Delaware		94-3260659
(State or other jurisdiction of Incorporation or organization)		(I.R.S. Employer Identification No.)

740 Bay Road, Redwood City, CA		94063
(Address of principal executive offices)		(Zip code)

Common Stock $0.001 par value		40,936,370
Class		Outstanding at November 8, 2002

Item 1.		Financial Statements		3
		Consolidated Balance Sheets (unaudited)		3
		Consolidated Statements of Operations (unaudited)		4
		Consolidated Statements of Cash Flows (unaudited)		5
		Notes to Consolidated Financial Statements (unaudited)		6
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		12
Item 3.		Quantitative and Qualitative Disclosures about Market Risk		33
Item 4.		Controls and Procedures		34

Item 1.		Legal Proceedings		34
Item 2.		Changes in Securities and Use of Proceeds		34
Item 3.		Defaults Upon Senior Securities		34
Item 4.		Submission of Matters to a Vote of Security Holders		34
Item 5.		Other Information		34
Item 6.		Exhibits and Reports on Form 8-K		34
Signatures				36
Certifications				37

		September 30, 2002				December 31, 2001
Assets
Current assets:
Cash and cash equivalents		$	28,415			$	61,363
Marketable securities			21,253				15,118
Accounts receivable, net			769				2,511
Prepaid expenses and other current assets			3,889				2,207
Total current assets			54,326				81,199
Property, plant and equipment, net			36,606				16,672
Goodwill			—				1,788
Intangible assets, net			6,249				3,479
Notes receivable from related parties			995				495
Restricted cash			3,838				2,869
Other assets			2,730				2,548
Total assets		$	104,744			$	109,050
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable		$	8,877			$	4,131
Accrued liabilities			7,193				5,864
Current portion of capital lease obligations			21				11
Current portion of loans payable			14,008				2,382
Current portion of deferred revenue			13,838				7,257
Total current liabilities			43,937				19,645
Capital lease obligations, less current portion			9				28
Loans payable, less current portion			2,374				3,059
Other long-term liabilities			990				990
Deferred credit			2,953				—
Deferred revenue, less current portion			2,910				1,657
Total liabilities			53,173				25,379
Stockholders’ equity:
Common stock, $0.001 par value:
Authorized: 75,000,000 shares, issued and outstanding: 40,908,740 and 32,077,012 shares at September 30, 2002 and December 31, 2001, respectively			41				32
Additional paid-in capital			238,615				186,595
Unearned stock-based compensation			(1,018	)			(3,019	)
Notes receivable from stockholders			(805	)			(805	)
Accumulated deficit			(185,262	)			(99,132	)
Total stockholders’ equity			51,571				83,671
Total liabilities and stockholders’ equity		$	104,744			$	109,050

		Three months ended September 30,								Nine months ended September 30,
		2002				2001				2002				2001
Contract revenue		$	4,409			$	2,265			$	12,943			$	7,451
Costs and expenses:
Research and development			20,821				13,080				58,736				31,688
Selling, general and administrative			5,316				4,472				14,388				12,654
Impairment of goodwill and other long-lived assets			26,793				—				26,793				—
Total costs and expenses			52,930				17,552				99,917				44,342
Loss from operations			(48,521	)			(15,287	)			(86,974	)			(36,891	)
Interest income			686				915				1,566				3,887
Interest expense			(325	)			(262	)			(722	)			(561	)
Net loss		$	(48,160	)		$	(14,634	)		$	(86,130	)		$	(33,565	)
Net loss per common share, basic and diluted		$	(1.19	)		$	(0.50	)		$	(2.34	)		$	(1.16	)
Weighted average shares used in computing net loss per common share, basic and diluted			40,517				29,504				36,865				28,959

		Nine months ended September 30,
		2002				2001
Cash flows from operating activities:
Net loss		$	(86,130	)		$	(33,565	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			5,256				1,872
Amortization of equipment under capital lease			21				—
Amortization of warrants issued in connection with loans			55				35
Amortization of intangible assets			3,203				224
Amortization of unearned stock-based compensation expense			1,344				3,006
Amortization of premium (discount) on marketable securities			134				(637	)
Lease loss			—				1,312
Write-off of in-process research and development costs			110				907
Impairment of goodwill and other long-lived assets			26,793				—
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable			1,742				(1,206	)
Prepaid expenses and other current assets			(1,274	)			(1,110	)
Other assets			19				(2,899	)
Accounts payable			(880	)			1,028
Accrued expenses			481				628
Deferred revenue			7,834				(400	)
Net cash used in operating activities			(41,292	)			(30,805	)
Cash flows from investing activities:
Purchase of marketable securities			(11,269	)			(39,364	)
Maturities of marketable securities			5,000				55,000
Acquisition of property, plant and equipment			(1,729	)			(4,434	)
Acquisition of leasehold improvements			(17,001	)			(318	)
Increase in restricted cash			(969	)			(2,707	)
Issuance of notes receivable			(500	)			(260	)
Acquisition of Arcaris, Inc., net of cash acquired			—				(450