall survive the expiration or termination of
this Agreement until one (1) year after the expiration date of the last batch of
Product Manufactured hereunder.


                                                                              25

             SECTION 6. REPRESENTATIONS AND WARRANTIES; DISCLAIMERS

6.1. Representations and Warranties of Gilead.

      (a) Gilead hereby represents and warrants to Eyetech that:

            (i) The Product when delivered by Gilead to Eyetech under this
Agreement:

                        (A) shall be of the quality specified in, and shall
                  conform with, the Specifications, the Quality Agreement, the
                  Product Supplement and all Applicable Laws, and shall be
                  Manufactured and delivered in conformity with the
                  Specifications, the Quality Agreement, the Product Supplement
                  and Applicable Laws (except in each preceding case to the
                  extent that lack of quality or non-conformity is a result of
                  Gilead's compliance with Eyetech's instructions), and shall
                  not contain any material that while in Gilead's control has
                  not been used, handled or stored in accordance with the
                  Specifications, any other agreed upon quality assurance
                  requirements of Eyetech or the supplier of such material, the
                  Quality Agreement, the Product Supplement and cGMP (except in
                  each preceding case to the extent that such material is
                  introduced or used as a result of Gilead's compliance with
                  Eyetech's instructions); and

                        (B) shall, at the time delivered, have a remaining
                  shelf-life of not less than [**]% of initial shelf life.
                  (Sections (a)(i)(A) and (B) collectively, the "Product
                  Warranty").

            (ii) Gilead does not employ as of the Effective Date and will not
      employ during the Term of this Agreement any debarred persons pursuant to
      sections 306(a) and (b) of the FDA Act (21 U.S.C. 335(a) and (b)) or any
      comparable Law who will participate in the Manufacture of Product;

            (iii) The execution, delivery and performance of this Agreement by
      Gilead does not and will not violate any agreement or instrument to which
      Gilead is a party;

            (iv) Gilead will perform its obligations under this Agreement in
      accordance with Applicable Laws; and

            (v) Gilead will not use any information or technology which to its
      knowledge has been misappropriated from any third party or which to its
      knowledge will infringe any patents of any third party; provided however,
      that such representation and warranty does not cover infringement of any
      third party patents that necessarily results from the Manufacture, use,
      import, offer for sale or sale of Product or the utilization or
      satisfaction of the Specifications.

      (b) Gilead represents to Eyetech as of the Effective Date that:


                                                                              26

            (i) it is a corporation duly organized, validly existing and in good
      standing under the laws of Delaware;

            (ii) it has power and authority to conduct its business as currently
      being conducted and as contemplated herein; and

            (iii) it has power and authority to make, deliver and perform its
      obligations under this Agreement and has taken all necessary action to
      authorize the execution, delivery and performance of this Agreement. No
      consent of authorization of, filing with or other act by or in respect of,
      any Governmental Authority or any other Person is or will be required in
      respect of Gilead in connection with the execution, delivery, performance,
      validity or enforceability of this Agreement. This Agreement has been duly
      executed and delivered on behalf of Gilead. This Agreement constitutes the
      legal, valid and binding obligation of Gilead enforceable against Gilead
      in accordance with its terms.

6.2 Representations and Warranties of Eyetech.

      (a) Eyetech represents and warrants to Gilead that:

            (i) it has and will have sufficient right, title and interest in and
      to the Eyetech Product Intellectual Property to grant a license to the
      Eyetech Product Intellectual Property pursuant to Section 8.4 of this
      Agreement;

            (ii) it, its Affiliates, the Sublicensee and their respective
      sublicensees and distributors will conduct the further manufacturing,
      packaging, labeling, testing, use, handling, storage, transport,
      disposition, marketing, distribution, and commercialization of Product
      following delivery by Gilead under this Agreement in accordance with all
      Applicable Laws;

            (iii) it has not provided and will not provide Gilead with any
      information or technology that, to its knowledge has been misappropriated
      from any third party and, the Manufacture of Product by Gilead for supply
      to Eyetech in compliance with the Specifications, which to its knowledge
      will not infringe any patents of any third party;

            (iv) the execution, delivery and performance of this Agreement by
      Eyetech will not violate any agreement or instrument to which Eyetech is a
      party; and

            (v) Eyetech will perform its obligations under this Agreement in
      compliance with all applicable Laws.

      (b) Eyetech represents that as of the Effective Date:


                                                                              27

            (i) it is not subject to any legal, regulatory, contractual, or
      other restrictions which might enable another person or entity to claim
      any rights in or to the Product or any Information; and

            (ii) neither it nor its Affiliates nor, to its knowledge, the
      Sublicensee has received or is otherwise aware of any actual or threatened
      Claim or Proceeding, the basis of which may be that the manufacture, use,
      import, offer for sale or sale of Product would infringe or misappropriate
      any Intellectual Property of any third party except as follows: [**]

            (iii) it is a corporation duly organized, validly existing and in
      good standing under the laws of Delaware;

            (iv) it has power and authority to conduct its business as currently
      being conducted and as contemplated herein; and

            (v) it has power and authority to make, deliver and perform its
      obligations under this Agreement and has taken all necessary action to
      authorize the execution, delivery and performance of this Agreement. No
      consent or authorization of, filing with or other act by or in respect of,
      any Governmental Authority or any other Person is or will be required in
      respect of Eyetech in connection with the execution, delivery,
      performance, validity or enforceability of this Agreement; provided that
      Gilead acknowledges that the Product has not yet received Regulatory
      Approval in the Territory. This Agreement has been duly executed and
      delivered on behalf of Eyetech. This Agreement constitutes the legal,
      valid and binding obligation of Eyetech enforceable against Eyetech in
      accordance with its terms

6.3   No Other Warranties.

EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES IN SECTION 6.1 AND 6.2, GILEAD AND
EYETECH MAKE NO OTHER WARRANTIES, EXPRESS OR IMPLIED. ALL OTHER WARRANTIES,
WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, INCLUDING WITHOUT LIMITATION,
THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NON-INFRINGEMENT, ARE HEREBY EXPRESSLY DISCLAIMED BY GILEAD AND EYETECH.

6.4.  Survival.

The provisions of this Section 6 shall survive termination or expiration of this
Agreement.

       SECTION 7. ENVIRONMENTAL REPRESENTATIONS, WARRANTIES AND COVENANTS.

7.1.  Compliance with Environmental Laws.


                                                                              28

Gilead shall perform all Manufacture of Product in material compliance with all
applicable Environmental Laws and shall be solely responsible for all
Environmental Losses occurring as a result of its Manufacture of Product prior
to delivery thereof to Eyetech.

7.2.  Permits, Licenses and Authorization.

Gilead shall be solely responsible for obtaining, and shall obtain, all
necessary environmental or other licenses, registrations, certificates,
approvals, authorizations or permits required under Environmental Law, whether
original documents or modifications to existing documents, which are necessary
to perform Manufacture of the Product as provided in this Agreement and shall
bear all costs and expenses associated therewith. Gilead shall provide copies
thereof to Eyetech upon request by Eyetech and shall operate in compliance
therewith. Gilead shall provide Eyetech with immediate verbal notice, confirmed
in writing within twenty-four (24) hours, upon learning of revocation or
modification of such documents, or with regard to any other event or regulatory
action or involvement such as an order or notice, which in any way materially
impacts Gilead's ability to comply with its obligations to supply Product to
Eyetech in compliance with this Agreement.

