================================================================================


                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB


        (Mark One)

            [X]   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                  EXCHANGE ACT OF 1934

               For the quarterly period ended September 30, 2003

            [_]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                  EXCHANGE ACT OF 1934
               For the transition period from ________ to ________

                         Commission file number 0-19724



                       PROTEIN POLYMER TECHNOLOGIES, INC.
        (Exact name of small business issuer as specified in its charter)


                 Delaware                                 33-0311631
      (State or other jurisdiction of          (IRS Employer Identification No.)
      incorporation or organization)


                 10655 Sorrento Valley Road, San Diego, CA 92121
                    (Address of principal executive offices)

                                 (858) 558-6064
                           (Issuer's telephone number)


Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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
                                                             -----    -----

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of November 7, 2003, 36,825,682
shares of common stock were outstanding.

Transitional Small Business Disclosure Format (check one):     Yes       No  X
                                                                  -----    -----


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                                       1
<PAGE>


                       PROTEIN POLYMER TECHNOLOGIES, INC.

                                   FORM 10-QSB

                                     INDEX


                                                                        Page No.
                                                                        --------

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

          Condensed Balance Sheets -
                 September 30, 2003 and December 31, 2002.....................3

          Condensed Statements of Operations -
                 For the three months and nine months ended September 30,
                 2003 and 2002 and the period July 6, 1988 (inception) to
                 September 30, 2003...........................................4

          Condensed Statements of Cash Flows -
                 For the nine months ended September 30, 2003 and 2002 and
                 the period July 6, 1988 (inception) to September 30, 2003....5

          Notes to Condensed Financial Statements.............................7

Item 2.   Management's Discussion and Analysis of
                 Financial Condition and Results of Operations................9

Item 3.   Controls and Procedures............................................13


PART II.  OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K...................................14


          Signatures.........................................................15


                                       2
<PAGE>


                                     PART I.
                              FINANCIAL INFORMATION

Item 1.         Financial Statements

                       PROTEIN POLYMER TECHNOLOGIES, INC.
                          (A Development Stage Company)

                            Condensed Balance Sheets


<TABLE>
<CAPTION>

                                                                                         September 30,           December 31,
                                                                                              2003                    2002
                                                                                        ----------------------------------------
<S>                                                                                     <C>                     <C>
Assets                                                                                    (unaudited)
Current assets:
Cash and cash equivalents                                                               $    2,010,363          $    733,978
Contract receivable                                                                             95,796                     -
Other current assets                                                                           182,735                30,773
                                                                                        ----------------------------------------
Total current assets                                                                         2,288,894               764,751

Deposits                                                                                        30,479                29,679
Equipment and leasehold improvements, net                                                      113,389                80,928
                                                                                        ----------------------------------------

                                                                                        $    2,432,762          $    875,358
                                                                                        ========================================
Liabilities and stockholders' equity
   Current liabilities:
   Accounts payable                                                                     $      232,067          $    389,109
   Accrued employee benefits                                                                   133,157               112,714
   Other accrued expenses                                                                       21,002                49,530
   Deferred rent                                                                                24,111                24,111
                                                                                        ----------------------------------------
Total current liabilities                                                                      410,337               575,464


   Long-term portion deferred rent                                                               6,028                24,111


Stockholders' equity:
Convertible Preferred Stock, $.01 par value, 5,000,000 shares
   authorized, 86,596 and 76,120 shares issued and outstanding
   at September 30, 2003 and December 31, 2002, respectively;
   liquidation preference of $8,659,600 and $7,612,000 at
   September 30, 2003 and December 31, 2002, respectively                                    8,114,917             7,266,780
Common stock, $.01 par value, 120,000,000 shares authorized,
   36,734,773 and 29,731,535 shares issued and outstanding at
   September 30, 2003 and December 31, 2002, respectively                                      367,358               297,327

Additional paid-in capital                                                                  40,324,727            36,618,235
Deficit accumulated during development stage                                               (46,790,605)          (43,906,559)
                                                                                        ----------------------------------------
Total stockholders' equity                                                                   2,016,397               275,783
                                                                                        ----------------------------------------

                                                                                        $    2,432,762          $    875,358
                                                                                        ========================================
</TABLE>


    See accompanying notes.


