Delaware		94-3186021
(State or other jurisdiction of incorporation of organization)		(I.R.S. Employer Identification Number)

1365 Main Street, Waltham, Massachusetts		02451
(Address of principal executive offices)		(ZIP Code)

				Page Number
PART I    FINANCIAL INFORMATION
Item 1.		Condensed Consolidated Financial Statements
		Condensed Consolidated Balance Sheets as of September 30, 2002 and December 31, 2001		3
		Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2002 and September 30, 2001		4
		Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2002 and September 30, 2001		5
		Notes to Condensed Consolidated Financial Statements		6
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		11
		Risk Factors That May Affect Results		16
Item 3.		Quantitative and Qualitative Disclosures about Market Risk		24
Item 4.		Controls and Procedures		24
PART II    OTHER INFORMATION
Item 1.		Legal Proceedings		25
Item 6.		Exhibits and Reports on Form 8-K		25
Signatures				26
Certificates Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				27

		September 30, 2002				December 31, 2001
		(in thousands, except share amounts)
		(unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	12,153			$	57,469
Marketable securities			27,172				2,065
Restricted cash			100				—
Trade and other receivables			637				5,403
Prepaid expenses and other current assets			1,354				518
Assets held for sale			460				—
Total current assets			41,876				65,455
Restricted cash			885				—
Property and equipment, net			4,681				5,538
Goodwill			1,526				6,276
Other assets			1,307				775
Total assets		$	50,275			$	78,044
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable		$	1,066			$	1,284
Accrued compensation			1,381				2,210
Current portion of notes payable			1,002				668
Accrued merger and financing costs			10				700
Deferred revenue			904				3,579
Accrued restructuring			1,730				—
Other accrued liabilities			1,178				1,196
Total current liabilities			7,271				9,637
Long-term portion of notes payable			657				456
Long-term portion of accrued restructuring			658				—
Accrued rent			345				395
Series B convertible redeemable preferred stock, par value $0.001; 60,000 shares authorized; 60,000 shares issued and outstanding at September 30, 2002 and December 31, 2001 (net of deemed dividend and issuance costs)			53,051				51,775
Commitments and contingencies			—				—
Stockholders’ equity (deficit):
Preferred stock, par value $0.001; 5,000,000 shares authorized; 60,000 Series B shares issued and outstanding at September 30, 2002 and December 31, 2001			—				—
Common stock, par value $0.001; 50,000,000 shares authorized; 18,858,017 and 16,752,723 shares issued and outstanding at September 30, 2002 and December 31, 2001, respectively			19				17
Additional paid-in capital			105,079				99,800
Deferred compensation			(1,584	)			(2,692	)
Notes receivable from officers			(217	)			(231	)
Accumulated deficit			(115,386	)			(81,113	)
Accumulated other comprehensive income			382				—
Total stockholders’ equity (deficit)			(11,707	)			15,781
Total liabilities and stockholders’ equity (deficit)		$	50,275			$	78,044

		Three Months Ended September 30,								Nine Months Ended September 30,
		2002				2001				2002				2001
Revenues:
Research revenue		$	1,267			$	1,030			$	5,131			$	3,761
Milestone, licensing and other revenue			570				1,893				2,086				3,677
Total revenues			1,837				2,923				7,217				7,438
Operating expenses:
Research and development			4,728				4,201				16,687				12,678
General and administrative			2,536				1,045				7,244				3,508
Purchased in-process research and development			—				—				7,702				—
Restructuring charges			—				—				10,720				—
Total operating expenses			7,264				5,246				42,353				16,186
Loss from operations			(5,427	)			(2,323	)			(35,136	)			(8,748	)
Interest and other income, net			348				69				863				406
Net loss			(5,079	)			(2,254	)			(34,273	)			(8,342	)
Accretion of deemed dividend to Series B preferred stockholders			(426	)			—				(1,276	)			—
Net loss allocable to common stockholders		$	(5,505	)		$	(2,254	)		$	(35,549	)		$	(8,342	)
Basic and diluted net loss per common share		$	(0.30	)		$	(0.20	)		$	(1.99	)		$	(0.73	)
Weighted-average shares used in computing basic and diluted net loss per common share			18,481				11,519				17,821				11,497

		Nine Months Ended September 30,
		2002				2001
		(in thousands)
Cash flows from operating activities:
Net loss		$	(34,273	)		$	(8,342	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization			1,536				1,624
Stock compensation expense			684				24
Notes receivable from officers			14				—
Purchased in-process research and development			7,702				—
Accrued rent			9				85
(Gain) loss on fixed assets disposal			(78	)			44
Goodwill impairment			6,276				—
Charges for impairment of assets			1,037				—
Changes in assets and liabilities:
Trade and other receivables			4,466				7,205
Prepaid expenses and other current assets			(836	)			(109	)
Other assets			(532	)			(860	)
Accounts payable			(1,440	)			616
Accrued compensation			(1,005	)			339
Accrued restructuring			1,672				—
Other accrued liabilities			(77	)			370
Deferred revenue			(2,675