7.3.  Hazardous Materials and Waste.

The generation, collection, storage, handling, transportation, movement, and
Spill of all Hazardous Materials and Waste, as applicable, shall be the sole
responsibility of Gilead at it sole cost and expense.

7.4.  Generation of Hazardous Wastes.

Without limiting other legally applicable requirements, Gilead shall prepare,
execute and maintain, as the generator of Hazardous Waste, all registrations,
notices, shipping documents and Hazardous Waste manifests required under
Environmental Law for Hazardous Waste and in accordance therewith.

7.5.  Diversion Issues.

Gilead shall be responsible for developing and implementing all procedures
necessary to prevent the diversion of Product from the waste stream in the
course of Manufacture, including the rendering of the Product unsaleable.

7.6.  Health and Safety Procedure.

Gilead shall be solely responsible for implementing and maintaining health and
safety procedures for the Manufacture of the Product Materials and Product as
provided for herein and for any testing and handling of Hazardous Materials and
Waste as provided herein. Such procedures shall comply with all applicable
Environmental Laws. Other than serving in an advisory role as


                                                                              29

the Product expert, Eyetech shall have no responsibility for developing,
implementing or overseeing Gilead's health and safety program.

7.7.  Training.

Gilead shall educate and train all affected employees and contractors who
participate in the Manufacture of the Product regarding the potential hazards
associated with the generation and handling of the Hazardous Materials, Waste,
analyzing and handling of the Product, API and Product Materials, and on the
proper use of engineering controls, process equipment and appropriate personal
protective equipment. Eyetech will provide to Gilead all information within its
control regarding the potential or actual hazards associated with the handling
of any Hazardous Material or Waste, or on the Manufacture of the Product, or on
the proper use of engineering controls, process equipment and appropriate
personal protective equipment. Beyond such provision of information, Eyetech
shall have no responsibility for educating, training or ensuring knowledge of
Gilead's employees or contractors regarding the potential or actual hazards
associated with the handling of any Hazardous Material or Waste, or on the
Manufacture of the Product, or on the proper use of engineering controls,
process equipment and appropriate personal protective equipment.

7.8.  Survival.

The obligations of Gilead under this Section 7 shall survive termination or
expiration of this Agreement.

SECTION 8.  OWNERSHIP; TRADEMARKS; PROPRIETARY INFORMATION.

8.1. Eyetech's Ownership of Intellectual Property; Eyetech Technology and
Information.

      (a) Right, title and interest in and to any creative ideas, proprietary
information, developments, inventions, or improvements or modifications to the
Product or the Intellectual Property associated with the Product that are
invented or otherwise developed under this Agreement by Eyetech or Gilead, or
any of their respective Affiliates or agents, either jointly or severally, and
whether or not patentable ("Improvements") shall be governed by this Section
8.1(a). Gilead agrees to disclose to Eyetech all Improvements developed by
Gilead or its Affiliates or agents and to receive the approval of Eyetech prior
to implementing any Improvements in the Manufacture of Product.

            (i) Eyetech shall own, and Gilead hereby assigns (or shall cause its
      Affiliate or agent to assign) to Eyetech, all right, title and interest in
      and to all Improvements that are useful solely for Manufacturing of
      Products, i.e. not useful in or common to manufacturing, packaging,
      filling, testing or other procedures for other products, including those
      currently manufactured by Gilead ("Product Improvements").

            (ii) All other Improvements other than Product Improvements
      ("Manufacturing Improvements") shall be the exclusive property of Eyetech
      and shall be


                                                                              30

      held in confidence by Gilead and assigned by Gilead (or by Gilead's
      Affiliate or agent) to Eyetech for Eyetech's benefit in the development
      and/or the operation of Manufacturing processes with respect to the
      Product, provided, however, that Eyetech hereby grants Gilead a
      nonexclusive, worldwide, paid-up, perpetual, irrevocable license under all
      Intellectual Property covering the Manufacturing Improvements developed by
      Gilead or its Affiliates or agents to use and practice such Manufacturing
      Improvements for the manufacture of Gilead's and third parties' products
      at any location, with the right to sublicense contract manufacturers for
      such manufacture of Gilead products, and Gilead shall have the right to
      disclose such Manufacturing Improvements to sublicensees under such
      license subject to obligations of confidentiality at least as restrictive
      as those of Section 12 for purposes of practicing its license rights.

      (b) Any trademarks, trade names, brand names, patents, slogans, logos,
copyrights, trade dress, know-how and goodwill associated with the Product shall
be the sole and exclusive property of Eyetech. Gilead shall not have any right
or license to use any such rights at any time before, during or after the Term
of this Agreement, except as necessary for the Manufacture and supply of Product
for Eyetech hereunder.

      (c) Gilead agrees to execute all assignments and other documents and take
all further actions reasonably requested by Eyetech to give effect to the
provisions of this Section 8.1.

8.2.  Ownership of Other Property.

It is agreed that Eyetech, its Affiliates and the Sublicensee are the sole
owners of any and all tools, specifications, blueprints and designs supplied or
paid for by them, and Gilead shall not use, transfer, loan or publicize any of
the above except as necessary for its performance under this Agreement.

8.3.  Limited Right to Use.

Nothing set forth in this Agreement shall be construed to grant to either party
any title, right or interest in or to any Intellectual Property Controlled by
the other party or any of its Affiliates or the Sublicensee, except as expressly
set forth in Sections 8.1, 8.2 or 8.4.

8.4   License.

Eyetech hereby grants to Gilead a non-exclusive paid-up non-transferable
non-assignable license under the Eyetech Product Intellectual Property to
Manufacture Product in the Territory in accordance with this Agreement, solely
for supply to Eyetech. Gilead shall not practice or use the Eyetech Product
Intellectual Property for any purpose other than performance of its obligations
under this Agreement.


                                                                              31

8.5.  Survival.

The provisions of Sections 8.1, 8.2, and 8.3 shall survive the expiration or
termination of this Agreement.

              SECTION 9. INDEMNIFICATION; LIMITATIONS OF LIABILITY.

