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 June 30, 2002 and December 31, 2001		3
		Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2002 and June 30, 2001		4
		Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2002 and June 30, 2001		5
		Notes to Condensed Consolidated Financial Statements		6
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		10
		Risk Factors That May Affect Results		14
Item 3.		Quantitative and Qualitative Disclosures about Market Risk		21
PART II    OTHER INFORMATION
Item 4.		Submission of Matters to a Vote of Security Holders		22
Item 6.		Exhibits and Reports on Form 8-K		22
Signatures				23

		June 30, 2002				December 31, 2001
		(in thousands, except share amounts)
		(unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	17,002			$	57,469
Marketable securities			26,310				2,065
Trade and other receivables			966				5,403
Prepaid expenses and other current assets			1,049				518
Assets held for sale			669				—
Total current assets			45,996				65,455
Restricted cash			472				—
Property and equipment, net			4,485				5,538
Goodwill			1,526				6,276
Other assets			1,244				775
Total assets		$	53,723			$	78,044
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable		$	518			$	1,284
Accrued compensation			991				2,210
Current portion of notes payable			434				668
Accrued merger and financing costs			131				700
Deferred revenue			663				3,579
Accrued restructuring			2,515				—
Other accrued liabilities			1,052				1,196
Total current liabilities			6,304				9,637
Long-term portion of notes payable			280				456
Long-term portion of accrued restructuring			787				—
Accrued rent			354				395
Series B convertible redeemable preferred stock, par value $0.001; 60,000 shares authorized; 60,000 shares issued and outstanding at June 30, 2002 and December 31, 2001 (net of deemed dividend and issuance costs)			52,626				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 June 30, 2002 and December 31, 2001			—				—
Common stock, par value $0.001; 50,000,000 shares authorized; 18,838,821 and 16,752,723 shares issued and outstanding at June 30, 2002 and December 31, 2001, respectively			19				17
Additional paid-in capital			105,467				99,800
Deferred compensation			(1,756	)			(2,692	)
Notes receivable from officers			(217	)			(231	)
Accumulated deficit			(110,307	)			(81,113	)
Accumulated other comprehensive income			166				—
Total stockholders’ equity (deficit)			(6,628	)			15,781
Total liabilities and stockholders’ equity (deficit)		$	53,723			$	78,044

		Three Months Ended June 30,								Six Months Ended June 30,
		2002				2001				2002				2001
Revenues:
Research revenue		$	1,826			$	961			$	3,864			$	2,731
Milestone, licensing and other revenue			449				892				1,516				1,784
Total revenues			2,275				1,853				5,380				4,515
Operating expenses:
Research and development			6,399				4,406				11,959				8,477
General and administrative			2,525				1,340				4,708				2,463
Purchased in-process research and development			—				—				7,702				—
Restructuring charges			10,720				—				10,720				—
Total operating expenses			19,644				5,746				35,089				10,940
Loss from operations			(17,369	)			(3,893	)			(29,709	)			(6,425	)
Interest and other income, net			261				166				515				337
Net loss			(17,108	)			(3,727	)			(29,194	)			(6,088	)
Accretion of deemed dividend to Series B preferred stockholders			(425	)			—				(850	)			—
Net loss allocable to common stockholders		$	(17,533	)		$	(3,727	)		$	(30,044	)		$	(6,088	)
Basic and diluted net loss per common share		$	(0.95	)		$	(0.32	)		$	(1.72	)		$	(0.53	)
Weighted-average shares used in computing basic and diluted net loss per common share			18,408				11,509				17,491				11,486

		Six Months Ended June 30,
		2002				2001
		(in thousands)
Cash flows from operating activities:
Net loss		$	(29,194	)		$	(6,088	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization			1,112				1,118
Stock compensation expense			485				15
Notes receivable from officers			14				—
Purchased in-process research and development			7,702				—
Accrued rent			(15	)			59
Loss on fixed assets disposal			15				44
Goodwill impairment			6,276				—
Charges for impairment of assets			1,037				—
Changes in assets and liabilities:
Trade and other receivables			4,137				7,245
Prepaid expenses and other current assets			(531	)			(197	)
Other assets			(469	)			(10	)
Accounts payable			(1,988	)			(54	)
Accrued compensation			(1,395	)			159
Accrued restructuring			2,540				—
Other accrued liabilities			(170	)			330
Deferred revenue			(2,916	)			(3,285	)
Net cash used in operating activities			(13,360	)			(664	)
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