<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

|X|   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001

                                       OR

|_|   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934 for the transition period ended ___________________

                         Commission File Number 0-23553

                           PHOTOGEN TECHNOLOGIES, INC.
             (Exact name of registrant as specified in its charter)

            NEVADA                                       36-4010347
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

                             140 Union Square Drive
                          New Hope, Pennsylvania 18938
               (Address of principal executive offices)(Zip Code)

                                  215/862-6860
               (Registrant's telephone number including area code)

      Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days:

                                YES: |X| NO: |_|

      Indicate the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 37,712,687 SHARES OF COMMON
STOCK, $.001 PAR VALUE PER SHARE, ISSUED AND OUTSTANDING AS OF May 11, 2001

================================================================================
<PAGE>

                                      INDEX

                                                                           Page
Part I.  Financial Information                                              1

         Item 1.  Financial Statements                                      1
         Item 2.  Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                       10
         Item 3.  Quantitative and Qualitative Disclosures about
                  Market Risk                                               13

Part II  Other Information                                                  13

         Item 1.  Legal Proceedings                                         13
         Item 4.  Submission of Matters to a Vote of Security Holders       13
         Item 5.  Other Information                                         13
         Item 6.  Exhibits and Reports on Form 8-K                          19


                                        i
<PAGE>

                          PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                           PHOTOGEN TECHNOLOGIES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                                   (UNAUDITED)
                                All amounts in $

<TABLE>
<CAPTION>
                                                                                                    March 31,     December 31, 2000
                                                                                                         2001             (Audited)
                                                                                                 (Unaudited)
                                   Assets
<S>                                                                                              <C>                   <C>
Current Assets
     Cash and cash equivalents                                                                   $    974,355          $    622,795
     United States Treasury Notes, total face value $3,057,000 and
         $4,945,000, respectively                                                                   3,057,507             4,943,971
     Interest receivable                                                                               74,386                93,219
     Prepaid consulting expense                                                                       445,976               760,363
     Prepaid expenses                                                                                  44,450               182,115
     Deposit                                                                                          100,000               100,000

Total Current Assets                                                                                4,696,674             6,702,463

Equipment and Leasehold Improvements, less accumulated
     depreciation of $863,608 and $761,425, respectively                                            1,282,670             1,377,741

Patent Costs, net of amortization of $69,444 and $59,027, respectively                                430,556               440,973

Deposits                                                                                              443,753               429,370

Investment in and Advances to Affiliate                                                            10,478,134            10,701,490

              Total Assets                                                                       $ 17,331,787          $ 19,652,037

                    Liabilities and Stockholders' Equity

Current Liabilities
     Accounts payable                                                                            $    619,942          $    891,171
     Accrued restructuring                                                                            226,144               330,000
     Accrued equipment lease                                                                          140,467                    --
     Current portion of obligation under capital leases                                                13,051                16,802
</TABLE>


                                       1
<PAGE>

<TABLE>
<S>                                                                                              <C>                   <C>
Total Current Liabilities                                                                             999,604             1,237,973

Obligation Under Capital Leases                                                                            --                 1,554

Accrued Equipment Lease                                                                               555,603                    --

Shareholders' Equity
     Preferred stock; par value $.01 per share; 5,000,000 shares
         authorized including:

         Series A Preferred Stock; 12,856 shares authorized,
         issued and outstanding at March 31, 2001, liquidation
         preference $1,000 per share (in aggregate $12,856,000)                                           128                   128

         Series B Preferred Stock; 402,000 shares authorized; 357,279
         and 337,056 shares issued and outstanding, respectively,
         liquidation preference $16.88 per share (in aggregate $6,030,870
         and $5,689,505, respectively)                                                                  3,572                 3,370

     Common stock; par value $.001 per share; 150,000,000 shares authorized;
         37,525,421 and 37,383,386 shares issued and outstanding, respectively                         37,526                37,384
     Additional paid-in capital                                                                    38,132,763            37,741,925
     Deficit accumulated during the development stage                                             (22,397,409)          (19,370,297)

Total Shareholders' Equity                                                                         15,776,580            18,412,510

Total Liabilities and Shareholders Equity                                                        $ 17,331,787          $ 19,652,037
</TABLE>


                                       2
<PAGE>

                           Photogen Technologies, Inc.
                          (A Development Stage Company)
                 Consolidated Condensed Statements of Operations
                                   (Unaudited)
                                All amounts in $

<TABLE>
<CAPTION>
                                                                                                 Cumulative
                                                                                                    Amounts
                                                     Three Months        Three Months                  From
                                                      Ended March               Ended           November 3,
                                                         31, 2001      March 31, 2000      1996 (Inception)
                                                      (Unaudited)         (Unaudited)           (Unaudited)
<S>                                                   <C>                <C>                  <C>
Operating Expenses
     Research and development                         $   789,788        $    757,497         $   9,753,421
     General and administrative                         1,124,902           1,315,249            10,521,757
     Restructuring charges                                     --                  --               597,025
     Provision for future lease payments                  696,070                  --               696,070

Total operating expenses                                2,610,760           2,072,746            21,568,273

Loss From Joint Venture                                 (472,553)           (459,004)           (1,981,974)

Investment Income                                          56,201             101,786             1,152,838

Net Loss                                              (3,027,112)         (2,429,964)         $(22,397,409)

Dividends on Preferred Stock                            (731,702)           (303,974)

Net Loss Applicable to Common Shareholders           $(3,758,814)        $(2,733,938)

Basic and Diluted Loss Per Common Share               $     (.10)        $      (.07)

Weighted Average Number of Common
     Shares Outstanding - Basic and Diluted            37,420,980          37,383,386
</TABLE>


                                       3
<PAGE>

                           Photogen Technologies, Inc.
                          (A Development Stage Company)
            Consolidated Condensed Statements of Shareholders' Equity
                                   (Unaudited)
                                All amounts in $

<TABLE>
<CAPTION>


                                                        Preferred Stock            Preferred Stock
                                                            Series A                   Series B                   Common Stock
                                                     Shares           Amount    Shares           Amount       Shares          Amount
<S>                                                      <C>     <C>                <C>      <C>          <C>                <C>
Contribution of capital                                  --      $        --        --      $        --           --    $        --
Net loss for the period ended December 31, 1996          --               --        --               --           --             --

Balance, at December 31, 1996                            --               --        --               --           --             --

      Net loss and capital contributions for the
           period January 1, 1997 to May 15, 1997        --               --        --               --           --             --
      Capital contribution                               --               --        --               --           --             --

Balance, at May 15, 1997                                 --               --        --               --           --             --

      Issuance of common stock                           --               --        --               --    6,312,833          6,313
      Effect of recapitalization and merger              --               --        --               --   29,687,167         29,687
      Cost associated with recapitalization and
           merger                                        --               --        --               --           --             --
      Net loss for the period May 16, 1997 to
           December 31, 1997                             --               --        --               --           --             --