9.1.  Indemnification of Eyetech.

Gilead shall indemnify, defend and hold Eyetech, its Affiliates, the Sublicensee
and their respective officers, directors, employees and agents (each, an
"Eyetech Indemnified Party") harmless from and against any and all Losses
suffered, incurred or sustained by any Eyetech Indemnified Party by reason of
any Claim or Proceeding to the extent arising out of or resulting from (a) a
breach of Gilead's representations, warranties and covenants in Section 6.1; (b)
any actual or alleged injury to Person or property or death occurring to any
employees, subcontractors, agents of Gilead, or any individuals on the premises
of Gilead (other than injuries due to API defects existing upon receipt by
Gilead); (c) product liability arising out of or resulting from failure by
Gilead to Manufacture the Product in accordance with the Specifications; or (d)
any negligent act or omission on the part of any Gilead Indemnified Party.
Notwithstanding the foregoing, it is understood and agreed that Gilead shall not
have an obligation of defense or indemnity for Claims or Proceedings or be
liable for Losses to the extent that Eyetech has an obligation of defense or
indemnity for Claims or Proceedings or is liable for Losses pursuant to Section
9.2. Except with respect to Losses arising out of or resulting from third party
claims or Gilead's gross negligence or intentional misconduct, in no event shall
Gilead's liability under this Section 9.1 exceed $[**] per occurrence

9.2.  Eyetech's Indemnification of Gilead.

Eyetech shall indemnify and hold Gilead, its Affiliates and its respective
officers, directors, employees and agents (each, a "Gilead Indemnified Party")
harmless from and against any and all Losses suffered, incurred or sustained by
any Gilead Indemnified Party by reason of any Claim or Proceeding to the extent
arising out of or resulting from (a) any breach of Eyetech's representations or
warranties in Section 6.2; (b) any manufacture, packaging, labeling, testing,
use, handling, storage, transport, disposition, marketing, distribution, and
commercialization of API (prior to receipt by Gilead) or Products (following
delivery by Gilead) unless such Claim or Proceeding arises out of or results
from Gilead delivering Product which does not conform with the Specifications
and such failure results from Gilead's failure to deliver such Product in
conformance with the Product Warranty and not from any defect in the API
existing prior to receipt thereof by Gilead; (c) any actual or alleged injury to
Person or property or death occurring to any employees, subcontractors, agents
of Eyetech, or any individuals on the premises of Eyetech; or (d) any negligent
act or omission on the part of any Eyetech Indemnified Party. Notwithstanding
the foregoing, it is understood and agreed that Eyetech shall not have an
obligation of defense or indemnity for Claims or Proceedings or be liable for
Losses to the extent that Gilead has an obligation of defense or indemnity for
Claims or Proceedings or is liable for Losses pursuant to Section 9.1.


                                                                              32

9.3.  Assertion of Claim.

The indemnification provisions set forth in Sections 9.1 and 9.2 above are
conditioned upon the party claiming indemnification (i) promptly furnishing the
other party with written notice of each Claim or Proceeding by reason of which
there may be a Loss for which indemnity will be claimed, (ii) permitting the
indemnifying party to assume the defense and/or settlement of such Claim or
Proceeding at its sole cost and expense, and (iii) cooperating at the other
party's reasonable request and expense in such defense and/or settlement. The
indemnified party may hire counsel of its choice at its own cost and participate
in the defense. In no event shall either party institute, settle or otherwise
resolve any Claim or Proceeding that involves other than payment of monetary
damages without the prior written consent of the other party, not to be
unreasonably withheld, delayed or conditioned.

9.4   Limitation of Liability.

Except as expressly provided in this Agreement, and except for breach of
confidentiality obligations, neither party shall be liable to the other party
(and Gilead shall not be liable to the Sublicensee or any Affiliate of Eyetech
or the Sublicensee) for lost profits or for any indirect, incidental,
consequential, special, punitive or exemplary damages of the other party (or of
the Sublicensee or any Affiliate of Eyetech or the Sublicensee) pursuant to or
relating to this Agreement, however caused, under any theory of liability.

 It is expressly understood and agreed that the obligations of either party
under Sections 9.1 and 9.2 of this Agreement to indemnify for Losses shall not
be limited by this Section 9.4.

9.5.  Survival.

The provisions of this Section 9 shall survive termination or expiration of this
Agreement.

                             SECTION 10. INSURANCE.

10.1. Insurance.

Each party shall obtain and keep in force throughout the Term of this Agreement
and for a period of three (3) years from the date of the last delivery of
Product to Eyetech hereunder, policies of insurance from carriers reasonably
acceptable to the other party providing coverage as specified in Section 10.2.
Each party shall require its subcontractors (to the extent approved hereunder)
or, in the case of Eyetech, its Sublicensee, other sublicensees and
distributors, to provide the coverage as specified in Section 10.2, and any
deficiencies in the coverage or policy limits of said subcontractors,
sublicensees or distributors will be the sole responsibility of such party. The
provisions of this Section 10.1 shall survive the expiration or termination of
this Agreement.

10.2  Coverage.


                                                                              33

      Each party shall acquire and maintain at its sole cost and expense (i)
Statutory Worker's Compensation Insurance and Employer's Liability Insurance;
and (ii) Comprehensive General Liability Insurance, including Contract
Liability, Product Liability, Bodily Injury and Property Damage Insurance (with
a Broad Form Vendor's Endorsement naming the other party, its subsidiaries and
affiliated companies and the officers, directors, employees and agents thereof,
as well as its authorized distributors and customers, as additional insureds)
with a combined single limit of not less than $[**]. Each party shall
require its subcontractors, to the extent approved hereunder, and, in the case
of Eyetech, its Sublicensee, to provide coverages with a combined single limit
of not less than $1,000,000.

10.3. Certificates of Insurance; Maintenance of Coverage.

Each party shall submit a certificate of such insurance (which shall include
such information as set forth in Section 10.2) to the other party for its
approval as of the Effective Date. Any failure of a party to furnish such
certificate within thirty (30) days of the Effective Date shall be a material
breach of this Agreement.

               SECTION 11. TITLE, RISK OF LOSS AND REIMBURSEMENT.

11.1. Testing.

Gilead shall undertake testing of each shipment of API if required by the
Specifications. If the API does not meet the specifications, Gilead will
promptly inform Eyetech and Gilead shall be excused from its obligation to
supply Product to Eyetech until sufficient quantities of API meeting the
Specifications are delivered to Gilead. Upon such delivery of replacement API,
Gilead will use commercially reasonable efforts to supply Product to Eyetech
within ninety (90) days taking into account Gilead's firm plans and commitments
for manufacturing its own and third parties' products at the Facility. To the
extent Gilead has existing stock of API which conforms to the approved
Specifications and is reasonably sufficient for Manufacture of one or more whole
batches of Product, nothing in the forgoing shall relieve Gilead of its
obligation to supply such batch(es) of Product deriving from such conforming
API, provided, however, that Gilead shall not be in breach of this Agreement for
failure to supply future batches of Product if such failure results from
Eyetech's or Eyetech's vendor's failure to replenish within an appropriate time
Gilead's stock of API conforming to the approved Specifications.

11.2. Title and Risk of Loss.

      (a) Title to the API supplied by Eyetech shall remain with Eyetech;
however, risk of loss for API inventory levels agreed pursuant to Section 5.4(a)
shall pass to Gilead at the time API arrives at Gilead's Facilities; provided
that Gilead's liability for loss of API shall be subject to the limitation set
forth in Section 11.3(b). Gilead shall not use API supplied by Eyetech for any
purposes other than those related to the Manufacture of the Product for supply
to Eyetech pursuant hereto.


