UNITED STATES

SECURITIESAND EXCHANGE COMMISSION

Washington,D.C. 20549

FORM 10-Q

Scios Inc.

PART I.FINANCIAL INFORMATION

Item 1. FinancialStatements

```

                                                        SCIOS INC.

                                               Consolidated Balance Sheets
                                     (In thousands, except share, and per share data)

     ASSETS                                                                   June 30,                      December 31,
                                                                                2001                            2000
                                                                          ------------------              -----------------
                                                                          ------------------              -----------------
                                                                             (Unaudited)
Current assets:
     Cash and cash equivalents                                            $                               $
                                                                          20,726                          3,291
     Marketable securities                                                           65,667                         35,356
     Accounts receivable                                                              5,083
                                                                                                               5,217
     Prepaid expenses and other assets                                                1,241
                                                                                                                722
                                                                          ------------------              -----------------
                                                                          ------------------              -----------------
       Total current assets                                                         92,717                          44,586

Marketable securities, non-current                                                  77,839                          32,884
Property and equipment, net                                                          8,171
                                                                                                               8,910
Other assets                                                                         3,890
                                                                                                               2,007
                                                                          ------------------              -----------------
                                                                          ------------------              -----------------

TOTAL ASSETS                                                              $       182,617                 $         88,387
                                                                          ==================              =================

     LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable                                                     $           8,500               $
                                                                                                          4,587
     Other accrued liabilities                                                       7,726                          10,749
     Deferred contract revenues                                                     14,098                          16,193
                                                                          ------------------              -----------------
       Total current liabilities                                                    30,324                          31,529

Long-term debt                                                                      40,697                          39,095
                                                                          ------------------              -----------------
                                                                          ------------------              -----------------
       Total liabilities                                                            71,021                          70,624
                                                                          ------------------              -----------------

Stockholders' equity:
     Preferred stock; $.001 par value; 20,000,000
        shares authorized; 4,991 shares issued and outstanding                           --                             --
     Common stock; $.001 par value; 150,000,000
        shares authorized; 45,365,590 and 39,166,373 shares
        issued and outstanding, respectively
                                                                                 45                              39
     Additional paid-in capital                                                    545,450                        428,987
     Notes receivable from stockholders
                                                                                (446)                          (634)
     Deferred compensation, net
                                                                                (106)                          (417)
     Accumulated other comprehensive income                                             556
                                                                                                               1,195
     Accumulated deficit                                                         (433,903)                       (411,407)
                                                                          ------------------              -----------------
                                                                          ------------------              -----------------
       Total stockholders' equity                                                 115,596                          17,763
                                                                          ------------------              -----------------
                                                                          ------------------              -----------------

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                           $        182,617                $         88,387
                                                                          ==================              =================

                 The accompanying notes are an integral part of these consolidated financial statements.
```

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                                                              SCIOS INC.

                                     Consolidated Statements of Operations and Comprehensive Loss
                                            (In thousands, except share and per share data)

                                                                     Three months ended                       Six months ended
                                                                          June 30,                                June 30,
                                                                  2001                2000                 2001               2000
                                                             ----------------    ----------------     ---------------    ---------------
                                                             ------------------------------------     ----------------------------------
                                                                         (Unaudited)                             (Unaudited)
Revenues:
       Product sales                                         $                   $                    $                        $     --
                                                             2,098               --                   2,098
       Research and development contracts
                                                                  1,484               1,482               2,581              3,376
       Gain on sale of marketing rights                                   --                                                         --
                                                                                       --                 9,363
       Psychiatric product sales, co-promotion
         commissions, net of expenses
                                                                  1,659               1,584               3,142              2,915
                                                             ----------------    ----------------     ---------------    ---------------
                                                             ----------------    ----------------     ---------------    ---------------
                                                                                                             17,184
                                                                  5,241               3,066                                  6,291
                                                             ----------------    ----------------     ---------------    ---------------
                                                             ----------------    ----------------     ---------------    ---------------

Costs and expenses:
       Research and development                                                           11,294             22,564              20,578
                                                                 13,084
       Marketing, general and administration                                                                  16,758
                                                                 10,278               2,756                                  6,232
       Restructuring credits                                              --                                      --              (993)
                                                                                           (993)
                                                             ----------------    ----------------     ---------------    ---------------
                                                             ----------------    ----------------     ---------------    ---------------
                                                                      23,362              13,057             39,322
                                                                                                                             25,817
                                                             ----------------    ----------------     ---------------    ---------------
                                                             ----------------    ----------------     ---------------    ---------------

Loss from operations                                                (18,121)             (9,991)            (22,138)           (19,526)