Balance, at December 31, 1997                            --               --        --               --   36,000,000         36,000

      Issuance of common stock                           --               --        --               --      875,020            875
      Costs associated with common stock
           issuance                                      --               --        --               --           --             --
      Options issued to consultants                      --               --        --               --           --             --
      Net loss for the year ended December 31, 1998      --               --        --               --           --             --

<CAPTION>
                                                                                             Deficit
                                                                                         Accumulated
                                                                        Additional        During the
                                                          Members'         Paid-in       Development
                                                           Capital         Capital             Stage             Total
<S>                                                  <C>                 <C>              <C>               <C>
Contribution of capital                              $     7,268       $        --       $        --       $     7,268
Net loss for the period ended December 31, 1996           (1,779)               --                --            (1,779)

Balance, at December 31, 1996                              5,489                --                --             5,489

      Net loss and capital contributions for the
           period January 1, 1997 to May 15, 1997             --                --            (3,511)           (3,511)
      Capital contribution                                 3,511                --                --             3,511

Balance, at May 15, 1997                                   9,000                --            (3,511)            5,489

      Issuance of common stock                                --         1,797,137                --         1,803,450
      Effect of recapitalization and merger               (9,000)        1,181,500             1,732         1,203,919
      Cost associated with recapitalization and
           merger                                             --          (371,111)               --          (371,111)
      Net loss for the period May 16, 1997 to
           December 31, 1997                                  --                --          (554,702)         (554,702)

Balance, at December 31, 1997                                 --         2,607,526          (556,481)        2,087,045

      Issuance of common stock                                --         6,999,125                --         7,000,000
      Costs associated with common stock
           issuance                                           --           (50,000)               --           (50,000)
      Options issued to consultants                           --            45,446                --            45,446
      Net loss for the year ended December 31, 1998           --                --        (1,973,913)       (1,973,913)
</TABLE>


                                       4
<PAGE>

<TABLE>
<CAPTION>


                                                          Preferred Stock          Preferred Stock
                                                             Series A                  Series B                    Common Stock
                                                      Shares         Amount      Shares          Amount        Shares         Amount
<S>                                                  <C>        <C>             <C>        <C>             <C>           <C>
Balance, at December 31, 1998                             --   $         --          --    $         --    36,875,020   $     36,875

      Exercise of stock options                           --             --          --              --         4,500              5
      Issuance of warrants and options                    --             --          --              --            --             --
      Issuance of common stock                            --             --          --              --       503,866            504
      Issuance of preferred stock                     12,015            120          --              --            --             --
      Net loss for the year ended December 31, 1999       --             --          --              --            --             --

Balance, at December 31, 1999                         12,015            120          --              --    37,383,386         37,384

      Stock option compensation                           --             --          --              --            --             --
      Issuance of warrants and options                    --             --          --              --            --             --
      Issuance of preferred stock dividend               841              8          --              --            --             --
      Issuance of preferred stock                         --             --     337,056           3,370            --             --
      Net loss for the year ended December 31, 2000       --             --          --              --            --             --

Balance, at December 31, 2000                         12,856            128     337,056           3,370    37,383,386         37,384

      Stock option compensation                           --             --          --              --            --             --
      Issuance of common stock                                                                                142,035            142
      Issuance of preferred stock dividend                --             --      20,223             202            --             --
      Net loss for the three months ended
      March  31, 2001                                     --             --          --              --            --             --

Balance, at March 31, 2001                            12,856   $        128     357,279    $      3,572    37,525,421   $     37,526

<CAPTION>
                                                                                             Deficit
                                                                                         Accumulated
                                                                        Additional        During the
                                                        Members'           Paid-in       Development
                                                         Capital           Capital             Stage             Total
<S>                                                   <C>           <C>                <C>                <C>
Balance, at December 31, 1998                         $     --      $  9,602,097       $ (2,530,394)      $  7,108,578

      Exercise of stock options                             --            50,058                 --             50,063
      Issuance of warrants and options                      --         3,664,749                 --          3,664,749
      Issuance of common stock                              --         6,082,150                 --          6,082,654
      Issuance of preferred stock                           --        11,578,839                 --         11,578,959
      Net loss for the year ended December 31, 1999         --                --         (6,052,841)        (6,052,841)

Balance, at December 31, 1999                               --        30,977,893         (8,583,235)        22,432,162

      Stock option compensation                             --           125,020                 --            125,020
      Issuance of warrants and options                      --         1,366,050                 --          1,366,050
      Issuance of preferred stock dividend                  --                (8)                --                 --
      Issuance of preferred stock                           --         5,272,970                 --          5,276,340
      Net loss for the year ended December 31, 2000         --                --        (10,787,062)       (10,787,062)

Balance, at December 31, 2000                               --        37,741,925        (19,370,297)        18,412,510

      Stock option compensation                             --            16,182                 --             16,182
      Issuance of common stock                              --           374,858                 --            375,000
      Issuance of preferred stock dividend                  --              (202)                --                 --
      Net loss for the three months ended
      March  31, 2001                                       --                --         (3,027,112)        (3,027,112)

Balance, at March 31, 2001                            $     --      $ 38,132,763       $(22,397,409)      $ 15,776,580
</TABLE>


                                       5
<PAGE>

                           Photogen Technologies, Inc.
                          (A Development Stage Company)
                 Consolidated Condensed Statements of Operations
                                   (Unaudited)
                                All amounts in $

<TABLE>
<CAPTION>
                                                           Three Months                                    Cumulative
                                                                  Ended           Three Months           Amounts From
                                                              March 31,                  Ended       November 3, 1996
                                                                   2001         March 31, 2000            (Inception)
                                                            (Unaudited)            (Unaudited)            (Unaudited)
<S>                                                       <C>                      <C>                  <C>
Cash Flows From Operating Activities
     Net loss                                             $ (3,027,112)            (2,429,964)          $(22,397,409)
     Depreciation and amortization                             116,505                 95,717                980,899
     Loss on disposal of equipment and
         leasehold improvements                                  2,714                     --                 45,755
     Loss (gain) on sale of marketable securities                   --                     --                (18,503)
     United States Treasury Notes
         amortization                                           (1,536)                 7,413                 12,079
      Provision for future lease payments                      696,070                     --                696,070
     Stock option compensation                                 330,569                 22,914                882,356
     Issuance of warrants in exchange for
         services rendered                                          --                676,275              3,234,728
     Loss from investment in affiliate                         472,553                459,003              1,981,974
     Changes in operating assets and
         Liabilities:
         Prepaid expenses                                      137,665                252,168                (44,450)
         Interest receivable                                    18,833                (25,770)               (74,386)
         Accounts payable                                     (271,229)               (32,774)               619,942
         Accrued restructuring                                (103,856)                    --                226,144