                                                                              34

      (b) The risk of loss or damage to API during the storage thereof by Gilead
shall be solely with Gilead for inventory levels thereof agreed pursuant to
Section 5.4(a). In the event of such loss or damage, Gilead will purchase from
Eyetech, and Eyetech will sell to Gilead any API required for replacement
thereof at a price equivalent to Eyetech's replacement costs.

11.3 Reimbursement for Loss of API; Non-Complying Product.

      (a) Subject to Section 11.3(b), Gilead will reimburse Eyetech for
Eyetech's out of pocket costs for API per batch (pro-rated over the usable
portion of the batch if applicable) for any batch that does not meet
Specifications prior to or as of delivery by Gilead and therefore can not be
released, and Gilead will be responsible for all of Gilead's costs of
Manufacture of such batch (pro-rated over the usable portion of the batch if
applicable), in each case to the extent that such failure to meet Specifications
was caused by: (A) a breach of this Agreement by Gilead; (B) the negligence of
Gilead, or (C) willful misconduct of Gilead.

      (b) Gilead shall not be liable or responsible for any reimbursement of API
costs or for any costs of Manufacture pursuant to Section 11.3(a) for any batch
or partial batch quantity that does not meet Specifications as of delivery by
Gilead in excess of [**]. Disputes between the parties as to whether all or
any part of a shipment rejected by Eyetech conforms with the Product
Specifications shall be resolved pursuant to Sections 5.10 and 5.13.

                      SECTION 12. CONFIDENTIAL INFORMATION.

12.1  Confidentiality of Information.

In performing the obligations under this Agreement, each party shall come in
contact with certain confidential and proprietary information of the other party
that should reasonably be believed by the receiving party to be confidential and
proprietary to the other party ("Information"). Each party agrees that it will
(and will cause each of its representatives, employees and agents to):

      (a) use such Information obtained from the other party hereunder only in
connection with the activities to be undertaken by each party as contemplated
and permitted hereunder;

      (b) use its commercially reasonable efforts (but in no event lesser
efforts than it uses to so safeguard its own confidential and proprietary
information) to restrict disclosure of such Information within its own
organization to those of its Affiliates, the Sublicensee (in the case of
Eyetech), employees, independent contractors, and legal and legal and financial
advisors who have a reasonable need to know for purposes of enabling such party
to perform its obligations under this Agreement and who are subject to binding
obligations of confidentiality at least as protective as those of this Section
12; and


                                                                              35

      (c) not divulge to third parties, without the prior written consent of the
other party, any Information obtained from the other party hereunder.

12.2  Exceptions.

The confidentiality and limited use obligations of Section 12.1 shall not apply
if and to the extent that:

      (a) the Information is known to the receiving party prior to obtaining the
same from the disclosing party, as demonstrated by the receiving party's written
records;

      (b) the Information is, at the time of disclosure, in the public domain,
or comes into the public domain without any fault of the receiving party (or,
where the receiving party is Eyetech, its Affiliates or the Sublicensee);

      (c) the Information is obtained by the receiving party from a third party
who is not obligated to keep the Information confidential;

      (d) the Information is independently developed by the receiving party
and/or by any of its Affiliates (or, where the receiving party is Eyetech, by
the Sublicensee), as demonstrated by the receiving party's written records; or

      (e) the Information is disclosed pursuant to court order or as otherwise
required by law; provided, however, that: (i) the receiving party (A) gives the
disclosing party prompt written notice of such required disclosure and (B)
assists the disclosing party in its reasonable efforts to prevent or limit such
disclosure; and (ii) any Information disclosed pursuant to this Section 12.2.(e)
shall otherwise remain Information for the purposes of this Agreement.

12.3  Return or Destruction.

Upon expiration or termination of this Agreement, each party shall return to the
other party, or by mutual agreement, destroy all Information of the other party
and all copies, extracts, and summaries thereof, provided that it may retain one
(1) copy thereof in its legal archives solely for the purpose of ensuring
compliance with its surviving obligations under this Section 12.

12.4  Terms of Agreement.

Neither party shall disclose or refer to the existence or terms of this
Agreement in any public statements, whether oral or written, but not limited to,
annual reports or shareholder reports, statements to other customers or
prospective customers or other communications, without the other party's prior
written consent except to the extent that such party, in its reasonable opinion,
determines that such disclosure is required by law. Nothing in this Section 12.4
shall restrict a party from disclosing this Agreement to its Affiliates or, in
the case of Eyetech, to the Sublicensee.


                                                                              36

12.5  Survival.

The provisions of this Section 12 shall survive the termination or expiration of
this Agreement for a period of five (5) years.

                         SECTION 13. TERM; TERMINATION.

13.1. Initial Term; Term.

Unless terminated in accordance with the provisions of this Agreement, the
initial term (the "Initial Term") of this Agreement shall commence as of the
Effective Date and shall continue until the third anniversary of the first
Commercial Launch of Product. Not less than 24 months prior to the expiration of
the Initial Term the parties shall discuss extending this Agreement for a
further period of twelve months. Thereafter the Agreement may be extended by
further twelve months periods upon mutual agreement of the parties reached not
less than 24 months prior to the expiration of any such extended term. The
Initial Term and all renewals thereof collectively shall be considered the
"Term" of this Agreement.

13.2. Termination by Eyetech.

      This Agreement may be terminated by Eyetech:

      (a) immediately upon written notice to Gilead, upon the bankruptcy
(voluntary or involuntary), insolvency or placing of the business of Gilead in
the hands of a receiver; or

      (b) if (i) an occurrence described in Section 2.9(b) occurs, (ii) the
Manufacturing Committee has used good faith efforts to resolve any such supply
failure for no less than forty-five (45) days and (iii) after such forty-five
(45) day period, the Manufacturing Committee shall have failed to resolve such
occurrence; or

      (c) subject to Section 13.2(d), by Eyetech upon a material breach of this
Agreement by Gilead if Gilead fails to cure such breach within thirty (30) days
after receipt of written notice thereof; or

      (d) upon written notice to Gilead given within sixty (60) days of the
relevant event, with immediate effect, if at any time during the Term, Gilead
acquires, is acquired by or becomes an Affiliate of a competitor of Eyetech,
where a competitor is a manufacturer, supplier and/or distributor of products
competitive with the Product; or

      (e) after three (3) years, upon at least six (6) months prior written
notice to Gilead, in the event that the Product is the subject of a consummated
transaction for the sale by Eyetech and Sublicensee to a third party of
substantially all Product rights in the Territory or the Product is withdrawn
from the market in the Territory by Eyetech for any reason, provided that
Eyetech shall comply with Section 2.4(b); or


                                                                              37

      (f) upon prompt written notice to Gilead upon any commitment by Eyetech
not to proceed with seeking Regulatory Approval for the Product in the Territory
or with commercialization of the Product in the Territory, as evidenced by (i)
formal withdrawal of all New Drug Applications (and equivalents thereof) for the
Territory; (ii) termination of all commercial launch planning and preparation
activities for the Territory; (iii) withdrawal of the Product from the market in
the Territory, or (iv) any other action by Eyetech that reasonably and clearly
evidences such a commitment; or

      (g) upon the events giving rise to a right of termination pursuant to
Section 14.1.

