DELAWARE		22-3203193
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

						PAGE NO.
PART I.		FINANCIAL INFORMATION
		Item 1.		Financial Statements
				a)  Condensed Balance Sheets as of June 30, 2002 (unaudited) and December 31, 2001		2
				b)  Condensed Statements of Operations for the Three Months and Six Months Ended June 30, 2002 and 2001 (unaudited)		3
				c)  Condensed Statements of Cash Flows for the Six Months Ended June 30, 2002 and 2001 (unaudited)		4
				d)  Notes to Condensed Financial Statements		5
		Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		6
		Item 3.		Qualitative and Quantitative Disclosures About Market Risk		18
PART II.		OTHER INFORMATION
		Item 2.		Changes in Securities and Use of Proceeds		19
		Item 4.		Submission of Matters to a Vote of Security Holders		19
		Item 6.		Exhibits and Reports on Form 8-K		19
SIGNATURES						20
EXHIBIT INDEX						21

		June 30, 2002				December 31, 2001
		(unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	26,217			$	13,912
Short-term investments			34,088				56,969
Accounts receivable			1,649				1,955
Other current assets			2,482				3,253
Total current assets			64,436				76,089
Property and equipment, net			3,944				3,858
Long-term investments			3,067				10,361
Deposits and other assets			766				774
Total Assets		$	72,213			$	91,082
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	247			$	932
Accrued liabilities			4,301				4,524
Accrued compensation			1,127				1,975
Deferred revenue			6,904				7,572
Current portion of long-term debt			—				281
Current portion of capital lease obligations			985				1,120
Total current liabilities			13,564				16,404
Deferred revenue, less current portion			5,031				7,454
Capital lease obligations, less current portion			1,529				2,013
Commitments			—				—
Stockholders’ equity:
Common stock, $0.001 par value; 80,000,000 shares authorized, 25,168,975 and 24,919,696 shares issued and outstanding at June 30, 2002 and December 31, 2001, respectively			25				25
Additional paid-in capital			156,904				156,481
Deferred stock-based compensation			(587	)			(987	)
Accumulated other comprehensive income			174				486
Accumulated deficit			(104,427	)			(90,794	)
Total stockholders’ equity			52,089				65,211
Total Liabilities and Stockholders’ Equity		$	72,213			$	91,082

		Three Months Ended June 30,								Six Months Ended June 30,
		2002				2001				2002				2001
Revenue:
Collaborative and license revenue		$	3,114			$	2,982			$	6,142			$	6,048
Grant revenue			—				89				—				140
Total revenue			3,114				3,071				6,142				6,188
Operating expenses:
Research and development			7,421				7,161				15,797				12,421
General and administrative			2,127				1,891				4,444				3,530
Marketing			217				330				478				964
Total operating expenses			9,765				9,382				20,719				16,915
Loss from operations			(6,651	)			(6,311	)			(14,577	)			(10,727	)
Interest income, net:
Interest income			483				1,236				1,115				2,744
Interest expense			(82	)			(146	)			(171	)			(280	)
Interest income, net			401				1,090				944				2,464
Net loss			(6,250	)			(5,221	)			(13,633	)			(8,263	)
Basic and diluted net loss per share		$	(0.25	)		$	(0.21	)		$	(0.54	)		$	(0.34	)
Shares used in computation of basic and diluted net loss per share			25,111				24,723				25,047				24,654

		Six Months Ended June 30,
		2002				2001
OPERATING ACTIVITIES
Net loss		$	(13,633	)		$	(8,263	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense			859				505
Non-cash stock-based compensation expense			373				615
Non-cash consulting expense			—				60
Non-cash interest expense			6				60
Changes in current assets and liabilities
Accounts receivable			306				5,996
Other current assets			765				(1,000	)
Deferred revenue			(3,091	)			(4,666	)
Accounts payable			(685	)			(213	)
Accrued liabilities and compensation			(1,071	)			(493	)
Net cash used in operating activities			(16,171	)			(7,399	)
INVESTING ACTIVITIES
Purchases of investments			(62,459	)			(54,837	)
Maturities of investments			92,330				30,669
Purchases of property and equipment			(945	)			(1,898	)
Net cash provided by (used in) investing activities			28,926				(26,066	)
FINANCING ACTIVITIES
Payments on long-term debt			(281	)			(757	)
Proceeds from capital lease financing agreement			—				960
Payments on capital lease obligations			(619	)			264
Proceeds from exercise of stock options			126				241
Issuance of common stock under the Employee Stock Purchase Plan			324				426
Net cash provided by (used in) financing activities			(450	)			606
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			12,305</