Net cash used in operating activities                       (1,628,824)              (975,018)           (13,854,801)

Cash Flows From Investing Activities
     Sale of marketable securities                                  --                     --              2,164,464
     Purchases of marketable securities                             --                     --             (2,182,967)
     Purchases of United States Treasury
         Notes                                              (1,320,000)            (7,350,000)           (35,106,973)
     Sales of United States Treasury Notes                   3,208,000              3,400,000             33,171,548
     Purchase of equipment and leasehold
         improvements                                          (13,731)              (259,272)            (1,911,346)
     Costs to acquire patent                                        --                     --               (237,335)
     Investment in and advances to affiliate                  (249,197)              (310,341)           (12,460,108)
     Decrease in restricted cash                                    --                 50,000                     --
     Increase in deposit                                       (14,383)              (500,000)              (543,753)

Net cash provided by (used in) investing activities          1,610,689             (4,969,613)           (17,106,470)
</TABLE>


                                       6
<PAGE>

<TABLE>
<CAPTION>
                                                                               Cumulative
                                                                                  Amounts
                                                      Three Months           Three Months                   From
                                                             Ended                  Ended       November 3, 1996
                                                    March 31, 2001         March 31, 2000            (Inception)
                                                       (Unaudited)            (Unaudited)            (Unaudited)
<S>                                                   <C>                    <C>                     <C>
Cash Flows From Financing Activities
     Principal payments on capital leases             $    (5,305)           $    (5,662)              (278,653)
     Net proceeds from issuance of equity                 375,000              5,276,340             30,673,716
     Proceeds from capital contributions by
         shareholders                                          --                     --              1,911,674
     Cost of recapitalization                                  --                     --               (371,111)

Net cash provided by financing activities                 369,695              5,270,678             31,935,626

Decrease in Cash and Cash Equivalents                     351,560               (673,953)               974,355

Cash and Cash Equivalents, at beginning of period         622,795              1,681,773                     --

Cash and Cash Equivalents, at end of period           $   974,355            $ 1,007,820                974,355
</TABLE>


                                       7
<PAGE>

                           PHOTOGEN TECHNOLOGIES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                 March 31, 2001

1. BASIS OF PRESENTATION

      The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information pursuant to Regulation S-K. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three months ended March 31, 2001 are not necessarily indicative of the results
that may be expected for the year ended December 31, 2001.

2. JOINT VENTURE/INVESTMENT IN AFFILIATE

      The following is summarized financial information for the joint venture
      Sentigen at March 31, 2001 and 2000.

       March 31,                                         2001            2000
      -------------------------------------------------------------------------

      License purchased from Elan,
          net of amortization of
          $489,131 in 2001                        $14,510,869     $15,000,000
      -------------------------------------------------------------------------

      Total assets                                $14,510,869     $15,000,000
      =========================================================================

      Due to affiliates                           $ 1,985,243     $ 1,715,526

      Total shareholders' equity                   12,525,626      13,284,474
      -------------------------------------------------------------------------

      Total liabilities and equity                $14,510,869     $15,000,000
      =========================================================================

      Research and development
          expense                                 $   589,954     $   573,056
      -------------------------------------------------------------------------

      Net loss                                    $   589,954     $   573,056
      =========================================================================

3. BASIC AND DILUTED LOSS PER COMMON SHARE

      Basic and diluted loss per common share is computed based on the weighted
average number of common shares outstanding. Loss per share excludes the impact
of outstanding options and warrants and preferred stock, as they are
antidilutive. Potential common shares excluded from the calculation at March 31,
2001 are 6,294,000 options, 1,149,724 warrants and 1,036,009 shares issuable
upon the conversion of Series A and B Preferred Stock.


                                       8
<PAGE>

4. EQUITY

      (a)   On February 9, 2001, the Company's shelf registration on Form S-3
            was declared effective. Under the shelf registration, the Company
            may issue up to $40,000,000 of common stock. As of March 31, 2001,
            142,035 shares have been issued under the shelf registration at a
            total consideration of $375,000.

      (b)   During the first quarter 2001, the Company issued 400,000 stock
            options to an employee under the 2000 Long Term Incentive
            Compensation Plan and 250,000 stock options to employees under the
            1998 Long Term Incentive Compensation Plan. The options were issued
            at exercise prices ranging from $1.91 to $5.31 per share. The
            exercise price was the closing price quoted on the NASDAQ SmallCap
            Market on the date of the grant.

      (c)   The Series B Preferred contains beneficial conversion features.
            Emerging Issues Task Force Issue 98-5, "Accounting for Convertible
            Securities with Beneficial Conversion Features or Contingently
            Adjustable Conversion Ratios," requires the issuer to assume that
            the holder will not convert the instrument until the time of the
            most beneficial conversion. Using the conversion ratio at January 1,
            2002 and the stock price at the date of issuance, the maximum
            beneficial conversion amount is $2,412,350. This amount will be
            recorded as additional preferred stock dividends over the period
            from issuance until January 1, 2002. Through March 31, 2001,
            $1,368,647 has been recorded as additional dividends.

5. RESTRUCTURING

      In 2000, the Company recorded a restructuring charge of $597,025, included
in operating expenses, relating to the closure of its operations in Westborough,
Massachusetts. The restructuring charge includes accruals related to estimated
lease termination costs and accruals related to employee severance and related
expenses in connection with their termination. All employees at the Westborough
facility were terminated. The activities previously performed at the Westborough
facility will continue at other company locations or with outside consultants.
The restructuring charge is summarized as follows:

<TABLE>
<CAPTION>
                                                       Balance at                           Balance at
                Charged in        Utilized in        December 31,       Utilized in          March 31,
                      2000               2000                2000              2001               2001
------------------------------------------------------------------------------------------------------
<S>                <C>                <C>                <C>                <C>                <C>
Employee costs     395,233             65,223            330,000            103,856            226,144
Lease costs        201,802            201,802                 --                 --                 --
------------------------------------------------------------------------------------------------------
Total              597,025            267,025            330,000            103,856            226,144
======================================================================================================
</TABLE>

6. PROVISION FOR FUTURE LEASE PAYMENTS

      During the first quarter of 2001, the Company determined that equipment
leased by the Company under an operating lease will no longer be used by the
Company in its research. As a result, at March 31, 2001, the Company recorded a
provision for future lease payments of $696,070. This provision


                                       9
<PAGE>

represents the future lease payments less any costs the Company believes it can
recover from third parties for use of the equipment.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

      We are an emerging, development-stage biotechnology company focused on
developing minimally invasive products for the treatment and diagnosis of
cancer, pre-cancerous conditions and other diseases. We have assembled a
platform of core technologies that we believe will support multiple products and
applications.