13.3  Termination by Gilead.

This Agreement may be terminated by Gilead:

      (a) upon a material breach of this Agreement by Eyetech if Eyetech fails
to cure such breach within thirty (30) days after receipt of written notice
thereof; or

      (b) upon the events giving rise to a right of termination pursuant to
Section 14.1.

13.4. Effect of Termination.

      (a) Expiration or termination of this Agreement shall not affect rights
and obligations of the parties that accrue prior thereto, including that
termination of this Agreement shall not affect any obligation to pay money due
hereunder, indemnify, or maintain confidentiality, which either party hereto may
have incurred during the Term hereof. Termination pursuant to this Section 13
shall be in addition to, and not in place of, a party's other rights and causes
of action which were in existence prior to such termination.

      (b) Within a reasonable time after Eyetech gives notice of termination
pursuant to the provisions of Sections 13.2(b), (c), (d), (e) or (f), Eyetech
agrees to have good faith discussions with Gilead regarding mitigation of
unrecoverable losses resulting from amounts paid toward the purchase price of
any product acquired specifically for Manufacture of Product.

      (c) Unless this Agreement has terminated pursuant to Sections 13.2(d) or
13.3(b), Gilead will fulfill all Orders outstanding as of the effective date of
expiration or termination of this Agreement in accordance with the terms of this
Agreement. If this Agreement terminates pursuant to Sections 13.2(d) or 13.3(e),
(i) Gilead shall be relieved from any obligation to supply any Order for Product
having a delivery date after the effective date of termination; (ii) Gilead
shall use commercially reasonable efforts to reallocate its personnel, equipment
and resources to other projects but to the extent it does not achieve such
reallocation, Eyetech shall be liable for the costs thereof; and (iii) Eyetech
shall pay Gilead for any Orders placed by Eyetech that have delivery dates after
the effective date of termination a percentage of the Price appropriate to
fairly compensate Gilead for lost profits on any such Orders.

13.5. Return of Materials, etc. Supplied by Eyetech.


                                                                              38

      (a) Upon the effective date of expiration or termination of this Agreement
for any reason whatsoever, Gilead shall promptly deliver to Eyetech all Product
Materials, bulk packaging materials and labels, and equipment provided by, or
purchased on behalf of, Eyetech. Eyetech will promptly reimburse Gilead for
Gilead's out-of-pocket costs for any such items purchased by Gilead for use in
Manufacture of Product. Gilead will remove all such equipment from the Facility
and have such equipment on its dock ready for Eyetech to transport. Gilead shall
maintain ownership of all other equipment utilized in connection herewith. All
delivery, removal and transportation costs incurred in connection with this
Section 13.5 shall be borne by Eyetech.

      (b) Upon the effective date of expiration or termination of this Agreement
for any reason whatsoever, Gilead shall also deliver to Eyetech all Product
Manufactured hereunder and in its control and shall invoice Eyetech in
accordance with the terms of Section 4.3. Any Product quarantined and at the
time of expiration or termination of this Agreement shall be disposed of or
destroyed in accordance with Eyetech's instructions. Subsequent to the
expiration or termination of this Agreement, the parties shall continue to be
responsible for rejected and non-complying Product and Product Materials in
accordance with the terms of Sections 5.9 and 5.10.

                  SECTION 14. FORCE MAJEURE; COMPETING PRODUCT.

14.1. Force Majeure.

Performance under this Agreement (other than payments required to be made by any
party) shall be excused to the extent prevented or delayed by fire, flood,
explosion, widespread product tampering by third parties, governmental acts or
regulations, war, any act of God, or by any other similar circumstances of any
character reasonably beyond the control of the party so excused. The party
affected shall promptly notify in writing the non-affected party or parties of
the event of force majeure and the probable duration of the delay. Any delay
caused by an event of force majeure shall toll the term of this Agreement, which
shall be extended by the length thereof. In the event a force majeure prevents
performance by either party for more than three (3) months, either party shall
have the right to terminate this Agreement (in its entirety).

14.2. Competing Products.

Gilead hereby agrees that during the Term of this Agreement and for a period of
[**] years following the termination or expiration of this Agreement, it shall
not manufacture, supply or otherwise distribute for itself or a third party,
without the prior written approval of Eyetech, any product or products identical
or similar to the Product, i.e. aptamers of similar composition for indications
for which the Product is approved or developed. In no event shall Gilead
manufacture, supply or otherwise distribute for itself or a third party a copy
or "knock-off" of the Product so as to infringe or misappropriate Eyetech's or
the Sublicensee's Intellectual Property.


                                                                              39

                           SECTION 15. MISCELLANEOUS.

15.1. Relationship of the Parties.

The parties shall be deemed independent contractors with respect to the terms
and provisions of this Agreement and shall not in any respect act as an agent or
employee of the other party. All persons employed by Gilead in connection with
the manufacture and supply of the Product to Eyetech shall be employees, agents
or contractors of Gilead. Under no circumstances shall employees or agents of
Gilead be deemed to be employees or agents of Eyetech.

15.2. Successors and Assigns; Subcontracting.

Except for assignment of this Agreement in whole to an Affiliate, or by Eyetech
to the Sublicensee, upon written notice to the other party, neither party shall,
without the prior written consent of the other party (which consent shall not be
reasonably withheld or delayed), delegate, transfer, convey, assign or pledge
any of its rights or obligations under this Agreement to any other Person.
Gilead shall not subcontract any obligation or duty owed under this Agreement
without the prior written consent of Eyetech. This Agreement shall be binding
upon and inure to the benefit of the parties hereto, and subject to the terms of
this Section 15.2, its respective successors, legal representatives and
permitted assigns. Any assignment or subcontract in contravention of this
Section 15.2 shall be ineffective and considered null and void.

15.3. Notice.

All notices, requests, demands or other communications to or upon the parties
hereto shall be in writing and, unless otherwise specified herein, deemed to
have been given or made (a) five (5) business days after being deposited in the
mails, registered mail or certified, return receipt requested, postage prepaid;
(b) one (1) business day after being sent by bonded courier for next business
day delivery; (c) upon facsimile transmission, the receipt of which is confirmed
electronically or telephonically; or (d) when personally delivered, in each case
addressed to the appropriate party at the following address:

            IF TO EYETECH:

            Eyetech Pharmaceuticals, Inc.
            500 Seventh Avenue, 18th Floor
            New York, New York 10018
             Attention:  Chief Executive Officer
             Facsimile No.:  (212) 997-9251

            with a copy to:

            Hale and Dorr LLP
            60 State Street


                                                                              40

            Boston, Massachusetts  02109
            Attention:  David E. Redlick, Esq.
            Facsimile No:  (617) 526-5000

            IF TO GILEAD:

            Gilead Sciences, Inc.
            650 Cliffside Drive
            San Dimas, CA  91773
            Attention:  Tony Caracciolo, Sr. VP, Manufacturing
            Telephone:  (909) 394-4024
            Facsimile No: (909) 599-8716

            with a copy to:

            Gilead Sciences, Inc.
            333 Lakeside Drive
            Foster City, CA  94404
            Attention:  Gregg H. Alton, VP and General Counsel
            Facsimile No:  (650) 522-5537

The above addresses for receipt of notice may be changed by any party by notice,
given as provided herein.