                                       3
<PAGE>


                       PROTEIN POLYMER TECHNOLOGIES, INC.
                          (A Development Stage Company)

                       Condensed Statements of Operations
                                   (unaudited)


<TABLE>
<CAPTION>


                                                                                                         For the period
                                                                                                          July 6, 1988
                                         Three months ended               Nine months ended               (inception) to
                                            September 30,                   September 30,                  September 30,
                                      2003               2002          2003                 2002               2003
                                 -----------------------------------------------------------------------------------------
<S>                              <C>               <C>              <C>                <C>              <C>
 Revenues:
    Contract revenue             $      95,796     $     713,742    $     1,289,475    $     2,127,084  $     10,548,061
    Interest income                      5,378             1,058             16,224              4,695         1,263,171
    Product and other income                 -                 -                  -              1,500           694,779
                                 ---------------------------------- ----------------------------------- ------------------
 Total revenues                        101,174           714,800          1,305,699          2,133,279        12,506,011

 Expenses:
    Research and development           603,850           556,916          1,781,802          2,080,673        34,167,907
    Selling, general and
    administrative                     338,871           303,602          1,034,697            970,347        19,807,078
                                 ---------------------------------- ----------------------------------- ------------------
 Total expenses                        942,721           860,518          2,816,499          3,051,020        53,974,985
                                 ---------------------------------- ----------------------------------- ------------------

 Net loss                             (841,547)         (145,718)        (1,510,800)          (917,741)      (41,468,974)
 Undeclared, imputed and/or
    paid dividends on
    preferred stock                     69,980            69,980          1,580,906            207,659         7,653,477
                                 ---------------------------------- ----------------------------------- ------------------

 Net loss applicable to
    common shareholders          $    (911,527)    $    (215,698)   $    (3,091,706)   $    (1,125,400) $    (49,122,451)
                                 ==========================================================================================


 Basic and diluted net loss
    per common share             $       (0.02)    $       (0.01)   $         (0.09)   $         (0.04)
                                 ==========================================================================================


 Shares used in computing
    basic and diluted net loss
    per common share                36,720,701        29,713,871         33,542,290         26,964,186
                                 ==========================================================================================
</TABLE>


    See accompanying notes.


                                       4
<PAGE>


                       PROTEIN POLYMER TECHNOLOGIES, INC.
                          (A Development Stage Company)

                       Condensed Statements of Cash Flows
                                   (unaudited)


<TABLE>
<CAPTION>


                                                                                                For the period
                                                                                                 July 6, 1988
                                                                   Nine months ended            (inception) to
                                                                     September 30,                 Sept. 30,
                                                             2003                    2002            2003
                                                     ----------------------------------------------------------
<S>                                                  <C>                 <C>                     <C>
Operating activities
Net loss                                             $      (1,510,800)  $        (917,741)      $(41,468,974)
Adjustments to reconcile net loss to net cash
used for operating activities:
Stock issued for compensation and interest                           -                   -            472,676
Depreciation and amortization                                   47,487             123,697          2,405,871
Write-off of purchased technology                                    -                   -            503,500
Changes in assets and liabilities:
Contract receivable                                            (95,796)                  -            (95,796)
Deposits                                                          (800)               (800)           (30,479)
Other current assets                                          (151,962)            (65,017)          (182,735)
Accounts payable                                              (157,042)            (91,701)           232,067
Accrued employee benefits                                       20,443             (18,738)           133,157
Other accrued expenses                                         (28,528)             10,077             21,003
Deferred revenue                                                     -            (250,000)                 -
Deferred rent                                                  (18,083)            (18,083)            30,139
                                                     ----------------------------------------------------------
Net cash used for operating activities                       (1,895,081)        (1,228,306)       (37,979,571)

Investing activities
Purchase of technology                                               -                   -           (570,000)
Purchase of equipment and improvements                         (79,946)            (27,112)        (2,077,232)
Purchases of short-term investments                                  -                   -        (16,161,667)
Sales of short-term investments                                      -                   -         16,161,667
                                                     ----------------------------------------------------------
Net cash provided by (used for) investing
activities                                           $         (79,946)  $         (27,112)      $ (2,647,232)
</TABLE>


    See accompanying notes.


                                       5
<PAGE>




                       PROTEIN POLYMER TECHNOLOGIES, INC.
                          (A Development Stage Company)

                       Condensed Statements of Cash Flows
                                   (unaudited)

<TABLE>
<CAPTION>


                                                                                                For the period
                                                                                                 July 6, 1988
                                                                   Nine months ended            (inception) to
                                                                     September 30,                 Sept. 30,
                                                             2003                    2002            2003
                                                     ----------------------------------------------------------
<S>                                                  <C>                 <C>                     <C>

Financing activities
Net proceeds from exercise of options and
    warrants, and sale of common stock               $         361,762   $       1,687,214       $ 23,217,838
Net proceeds from issuance and conversion of
    preferred stock                                          2,889,650                   -         18,398,068
Net proceeds from convertible notes and
    detachable warrants                                              -                   -          1,068,457
Payment on capital lease obligations                                 -                   -           (288,770)
Payment on note payable                                              -                   -           (242,750)
Proceeds from note payable                                           -                   -            484,323
                                                     ----------------------------------------------------------
Net cash provided by financing activities                    3,251,412           1,687,214         42,637,166
                                                     ----------------------------------------------------------

Net increase in cash and cash equivalents                    1,276,385             431,796          2,010,363

Cash and cash equivalents at beginning of
    period                                                     733,978             234,271                  -
                                                     ----------------------------------------------------------
Cash and cash equivalents at end of period           $       2,010,363   $         666,067       $  2,010,363
                                                     ==========================================================