      We have discovered new methods and apparatus for using energy from lasers,
X-rays or other sources to activate energy-sensitive compounds within tissue to
produce a range of beneficial therapeutic and diagnostic outcomes. These
discoveries include methods, materials and devices that are used to produce
light or other energy, and development of compounds that react with energy all
for the purpose of destroying diseased cells, removing tissue or identifying and
diagnosing disease. Compounds that react with light energy are called
"photoactive agents," those that react with ionizing radiation (which we
generically refer to as X-rays) are called "radiosensitizers."

      We are pursuing development of three core technologies:

      o     Photodynamic Therapy - We are developing proprietary compounds and
            technologies to treat tumors confined to specific areas within the
            body (solid tumors) and to treat diseased tissue on the surface of
            the body. One of these compounds, named PH-10, is both a photoactive
            agent and radiosensitizer that accumulates in diseased tissue and
            absorbs light energy and X-rays. When energy is applied, PH-10
            becomes activated, thereby destroying the tissue.

      o     Diagnostic Imaging - We are the exclusive licensee to a special
            group of proprietary materials, the lead compound of which is named
            N-1177, that precisely locate and diagnose the spread of cancer
            (micro-metastases) when the materials are administered into a
            patient's lymphatic system. These materials called
            "nanoparticulates," are very small particles designed to travel
            through the lymphatic system. Evaluating lymph nodes and the lymph
            system by using devices such as computed tomography scanners that
            create an image of the lymph nodes is called "lymphography."

      o     Multi-photon Technology - Our proprietary laser technology uses
            ultrashort, pulsed bursts of long wavelength light to activate
            photoactive agents and other compounds that react with light to
            destroy diseased tissue. This technology can also be used to create
            images of tissue for diagnostic purposes.

      Our proposed products have the potential to replace numerous surgical and
similar invasive treatments and diagnostics, reduce side effects (such as those
resulting from chemotherapy), improve treatment efficacy, and lower the overall
cost of care for oncology and other applications.

      Our scientific research team is located in Knoxville, Tennessee, with the
senior executive and clinical development team working in our corporate
headquarters in New Hope, Pennsylvania. Our team of scientists includes
specialists in molecular biology, non-linear laser physics, interventional
radiology, spectroscopy, bioengineering and photochemistry. We have recently
hired additional personnel with


                                       10
<PAGE>

expertise in clinical development, clinical trial design and regulatory approval
processes. We also work closely with consultants experienced in drug development
and regulatory requirements.

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

      We have not generated revenues from the sale of any proposed diagnostic or
therapeutic products or other operations. For the three months ended March 31,
2001, our investment income decreased to $56,201 from $101,786 for the three
months ended March 31, 2000. The decrease in investment income resulted
primarily from lower average balances of securities in our investment portfolio.
We expect our investment income to fluctuate both as our capital decreases or
increases and as the rates of interest earned by our portfolio vary due to
shifts in short term interest rates. The proceeds of the sales of our stock are
invested primarily in United States Government obligations.

      Research and development costs for the three month period ended March 31,
2001, increased to $789,788 from $757,497 for the comparable three month period
ended March 31, 2000. Although research spending did not materially increase,
there has been a significant shift in its focus, moving from costs associated
with research contracts with academic institutions to expenses for preclinical
and clinical related to development of our proposed products.

      General and administrative expenses decreased to $1,124,902 in the quarter
ended March 31, 2001 from $1,315,249 in the comparable 2000 quarter. The
decrease is due primarily to a reduction in the amortization of warrants granted
to certain consultants.

      During the three months ended March 31, 2001, we spent approximately
$13,731 to acquire equipment necessary to support animal preclinical and human
clinical trials. During the next twelve months we expect such capital
expenditures to be less than $100,000. We have determined that equipment we
were leasing is no longer useful in our research. Accordingly, we have recorded
a provision for future lease payments of $696,070.

      We recorded dividends on preferred stock of $731,702 in the first quarter
of 2001 compared to $303,974 for the first quarter of 2000. This increase is due
to the impact of dividends payable under Series B Preferred Stock originally
issued in February, 2000. Under the applicable Certificate of Designations the
holder of Series A Preferred is entitled to a mandatory payment-in-kind dividend
equal to 7% (i.e., 0.07 additional shares of Series A Preferred) which is
cumulative, compounds on a semi-annual basis and is payable twice a year.
Similarly, under the applicable Certificate of Designation the holders of Series
B Preferred are entitled to a payment-in-kind dividend equal to 6% (i.e., 0.06
additional shares of Series B Preferred), which is cumulative and payable
annually commencing in January, 2001. On January 15, 2001, we issued 20,223.36
additional shares of Series B Preferred to Series B Stockholders of record as of
January 15, 2001.

      As a result of the above factors and the effect of the beneficial
conversion feature of our Preferred Stock, our net loss attributable to common
shareholders for the three months ended March 31, 2001, increased to $.10 from
$.07 for the three months ended March 31, 2001.

LIQUIDITY; CAPITAL RESOURCES

      We have used, and expect over the next 12 months to use, the capital
available in our investment portfolio as well as proceeds and expected proceeds
from sales of common stock under the registration statement declared effective
in February, 2001 for up to $40 million of common stock, for general corporate
purposes, including activities related to preparing for and conducting clinical
trials, purchase and preparation of clinical material, conduct of preclinical
studies, administrative expenses to support our


                                       11
<PAGE>

research and development activities, capital expenditures and to meet other
working capital needs. We expect to evaluate from time to time the acquisition
or license of businesses, technologies or products for which a portion of the
net proceeds may be used; however we have no present plan or commitments for any
acquisition or license. We expect our use of capital to increase as we move
toward initiating Phase 2 clinical trials.

      We have a $4.8 million credit facility from Elan to fund a portion of the
operations of the Sentigen joint venture. Our borrowings under this facility
would bear interest at 8% per annum, be repayable in 2005 or be convertible at
Elan's election into our common stock at a conversion price of $18.15 per share.

      On September 22, 2000, we filed a shelf registration statement with the
SEC to enable us to issue up to $40 million of our common stock. This shelf
registration was declared effective by the SEC in February, 2001 and will permit
us to issue common stock from time to time at our option. Through March 31,
2001, we sold 142,035 shares of common stock pursuant to this registration
statement to an institutional investor for gross proceeds of $375,000 at prices
ranging from approximately $4.89 to $1.84.

      As of March 31, 2001 we had U.S. Treasury notes available for sale, cash
and interest receivable totaling approximately $4,106,248. Maturity dates of
these securities range from April 1, 2001 to May 31, 2001. Yields range from
5.0% to 6.375%. At the current rate of spending, we will exhaust these
particular resources by approximately November, 2001. We have access to
additional capital through borrowing funds from our credit line with Elan for
development costs of N-1177. In addition, at our option, our registration
statement gives us the ability to sell from time to time up to $40 million of
additional common stock. We believe that through the use of our cash, U.S.
Treasury notes and line of credit we will have sufficient cash resources for our
current commitments through the next twelve months. If necessary we can adjust
our use of cash and capital by modifying the timing of and related financial
commitments for our development programs for PH-10, N-1177 and other programs.
See "Risk Factors -- We must raise additional financing in the future and our
ability to do so could prevent us from implementing our business plan," below.