15.4. Entire Agreement.

This Agreement, including all Attachments attached hereto and made a part hereof
contain the entire understanding of the parties, superseding in all respects any
and all prior oral or written agreements or understandings pertaining to the
subject matter hereof. This Agreement may be amended or modified only by written
agreement executed by the parties hereto.

15.5. Severability.

If any provision of this Agreement is held to be illegal, invalid or
unenforceable under any applicable Law (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof, (c) the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance therefrom and (d) in lieu of such illegal, invalid or
unenforceable provision, there will be added automatically as a part of this
Agreement, a legal, valid and enforceable provision that achieves the original
intent of the parties reflected in the illegal, invalid or unenforceable
provision as best as may be possible.


                                                                              41

15.6. Waiver.

Any term or condition of this Agreement may be waived at any time by the party
that is entitled to the benefit thereof, but no such waiver shall be effective
unless set forth in a written instrument duly executed by or on behalf of the
party or parties waiving such term or condition. No waiver by any party of any
term or condition of this Agreement, in any one or more instances, shall be
deemed to be or construed as a waiver of the same or any other term or condition
of this Agreement on any future occasion. Except as expressly stated herein, all
remedies, either under this Agreement or by Law or otherwise afforded, will be
cumulative and not alternative.

15.7. Headings.

Headings in this Agreement are included for ease of reference only and have no
legal effect.

15.8. Counterparts.

This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original and all of which together shall constitute one and the
same instrument.

15.9. Governing Law.

This Agreement shall be governed by and construed in accordance with the laws of
the State of New York, without giving effect to the conflict of law principles
thereof.


                                                                              42

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and to be effective as of the Effective Date.

                              EYETECH PHARMACEUTICALS, INC.

                              By: /s/ Paul Chaney
                                  --------------------------
                              Name:  Paul Chaney
                              Title: Chief Operating Officer



                              GILEAD SCIENCES, INC.

                              By: /s/ Mark L. Perry
                                  --------------------------
                              Name:  Mark L. Perry
                              Title: Executive Vice President, Operations



                                                                              43

                                  Attachment 1

                               Product Supplement

                                     Macugen

1.    Product Description;    Strength/Pack;    Item Number
      Macugen                 0.3mg             To Be Determined (TBD)
      Macugen                 1.0mg             TBD


2.     Product Price Appendix

2.1   STANDARD SERVICES/TOLL MANUFACTURING ACTIVITIES (BATCH CHARGES):

(a) For Less Than [**] Units (but less than [**] Batches) Delivered in a
Calendar Year:


Batch Charge                                    $[**]
Per-Unit Filling Charge                         $[**]
Per Unit Packaging Charge                       $[**]

Batch Charge is the toll manufacturing fee applicable to the semi-automatic
syringe filling from a single shift aseptic filling operation (to be between
approximately 10,000 and 20,000 syringes).

The Per-Unit Charges shall be applied to each unit of Product delivered from a
single batch (i.e., The "Unit Charges" = Number of syringes delivered multiplied
by the "Per-Unit Charges")

For each Batch manufactured GILEAD shall invoice EYETECH the sum of the Batch
Charge plus the Unit Charges.

The Batch Charge price set forth above is applicable to no fewer than [**] up to
[**] Batches delivered in a calendar year.

(b) For Greater Than [**] Units (but less than [**] Batches) Delivered in a
Calendar Year:

Batch Charge                                    $[**]
Per-Unit Filling Charge                         $[**]
Per Unit Packaging Charge                       $[**]

Batch Charge is the toll manufacturing fee applicable to the semi-automatic
syringe filling from a single shift aseptic filling operation for one Batch
which the Parties estimate will be between approximately 10,000 and 20,000
syringes but the exact size of which will be determined during equipment
qualification and validation.

The Per-Unit Charges shall be applied to each unit of Product delivered from a
single batch (i.e., The "Unit Charges" = Number of syringes delivered multiplied
by the "Per-Unit Charges")

For each batch manufactured GILEAD shall invoice EYETECH the sum of the Batch
Charge plus the Unit Charges.

The Batch Charge price set forth above is applicable to no fewer than [**] and
up to [**] batches delivered in a calendar year.

(c) For Greater Than [**] Batches (but less than [**] Batches) Delivered in a
Calendar Year:

Batch Charge                                    $[**]
Per-Unit Filling Charge                         $[**]
Per Unit Packaging Charge                       $[**]

Batch Charge is the toll manufacturing fee applicable to the semi-automatic
syringe filling from a single shift aseptic filling operation (to be between
approximately 10,000 and 20,000 syringes).

The Per-Unit Charges shall be applied to each unit of Product delivered from a
single batch (i.e., The "Unit Charges" = Number of syringes delivered multiplied
by the "Per-Unit Charges")

For each batch manufactured GILEAD shall invoice EYETECH the sum of the Batch
Charge plus the Unit Charges.

(d) For greater than [**] Batches (but less than [**] Batches) Delivered in a
Calendar Year:

Batch Charge                                    $[**]
Per-Unit Filling Charge                         $[**]
Per Unit Packaging Charge                       $[**]

Batch Charge is the toll manufacturing fee applicable to the semi-automatic
syringe filling from a single shift aseptic filling operation (to be between
approximately 10,000 and 20,000 syringes).

The Per-Unit Charges shall be applied to each unit of Product delivered from a
single batch (i.e., The "Unit Charges" = Number of syringes delivered multiplied
by the "Per-Unit Charges")

(e) For greater than [**] Batches delivered in a Calendar Year:

Batch Charge                                    $[**]
Per-Unit Filling Charge                         $[**]
Per Unit Packaging Charge                       $[**]

Batch Charge is the toll manufacturing fee applicable to the semi-automatic
syringe filling from a single shift aseptic filling operation (to be between
approximately 10,000 and 20,000 syringes).

The Per-Unit Charges shall be applied to each unit of Product delivered from a
single batch (i.e., The "Unit Charges" = Number of syringes delivered multiplied
by the "Per-Unit Charges")

For each batch manufactured GILEAD shall invoice EYETECH the sum of the Batch
Charge plus the Unit Charges.

All of these Batch/Unit charges and related assumptions are based on GILEAD's
experience with EYETECH's Product to date and Critical Equipment/discussions
with Eyetech to date. GILEAD reserves the right to make reasonable pricing
adjustment, per Section 5.2 (b) of the Manufacturing and Supply Agreement if
needed to accommodate Product Specification changes or changes to the Product
Supplement.

GILEAD charges for additional support services/handling requirements (i.e.,
above and beyond the Standard Services/Toll Manufacturing Activities in Section
4, hereinbelow) including, but not limited to validation and tech transfer
efforts for the Product shall be ordered by EYETECH as set forth in Section 2.2
of this Attachment.

