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

Common Stock, $0.01 par value		50,184,407
(Class)		(Outstanding at October 31, 2002)

				Page No.
PART I		FINANCIAL INFORMATION
Item 1.		Financial Statements
a)		Condensed Consolidated Balance Sheets at September 30, 2002 and December 31, 2001		1
b)		Condensed Consolidated Statements of Operations for the three months and nine months ended September 30, 2002 and 2001		2
c)		Condensed Consolidated Statements of Cash Flows for the nine months ended September 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		7
Item 3.		Quantitative and Qualitative Disclosures About Market Risk		21
Item 4.		Controls and Procedures		21
PART II		OTHER INFORMATION
Item 1.		Legal Proceedings		22
Item 2.		Changes in Securities and Use of Proceeds		22
Item 3.		Defaults Upon Senior Securities		22
Item 4.		Submission of Matters to a Vote of Security Holders		22
Item 5.		Other Information		22
Item 6.		Exhibits and Reports on Form 8-K		22
SIGNATURES				23
CERTIFICATIONS				24
EXHIBIT INDEX				26

		September 30, 2002			December 31, 2001
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	17,269,000		$	25,186,000
Accounts receivable			1,626,000			2,475,000
Receivable from unconsolidated, majority-owned research and development joint venture			612,000			893,000
Prepaid expenses and other			840,000			935,000
Total current assets			20,347,000			29,489,000
Property and equipment, net			6,407,000			8,308,000
Goodwill, net			31,520,000			31,752,000
Other assets			1,377,000			1,489,000
Total assets		$	59,651,000		$	71,038,000
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses		$	2,941,000		$	3,452,000
Payable to unconsolidated, majority-owned research and development joint venture			696,000			1,123,000
Accrued employee expenses			660,000			1,114,000
Deferred revenue			6,925,000			4,631,000
Current portion of long-term obligations			1,214,000			1,308,000
Total current liabilities			12,436,000			11,628,000
Deferred rent			791,000			640,000
Long-term obligations			22,531,000			16,403,000
Deferred revenue			—			4,966,000
Commitments
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; 50,184,047 shares issued and outstanding at September 30, 2002 and 44,125,677 shares issued and outstanding at December 31, 2001			502,000			441,000
Additional paid-in capital			207,035,000			202,927,000
Accumulated deficit			(195,659,000			(177,982,000
Total shareholders’ equity			11,878,000			25,386,000
Total liabilities and shareholders’ equity		$	59,651,000		$	71,038,000

		Three months ended September 30,								Nine months ended September 30,
		2002				2001				2002				2001
Revenue:
Collaborative agreements		$	4,465,000			$	4,854,000			$	12,814,000			$	11,591,000
Collaborative agreement with unconsolidated, majority-owned research and development joint venture			357,000				684,000				1,971,000				2,091,000
Total revenue			4,822,000				5,538,000				14,785,000				13,682,000
Operating expenses:
Research and development			7,684,000				8,899,000				25,048,000				21,930,000
Equity in net loss of unconsolidated, majority-owned research and development joint venture			315,000				946,000				1,926,000				2,813,000
Amortization of purchased intangibles			112,000				1,517,000				365,000				4,552,000
General and administrative			1,222,000				1,469,000				4,454,000				4,937,000
Total operating expenses			9,333,000				12,831,000				31,793,000				34,232,000
Loss from operations			(4,511,000	)			(7,293,000	)			(17,008,000	)			(20,550,000	)
Investment income			101,000				415,000				327,000				1,695,000
Interest expense			(424,000	)			(114,000	)			(996,000	)			(244,000	)
Net loss		$	(4,834,000	)		$	(6,992,000	)		$	(17,677,000	)		$	(19,099,000	)
Net loss per share (basic and diluted), restated		$	(0.11	)		$	(0.16	)		$	(0.40	)		$	(0.44	)
Shares used in computation of net loss per common share			44,489,000				44,119,000				44,263,000				43,873,000

		Nine months ended September 30,
		2002				2001
Operating activities:
Net loss		$	(17,677,000	)		$	(19,099,000	)
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			1,926,000				2,813,000
Depreciation and amortization			2,435,000				1,821,000
Amortization of purchased intangibles			365,000				4,552,000
Stock-based compensation expense			—				80,000
Changes in assets and liabilities:
Decrease in accounts receivable			849,000				572,000
Decrease in deferred revenue			(2,672,000	)			(5,112,000	)
Decrease (increase) in current and other assets			207,000				(566,000	)
Decrease in current and other liabilities			(234,000	)			(1,140,000	)
Decrease (increase) in accounts receivable from unconsolidated, majority-owned research and development joint venture			281,000				(43,000	)
Net cash used in operating activities			(14,520,000	)			(16,122,000	)
Investing activities:
Investment in unconsolidated, majority-owned research and development joint venture			(2,353,000	)			(2,804,000
Purchases of property and equipment			(632,000	)			(3,906,000	)
Net cash used in investing activities			(2,985,000	)			(6,710,000	)
Financing activities:
Loan proceeds from collaborative partner			5,950,000				8,000,000
Proceeds from leasehold improvements and equipment financing arrangements			607,000				2,401,000
Payments under leasehold improvements and equipment financing arrangements			(1,005,000	)			(812,000	)
Net proceeds from sale of capital stock			4,036,000				2,800,000
Net cash provided by financing activities			9,588,000				12,389,000
Net decrease in cash and cash equivalents			(7,917,000	)			(10,443,000	)
Cash and cash equivalents, beginning of period			25,186,000				38,630,000
Cash and cash equivalents, end of period		$	17,269,000			$	28,187,000	&n