PLAN OF OPERATION

      During the next twelve months, we will focus our efforts on completing
preclinical studies, preparing required filings to the FDA and foreign
regulatory bodies, acquiring quantities of clinical grade drug formulations of
our proposed products, conducting human clinical studies on selected
indications, and preparing for the design and assembly of laser and other
treatment devices. We expect to continue to incur increasing losses for at least
the next several years as we intensify research and development, preclinical and
clinical testing and associated regulatory approval activities and engage in or
provide for the manufacture and/or sale of any products that we may develop.

      We expect that our technologies will be useful in several therapeutic and
diagnostic applications. Over the next twelve months, we intend to devote a
significant majority of our financial and other resources to preparing for and
initiating clinical development of PH-10 for the treatment of psoriasis and the
treatment of focal tumors (a tumor that is confined to a specific area of the
body), and continuing the clinical development of N-1177. We will continue Phase
1 human clinical studies on PH-10, as a topical treatment for psoriasis and plan
to commence clinical trials for certain other topical indications in the coming
months. We also plan to begin Phase 2 clinical trials of N-1177 later this year.

      As we progress toward and into human clinical trials, our use of capital
will increase. Greater capital resources would enable us to quicken and expand
our research and development activities, and our failure to raise additional
capital will (absent a suitable collaborative agreement providing for a third
party to take over or finance the development of these programs) significantly
impair our ability to conduct


                                       12
<PAGE>

further research and development activities beyond those currently contracted
for and our ability to seek regulatory approval for any possible product
resulting from that research. In any event, complete development and
commercialization of our technology will require substantial additional funds.
See "Risk Factors -- We must raise additional financing in the future and our
inability to do so could prevent us from implementing our business plan," below.
Accordingly, we are continuously evaluating capital formation activities and
opportunities, either as part of collaborative arrangements with third parties
or through other offerings of equity or debt.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

      The primary market risk, which could impact us, is the fluctuation in
interest rates related to our investments in Government bonds. As our
investments all have short-term maturities, the investment return will
reflect the current market rates. To date, we have not engaged in any
derivative or hedging activities.

                           PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

      In conjunction with the restructuring of our clinical development office
in Westborough, Massachusetts, we filed a lawsuit captioned Photogen, Inc. v.
Gerald L. Wolf (Case No. 00C 5841), in the United States District Court for the
Northern District of Illinois. That litigation is described in our Form 10-K for
the year ended December 31, 2000.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

      None.

ITEM 5. OTHER INFORMATION

RISK FACTORS

      This Form 10-Q contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. Forward-looking statements
involve risks, uncertainties and other factors that may cause our actual results
or performance to differ materially from any results or performance expressed or
implied by those statements. Examples of forward-looking statements include
predictive statements, statements that depend on or refer to future events or
conditions, and which may include words such as "expects," "anticipates,"
"intends," "plans," "believes," "estimates," "should," "may," or similar
expressions, or statements that involve hypothetical events.

      The following are some of the key risk factors that may affect our future
results:

WE ARE A DEVELOPMENT STAGE COMPANY, WE HAVE CONDUCTED ONLY LIMITED STUDIES ON
OUR TECHNOLOGIES AND WE DO NOT HAVE ANY PRODUCTS OR REVENUES FROM SALES.

      Our company and our technologies are in early stages of development. We
began our business as a biotechnology company in 1997. We have not generated
revenues from sales or operations, and we do not expect to generate sufficient
revenues to enable us to be profitable for at least several years.


                                       13
<PAGE>

      Our proposed technologies and products generally must complete preclinical
tests in animals and three phases of tests (also called clinical trials) in
humans before we can market them for use. Use of our technology has been limited
primarily to laboratory experiments, animal testing or human pilot studies and
only one compound has completed Phase 1 clinical trials in humans. We have
therefore not yet conducted substantive studies on the effectiveness of our
compounds or devices on human subjects. The drug and device products we
currently contemplate developing will require costly and time-consuming research
and development, preclinical and clinical testing and regulatory approval before
they can be manufactured and sold. We may not be able to develop our technology
into marketable products or develop our technology so it is effective for
diagnosis or treatment of human diseases. As a result of changing economic
considerations, market, clinical or regulatory conditions, or clinical trial
results, we may shift our focus or determine not to continue one or more of the
projects we are currently pursuing.

WE HAVE A HISTORY OF LOSSES AND WE MAY NOT ACHIEVE OR MAINTAIN PROFITABILITY IN
THE FUTURE OR PAY CASH DIVIDENDS.

      We have incurred losses since the beginning of our operations. As of March
31, 2001, we incurred cumulative losses of approximately $22,397,409. We expect
our losses to increase in the future as our financial resources are used for
research and development, preclinical and clinical testing, regulatory
activities, manufacturing, marketing and other related expenses. We may not be
able to achieve or maintain profitability in the future. We have never declared
or paid any cash dividends to stockholders, and do not expect to do so in the
foreseeable future.

WE MUST RAISE ADDITIONAL FINANCING IN THE FUTURE AND OUR INABILITY TO DO SO
COULD PREVENT US FROM IMPLEMENTING OUR BUSINESS PLAN.

      Under the present circumstances, we have sufficient capital to conduct
operations for the next twelve months (depending on the pace of our spending for
preclinical and clinical testing and other commitments, which, to an extent, we
can adjust to preserve cash). We will need substantial additional financing for
our research, clinical testing, product development and marketing programs. We
cannot accurately estimate the amount of additional financing required; however,
the amount could be an additional $30 - 50 million or more. Depending on market
conditions, we will attempt to raise additional capital through stock and debt
offerings, collaborative relationships and other available sources. Additional
funds may not be available on acceptable terms, if at all, and existing
stockholders may be diluted as a result of those offerings. The pricing of our
common stock in our recent shelf registration will also result in an increase in
the number of shares of common stock issuable upon conversion of Series A and
Series B preferred stock in accordance with the anti-dilution provisions in the
respective Certificates of Designation for those series.

WE MAY HAVE TO ISSUE ADDITIONAL SHARES OF OUR COMMON STOCK TO ELAN, WHICH WOULD
DILUTE SHAREHOLDERS' OWNERSHIP.

