Delaware		94-3222727
(State of incorporation)		(IRS Employer Identification Number)

				PAGE
Part I:		Financial Information
Item 1.		Financial Statements (Unaudited)
		Condensed Balance Sheets as of June 30, 2002 and December 31, 2001		3
		Condensed Statements of Operations for the Three and Six Months Ended June 30, 2002 and 2001 and for the Cumulative Period From May 5, 1995 (Inception) to June 30, 2002		4
		Condensed Statements of Cash Flows for the Six Months Ended June 30, 2002 and 2001 and for the Cumulative Period from May 5, 1995 (Inception) to June 30, 2002		5
		Notes to the Condensed Financial Statements		6
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		7
Item 3.		Quantitative and Qualitative Disclosures About Market Risk		15
Part II:		Other Information
Item 1.		Legal Proceedings		15
Item 2.		Changes in Securities and Use of Proceeds		16
Item 3.		Defaults upon Senior Securities		16
Item 4.		Submission of Matters to a Vote of Security Holders		16
Item 5.		Other Information		17
Item 6.		Exhibits and Reports on Form 8-K.		17
Signatures				20

		June 30, 2002				December 31, 2001
ASSETS
Current assets:
Cash and cash equivalents		$	45,780			$	30,970
Restricted cash			34,125				34,125
Short-term marketable investments			30,917				45,883
Accounts receivable			152				1,540
Prepaid expenses and other current assets			629				546
Inventories			42				14
Total current assets			111,645				113,078
Long-term marketable investments			48,316				60,598
Restricted cash			—				500
Property and equipment, net			9,356				8,887
Other assets, net			100				119
Total assets		$	169,417			$	183,182
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	941			$	974
Accrued payroll and related expenses			1,057				1,077
Accrued expenses and other current liabilities			2,908				1,987
Deferred revenue			519				596
Litigation settlements accrual			30,541				27,197
Current portion of loans payable			57				55
Total current liabilities			36,023				31,886
Loans payable, net of current portion			478				507
Deferred rent			378				322
Total liabilities			36,879				32,715
Contingencies (Note 3)
Stockholders’ equity:
Common stock, $0.001 par value:
Authorized 150,000,000 shares; Issued and outstanding: 36,148,437 shares at June 30, 2002 and 35,871,066 shares at December 31, 2001			36				36
Additional paid-in capital			259,235				259,327
Deferred stock-based compensation			(1,695	)			(2,785	)
Stockholder notes receivable for common stock			(579	)			(571	)
Accumulated other comprehensive income			308				281
Deficit accumulated during development stage			(124,767	)			(105,821	)
Total stockholders’ equity			132,538				150,467
Total liabilities and stockholders’ equity		$	169,417			$	183,182

		Three Months Ended June 30,								Six Months Ended June 30,								Cumulative Period from May 5, 1995 (Inception) to June 30, 2002
		2002				2001				2002				2001
Revenues		$	673			$	849			$	1,263			$	1,783			$	16,631
Costs and operating expenses:
Research and development			6,668				5,921				13,060				11,676				76,305
Selling, general and administrative			3,078				2,537				5,911				5,416				40,121
Litigation settlement			1,810				(2,389	)			3,344				2,388				43,391
Total costs and operating expenses			11,556				6,069				22,315				19,480				159,817
Loss from operations			(10,883	)			(5,220	)			(21,052	)			(17,697	)			(143,186	)
Interest income			1,037				2,014				2,130				4,689				21,230
Interest expense			(12	)			(13	)			(24	)			(26	)			(1,225	)
Net loss before extraordinary loss			(9,858	)			(3,219	)			(18,946	)			(13,034	)			(123,181	)
Extraordinary loss on early retirement of debt			—				—				—				—				(1,103	)
Net loss		$	(9,858	)		$	(3,219	)		$	(18,946	)		$	(13,034	)		$	(124,284	)
Dividends related to beneficial conversion feature of preferred stock			—				—				—				—				(5,000	)
Accretion to redemption value and accrued dividends on mandatorily redeemable convertible preferred stock			—				—				—				—				(6,292	)
Net loss attributable to common stockholders		$	(9,858	)		$	(3,219	)		$	(18,946	)		$	(13,034	)		$	(135,576	)
Net loss per common share, basic and diluted		$	(0.27	)		$	(0.09	)		$	(0.53	)		$	(0.37	)
Shares used in net loss per common share calculation, basic and diluted			36,051				35,360				35,955				34,892

		Six Months Ended June 30,								Cumulative Period from May 5, 1995 (Inception) to June 30, 2002
		2002				2001
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(18,946	)		$	(13,034	)		$	(124,284	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			1,004				742				4,884
Amortization of discount on marketable investments			(276	)			(287	)			(3,113	)
Amortization of note and long-term debt discount			—				—				597
Amortization of deferred stock based compensation			705				1,353				11,926
Amortization of other assets			—				25				81