CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

      In 2004, we have engaged in the following transactions with our directors and officers and holders of more than 5% of our voting securities and affiliates of our directors, officers and 5% stockholders:

      Pfizer held 3,567,443 shares of our common stock, representing 8.6% of our common stock as of March 10, 2005. In December 2002, we entered into several concurrent agreements with Pfizer to jointly develop and commercialize Macugen® (pegaptanib sodium injection) for the prevention and treatment of diseases of the eye and related conditions. Macugen, our first product, was approved in December 2004 by the United States Food and Drug Administration, or FDA, to treat neovascular age-related macular degeneration (AMD) under its “fast track,” Pilot 1 program, which is reserved for drug candidates that may meet a significant unmet medical need. 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 neovascular AMD, diabetic macular edema (DME), and retinal vein occlusion (RVO) and other agreed upon ophthalmic indications;

      Pfizer has made the following payments and investments to date under our collaboration:

      In the future, Pfizer may be obligated to make additional payments to us under the following circumstances:

      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. 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.

      In connection with the Macugen collaboration, we entered into an agreement with Pfizer under which our sales force is entitled to participate in selling activates, or detailing, with respect to Pfizer’s Xalatan glaucoma product on a nonexclusive basis in the United States. Xalatan is a once-a-day prescription eye drop marketed by Pfizer as a primary, or first line, therapy for glaucoma, an eye disease that is associated with the degeneration of the retinal cells responsible for transmitting images from the eye to the brain.

      Under this agreement, Pfizer is obligated to pay us a per detail fee for our details to general ophthalmologists and a percentage of incremental net revenues that are above a baseline threshold for our details to retinal specialists. The agreement automatically terminates upon a termination of the Macugen collaboration or upon Pfizer’s sale, assignment, exclusive license or other disposition of the Xalatan product. In addition, we may terminate the agreement upon four months’ prior notice. Either party may terminate the agreement based upon material uncured breaches by the other party.

      We view the Xalatan agreement as primarily a strategic arrangement and anticipate only a modest economic impact. We are currently focusing our sales force entirely on Macugen and not detailing Xalatan. We and Pfizer will continue to assess the benefits of having our sales force initiate detailing of Xalatan, but do not have any current plants to do so.

      In March 2004, we agreed to extend a consulting agreement with Dr. Samir Patel, one of our founders and a member of our Board, under which Dr. Patel provided consulting services to us relating to our development, clinical investigation and commercialization of Macugen. Under such agreement, Dr. Patel provided us with at least 40 hours of consulting services per week and was paid $251,000 for 12 months of service in 2004.

      As of January 4, 2005, we agreed to retain Dr. Patel, a member of our Board of Directors, as Chief Clinical and Commercial Strategy. Under the agreement, Dr. Patel receives an annual base salary of $225,000, which is subject to change upon an annual review by Eyetech’s Board of Directors. Dr. Patel will be eligible to receive additional incentive cash compensation with a target of 50% of his base salary at the sole discretion of Eyetech’s Board. Dr. Patel has also been granted options to purchase 50,000 shares of Eyetech common stock at $43.88 per share, subject to standard vesting requirements. Under the terms of the agreement with Dr. Patel, either Eyetech or Dr. Patel may terminate his employment at any time, subject to continuation of salary payment and benefits for one year if Eyetech terminates Dr. Patel’s employment without cause or if Dr. Patel terminates his employment for good reason. If Eyetech terminates Dr. Patel’s employment without cause or if he terminates his employment for good reason within three months before or 12 months following a change in control of Eyetech, Eyetech is obligated to pay Dr. Patel a lump sum payment equal to 15 months of his then current base salary and reimburse Dr. Patel for the costs of medical and dental benefits for up to 15 months. Upon any change in control of Eyetech, 50% of all of Dr. Patel’s unvested equity rights that were granted in his capacity as an employee will immediately vest, and if Eyetech terminates Dr. Patel’s employment without cause or if he terminates his employment for good reason within three months before or 12 months following the change in control, 100% of Dr. Patel’s unvested equity rights that were granted in his capacity as an employee will immediately vest.

      On April 7, 2005, Mr. Marty Glick’s resigned as a member of the Board. On April 7, 2005, Mr. Glick and the Company entered into a consulting agreement for the period from April 7, 2005 through October 6, 2006 pursuant to which Mr. Glick will provide consulting services on general matters and will receive $5,000 per month plus reimbursement of expenses.

      On July 1, 2002, we provided a loan to Anthony P. Adamis, our Chief Scientific Officer and Senior Vice President, Research, that is evidenced by a promissory note in the aggregate principal amount of $102,000. The note bore interest at a fixed annual rate of 4.71%, with the interest payable at maturity, and matured in July 2008. Dr. Adamis used the proceeds from the loan to acquire 75,000 shares of our common stock, which he pledged to secure the loan. On June 15, 2004, Dr. Adamis repaid the $110,795 outstanding balance of the loan, which included accrued interest.

      Please see “Board Structure and Compensation — Director Compensation Arrangements” for a discussion of options granted to and other compensation payable to our non-employee directors.

      Please see “Executive Compensation”, including “— Stock Options” and “— Employment Agreements,” for additional information on compensation of our executive officers.