      We may be required to issue additional shares to an affiliate of Elan
Corporation plc, with whom we are engaged in a joint venture, so that the
weighted average price for common stock Elan purchased (at $13 per share) equals
the effective price in our first offering after Elan's purchase. Since we have
begun to issue common stock in our most recent shelf registration on Form S-3
declared effective February 9, 2001 at less than $13 per share, we must issue
additional shares of common stock to Elan so that the average price per share
paid by Elan for its aggregate ownership of our common stock will equal the
effective price in that offering. Based on the per share sale price in our first
transaction under the shelf registration (in which we sold 15,312 shares at
$4.8981 per share), we would issue


                                       14
<PAGE>

763,427 additional shares of our common stock to Elan at no additional cost
representing approximately two percent of our outstanding common stock. However,
we are in negotiations with Elan regarding the precise terms of its
anti-dilution rights with respect to our shelf registration, which may result in
greater or less dilution of our common stock. The pricing of our common stock in
the shelf registration will also result in an increase in the number of shares
of common stock issuable upon conversion of Series A Preferred and Series B
Preferred stock in accordance with the anti-dilution provisions in the
respective Certificates of Designation for those series.

OUR PROPOSED PRODUCTS ARE SUBJECT TO EXTENSIVE TESTING AND GOVERNMENT APPROVAL,
AND WE MAY NOT OBTAIN THE APPROVALS NECESSARY TO SELL OUR PROPOSED PRODUCTS.

      None of our proposed drug and device products have completed the Food and
Drug Administration's extensive approval process. This must be completed before
our proposed products can be sold in the United States. Requirements for FDA
approval of a product include preclinical and clinical testing for effective use
and safety in animals and humans, and that testing can be extremely costly. The
time frame necessary to perform these tasks for any individual product is long
and uncertain, and we may encounter problems or delays that we cannot predict at
this time. Even if testing is successful, our proposed products may not
demonstrate sufficient effectiveness or safety to warrant approval by the FDA or
other regulatory authorities. Any regulatory approval may not cover the clinical
symptoms or indications that we may seek. Marketing our products in other
countries will require seeking and obtaining regulatory approvals comparable to
those required in the United States.

IF WE DO NOT OBTAIN AND MAINTAIN PATENT OR OTHER PROTECTION OF OUR CORE
TECHNOLOGIES (NAMELY PH-10, OUR LYMPHOGRAPHY MATERIALS AND METHODS, AND OUR
LASER TECHNOLOGIES), WE MAY HAVE DIFFICULTY DEVELOPING OR COMMERCIALIZING
PRODUCTS USING THESE TECHNOLOGIES.

      Our success depends in part on our ability to obtain, assert and defend
our patents, protect trade secrets and operate without infringing the
intellectual property of others. Among the important risks in this area are
that:

      o     Our patent applications may not result in issued patents. Moreover,
            any issued patents may not provide us with adequate protection of
            our intellectual property or competitive advantages, and the law on
            the scope of patents is continually changing.

      o     Various countries limit the subject matter that can be patented and
            limit the ability of a patent owner to enforce patents in the
            medical field. This may limit our ability to obtain or utilize those
            patents.

      o     Existing or future patents or patent applications (and the products
            or methods they cover) of our competitors (or others, such as
            research institutions or universities) may interfere, invalidate,
            conflict with or infringe our patents or patent applications.
            Similarly, the use of the methods or technologies contained in our
            patents, patent applications and other intellectual property may
            conflict with or infringe the rights of others.

      o     If an advance is made that qualifies as a joint invention, the joint
            inventor or his or her employer may have rights in the invention. We
            are currently in litigation with our former Medical Director and his
            former employer, Massachusetts General Hospital, concerning his
            claims of joint inventorship of some of our PH-10 inventions.


                                       15
<PAGE>

            We will be able to protect our proprietary rights from unauthorized
use by third parties only to the extent that these rights are covered by valid
and enforceable patents or effectively maintained as trade secrets. We own six
patents in the U.S., and ten other patents in foreign countries including
Taiwan, Australia, Singapore, Japan and New Zealand. We have filed patent
applications under the Patent Cooperation Treaty covering a number of foreign
countries. These patents and the patent applications relate to laser and
ionizing radiation technology, photoactive agents and methods, methods for
enhanced cell production and methods for performing lymphography. We are also
the exclusive licensee to a group of patented proprietary compounds known as
nanoparticulates from Massachusetts General Hospital and Nycomed Imaging AS.

            The patent position of biotechnology companies involves complex
legal and factual questions, and therefore we cannot assure the enforceability
of these patents. Litigation over patents and other intellectual property rights
occurs frequently in our industry, and there is a risk that we may not prevail
in disputes over the ownership of intellectual property. Further, interference
may occur over the rights to certain inventions, and there is a risk that we may
not prevail in an interference. Those disputes can be expensive and time
consuming, even if we win. Intellectual property disputes are often settled
through licensing arrangements that could be costly to us. In any intellectual
property litigation, it is possible that licenses necessary to settle the
dispute would not be available, or that we would not be able to redesign our
technologies to avoid any claimed infringement.

      Confidentiality agreements covering our intellectual property may be
violated and we may not have adequate remedies for any violation. Third
parties may challenge our existing patents and seek to hold them invalid or
unenforceable. Also, our intellectual property may in other ways become known
or be independently discovered by competitors.

      To the extent we use intellectual property through licenses or
sub-licenses (as is the case for some of our lymphography technology), our
rights are subject to us performing the terms of the license or sub-license
agreement with third parties. Our rights are also subject to the actions of
third parties we may not be able to control, such as our sub-licensor complying
with the terms of its license with the patent owner and the patent owner
maintaining the patent.

      Where intellectual property results from a research project supported by
U.S. Government funding, the Government has limited rights to use the
intellectual property without paying us a royalty.

WE ARE HIGHLY DEPENDENT UPON A SMALL NUMBER OF EMPLOYEES AND CONSULTANTS WHO
PROVIDE SCIENTIFIC AND MANAGEMENT EXPERTISE, AND IT MAY BE DIFFICULT TO
IMPLEMENT OUR BUSINESS DEVELOPMENT PLANS WITHOUT THIS EXPERTISE.

      These individuals have entered into employment or consulting agreements,
confidentiality and/or non-competition agreements with us. We could suffer
competitive disadvantage, loss of intellectual property or other material
adverse effects on our business and results of operations if any employee or
consultant violates or terminates these agreements or terminates their
association with us. Our growth and future success also depends upon the
continued involvement and contribution from these individuals, as well as our
ability to attract and retain highly qualified personnel now and in the future.

      We currently employ four senior scientists (Drs. Dees, Fisher, Scott and
Wachter) and three senior executive officers, including Dr. Williams (our CEO),
Mr. Boveroux (our CFO) and Dr. Reinhard Koenig (Senior Vice President of Medical
and Regulatory Affairs). We also have retained consultants to advise us in
regulatory affairs and product development matters. If we lost the services of
our executive officers or outside consultants, we would experience a delay in
the implementation of our business plan


                                       16
<PAGE>

until we arranged for another individual or firm to fulfill the role. The loss
of one of our scientists could cause delay in implementing our business plan and
also jeopardize development of new technologies.