Supplemental disclosures of cash flow
    information
Equipment purchased by capital leases                                -                   -       $    288,772
Interest paid                                                        -                 723            146,775
Imputed dividend on Series E stock                                   -                   -          3,266,250
Imputed dividend on Series I stock                           1,373,247                   -          1,373,247
Conversion of Series D preferred stock to
    common stock                                                     -                   -          2,142,332

Conversion of Series E preferred stock to
    common stock                                             1,921,513             643,750          5,277,813

Conversion of Series G preferred stock to
    common stock                                                15,000             570,000            585,000

Conversion of Series I preferred stock to
    common stock                                               105,000                   -            105,000

Series D stock issued for Series C stock                             -                   -          2,073,925
Series C dividends paid with Series D stock                          -                   -            253,875
Series D dividends paid with common stock                            -                   -            422,341
</TABLE>

See accompanying notes.


                                       6
<PAGE>


                       PROTEIN POLYMER TECHNOLOGIES, INC.
                          (A Development Stage Company)

                     Notes to Condensed Financial Statements
                                   (unaudited)

                               September 30, 2003

1.    Basis of Presentation

The condensed financial statements of Protein Polymer Technologies, Inc. (the
"Company") for the three months and the nine months ended September 30, 2003 and
2002 are unaudited. These financial statements reflect all adjustments,
consisting of only normal recurring adjustments which, in the opinion of
management, are necessary to state fairly the financial position at September
30, 2003 and the results of operations for the three months and the nine months
ended September 30, 2003 and 2002. The results of operations for the nine months
ended September 30, 2003 are not necessarily indicative of the results to be
expected for the year ended December 31, 2003. For more complete financial
information, these financial statements and the notes thereto should be read in
conjunction with the audited financial statements included in our Annual Report
on Form 10-KSB for the year ended December 31, 2002, filed with the Securities
and Exchange Commission.

2.    New Accounting Pronouncements

In December 2002, the FASB issued SFAS 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure," which amends SFAS 123, "Accounting
for Stock-Based Compensation." SFAS 148 provides alternative methods of
transition for a voluntary change to the fair value based method of accounting
for stock-based employee compensation. In addition, SFAS 148 amends the
disclosure requirement of SFAS 123 to require more prominent and more frequent
disclosures in financial statements about the effects of stock-based
compensation, regardless of which accounting method is used to account for
stock-based compensation. The transition guidance and annual disclosure
provisions of SFAS 148 are effective for fiscal years ending after December 15,
2002. The interim disclosure provisions are effective for financial reports
containing financial statements for interim periods beginning after December 15,
2002. The Company has adopted the disclosure requirements of SFAS 148 as
described in Footnote 6.

3.    Revenue and Expense Recognition

Research and development contract revenues are recorded as earned in accordance
with the terms and performance requirements of the contracts. If the research
and development activities are not successful, we are not obligated to refund
payments previously received. Fees from the sale or license of technology are
recognized on a straight-line basis over the term required to complete the
transfer of technology or the substantial satisfaction of any performance
related responsibilities. License fee payments received in advance of amounts
earned are recorded as deferred revenue. Milestone payments are recorded as
revenue based upon the completion of certain contract specified events that
measure progress toward completion under certain long-term contracts. Royalty
revenue related to licensed technology is recorded when earned and in accordance
with the terms of the license agreement. Research and development costs are
expensed as incurred.

4.    Issuance of Preferred Stock

On March 25 and May 12, 2003, we raised approximately $3.25 million from the
sale of 32,550 shares of our Series I Convertible Preferred Stock ("Series I
Stock") priced at $100 per share, with warrants to purchase an aggregate of
2,582,669 shares of common stock to a small group of institutional and
accredited investors. Each share of Series I Stock is convertible at any time at
the election of the holder into approximately 181 shares of common stock at a
conversion price of $0.55 per share, subject to certain anti-dilution
adjustments. In connection with this transaction, we recorded a non-cash
"imputed dividend" expense of $1,373,247 in order to account for the difference
between the fair market value of the common stock and the conversion price of
the preferred stock into common stock.

We intend to use the net proceeds for general corporate and working capital
purposes.

Each share of Series I Stock received two common stock warrants. One warrant is
exercisable at any time for 27 shares of common stock at an exercise price of
$0.88 per share, and expires 18 months after the close of the offering; the
other warrant is exercisable at any time for 18 shares of common stock at an
exercise price of $1.65 per share, and expires 48 months after the


                                       7
<PAGE>


close of the offering. In connection with the issuance of the Series I Stock,
additional warrants to purchase 819,543 shares of common stock at an exercise
price of $0.65 per share, expiring 18 months after the close of the offering
were issued, as well as warrants to purchase 204,998 shares of common stock at
an exercise price of $0.58 per share, warrants to purchase 27,340 shares of
common stock at an exercise price of $0.68 per share, warrants to purchase
30,748 shares of common stock at an exercise price of $0.92 per share and
warrants to purchase 20,500 shares of common stock at an exercise price of $1.73
per share, each expiring 5 years after the close of the offering.

