(Mark One)
x		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the quarterly period ended June 30, 2002
		OR
¨		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the transition period from              to

Washington		91-1549568
(State of Incorporation)		(IRS Employer Identification No.)

Common Stock, $.01 par value		44,158,730
(Class)		(Outstanding at August 1, 2002)

				Page No.
PART I		FINANCIAL INFORMATION
Item 1.		Financial Statements
a)		Condensed Consolidated Balance Sheets at June 30, 2002 and December 31, 2001		1
b)		Condensed Consolidated Statements of Operations for the three months and six months ended June 30, 2002 and 2001		2
c)		Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2002 and 2001		3
d)		Notes to Condensed Consolidated Financial Statements		4
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		9
Item 3.		Quantitative and Qualitative Disclosures About Market Risk		31
PART II		OTHER INFORMATION
Item 1.		Legal Proceedings		32
Item 2.		Changes in Securities and Use of Proceeds		32
Item 3.		Defaults Upon Senior Securities		32
Item 4.		Submission of Matters to a Vote of Security Holders		32
Item 5.		Other Information		32
Item 6.		Exhibits and Reports on Form 8-K		32
SIGNATURES				33

		June 30, 2002				December 31, 2001
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	17,273,000			$	25,186,000
Accounts receivable			3,197,000				2,475,000
Receivable from unconsolidated, majority-owned research and development joint venture			1,062,000				893,000
Prepaid expenses and other			1,065,000				935,000
Total current assets			22,597,000				29,489,000
Property and equipment, net			7,087,000				8,308,000
Goodwill and other purchased intangibles, net			31,499,000				31,752,000
Other assets			1,412,000				1,489,000
		$	62,595,000			$	71,038,000
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses		$	3,130,000			$	3,452,000
Payable to unconsolidated, majority-owned research and development joint venture			1,103,000				1,123,000
Accrued employee expenses			819,000				1,114,000
Deferred revenue			6,072,000				4,631,000
Current portion of long-term obligations			1,253,000				1,308,000
Total current liabilities			12,377,000				11,628,000
Deferred rent			742,000				640,000
Long-term obligations			21,870,000				16,403,000
Deferred revenue			3,012,000				4,966,000
Commitments (Notes 6 and 7)
Series B convertible exchangeable preferred stock			12,015,000				12,015,000
Shareholders’ equity:
Preferred stock, $0.01 par value, 6,000,000 shares authorized:
Series A preferred stock, 800,000 shares designated, none issued and outstanding			—				—
Series B convertible exchangeable preferred stock; 12,015 shares designated, issued and outstanding			—				—
Common stock $0.01 par value, 120,000,000 shares authorized, 44,158,730 shares issued and outstanding at June 30, 2002 and 44,125,677 shares at December 31, 2001			442,000				441,000
Additional paid-in-capital			202,963,000				202,927,000
Accumulated deficit			(190,826,000	)			(177,982,000	)
Total shareholders’ equity			12,579,000				25,386,000
		$	62,595,000			$	71,038,000

		Three months ended June 30,								Six months ended June 30,
		2002				2001				2002				2001
Revenue:
Collaborative agreements		$	3,818,000			$	3,609,000			$	8,349,000			$	6,737,000
Collaborative agreement with unconsolidated, majority-owned research and development joint venture			775,000				730,000				1,614,000				1,407,000
Total revenue			4,593,000				4,339,000				9,963,000				8,144,000
Operating expenses:
Research and development			8,325,000				6,637,000				17,364,000				13,031,000
Equity in net loss of unconsolidated, majority-owned research and development joint venture			833,000				1,019,000				1,611,000				1,867,000
Amortization of purchased intangibles			127,000				1,518,000				253,000				3,035,000
General and administrative			1,579,000				1,441,000				3,232,000				3,468,000
Total operating expenses			10,864,000				10,615,000				22,460,000				21,401,000
Loss from operations			(6,271,000	)			(6,276,000	)			(12,497,000	)			(13,257,000	)
Investment income			139,000				477,000				226,000				1,279,000
Interest expense			(305,000	)			(66,000	)			(572,000	)			(130,000	)
Net loss		$	(6,437,000	)		$	(5,865,000	)		$	(12,843,000	)		$	(12,108,000	)
Net loss per share (basic and diluted), restated		$	(0.15	)		$	(0.13	)		$	(0.29	)		$	(0.28	)
Shares used in computation of net loss per common share			44,159,000				43,977,000				44,148,000				43,748,000

		Six months ended June 30,
		2002				2001
Operating activities:
Net loss		$	(12,843,000	)		$	(12,108,000	)
Adjustments to reconcile net loss to net cash used in operating activities:
Equity in net loss of unconsolidated, majority-owned research and development joint venture			1,611,000				1,867,000
Depreciation and amortization			1,612,000				1,884,000
Amortization of purchased intangibles			253,000				3,035,000
Stock-based compensation expense			—				80,000
Changes in assets and liabilities:
Decrease (increase) in accounts receivable			(722,000	)			1,014,000
Decrease in deferred revenue			(513,000	)			(3,357,000	)
Increase in current and other assets			(53,000	)			(429,000	)
Increase (decrease) in current and other liabilities			55,000				(2,284,000	)
Increase in accounts receivable from unconsolidated, majority-owned research and development joint venture			(169,000	)			(63,000	)
Net cash used in operating activities			(10,769,000	)			(10,361,000	)
Investing activities:
Investment in unconsolidated, majority-owned research and development joint venture			(1,631,000	)			(4,112,000	)
Purchases of property and equipment			(486,000	)			(1,769,000	)
Net cash used in investing activities			(2,117,000	)			(5,881,000	)
Financing activities:
Loan proceeds from collaborative partner			5,000,000				—
Proceeds from leasehold improvements and equipment financing arrangements			607,000				1,938,000
Payments under leasehold improvements and equipment financing arrangements			(670,000	)			(511,000	)
Net proceeds from sale of capital stock			36,000				2,767,000
Net cash provided by financing activities			4,973,000				4,194,000