GILEAD charges for additional support services/handling requirements/materials
purchasing as it relates to all aspects (except for the labor component
identified as the "Per Unit Packaging Charge", hereinabove) of primary (i.e.,
the pouch/bag/tray directly containing the Product syringe) and secondary (any
respective product cartoning) labeling and packaging materials, on a cost plus
[**]% basis.

NOTE: These charges (hereinabove) are expressly conditional upon Eyetech
continuing to make additional capital investments in additional Critical
Equipment in accordance with Section 2.2(b) to facilitate the Manufacture of the
PRODUCT at GILEAD's Facility.

2.2   MINIMUM LABOR PRICING FOR SUPPORT SERVICES PERFORMED OUTSIDE THE "STANDARD
      SERVICES/TOLL MANUFACTURING ACTIVITIES" (HOURLY RATE):

In the event of unique/non-routine requirements associated with the Product,
cost estimates for Regulatory, Validation, Tech Transfer, additional (i.e.,
other than the one annual Product stability lot) stability studies and other
services will be provided upon request after requirements (i.e., a work plan)
are mutually agreed upon by GILEAD and EYETECH. Costs for such services will

be procured by EYETECH by separate Purchase Order and will be based upon a
time/rate basis using following scale (on a per hour basis for the 2003 Calendar
Year):

Hourly Rates:

                                                          
Project Support Services (Clerical, General Administrative)  $[**]
Technician/Specialist                                        $[**]
Engineer/Manager/Scientist                                   $[**]
Director/Sr. Engineer/Sr. Scientist/Sr. Regulatory           $[**]
Vice President/Legal                                         $[**]



After December 31, 2003, GILEAD may make adjustments to these Hourly Rates as
GILEAD requires. Such adjustments to these Hourly Rate will be clearly indicated
as part of any quotation GILEAD makes for a mutually agreed upon work plan.

3. Initial Planning Forecast and Annual Minimum Percentages:


Eyetech's initial (5) Five Year Planning Forecast of Orders for Product from
Gilead on a calendar year basis:



Through Q4/2004         2005          2006           2007          2008
                                                       
[**] syringes           [**]          [**]           [**]          [**]


Annual Minimum Percentages:



- ---------------------------------------------------------------
Through Launch   1st Commercial  2nd Commercial  3rd Commercial
                 Year            Year            Year
- ---------------------------------------------------------------
                                        
100%             100%            [**]%           [**]%
- ---------------------------------------------------------------


4. Description of Work That Constitutes The "STANDARD SERVICES/TOLL
MANUFACTURING ACTIVITIES" To Be Performed By Gilead:

      Gilead shall manufacture Product for Eyetech from the active drug
      substance (API) as supplied by Eyetech. The Becton Dickinson syringe and
      stoppers components and other required starting materials shall be
      procured by Gilead and included in Product cost. Eyetech will approve the
      master production and control documents (i.e., Gilead's Master Production
      Records [MPR] and Specifications [SPC]) for compounding, component
      preparation, aseptic filling, visual inspection of unlabeled filled
      syringes, individual and/or bulk syringe container labeling/encoding,
      individual and/or bulk syringe container

      packaging (e.g., bagging, sealing as primary and/or secondary [product
      shelf cartooning] packaging), shipping of individual and/or bulk syringes,
      and warehousing such Product in accordance with the Specifications that
      will be followed by GILEAD in the manufacture and testing of the Product
      and that constitute Exhibit A of this Attachment.

      Eyetech will provide released API at Gilead's Facility at least two weeks
      prior to commencement of Product manufacturing. Each will have a release
      certificate provided to Gilead by Eyetech. API shall be tested by Gilead
      using Gilead's approved procedures to confirm their identity.

      Gilead will supply approved sodium phosphate monobasic monohydrate, sodium
      phosphate dibasic heptahydrate, sodium chloride, sodium hydroxide,
      hydrochloric acid, nitrogen, and Water for Injection. Gilead will perform
      quality control tests on these materials and release for use per approved
      Gilead procedures. Gilead's QC will perform lot specific in-process tests
      and lot specific testing to release specifications per approved Gilead
      procedures in Exhibit A of this Attachment. Gilead will additionally
      perform quality control tests to stability specifications on one lot per
      year (i.e., the annual stability lot) per approved Gilead procedures in
      Exhibit A of this Attachment.

5.    Purchase Order/Invoicing Contacts:

      5.1.  Orders to be directed to Gilead via fax at (909) 599-8716,
            Attention: Gilead Purchasing - Purchasing at (909) 599-8716.

      5.2.  Invoices to be directed to Eyetech via fax at (212) 997-9251, Attn:
            Vice President - Finance via fax at (212) 997-9251.

Attachment 1 - Product Supplement - Macugen (continued)

EXHIBIT A - Master production Records, Bill Of Materials, Analytical Methods and
Specifications that constitute Standard Services (unless otherwise noted):



 NUMBER       REVISION     EFFECTIVE                 TITLE
                             DATE
- ------------------------------------------------------------------------------------
                               




















                                      [**]





















                                  Attachment 2

                               Critical Equipment



Equipment    Model No.     Manufacturer       Description
S/N
- -----------------------------------------------------------------------
                                     





















                                      [**]






















                                 Attachment 2-A

               Building and Equipment Improvement Plan and Budget

We understand that the cap on this budget will be $[**], though the parties
agree that much less may actually be required depending on Eyetech's
requirements.

                                  Attachment 3

                   Initial Manufacturing Committee Membership

Gilead and Eyetech initially designate the following two (2) representatives to
serve as members of the Manufacturing Committee:

For Eyetech:


Chuck WilliamsSenior VP Manufacturing
            Telephone: 973 539 6009 (x229)
            Facsimile: 973 539 2665

Donald HodgsonDirector Manufacturing
            Telephone: 714 992 4889
            Facsimile No: 714 526 1495
For Gilead:

Tony Caracciolo, Sr. VP, Manufacturing
            Telephone:  (909) 394-4024
            Facsimile No: (909) 599-8716

Peter Durfee, Sr. Director Manufacturing/Engineering
            Telephone:  (909) 394-4022
            Facsimile No: (909) 599-1875


2

                                  Attachment 4

                        Work Plan for Technology Transfer

GILEAD WILL FOLLOW ITS RELATED SOP NO. 877, "LABORATORY TECHNOLOGY TRANSFER OF
ANALYTICAL METHODS", TO TRANSFER THE RESPECTIVE MACUGEN TEST METHODS TO THE
GILEAD QUALITY CONTROL (QC) LABORATORIES IN SAN DIMAS. SUCH A TYPICAL
INTER-LABORATORY TECHNOLOGY TRANSFER OF VALIDATED METHODS REQUIRES MULTIPLE
ASSAY PERFORMANCE ON THREE PRODUCT LOTS.

THE EYETECH METHODS TO BE TRANSFERRED ARE LISTED ON PAGE TWO OF THIS ATTACHMENT
4.