WE HAVE TO RELY ON THIRD PARTIES AND COLLABORATIVE RELATIONSHIPS FOR THE
MANUFACTURING, CLINICAL TESTING AND MARKETING FOR OUR PROPOSED PRODUCTS, AND IT
MAY BE DIFFICULT TO IMPLEMENT OUR BUSINESS DEVELOPMENT PLANS WITHOUT THESE
COLLABORATIONS.

      We are currently involved in the following collaborations or joint
ventures:

      o     A joint venture with affiliates of Elan Corporation, plc. called
            Sentigen Ltd., is working to develop and commercialize lymphography
            materials.

      o     We have had and expect to continue in the future to have a variety
            of research agreements with universities and other research
            institutions to investigate specific protocols.

      We must continue to enter into collaborative relationships with third
parties for additional research and development, preclinical and clinical
testing, manufacturing, marketing and distribution of our proposed products.

      We are also dependent on third parties for the supply of lasers and
radiotherapy devices and similar hardware, and for supplies of photoactive
agents and nanoparticulates. We have several research and supply agreements with
third parties. However, we may not be able to negotiate other acceptable
collaborative and supply arrangements in the future.

      Collaborative relationships may limit or restrict our operations or may
not result in an adequate supply of necessary resources. Our collaborative
partners could also pursue alternative technologies as a means of developing or
marketing products for the diseases targeted by our collaborative programs. If a
third party we are collaborating with fails to perform under its agreement or
fails to meet regulatory standards, this could delay or prematurely terminate
clinical testing of our proposed products.

OUR POTENTIAL MARKETS ARE EXTREMELY COMPETITIVE, AND MANY OF OUR COMPETITORS
HAVE GREATER RESOURCES AND HAVE PRODUCTS THAT ARE IN MORE ADVANCED STAGES OF
DEVELOPMENT.

      We face substantial competition from competitors with greater financial,
technical and human resources and with greater experience in developing
products, conducting preclinical or clinical testing, obtaining regulatory
approvals, manufacturing and marketing. Our competitors include the following
firms in the field of using light energy to treat and diagnose disease: Miravant
Medical Technologies, Pharmacyclics, Inc., QLT Inc. and Dusa Pharmaceuticals,
Inc. There are also numerous other companies developing other technologies to
treat and diagnose cancer and other diseases. Examples of the technologies from
those other companies are drug or genetic treatments, procedures that use sound
waves and procedures that destroy diseased tissue using heat. Some of these
firms have drugs or devices that have completed or are in advanced stages of
clinical trials and regulatory approvals.

      Others may develop technologies and obtain patent protection that could
render our technologies or products obsolete or less competitive or our patents
invalid or unenforceable. Due to the inherent risk of failure associated with
the testing, development and production of new and innovative technologies, our
technologies and products may be found to be ineffective, have unanticipated
limitations or otherwise be unsuccessful in the marketplace. Also, although we
believe our estimates of the possible size of markets for our potential products
are based on information we consider reliable (including data from the American
Cancer Society and similar sources in the public domain), that data or our
analysis of the data could prove incorrect.


                                       17
<PAGE>

CHANGES IN HEALTH CARE REIMBURSEMENT POLICIES OR LEGISLATION MAY MAKE IT
DIFFICULT FOR PATIENTS TO USE OR RECEIVE REIMBURSEMENT FOR USING OUR PRODUCTS,
WHICH COULD REDUCE OUR REVENUES.

      Our success will depend, in part, on the extent to which health insurers,
managed care entities and similar organizations provide coverage or
reimbursement for using the medical procedures and devices we plan to develop.
These third-party payors are increasingly challenging the price of medical
procedures and services and establishing guidelines that may limit physicians'
selections of innovative products and procedures. We also cannot predict the
effect of any current or future legislation or regulations relating to
third-party coverage or reimbursement on our business. We may not be able to
achieve market acceptance of our proposed products or maintain price levels
sufficient to achieve or maintain any profits on our proposed products if
adequate reimbursement coverage is not available.

A SMALL GROUP OF STOCKHOLDERS CONTROLS PHOTOGEN, WHICH MAY MAKE IT DIFFICULT FOR
STOCKHOLDERS WHO ARE NOT IN THAT GROUP TO INFLUENCE MANAGEMENT.

      A small group of our officers, directors and others control approximately
75% of our outstanding common stock. Several of our principal stockholders are
also parties to a Voting Agreement concerning the election of certain designees
to the Board of Directors of Photogen Technologies, Inc. and Photogen, Inc. This
group of stockholders can significantly influence Photogen and the direction of
our business and affairs. This concentration of ownership may delay or prevent a
change in control of Photogen, and may also result in a small supply of shares
available for purchase in the public securities markets. These factors may
affect the market and the market price for our common stock in ways that do not
reflect the intrinsic value of the stock.

THE PRICE AND TRADING VOLUME OF OUR COMMON STOCK FLUCTUATES SIGNIFICANTLY, WHICH
MAY MAKE IT DIFFICULT FOR US OR A STOCKHOLDER TO SELL OUR COMMON STOCK AT A
SUITABLE PRICE AND MAY CAUSE DILUTION FOR EXISTING STOCKHOLDERS WHEN WE ISSUE
ADDITIONAL SHARES.

      During the period from January 1, 2001 through March 31, 2001 our stock
price ranged from $1.50 to $7.00 per share. Daily trading volume ranged from
11,000 shares to 732,000 shares during that period.

      The following factors may have an impact on the price of our stock:

      o     Announcements by us or others regarding scientific discoveries,
            technological innovations, commercial products, patents or
            proprietary rights;

      o     The progress of preclinical or clinical testing;

      o     Changes in government regulation;

      o     Public concern about the safety of devices or drugs;

      o     Limited coverage by securities analysts;

      o     The occurrence of any of the risk factors described in this section;

      o     Sales of large blocks of stock by an individual or institution;


                                       18
<PAGE>

      o     Changes in our financial performance from period to period;
            securities analysts' reports; and general market conditions.

OUR COMMON STOCK COULD BE DELISTED FROM THE NASDAQ SMALLCAP MARKET, WHICH WOULD
MAKE TRADING IN OUR STOCK MORE DIFFICULT.

      Since November 1999, our common stock has been quoted in the Nasdaq
SmallCap Market. Our shares could be delisted if we fail to meet the listing
requirements of the Nasdaq SmallCap Market, which would force us to list our
shares on the OTC Bulletin Board or some other quotation medium, such as pink
sheets, depending upon our ability to meet the specific listing requirements of
those quotation systems. As a result, an investor might find it more difficult
to dispose of, or to obtain accurate price quotations for, our shares. Delisting
might also reduce the visibility, liquidity, and price of our common stock. If
our common stock were delisted from the Nasdaq SmallCap Market and were not
traded on another national securities exchange, we could become subject to penny
stock regulations that impose additional sales practice disclosure and market
making requirements on broker/dealers who sell or make a market in our stock.
The rules of the SEC generally define "penny stock" to be common stock that has
a market price of less than $5.00 per share which is not traded on a national
exchange. If our stock became subject to penny stock regulations, it would
adversely affect the ability and willingness of broker/dealers who sell or make
a market in our common stock and of investors to purchase or sell our stock in
the secondary market.