No underwriters were engaged by us in connection with such issuance and,
accordingly, no underwriting discounts were paid. The offering is exempt from
registration under Section 4(2) of the Securities Act of 1933, as amended (the
"Securities Act"), and met the requirements of Rule 506 of Regulation D
promulgated under the Securities Act.

5.    Exercise and Exchange of Warrants

In June 2003, certain holders of warrants exercised their warrants to purchase
common stock, these warrants were due to expire in August 2003. The exercise
prices of such warrants were $0.40 and $0.10 per share. As an incentive to
exercise the warrant early the Company offered each holder the issuance of a new
warrant, for a similar number of shares, at an exercise price of $0.55 per
share. As a result, the Company raised $353,500. The newly issued warrants will
expire on the last day of January 2004.

6.    Accounting for Stock-Based Compensation

As allowed by Statement No. 123, Accounting for Stock-Based Compensation, we
account for stock compensation arrangements with employees using the intrinsic
value method under the provisions of the Accounting Principles Board's Opinion
No. 25, Accounting for Stock Issued to Employees. Deferred stock-based
compensation is amortized over the vesting period, which is generally three to
five years, utilizing the accelerated method prescribed in FASB Interpretation
No. 28. Pro Forma stock compensation in accordance with Statement No. 123 is
amortized using the straight-line method over the vesting period.

The following table illustrates the effect on net income and earnings per share
if we had applied the fair value recognition provisions of Statement No. 123:

<TABLE>
<CAPTION>

                                                                    For the three months                For the nine months
                                                                     Ended September 30,                Ended September 30,
                                                                   2003              2002             2003              2002
                                                                   ----              ----             ----              ----
<S>                                                             <C>               <C>              <C>               <C>
Net loss:
As reported                                                     $(911,527)       $(215,698)       $(3,091,706)       $(1,125,400)
Total stock-based employee compensation expense
determined under fair value based methods for all
options, net of related tax effects                               (31,555)         (88,463)          (108,218)          (107,257)


Pro forma net loss                                               (943,082)        (304,161)        (3,199,924)        (1,232,657)

Basic and diluted net loss per share:
     As reported                                                     0.02             0.01               0.09               0.04
     Pro forma                                                  $    0.03        $    0.01        $      0.10        $      0.05
</TABLE>

7.    Liquidity

We believe our existing available cash and cash equivalents as of September 30,
2003, plus contractual amounts receivable, is sufficient to meet our anticipated
capital requirements until April 2004. Substantial additional capital resources
will be required to fund continuing expenditures related to our research,
development, clinical trials, and product marketing activities. If adequate
funds are not available, we will be required to significantly curtail our
operating plans and may have to sell or license out significant portions of our
technology or potential products.


                                       8
<PAGE>



Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations


Forward Looking Statements

Certain statements contained or incorporated by reference in this Quarterly
Report on Form 10-QSB constitute "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause actual results, performance or achievements of the company, or
industry results, to be materially different from any future results,
performance or achievements expressed or implied by forward-looking statements.
Such risks and uncertainties include, among others, history of operating losses,
raising adequate capital for continuing operations, early stage of product
development, scientific and technical uncertainties, competitive products and
approaches, reliance upon collaborative partnership agreements and funding,
regulatory testing and approvals, patent protection uncertainties and
manufacturing scale-up and required qualifications. While these statements
represent management's current judgment and expectations for the company, such
risks and uncertainties could cause actual results to differ materially from any
future results suggested herein. The company undertakes no obligation to release
publicly the results of any revisions to these forward-looking statements to
reflect events or circumstances arising after the date hereof.

General Overview

Incorporated in 1988, Protein Polymer Technologies, Inc., a Delaware corporation
with corporate offices and laboratories located in San Diego, California, is a
development-stage biotechnology company engaged in the research, development,
production and clinical testing of medical products based on its proprietary
protein-based biomaterials and tissue engineering technology. Since 1992, we
have focused primarily on developing technology and products to be used in the
surgical repair, augmentation, and regeneration of tissue; surgical adhesives
and sealants; soft tissue augmentation products; matrices for wound healing and
tissue engineering; and drug delivery formulations. We have been unprofitable to
date, and as of September 30, 2003 had an accumulated deficit of $(46,791,000).

Protein polymers are synthetic proteins created "from scratch" through chemical
DNA (gene) synthesis, and produced in quantity by traditional large-scale
microbial fermentation methods. As a result, protein polymers contain no human
or animal components that could potentially transmit or cause disease. Due to
their synthetic design, protein polymers are capable of combining the biological
functionality of natural proteins with the chemical functionality and
exceptional physical properties of synthetic polymers. A common goal is to
develop materials that beneficially interact with human cells, enabling cell
growth and the regeneration of tissues with improved outcomes as compared to
current products and practices.