Other income and expense:
       Investment income                                                                                       1,554
                                                                   742                1,204                                  2,588
       Interest expense                                                (754)             (1,019)             (1,603)            (2,010)
       Realized gains (losses) on securities                                               (100)                                  (184)
                                                                   135                                     389
       Other expense, net                                              (275)               (403)               (698)              (702)
                                                             ----------------    ----------------     ---------------    ---------------
                                                             ----------------    ----------------     ---------------    ---------------
                                                                       (152)               (318)               (358)
                                                                                                                                  (308)
                                                             ----------------    ----------------     ---------------    ---------------
                                                             ----------------    ----------------     ---------------    ---------------

Net loss                                                                               ( 10,309)
                                                             (18,273)                                 (22,496)           (19,834)

Other comprehensive loss:
       Change in unrealized gain (losses) on securities                (755)                                   (639)
                                                                                       325                                    229
                                                             ----------------    ----------------     ---------------    ---------------
Comprehensive loss:                                                 $                 $  (9,984)          $ (23,135)         $ (19,605)
                                                                (19,028)
                                                             ================    ================     ===============    ===============

       Loss per common share:
            Basic and diluted                                $                   $                    $                  $
                                                             (0.46)              (0.27)               (0.57)             (0.52)

            Weighted average number of common
              shares outstanding used in the
             calculation of net loss per share:
             Basic and diluted                                    40,087,161          37,780,077          39,653,959         37,780,077

The accompanying notes are an integral part of these consolidated financial statements
```

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                                                   SCIOS INC.

                                     Consolidated Statements of Cash Flows
                                                 (In thousands)

                                                                                       Six months ended
                                                                                           June 30,
                                                                                    2001               2000
                                                                               ---------------     --------------
                                                                                          (Unaudited)
Cash flows from operating activities:
   Net loss                                                                        $ (22,496)         $ (19,834)
   Adjustments to reconcile net loss to net
   cash used in operating activities:
      Depreciation and amortization
                                                                                   1,417               1,967
       Accrued long-term interest payable
                                                                                   1,602               2,010
       (Gain) loss on sale of securities
                                                                                        (389)           184
       Amortization of deferred compensation
                                                                                    311                 170
      Changes in assets and liabilities:
        Accounts receivable
                                                                                    134                     (19)
        Accounts payable
                                                                                   3,913               1,079
        Other accrued liabilities                                                     (3,023)              (799)
        Prepaid expenses and other assets                                             (2,997)
                                                                                                       1,224
        Deferred contract revenue                                                     (2,095)              (742)
        Restructuring charges                                                              --            (1,052)
                                                                               ---------------     --------------
             Net cash used in operating activities                                   (23,623)           (15,812)
                                                                               ---------------     --------------

Cash flows from investing activities:
   Purchases of property and equipment                                                    (                (701)
                                                                                    678)
   Sales/maturities of marketable securities                                           88,492
                                                                                                      34,262
   Purchases of marketable securities                                               (163,413)           (15,335)
                                                                               ---------------     --------------
             Net cash provided by (used in) investing activities                     (75,599)
                                                                                                      18,226
                                                                               ---------------     --------------

Cash flows from financing activities:
   Issuance of common stock and collection of notes
      receivable from stockholders, net                                               116,657
                                                                                                        636
   Payment of notes payable                                                                --            (2,000)
                                                                               ---------------     --------------
             Net cash provided by (used in) financing activities                     116,657             (1,364)
                                                                               ---------------     --------------

Net increase in cash and cash equivalents
                                                                                   17,435              1,050
Cash and cash equivalents, at beginning of period
                                                                                   3,291              11,582
                                                                               ---------------     --------------
Cash and cash equivalents, at end of period                                       $ 20,726           $ 12,632
                                                                               ===============     ==============

            The accompanying notes are an integral part of these consolidated financial statements.
```

SCIOS INC.

1. Basis ofPresentation

2. NewAccounting Pronouncements

3. Computationof Loss Per Share

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         The following table sets forth the computation of the Scios' basic and diluted loss per share (in thousands, except per
 share amounts):

                                                          Three months ended                Six months ended
                                                               June 30,                         June 30,
                                                         20001            2000                2001         2000
                                                   --------------------------------- -------------------------------

         Numerator

         Basic
            Net loss                                     $ 18,273           $10,309         $22,496         $19,834

         Diluted
             Net loss                                       $18,273         $10,309         $22,496         $19,834

         Denominator

         Basic
            Weighted average shares                        40,087          37,781            39,654         37,781

         Basic loss per share                                $ 0.46          $ 0.27          $ 0.57        $ 0.52

         Diluted loss per share                              $ 0.46          $ 0.27          $ 0.57        $ 0.52
```

5. Gain onSale of Marketing Rights