Note

Summary of Significant Accounting Policies

Business

Progenics Pharmaceuticals, Inc. and its subsidiaries (“the Company,” “Progenics,” “we,” or “us”) develop innovative medicines and other technologies to target and treat cancer. Our pipeline includes:

therapeutic agents designed to precisely target cancer (AZEDRA

and

1095),

PSMA-targeted imaging agents for prostate cancer

(1404

and PyL

), and

imaging analysis tools.

February

2011,

we licensed our

first

commercial drug, RELISTOR

(methylnaltrexone bromide) subcutaneous injection for the treatment of opioid induced constipation (“OIC”), to Salix Pharmaceuticals, Inc. (a wholly-owned subsidiary of Valeant Pharmaceuticals International, Inc. (“Valeant”)). In

September

2014,

RELISTOR received an expanded approval from the U.S. Food and Drug Administration ("FDA") for the treatment of OIC in patients taking opioids for chronic non-cancer pain, and in

July

2016,

RELISTOR Tablets were approved by the FDA for the treatment of OIC in adults with chronic non-cancer pain. We have in the past and continue to consider opportunities for strategic collaborations, out-licenses, and other arrangements with biopharmaceutical companies involving proprietary research, development and clinical programs, and

may

in the future also in-license or acquire additional oncology compounds and/or programs.

Our current principal sources of revenue from operations are royalty, development and commercial milestones, and sublicense revenue-sharing payments from Valeant relating to RELISTOR. Royalty and further milestone payments from RELISTOR depend on success in development and commercialization, which is dependent on many factors, such as Valeant’s efforts, decisions by the FDA and other regulatory bodies, competition from drugs for the same or similar indications, and the outcome of clinical and other testing of RELISTOR.

We commenced principal operations in

1988,

became publicly traded in

1997,

and throughout have been engaged primarily in research and development efforts, establishing corporate collaborations and related activities. Certain of our intellectual property rights are held by wholly owned subsidiaries. All of our U.S. operations are presently conducted at our headquarters in New York, and the operations of our foreign subsidiary, EXINI Diagnostics A.B. (“EXINI”), are conducted at our facility in Lund, Sweden. We operate under a single research and development operating segment.

Liquidity

March

31,

2017,

we had

$126.3

million of cash and cash equivalents, a decrease of

$12.6

million from

$138.9

million at

December

31,

2016.

We expect that this amount will be sufficient to fund operations as currently anticipated beyond

one

year from the filing date of this Form

-Q. We have historically funded our operations to a significant extent from capital-raising and we expect to require additional funding in the future, the availability of which is never guaranteed and

may

be uncertain. We expect that we

may

continue to incur operating losses for the foreseeable future.

Basis of Presentation

Our interim condensed consolidated financial statements have been prepared in accordance with applicable presentation requirements, and accordingly, do not include all information and disclosures necessary for a presentation of our financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the U.S. ("GAAP"). In the opinion of management, these financial statements reflect all adjustments, consisting primarily of normal recurring accruals necessary for a fair statement of results for the periods presented. The results of operations for interim periods are not necessarily indicative of the results for the full year.

Our interim condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto contained in our Annual Report on Form

-K for the year ended

December

31,

2016.

The year-end consolidated balance sheet data in these financial statements were derived from audited financial statements but do not include all disclosures required by GAAP. Certain prior period amounts in our condensed consolidated financial statements have been reclassified to conform to the current period presentation. Accounts payable, which was historically combined with accrued expenses on our consolidated balance sheet, has been presented as a separate line item for all periods presented in these unaudited condensed consolidated financial statements.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of Progenics as well as its wholly-owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation.

December

2015,

we commenced a judicial process in Sweden for acquiring the remaining shares of EXINI. On

December

2016,

a Swedish arbitral tribunal awarded us advanced title to the remaining shares of EXINI and, as of that date, EXINI became a wholly-owned subsidiary with

100%

of the voting shares owned by us. We paid

$368

thousand to the minority interest shareholders in connection with the acquisition of the remaining shares of EXINI.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results

may

differ from those estimates.

Foreign Currency Translation

Each of our international subsidiaries generally considers their respective local currency to be their functional currency. Assets and liabilities of these international subsidiaries are translated into U.S. dollars at quarter-end exchange rates and revenues and expenses are translated at average exchange rates during the quarter and year-to-date period. Foreign currency translation adjustments for the reported periods are included in accumulated other comprehensive loss (“AOCL”) in our condensed consolidated statements of comprehensive loss, and the cumulative effect is included in the stockholders' equity section of our condensed consolidated balance sheets. Realized gains and losses denominated in foreign currencies are recorded in operating expenses in our condensed consolidated statements of operations and were not material to our consolidated results of operations for the

three

months ended

March

31,

2017

2016.

Property and Equipment

Property and equipment is recorded at historical cost, net of accumulated depreciation and amortization of

$1.0

million and

$0.8

million as of

March

31,

2017

and

December

31,

2016,

respectively. The following table summarizes our property and equipment (in thousands):

	March 31,			December 31,
	2017			2016
Machinery and equipment	$	2,224		$	1,493
Leasehold improvements		1,716			1,640
Computer equipment		701			695
Furniture and fixtures		878			877
Construction in progress		221			893
Property and equipment, gross		5,740			5,598
Less - accumulated depreciation		(1,038	)		(838	)
Property and equipment, net	$	4,702		$	4,760