Our product candidates for surgical repair, augmentation and regeneration of
human tissues are in various stages of research and development. The more
advanced programs are bulking agents for soft tissue augmentation, particularly
for use in urethral tissue for the treatment of female stress incontinence and
in dermal tissue for cosmetic and reconstructive procedures, and tissue adhesive
formulations for the repair of spinal discs damaged due to injury or aging and
as surgical sealants for use in pulmonary and abdominal surgical procedures. We
currently are devoting the majority of our resources to the development and
registration of these products.

Because of our technology's breadth of commercial opportunity, we are pursuing
multiple routes for commercial development. Currently, we independently are
developing the incontinence and the dermal augmentation products, which share
similar technology and product characteristics. We have established a
comprehensive license and development agreement with Genencor International for
the use of our biomaterials and technology to develop, manufacture and
commercialize products for industrial markets. Genencor International is one of
the world's largest manufacturers of industrial enzymes and other biologically
derived products. Through this arrangement, we will receive milestone payments,
and eventually royalties on the sale of products. For development and
commercialization of our spinal disc repair product, we joined with Windamere
Venture Partners to establish a new company, Spine Wave, Inc., that provides us
with both near term research and development support and eventually royalties on
the sale of licensed products. Except for the industrial products, we have
retained manufacturing rights.


                                       9
<PAGE>


Significant Collaborative Agreements

Our collaborative development agreements generally contain provision for
specific payments for defined activities, services, royalties on the sales of
developed products, and/or the accomplishment of performance benchmarks. These
agreements also may provide for equity investments or other financial
incentives. Technology license agreements usually are associated with
collaborative development agreements, but occasionally we will agree to a
license without an accompanying development agreement.

Spine Wave
----------

In April 2001, we entered into agreements with Spine Wave, Inc. ("Spine Wave"),
to develop and commercialize an injectable protein-based formulation for the
repair of spinal discs damaged either by injury or aging. As consideration for
entering into an exclusive, worldwide license agreement with Spine Wave, we
received one million shares of the founding common stock in Spine Wave, valued
initially at $10,000. Royalties from the sale or sublicensing of licensed
products will be determined in the future based on the gross margin (sales
revenue less the cost of goods) realized by Spine Wave from the sale of the
products.

The shares of founding common stock are subject to a vesting schedule consisting
of three triggers corresponding to Spine Wave's progress in commercializing
products using the licensed technology. Unvested shares of founding common stock
are subject to repurchase by Spine Wave at the original purchase price.
One-third of the shares of founding common stock vest on or after each trigger.

In connection with the license agreement, we entered into a separate supply and
services agreement to provide Spine Wave with a variety of research and
development services, and to supply materials to Spine Wave for pre-clinical and
clinical testing. Spine Wave, in return, agreed to reimburse us for both our
direct costs and the associated overhead costs for the services provided. During
2001, we recognized contract revenues of $450,000 related to activities
performed under the collaborative agreement.

In March 2002, we executed additional agreements with Spine Wave that expanded
our contractual research and development relationship, and that offered us
additional equity incentives in the form of Spine Wave common stock and
warrants. Under the amended supply and services agreement, we, on behalf of
Spine Wave, are proceeding with pre-clinical safety and performance studies of a
product for spinal disc repair to support Spine Wave's filing of an
Investigational Device Exemption with the FDA to obtain approval to initiate
human clinical testing. During the subsequent period leading to regulatory
marketing approval, our contractual responsibilities include the supply of
product to be used in clinical testing and preparation for commercial
manufacturing operations. Research and development services performed for Spine
Wave are reimbursed including both direct costs and associated overhead costs.
Spine Wave is responsible for clinical testing, regulatory approvals, and
commercialization. For the year ended December 31, 2002 and for the period ended
September 30, 2003 we recognized $2,427,000 and $1,289,000, respectively, in
contract revenue from Spine Wave which represents the reimbursement of direct
costs plus overhead costs allocated to the research and development resources
used in performing the collaborative activities.

Additional equity incentives offered in conjunction with the expanded supply and
services agreement of March 17, 2002 consist of a three year warrant to purchase
1,000,000 shares of Spine Wave common stock at an exercise price of $0.50 per
share (recently issued Spine Wave preferred stock was also priced at $0.50 per
share), and 400,000 shares of common stock valued at $0.05 per share subject to
repurchase at cost until each of three performance goals is achieved. The
performance goals consist of: (i) completion of certain studies for filing an
Investigational Device Exemption application (100,000 shares); (ii) completion
of additional studies for filing of the Investigational Device Exemption and
provision of inventory for the pilot clinical study (150,000 shares); and (iii)
completion of certain manufacturing arrangements, and production of certain
quantities of product (150,000 shares). As of September 30, 2003, the first of
the three performance goals had been met.