IF STOCKHOLDERS HOLDING SUBSTANTIAL AMOUNTS OF OUR COMMON STOCK SHOULD SELL
IN THE PUBLIC MARKET, THE PRICE OF OUR STOCK COULD FALL OR IT MAY BE MORE
COSTLY FOR US TO RAISE CAPITAL.

      As of March 31, 2001 we had 37,955,777 shares of common stock and
preferred stock convertible into common stock outstanding.  Approximately
9,200,927 shares were eligible for sale in the public market free of
restrictions under the Securities Act of 1933, as amended, including
restrictions under Rule 144.  Approximately 6,458,236 shares are eligible for
sale under Rule 144.  Approximately 2,297,474 shares are currently subject to
agreements requiring us to permit the holders of the shares, under certain
circumstances, to join a public offering of our stock or to demand that we
register their shares.  Our obligation to register 1,037,474 of the shares
subject to those agreements terminates when they become freely tradable under
Rule 144 (those shares are included in the total number of shares eligible
for sale under Rule 144).  On May 9, 2001 our five founders entered into a
lock-up agreement prohibiting them from selling in the public markets
22,558,435 shares until May 9, 2004 (except for limited sales by each of them
of between 42,000 and 78,000 shares each year at prices above $5.00 per
share).

      As of March 31, 2001 we had reserved 10,592,936 shares of common stock
for future issuance upon grants of options, or exercise or conversion of
outstanding options and warrants and convertible securities.  If these
options and warrants are all issued and exercised, investors may experience
significant dilution in the book value and earnings per share of their common
stock.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

      (a) Exhibits.

            The following is a list of exhibits filed as part of this Form 10-Q.
Exhibits that were previously filed are incorporated by reference. For exhibits
incorporated by reference, the location of the exhibit in the previous filing is
indicated in parenthesis.

        EXHIBIT NO.                         DESCRIPTION

            3.1         Restated Articles of Incorporation of Photogen
                        Technologies, Inc. (Filed as Exhibit 3.1 to the
                        Company's Current Report on Form 8-K dated May 17, 2000
                        and incorporated herein by reference.)

            3.2         Amended and Restated Certificate of Designations,
                        Preferences and Rights of Series A Preferred Stock.
                        (Filed as Exhibit 3.5 to the Company's Quarterly Report
                        on Form 10-QSB for the quarter ended September 30, 1999
                        and incorporated herein by reference.)

            3.3         Certificate of Designation, Preferences and Rights of
                        Series B Convertible Preferred Stock. (Filed as Exhibit
                        3 to the Company's Current Report on Form 8-K dated
                        February 18, 2000 and incorporated herein by reference.)


                                       19
<PAGE>

        EXHIBIT NO.                         DESCRIPTION

            3.4         Bylaws of Photogen Technologies, Inc. (Amended and
                        Restated as of May 17, 2000) (Filed as Exhibit 3.2 to
                        the Company's Current Report on Form 8-K dated May 17,
                        2000 and incorporated herein by reference.)

            3.5         Charter of Photogen, Inc. (Filed as Exhibit 3.3 to the
                        Company's Registration Statement on Form 10-SB dated
                        December 24, 1997 and incorporated herein by reference.)

            3.6         Amended and Restated Bylaws of Photogen, Inc. (Filed as
                        Exhibit 3.3 to the Company's Current Report on Form 8-K
                        dated May 17, 2000 and incorporated herein by
                        reference.)

            10.1        Employment Agreement with Reinhard Koenig, Ph.D., M.D.,
                        RAC dated January 4, 2001.

            10.2        Agreement entered into as of May 9, 2001 by and among
                        the Company, Photogen, Inc., and Timothy Scott, John
                        Smolik, Eric Wachter, Craig Dees and Walter Fisher,
                        Theodore Tannebaum and Robert W. Weinstein.

      (b) Reports on Form 8-K.

            We did not file any reports on Form 8-K during the three month
period ended March 31, 2001.


                                       20
<PAGE>

                                   Signatures

      In accordance with the requirements of the Exchange Act, the registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.

Date: May 15, 2001                 Photogen Technologies, Inc.

                                   /s/ Taffy J. Williams
                                   ----------------------------------
                                   Taffy J. Williams, Ph.D., President and Chief
                                   Executive Officer


                                   /s/ Brooks Boveroux
                                   ----------------------------------
                                   Brooks Boveroux, Senior Vice President -
                                   Finance and Chief Financial Officer
                                   (Principal Financial and Chief
                                   Accounting Officer)


                                       21
<PAGE>

                                  Exhibit Index

        Exhibit No.                         Description

            +3.1        Restated Articles of Incorporation of Photogen
                        Technologies, Inc. (Filed as Exhibit 3.1 to the
                        Company's Current Report on Form 8-K dated May 17,
                        2000.)

            +3.2        Amended and Restated Certificate of Designations,
                        Preferences and Rights of Series A Preferred Stock.
                        (Filed as Exhibit 3.5 to the Company's Quarterly Report
                        on Form 10-QSB for the quarter ended September 30,
                        1999.)

            +3.3        Certificate of Designation, Preferences and Rights of
                        Series B Convertible Preferred Stock. (Filed as Exhibit
                        3 to the Company's Current Report on Form 8-K dated
                        February 18, 2000.)

            +3.4        Bylaws of Photogen Technologies, Inc. (Amended and
                        Restated as of May 17, 2000) (Filed as Exhibit 3.2 to
                        the Company's Current Report on Form 8-K dated May 17,
                        2000.)

            +3.5        Charter of Photogen, Inc. (Filed as Exhibit 3.3 to the
                        Company's Registration Statement on Form 10-SB dated
                        December 24, 1997.)

            +3.6        Amended and Restated Bylaws of Photogen, Inc. (Filed as
                        Exhibit 3.3 to the Company's Current Report on Form 8-K
                        dated May 17, 2000.)

            *10.1       Employment Agreement with Reinhard Koenig, Ph.D., M.D.,
                        RAC dated January 4, 2001.

            *10.2       Agreement entered into as of May 9, 2001 by and among
                        the Company, Photogen, Inc., and Timothy Scott, John
                        Smolik, Eric Wachter, Craig Dees and Walter Fisher,
                        Theodore Tannebaum and Robert W. Weinstein.

+ Incorporated by reference from the filing indicated.
* Filed herewith.


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