GILEAD WILL PERFORM THIS EFFORT ON A TIME AND MATERIAL BASIS NOT TO EXCEED (NTE)
[**] HOURS, BREAKOUT ESTIMATES FOR WORK TO BE PERFORMED BY GILEAD IN SAN DIMAS
ARE AS FOLLOWS:

GILEAD QC LABORATORY ESTIMATES:

CHEMISTRY TESTING                                           [**] HOURS
MICROBIOLOGY TESTING                                        [**] HOURS
ADDITIONAL REPORTS AND DOCUMENTATION PREPARATION            [**] HOURS
QC HOURS SUB-TOTAL:                                         [**] HOURS

GILEAD PPC LABORATORY ESTIMATES:

CHEMISTRY TESTING                                           [**] HOURS
MICROBIOLOGY TESTING (EXCLUDES STERILITY)                   [**] HOURS
ADDITIONAL REPORTS AND DOCUMENTATION PREPARATION            [**] HOURS
PPC HOURS SUB-TOTAL:                                        [**] HOURS

GILEAD QA SUPPORT ESTIMATES:                                [**] HOURS
PPC HOURS SUB-TOTAL:                                        [**] HOURS

TOTAL PROJECT NTE HOURS:                                    [**] HOURS

COSTS FOR THESE SERVICES WILL BE PROCURED BY EYETECH BY SEPARATE PURCHASE ORDER
AND WILL BE BASED UPON A TIME/RATE BASIS USING FOLLOWING SCALE (ON A PER HOUR
BASIS FOR THE 2003 CALENDAR YEAR) OF HOURLY RATES:

PROJECT SUPPORT SERVICES (CLERICAL, GENERAL ADMINISTRATIVE) $[**]
TECHNICIAN/SPECIALIST                                       $[**]
ENGINEER/MANAGER/SCIENTIST                                  $[**]
DIRECTOR/SR. ENGINEER/SR. SCIENTIST/SR. REGULATORY          $[**]
VICE PRESIDENT/LEGAL                                        $[**]


2

NOTE: These estimates are based upon GILEAD'S experiences to date, method
complexity and GILEAD'S related procedures. GILEAD reserves the right to revise
these estimates after obtaining a copy of the formal Tech Transfer Protocol
under development by Dr. Scypinski at Eyetech. ]

2

Eyetech Method List

                   API

                      
Test                     MTD #
Appearance               AN-TMD-1011
Water                    AN-TMD-1007
PH & Solution Clairity   AN-TMD-1010
UV Abs                   AN-TMD-1018
RP                       MTD 283(Gilead
                         mtd)
PBA                      AN-TMD-1009
SEC                      AN-TMD-1002
AE                       AN-TMD-1001
Base composition*        AN-TMD-1004



* Is not required for ICH stability

            DRUG PRODUCT

                      
Test                     MTD #
Appearance               AN-TMD-1012
Evaluation of Visible    AN-TMD-1020
Particles
Appearance of 2(degree)  AN-TMD-1021
Delivered Volume         AN-TMD-1008
pH                       AN-TMD-1013
Osmolality               AN-TMD-1015
Viscosity                TBD
AE                       AN-TMD-1001
SEC                      AN-TMD-1002
UV Abs                   AN-TMD-1018
PBA                      AN-TMD-1009
Endotoxins               AN-TMD-1006




2

EX-10.59

                                                                   EXHIBIT 10.59

           SUMMARY OF INTERIM RETAINER FEE FOR NON-EMPLOYEE DIRECTORS


      On March 15, 2006, our Compensation Committee of the Board of Directors
approved an interim retainer fee to cover service by non-employee directors on
the Board (including on any Board committees) for the interim period from March
16, 2006 to June 14, 2006. The purpose of such action is to compensate board
members for service during the interim period between March 16, 2006 and the
2006 Annual Meeting of Stockholders, such service of which would otherwise not
have been compensated as a result in the change of our fiscal year end. The
interim retainer fee is an amount equal to each director's current annual
retainer fee, pro-rated for the interim period as set forth below:

      Chairman of the Board: Interim retainer of $37,500, half of which must be
      taken as OSI Common Stock with three-month transfer restriction. Balance
      to be taken in cash or stock at director's option.

      Chairman of the Audit Committee: Interim retainer of $22,500, half of
      which must be taken as OSI Common Stock with three-month transfer
      restriction. Balance to be taken in cash or stock at director's option.

      Audit Committee Member: Interim retainer of $18,750, half of which must
      be taken as OSI Common Stock with three-month transfer restriction.
      Balance to be taken in cash or stock at director's option.

      Other Committee Member: Interim retainer of $15,625, half of which must
      be taken as OSI Common Stock with three-month transfer restriction.
      Balance to be taken in cash or stock at director's option.

      Consistent with the terms of our Amended and Restated Stock Incentive
Plan, one-half of of each non-employee director's interim retainer is payable in
the form of an award of restricted OSI common stock, and the remainder is paid
in cash on a monthly basis, unless the director elects to receive additional
shares of OSI common stock. The grant of restricted stock will be made on March
16, 2006 and will vest in three equal installments on April 16, 2006, May 16,
2006 and June 14, 2006.

EX-21

                                                                      EXHIBIT 21

                           SUBSIDIARIES OF THE COMPANY

     (OSI) Eyetech, Inc., organized under the laws of Delaware.

     OSI Pharmaceuticals (UK) Limited, organized under the laws of the United
Kingdom.

     Prosidion Limited, organized under the laws of the United Kingdom.

EX-23

                                                                      EXHIBIT 23

            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors
OSI Pharmaceuticals, Inc.:

We consent to the incorporation by reference in the registration statements on
Form S-8 (No. 333-129749, No. 333-91118, No. 333-65072, No. 333-42274, No.
333-39509, No. 333-06861, No. 33-64713, No. 33-38443) and on Form S-3
(333-124279) of OSI Pharmaceuticals, Inc. and subsidiaries of our reports dated
March 13, 2006, relating to (i) the consolidated balance sheets of OSI
Pharmaceuticals, Inc. and subsidiaries as of December 31, 2005 and 2004, and the
related consolidated statements of operations, stockholders' equity and cash
flows, for the year ended December 31, 2005, for the three months ended December
31, 2004, and for each of the two fiscal years in the period ended September 30,
2004, and (ii) management's assessment of the effectiveness of internal control
over financial reporting as of December 31, 2005, and the effectiveness of
internal control over financial reporting as of December 31, 2005, which reports
appear in the December 31, 2005 Annual Report on Form 10-K of OSI
Pharmaceuticals, Inc. Our report described in (ii) above contains an explanatory
paragraph relating to the exclusion of internal control over financial reporting
associated with one entity acquired during 2005 from management's assessment and
our assessment of the effectiveness of internal control over financial reporting
of OSI Pharmaceuticals, Inc. as of December 31, 2005.

As discussed in note 1(b) to the consolidated financial statements, the Company
adopted EITF 00-21 "Revenue Arrangements with Multiple Deliverables" in fiscal
2004.

As discussed in notes 1(j) and 8 to the consolidated financial statements, the
Company fully adopted the provisions of Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets" in fiscal 2003.

March 15, 2006                               /s/ KPMG LLP

EX-31.1

EX-31.1

EX-31.2

EX-31.2

EX-32.1

EX-32.1

EX-32.2

EX-32.2