License Agreements

Our license agreements usually include provision for up-front compensation and
eventual royalties on the sale of licensed products. Terms of license agreements
typically commence as of the date executed and continue for a period of the
greater of twenty (20) years from execution date or the date upon which the last
of the patented technology under license expires.

Femcare, Ltd.
-------------

In January 2000, we entered into a strategic alliance agreement with Femcare,
Ltd. ("Femcare"), for the commercialization in Europe and Australia of our
product for treatment of stress urinary incontinence. Under the terms of the
license agreement, Femcare paid a $1 million non-refundable license fee in
exchange for the patented technology and a three year commitment


                                       10
<PAGE>


from us to provide support to Femcare in its efforts to clinically test our
products in Great Britain and to achieve European regulatory approval. We have
not incurred any research and development costs associated with our support
efforts to date. As a result of the arrangement, we recognized approximately
$333,000 in deferred license fee revenue for 2000 and 2001, and 2002. In
accordance with the agreement, we will receive a royalty on net product sales
generated by Femcare, and we have the right to manufacture commercial product
for Femcare. The agreement terminates on the greater of 20 years or upon which
the last of the licensed patents expire.

Genencor International, Inc.
----------------------------

In December 2000, we signed a broad-based, worldwide exclusive license agreement
with Genencor International, Inc. ("Genencor") enabling Genencor to potentially
develop a wide variety of new products for industrial markets. In October 2002,
the license agreement was amended to provide Genencor with an additional
one-year option to initiate development of products in the field of non-medical
personal care. As a result of the agreements, Genencor may use our patented
protein polymer design and production technology, in combination with Genencor's
extensive gene expression, protein design, and large-scale manufacturing
technology, to design and develop new products with improved performance
properties for defined industrial fields and the field of non-medical personal
care products.

In return for the licensed rights, Genencor paid us an up-front license fee of
$750,000, and will pay royalties on the sale of any products commercialized by
Genencor under the agreement. The licensed technology was transferred to
Genencor upon execution of the license agreement without any further product
development obligation on our part. Future royalties on the net sales of
products incorporating the technology under license and developed by Genencor
will be calculated based on a royalty rate to be determined at a later date. In
addition, we are entitled to receive up to $5 million in milestone payments
associated with Genencor's achievement of various industrial product development
milestones incorporating the licensed technology. There is no limitation on the
amount of milestone payments we can receive from Genencor for Genencor's product
development in the field of non-medical personal care products. In December 2002
we received a license milestone payment of $250,000 from Genencor for Genencor's
initiation of a product development project based on technology licensed from
us.

In connection with the license agreement, Genencor was issued two warrants, each
convertible by formula into $500,000 of our common stock. The first warrant
could be converted into 442,478 shares at an exercise price of $1.13 per share.
The second warrant could be converted into 1,250,000 shares at an exercise price
of $0.40 per share. As a result of the collaboration, in 2000 we recognized
$750,000 in license fee revenue (less the issuance of warrants to purchase $1
million of our common stock valued at $319,000). The agreement terminates on the
date of expiration of the last remaining patent.

Research and Development

We currently maintain detailed project costs (direct costs plus allocated
overhead) for contractual research and development services. However, we do not
maintain cost breakdowns for our internal research and development projects due
to the extensive degree of overlap between our tissue augmentation projects such
as common manufacturing, quality control, and developmental product testing.

Our product for the treatment of female stress urinary incontinence is in pilot
human clinical testing. We project beginning pivotal clinical testing during
2004. We expect these trials, including patient follow-up, will take
approximately 24 months, and the subsequent Food and Drug Administration review
of our pre-market approval submission may take an additional 12 months. Assuming
this schedule is met and the product is approved, U.S. sales of the product are
projected to begin in 2007. Commercial manufacturing process development and
completion of the clinical trials are estimated to cost approximately $10
million. Femcare, Ltd., our licensee for this product in Europe and Australia,
has advised us that commercialization of the product in Europe potentially can
occur at least one year in advance of U.S. commercialization.

Our tissue augmentation product for use in cosmetic and reconstructive surgery
applications is in pilot human clinical testing. We project beginning pivotal
clinical testing during 2004. We expect these trials, including patient
follow-up, will take approximately 15 months, and the subsequent Food and Drug
Administration review of our pre-market approval submission may take up to an
additional 12 months. Assuming this schedule is met and the product is approved,
U.S. sales are projected to begin in 2006. The pivotal clinical trial is
estimated to cost approximately $2.2 million. This product is based on the same
manufacturing technology as our product for the treatment of female stress
urinary incontinence, and thus, the incremental cost of manufacturing
development is estimated to be approximately $0.1 million.

We currently do not have sufficient cash to complete the development of these
products. We anticipate obtaining the necessary cash either by additional equity
financings, or by sharing the cost of development with potential marketing
partners, or a combination of both methods. If we are unable to obtain the
necessary cash, it will have a material adverse effect on us.


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<PAGE>


Our spinal disc repair product being developed for our licensee, Spine Wave, is
in pre-clinical testing. The timing of this project is under the control of
Spine Wave. Under our contract with Spine Wave, we are responsible for
development of the formulated product, its manufacturing process, and product
production for both clinical trials and commercialization. Spine Wave is
responsible for funding all expenses associated with these activities. Contract
revenue received from Spine Wave is approximately equal to our cost (direct
project costs plus allocated laboratory and corporate overhead expenses) of the
work performed. Total research and development costs plus certain administrative
costs, for the three month period ended September 30, 2003 and for the period of
project inception to date are approximately $96,000 and $4,167,000 respectively.

To the extent sufficient capital resources are available, we continue to
research the use of our patented technology to produce proteins of unique design
for other tissue repair and medical device applications, principally for use in
supporting the wound healing process, including devices based on tissue
engineering, and in drug delivery devices. Our strategy for most of our programs
is to enter into collaborative development agreements with product marketing and
distribution companies. Although these relationships, to the extent any are
consummated, may provide significant near-term revenues through up-front
licensing fees, research and development payments and milestone payments, we
expect to continue incurring operating losses for the next several years.

Results of Operations

We recognized $96,000 in contract and licensing revenue for the three months
ended September 30, 2003 as compared to $714,000 for the three months ended
September 30, 2002. For the nine-month period ended September 30, 2003, we
recognized $1,289,000 in contract and licensing income as compared to $2,127,000
for the same period in 2002. The contract and licensing revenue for the three
months ended September 30, 2003 was for research and development services for
Spine Wave associated with the development of an injectable spinal disc nucleus
product for the treatment of lower back pain whereas contract and licensing
revenue for the same period in 2002 also included $83,000 and $250,000
respectively in amortized revenue from a $1 million up-front license payment
(being recognized ratably over a period of three years) from Femcare for the
commercial rights to our incontinence product in Europe and Australia. The
amortization of the $1 million dollar payment terminated on December 31, 2002.
The decrease in contract revenue in 2003, particularly during the three months
ended September 30, 2003, is due to the completion of preclinical testing of the
injectable spinal disc nucleus product in preparation for Spine Wave's recent
filing of an Investigational Device exemption with the Food and Drug
Administration requesting permission to initiate human clinical trials.

Interest income was $5,000 and $16,000 respectively for the three months and
nine months ended September 30, 2003 versus $1,000 and $5,000 respectively for
the same periods in 2002.

Research and development expenses for the three and nine-month periods ended
September 30, 2003 were $604,000 and $1,782,000 respectively, as compared to
$557,000 and $2,081,000 for the same periods in 2002. The decrease in research
and development expenditures for the nine-month period in 2003 primarily
reflects reduced pre-clinical costs associated with the development of the
spinal disc nucleus replacement product. We expect, in general, that our
research and development, human clinical testing and manufacturing expenses will
increase over time if our incontinence and dermal products, and other products
in development, successfully progress and additional capital is obtained.

Selling, general and administrative expenses for the three and nine month
periods ended September 30, 2003 were $339,000 and $1,035,000 respectively as
compared to $304,000 and $970,000 respectively for the same periods in 2002. We
expect that our selling, general and administrative expenses will remain largely
unchanged in the near term, but may increase in the future as support for our
research and development and manufacturing efforts require additional resources
and to the extent additional capital is obtained.

For the three months ended September 30, 2003, we recorded a net loss applicable
to common shareholders of $912,000 or $0.02 per share, as compared to a loss of
$216,000 or $0.01 per share for the same period in 2002. For the nine months
ended September 30, 2003, we recorded a net loss applicable to common
shareholders of $3,092,000 or $0.09 per share as compared to a loss of
$1,125,000, or $0.04 per share for the same period in 2002. Included in the net
loss per share for the nine months ended September 30, 2003 is a one-time,
non-cash "imputed dividend" of $1,373,000 from the sale and issuance of our
Series I Preferred Stock which raised approximately $3.25 million less expenses
(see Note 4 to the Financial Statements). The net loss and the net loss per
share also included in each of the three month and the nine-month periods of
2003 and 2002 $70,000 and $208,000 for undeclared dividends related to our
preferred stock. Excluding the effect of the imputed dividends, the net loss
applicable to common shareholders would have been $1,719,000 ($.05 per share)
for the nine months ended September 30, 2003.


                                       12
<PAGE>


In general, there can be significant fluctuation in revenue from quarter to
quarter due to variability in outside contract and licensing payments. In
general, we expect to incur increasing operating losses in the future (to the
extent additional capital is obtained), due primarily to increases in our soft
tissue augmentation program's development, manufacturing and business
development activities, and the initiation of new tissue adhesive product
development activities. Our financial results depend on our ability to establish
strategic alliances and generate contract revenues, increased research,
development and manufacturing efforts, pre-clinical and clinical product testing
and commercialization expenditures, expenses incurred for regulatory compliance
and patent prosecution, and other factors.

To date we believe that inflation and changing prices have had only a modest
effect on our continuing operations. However, increases in utility costs,
insurance, and employee benefits may have a greater impact in the future.

Liquidity and Capital Resources

As of September 30, 2003, we had cash, cash equivalents and short-term
investments totaling $2,010,000 as compared to $734,000 at December 31, 2002. As
of September 30, 2003, we had working capital of $1,879,000, compared to a
working capital of $189,000 at December 31, 2002.

We do not have any off balance sheet financing activities and do not have any
special purpose entities. We had no long-term capital lease obligations as of
September 30, 2003 or December 31, 2002. For the three month period ended
September 30, 2003, our cash expenditures for capital equipment and leasehold
improvements totaled $80,000, compared with $27,000 for the same period in the
prior year. To the extent capital is available, we anticipate that these
expenditures will be increased in 2003 for laboratory renovations and additional
equipment required to meet the FDA's applicable Quality System regulation as we
scale up our manufacturing operations to meet product requirements for expanded
clinical testing. We may enter into capital equipment lease arrangements in the
future if available at appropriate rates and terms.

We believe our existing available cash, cash equivalents and short-term
investments as of September 30, 2003, in combination with continuing contractual
commitments will be sufficient to meet our anticipated capital requirements
until April of 2004. Substantial additional capital resources will be required
to fund continuing expenditures related to our research, development,
manufacturing and business development activities. In addition we are pursuing a
number of alternatives available to meet the continuing capital requirements of
our operations, such as collaborative agreements and public or private
financings. Further, we are continuing our reimbursed services to Spine Wave. We
are currently in preliminary discussions with potential financing sources and
collaborative partners, and funding in the form of equity investments, license
fees, milestone payments or research and development payments could be
generated. There can be no assurance that any of these fundings will be
consummated in the timeframes needed for continuing operations or on terms
favorable to us. If adequate funds are not available, we will be required to
significantly curtail our operating plans and would likely have to sell or
license out significant portions of our technology, and possibly cease
operations.


Item 3. Controls and Procedures

        (a) Evaluation of Disclosure Controls and Procedures. Based on their
            evaluation, as of the end of the period covered by this quarterly
            report, our principal executive officer and principal financial
            officer have concluded that our disclosure controls and procedures
            (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities
            Exchange Act of 1934 ("Exchange Act")) are effective based on their
            evaluation of these controls and procedures required by paragraph
            (b) of Rules 13a-15 or 15d-15 under the Exchange Act.

        (b) Changes in Internal Control Over Financial Reporting. There were no
            changes in our internal control over financial reporting identified
            in connection with the evaluation required by paragraph (d) of Rules
            13a-15 or 15d-15 under the Exchange Act that occurred during our
            last fiscal quarter that has materially affected, or is reasonably
            likely to materially affect, our internal control over financial
            reporting.


                                       13
<PAGE>


                                    PART II.
                                OTHER INFORMATION


Item 6. Exhibits and Reports on Form 8-K

        a. Exhibits

            31.1  Certification of Chief Executive Officer pursuant to 18 U.S.C.
                  Section 1350, as adopted pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 2002.

            31.2  Certification of Director of Finance (Principal Financial
                  Officer) pursuant to 18 U.S.C. Section 1350, as adopted
                  pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

            32.1  Certification of Chief Executive Officer pursuant to 18 U.S.C.
                  Section 1350, as Adopted Pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002.

            32.2  Certification of Director of Finance (Principal Financial
                  Officer) pursuant to 18 U.S.C. Section 1350, as Adopted
                  Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


        b. Reports on Form 8-K

                  None.


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<PAGE>


                                   SIGNATURES


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


                                             PROTEIN POLYMER TECHNOLOGIES, INC.



               Date:  November 13, 2003      By  /s/  J. Thomas Parmeter
                                                 -----------------------
                                                 J. Thomas Parmeter
                                                 Chairman of the Board, Chief
                                                 Executive Officer, President


               Date:  November 13, 2003      By  /s/  Janis Y. Neves
                                                 -------------------
                                                 Janis Y. Neves
                                                 Director of Finance, Controller
                                                 and Assistant Secretary


                                       15
<PAGE>


                                  EXHIBIT INDEX



Exhibit
Number     Description
------     -----------


   31.1    Certification of Chief Executive Officer pursuant to 18 U.S.C.
           Section 1350, as adopted pursuant to Section 302 of the
           Sarbanes-Oxley Act of 2002.

   31.2    Certification of Director of Finance (Principal Financial Officer)
           pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
           302 of the Sarbanes-Oxley Act of 2002.

   32.1    Certification of Chief Executive Officer pursuant to 18 U.S.C.
           Section 1350, as Adopted Pursuant to Section 906 of the
           Sarbanes-Oxley Act of 2002.

   32.2    Certification of Director of Finance (Principal Financial Officer)
           pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
           906 of the Sarbanes-Oxley Act of 2002.


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